* Antifragile_ Things That Gain From Disorde - Nassim Nicholas Taleb
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** Notes for page (41 . 4950)
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There is another issue with the abstract state, a psychological one. We humans scorn what is not concrete. We are more easily swayed by a crying baby than by thousands of people dying elsewhere that do not make it to our living room through the TV set. The one case is a tragedy, the other a statistic. Our emotional energy is blind to probability. The media make things worse as they play on our infatuation with anecdotes, our thirst for the sensational, and they cause a great deal of unfairness that way. At the present time, one person is dying of diabetes every seven seconds, but the news can only talk about victims of hurricanes with houses flying in the air.

The problem is that by creating bureaucracies, we put civil servants in a position to make decisions based on abstract and theoretical matters, with the illusion that they will be making them in a rational, accountable way.

Also consider that lobbyists—this annoying race of lobbyists—cannot exist in a municipality or small region. The Europeans, thanks to the centralization of (some) power with the European Commission in Brussels, are quickly discovering the existence of these mutants coming to manipulate democracy for the sake of some large corporation. By influencing one single decision or regulation in Brussels, a single lobbyist gets a large bang. It is a much larger payoff (at low cost) than with municipalities, which would require armies of lobbyists trying to convince people while embedded in their communities.3

Consider, too, the other effect of scale: small corporations are less likely to have lobbyists.

The same bottom-up effect applies to law. The Italian political and legal philosopher Bruno Leoni has argued in favor of the robustness of judge-based law (owing to its diversity) as compared to explicit and rigid codifications. True, the choice of a court could be a lottery—but it helps prevent large-scale mistakes.

I use the example of Switzerland to show the natural antifragility of political systems and how stability is achieved by managing noise, having a mechanism for letting it run its natural course, not by minimizing it.

Note another element of Switzerland: it is perhaps the most successful country in history, yet it has traditionally had a very low level of university education compared to the rest of the rich nations. Its system, even in banking during my days, was based on apprenticeship models, nearly vocational rather than the theoretical ones. In other words, on techne (crafts and know how), not episteme (book knowledge, know what).

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** Like in jury duty. Also, random choice, if the number is large enough, eliminates the need for elections.
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I immediately thought that perhaps the opposite parable should be written: instead of having the rulers randomize the jobs of citizens, we should have citizens randomize the jobs of rulers, naming them by raffles and removing them at random as well. That is similar to simulated annealing—and it happens to be no less effective. It turned out that the ancients—again, those ancients!—were aware of it: the members of the Athenian assemblies were chosen by lot, a method meant to protect the system from degeneracy. Luckily, this effect has been investigated with modern political systems. In a computer simulation, Alessandro Pluchino and his colleagues showed how adding a certain number of randomly selected politicians to the process can improve the functioning of the parliamentary system.

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** Notes for page (51 . 11601)
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On the other hand, social science seems to diverge from theory to theory. During
the cold war, the University of Chicago was promoting laissez-faire theories, while
the University of Moscow taught the exact opposite—but their respective physics
departments were in convergence, if not total agreement. This is the reason I put
social science theories in the left column of the Triad, as something superfragile for
real-world decisions and unusable for risk analyses. The very designation “theory” is
even upsetting. In social science we should call these constructs “chimeras” rather
than theories.
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** Notes for page (51 . 19900)
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But I also buy the opposite argument that regulating street signs does not seem to
reduce risks; drivers become more placid. Experiments show that alertness is
weakened when one relinquishes control to the system (again, lack of
overcompensation). Motorists need the stressors and tension coming from the
feeling of danger to feed their attention and risk controls, rather than some external
regulator—fewer pedestrians die jaywalking than using regulated crossings. Some
libertarians use the example of Drachten, a town in the Netherlands, in which a
dream experiment was conducted. All street signs were removed. The deregulation
led to an increase in safety, confirming the antifragility of attention at work, how it is
whetted by a sense of danger and responsibility. As a result, many German and
Dutch towns have reduced the number of street signs. We saw a version of the
Drachten effect in Chapter 2 in the discussion of the automation of planes, which
produces the exact opposite effect than what is intended by making pilots lose
alertness. But one needs to be careful not to overgeneralize the Drachten effect, as
it does not imply the effectiveness of removing all rules from society. As I said
earlier, speed on the highway responds to a different dynamic and its risks are
different.
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** Difference between Buddhism and Stoicism
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1 For those readers who wonder about the difference between Buddhism and
Stoicism, I have a simple answer. A Stoic is a Buddhist with attitude, one who says
“f*** you” to fate.
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** The economist who can provide. A joke for Nancy
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The Accountant and the Rock Star

