Jason's Notes

December 26 02015

The Future Has Always Been Crazier Than We Thought

Talab is tearing through the faculty of logic and theory to get at a simple truth: our minds can manufacturer endless fantasies. This is a benefit for creating and a endless pit for theorizing.

Black Swan: Event that wasn't seen coming
  1. Hard to predict based on information before it occured, (computers, Harry Potter, neck ties, World War).
  2. Low predictability and high consequence.
  3. They have retrospective predictably, but unfathomable beforehand.

Silent evidence is highlighted by historians, who don't deal imperial evidence so they can't make predictions. They need to work with real data. Neal Ferguson is such a historian. He showed the UK war bond market didn't see WWI coming. Over-causation

This personal bias is fundamental to our mental construct. Hume's Problem: domain dependent philosophers are out of touch beyond the venue of their expertise. Not recognizing their own subject in the texture of real life.

Framing is a condition where once you see something on paper you start believing in it. All statistics work like this. Once you establish a perceived pattern it is very hard to un-see. In general, the use of statistics leads to mediocrity as it smooths out all anomalies against the background. In historic research we instead see the exceptional, items not supported by statisticians because of their framing.

"Never take advice from someone wearing a suit and tie."

The notion is that a "professional" is going to profess, as that is his or her job. "Never ask a barber if you need a haircut". They will have an opinion because they want to validate their position in society. There is a critical lack of the ability to say "I don't know."

(Trungpa Rimpoche identified this as the "realm of the professional". Their key phrase: "Trust me.")

The real risk are theorist leaving their home of infinite number of possibilities and applying such mindsets to practice. Better is to practice - then theorize. Then you are working with givens and constraints.

A discipline for the professional: don't tell people what they should do, tell them what they shouldn't. Your theories are nebulous and unproven. Your mistakes are concrete lessons learned from experience. There is a survival reason to keep elders around: they remember things that actually happened and therefore draw conclusions from givens.

Conversly, don't ask what should you do, ask what you should not do.

Lebanon-born, polyglot, Nassim Nicholas Taleb is a scholar of randomness and knowledge, a mathematical finance practitioner, and author of The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness: The Hidden Role of Chance in Life and the Markets.

Nassim Nicholas Taleb's Homepage

Skeptical empiricist Nassim Taleb, author of The Black Swan: The Impact of the Highly Improbable, has bracing things to say about the future. It is inevitable that we will be massively blindsided by events, because our understanding is misled by an array of beguiling illusions about reality. Some lessons: Events are not predictable, but consequences are, so focus on preparedness. Pay attention to elders, because they've experienced more Black Swans. Check Wikipedia's bio of Taleb for more on the vividness of his ideas and exposition.

From the Long Now:

Dispatches from Extremistan

A “black swan,” Taleb explained, is an event which is 1) Hard to predict; 2) Highly consequential; 3) Wrongly retro-predicted. We pretend we know why the big event happened, and so entrench our inability to deal with the next world-changing improbable event.

Examples: Viagra, 9/11, Harry Potter, First World War, Beatles, the PC, Google, and the rise of any successful religion. History is dominated by sudden, lasting changes wrought by deeply unexpected events.

Part of the problem is that we ignore the “silent evidence” of the nonobserved and nonobservable. We compute probability from the success of survivors. No one writes or reads a book titled “How I Lost a Million Dollars.” Another problem is that we revise our own predictions and intentions unconsciously to match what actually happens. We disguise having been wrong by pretending we were right. This is “confirmation bias.”

There are TWO kinds of randomness, two realms in which events happen…

Mediocristan is dominated by the average— one new observation won’t change much. If you are measuring the weight of a large sample of humans, adding the heaviest person in the world won’t change the result, whereas measuring the average wealth of a large sample of humans would be transformed by adding the wealthiest person. Mediocristan is the realm of the Law of Large Numbers and of the Gaussian Bell Curve.

Extremistan is dominated by extremes. Every year 16,000 novels are published in English. A handful of best-sellers absolutely dominate. This is the realm of the power-law curve and the Long Tail. Extremistant defies prediction. You can say there will be a few monsters and lots of midgets and the world will be changed by the monsters, and that’s all you can say.

Benoit Mandelbrot convinced Taleb that the main dynamic of Mediocristan is energy, and the main dynamic of Extremistan is information. Anything social is Extremistan.

Thus there are two kinds of experts. A soufflé chef really is an expert and can be trusted. An economist is a pseudo-expert. “Never take advice from someone wearing a tie.” All you get from a Council of Economic Advisors is an illusion of control. Stock market analysts have proved to be worse than nothing.

Don’t focus on probability. Focus on consequences. Black Swans will come. Prepare against the negative ones; be ready to soar with the positive ones.

Pay attentive heed to tradition and old people— they have experienced more Black Swans.

PS… All of the SALT speakers perform for free. Taleb added the further generosity of insisting on paying for his travel and lodging. Extra thanks to him for that.

       --Stewart Brand