I Want to Be Antifragile and Have Skin in the Game

Having read The Black Swan and Antifragile by Nassim Taleb I might have become an orthodox member of the Taleb Cult.

The more Taleb’s ideas struck a chord with me intuitively, the more I try to scrutinize them. I jumped to the 1-star reviews amazon.com to challenge my gullibility, and I tried my best to be as critical as possible. Mostly to no avail.

In my recent post I had conjectured that simple models of society and economy can make sense if the characteristic property in question is similar to, say, temperature. However, not many really interesting – or dangerous – properties are similar to temperature. Point taken.

Taleb’s compelling argument is about the circular reference between modeling systems and confirming the validity of your model: You collect data and start modelling by using the model of your choice – such as the dreaded Gaussian bell curve, rendering the impact of the highly improbably (too) low. As soon as the data start to match the model you are satisfied and stop exploring other parts of the hyperspace of data. You fall for confirmation bias.

So-called Big Data is particularly sensitive to yielding false spurious correlations. It would be tempting to jump into a discussion about NSA’s Big Data and models they build from it.

The overall message of The Black Swan in bleak, in particular for a nerd as myself;  thus I needed to read the sequel – Antifragile.

Antifragile is about structures, networks, properties that are enhanced and thrive in an environment that is unpredictable and volatile.

Taleb considers small Switzerland, itself built from nearly independent counties, superior to larger and centrally managed countries. I agree to the general idea of keeping structures from growing by stabilizing them via interventions – until they are too big too fail. As a minor critique, I fail to see how the European Union manages to delegate political action to the smallest possible unit – even though some declaration says so. The EU central bureaucracy and regulation madness is infamous – and rightly so.

This EU-related comment is typical for negative reviews of the book as ideas are presented in an anecdotal fashion, and the nit-picking experts on history, medicine, and other fields Taleb is not shy to have a strong opinion about, might point out some (minor) errors correctly.

He advocates less interventionism by medical doctors, such as throwing too much medication at non-severe illnesses such as rhinitis – ending up curing the side effects of medication with other medication. I am not a medical doctor so I cannot judge on the details, but I am extremely sympathetic to this – first as a taxpayer and, second, as a patient who is usually shocked by the number of different drugs you are prescribed when “suffering” from something harmless. I have formed an opinion when I once observed a grandfather asking for sleeping pills for his about 7 year old grandchild at the doctor’s – because she caught a cold.

Living beings and nature in general are Taleb’s prime examples of antifragile systems, and he has a subtle point: Even if individual species might be bound to die in the course of evolution, a larger organism would survive. You could make yourself immune against poison by taking in small doses over a long time (as illustrated by colorful anecdotes of the regime of the Borgias in renaissance Italy) – some of your individual cells might die, but you will survive.

He calls entrepreneurs and start-ups fragile for the same reason – the whole systems including those are made antifragile based on the individuals’ sacrifices for the greater good.

I understand antifragility – a term Taleb invented because he was not able to find an equivalent in several languages investigated – as the ability to react fast, immediately, intuitively and adaptive to an external trigger, even if this adds to higher short-term fluctuations. Taleb calls corporate employees fragile because they feels save after years of perfect stability, until they are laid off suddenly. In contrast to that, a taxi driver is antifragile.

His literary characters are invoked again: Fat Tony, master socializer and deal maker without formal training, is of course his antifragile stereotype. Actually, half of the book consists of opinionated, personal anecdotes – and this seems to be the reason why some people love and others hate the book.

Taleb states he needed to de-intellectualize after his stint at academia to work with British traders with pronounced cockney accent. The point was that these traders got their business right although or because they were ignorant of those grand mathematical formalism and models – while professors falsely believed that knowledge of advanced math is a pre-requisite for working as a pit trader.

He rants a lot about the arrogance of academia in stating that inventions constitute the direct output of academic research. Taleb questions this neat process as it is depicted in the marketing brochures of governmental agencies handling grants:
Basic reasearch –> applied research –> development –> applications.

Taleb quotes historical sources that seem to prove to more inventions than conventional history of science and engineering wants us to believe can be attributed to playful tinkerers  – MacGyver-like amateurs, such as 19th century British clergy men with enough time at their hands.

