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November 9 - November 29, 2018
post bellum auxilium, sending troops after the battle.
T
In the United States, we burn twelve calories in transportation for every calorie of nutrition; in Soviet Russia, it was one to one.
I ran to the podium and told the audience that the next time someone in a suit and tie gave them projections for some dates in the future, they should ask him to show what he had projected in the past—in this case, what he had been forecasting for 2008 and 2009 (the crisis years) two to five years earlier, in 2004, 2005, 2006, and 2007. They
There are ample empirical findings to the effect that providing someone with a random numerical forecast increases his risk taking, even if the person knows the projections are random.
you do not need to predict much, unlike those who are in the opposite situation, namely, in debt. Those, because of their fragility, need to predict with more, a lot more, accuracy.
Not seeing a tsunami or an economic event coming is excusable; building something fragile to them is not.
the more intelligent (and practical) action is to make the world greed-proof, or even hopefully make society benefit from the greed and other perceived defects of the human race.
Social, economic, and cultural life lie in the Black Swan domain, physical life much less so. Further, the idea is to separate domains into those in which these Black Swans are both unpredictable and consequential, and those in which rare events are of no serious concern, either because they are predictable or because they are inconsequential.
Now, what is worse, because of modernity, the share of Extremistan is increasing. Winner-take-all effects are worsening: success for an author, a company, an idea, a musician, an athlete is planetary, or nothing.
Warren Buffett that he tries to invest in businesses that are “so wonderful that an idiot can run them. Because sooner or later, one will.”
As for Fat Tony, he had different allergies: the empty suit, which we speculate is someone who has a command of all the superfluous and administrative details of things but misses the essential (and isn’t even aware of it), so his conversation becomes mere chitchat around the point, never getting to the central idea.
A man is honorable in proportion to the personal risks he takes for his opinion—in other words, the amount of downside he is exposed to.
You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble, perhaps even go bust. Why? Someone who predicts will be fragile to prediction errors. An overconfident pilot will eventually crash the plane. And numerical prediction leads people to take more risks.
Fat Tony’s model is quite simple. He identifies fragilities, makes a bet on the collapse of the fragile unit, lectures Nero and trades insults with him about sociocultural matters, reacts to Nero’s jabs at New Jersey life, collects big after the collapse. Then he has lunch.
My point is that wisdom in decision making is vastly more important—not just practically, but philosophically—than knowledge.
And the key phrase reverberating in Seneca’s oeuvre is nihil perditi, “I lost nothing,” after an adverse event. Stoicism makes you desire the challenge of a calamity. And Stoics look down on luxury: about a fellow who led a lavish life, Seneca wrote: “He is in debt, whether he borrowed from another person or from fortune.”
Seneca’s version of that Stoicism is antifragility from fate. No downside from Lady Fortuna, plenty of upside.
Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.
When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat.
“Men feel the good less intensely than the bad”
Likewise, when I was a trader, a profession rife with a high dose of randomness, with continuous psychological harm that drills deep into one’s soul, I would go through the mental exercise of assuming every morning that the worst possible thing had actually happened—the rest of the day would be a bonus.
Stoicism is about the domestication, not necessarily the elimination, of emotions. It is not about turning humans into vegetables. My idea of the modern Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.
He said that wealth is the slave of the wise man and master of the fool.
To see why asymmetric payoffs like volatility, just consider that if you have less to lose than to gain, more upside than downside, then you like volatility (it will, on balance, bring benefits), and you are also antifragile.
Fragility implies more to lose than to gain, equals more downside than upside, equals (unfavorable) asymmetry and Antifragility implies more to gain than to lose, equals more upside than downside, equals (favorable) asymmetry
The first step toward antifragility consists in first decreasing downside, rather than increasing upside; that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself.
As to growth in GDP (gross domestic product), it can be obtained very easily by loading future generations with debt—and the future economy may collapse upon the need to repay such debt.
For antifragility is the combination aggressiveness plus paranoia—clip your downside, protect yourself from extreme harm, and let the upside, the positive Black Swans, take care of itself.
more upside than downside can come simply from the reduction of extreme downside (emotional harm) rather than improving things in the middle.
Females in the animal kingdom, in some monogamous species (which include humans), tend to marry the equivalent of the accountant, or, even more colorless, the economist, someone stable who can provide, and once in a while they cheat with the aggressive alpha, the rock star, as part of a dual strategy.
Yiddish proverb that says “Provide for the worst; the best can take care of itself.”
say, the anxiety-free profession of civil servant, with few intellectual demands and high job security, the kind of low-risk job that ceases to exist when you leave the office, then spend their spare time writing, free to write whatever they want, under their own standards.
Many of the “doers” turned “thinkers” like Montaigne have done a serial barbell: pure action, then pure reflection.
So take for now that a barbell strategy with respect to randomness results in achieving antifragility thanks to the mitigation of fragility, the clipping of downside risks of harm—reduced pain from adverse events, while keeping the benefits of potential gains.
So just as Stoicism is the domestication, not the elimination, of emotions, so is the barbell a domestication, not the elimination, of uncertainty.
The rational flâneur is someone who, unlike a tourist, makes a decision at every step to revise his schedule, so he can imbibe things based on new information,
Now a warning: the opportunism of the flâneur is great in life and business—but not in personal life and matters that involve others.
The worst side effect of wealth is the social associations it forces on its victims, as people with big houses tend to end up socializing with other people with big houses.
The option is an agent of antifragility.
Financial independence, when used intelligently, can make you robust; it gives you options and allows you to make the right choices. Freedom is the ultimate option.
Sour grapes—as in Aesop’s fable—is when someone convinces himself that the grapes he cannot reach are sour.
The “tails” of the distribution on the higher end of the income brackets, the extreme, are much more determined by changes in inequality than changes in the average. It gains from dispersion, hence is antifragile.
Harvard’s former president Larry Summers got in trouble (clumsily) explaining a version of the point and lost his job in the aftermath of the uproar. He was trying to say that males and females have equal intelligence, but the male population has more variations and dispersion (hence volatility), with more highly unintelligent men, and more highly intelligent ones. For Summers, this explained why men were overrepresented in the scientific and intellectual community (and also why men were overrepresented in jails or failures). The number of successful scientists depends on the “tails,” the
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Option = asymmetry + rationality
Risk taking ain’t gambling, and optionality ain’t lottery tickets.
But the largest generators of wealth in America historically have been, first, real estate (investors have the option at the expense of the banks), and, second, technology (which relies almost completely on trial and error). Further, businesses with negative optionality (that is, the opposite of having optionality) such as banking have had a horrible performance through history: banks lose periodically every penny made in their history thanks to blowups. But these are all dwarfed
suppose that the main benefit of being rich (over just being independent) is to be able to despise rich people (a good concentration of whom you find in glitzy ski resorts) without any sour grapes. It is even sweeter when these farts don’t know that you are richer than they are. 2 We will use nature as a model to show how its operational
We talk big but hardly have any imagination, except for a few visionaries who seem to recognize the optionality of things. We need some randomness to help us out—with a double dose of antifragility. For randomness plays a role at two levels: the invention and the implementation. The first point is not overly surprising, though we play down the role of chance, especially when it comes to our own discoveries.
Academia → Applied Science and Technology → Practice
