Jack Boss Coaching

Nassim Nicholas Taleb’s Black Swan offers a devastating critique of the many conceptual errors we make to assimilate highly improbable events into the exact cognitive schema that they should shatter.  Turns out that our conceptual universe apparently craves homeostasis and clings to what has worked so far in spite of evidence to the contrary (this, of course, is another version of the phenomenon of last year’s picnic, and also has resonance with Bion’s hypothesis about groups taking on their own survival as their primary task, and is related to the dialectic of eros and thanatos that Freud found at the logical end of homeostasis: death).

So, we stick to strategies that don’t work, explaining that they would have been entirely adequate if only it weren’t for x, where x = some highly improbable event.  Of course, while the odds against any given highly improbable event are long enough to be ignored, the odds of an aggregate of all highly unlikely events are so substantial that long-term forecasting of any sort should be viewed with great skepticism.

So why are we able to habitually ignore the black swans that wreck the best laid plans?  Because black swans look inevitable in retrospect.  9/11?  The Argentine Currency crisis? The internet stock sell-off?  The subprime mortgage meltdown?  All have wreaked havoc on any long term financial forecasts since 1995, yet such forecasting continues because each looks like a one-time event, an inevitable correction or a one-time slip, and what are the odds that anything like it could ever happen again?  Well, it depends what you mean by “like it”?

So, all this is covered in great detail in Taleb’s excellent book, but it brought to mind a reality that underlies our retroactive determinism: Our reality, at least in our imagination, is supersaturated with causes, each waiting patiently to be triggered, to release its ravaging effects on the world.  Examples are all around us: when Russian intervened in the crisis in Georgia, we all said that the Caucuses are a tinderbox, just waiting to explode.  When the the dotcom stocks tumbled or the subprime mortgage crisis hit, it confirmed what we knew all along: that nothing goes up forever.  But the world is full of tinderboxes and things that will have to come down.  Whatever gets blown up next, the cause is floating, unattached, through the milieau right now.  The anger of the muslim world; the delicate environmental balances that stand on the brink of any number of catastrophes, etc,; the influenza killer virus/antibiotic-proof bacteria/the epidemic of whateveria…each is bound to happen.  Most won’t, but when whatever happens does, its inevitable cause will be readily apparent.  As it is now, only the paranoid focus on it.

Taleb offers many recommendations in negative: he’s against risk-mitigation strategies, long-term forecasts, and hates the banking industry.  But as for positive recommendations, he can only recommend that we learn to accommodate black swans, that we build systems that presume their existence rather than holding the illusion of safety.  He favors decentralization and wide-splatter, figuring that safety comes is meta-diversification and with enough separation between entities, the black swan’s ripple effect will be limited.  Unfortunately, of course, we live in a world of ever-greater interconnectedness and webs of interdependencies.

I propose that we invent Lack of Information Technologies to compensate for the blade of uncertainty that hangs over us: technologies to help spread risks out, to help diversify our bets and set off alarms if we inadvertantly cluster too many resources on one outcome.  These technologies would incur small losses in effeciency and order so as to maximize exposure to possible opportunities and minimize exposure to catastrophic meltdown.  I have no idea what these technologies would be, but I’m working on it.