Incerto 4-Book Bundle: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile

by Nassim Nicholas Taleb

My biggest problem with the educational system lies precisely in that it forces students to squeeze explanations out of subject matters and shames them for withholding judgment, for uttering the “I don’t know.”

Do not allow yourself to be forced into giving an causal explanation. Use the "I don't know" argument as often as possible. "What do you think about how Trump handled COVID?" "I don't know. Maybe he could have done better, maybe he could have done worse. It's not my job to know."

In each of these examples, we are taking a condition, survival, and looking for the explanations, instead of flipping the argument on its head and stating that conditional on such survival,

We miss SILENT EVIDENCE when we take SURVIVAL AS A CONDITION. Why did these people survive the plague? Answer: I DON'T KNOW. Maybe most others who did exactly as they did didn't survive.

But have the integrity to deliver your “because” very sparingly; try to limit it to situations where the “because” is derived from experiments, not backward-looking history.

Unless you have done experiments using THE SCIENTIFIC METHOD, any causal link you claim is without merit. Use the I DON'T KNOW argument instead. Why? Because you really don't know.

All I am saying is that it is not so simple; be suspicious of the “because” and handle it with care—particularly in situations where you suspect silent evidence.

I said earlier that our perceptual system may not react to what does not lie in front of our eyes, or what does not arouse our emotional attention.

We are not conditioned to look for SILENT EVIDENCE. When we do look, others will perceive us as negative and fearful.

We are made to be superficial, to heed what we see and not heed what does not vividly come to mind.

SEE IN OUR MIND what WE SEE WITH OUR EYES. SILENT EVIDENCE does not come into existence because of things we see with our eyes. It comes into existence like fairies. Huh? Yeah, that's right. They may not even exist in our imagination. This is one of PLATO's levels of existence. However, the POSSIBILITY OF FAIRIES can make us act as if there really are fairies. We need to make an effort to imagine silent evidence. It exists, but there may be no written records. For instance, the people up the hill live in expensive houses, drive expensive cars and have lots of expensive things. That's the river we see on the surfice. It may be placid on top, but have an undercurrent of fear of loss. In bad cases, all those things may have been "paid for" with loans. If the person loses their job, or even experiences a loss of hours, everything can be destroyed. The STAY AT HOME for COVID-19 happened suddenly. Not instantaneiously. We figured out it was going to happen about a month before. Because of the possibility it could happen, we stockpiled TOILET PAPER and non-perishable food. Rice, oatmeal, Ramen noodles, canned vegetable. etc. Therefore, we didn't have any hardship. There were preparations not readily visible. I spent the last year paying off all my credit card debt. Now, my retirement and social security easily pays my bills with enough left over to buy too many books. Some people were suddenly put into a disasterious position, but I don't see evidence of that. I know people are losing work because people aren't going places. Why don't we see news on people being financially crushed? The SILENT EVIDENCE is there in short articles. Perhaps, it's SO PERVASIVE nobody wants to talk about it.

Silent evidence can actually bias matters to look less stable and riskier than they actually are. Take cancer. We are in the habit of counting survival rates from diagnosed cancer cases—which should overestimate the danger from cancer.

Uncovering silent evidence can actually make things seem more dangerious than they already are. For instance, and I don't know if this is true, someone might point out that more people are getting cancer than ever before. Well, there are more people. No, I mean the cancer rate is getting higher. Prove it, I say. Let's say they prove it by referencing a website. But what about the test? The more sensitive the imaging the more cancer you will find. Maybe the rate of cancer isn't going up. Maybe the diagnosis rate is going up. Many people get diagnosed while the tumer tiny. They will never live long enough for the tumor to get big enough to harm them. As an investment advisor, I pointed out that INFLATION put their SAFE PORTFOLIO at GREAT RISK. This was while a person was young. As they got OLDER, there wasn't enough time for INFLATION to hurt them badly. However, AN ILL-TIMED MARKET CRASH could affect them. I'd also point out that interest rates being cut in half is the same as LOSING HALF THEIR MONEY. We had no choice but to take risk. The question was, "Which risk did we want to take?"

