Antifragile: Things That Gain from Disorder (20 page)
Read Antifragile: Things That Gain from Disorder Online
Authors: Nassim Nicholas Taleb
In the Cosa Nostra, the Sicilian mafia, the designation “man of honor” (
uomo d’onore
) implies that the person caught by the police would remain silent and not rat on his friends, regardless of benefits, and that life in prison is preferable to a plea that entails hurting other members. The tribe (Cosa Nostra) comes before the individual. And what broke the back of the mafia was the recent generation of plea bargainers. (Note that “honor” in the mafia is limited to such in-group solidarity—they otherwise lie, and there is nothing honorable about them in other domains. And they kill people from behind, something that on the east side of the Mediterranean is considered the purest form of cowardice.)
Likewise, we humans may have to be self-centered at the expense of other species, at the risk of ecological fragility, if it insures our survival. Our interests—as a human race—prevail over those of nature; and we can tolerate some inefficiency, some fragility, in order to protect individuals, although sacrificing nature too much may eventually hurt ourselves.
We saw the trade-off between the interests of the collective and those of the individual. An economy cannot survive without breaking individual
eggs; protection is harmful, and constraining the forces of evolution to benefit individuals does not seem required. But we can shield individuals from starvation, provide some social protection. And give them respect. Or more, as we see next.
Meanwhile, if as a utopist (indeed), I hate what I am figuring out, I think that there is hope.
Heroism and the respect it commands is a form of compensation by society for those who take risks for others. And entrepreneurship is a risky and heroic activity, necessary for growth or even the mere survival of the economy.
It is also necessarily collective on epistemological grounds—to facilitate the development of expertise. Someone who did
not
find something is providing others with knowledge, the best knowledge, that of
absence
(what does not work)—yet he gets little or no credit for it. He is a central part of the process with incentives going to others and, what is worse, gets no respect.
5
I am an ingrate toward the man whose overconfidence caused him to open a restaurant and fail, enjoying my nice meal while he is probably eating canned tuna.
In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using exactly the same logic (the entrepreneur is still alive, though perhaps morally broken and socially stigmatized, particularly if he lives in Japan). For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner)—likewise, there is no such thing as a failed entrepreneur or failed scientific researcher, any more than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take personal risks. (Sorry.)
Psychologists label “overconfidence” a disease, blinding people to the odds of success when engaging in ventures. But there is a difference between the benign, heroic type of risk taking that is beneficial to others,
in the antifragile case, and the nastier modern type related to negative Black Swans, such as the overconfidence of “scientists” computing the risks of harm from the Fukushima reactor. In the case of the former, what they call overconfidence is a good thing, not something to medicate.
And compare entrepreneurs to the beancounting managers of companies who climb the ladder of hierarchy with hardly ever any real downside. Their cohort is rarely at risk.
What Erasmus called
ingratitudo vulgi,
the ingratitude of the masses, is increasing in the age of globalization and the Internet.
My dream—the solution—is that we would have a National Entrepreneur Day, with the following message:
Most of you will fail, disrespected, impoverished, but we are grateful for the risks you are taking and the sacrifices you are making for the sake of the economic growth of the planet and pulling others out of poverty.
You are at the source of our antifragility
. Our nation thanks you.
1
A technical comment on why the adaptability criterion is innocent of probability (the nontechnical reader should skip the rest of this note). The property in a stochastic process of not seeing at any time period
t
what would happen in time after
t,
that is, any period higher than
t,
hence reacting with a lag, an incompressible lag, is called
nonanticipative strategy,
a requirement of stochastic integration. The incompressibility of the lag is central and unavoidable. Organisms can only have nonanticipative strategies—hence nature can only be nonpredictive. This point is not trivial at all, and has even confused probabilists such as the Russian School represented by Stratonovich and the users of his method of integration, who fell into the common mental distortion of thinking that the future sends some signal detectable by us. We wish.
2
Strong antifragility is when the love of volatility knows no bound—the gains have a remote limit or are truly unlimited—the sky is the limit. These can only exist in artificial, man-made life such as economic contracts and cultural products, not really in natural processes. More in the Appendix.