From critical reviews I conclude that many academics accuse Taleb of underestimating academic science. It seems I have read a different book. Taleb ridicules The Much Too Organized Corporate World and Their Useless but Seemingly Reasonable Risk Management (this is not a verbatim quote, but Taleb uses that kind of Fake Capital Letter Terms a lot and I admit I enjoy them, too) as much as organized, targeted academic science. Over-organization is key here and the mantra of manufactured and controlled innovation.

I can speak from some experience of research and development projects. A seasoned expert knows how to dress up his application for grants (taxpayer’s money)  in a way that it fits into the neat picture of nicely connected, half-overlapping arrows, further contributing to the myth of organized innovation. I have criticized those Potemkin villages of skillfully crafted documents and related projects ever since (one of the reasons I left academia) – and those writings and fraud are the same in so-called academic research as in seemingly useful proposals created by management consultants.

We tinker at the university and we learn how to present it in academic language – probably this is the most employable skill you acquire as a graduate student of the sciences. Later we tinker at The Corporate R&D Department and we know how to please (fool) the VP of innovation with our forecasts and reports.

Now I have opted for tinkering at my own small business now, at my own financial risk, denying government subsidies or participation in Those Glorious EU funded Research Projects with Renowned Corporate Partners – even or because these might be low-hanging fruits in renewable energies nowadays.

This brings me to the most important point Taleb makes: He demands anybody who comments on economy, corporations, and the world at large to have

Skin in the Game.

Famous economy professors as well as employed managers of banks should be held accountable as the engineers who were required to spend some time beneath the bridge they built. Forecasters and commentators should be judged on their own portfolios and investments.

I could not agree more, and this compensates for any errors the nit-pickers may find in the book or too much anecdotal evidence. I don’t see Antifragility primarily as a commentary on economical systems and probability, but rather as Taleb’s attempts to reconcile his various careers and philosophical theories. This is ambitious to say the least, but as you could conclude from my blog’s site title, it is a goal worth aiming at.
You make yourself an easy target of critics who zoom in on some aspect of your theories and their consistency with your own life. I would invite critics – so-called experts in a tiny aspect of this grand picture, but who do not have any skin in any of the games discussed – to put their own lives, professions, opinions and consistency between them to a test (in public).

Taleb states he does not write on anything he is not personally involved in – not because this would add statistical evidence but because this would add credibility and prove your having skin in the game. I suppose the detailed chapters on medicine stem from his having fought cancer.

I found his position of criticizing medical hyper-interventionism without advocating so-called alternative medicine (he even adds a disclaimer) a rare and a laudable one.

Taleb was a ‘capitalist’ trader and made a fortune in betting on the economic melt-down in 2008, thus you could hypothesize why he is inclined to (wealthy) Seneca’s stoicism, and might call Taleb a capitalist because he profited from “the market”. But again he denies fitting into boxes and categories. He is very sympathetic of small businesses and artisans, in contrast to Those Ostracized Corporations.

Small villages and agricultural / artisanal culture should be antifragile - I hope (This is near the village where I live).

Small villages and agricultural / artisanal culture should be antifragile – I hope (This is near the village where I live).

I can relate to a biography that is based on serial successes in academia and corporations – making the numbers and proving you would be cut for thriving by following the rules, but just long enough to provide that said proof and financial results that allow for retracting from the rat race and aiming at leading a life as independent as possible. However, reading Antifragile as an exercise in practical ethics, trying to answer the question of ‘how to live’, we should probably challenge it on the basis of what I call scalability: Would it work out – globally – if anybody in the world would try to live like this?

Probably not, and Randy Komisar‘s book and theories (that I admire, too) have been criticized in the same way: ‘Now after he has made it (based on luck or pedigree) it is easy to talk fluffy Zen Capitalism’. By the way, Komisar’s portfolio of passions is an antifragile idea par excellence, and very similar to Taleb’s optionality.

However, Taleb makes the same point that I use when trying to invalidate the but-what-about-the-poor-overworked-single-mother-of-three-who-has-no-choice critique in relation to a calling to our sense of independence.
Books like this are targeted to those who could have more options based on their financial situation – the amazing thing is that they do limit their opportunities all by themselves. The wealthier we get (on average, as a society) the more dependent we feel and/or the more dependent we make ourselves based on the mantra that expenditures absolutely need to rise with income. But we wouldn’t have needed a long book to find that out, right? So probably the main ideas about antifragility are rather old and ‘grandmother’s wisdom’ – but repackaging them and adding science, history, philosophy and irreverent anecdotes to them makes them more accessible to nerdy and/or intellectual readers.