THE LUDIC FALLACY, OR THE UNCERTAINTY OF THE NERD

A LUDIC FALLACY is the ASSUMPTION that reality will follow the rules of any games we set up to test it.

It is remarkable how his self-control and personal discipline, otherwise admirable, fail to apply to his waistline.

My sister was talking about a woman like this last night. She is overweight, but she is very smart with things not concerning weight. Why can't she figure out what a good diet is? I pointed out that it may be because there is so much bad information out there that there is nothing to point her to the good information. I've found diet to be a taboo subject. Everyone believes their expert. I find those who can't lose weight have the strongest opinions about how to do it. It's like me saying, "Train without pain. No pain, more gain, etc. Fix your knew by extended rest" "What do you know about plantar faciatis?" "I know enough not to get it or to fix it in the early stages." Never ask a person with a chronic disease how to cure that disease. Well, this runs into all sorts of empathy problems. I'm not saying don't give a hand to pull someone up.

All the while an employee, he started acquiring property in bankruptcy proceedings, buying it from financial institutions. His big insight is that bank employees who sell you a house that’s not theirs just don’t care as much as the owners;

Tony has this remarkable habit of trying to make a buck effortlessly, just for entertainment, without straining, without office work, without meeting, just by melding his deals into his private life. Tony’s motto is “Finding who the sucker is.” Obviously, they are often the banks: “The clerks don’t care about nothing.”

Dr. John is a master of the schedule; he is as predictable as a clock.

John meticulously packs his sandwich every morning, fruit salad in a plastic container. As for his clothing, he also wears a suit that looks like it came from a Web catalog, except that it is quite likely that it actually did.

He takes his work seriously, so seriously that, unlike Tony, you can see a line in the sand between his working time and his leisure activities.

A nerd is simply someone who thinks exceedingly inside the box.

Some of this may have something to do with luck in outcomes, but there is this sterile and obscurantist quality that is often associated with classroom knowledge that may get in the way of understanding what’s going on in real life.

This is analogous to the DAVID STRATEGY Malcomb Gladwell described in "David and Goliath." I call it the DAVID STRATEGY. The DAVID STRATEGY is either OUTSIDE THE BOX or REQUIRES TREMENDOUS EFFORT or both. It is a full game FULL COURT PRESS. By taking a contest outside your opponents box and into your box, you improve the odds. It's like a fighter pilot refusing to go into their opponents sweet spot of the envelope. You don't get an F-105 into a turning contest. You take it on the deck and fast.

While the problem is very general, one of its nastiest illusions is what I call the ludic fallacy—the attributes of the uncertainty we face in real life have little connection to the sterilized ones we encounter in exams and games.

LUDIC FALLACY Real life has little relationship to classroom games. Even the thought games in this book. Real life involves a real person using a real strategy that is outside the box for a real opponent. The underdog wins. So, Dr. John would win the previous thought game against Fat Tony. Why? He would think John is rigged after 999 days and bet against getting his head chopped off on the thousandth day.

An assistant secretary of defense was among us, but had I not known his profession I would have thought he was a practitioner of skeptical empiricism.

I came out of the meeting realizing that only military people deal with randomness with genuine, introspective intellectual honesty—unlike academics and corporate executives using other people’s money.

Indeed, for many, the successful defense policy is the one that manages to eliminate potential dangers without war, such as the strategy of bankrupting the Russians through the escalation in defense spending.

Ok, let's look at TRUMP in 2020. He is getting CONSTANT MEDIA ATTENTION from the CORONA VIRUS. The election is in NOVEMBER, less than six-months away Today, Trump presented OPERATION WARP SPEED. A way to maybe get a vaccine by the end of the year. He can't lose. If he gets it, he wins. The Democrats will be negative and in the position of opposing the effort. During the news conference, TRUMP WAS EXCITED AND FLUENT. Lots of good motivating rah, rah, rah words. So were the other people. The press didn't even ask many nasty questions. OUT OF THE BOX and demanding EXTRAORDINARY EFFORT. It may be a DAVID STRATEGY. I hope it works. I'm certainly not going to bet against it.