3
He and his co-authors published in the journal
Genes
a paper on the idea of antifragility in biological systems. Interestingly, the article was in response to a draft of this book; in turn this book was modified in response to Danchin’s article.
4
Many people think at first that their own death is the worst Black Swan scenario. It is not. Unless they’ve studied too much modern economics, they would agree explicitly that their death
plus
the death of their loved ones
plus
the termination of humanity would be a vastly worse outcome than their own death. Recall my comment on complex systems. We are a mere part of a large chain, and we are worried about both ourselves and the system, as well as the preservation of parts of that large chain.
5
A correspondent, Jean-Louis Rheault, wrote, “I have noticed that the more people glorify the entrepreneur as an abstraction, the more they will scorn an actual one they meet.”
A
s in Baudelaire’s sad poem about the albatross, what is made to fly will not do well trapped on the ground, where it is forced to traipse. And it is quite fitting that “volatility” comes from
volare,
“to fly” in Latin. Depriving political (and other) systems of volatility harms them, causing eventually greater volatility of the cascading type.
This section,
Book II
, deals with the fragility that comes from the denial of hormesis, the natural antifragility of organisms, and how we hurt systems with the very best of intentions by playing conductor. We are fragilizing social and economic systems by denying them stressors and randomness, putting them in the Procrustean bed of cushy and comfortable—but ultimately harmful—modernity.
Procrustes was an inn-keeper in Greek mythology who, in order to make the travelers fit in his bed, cut the limbs of those who were too tall and stretched those who were too short. But he had the bed fitting the visitor with total perfection.
As we saw in
Chapter 3
, treating an organism like a simple machine is a kind of simplification or approximation or reduction that is exactly like a Procrustean bed. It is often with the most noble intentions that we
do so, as we are pressured to “fix” things, so we often blow them up with our fear of randomness and love of smoothness.
1
Book II
will also discuss the competition between man and natural forces, the craving of volatility by some antifragile systems, and how we make social, political (and other) systems vulnerable to Black Swans when we overstabilize them.
1
Where simplifications fail, causing the most damage, is when something nonlinear is simplified with the linear as a substitute. That is the most common Procrustean bed.
The Reds and the Whites all go to Zurich—War is not a prison—The turkey’s thwarted projects—Remember we are in Extremistan
Consider the fate of Ioannis (John) and Georgios (George), two identical twin brothers, born in Cyprus (both of them), currently both living in the Greater London area. John has been employed for twenty-five years as a clerk in the personnel department of a large bank, dealing with the relocation of employees around the globe. George is a taxi driver.
John has a perfectly predictable income (or so he thinks), with benefits, four weeks’ annual vacation, and a gold watch every twenty-five years of employment. Every month, £3,082 is deposited in his local Nat West checking account. He spends a portion of it for the mortgage on his house west of London, the utilities, and feta cheese, and has a bit left for his savings. He used to wake up on Saturday morning, the day when people stretch and linger in bed, anxiety free, telling himself “life is good”—until the banking crisis, when he realized that his job could be “made redundant.” Unemployment would seriously hit him hard. As a personnel expert, he has seen the implosions of long careers, with persons who, laid off at the age of fifty, never recovered.
George, who lives on the same street as his brother, drives a black taxi—meaning he has a license for which he spent three years expanding
his frontal lobes by memorizing streets and itineraries in Greater London, which gives him the right to pick up clients in the streets. His income is extremely variable. Some days are “good,” and he earns several hundred pounds; some are worse, when he does not even cover his costs; but, year after year, he averages about the same as his brother. To date, he has only had a single day in his twenty-five-year career without a fare. Because of the variability of his income, he keeps moaning that he does not have the job security of his brother—but in fact this is an illusion, for he has a bit more.
This is the central illusion in life: that randomness is risky, that it is a bad thing—and that eliminating randomness is done by eliminating randomness.
Artisans, say, taxi drivers, prostitutes (a very, very old profession), carpenters, plumbers, tailors, and dentists, have some volatility in their income but they are rather robust to a minor professional Black Swan, one that would bring their income to a complete halt. Their risks are visible. Not so with employees, who have no volatility, but can be surprised to see their income going to zero after a phone call from the personnel department. Employees’ risks are hidden.