The Black Swan: The Impact of the Highly Improbable (Incerto, #2)

by Nassim Nicholas Taleb

Once again, I am not saying that we need to stop globalization and prevent travel. We just need to be aware of the side effects, the trade-offs—and few people are. I see the risks of a very strange acute virus spreading throughout the planet.

Functional redundancy, studied by biologists, is as follows: unlike organ redundancy—the availability of spare parts, where the same function can be performed by identical elements—very often the same function can be performed by two different structures. Sometimes the term degeneracy is used (by Gerald Edelman and Joseph Gally).

So when you have a lot of functional redundancies, randomness helps on balance, but under one condition—that you can benefit from the randomness more than you can be hurt by it (an argument I call more technically convexity to uncertainty). This is certainly the case with many engineering applications, in which tools emerge from other tools.

The corollary is obvious: since there is nothing new about the crisis of 2008, we will not learn from it and we will make the same mistake in the future. And the evidence is there at the time of writing: the IMF continues to issue forecasts (not realizing that previous ones did not work and that the poor suckers relying on them are—once again—going to get in trouble); economics professors still use the Gaussian; the current administration is populated with those who are bringing model error into industrial proportion, making us rely on models even more than ever before.

I then discovered to my great shame the following. I had spent my life thinking about randomness; I had written three books on dealing with randomness (one technical); I was prancing about as the expert in the subject of randomness from mathematics to psychology. And I had missed something central: living organisms (whether the human body or the economy) need variability and randomness. What’s more, they need the Extremistan type of variability, certain extreme stressors. Otherwise they become fragile.

Organisms need, to use the metaphor of Marcus Aurelius, to turn obstacles into fuel—just as fire does.

If you deprive an organism of stressors, you affect its epigenetics and gene expression—some genes are up-regulated (or down-regulated) by contact with the environment. A person who does not face stressors will not survive should he encounter them. Just consider what happens to someone’s strength after he spends a year in bed, or someone who grows up in a sterile environment and then one day takes the Tokyo subway, where riders are squeezed like sardines.

Not understanding that doing nothing can be much more preferable to doing something potentially harmful. (Mistake made by most people who are not grandmothers.)

The more remote the event, the less we can get empirical data (assuming generously that the future will resemble the past) and the more we need to rely on theory

Things that have worked for a long time are preferable—they are more likely to have reached their ergodic states. At the worst, we don’t know how long they’ll last.

Seneca is the one who (with some help from Cicero) taught Montaigne that to philosophize is to learn how to die. Seneca is the one who taught Nietzsche the amor fati, “love fate,” which prompted Nietzsche to just shrug and ignore adversity, mistreatment by his critics, and his disease, to the point of being bored by them.

For Seneca, Stoicism is about dealing with loss, and finding ways to overcome our loss aversion—how to become less dependent on what you have. Recall the “prospect theory” of Danny Kahneman and his colleagues: if I gave you a nice house and a Lamborghini, put a million dollars in your bank account, and provided you with a social network, then, a few months later, took everything away, you would be much worse off than if nothing had happened in the first place.

In other words, nothing that might be taken from him did he consider to be a good

Which includes one’s own life. Seneca’s readiness to lose everything extended to his own life. Suspected of partaking in a conspiracy, he was asked by the emperor Nero to commit suicide. The record says that he executed his own suicide in an exemplary way, unperturbed, as if he had prepared for it every day.

Seneca ended his essays (written in the epistolary form) with vale, often mistranslated as “farewell.” It has the same root as “value” and “valor” and means both “be...