The Black Swan is a Red Herring

Nicholas Nassim Taleb has seemingly spent his entire life chasing what he refers to as the black swan.  A series of highly improbable events that have continuously shaped the course of human history.  He presents his description of this phenomenon in what might be termed an autobiographical manifesto of sorts, the exhaustive and seemingly endlessly referenced book, "The Black Swan -- The Impact of the Highly Improbable".  It's not that Taleb isn't onto something, or hasn't written a thought provoking book, he has.  But it has taken him 300 pages and most of his life  to tell us something as uninteresting and commonplace as smashing a bug with your shoe.  To the rest of us, something as regular as taking a a simple step during a walk in the park.  To the bug a seemingly random yet catastrophic event that comes out of nowhere, a third dimension, smashes quickly and lethally into it's two dimensional world and then retreats just as fast.  When perhaps an asteroid crashes into our planet we will have the opportunity to experience what a bug might be thinking in the closing seconds as the foot shadows overhead.  Until then we have earthquakes and tornadoes and tsunamis to occupy our time.  Yes it might be a fools occupation to try to predict the next catastrophic occurrence of the black swan event, or not, according to Taleb our minds are simply not set up to think about the unknown unknowns --- just like the bug could never conceive of a shoe.  But might it is also prudent to simply understand that you are living in Kansas, just as certainly as if you are living in Texas you should check your shoes for scorpions.    The list of rules goes on and on.  Look both ways before you cross the street. Look before you leap, etc.  Taleb claims there is something called silent knowledge or entire cemeteries of knowledge that we will never know exist because the dead man tells no tale and history is written by the victorious not the defeated.  And trying to study history for cause and effect will never work because it is impossible to discern causation, in a highly complex world, sufficiently to know for sure.  Well it seems to me that there have been enough dead people with their dying breath utter the words "scorpion" for us to know their exact cause of death.   Therefore  we check our shoes, each and every time.  Occasionally, a scorpion will fall out, but sometimes a spider, and we learn and we spread the word.  So there are definite problems with Taleb's theory that he seems to ignore for the sake of his argument.

But what is more important is to determine if there really is such a thing as a black swan.  Is the black swan a  9/11 event?  Or is it how we reacted to the 9/11 event?  Had we all collectively ignored the event would it have had the global economic effect?  If a tree falls in the woods does it make a sound?  Perhaps to the beavers who used it to dam up a river heard the tree fall, but until it blocked the cooling water to the nuclear power plant further down stream, no one else cared, until it was too late to care.  But look, as early as 1998, much had been written about the coming terrorist threat, so was it a surprise? Taleb himself admitts that, at most, with the right type of open minded thinking, we can turn black swans into gray swans.  Well, in the end, I think he has defeated his own argument with his admission that there are gray swans -- essentially black swans that we can predict and therefore mitigate some of their impact.  Maybe it was a surprise to turkey number one that after 1000 days of nice treatment and good food a surprise would occur, but after turkey number two disappears unexpectedly from the gaggle rumors will start, it's not hard to begin postulating theories on their disappearance.  As with 9/11, we knew -- there was enough knowledge to know and enough time to put security doors on the cockpits ahead of time.  This black swan was not a black swan at all, it was a failure not of imagination but of a huge bureaucracy struggling to protect 300 million people at the same time -- and not to be crass but the numbers of US causalities not just on 9/11 but during the subsequent wars is still a low number, tragedies each and everyone, but not statistics as Stalin would have put it.  And what of Katrina -- having spent some time drinking Hurricanes in New Orleans, it has been a known fact for many decades that to be drinking a Hurricane in the French Quarter, was to be drinking a Hurricane underwater if and when the levies break.  Black swan you say?  Gray swan at a minimum and in my book just dumb planning.