In summary, I consider Antifragile a personal, opinionated essay about Life, the Universe and Everything, underpinned by anecdotal, but strong evidence, and ample analysis of literary and philosophical classics as well as quantitative science, and loads of practical hands-on business experience. Which is a rare combination indeed. Critics are invited to bring anything equivalent to the table.

I am not sure if I did the book justice as I cherry-picked some ideas that resonated with me and I focused on the interdependence of seemingly general ideas with individual biography. I am fully aware of the generalizations that I might have introduced now, due to the fact that I tried to squeeze (a subset of) these ideas into a single blog post – which is already too long though. This has not been a book review, but an exercise in challenging my own ideas.

This post feels unfinished – but I think this is a good thing.

_________________________

Further reading and interesting dialogues: I owe to the following bloggers for inspiration (in chronological order of publication date). It seems I flooded all related blogs with my thoughts on skin in the game today.

  • What do we owe to those for whom we labor? which reminded me of the noble accountability of the engineer. I cursed it often and I wondered if I would be happier as a mere commentator without skin in the game. However, I went for the accountability several times. Yes, I want to be in charge of making machines work even if gives me sleepness nights sometimes.
  • The Cream Separator A video and some powerful metaphors related to capitalism – triggering an interesting discussion. I am reminded of not to over-generalize and not to neglect historical context. I should read the original literature quoted by Taleb.
  • Why Are Intellectuals Anti-Capitalist? triggering a first version of this post dumped as a comment. Trying to distinguish between ‘leftist’ and capitalist angles I rather came to the conclusion in the discussion that I prefer to think in terms of skin in the game or not.
  • If Businessmen Became Bodhisattvas: “Selling In” – thought-provoking and (to me, ignorant of Eastern philosophy) fresh perspective – discussing the approach of savvy capitalists who claim they work that hard in order to become outstanding philantrops. My hypothesis is they lack skin in the game though.

26 thoughts on “I Want to Be Antifragile and Have Skin in the Game

  1. Pingback: The Future of Small Business? | elkemental Force

  2. I’ve been thumbing through my copy of The Black Swan (2nd edition) and I can put my finger on the reason I feel uneasy–better articulated by Maurice–but in short, I sense that Taleb’s essays are too much like my own, and I know the limits of extrapolating from one’s personal experiences and trying to see how those observations fit to the larger world outside one’s own life. Maurice’s connection to resiliency startled me, as this is the term used in social work that defines my own practices of trying to generate the questions and openness that resist fear and over-generalizing (such as taking personal anecdotes and building larger theories from them). Thus, the alarm bells ring when I look at Taleb, not so much that I want to resist but I feel I can’t… he is speaking from the very same trap I worry I myself live within. I don’t want to fool myself into being certain, even when discussing uncertainty! Thus, I decided to set Black Swan aside for a while and I am reading Pema Chodron’s The Places that Scare You. I ordered this at the same time as Black Swan. Chodron is an American Buddhist nun, and this book is about compassion and using fear and hurt as a means for connecting with, and caring for, others. I would say that this book is exactly about being anti- fragile (resilient, flexible, open) while having skin in the game (connected, present, and compassionate). 🙂

    • Thanks for your thoughtful comment, Michelle!
      I can relate to your critique and Maurice’s – but still I cannot help enjoying Taleb’s books – a lot!! It seems like a contradiction I cannot quite resolve at the moment. I can’t say it better in the moment than: I see this apparent certainty expressed by the author is a stylistic device, but at the same time I would not say he is dishonest. I need to think about it, but on the other hand I don’t want to dissect it anyway. Taleb is one if the rare authors whom I “forgive” even I could feel criticized directly (as female Dr. John, for example).
      Dan seems to be Taleb fan in the same same way as I am – see his comment below.

