Snippets from Antifragile by N.N. Taleb. #1

Antifragile is by far one the best book I’ve read in 2019. Here are some amazing snippets –

  • antifragility is fragility with a negative sign in front of it
  • Sophistication, a certain brand of sophistication, also brings fragility to Black Swans: as societies gain in complexity, with more and more “cutting edge” sophistication in them, and more and more specialization, they become increasingly vulnerable to collapse.
  • To counter success, you need a high offsetting dose of robustness, even high doses of antifragility.
  • How do you innovate? First, try to get in trouble. I mean serious, but not terminal, trouble. I hold—it is beyond speculation, rather a conviction—that innovation and sophistication spark from initial situations of necessity, in ways that go far beyond the satisfaction of such necessity (from the unintended side effects of, say, an initial invention or attempt at invention).
  • The excess energy released from overreaction to setbacks is what innovates!

This message from the ancients is vastly deeper than it seems. It contradicts modern methods and ideas of innovation and progress on many levels, as we tend to think that innovation comes from bureaucratic funding, through planning, or by putting people through a Harvard Business School class by one Highly Decorated Professor of Innovation and Entrepreneurship (who never innovate
d anything) or hiring a consultant (who never innovated anything). This is a fallacy—note for now the disproportionate contribution of uneducated technicians and entrepreneurs to various technological leaps, from the Industrial Revolution to the emergence of Silicon Valley, and you will see what I mean.

  • The world as a whole has never been richer, and it has never been more heavily in debt, living off borrowed money. Abundance is harder for us to handle than scarcity.
  • When I was a pit trader (one of those crazy people who stand in a crowded arena shouting and screaming in a continuous auction), I learned that the noise produced by the person is inverse to the pecking order: as with mafia dons, the most powerful traders were the least audible. One should have enough self-control to make the audience work hard to listen, which causes them to switch into intellectual overdrive.
  • Redundancy is ambiguous because it seems like a waste if nothing unusual happens. Except that something unusual happens—usually.

Some jobs and professions are fragile to reputational harm, something that in the age of the Internet cannot possibly be controlled—these jobs aren’t worth having. You do not want to “control” your reputation; you won’t be able to do it by controlling information flow. Instead, focus on altering your exposure, say, by putting yourself in a position impervious to reputational damage. Or even put yourself in a situation to benefit from the antifragility of information. In that sense, a writer is antifragile, but we will see later most modernistic professions are usually not.

With few exceptions, those who dress outrageously are robust or even antifragile in reputation; those clean-shaven types who dress in suits and ties are fragile to information about them.

And we are blind to this antifragility of information in even more domains. If I physically beat up a rival in an ancestral environment, I injure him, weaken him, perhaps eliminate him forever—and get some exercise in the process. If I use the mob to put a contract on his head, he is gone. But if I stage a barrage of informational attacks on websites and in journals, I may be just helping him and hurting myself.

Get another job
  • When you hear a corporation or a debt-laden government trying to “reinstill confidence” you know they are fragile, hence doomed.
  • A human body can benefit from stressors (to get stronger), but only to a point. But a dish, a car, an inanimate object will not—these may be robust but cannot be intrinsically antifragile.
  • Another way to see it: machines are harmed by low-level stressors (material fatigue), organisms are harmed by the absence of low-level stressors (hormesis).
  • The fragilista mistakes the economy for a washing machine that needs monthly maintenance, or misconstrues the properties of your body for those of a compact disc player. Adam Smith himself made the analogy of the economy as a watch or a clock that once set in motion continues on its own.
  • Ancestral life had no homework, no boss, no civil servants, no academic grades, no conversation with the dean, no consultant with an MBA, no table of procedure, no application form, no trip to New Jersey, no grammatical stickler, no conversation with someone boring you: all life was random stimuli and nothing, good or bad, ever felt like work. Dangerous, yes, but boring, never.

The fragility of every startup is necessary for the economy to be antifragile, and that’s what makes, among other things, entrepreneurship work: the fragility of individual entrepreneurs and their necessarily high failure rate.

What kills me makes others stronger
  • growth was very modest, less than 1 percent per head, throughout the golden years surrounding the Industrial Revolution, the period that propelled Europe into domination. But as low as it was, it was robust growth—unlike the current fools’ race of states shooting for growth like teenage drivers infatuated with speed.
  • If you put 90 percent of your funds in boring cash (assuming you are protected from inflation) or something called a “numeraire repository of value,” and 10 percent in very risky, maximally risky, securities, you cannot possibly lose more than 10 percent, while you are exposed to massive upside. Someone with 100 percent in so-called “medium” risk securities has a risk of total ruin from the miscomputation of risks.
  • clip your downside, protect yourself from extreme harm, and let the upside, the positive Black Swans, take care of itself.more upside than downside can come simply from the reduction of extreme downside rather than improving things in the middle.

