Monday, June 29, 2009

The Black Swan

The Black SwanStrange to say but I've held off writing this review.

You see, earlier this year Andrew kept telling me about this great book he was reading and how much I'd like it but I pretty much ignored him. "Yea, yea" I thought. "I'd love it. Got it."

But it wasn't until I was in the mood for something meaty that I finally caved and gave it a try and from the first page I was hooked. I found it so interesting and so "WOW!" that after I was finished I turned around right then and read it a second time, gleaning all those little kernels that I'd missed with the first passing. And yes, Andrew's found satisfaction in many "I told you so's."

I still haven't got it all down yet and could probably do with a third reading so I'm rather hesitant to review it because I most certainly won't do it justice but here goes. . . .

It's called The Black Swan: The Impact of the Highly Improbable and if you have any background in economics you'll recognize that a Black Swan is a name to describe an event that was unforeseen and rare but that had a lasting consequence. It seems that back before the world had been so thoroughly explored, Europeans believed that the only kind of swans in existence were white. The idea of a swan being black went against their concept of reality. However, once explorers reached Australia and found black swans happily living there the pseudo-truth that "all swans are white" was destroyed and replaced by a new view.

So it is with certain events. We go along in life, living and working and thinking we know what will happen tomorrow when "BAM!" something comes along--a Black Swan--that changes our world. It might be something historically significant like 9/11 or it might be something culturally revolutionary such as Harry Potter but to be a Black Swan it must be unpredictable and it must have a large impact.

Nassim Nicholas TalebThe author, Taleb, brings a unique experience to his writing. Originally from Lebanon, his father was a high-ranking government official in a country known for its cultural richness and diversity. Then came war (a Black Swan for sure) and suddenly he's living with bombs overhead and later as an expatriate.

One of the most intelligent writers I've read he worked on Wall Street as a quant (quantitive analyst) working with numbers to assess risk but began to believe that in fact, the world was completely and utterly unpredictable. While he was spending his time analyzing numbers to lead his clients to money he realized that our extremist, fast-paced world is becoming increasingly governed by these Black Swans--and after the economics we've seen in the past year I would do nearly anything to sit down with Taleb and talk with him about the situation and if he feels a small bit of vindication.

Anyway, I could go on and on because it's really and truly one of those books you read that changes the way you look at the world--you start seeing Black Swans everywhere. In effect, the bottom line is the old Socratic adage: "True wisdom is knowing that you know nothing."

As an example of a few of the things he covers, one part describes how we humans have a driving need to create an understanding of events. We need narrative, we demand explanations and even if there may not be an explanation (Taleb argues there rarely is, particularly when dealing with Black Swans) our minds pick and choose our memories and experiences to create explanations and narratives to suit our purposes.

As a personal example--months ago I mentioned our Senator Ted Stevens and the legal troubles he was encountering. I'm pretty cynical of the situation, I didn't vote for Stevens and figured justice had been served when he was pronounced guilty.

Later new evidence surfaced that the prosecution hadn't presented an honest case. That they hadn't shared evidence that was potentially exculpatory. In the end the verdict was thrown out and the prosecution backed down on having a new trial which left Stevens a free man. My sister, a firm Stevens supporter made a comment to the effect of "See! I told you he was innocent."

Perfect example of the narrative fallacy. Stevens' conviction was overturned because of prosecutorial misconduct and because my sister supported our longtime Senator she created the explanation that he is innocent. Me? Just as bad because I thought he was guilty and said, "This proves nothing. The guy is still guilty and good riddance." We both had our opinions on the issue and looked for facts that supported our views, conveniently ignoring anything that didn't fit our theory.

It's human nature and we do it all the time but it's particularly dangerous when it comes from news media, politicians, bankers and economists because the rest of us are silly enough to listen to these false experts then rely on the narratives they've created.

Another thing we're susceptible to is thinking we can predict the future. Unless you have divine powers on your side (and I'm not going to get into the religious nature of that argument--Taleb doesn't touch it and neither will I) you simply cannot tell anything about where we're going. Nothing. Despite all the Monday morning quarterbacks springing up across the country you could not have predicted to any degree what has happened in America this past year economically. However, despite our rotten abilities to see ahead we continually try and then think we're being oh so astute and savvy, which only gives us a false sense of security and some inflated egos, ultimately causing even more harm by blinding us to our own blindness.

Anyway, I'll stop here. The book is fabulous, terrific, stunning and all that. I'd read it again and maybe this time around I'd been able to grasp more at the end when he gets into some of the deeper, more technical parts with fractals, Mandelbrotian theory and Gaussian curves (I think I understand it, the second time around helped but still . . . it's deep stuff). But don't let that scare you, it's quite readable and makes so much sense you wonder why you hadn't heard this before.

There you have it. You never know what you'll find here do you? Completely unpredictable isn't it?

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Great-Granny Grandma said...

Interesting post. Lots of food for thought in that book, it seems. I'll have to see if there's a copy in our library.

Heart2Heart said...


The books sounds intriguing and I will have to pick it up. I love that when people try to figure things out it never quite adds up!

Love and Hugs ~ Kat

govision20/20 said...

I'm fortunate to have a wonderful library here in Kennebunk, Maine. I'm sure they will have a copy for me! Thanks!

Maddy said...

My book list is pretty lengthy as it is. I had great plans to play catchup whilst we were on holiday but instead the list just got longer.

Melissa B. said...

I am really looking forward to reading this book...thanks so much for the introspective analysis.

BTW, my youngest just launched a photo blog, and I'm shamelessly trolling for traffic. Please visit my site to see what she's got going, and pay her a visit!

Paula said...

A good review...thanks

Danyelle Ferguson said...

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Daisy said...

Now I have an ear worm: the song "Black Swan" from the opera The Medium. It's a scary song from a rather creepy part of the show...

Mandy said...

This sounds interesting. I will have to include it on my "goodreads" list.

Stephanie said...

I think you've convinced me. I'm going to add this book to my "to-read" list. It's a long list, though, so it may take awhile for me to get to it. ;)

Right now I'm reading "Parenting With Love & Logic"...and I really like it so far. What are your favorite parenting books?

jubilee said...

Sounds deep and my interest is piqued. I am not sure I am ready for deep. Especially since I only get 10 or 15 min at a time to do any reading at all.

I hadn't even heard of the Black Swan concept until earlier this year. Where have I been?!

Beverlydru said...

I thoroughly enjoyed this review and learning about the meaning of the The Black Swan.

Patricia L said...

Okay, I know this is an old post, but I just finished reading The Guinea Pig Diaries by AJ Jacobs and he references The Black Swan in his chapter on Rationality. I kept thinking "I've heard of that book somewhere" and lo & behold it was right here on your blog. So now, several months later, I'm adding it to my to-read list.