      Thanks for the link – indeed, this seems to be quite an alternative approach! I ama tempted to buy the book immediately for comparison 😉 I have some vague ideas about what makes us love or hate books on Life, the Universe and Everything… but I need to think about it! I am not sure if this is something fundamental or rather a matter of taste and more related to wirting style and less so to content.

      • I am intrigued with the responses people have given. I have noticed Dan’s enthusiasm. I wonder if the book is, for the two of you, a kind of permission to let go of the constrictions of academic narratives and to be more free with associations and the play of ideas? Those of us who are already on the playground (i.e. further away from university courses and dissertations at the moment) don’t seem to be as captivated. (Or am I generalizing again!) I think we owe it to ourselves to go where we’re drawn, and equally so, to explore where we’re repelled. I feel both with Taleb, so it should be a win-win for me. I felt the same when I read Gladwell’s The Outliers, another book which seemed to provoke a variety (and sometimes conflicting) readings of the same text.

        • You know how to deconstruct your fellow bloggers! 🙂
          Probably I am searching for an escape of the need of technical precision? But in the moment as I nearly start crafting a narrative (…about similar books, such as Mike Daisey’s and how it helped me to cope with corporate madness back then…) I am asking myself: Am I now deluded by Taleb’s narrative fallacy?

          • I am not trying to deconstruct any of us, but I am curious about the draw to Taleb’s work. We tend to go where we need to go, and I don’t have a strong draw to his work. My husband was more interested and will probably finish reading it before I do. I believe a lot of what he says, with a quick glance, and am intrigued with the way he connects the dots in his arguments. It is a lot like reading my own patchwork of ideas in places, and I don’t trust that my ideas aren’t entirely sound or safe to state out loud. I know how flimsy the connective tissue can be. However, as an exercise in creative thinking–not an analysis of a study–there is something valuable in his narrative style. Perhaps the value of his work is that it dares… sometimes dot connecting bears fruit in the way others take those dots and use them for their own approach to work and life. He invites a different perspective, I suppose.

            • But you definitely have a point here! It really got me thinking about the underlying reasons why we like specific books. I am seriously considering to pick a book that I expect to hate – just as an experiment (?). Stephen King says in On Writing that you should expose yourself to good and bad writing, and that you even learn more from bad writing. We do not exactly discuss good versus bad writing here, but books we like and dislike, but probably the same holds here?
              On thing has sprung to my mind: When I have read those popular science (science in a broad sense) books, I had been most interested in the author’s biography and the way a (knowledgeable, “expert”) author weaves in his biography and opinions – as politically incorrect and shocking they may be – into a non-fiction book.
              That’s why I found these second-hand iterations of the brain’s physiology so boring in otherwise interesting books – such as Quiet or The Shallows. In Quiet I liked the description of the Tony Robbins self-experiment, for example, or the sarcastic description of the over-confident Harvard students. This comes close to Taleb’s cartoon-style clichéd characters.

  3. It seems like an interesting read! I might give it a look. One question, though: how about large-scale enterprises such as the LHC or the moon landing? These can only be accomplished with the support of big government. A small country would never be able to fund it. Should we scrap those according to Taleb?

    • You are of course right. I tend to say that Taleb does not object to any large organized scientific or engineering endeavors in general, in particular not if this is project with a clearly defined outcome – something that can be planned. Putting a man on the moon is for sure a straight-forward project. What he despises is the illusion that the invention and development of hitherto unknown things can be planned and organized – governments and corporations make the same mistakes by expecting quarterly reports and forecasts. I would say he’d call “innovation management” an oxymoron. I am theorizing, but I believe he would be in favor or an overall less regulated, paranoid and over-managed culture in the “management” of R&D. I am aware of the counter-argument of the need to avoid risks etc. (airplane crashes, 100% safety), but I feel we transfer this airplane-safety-mentality to each and everything – and create mind-numbing (and expensive) technical standards and EU regulations.

      I would be interested in your take on Taleb’s book – he has a unique writing style, I believe you either hate it or love it. As Dan Mullin pointed out in a comment below, these books are over-sized essays, not scientific writing, and Taleb rather uses hyperbole and sarcasm to get the main message across, rather than aiming at scientific precision. Thus even if he beleives that some large projects, large corporations do make sense, he would rather focus on the critique of the hypertrophic ones only. I admit, I do the same very often, too.
      E.g. he actually mentions the moon landing, but he uses it in order to “prove” that we (as overachieving nerds) sometimes miss the obvious, down-to-earth “innovations”. Taleb said it took 30 years after we had put a man on the moon to come up with the idea of putting wheels on trolleys.