Military people can understand such things, and the idea became recently prevalent in military circles with the expression unknown unknown (as opposed to the known unknown).

ludic fallacy.

The military calls a BLACK SWAN and UNKNOWN UNKNOWN. Now, here is one. Those little boats the Iranians have in the Gulf supposedly have three cruise missiles apiece on them. There are enough of them to overwhelm the defenses of several U.S. naval ships. This was gamed in an exercise related in the book "Blink" (I think.) The point is A LUDIC FALLACY is one where real life doesn't parallel the classroom game. What if you sent one plane against high value targets and three against low value targets? Or, what if we just let COVID run? That makes OPERATION WARP SPEED'S success imperative.

What is the ludic fallacy? Ludic comes from ludus, Latin for games.

They are taking money to help people losing their jobs because of COVID. Where is it coming from? Probably from people who need it equally badly. Those who failed to save a rainy day fund should experience the rain. They shouldn't get to force those who saved to buy them an umbrella. Expressing this opinion can make a person quite unpopular. However, some measure of this opinion is important. Otherwise, gains will be privatized and losses will be socialized.

In real life you do not know the odds; you need to discover them, and the sources of uncertainty are not defined.

This is an important point. In real life, you do not know the odds. You need to discover them. MUNICIPALIZE THE ELECTRIC COMPANY. That was our city's plan. Thank goodness it was voted down. If it went well, they would have taken part of the money to support additional projects. If it went poorly, they would have increased taxes and then took more money when it went well again. It would have been a money pit for the consumer.

Had he taken economic or financial risks he would have realized that these “computable” risks are largely absent from real life!

OPEN-END GOALS AND CLOSED-END EFFORT This became apparent to me when prospecting as a financial advisor and when writing books. It's easy to predict the level of succes. It's harder to be right. I did better as a financial advisor as I had some data to work from. Trump is crazy to predict a success time for OPERATION WARP SPEED except as a motivator. He did hedge it a bit later in the conference, but nobody will remeber that. So, SET THE GOAL ONCE, then CONTINUOUSLY FOCUS ON THE EFFORT. For instance, in the case of the group of 12-year old girls who knew little about basketball, they FOCUSED ON THE FULL COURT PRESS and went to nationals. I'm in a READING FULL COURT PRESS. And also a WRITING FULL COURT PRESS. I don't have a goal for the number of books to read this year. I'll just keep my head down and PRESS, PRESS, PRESS. This is the DAVID STRATEGY. Now, I did set a goal of 36 books for the year. How would an outsider calculate the odds of me doing it? They would do a gausian estimate and on the whole, they would be OK for the group. My odds aren't published anywhere. I may be seen as an outlier or average. What won't be measured is the level of knowledge I gain by the FULL COURT PRESS.

college students are taught under the subject of chance and came out horrified; they were brainwashed with this ludic fallacy and the outlandish bell curve.

Those who are calculating the probability of success for OPERATION WARP SPEED are discounting the concept that those working on it may be FULLY COMMITTED TO SUCCESS. TRUMP needs to imitate CHARLES SCHABB with Pittsburgh? Steel. He would FIRE ANYONE WHO WASN'T SUPER MOTIVATED EVEN IF THEY WERE BETTER AT THEIR JOB. Now, do you get why Trump fires so many people? He doesn't want people less enthused than he is. Excitement brings success. Or glorious failure.

Excellent book perhaps, but like all other modern books it is grounded in the ludic fallacy.

He teaches us the art of doubting, how to position ourselves between doubting and believing. He writes: “One needs to exit doubt in order to produce science—but few people heed the importance of not exiting from it prematurely.

Furthermore, just as we tend to underestimate the role of luck in life in general, we tend to overestimate it in games of chance.

One does not need heavy training in probability theory to understand that the casino was sufficiently diversified across the different tables to not have to worry about taking a hit from an extremely lucky gambler

For it turned out that the four largest losses incurred or narrowly avoided by the casino fell completely outside their sophisticated models.