Additionally, we already have a category for black swan's in our lexicon.  It's called an act of God.  Ironically Taleb concedes that religon is the only mitigator of black swans that he can think of -- but not for metaphysical reasons.  It's not philosophical or theological. It's not random or uncertain or risky.  It is what it is.  Do we worry about crossing the street?  Do we worry about dying in a car accident?  Collectively if someone dies on our nations highways, it's not a big deal.  Despite over 40,000 deaths annually on these same highways - it's not a big deal to the nation or country as a whole, because these are statistics.  Wear your seat belt, don't drink and drive, speed kills.  Everything is completely random and unpredictable and the math is impossible because it it far too complex -- this is Taleb's point which he makes again and again.  So much so that now when I get out of bed in the morning, I suspect it will represent my last moments on earth, so I say my prayers.  But wait, I did this anyway -- so have I gained any perspective from Taleb.  I don't think so.  But perhaps I am special in my thinking -- an advanced open-minded thinker.  So will the multiple pin heads who seemingly surround us, who couldn't think outside the box if their life depended on it or do the math, alter their way of thinking as a result of reading Taleb's book? Will they gain from his life long pursuit?  Only if they wake up to the fact that they are living in Kansas, or living in a flood plain, or living on the San Andreas fault, and then only when the Black Swan event occurrs they don't whine to the government that someone should have told them, and then expect relief at our expense.  That, I think, is the point of his book.  He could have said this in 10 pages.

Yet there are still many more counter arguments to Taleb's notion's.  For instance, he completely ignores an attribute called quality and does not believe there are differences in human performance that account for the injustices he sees all around him.  It is true that the differences in human performance are not so great as to seperate us on the scale he uses to differenciate black swans, the net worth of Bill Gates for instance.  But he fails to recongize that there is a difference.  It is not luck.  Some of it was skill -- without a functional operating systems Gates had nothing to sell.  And some of it was business sense -- writing a excusive contract.  Yes there was luck in the timing of the venture but there was still quality.  Yes there were other operating systems out there -- and MS DOS can be judged against those, not the operating system that I was working on, since I wasn't.  And later came the arguable thug tactics and anti-trust violations used to steal the industry.  Crimes perhaps, but not the luck of the draw.  Crediting the next 20 years of growth for MicroSoft as a black swan event is misleading because it is not the triggering event.  It might be an artifact of something attributable, not in this case, to an act of God, but is is more about the way things grow when they become epidemics -- this math is well understood.  Nothing new here.

So Taleb has not given us a black swan.  He has given us a Red Herring.  He has taken a small piece of stinky fish and dragged it in the dirt perpendicular to the path we are on.  There is a small benefit, if we leave our path momentarily to gain a new perspective, new insights will emerge, but that is all our feeble brains can comprehend, and nothing more.  But to think there are no thinker's among us who do not understand the need to search for the extraordinary and to try to link them to potential causes, that although we might not understand completely, are contributory and can indeed be rectified, is not to be an observer of the human race at all.  Ultimately he is wrong.

So read this book.  Then go divesify your investments.  Be amused as a  highly intelligent, well read, and apparently wealthy man, rails against the system -- I also hate journalists but would like to add lawyers and tow truck operators to my list as well. But remember who he is, he is the modern day "Chicken Little" or "Fiver" if you like rabbit's instead of chickens.   Understand that we are special and the fragile world we live in is extremely random and the catastrophic is both commonplace and everyday -- it's not just the end of the world events to fear.  So pay attention every now and then to the world around you.  Pick your head up when you are at work, but more importantly,  do it when you cross the street -- remember it's left, right, then left again.  If you are in England, it's right, left, then right again.  If we humans couldn't turn crossing the street into a non-lethal act, ahead of time, we would never cross the street.

Nicholas Nassim Taleb has seemingly spent his entire life chasing what he refers to as the black swan.  A series of highly improbable events that have continuously shaped the course of human history.  He presents his description of this phenomenon in what might be termed an autobiographical manifesto of sorts, the exhaustive and seemingly endlessly referenced book, "The Black Swan -- The Impact of the Highly Improbable".  It's not that Taleb isn't onto something, or hasn't written a thought provoking book, he has. But Taleb has not given us a black swan.  He has given us a Red Herring.  He has taken a small piece of stinky fish and dragged it in the dirt perpendicular to the path we are on.  There is a small benefit, if we leave our path momentarily to gain a new perspective, new insights will emerge, but that is all our feeble brains can comprehend, and nothing more.  But to believe there are no thinker's among us who do not understand the need to search for the extraordinary and to try to link them to potential causes, that although we might not understand completely, are contributory and can indeed be rectified, is not to be an observer of the human race at all.  Ultimately he is wrong about the Black Swan but he is right about the requirement for us to think outside the box.  But this has been said before.  Taleb just reminds us.