February 17, 2013

Editor's Choice Award

I'm perhaps too generous with stars in Review Corner. I'm pretty respectful of an Author's work, and -- contra Tyler Cowen -- by the time I invest the time and money in a book, I'm fairly certain I'll be interested. The problem is that I am left without tools to highlight that exceptional, once-a-year, mind-blowing book. My inner math guy will not allow six on a scale of five.

But this is a blog, and you can just make **** up as it pleases. Ergo and further pursuant to, I institute the "Editor's Choice Award" and if any of my blog brothers wish to award one, we'll move the apostrophe.

I retroactively award it to David Deutsch's "The Beginning of Infinity." We discussed it last year, but I am in a thread on the JC-JK Book Club on it. And it is a reminder of the kind of book that gets something beyond five crummy little ThreeSources Review Corner stars.

The second recipient is the topic of today's Review Corner: Nassim Nicholas Taleb's: Antifragile: Things That Gain from Disorder. Both are mind blowing books by brilliant, off-the-charts-long-tail-genius authors. Curiously, Taleb contradicts many things I believe; Deutsch much fewer. I mention that only because my ThreeSources reviews are more political and philosophical than literary. To most I would not bring it up

To steep in the intelligence of either is a great gift. Taleb worked as a "quant:" the highest, brainiac job on Wall Street. He worked just long enough to earn what he calls his "f*** you money," enabling him to pursue life and knowledge on his own terms. He is a polyglot and a polymath. His books will quote philosophy, physics, business, medicine, ancient history, and the derivation of Aramaic words -- all before breakfast. I enjoyed Black Swan, but this is his Magnum Opus. It is divided into seven books, and he says "Black Swan" should rightfully be the eighth book in "Antifragile."

If you don't wish to commit $15.99 and some serious brain cycles to the book, I'd search the Internet for interviews and reviews where he author defines Antifragility. My description will be too short and incomplete:

Fragility, like the author's favorite tea cup, is the exposure to great harm from volatility. When asked for the antonym of fragile, most will choose "robust." The stone, unlike the tea cup, can be dropped on the floor or shaken in shipment. Taleb claims that we have no term for the actual antonym of fragile, so he provides the neologism "Antifragile." Antifragile things don't just weather volatility, they are strengthened by it. The first example is human bones. Six months of weightlessness in space or an extended hospital stay greatly reduces bone strength which requires stressors. Indeed the entire body profits from random stressors of exercise, fasting, &c.

Much of our modern, structured, world has been harming us with top-down policies and contraptions (dubbed "Soviet-Harvard delusions" in the book) which do precisely this: an insult to the antifragility of systems. This is the tragedy of modernity: as with neurotically overprotective parents, those trying to help are often hurting us the most.
[...]
The antifragile gains from prediction errors, in the long run. If you follow this idea to its conclusion, then many things that gain from randomness should be dominating the world today-- and things that are hurt by it should be gone. Well, this turns out to be the case. We have the illusion that the world functions thanks to programmed design, university research, and bureaucratic funding, but there is compelling-- very compelling-- evidence to show that this is an illusion, the illusion I call lecturing birds how to fly.

There is the medical fragilista who overintervenes in denying the body's natural ability to heal and gives you medications with potentially very severe side effects; the policy fragilista (the interventionist social planner) who mistakes the economy for a washing machine that continuously needs fixing (by him) and blows it up; the psychiatric fragilista who medicates children to "improve" their intellectual and emotional life; the soccer-mom fragilista; the financial fragilista who makes people use "risk" models that destroy the banking system (then uses them again); the military fragilista who disturbs complex systems; the predictor fragilista who encourages you to take more risks; and many more.

Taleb, Nassim Nicholas (2012-11-27). Antifragile: Things That Gain from Disorder (Kindle Locations 462-467). Random House, Inc.. Kindle Edition.


Did I mention that Taleb is rudely dismissive of those he considers beneath him? This includes most people, but happily for the ThreeSourcer, academics and mainstream journalists top the list. Thomas Friedman and Paul Krugman get some serious whacks. Alan Greenspan -- it's all good fun until he turns his sights on Hayek and Ronald Reagan (neither get it as bad as the others, but I am warning the ThreeSourcer...)

