“The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding, or better at explaining than doing.”
Nassim Nicholas Taleb
“What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing.”
Nassim Nicholas
“Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.”
“Finally, when young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro-level, my suggestion is: 1) Never engage in virtue signaling; 2) Never engage in rent-seeking; 3) You must start a business. Put yourself on the line, start a business.”
In what was incredibly appropriate timing given the ‘shocktober’ market blowup, Bloomberg News invited “Black Swan” author Nassim Taleb to its set on Halloween for a discussion about the increasingly fragile market ecosystem in which we all reside, and the mounting risks that, Taleb believes, could soon ignite another financial crisis that will be even more severe than what we saw in 2008.
Taleb, dressed up as “black swan man”, wasted little time in explaining how the global economy is becoming increasingly vulnerable to a global debt crisis, how the global quantitative easing did nothing to fix the underlying problem of too much debt – instead it exacerbated it – and how the inevitable reckoning might play out in markets once the long-dreaded “inflection point” finally arrives.
“Intellectual Yet Idiot: semi-erudite bureaucrat who thinks he is an erudite; pathologizes others for doing things he doesn’t understand not realizing it is his understanding that may be limited; imparts normative ideas to others: thinks people should act according to their best interests *and* he knows their interests, particularly if they are uneducated “red necks” or English non-crisp-vowel class.
More socially, the IYI subscribes to The New Yorker. He never curses on twitter. He speaks of “equality of races” and “economic equality” but never went out drinking with a minority cab driver. Those in the U.K. have been taken for a ride by Tony Blair. The modern IYI has attended more than one TEDx talks in person or watched more than two TED talks on Youtube.
Not only will he vote for Hillary Monsanto-Malmaison because she seems electable and some other such circular reasoning, but holds that anyone who doesn’t do so is mentally ill.”
“There is something irremediably sad at an atheist’s funeral.”
Nassim Taleb
“Any work you do in the comfort of a routine risks being taken over by a robot.”
Nassim Taleb
“If, in some wealthy communities, you run into people who look like cousins, it is more probable that they use the same plastic surgeon.”
Nassim Taleb
“While Monsanto can lobby in DC, bully, soft-bribe & manipulate regulators, and intimidate & smears scientists (like yours truly), Bayer as a foreign-owned corporation can’t easily do so. Bayer lost ~20% since the Monsanto trial (another 4% today).”
Arabs fighting to the last Palestinian –Where are the lions? –Italians don’t die easily– Make historians build rockets –Commerce makes people equal (or unequal but that’s another subject)
One of the problems of the interventionista — wanting to get involved in other people’s affairs “in order to help” — results in disrupting some of the peace-making mechanisms that are inherent in human affairs, a combination of collaboration and strategic hostility. As we saw in the Prologue 1, the error continues because someone else is paying the price.
I speculate that had IYIs and their friends not gotten involved, problems such as the Israeli-Palestinian one would have been solved, sort of — and both parties, especially the Palestinians, would have been better off. As I am writing these lines the problem has lasted seventy years, with way too many cooks in the same tiny kitchen, most of whom never have to taste the food. I conjecture that when you leave people alone, they tend to settle for practical reasons.
People on the ground, those with skin in the game, are not too interested in geopolitics or grand abstract principles, but rather in having bread on the table, beer (or, for some, nonalcoholic fermented beverages such as yoghurt drinks) in the refrigerator, and good weather at outdoor family picnics. Also they don’t want to be humiliated in their human contact with others.
Imagine [Nero1] the absurdity of Arab states prodding the Palestinians to fight for their principles while their potentates are sitting in carpeted alcohol-free palaces (with well-stocked refrigerators full of nonalcoholic fermented beverages such as yoghurt) while the recipients of their advice live in refugee camps. Had the Palestinians settled in 1947, they would have been better off. But the idea was to throw the Jews and neo-crusaders in the Mediterranean; Arab rhetoric came from Arab parties who were hundreds, thousands of miles away arguing for “principles” when Palestinians were displaced, living in tents. Then came the war of 1948. Had Palestinians settled then, things would have worked out. But, no, there were “principles.” But then came the war of 1967. Now they feel they would be lucky if they recovered the territory lost in 1967. Then in 1992 came the Oslo peace treaty, from the top. No peace proceeds from bureaucratic ink. If you want peace, make people trade, as they have done for millennia. They will be eventually forced to work something out.
We are largely collaborative — except when institutions get in the way. I surmise that if we put those “people wanting to help” in the State Department on paid vacation to do ceramics, pottery, or whatever low-testosterone people do when they take a sabbatical, it would be great for peace.
