Japanese children being checked for radiation, March 2011

Experts know nothing of future Black Swans

TO SURVIVE and thrive in an uncertain world, you need to be familar with Black Swans. These refer to major disasters that no one, not even so-called experts, could have predicted.

The 21st Century has seen a deluge of Black Swans, from the September 11, 2000 destruction of New York’s World Trade Centre to the destruction and radiation leak at Japan’s Fukishima Daiichi nuclear power plant in March 2011.

The ongoing Black Swan is the Arab Spring that is still being played out in front of our eyes. It began with the police torture and suicide of a young man selling fruits by the roadside in Tunisia in December 2010, and resulted in the collapse of the decades-old murderous regimes in Tunisia, Egypt and Libya. It’s only a matter of time before the regimes in Yemen and Syria collapsed.

Nassim Nicholas Taleb, the writer who first talked about Black Swans, explains the idea the New York Times (April 22, 2007):

What we call here a Black Swan is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

I stop and summarise the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explains almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.

In his book, The Black Swan, the Impact of the Highly Improbable, Taleb explains that in Europe in the early 17th Century, people saw and knew only swans that were white. No one then would have imagined that swans could also be black, until 1697 when they were discovered in Australia.

According to Taleb, it is impossible to predict Black Swan events based on past happenings. Neither is there any point in projecting the future on the assumption that similar events have taken place.

Excerpts from The Black Swan:

When I ask people to name three recently implemented technologies that most impact our world today, they usually propose the computer, the Internet and the laser. All three were unplanned, unpredicted, and unappreciated upon their discovery, and remained unappreciated well after their initial use. They were consequential. They were Black Swans. Of course, we have this retrospective illusion of their partaking in some master plan. You can create your own lists with similar results, whether you use political events, wars, or intellectual epidemics.

You would expect our record of prediction to be horrible: the world is far, far more complicated than we think, which is not a problem, except when most of us don’t know it. We tend to “tunnel” while looking into the future, making it business as usual, Black Swan-free, when in fact there is nothing usual about the future.

On a personal level, Taleb gives readers this advice:

I am sometimes taken aback by how people can have a miserable day or get angry because they feel cheated by a bad meal, cold coffee, a social rebuff or a rude reception… We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance of occurrence of monstrous proportions.

Imagine a speck of dust next to a planet a billion times the size of earth. The speck of dust represents the odds in favour of your being born; the huge planet would be the odds against it. So stop sweating the small stuff. Don’t be like the ingrate who got a castle as a present and worried about the mildew in the bathroom. Stop looking at the gift horse in the mouth – remember you are a Black Swan.

Author Nassim Nicholas Taleb, previously a trader, is now Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst. His latest book, Fooled by Randomness, is a bestseller sold in 20 languages.

The Black Swan: The Impact of the Highly Improbable (366 pages), Random House (2007) – April 2012

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Japanese children being checked for radiation, March 2011