  4. But fragile things are quite beautiful. This is why beauty is allowed to occur and is therefore, fragile.

    Pidgins are resilient. So are weeds. So are cockroaches. Is this, then, what consists of an ideal garden?

    Maybe instead of being antifragile, we can just be careful and respectful?

    • Hi Norm, thanks for commenting!
      I think the overall idea of antifragility encompasses the fragile as a necessity – as nature is only antifragile because there are some fragile components, too. However, I am at a loss now to explain how the fragile needs the antifragile. I also don’t love the slugs devouring my flowers in the garden.
      On the other hand, I do cultivate plants that are called weed by others. Beauty in the eye of the beholder? I have no theory on the aesthetics of the antifragile – but thanks for connecting the fragile and the beautiful, an intriguing idea.

      • Thank you for writing such an interesting post!

        Fragile things need “antifragile” things to leave them alone. In the same way your flowers need the space to thrive. Perhaps I’m connecting antifragile with powerful/aggressive more than the author intended.

        • I would say that antifragility is not a clear-cut concept – the author himself is definitely powerful and aggressive 🙂 As Dan said below, he is an essayist!

  5. Excellent post! There’s a lot to think about here. As you know, I’m also a Taleb fan, so you’re preaching to the choir. I also like his irreverence, dilettantism, and narrative approach. Of course, these are precisely the qualities his critics hate. They often criticize him for being a generalist (I like that), ignoring some minutia of their academic discipline, or relying on anecdotal evidence. I think such criticisms miss the point. You correctly identify his genre: he is an essayist (even if those essays stretch to book length) so there will be a fair amount of meandering and imprecision. But he`s not writing in the academic mode, so I don`t hold it against him. Thanks again for a great post. You are quite the dilettante essayist in your own right!

    • Thanks, Dan, I take dilettante essayist as a badge of honor! Actually I had deleted or re-written some paragraphs that I considered too sarcastic (too wannabe-Taleb-like) – probably I should have left them in 🙂
      I was not aware of this genre, but I (my subconsciousness) probably noticed first when I read monologist’s Mike Daisey’s book 21 Dog Years: Doing Time @amazon. Actually I read this about 10 times as I enjoyed this mixture of autobiographical attitudes, enriched with clichéd characters, sharp observation, and sublime entertainment. The first line in the book is BTW “I am a dilettante”.
      Those authors are the only ones I can forgive if I feel criticized myself (as overachieving nerd, for example).
      But as a reader (follower, disciple :-)) you need to accept and seldom sarcasm and hyperbole as legitimate stylistic device. This is art, not science. This makes discussion on overly politically correct discussion groups in web 2.0 so dreadful sometimes.
      I admit I do enjoy some Austrian comedians that others find tasteless – that kind of humor that has been captured by this post by The Happy Hermit on the Boston Massacre – if I remember correctly, you liked it as well. (“Why did they bring it up after 250 years?”)
      The armchair psychologist in me says that these writers, comedians etc. are very serious and committed at the bottom of their hearts – as they have skin in the game! Irony and sarcasm is sometimes even needed for protection.

      • I hadn’t heard of Daisey’s book, but it sounds like something I would enjoy. Btw, you probably noticed that Taleb often quotes the seventeenth century French essayist and philosopher Montaigne. You might also enjoy his work, as he’s a pioneer of this genre.

        Sarcasm, irony, and hyperbole are definitely legitimate stylistic devices. It’s all part of the art of rhetoric. Among philosophers, rhetoric often has a bad name because Plato famously lambasts the Sophists for dealing in rhetoric and not logic, but it’s absolutely crucial to any compelling argument in my opinion.

        • Thanks again for the pointer to Montaigne. Taleb mentions so many authors, difficult to pick from his list of favorites.
          I also want to read Seneca – even though he is a bit too popular in terms of “Seneca for managers” and the like. Somebody – unfortunately I forgot who it was, claimed that the Stoics have often been misused for motivating managers and other leaders (such as military leaders). It would also be fun to brush-up my Latin – I was a die-hard Latin fan in school. Unfortunately I never learned French.
          And after reading many blogs discussing Nietzsche I realized I am blessed because I could read him in the original.

