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One impossibly sunny September day in Manhattan, I was making my way to work, and—appropriately enough for a New Yorker—dropping off dress shirts. My extremely pleasant dry cleaner eschewed the usual greeting and exclaimed, "A plane has hit one of the Twin Towers." That was it. He moved on and didn't seem especially agitated. Surprised but not unduly distressed, I hopped on my bike and continued to the church office. Just another normal day.
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I'm going to assume that the day before, somewhere in the vicinity of Boston, eager hands grabbed another set of dry-cleaned clothes in preparation for a trip to Los Angeles. This customer had been getting ready for United Flight 175 and was flying overhead as I leisurely pedaled in Central Park on the way to Fifth Avenue Presbyterian Church. That 767 would collide with the South Tower. Who would have known? Who could have predicted that set of events?
Routinely we operate on the understanding that life in general and our own lives in particular are governed by the predictable, the consistent. But such was hardly the case on that beautiful September morning. In The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb makes the case that
Our world is dominated by the extreme, the unknown, and the very improbable (improbable according to our current knowledge)—and all the while we spend our time engaged in small talk, focusing on the known, and the repeated.
This emphasis on the predictable leads us to make all sorts of false assumptions, about matters large and small. Before people in the Old World encountered Australia, all swans were assumed to be white. Then they saw a black swan.
Taleb is himself an idiosyncratic character—a high-stakes trader and an autodidact with a taste for philosophy. (The Wall Street Journal says that his previous book, Fooled by Randomness, "enjoys cult status in the hedge-fund industry.") His style has the flavor of Umberto Eco and Milan Kundera: jumpy, sprightly, erudite, iconoclastic, and even somewhat cynical. The Black Swan verges on chaos at times and cries for another round of editing. But I suppose that's what I should have expected from a book which asserts that the unanticipated and discontinuous make the biggest difference in life. In other words, the book's form embodies its content.
Our perennial problem, Taleb says, is our craving for certainty. We want to be able to grasp the future and graph it on a comforting bell curve. But as Yogi Berra (a Taleb favorite) once quipped, "It is tough to make predictions, especially about the future." We never see Black Swans coming, but ex post facto, we offer intricate accounts for why they were so obvious. Using Taleb's vocabulary, we want a world that's Mild. Instead it's Wild. We want to live in Mediocristan, but we actually live in Extremistan. The former is "The province dominated by the mediocre, with few extreme successes or failures. No single observation can meaningfully affect the aggregate. The bell curve is grounded in Mediocristan." The latter is "The province where the total can be conceivably impacted by a single observation."
Taleb offers examples of both. In the land of Mediocristan are height and weight distributions, income for a dentist, and mortality rates. In Extremistan are wealth, damage caused by an earthquake, financial markets, and book sales per author. (I mention that last case because, as an author, I find it oddly reassuring.) More worthy of note is that Taleb openly admits that it was not possible to predict the stock market crash of 1987, for example, and advises us that more economic Black Swans are due in the future (and that we can potentially benefit from that fact).
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