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Taking Aim at the Black Swan

Shane Deichman reviews Nassim Nicholas Taleb’s The Black Swan: The Impact of the Highly Improbable and finds it wanting:

Perhaps it’s my naïveté (or perhaps that I’m a product of the California public school system), but I honestly don’t see our civilization marching toward “Extremistan”. Quite the opposite: While our awareness of remote events has increased, and our networks have grown exponentially, I believe that the diffuse topology of our networks actually dampens the impact of an extreme event. Consider the “Butterfly Effect”. Do you really think a butterfly flapping its wings in Jakarta is going to eventually cause a hurricane in New York City? Or do you think the minor perturbation is absorbed locally without cascading into some kind of resonance? Yes, there are examples that illustrate the dire consequences of unplanned resonance. Taleb (who waffles at the end of his book as half hyperskeptic, half intransigently certain) abandons the Gaussian bell curve, yet — with only a single mention of Albert-László Barabási — firmly embraces Power Law scale invariance as normative.Despite Taleb’s too-casual treatment of scale, I think he would agree with George E.P. Box’s statement (c. 1987) that “…[A]ll models are wrong, but some are useful.” Abandoning our dogmatic devotion to certainty is essential in any creative, innovative enterprise — and can reveal hidden opportunities, and hidden abilities.

Read the whole thing here.

Unlike most reviewers, Shane could go head-to-head with Taleb on things mathematical ( though you hardly need a math background to understand The Black Swan) and Shane is right that networks that are intrinsically and generally resilient are better suited to enduring unexpected, system perturbing, black swans.

Hope to have my review up Sunday evening.

7 Responses to “Taking Aim at the Black Swan”

  1. Fabius Maximus Says:

    Nice to see someone with strong math expertise dispute the "fragile networks" meme that has become so widespread, with so little supporting analysis or data.  I wonder if this pessimism about "systems" results from the combination of our dependence on them AND our lack of understanding how they work.

    An engineer might understand our utility systems, an MBA the finanical systems, a geologist the extrative sytems — but to each of us there are aspects that are unknown and disturbingly vulnerable.

    I was at a community meeting in Fall 1999, organized to discuss Y2k.  They were considering wind towers, water storage, etc.  I asked each of them what preparations had been made at their place of work.  Each said that their own piece of the system would run after Y2k — the traffic lights were fine, the hospital were fine, etc.  Each person worried that the others were unprepared.

  2. zen Says:

    Hi FM
    "Fragility" always depends on the direction the stress is coming from. A pillar is immensely resilient to vertical stress; horizontal stress….not so much.

  3. deichmans Says:

    Thx for the link, Zen!  Looking forward to your review this weekend.

    FM: We’re a cynical bunch, aren’t we? 🙂  Your story reminded me of the best Y2K practical joke I’ve heard.  A friend was at a 12/31/1999 NYEve party in a rural neighborhood.  The host’s son said (shortly after 11pm) that he wasn’t feeling well and left the room; he later snuck into the basement and, at exactly Midnight, flipped the master circuit breaker for the home’s electrical supply.  What’s funniest about the story is that nobody was surprised by the abrupt loss of electricity!  So I guess we’re gullible as well as cynical….

  4. TDL Says:

      I wouldn’t take the MBA example of understanding, anything, too far!

    MBA 2006

  5. The Lounsbury Says:

    I was not particularly moved by his criticisms as such.

  6. Larry Says:

    ""Fragility" always depends on the direction the stress is coming from. A pillar is immensely resilient to vertical stress; horizontal stress….not so much"
    The force inside a pillar is the same in all directions. The difference is that the outside force is in shear vertically, and in is in a bending force horizontally, if applied to the center. Hard to shear a pillar vertically, but relatively easy to bend it horizontally. If the pillar is made out of something like stone it brakes when bent. The conservative republican, now days, hopes the pillar is made out of something resilient so the totalitarian force applied horizontally will bend the pillar instead of braking it. Considering the totalitarian force has nukes and millions to lose, not a bad hope, I suppose.

  7. Granite Tiles  Says:

    our circuit breaker is always manufactured by General Electric and they last very long;-*

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