Further, these people tend to see everything as geopolitics, as if the world was polarized into two big players, not a collection of people with diverse interests. To spite Russia, the State Department is urged to perpetuate the war in Syria, which in fact just punishes Syrians.
Peace from the top differs from real peace: consider that today’s Morocco, Egypt, and to some extent Saudi Arabia, with more or less overtly pro-Israeli governments (with well-stocked refrigerators full of nonalcoholic fermented drinks such as yoghurt), have local populations conspicuously hostile to Jews. Compare this to Iran, with a local population that is squarely pro-Western and tolerant of Jews. Yet some people with no skin in the game who have read too much about the Treatise of Westphalia (and not enough on complex systems) still insist on conflating relations between countries with relations between governments.
Mars vs. Saturn
If you understand nothing about the problem (like D.C. pundits) and have no skin in the game, then everything is seen through the prism of geopolitics. For these ignorant pundits, it is all Iran vs. Saudi Arabia, the U. S. vs. Russia, or Mars vs. Saturn.
I recall, during the Lebanese war, noticing how the local conflict was metamorphosed into an “Israel vs. Iran” problem. I described in The Black Swan how war journalists who came to Lebanon got all their information from other war journalists who came to Lebanon, hence they could live in a parallel world without ever seeing the true problems — absence of skin in the game does wonders in distorting information. But to those of us on the ground, the objective was to make things work and have a life, not sacrifice our existence for the sake of geopolitics. Real people are interested in commonalities and peace, not conflicts and wars.
Let us now examine history as it runs by itself, as opposed to what’s seen by “intellectuals” and institutions.
Where Are the Lions?
As I was writing Antifragile, I spent some time in South Africa in a wild reserve, doing Safari-style tours during part of the day and tinkering with the book in the afternoons. I went to the reserve to “see the lions.” In an entire week I only saw one lion and it was such a big event that it caused a traffic jam of tourists coming from all the neighboring camp-style resorts. People kept shouting “kuru” in Zulu as if they had found gold. Meanwhile, on the twice-daily failed tours to find the lions, I saw giraffes, elephants, zebras, wild boars, impalas, more impalas, even more impalas. Everyone else was like me, looking for kurus and getting peaceful animals: a South African fellow we encountered on another car in the middle of the savannah, after the usual sighting of boring (and bored) animals, cracked the joke while pointing his finger at a hill: “Look, we saw two giraffes and three impalas over there.”
It turned out that I had squarely made the error that I warn against, of mistaking the lurid for the empirical: there are very, very few predators compared to what one can call collaborative animals. The camp in the wild reserve was next to a watering hole, and in the afternoon it got crowded with hundreds of animals of different species who apparently got along rather well with one another. But of the thousands of animals that I spotted cumulatively, the image of the lion in a state of majestic calm dominates my memory. It may make sense from a risk-management point of view to overestimate the role of the lion — but not in our interpretation of world affairs.
If the “law of the jungle” means anything, it means collaboration for the most part, with a few perceptional distortions caused by our otherwise well-functioning risk management intuitions. Even predators end up in some type of arrangement with their prey.
History Seen from the Emergency Room
History is largely peace punctuated by wars, rather than wars punctuated by peace. The problem is that we humans are prone to the availability heuristic, by which the salient is mistaken for the statistical, and the conspicuous and emotional effect of an event makes us think it is occurring more regularly than in reality. This helps us to be prudent and careful in daily life, forcing us to add an extra layer of protection, but it does not help with scholarship.
When [Nero2] you read histories of international affairs, you might fall under the illusion that history is mostly wars, that states like to fight as a default condition, whenever they have the chance, and that the only coordination between entities takes place when two countries have a “strategic” alliance against a common danger, or some [Nero3] unification under a top-down bureaucratic structure. Recent peace among European states is attributed to the rule of verbose bureaucrats devoid of “toxic masculinity” (the most recent pathologification by utopisto-universalists in universities, some of whom are vegetarian marathon runners), rather than American and Soviet occupation.
We are fed a steady diet of histories of wars, fewer histories of peace. As a trader, I was trained to look for the first question people forget to ask: who wrote these book? Well, historians, international affairs scholars, and policy experts did. Can these people be fooled? Let’s be polite and say that they are in the majority no rocket scientists and operate under a structural bias. It looks like, in spite of quite a bit of lip service and introspection, an empirically rigorous approach in history and international relations is rare.
First, there are problems of “overfitting,” overnarrating, extracting too much via positiva and not enough via negativa from past data. Even in the empirical sciences, positive results (“this works”) tends to get more press that negative ones “this doesn’t work,” so it should be no surprise that historians and international relations scholars fall squarely into the same bias.