Academics, oh my:

A nail displaces another nail, with astonishing variety. But academics (particularly in social science) seem to distrust each other; they live in petty obsessions, envy, and icy-cold hatreds, with small snubs developing into grudges, fossilized over time in the loneliness of the transaction with a computer screen and the immutability of their environment. Not to mention a level of envy I have almost never seen in business.... My experience is that money and transactions purify relations; ideas and abstract matters like "recognition" and "credit" warp them, creating an atmosphere of perpetual rivalry. I grew to find people greedy for credentials nauseating, repulsive, and untrustworthy.

He's not very keen on Economists and big company CEOs.
Likewise, Gerd Gigerenzer reports a more serious violation on the part of Harry Markowitz, who started a method called "portfolio selection" and received the same iatrogenic Swedish Riskbank prize (called "Nobel" in economics) for it, like other fragilistas such as Fragilista Merton and Fragilista Stiglitz. I spent part of my adult life calling it charlatanism, as it has no validity outside of academic endorsements and causes blowups (as explained in the Appendix). Well, Doctor Professor Fragilista Markowitz does not use his method for his own portfolio; he has recourse to more sophisticated (and simpler to implement) cabdrivers' methodologies, closer to the one Mandelbrot and I have proposed.

If one judges a man by his enemies, Nassim Nicholas Taleb would be a ThreeSources hero and we would hold feasts in his honor with fireworks and martinis. Philosophically, it is hard to pin Taleb down. Some of his points should draw some amens from the ThreeSources choir:
The great benefit of the Enlightenment has been to bring the individual to the fore, with his rights, his freedom, his independence, his "pursuit of happiness" (whatever that "happiness" means), and, most of all, his privacy. In spite of its denial of antifragility, the Enlightenment and the political systems that emerged from it freed us (somewhat) from the domination of society, the tribe, and the family that had prevailed throughout history.
[...]
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.

[...]
This great variety of people and their wallets are there, in Switzerland, for its shelter, safety, and stability. But all these refugees don't notice the obvious: the most stable country in the world does not have a government. And it is not stable in spite of not having a government; it is stable because it does not have one.

He's a great reader of philosophy. Of all the folks I read, I think only Popper (and Taleb is a Popper fan) has a close-to-equivalent grasp of straight-up philosophy. Taleb probably has an advantage in depth of Eastern, Islamic scholars. Taleb is an Eastern Orthodox Christian from Lebanon (Levant to him) he has a foot in the east and one in the west as it were, and he assembles his knowledge and philosophy from both.

He quotes approbationally from philosophers I have dressed in silver and black and put on the Raiders' sidelines: Nietzsche, Wittgenstein, and of course Plato. I can't help but feel his nuance is a higher order. He doesn't go to Hagel or Kant, the ThreeSourcer is safe from that. But he is no Randian.

Perhaps the idea behind capitalism is an inverse-iatrogenic effect, the unintended-but-not-so-unintended consequences: the system facilitates the conversion of selfish aims (or, to be correct, not necessarily benevolent ones) at the individual level into beneficial results for the collective.

And while he is not anti-modernity, he is skeptical -- here we separate him from Deutsch. He would gladly trade the "addition" via positiva of all Pharmaceuticals ever invented for the "subtraction" via negativa of smoking. He drinks coffee (mmm, coffee), chamomile tea and wine -- nothing that has not been around 1000 years. He doesn't approve of eReaders, he listens to baroque classical music. All of these seem rather charming to his character but I have no plans to join him.

You can certainly criticize medicine and Big Pharma for producing solutions with worse side effects than the disease. No doubt we've all had a chuckle at the narrated fine print in the commercials. But I (and Deutsch) see it as trial and error (a most antifragile process) on the way to better medicine and medication. Patients should consider his points, but I'm not going to shutter Roche and Merck.

Quibbles. Picayune philosophical quibbles with the brilliant work of a brilliant author. Five Stars and the coveted ThreeSources "Editor's Choice Award" to this magnificent book.

Review Corner Posted by John Kranz at February 17, 2013 11:09 AM

If only your original elevator talk had explained that you saw classical liberalism's effect on "society" as an inverse-iatrogeneic effect. We would at least have been forced to delay pouncing on you long enough to look up what that means! ;)

The author's concept of fragility is intriguing. All of us have probably observed at one point or another that prosperity has made us soft. Here is a more rigorous explanation of that phenomenon.

Posted by: johngalt at February 18, 2013 4:01 PM

Heh, that was for you!

The fragility is less the softness of modernity, as the attempts to iron out natural volatility's setting up a catastrophic crash (Black Swan). Glue all of your expansion joints and the structure won't slip, but it will be more likely to shatter.

Posted by: jk at February 18, 2013 4:18 PM | What do you think? [2]