Many people keep deploring the low level of formal education in the United States (as defined by, say, math grades). Yet these fail to realize that the new comes from here and gets imitated elsewhere. And it is not thanks to universities, which obviously claim a lot more credit than their accomplishments warrant.
Like Britain in the Industrial Revolution, America’s asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no comparative shame in failing, starting again, and repeating failure. In modern Japan, by contrast, shame comes with failure, which causes people to hide risks under the rug, financial or nuclear, making small benefits while sitting on dynamite, an attitude that strangely contrasts with their traditional respect for fallen heroes and the so-called nobility of failure.

America’s Optionality
  • This kind of sum I’ve called in my vernacular “f*** you money”—a sum large enough to get most, if not all, of the advantages of wealth (the most important one being independence and the ability to only occupy your mind with matters that interest you) but not its side effects, such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of a marble-rich house renovation.
  • Financial independence, when used intelligently, can make you robust; it gives you options and allows you to make the right choices. Freedom is the ultimate option.
  • Sour grapes—as in Aesop’s fable—is when someone convinces himself that the grapes he cannot reach are sour. The essayist Michel de Montaigne sees the Thales episode as a story of immunity to sour grapes: you need to know whether you do not like the pursuit of money and wealth because you genuinely do not like it, or because you are rationalizing your inability to be successful at it with the argument that wealth is not a good thing because it is bad for one’s digestive system or disturbing for one’s sleep or other such arguments.
Thales’ antifragility. He pays little to get a huge potential. We can see the asymmetry between upside and downside.
  • Beyond books, consider this simple heuristic: your work and ideas, whether in politics, the arts, or other domains, are antifragile if, instead of having one hundred percent of the people finding your mission acceptable or mildly commendable, you are better off having a high percentage of people disliking you and your message (even intensely), combined with a low percentage of extremely loyal and enthusiastic supporters. Options like dispersion of outcomes and don’t care about the average too much.
  • Steve Jobs at a famous speech: “Stay hungry, stay foolish.” He probably meant “Be crazy but retain the rationality of choosing the upper bound when you see it.”
  • To crystallize, take this description of an option: Option = asymmetry + rationality

If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often.

How to be stupid
A central feature of positive Black Swans: the gains are unbounded (unlike a lottery ticket), or, rather, with an unknown limit; but the losses from errors are limited and known.
  • We use randomness to spoon-feed us with discoveries—which is why antifragility is necessary.
  • steam engine: the Greeks had an operating version of it, for amusement, of course: the aeolipyle, a turbine that spins when heated, as described by Hero of Alexandria. But it took the Industrial Revolution for us to discover this earlier discovery.
  • The Half-Invented. For there is a category of things that we can call half-invented, and taking the half-invented into the invented is often the real breakthrough.
  • For instance, take the computer mouse, or what is called the graphical interface: it took Steve Jobs to put it on your desk, then laptop—only he had a vision of the dialectic between images and humans—later adding sounds to a trilectic. The things, as they say, that are “staring at us.”

Just as great geniuses invent their predecessors, practical innovations create their theoretical ancestry.

  • Serious empirical investigation (largely thanks to one Lant Pritchet, then a World Bank economist) shows no evidence that raising the general level of education raises income at the level of a country. But we know the opposite is true, that wealth leads to the rise of education—not an optical illusion.
  • I am not saying that for an individual, education is useless: it builds helpful credentials for one’s own career—but such effect washes out at the country level. Education stabilizes the income of families across generations.
  • the skepticism in this discussion applies to the brand of commoditized, prepackaged, and pink-coated knowledge, stuff one can buy in the open market and use for self-promotion. Further, let me remind the reader that scholarship and organized education are not the same.
  • classroom education does not lead to wealth as much as it comes from wealth (an epiphenomenon).

Wealth and Economic Growth → Education

America’s values were “convex” risk taking and that I am glad that we are not like these helicopter-mom cultures

  • My experience of good practitioners is that they can be totally incomprehensible—they do not have to put much energy into turning their insights and internal coherence into elegant style and narratives. Entrepreneurs are selected to be just doers, not thinkers, and doers do, they don’t talk, and it would be unfair, wrong, and downright insulting to measure them in the talk department.
  • Bureaucrats, on the other hand, because of the lack of an objective metric of success and the absence of market forces, are selected on the “halo effects” of shallow looks and elegance. The side effect is to make them better at conversation.

