Antifragile: Things That Gain From Disorder (Incerto, #4)

by Nassim Nicholas Taleb

It is far easier to figure out if something is fragile than to predict the occurrence of an event that may harm it. Fragility can be measured; risk is not measurable

The chief ethical rule is the following: Thou shalt not have antifragility at the expense of the fragility of others.

Life is more, a lot more, labyrinthine than shown in our memory—our minds are in the business of turning history into something smooth and linear, which makes us underestimate randomness. But when we see it, we fear it and overreact. Because of this fear and thirst for order, some human systems, by disrupting the invisible or not so visible logic of things, tend to be exposed to harm from Black Swans and almost never get any benefit. You get pseudo-order when you seek order; you only get a measure of order and control when you embrace randomness.

You cannot say with any reliability that a certain remote event or shock is more likely than another (unless you enjoy deceiving yourself), but you can state with a lot more confidence that an object or a structure is more fragile than another should a certain event happen.

as a consequence, we don’t quite know what’s going on, particularly under severe nonlinearities;

Modernity has replaced ethics with legalese, and the law can be gamed with a good lawyer.

Compromising is condoning. The only modern dictum I follow is one by George Santayana: A man is morally free when … he judges the world, and judges other men, with uncompromising sincerity. This is not just an aim but an obligation.

Logical statements, or those backed by mathematical reasoning, on the other hand, do not require such a mechanism: they can and must stand on their own legs.

careerism (the debasing of knowledge by turning it into a competitive sport),

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.

Commerce, business, Levantine souks (though not large-scale markets and corporations) are activities and places that bring out the best in people, making most of them forgiving, honest, loving, trusting, and open-minded. As a member of the Christian minority in the Near East, I can vouch that commerce, particularly small commerce, is the door to tolerance—the only door, in my opinion, to any form of tolerance. It beats rationalizations and lectures. Like antifragile tinkering, mistakes are small and rapidly forgotten.

The Procrustean bed in life consists precisely in simplifying the nonlinear and making it linear—the simplification that distorts.

In spite of what is studied in business schools concerning “economies of scale,” size hurts you at times of stress; it is not a good idea to be large during difficult times.

It is completely wrong to use the calculus of benefits without including the probability of failure.2

indirect costs multiply, causing chains, explosive chains of interactions, all going in the same direction of more costs, not less.

Global disaster costs are today more than three times what they were in the 1980s, adjusting for inflation.

Interesting mechanism to explain the insurance crisis unfolding in Florida

The economy can get more and more “efficient,” but fragility is causing the costs of errors to be higher.

regulating the concentration effects.

This is an important idea. Efficiencies of scale are concave, and the search for wisdom in family affairs must include a strong sense of how much is enough to thrive, and then ensure antifragility

We are prone to make more severe errors because we are simply wealthier.

Even at an individual level, wealth means more headaches; we may need to work harder at mitigating the complications arising from wealth than we do at acquiring it.

“small” here means the smallest possible unit for a given function or task that can operate with a certain level of efficiency.

When I was in the transaction business, I used to make plenty of errors of execution. You buy one thousand units and in fact you discover the next day that you bought two thousand.

we can classify things by three simple distinctions: things that, in the long run, like disturbances (or errors), things that are neutral to them, and those that dislike them.

There seems to be a survival advantage to small or medium-sized owner-operated or family-owned companies.

people use public office to, at some point, legally profit from the public.

First, the more complicated the regulation, the more prone to arbitrages by insiders. This is another argument in favor of heuristics. Twenty-three hundred pages of regulation—something I can replace with Hammurabi’s rule—will be a gold mine for former regulators. The incentive of a regulator is to have complex regulation. Again, the insiders are the enemies of the less-is-more rule. Second, the difference between the letter and the spirit of regulation is harder to detect in a complex system. The point is technical, but complex environments with nonlinearities are easier to game than linear ones with a small number of variables. The same applies to the gap between the legal and the ethical. Third, in African countries, government officials get explicit bribes. In the United States they have the implicit, never mentioned, promise to go work for a bank at a later date with a sinecure offering, say $5 million a year, if they are seen favorably by the industry. And the “regulations” of such activities are easily skirted.