Antifragile 19. The Philosopher’s Stone and Its Inverse

Following the schedule of our reading calendar.

Taleb presents us in this short chapter with what is probably the central message from his book. A method for analyzing the fragility of systems that should replace the risk assessments in decision making. The basic idea is to measure how the payoff of a system varies under different assumptions and compare if eventual benefits in the best situation are bigger or smaller than eventual harm in the worst situation.

This comparison should define the system as fragile, robust or antifragile and should give us enough information to make decisions about that system. This method is independent of the probabilities of occurrence of the best and worst scenarios and so, it is not dependent of the quality of the risk assessments which cannot be very accurate.

Taleb considers this idea so important that he names it as “The Philosopher’s Stone” after the hypothetical method that alchemists searched during centuries to transform metals into gold.

It is indeed a powerful idea and by itself makes the reading of the book worthwhile.

Advertisements

Chapter 18: On the Difference Between a Large Stone and a Thousand Pebbles

Following our reading calendar, we have reached chapter 18.

In this chapter Taleb tries to present the concept of non-linearity for the reader that has no knowledge- or interest- in mathematics, and plays with the idea of convex versus concave curves to give a simple, graphical representation of it. This is mostly getting back to ideas from The Black Swan or Fooled by randomness on how the an impredictable single event can be a really lot more harmful than a thousand small shocks.

There are a couple of examples on traffic jams -a quite common resource for talking about non-linear effects- and a more interesting discussion about regularity in our food ingestion. Taleb makes a compiling argument that our digestive systems are not designed for eating regularly and proposes a more biologically realistic system of fasting and gorging (getting back to the barbell strategy).

Another interesting discussion about size, and how small is a lot more antifragile than big, applied to both animals and financial markets. Following a similar reasoning, in a recent post in Facebook, Taleb argued in favour of the Scottish independence due to the smaller size of the country it would create, instead the bigger United Kingdom.

I specially enjoyed his discussion on why planning tend to underestimate the cost of any project until the budget ends doubling, or even more. Before reading this chapter, I tended to attribute to the planning fallacy -as did Taleb before he started reflecting on the subject- that this was due to randomness, to unexpected drawbacks. But, as he explained, this didn’t happen in the past, so the real cause of such miscalculations is the complexity of our world, plus the agency problem: the divergence between the interests of the agent and the client. In the end time itself is responsible:

“ Just as time cannot be negative, a three-month project cannot be completed in zero or negative time. So, on a timeline going left to right, errors add to the right end, not the left end of it. If uncertainty were linear we would observe some projects completed extremely early (just as we would arrive sometimes very early, sometimes very late). But this is not the case.”

Another interesting idea of this chapter is the ecological principle of acting on nature like then thousand pebbles instead of one large stone. like in pollution ““The harm from polluting with ten different sources is smaller than the equivalent pollution from a single source”, or feeding from lots of different products instead of focusing on a very few, as we tend to do a lot in the Western world.

 

 

Antifragile 17. Fat Tony Debates Socrates

Following the schedule of our reading calendar.

There are two kinds of knowledge. On one side, definitional knowledge, the one that can be expressed clearly with non ambiguous words and can be found and developed by use of our reason. The other kind of knowledge, the complex and opaque, the one that words cannot convey, has to be acquired through living and trying and failing.

It is a central idea of our culture that only the definitional knowledge is knowledge. The other one is poetry or superstition or simply trivial practicalities. This idea is central to western civilization and we can trace it to Socrates. It has conquered the intellectual world, the Academia and the educational system and finds its apotheosis in the Enlightenment.

Our world has progressed by blind trial and error. At the same time, we have fooled ourselves convincing us that our progress comes from the rational understanding of the world and we have created an education system according to this idea which is not only useful to live but can even be very damaging to our innate abilities to interact with reality outside the classroom.

There has been along history, of course, thinkers that have reacted against it. Nietzsche calls for the Dionysian that has to complement our rational side. Without the Dionysian, reason falls dead without energy, and randomness to search for solutions.

Enlightenment had its critics at its time. They were call reactionaries and for most people now they are just nothing more that a bunch of black fanatics fighting against the progress of civilization. However, they have a lot of interesting things to say. What they were fighting was the naive rationalism that thought that we could dismiss the lore of knowledge acquired through generations and received in the form of tradition thinking that we could find out better solutions just turning on our brains.

Taleb cites also some contemporary anti Enlightenment writers and ideas and I have take note of John Gray to read some of his books.

This is exactly the reason why the killed Socrates. Because he tried to convince the youth that they can despise the received tradition and look into his intellects for the answers to the riddles of the world.

Fat Tony believes that they were totally justified in putting Socrates to death. (p. 249)

And finally, as a curiosity, Taleb, hints at us how two of his (and my) most admired thinkers: Popper and Hayek, are in fact also victims of the rationalistic fallacy.

Antifragile Chapter 16: A Lesson in Disorder

We have reached chapter 16 of Antifragile, following our reading calendar.

This chapter is a sort of interlude in which Taleb reflects on what has been told in the former chapter about theoretical knowledge and education using his own life as an example.
That way we learn how Taleb is an autodidact who used the barbell strategy to move around college: studying the minimum to pass grades and then reading as much as possible of any interesting subjects that won’t be taught in college.
His strategy was (and is) to jump into a book and read as long as it is interesting, when it becomes boring, or he is saturated with the subject, to move to another subject. In a sort of Borges fashion he explained us how he decided to pick every possible book about small probabilities and spent two years just reading that stuff until we felt confident enough to apply that knowledge to real life.
Instead of following course books he uses a trial and error process that gives him lot of options to choose from
Despite the mostly autobiographical nature of this chapter there are several ideas which are worth pointing at:

“What is picked up in the classroom stays mostly in the classroom”

How modernity has ruined our chance to learn and enjoy life in a non deterministic way, having
instead the busy CEO that even his leisure time is scheduled.

The metaphor of the lion in captitivy versus the lion that runs free in the wild. The first lives longer but, who wants to be a lion in captivity? This is an image that I’ve seen also used a lot in paleo life-style books.

Schools makes a twisted selection bias favoring those that do well in the rarified ambient of college, neglecting those abilities that are relevant for real life.

And let me finish with this powerful quote:

“Avoidance of boredom is the only worth mode of action. Liife otherwise is not worth living”