My first conversation with an expert was with a fellow called B. Something-that-ends-with-a-vowel dressed in a handmade Brioni suit. I was told that he was the biggest Swiss franc trader in the world, a legend in his day—he had predicted the big dollar collapse in the 1980s and controlled huge positions. But a short conversation with him revealed that he could not place Switzerland on the map—foolish as I was, I thought he was Swiss Italian, yet he did not know there were Italian-speaking people in Switzerland. He had never been there. When I saw that he was not the exception, I started freaking out watching all these years of education evaporating in front of my eyes. That very same day I stopped reading economic reports. I felt nauseous for a while during this enterprise of “deintellectualization”—in fact I may not have recovered yet.

  • People with too much smoke and complicated tricks and methods in their brains start missing elementary, very elementary things. Persons in the real world can’t afford to miss these things; otherwise they crash the plane. Unlike researchers, they were selected for survival, not complications.
  • “In theory there is no difference between theory and practice; in practice there is.” – Yogi Berra

I have seen evidence—as an eyewitness—of results that owe nothing to academizing science, rather evolutionary tinkering that was dressed up and claimed to have come from academia.

Practitioners don’t write; they do. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is truly written by losers with time on their hands and a protected academic position.

History written by losers
  • Traders trade → traders figure out techniques and products → academic economists find formulas and claim traders are using them → new traders believe academics → blowups (from theory-induced fragility)
  • No, we don’t put theories into practice. We create theories out of practice.
  • The theory is the child of the cure, not the opposite—ex cura theoria nascitur.
  • There were two main sources of technical knowledge and innovation in the nineteenth and early twentieth centuries: the hobbyist and the English rector, both of whom were generally in barbell situations.
  • As to the hobbyist in general, evidence shows him (along with the hungry adventurer and the private investor) to be at the source of the Industrial Revolution.
  • Universities prospered as a consequence of national wealth, not the other way around.

Visibly the money should go to the tinkerers, the aggressive tinkerers who you trust will milk the option.

Since you cannot forecast collaborations and cannot direct them, you cannot see where the world is going. All you can do is create an environment that facilitates these collaborations, and lay the foundation for prosperity. And, no, you cannot centralize innovations, we tried that in Russia.

Strategic planning is just superstitious babble.

  • It is not well advertised that there is no evidence that abilities in chess lead to better reasoning off the chessboard—even those who play blind chess games with an entire cohort can’t remember things outside the board better than a regular person. We accept the domain-specificity of games, the fact that they do not really train you for life, that there are severe losses in translation. But we find it hard to apply this lesson to technical skills acquired in schools, that is, to accept the crucial fact that what is picked up in the classroom stays largely in the classroom.
  • soccer moms try to eliminate the trial and error, the antifragility, from children’s lives, move them away from the ecological and transform them into nerds working on preexisting (soccer-mom-compatible) maps of reality. Good students, but nerds—that is, they are like computers except slower.

I believe that one can be an intellectual without being a nerd, provided one has a private library instead of a classroom, and spends time as an aimless (but rational) flâneur benefiting from what randomness can give us inside and outside the library.

Consider the difference between lions in the wild and those in captivity. Lions in captivity live longer; they are technically richer, and they are guaranteed job security for life, if these are the criteria you are focusing on …

  • The trick is to be bored with a specific book, rather than with the act of reading. So the number of pages absorbed could grow faster than otherwise. And you find gold, so to speak, effortlessly, just as in rational but undirected trial-and-error-based research. It is exactly like options, trial and error, not getting stuck, bifurcating when necessary but keeping a sense of broad freedom and opportunism. Trial and error is freedom.
  • Had I studied the subject by prepackaged means, I would be now brainwashed into thinking that uncertainty was something to be found in a casino, that kind of thing. There is such a thing as nonnerdy applied mathematics: find a problem first, and figure out the math that works for it (just as one acquires language), rather than study in a vacuum through theorems and artificial examples, then change reality to make it look like these examples.
  • Much of what other people know isn’t worth knowing
  • But there is something central in following one’s own direction in the selection of readings: what I was given to study in school I have forgotten; what I decided to read on my own, I still remember.

Avoidance of boredom is the only worthy mode of action. Life otherwise is not worth living.