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).
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.