Second, [Nero4] these scholars, as non–rocket scientists, fail to get a central mathematical property, confusing intensity with frequency. In the five centuries preceding the unification of Italy, there was supposed to be “a lot of warfare” ravaging the place. Therefore, many of these scholars insist, unification “brought peace.” But more than six hundred thousand Italians died in the Great War, during the “period of stability,” almost one order of magnitude higher than all the cumulative fatalities in the five hundred years preceding it. Many of the “conflicts” that took place between states or statelings were between professional soldiers, often mercenaries, and much of the population was unaware of them. Now, in my experience, after presenting these facts, I am almost always confronted with “still, there were more wars and instability.” This is the Robert Rubin–trade argument, that trades that lose money infrequently are more stable, even if they end up eventually wiping you out. [1]
Third, there is a problem of representativeness, or to what extent the narrated maps to the empirical. Historians and international affairistas who reach us are more motivated by stories of conflict than by organic collaboration on the ground between a broader set of noninstitutional players, merchants, barbers, doctors, money changers, plumbers, prostitutes, and others. Peace and commerce might be of some interest, but it’s not quite what interests people — and while the French Annales school brought some awareness that history is the whole life of an organism, not episodes of lurid wars, they failed to change much in the minds of the neighboring disciplines such as international affairs. Even I, while aware of the point and writing a chapter on it, tend to find accounts of real life boring.
Fourth, as we said before with the research done by Captain Mark Weisenborn, Pasquale Cirillo, and myself, accounts of past wars are fraught with overestimation biases. The lurid rises to the surface and keeps rising from account to account.
Journalism is about “events,” not absence of events, and many historians and policy scholars are glorified journalists with high fact-checking standards who allow themselves to be a little boring in order to be taken seriously. But being boring doesn’t make them scientists, nor does “fact checking” make them empirical, as these scholars miss the notion of absence of data points and silent facts. Learning from the Russian school of probability makes one conscious of the need to think in terms of one-sided inequalities: what is absent from the data should be taken into account — absence of Black Swans in the record doesn’t mean these were not there. The record is insufficient, and such asymmetry needs to be permanently present in one’s analysis. Silent evidence should the driver. Reading a history book offers a similar bias to reading an account of life in New York seen from an emergency room at Bellevue Hospital.
So always keep in mind that historians and policy scholars are selected from a cohort of people who derive their knowledge from books, not real life and business. The same is true for State Department employees, since these are not hired among adventurers and doers, but students of these scholars. Let’s say it bluntly: spending part of your life reading archives in the stacks of the Yale Library doesn’t fit the nonacademic temperament of someone who has to be aware and watch his back, say, a debt-collector for the Mafia or a pit speculator in fast commodities. (If you don’t get this, you are an academic.)
Let us take for example the standard account of Arabs in Spain, Turks in parts of the Byzantine Empire, or Arabs and Byzantines. From a geopolitics standpoint, you would see all of these situations as a tug–of-war. Yes, there was a tug-of-war, but not in the sense that you suspect. Merchants were doing business very actively during these periods. My own existence as Greek-Orthodox of Byzantine rite living under Islam (though at a safe, very safe physical distance from Sunni Muslims) is witness to such collaboration. And never discount the theological rationalizations to justify collaboration with the economic powers — before the discovery of America, the business center of gravity was in the East. The expression “better the turban of the Turk than the tiara of the Pope!” originated with the Grand Duke [CE5] Lucas Notaras, who negotiated a friendship treaty with the Ottomans, and was repeated at various stages in history. It is also attributed to Saint Mark of Ephesus, and was often shouted by Balkan peasants to justify siding with the Turks against their Catholic lords.
As the reader will know by now, I have myself lived through the worst part of the civil war in Lebanon. Except for areas near the Green Line, it didn’t feel like war. But those reading about it in history books will not understand my experience. [2]
Next
We just saw in Book 6 various asymmetries in life coming from largely undetected agency problems, where absence of skin in the game contaminates fields and produces distortions.
But recall that religion is about skin in the game — not quite about “belief.” We will spend the next few chapters with what people call “religion,” which will take us deeper and deeper into the core of the book: rationality and risk bearing.
[1] This is the elementary but very common error I pointed out in Fooled by Randomness, of confusing frequency with expectation (or average). It is very hard for nontraders to understand that if the bank J.P. Morgan made money trading on 251 out of 252 days, that it is not necessarily a good thing and very often it should be interpreted as a red flag.
