The Black Swan: The Impact Of The Highly Improbable
Nassim Nicholas Taleb
Discovering America in the 1970s meant discovering the Big Issue book, a kind we still don’t really do here; the big-idea, non-fiction book about the modern world – ideally one with business implications – that will put its author on the cover of Time and onto the major lecture circuit.
Such books were piled high in the lovely cathedral bookstores of 5th Avenue then and they sold like mad (still do), so let no-one accuse Americans of neglecting the life of the mind. I called them ‘worry books’ at the time, because they were usually written by Eastern intellectuals who were fretful about the way things were going in America.
I bought armfuls of them to take home, not least to feel up with big things. I particularly remember Christopher Lasch’s The Culture of Narcissism, which was about the emerging US religion of the self winning out against the hard-fought decent compromises between the private and public realms of earlier 20th-century America. And now in the 21st century, I’m a sucker for anything by Thomas Frank, who’s completely compelling – and credible – about America’s rightward swing.
But I’ve become very cynical about the category itself. These books – and the more ‘high concept’ the title and the idea, the more so – often fuel the organised wank-fests and circle-jerks of commercial and institutional conferencing and long-term planning. People on that circuit – the HR chiefs, change consultants, commercial seers and so forth – love this kind of book because it gives them something to talk about, and refreshes the business of well-paid predictable prediction.
The books are always presented as challenging every conventional wisdom going, attacking complacences, altogether edgy, and so forth.(So my main reaction to Malcolm Gladwell’s The Tipping Point was that the author had lovely hair – a big, scraggly, Post-Modern Shoreditch Afro – but his insights weren’t all that new and challenging to English people raised on the notion of straws on camel’s backs.)
Nassim Nicholas Taleb’s The Black Swan is just such a high-concept book following on the successful formula of his previous book Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (2001), which said that Very Big Stuff Just Happens Seemingly Out of Nowhere – which after 9/11 seemed worth observing – and that a conspiracy of dunces, economists, statisticians etc tried to pretend the future was knowable for all sorts of intellectually craven or financially venal reasons.
It was quite elegantly expressed, and the author ticked every box going. He’s an upper-class Lebanese Christian refugee, so he’s seen terrible stuff happen, which is intimidating to soft-life Americans and Western Europeans. He’s an occasional Wall Street trader too and has made himself Rich Enough (he suggests neither the Very Poor nor the Very Rich can afford intellectual independence), which means nobody can describe him as an ‘academic’.
But impressively enough, he is an academic, with an interesting-sounding post too (the Dean’s Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst). In addition, he’s got a formidable range of reference over mathematics, economics and philosophy and Old World culture generally, which is particularly impressive for New World readers from a narrower intellectual background. He seems like an elegant bear who likes nothing better than a barney.
The Black Swan has precisely the kind of title derived from precisely the kind of anecdote that I’m expecting to hear played back at me endlessly on the Big Thinking circuit throughout 2008, particularly as it looks as if we’ll be in a horrible slump that no-one anticipated in spring 2007.
The Black Swan challenge to comfortable thinking goes roughly that before the discovery of Australia, people in the Old World believed all swans were white because they’d seen nothing but. So the discovery of New-World black swans invalidated endless years of observation and belief. What Taleb calls a Black Swan throughout these 300 pages (plus another 65 of acknowledgements, glossary, notes and bibliography and index, so it feels like 500) is an important kind of event with three attributes.
First, it lies outside regular expectations because it conforms to no familiar historic norms. Second, it has an extreme impact, and third – notwithstanding one and two – the conspiracy of dunces invents explanations after the event to make it compliant with their thinking and subsume it into their (revised) tables of prediction.
Sarajevo and what followed; Hitler and World War II; the collapse of the Soviet bloc; the rise of Islamic fundamentalism; the spread of the internet; the market crash of 1987 — these are where he starts, so you can see this is very big stuff indeed. And then he’s on to 9/11 and the conventional wisdom that prevailed on 9/10, saying that if the risk had been conceivable, then the attacks wouldn’t have happened because airlines would’ve had locked bullet-proof doors and fighter planes would have been patrolling the twin towers area. They’ve got the locked cabins and the early warning systems now, of course, but too late. The next Black Swan events will appear somewhere else.
And, so Taleb says, the Black Swan events are the ones that really matter over the long haul too. In a long discussion of what most people know as the 80/twenty rule, derived from Pareto’s observations, (as in twenty per cent of books published account for 80 per cent of sales), Taleb puts up a case for a far greater percentage of, say, all the value creation or destruction on the world’s stock markets being accounted for by a very small percentage of trading days. In the things that matter, it’s 1/99 and sometimes even more.
A great deal of learning is paraded across these 300 pages, most of it interesting, but a lot repetitive – you feel the book’s being dragged out to the required configuration – and massive scores are being settled all round. I don’t know the pattern of Taleb’s various spats but there are constant swipes at everyone in the prediction business (good!), a raft of historians (okay by me), and the French (such a neo-con cliché). He also loves pointing out how many forgotten mediocrities have won Nobel prizes.
Taleb’s style is distinctive too, a combination of classical academic essayist (much smarter and denser than your average Big Issue writer) with quite a lot of adopted street-smart Brooklynisms of the ‘go-figure’ variety. (He’s obviously fascinated by the rougher traders he meets.)
But the real question raised by The Black Swan, and Taleb’s previous book, and the whole profitable genre of ‘challenging’, ‘maverick’, ‘counter-intuitive’, etc., books of this kind, is whether they ever do anything more than fuel precisely the kinds of people Taleb so despises. Can The Black Swan possibly ever be an intellectual Black Swan itself?