This will be in multiple parts. I am pasting direct quotes from books I think are great or relevant to what’s going on in the world or in my life personally. First up is a book by Nassim Nicholas Taleb – Fooled By Randomness. He also wrote The Black Swan, which I have yet to read but will soon.
The book is concerned primarily with the way we deal with uncertainty. He synthesizes his life experiences as a trader and a voracious reader of literature, science, and philosophy to buttress his central thesis – that a lot of the knowledge and “expert” advice that we take for granted doesn’t account for (nor does it even attempt to make room for) the degree of uncertainty that may eventually destroy the presumed credibility of said knowledge and advice. His conclusions have given voice to passing thoughts I’ve had for years and in the process of reading the book I have felt less like a lunatic and much more confident. Confident enough to start writing about this stuff, but although I am completely out of my fucking league I want to start anyway.
The Central Idea
A lot of observable systems that we come across are just too complicated for our brains to process rationally. I want to be clear however – this is not some bullshit cop-out “the world is too complicated, therefore I will withhold my opinion and sit in my armchair and trash others’ opinions because they can’t possibly know either.” The book is not suggesting that mentality at all. It is merely suggesting that we have to take into account that humans have an innate set of biases, programmed by millions of years of evolution, which are conditioned for a narrow set of environments where most variables are known and understood. We do not live in that world any longer, and this is where we get into trouble intellectually and financially. We are arrogant and assume we know certain things. We fit past events into conveniently neat little models that we use to determine future risks. The book is not offering conclusions that we may implement to avoid random outcomes (called black swans– they can be either positive or negative) – the book is suggesting that we merely be aware that they exist, and to be extremely wary of confidently dabbling or making predictions in areas that are prone to the disastrous influence of a black swan, much to the detriment of the general public. This is the scenario that we’re witnessing in the aftermath of the financial crisis. Taleb calls for an overhaul of the way current finance is conducted, to meet the constantly shifting demands of our environments. He calls for a more robust economy and financial system, able to withstand the inevitable influence of a black swan.
Taleb is sharp to read, his writing prods at you and his conclusions are unsettling to realize, but he is largely right. He uses a ridiculous amount of empirical evidence to confirm the validity of his thesis, and if the number of “Blacks Swan” books he’s already sold is any indication, this guy will hopefully be one of the few people worth listening to in public intellectual circles. His ideas are attractive to me because they confirm what I’ve always sensed and have now come to believe – that humans are far more fallible and intellectually dimwitted than we admit, and that acknowledging this and learning to exist in a world of uncertainty is probably a good place to start living…well.
Quotes
“At of the cost of appearing biased, I have to say that the literary mind can be intentionally prone to the confusion between noise and meaning, that is, between a randomly constructed arrangement and a precisely intended message. However, this causes little harm; few claim that art is a tool of investigation of the Truth–rather than an attempt to escape it or make it more palatable. Symbolism is the child of our inability an unwillingness to accept randomness; we give meaning to all manner of shapes; we detect human figures in inkblots.” Pg. 15 – Prologue
I read the Bret Easton Ellis novel Less Than Zero a few days ago. His writing flows as if the main character is narrating in the present, very stream of consciousness. The main character Clay will make lots of emotive free associations about the situations he observes that may potentially have real meaning later. For instance, as Clay’s girlfriend drove him home from the airport, she made a passing comment about how “people in LA are afraid to merge,” and that passing comment ended up having a huge degree of significance on Clay throughout the novel, as trivial on the surface as it may be. But at first I thought it could also be noise, randomly generated emotive reactions to the situations that may suggest a deeper significance but really don’t. However, as I got towards the end of the novel, Clay’s emotive connections ARE actually relevant. The otherwise trivial reactions he had early on are fleshed out and set to demonstrate some message later on. So its not just noise, they are precisely intended messages that happen to look like noise.
If the novel was actually just a bunch of noise, i.e. Clay was choosing random things to fixate on that do NOT actually have any significance or message, the novel would suck. It would lack an attractive or relevant narrative. Our own lives actually don’t have this working and active narrative, although we like to think they do, and we certainly like them in things we read or watch. Real life is boring.
“…that which came with the help of luck could be taken away by luck (and often rapidly and unexpectedly at that). The flipside, which deserves to be considered as well (in fact it is even more of our concern), is that things that come with little help from luck are more resistant to randomness.” Pg. 4
If I get swooped up and involved as the keyboardist in a pop group that doesn’t require a high set of skills beyond my looking good, than chances are I could be just as easily replaced. If I get involved in a group that requires skills that I’ve worked really hard for a long fucking time to acquire, it will be considerable more difficult to find an adequate replacement.
“I start with the platitude that one cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e., if history played out in a different way). Such substitute courses of events are called alternative histories. Clearly, the quality of a decision cannot be solely judged based on its outcome, but such a point seems to be voiced only by people who fail (those who succeed attribute their success to the quality of their decision). Such opinion– “that I followed the best course” –is what politicians on their way out of office keep telling those members of the press who still listen to them–eliciting the customary commiserating “yes, we know” that makes the sting even worse. And like many platitudes, this one, while being too obvious, is not easy to carry out in practice.” Pg. 22
This is funny and kind of depressing. Looking at the consequences of the bailout for instance, it gets fuzzy when determining what went right or wrong. If the results are horrific, no doubt politicians who supported the bailout will say something to the effect of “Well, see, imagine what would have happened if we didn’t pass this bailout! It would have been that much worse!”If the results are mediocre or good, they can say “Look! Our brilliant decision-making made this possible.” Conversely, the politicians who opposed to bailout could say (when a negative outcome occurs) “See, their idiot decision-making caused this!” and (when a positive outcome occurs) “This good outcome is attributable to luck and other factors not involving the bailout.”
“Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently, like a revolver that would have hundreds, even thousands, of chambers instead of six. After a few dozen tries, one forgets about the existence of the bullet, under a numbing false sense of security…
Second, unlike a well-defined precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality. Very rarely is the generator visible to the naked eye. One is thus capable of unwittingly playing Russian roulette–and calling it by some alternative “low-risk” name. We see the wealth being generated, never the processor, a matter that makes people lose sight of their risks, and never consider the losers…
Finally, there is an ingratitude factor in warning people about something abstract (by definition anything that did not happen is abstract)…”
Cool.