The casino spent hundreds of millions of dollars on gambling theory and high-tech surveillance while the bulk of their risks came from outside their models.

People learn about gambling theory by studying casino games. Yet, casinos got big losses by a tiger attacking its trainer, someone not filing tax forms, and a terrorist threat. The key point is the risk came FROM OUTSIDE THE MODEL.

WRAPPING UP PART ONE

The Cosmetic Rises to the Surface

wit. I jumped out of bed with the following idea: the cosmetic and the Platonic rise naturally to the surface.

Platonic is ACADEMIC DISCUSSION that does NOT lead to PRACTICAL ACTION.

This is also the problem of silent evidence. It is why we do not see Black Swans: we worry about those that happened, not those that may happen but did not. It is why we Platonify, liking known schemas and well-organized knowledge—to the point of blindness to reality.

If you want to know what I'll know in a year, you not only need a LIST OF BOOKS I'VE STUDIED, but also A LIST OF BOOK I WILL STUDY. The books on my list are hidden to the outsider. Maybe, based on the library they see, they can get a good idea of what I'll read, but there may be a BLACK SWAN BOOK? What is a BLACK SWAN BOOK? It's a book that changes the DIRECTION OF MY THINKING. The CODDLING OF THE AMERICAN MIND was such a book. I read it as a result of reading TRIGGERED by Donald Trump, Jr. NOBODY WOULD HAVE PREDICTED that I would have read a book by him. I didn't care much for Donald Trump. Now, my whole way of thinking got turned around. I don't like SOCIALISTS who want to control every DOLLAR OF MINE and every THOUGHT OF MINE. Well, they can go hug a Vermont Teddy Bear.

PLATONICFYING is similar to playing WALTER MITTY. It's discussing a situation in a classroom environment in a way that doesn't produce executible solutions.

Most of all we favor the narrated.

Randomness and uncertainty are abstractions. We respect what has happened, ignoring what could have happened.

People are uncomfortable with ABSTRACTIONS. We look at what HAS HAPPENED and fail to look at WHAT COULD HAVE HAPPENED. We love what is NARRATED, even though THE NARRATION IS FALSE.

In the same way, beaming light on the unseen is costly in both computational and mental effort.

I've found that when another person forms an opinion based on a A MULTIPLICITY of HEADLINES, it's impossible to get them to READ THE TEXT. Everytime I point out what the article said, or why it's OBVIOUSLY FALSE, they change the subject. THERE IS NO POINT IN DEBATING A HEADLINER. THEY DON'T DIG.

Distance from Primates

a gentleman’s life was practiced through idleness and a code of behavior that included, along with a set of manners, the avoidance of work beyond the necessities of comfortable subsistence.

All of these distinctions aim at lengthening the distance between us and our relatives among other primates.

All SOCIAL DISTINCTIONS serve to increase the GAP BETWEEN PEOPLE. This is a good thing. There are many people I don't want to associate with.

I propose that if you want a simple step to a higher form of

life, as distant from the animal as you can get, then you may have to denarrate, that is, shut down the television set, minimize time spent reading newspapers, ignore the blogs. Train your reasoning abilities to control your decisions; nudge System 1 (the heuristic or experiential system) out of the important ones. Train yourself to spot the difference between the sensational and the empirical.

If one wants to distance themselves from DIGITAL INANITY, on must practice DIGITAL MINIMALISM. This is harder than it sounds. I'll have to work on it harder. Learn to avoid WORLDLY TOXICITY. Avoid tunneling. Also avoid looking around too much.

This insulation from the toxicity of the world will have an additional benefit: it will improve your well-being.

Above all, learn to avoid “tunneling.”

We tend to “tunnel” while looking into the future, making it business as usual, Black Swan–free, when in fact there is nothing usual about the future.

When we look into the future, we tend to make it a logical extension of the present. We get BETTER HORSES instead of NEW CARS. What if COVID makes classroom environment impossible. What if students REFUSE COMPUTER LEARNING. What would happen if there WAS NO SCHOOL? Could people possibly be dumber than many are now? Or would they be forced to learn to exist in the world.