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Posts Tagged ‘Black Swan theory

Antifragile: what can Gain from Disorder (Incerto)?  And Nassim Nicholas Taleb

Nassim Nicholas Taleb, the bestselling author of The Black Swan and one of the foremost thinkers of our time, reveals how to thrive in an uncertain world.

I have reviewed and developed on the Black Swan theory in several articles https://adonis49.wordpress.com/2011/06/01/part-1-black-swan-model-can-rare-catastrophic-events-of-man-made-systems-be-controlled/

Black Swan is a term coined after discovering a black swan a couple of years ago.  People firmly believed that all swans were white:  A few might have observed a black swan but refused to identify it as a swan; or black swans are common sight in particular regions and people had no idea that black swans are considered rarity all over the world and might be purchased for their weight in gold to be raised in zoos!

You know the adage: “If an event can occur, it will happen“, meaning, it does not matter how low the predicted probability of occurrence of the rare events, it will strike “unexpectedly”.

If there is a chance in a million for an asteroid to smash onto earth, an asteroid will fall on our head: Asteroid did fall and transform earth several times in the last four billion years.

Just as human bones get stronger when subjected to stress and tension, and rumors or riots intensify when someone tries to repress them, many phenomena in life benefit from stress, disorder, volatility, and turmoil.

What Taleb has identified and calls “antifragile” is that category of things that not only gain from chaos but need it in order to survive and flourish.

The Black Swan theory states: “In complex systems, especially man-made complex systems, it is not feasible to comprehend all the interactions among the hundred of variables affecting outcomes. In man-made systems, we have to allow natural fluctuations that are at work.

The rare predicted calamitous events  will strike unexpectedly, and we will fail to react accordingly and adequately if we consciously avoid to consistently take them into consideration in our analysis and reports.”

The unexpected events cannot be analyzed as odds in card games or casino games:  Human behavior with thousands of variability in moods, emotions, conventions, conviction, personal experiences… cannot be predicted as games are.

In The Black Swan, Taleb showed us that highly improbable and unpredictable events underlie almost everything about our world.

In Antifragile, Taleb stands uncertainty on its head, making it desirable, even necessary, and proposes that things be built in an antifragile manner.

The antifragile is beyond the resilient or robust. The resilient resists shocks and stays the same; the antifragile gets better and better.

The antifragile is immune to prediction errors and protected from adverse events.

Why is the city-state better than the nation-state,?

Why is debt bad for you, and why is what we call “efficient” not efficient at all?

Why do government responses and social policies protect the strong and hurt the weak?

Why should you write your resignation letter before even starting on the job?

How did the sinking of the Titanic save lives?

The book spans innovation by trial and error, life decisions, politics, urban planning, war, personal finance, economic systems, and medicine.

And throughout, in addition to the street wisdom of Fat Tony of Brooklyn, the voices and recipes of ancient wisdom, from Roman, Greek, Semitic, and medieval sources, are loud and clear.

Antifragile is a blueprint for living in a Black Swan world.

Nassim Nicholas Taleb said:

The most rewarding moment in an author’s career. Finally, I am no longer the author of several books. I am now the author of a single book in 4 volumes: INCERTO, plus technical companions.

Why does it matter? I don’t know, but it is a big, very big deal to see your work as a single large coherent and self contained unit, to which you keep adding pieces to, ultimately, leave very few stones unturned

   
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Is “Black Swan Theory” applicable to man-made systems?

Has anyone seen a swan (baja3) physically? In the flesh, or even flying or walking?  If you are asked “what is the color of a swan?” I bet your answer is “White, obviously”.  Actually, a black swan was identified a few years ago.  Is it possible to eventually identify a multicolored swan?

You might say that finding a black swan, or even a tribe of black swans, or a mixture of black and white swans stand to reason, but is it feasible to have a green, blue… swan?  You might respond that genetic engineering can produce whatever colored swan you desire as a pet…

Why do you think all of us believed that a swan must be white, and nothing but white?  Most of us have not seen a swan, except in pictures, movies or documentaries; we might not even be able to identify a swan from a duck if the bird is not named…

If even nature, which changes slowly and its trends can be mostly predicted, has the potential of surprising us with rare events, a few of them catastrophic.

We got in the habit of expecting frequent disasters from man-designed and man-made systems, within a few years of their applications and usage by people…

The variability in living creatures and the behaviors of users are a thousand folds more numerous than variability in nature.  Wouldn’t you be appalled in total disbelief to hear any designer of systems claiming that the product is definitely designed and manufactured to be entirely controlled and managed according to users’ satisfaction, safety, and health?

The teams of designers of many professions such as scientists, engineers, psychologist, legal professionals… are aware of two things:

First, there will be frequent minor malfunctions to the system in terms of financial loss, safety and health casualties, but these malfunctions can be controlled and fixed.

Second, any system contains rare catastrophic malfunctions that will eventually occur (doud al khal minho wa fih) and predicting these rare events is very challenging and out of control and management.  When you hear of economic-safety analysis trade-off of a system, bear in mind that the study concerns the number of casualties and the financial cost that owners (more frequently the State or the tax payers) will have to set aside for these calamitous eventualities.

The funny part is that:

First, no money is ever set aside by the private shareholders for these catastrophes and the States or tax-payers will eventually cover up the expenses.

Second, transparency and full disclosure to the general public is never disseminated widely, if ever published.

Third, the public and communities in most countries have no say in the design and decision-making processes of vast man-made systems.

