Saturday, September 18, 2010

How not to fight, pt. II or Karate and the Attack of the Black Swans

My major hobby is teasing people who take themselves & the quality of their knowledge too seriously & those who don’t have the courage to sometimes say: I don’t know....

What I do: I am interested in a systematic program of how to live in a world we don’t understand very well –in other words, while most human thought (particularly since the enlightenment) has focused us on how to turn knowledge into decisions, I focus on how to turn lack of information, lack of understanding, and lack of “knowledge” into decisions –how not to be a “turkey”...

Nassim Nicholas Taleb

We live in an age of experts. A globalized world is a world of specialization. No point in being a good financial planner or interior decorator if the best one in the world is an email away. Seems like everyone is fighting tooth and nail to be the sole authority on something. And to ensure that you are the sole authority, that "something" has to be more and more remote, increasingly exotic and removed from our everyday experience. Which of course makes what you've master that much more irrelevant.

But we trust experts, don't we? It isn't just our daily, spoon-fed dose of intellectualism and pseudointellectualism by way of cable news punditry. Or the well-established truth that universities are bastions of knowledge and intellectual rigor. Or the fact that the captains of industry obviously made it to the top on their own merits and not through fortune or simply outlasting the competition. We want to believe that someone has the answers. Why do I love Wikipedia so much? I want to believe that its all in one place, that some expert has already answered the question before I've asked it. That the world is easy and ordered and comprehensible. It's a seductive comfort...until you discover a wiki page that is full of *gasp* INACCURACIES!!!

I've felt this strange ever-present problem with the world these last few years after university - it's like my own Matrix that I'm trying to wake up from. I suppose it really breaks down into three separate problems. First is the Authority Bias, a human trait of deferring to people based on not always rational cues of status. Second is the Hindsight Bias where the past is made to have been more predictable than it really was. And third is the Dunning–Kruger effect, where the people who don't know that they don't know are first to speak up, and the people who know what they know and know what they don't know sit patiently and swallow the shit that the first group is shoveling. Blindly trusting smart-sounding people who tell you that the world is eminently predictable when it is anything but when they should be doing more listening than talking themselves pretty much sums my attitude my world. It is a theoretical world pulled over our eyes to blind us from the truth. And it isn't their fault for talking. And we aren't wrong for listening. We just acquiesce too easily; we accept before examining the alternatives.

It isn't nihilism or an empty aphorism or a superficial solipsism to say that we underestimate greatly the significance of the unknown in general and the unexpected in particular. We really don't allow enough room for variability into our plans. There is a power there, a power in the unknown, that is formidable and to my regret has been largely abused throughout human history. Instead of inspiring and encouraging curiosity, the unknown is usually something made to fear and ignore. Instead of opening minds and setting spirits free, the unexpected closes minds and has us pointing fingers. Seems like no one is immune. But to my credit, I do distinctly remember thinking as I watched the Twin Towers come down that September 12, 2001 was going to be distinctly different from September 10th. And I remember thinking that maybe a stronger, more united world might result. I'm still waiting.

Then there's this guy Taleb and his book, The Black Swan. He seems to have put his finger right on a massive part of my Matrix that I couldn't express. It has to do with risk. And that is that the more regular and predictable and comprehensible and derivative and logical we view the world, the more vulnerable we are when the unexpected hits. The more we want to believe and the more we convince ourselves that tomorrow is accounted for, the more we open ourselves up to some serious pain when the unaccounted for arrives. He's taking aim at the cult of financial experts and economists who can use statistics and data about past performance to predict future stability right up to the moment when the global economy loses trillions of dollars in value. The best mathematical models in the world still can't imagine the unimaginable. Worse still, those that look to these models as the triumph of reason over speculation, are deceiving themselves, shareholders and the public by receiving very robust short-term compensation while the rest of us pay for their long-term lowballing of the growing risk of the next major shock to the system.

And that next shock is coming. It has to. It has to because humans are always looking for the next low-energy predictable, dependable status quo with which grand declarations like "the end of history", "they hate us because of our freedom" and "the war to end all wars" can be made. It gives a framework for us living our lives without having to think or watch our backs. But it still won't change the fact that the blow is coming from behind and it will hurt and it would probably hurt less if we acknowledged that it was coming and braced ourselves for it.

What does this have to do with Karate? Well it's an elegant analogy for martial training in general. The Black Swan is physical violence. Like the financial crisis, sure, it may only come once in a lifetime. But how significant could that one event be when set against all the years that it didn't happen - sudden, unexpected violence can literally change your life. How much then, should preparing for it be considered a hobby, even in light of the low probability? Do you consider saving for retirement a hobby? Or is it just a reasonable precaution given you might not become filthy rich? It's the ultimate low probability-high risk situation: you at gunpoint, you at knifepoint. You didn't see it coming. Did you give yourself a chance to survive it? Were you more diligent in your preparation than the experts at Bear Stearns or Lehman Brothers who were only responsible for billions of dollars and the livelihoods of thousands of families?



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