 
Biological systems are replete with barbell strategies. Take the following mating approach, which we call the 90 percent accountant, 10 percent rock star. (I am just reporting, not condoning.) Females in the animal kingdom, in some monogamous species (which include humans), tend to marry the equivalent of the accountant, or, even more colorless, the economist, someone stable who can provide, and once in a while they cheat with the aggressive alpha, the rock star, as part of a dual strategy. They limit their downside while using extrapair copulation to get the genetic upside, or some great fun, or both. Even the timing of the cheating seems nonrandom, as it corresponds to periods with high likelihood of pregnancy. We see evidence of such a strategy with the so-called monogamous birds: they enjoy cheating, with more than a tenth of the broods coming from males other than the putative father. The phenomenon is real, but the theories around it vary. Evolutionary theorists claim that females want both economic-social stability and good genes for their children. Both cannot be always obtained from someone in the middle with all these virtues (though good gene providers, those alpha males aren’t likely to be stable, and vice versa). Why not have the pie and eat it too? Stable life and good genes. But an alternative theory may be that they just want to have pleasure—or stable life and good fun
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** On writing simply and complex
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My writing approach is as follows: on one hand a literary essay that can be grasped
by anyone and on the other technical papers, nothing in between—such as
interviews with journalists or newspaper articles or op-ed pieces, outside of the
requirements of publishers.
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** Intelligence (or luck) for starts, then robustness, then options
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The great French biologist François Jacob introduced into science the notion of
options (or option-like characteristics) in natural systems, thanks to trial and error,
under a variant called bricolage in French. Bricolage is a form of trial and error close
to tweaking, trying to make do with what you’ve got by recycling pieces that would
be otherwise wasted.
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** On the connection between education and economic growth
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Further, Alison Wolf debunks the flaw in logic in going from the point that it is hard
to imagine Microsoft or British Aerospace without advanced knowledge to the idea
that more education means more wealth. “The simple one-way relationship which so
entrances our politicians and commentators—education spending in, economic
growth out—simply doesn’t exist. Moreover, the larger and more complex the
education sector, the less obvious any links to productivity become.” And, similar to
Pritchet, she looks at countries such as, say, Egypt, and shows how the giant leap in
education it underwent did not translate into the Highly Cherished Golden GDP
Growth That Makes Countries Important or Unimportant on the Ranking Tables.
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** History is written by losers
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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.
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** Notes for page (116 . 7892)
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The number of cars is the something, a variable; traffic time is the function of something. The behavior of the function is such that it is, as we said, “not the same thing.” We can see here that the function of something becomes different from the something under nonlinearities.

 (a) The more nonlinear, the more the function of something divorces itself from the something. If traffic were linear, then there would be no difference in traffic time between the two following situations: 90,000, then 110,000 cars on the one hand, or 100,000 cars on the other.

 (b) The more volatile the something—the more uncertainty—the more the function divorces itself from the something. Let us consider the average number of cars again. The function (travel time) depends more on the volatility around the average. Things degrade if there is unevenness of distribution. For the same average you prefer to have 100,000 cars for both time periods; 80,000 then 120,000, would be even worse than 90,000 and 110,000.

 (c) If the function is convex (antifragile), then the average of the function of something is going to be higher than the function of the average of something. And the reverse when the function is concave (fragile).

 
As an example for (c), which is a more complicated version of the bias, assume that the function under question is the squaring function (multiply a number by itself). This is a convex function. Take a conventional die (six sides) and consider a payoff equal to the number it lands on, that is, you get paid a number equivalent to what the die shows—1 if it lands on 1, 2 if it lands on 2, up to 6 if it lands on 6. The square of the expected (average) payoff is then (1+2+3+4+5+6 divided by 6)2, equals 3.52, here 12.25. So the function of the average equals 12.25.

But the average of the function is as follows. Take the square of every payoff, 12+22+32+42+52+62 divided by 6, that is, the average square payoff, and you can see that the average of the function equals 15.17.

So, since squaring is a convex function, the average of the square payoff is higher than the square of the average payoff. The difference here between 15.17 and 12.25 is what I call the hidden benefit of antifragility—here, a 24 percent “edge.”

There are two biases: one elementary convexity effect, leading to mistaking the properties of the average of something (here 3.5) and those of a (convex) function of something (here 15.17), and the second, more involved, in mistaking an average of a function for the function of an average, here 15.17 for 12.25. The latter represents optionality.

Someone with a linear payoff needs to be right more than 50 percent of the time. Someone with a convex payoff, much less. The hidden benefit of antifragility is that you can guess worse than random and still end up outperforming. Here lies the power of optionality—your function of something is very convex, so you can be wrong and still do fine—the more uncertainty, the better.

This explains my statement that you can be dumb and antifragile and still do very well.

This hidden “convexity bias” comes from a mathematical property called Jensen’s inequality. This is what the common discourse on innovation is missing. If you ignore the convexity bias, you are missing a chunk of what makes the nonlinear world go round. And it is a fact that such an idea is missing from the discourse. Sorry
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** The weakest have no rights.
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For Metternich, humanity started at the rank of baron; for Aristotle, as well as, though in a separate form, the English up until the twentieth century, it started at the rank of idle freeman, unpreoccupied with work. It never meant not working; it just meant not deriving your personal and emotional identity from your work, and viewing work as something optional, more like a hobby. In a way your profession does not identify you so much as other attributes, here your birth (but it could be something else). This is the f*** you money that allowed Thales of Miletus to gauge his own sincerity. For the Spartans, it was all about courage. For Fat Tony, humanity started at the level of “self-ownership.”
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