  6. Hi there. Well that thoughtful piece just gave me loads to chew on! …and I have to admit that, while reading this I’m constantly aware of the fact that the subversive Elkement’s first language is NOT english. Do you realize how intimidating that can be! :>) I also speak (some) French but I could not do what you do! It’s awesome!
    I’m another fan of Taleb–I discovered the Black Swan while browsing around a bookstore and was just plain drawn in to his ideas. I therefore had to read Antifragile just after it came out and must admit that, having just ready your essary, I did not do it justice. I shall have to read it again.
    There’s just one thing about Taleb that I wish could be changed. He comes across as very sure of his ideas–perhaps a bit too sure for my liking; almost arrogantly so. After all, some of his best ideas are predicated on the notion that we can never achieve certainty so, perhaps he might do well to build that in to his work. …but then again if he did that maybe nobody would listen. Who knows?
    On his chosen word, Antifragile, I often wonder why he did not go with perhaps a better word that exists in English. It is “Resilient.” Perhaps it does not have equivalents in other languages. If he has chosen that word, he would have also noticed that a fair bit of work has already been done on building that feature into modern organizational structures. Perhaps also, I have missed some of the subtleties in his work. I will need a second look.
    In the meantime you might like to have a listen to this fairly recent podcast in which resilience expert Andrew Zolli shares his ideas on combining humility with resilience. It is a nice companion to Antifragile.
    http://www.onbeing.org/program/a-shift-to-humility-andrew-zolli-on-resilience-and-expanding-the-edge-of-change/5501

    • Thanks a lot, Maurice, for reading this – probably too long – post.
      You – as a native speaker – do really honor me!!

      Yes, Taleb might get across as arrogant – I pondered about this as well. First I admit that I enjoy his irreverence. Mostly I agree with him so he ridicules the same things that the Subversive Element would, too 🙂
      But he comments on that, sort of, I can’t remember in which book, I think it was in Antifragile: Taleb says he despises people who talk about others in a different than they would talk to them. He, on the other hand, aims at talking in exactly the same way about others, in private, in public etc. My impression was that this is his peculiar way of reconciling all this theories and opinions. I can relate to this attempt so much and his “ethics” of skin in the game – I am probably overly generous when it comes to arrogance 🙂

      Wow, now I get across as a devoted follower .. Actually there are some slight inconsistencies, but I did not want to point these out too much as I consider them minor – and an inevitable consequence of creating such an essay about “everything”. E.g. he admires Steve Jobs (as an self-taught innovator, a high-tec artisan) and Apple, but on the other hand he says you only need marketing for stuff nobody needs.

      Re resilient: He mentions “resilient” and “robust” as alternatives pointed out too him, but he believes they are not “anti” enough. He thinks these notions lack the explicit profiting from volatility. One hypothesis I did not mention was the antifragility of fitness in relation to personal exercise – you profit from irregular eating habits and slow walks alternating with exhausting workouts. Probably Taleb would say resilience is not sufficient for us / nature / living beings.

  7. Interesting post. I was feeling a building resistance to Taleb since receiving my copy of The Black Swan, but I think I can crack it open now. 🙂

    I am going to come back with a more thoughtful set of responses after thinking on them. I also want to hit ‘like’ but I think I broke my WordPress; I can’t access anyone’s like buttons or my notifications now, not since mid-day yesterday. (I take this as a universal hint to go finish painting the house.)

    Thanks for the link to the cream separator post; I share the same learning experience here. 🙂

    • Thanks, Michelle – looking forward to your thoughts. Re the issues with likes – I had such problems either 1) when working behind a firewall that blocked some “dangerous” stuff selectively or 2) after Internet Explorer had crashed (had to delete all cookies and history), or when I turned on IE “compatibility mode” in error.

    • BTW I think I will need to write another post on Taleb’s books anyway. There are too many ideas I did not cover – deliberately… I can’t wirte real book reviews that aim at covering each and every aspect of a book in a balanced way. I rather want to point out which ideas got me thinking – probably I pointed out some specific aspects that haven’t been so important to the author.

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