Fourth, no man-made system has instituted an independent specialized and dedicated team responsible of gathering data and analysing statistics of the various malfunctions.  Most malfunctions are barely reported and serious hazardous events are dusted-off under the carpet:  No read, never happened!

Do you know that the UN agency for health is forbidden to collect and report statistics on nuclear disaster consequences?  That the atomic UN agency is not to share statistics with other UN agencies concerned with health and safety of world population?

Note 1: Nassim Nicholas Taleb, a mathematician by formation wrote  “The Black Swan:  The power of the unpredictable” and “Savage hazard”.  Taleb was initially trying to explain the financial crisis since he is in the financial business.  The theory is fine and explains many fluctuations in man-made designs, for example the international financial system.

Note 2: This post is a re-edited version of the first part of a lengthy article related to claims that Black Swan Theory does not apply to the political/social structure in Lebanon

How rare are dangerous events? How dangerous are “rare” species? Unless extinct…

Dozens of living species, animals and plants, go extinct every day.  The number is many folds higher, since we don’t know all that exist in species.  And mankind has no clear idea of their importance to our survival and to earth sustainability.

In the last two centuries, mankind was the direct cause and main catalyst for the extinction of all kinds of species.  Hundreds of “savaged” tribes have vanished as samples of how mankind survived in various environment.  This rate of extinction has increased drastically in the last five decades, and the international community is helpless regulating the savage mass production of the multinational companies and financial institutions.  Texaco alone is responsible for the extinction of two human tribes in the Equatorial Forest, due to excessive and unsafe operations in the oil extraction processes, polluting the region and water sources and rendering the survival domain of the tribe extinct. (read link on note #1)

Let us face it: Over 50% of mankind is now living in urban setting.  If urban people are denied zoos or affordable access to zoos, how many do you think have seen even a live chicken? Most probably, in most urban cities in the “third world”, there are no zoos, and people catch rats for their daily consumption, the fatter the happier.

Are you aware of expensive rare dirt minerals?  They are called dirt because they are not excavated underground:  You scratch the surface of earth and you pour highly toxic acid to clean out the other non-precious minerals.  Vast zones of open lands are polluted and dead for generations, along with water sources, on the surface and under.  China has the monopoly of extracting and exporting those expensive eight rare elements found in dirt.

Are rare events and species always dangerous phenomenon, before and after they are extinct?  For example, why should an urban dweller care about a black swan, if he never saw a living duck or a goose?

There is a complete theory on the eventual occurrence of dangerous rare events in man-made complex systems; it is called the Black Swan theory, because a black swan was identified to exist a few years ago.  Anyway, do you expect a black swan to behave differently than white swan? We tend not to see but a color variation in animals:  Unlike other animal species, mankind see behavioral differences in human of different color complexion.

The designers of man-made systems know the consequences of the inevitable dangerous rare events in the functioning of the system.  For example, nuclear power plants, automated fast trains and airplanes, military highly dangerous complex systems of activation… Actually, the economic-safety trade-off studies are rarely made public and are mostly not transparent for serious examination.

Once built, the man-made systems are rarely assigned an independent team of specialists to follow-up on the frequency of near-accidents and near misses of calamities.  Only serious errors of dysfunctions are reported to a government agency in developed States.

These dangerous systems are funded by governments and ultimately turned over to private investors.  Once a catastrophe strikes, it is the State and people tax money that cover the expenses of damages done to health and safety of operators and users.

Do you know that the sole purpose of the UN atomic agency is to encourage building nuclear power plants?  Do you know that the UN health and safety organization is prohibited of collecting statistics on nuclear accidents and their health consequences?  It is as if the atomic agency has the monopoly for disseminating misinformation, ill-health, death, and disasters.

Almost every day, there are at least a near-accident in nuclear power plants, and governments love not to receive official reports on these accidents, especially the veto-power States in the UN security council.

We are to expect different kinds of rare events in a couple of decades.  For example, youth in Japan will be rarer than old people.  Many will jump to the conclusion: “Great, Japan is the ideal vacation destination.  It must be the safest location: I am sure that I can outrun an elder person holding a blade to my face…”  We are missing the fact that Japan is polluted with nuclear radiation for years to come.

Until the current UN atomic agency is disbanded and a new charter created for an agency corresponding to world community health and safety standards, I am not visiting Japan and its surrounding States such as China, Korea, the Philippines, Viet Nam… I am not visiting Ukraine and Belarus.  I am not visiting France and the USA.  I need accurate, credible, and naive data on the far-reaching consequences of the nuclear meltdowns.

The State of Lebanon is the source of bizarre and rare dangerous man-made institutions.  Unfold a world map and look for arrows pointing to a location: It is probably Lebanon. A dot smaller than New Jersey State, a suburb of New York City. This spot is the densest location for world most fantastic show case carnival of extravagant rarities.

Lebanon was recognized a State in the first UN session in San Francisco in 1946.  Since then, Lebanon wallowed in this amazing rarity of staying a Non-State:  Lebanon is de facto administered by 18 recognized theocratic sub-States.

If you visit Lebanon, you discover that for every 6 young girls there is a young male: The remaining young males have immigrated to greener pastures…

Funny, I saw a black Mercedes with three-digit numbers plate, (reserved for Deputies in the Parliament), and the plate has the code of the Balance, the pictogram for Judge.   I saw a clerics driving this car.  Civil judges drive cars with four-digit plates:  Are religious judges in religious court, assessed as higher in status or power than civil judges?

More on this bizarre “State” of Lebanon in follow-up articles.

Note 1: https://adonis49.wordpress.com/2011/07/03/worst-ecological-disaster-who-is-pablo-fajardo-mendoza/


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