[2] What to read? It would not cure the via negativa problem, but, for a start, instead of studying Roman history in terms of Caesar and Pompey, or Peloponnesian balances of power or diplomatic intrigues in Vienna, consider studying instead the daily life and body of laws and customs. I accidentally discovered the book A History of Private Life (four volumes in English) by Paul Veyne, Philippe Ariès, and Georges Duby some thirty years ago. Volume 1 (Ancient Rome) has been at a comfortable distance from my bed ever since. Another representative book for the approach is Emmanuel Le Roy Ladurie’s Montaillou Village Occitan. And, for our beloved yet troubled Mediterranean, take Fernand Braudel’s magnificent opus: The Mediterranean and the Mediterranean World in the Age of Philip II.
rather than abstract geopolitical bulls**t. Some books make you smell the spices. Since the discovery of the works of Duby, Braudel, Bloch, Ariès, et al., I have been unable to read conventional historfy books, say, a book on the Ottoman Empire that focuses on the sultans, without irritation. It feels like historians across the board are engaging in the repulsive “narrative nonfiction” style of The New Yorker.
Other Books: James Davidson’s Courtesans and Fishcakes, where you see how the Greeks ate bread with the left hand. Or Graham Robb’s The Discovery of France, which informs you that the French spoke little French in 1914. And many more.
“The greatest want of the world is the want of men — men who will not be bought or sold; men who in their inmost souls are true and honest; men who do not fear to call sin by its right name; men whose conscience is as true to duty as the needle to the pole; men who will stand for the right though the heavens fall.” – Ellen G. White
The world becomes more chaotic by the day. Good luck finding a politician, business icon, or religious leader who is not bought and sold by corporate or special interests. Finding truth telling honest leaders in today’s world is virtually impossible. Charles Foster Kane, a quasi-biographical portrayal of William Randolph Hearst, is a fine representation of the billionaire clique that pull the strings in our warped, deceitful, greed driven, materialistic world.
Citizen Kane’s thematic portrayal of the American Dream is far more germane to our society today than it was when made in 1941. Financial affluence, material luxury, wielding power over others, and controlling the opinions of the masses through propaganda media, did not guarantee happiness or fulfillment for Kane or todays oligarchs. Kane was happiest as a poor child, living with his parents, playing in the snow on his sled – Rosebud.
How Europe will eat Halal — Why you don’t have to smoke in the smoking section — Your food choices on the fall of the Saudi king –How to prevent a friend from working too hard –Omar Sharif ‘s conversion — How to make a market collapse
The best example I know that gives insights into the functioning of a complex system is with the following situation. It suffices for an intransigent minority –a certain type of intransigent minorities –to reach a minutely small level, say three or four percent of the total population, for the entire population to have to submit to their preferences. Further, an optical illusion comes with the dominance of the minority: a naive observer would be under the impression that the choices and preferences are those of the majority. If it seems absurd, it is because our scientific intuitions aren’t calibrated for that (fughedabout scientific and academic intuitions and snap judgments; they don’t work and your standard intellectualization fails with complex systems, though not your grandmothers’ wisdom).
In the summer of 2009, I partook of a an hour long discussion with David Cameron, who was in the running for, and later became, the U.K. Prime Minister. The discussion was about how to make society robust, even immune to Black Swans, what structure was needed for both decentralization and accountability, and how the system should be built, that sort of thing. It was an interesting fifty-nine minutes around the topics of the Incerto and I felt great communicating all the points in bulk for the first time. The room in the elegant Royal Society for the Arts was full of journalists. I subsequently went to a Chinese restaurant in (London’s) Soho to celebrate with a few people when I received a phone call by a horrified friend. All London newspapers were calling me a “climate denier”, portraying me as someone part of a large anti-environment conspiracy.
2) Controlled immigration is based on the symmetry that someone brings in at least as much as he/she gets out. And the ethics of the immigrant is to defend the system as payback, not mess it up.
Uncontrolled immigration has all the attributes of invasions.
3) As a Christian Lebanese, saw the nightmare of uncontrolled immigration of Palestinians which caused the the civil war. & as a part-time resident of N. Lebanon, I am seeing the effect of Syrian migration on the place.
So I despise these virtue-signaling open-borders imbeciles.
“We should ban banks from risk-taking because society is going to pay the price… It was obvious that their profits were simply cash borrowed from destiny with some random payback time.”
Nassim Nicholas Taleb
“The Gramm-Leach-Bliley Act makes the most important legislative changes to the structure of the U.S. financial system since the 1930s. Financial services firms will be authorized to conduct a wide range of financial activities, allowing them freedom to innovate in the new economy.
The Act repeals provisions of the Glass-Steagall Act that, since the Great Depression, have restricted affiliations between banks and securities firms. It also amends the Bank Holding Company Act to remove restrictions on affiliations between banks and insurance companies. It grants banks significant new authority to conduct most newly authorized activities through financial subsidiaries.
Removal of barriers to competition will enhance the stability of our financial services system. Financial services firms will be able to diversify their product offerings and thus their sources of revenue. They will also be better equipped to compete in global financial markets.”
