Fragile-Robust-Antifragile as Damocles-Phoenix-Hydra. Domain dependence.
Wind extinguishes a candle and energizes fire.
Half of life—the interesting half of life—we don’t have a name for.
Hydra, in Greek mythology, is a serpent-like creature that dwells in the lake of Lerna, near Argos, and has numerous heads. Each time one is cut off, two grow back. So harm is what it likes. Hydra represents antifragility.
To counter success, you need a high offsetting dose of robustness, even high doses of antifragility. You want to be Phoenix, or possibly Hydra. Otherwise the sword of Damocles will get you.
fiscal deficits have proven to be a prime source of fragility in social and economic systems.
depriving systems of stressors, vital stressors, is not necessarily a good thing, and can be downright harmful.
This idea that systems may need some stress and agitation has been missed by those who grasp it in one area and not in another. So we can now also see the domain dependence of our minds, a “domain” being an area or category of activity. Some people can understand an idea in one domain, say, medicine, and fail to recognize it in another, say, socioeconomic life. Or they get it in the classroom, but not in the more complicated texture of the street. Humans somehow fail to recognize situations outside the contexts in which they usually learn about them.
Many, like the great Roman statesman Cato the Censor, looked at comfort, almost any form of comfort, as a road to waste.1 He did not like it when we had it too easy, as he worried about the weakening of the will. And the softening he feared was not just at the personal level: an entire society can fall ill. Consider that as I am writing these lines, we are living in a debt crisis. The world as a whole has never been richer, and it has never been more heavily in debt, living off borrowed money. The record shows that, for society, the richer we become, the harder it gets to live within our means. Abundance is harder for us to handle than scarcity.
Undercompensation from the absence of a stressor, inverse hormesis, absence of challenge, degrades the best of the best.
Most humans manage to squander their free time, as free time makes them dysfunctional, lazy, and unmotivated—the busier they get, the more active they are at other tasks. Overcompensation, here again.
Marcus Aurelius (one of the doer-Stoic authors), “fire feeds on obstacles.”
Much of aging comes from a misunderstanding of the effect of comfort—a disease of civilization: make life longer and longer, while people are more and more sick. In a natural environment, people die without aging—or after a very short period of aging. For instance, some markers, such as blood pressure, that tend to worsen over time for moderns do not change over the life of hunter-gatherers until the very end.
the worse touristification is the life we moderns have to lead in captivity, during our leisure hours: Friday night opera, scheduled parties, scheduled laughs. Again, golden jail. This “goal-driven” attitude hurts deeply inside my existential self.
Consider that all the wealth of the world can’t buy a liquid more pleasurable than water after intense thirst.
Much of modern life is preventable chronic stress injury.
So organisms need to die for nature to be antifragile—nature is opportunistic, ruthless, and selfish.
A tree has many branches, and these look like small trees; further, these large branches have many more smaller branches that sort of look like even smaller trees. This is a manifestation of what is called fractal self-similarity, a vision by the mathematician Benoît Mandelbrot. There is a similar hierarchy in things and we just see the top layer from the outside. The
The story of the Titanic illustrates the difference between gains for the system and harm to some of its individual parts.
Further, my characterization of a loser is someone who, after making a mistake, doesn’t introspect, doesn’t exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on. These types often consider themselves the “victims” of some large plot, a bad boss, or bad weather.
someone who has made plenty of errors—though never the same error more than once—is more reliable than someone who has never made any.
It is painful to think about ruthlessness as an engine of improvement.
continuous failures work to preserve the system. Paradoxically, many government interventions and social policies end up hurting the weak and consolidating the established.
there is no such thing as a failed entrepreneur or failed scientific researcher, any more than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take personal risks. (Sorry.)
avoidance of small mistakes makes the large ones more severe.
This great variety of people and their wallets are there, in Switzerland, for its shelter, safety, and stability. But all these refugees don’t notice the obvious: the most stable country in the world does not have a government. And it is not stable in spite of not having a government; it is stable because it does not have one. Ask random Swiss citizens to name their president, and count the proportion of people who can do so—they can usually name the presidents of France or the United States but not their own. Its currency works best (at the time of writing it proved to be the safest), yet its central bank is tiny, even relative to its size.
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.
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).
anything locked into planning tends to fail precisely because of these attributes—it is quite a myth that planning helps corporations: in fact we saw that the world is too random and unpredictable to base a policy on visibility of the future. What survives comes from the interplay of some fitness and environmental conditions.
A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys “with increased statistical confidence.” The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So with the butcher surprising it, the turkey will have a revision of belief—right when its confidence in the statement that the butcher loves turkeys is maximal and “it is very quiet” and soothingly predictable in the life of the turkey. This example builds on an adaptation of a metaphor by Bertrand Russell. The key here is that such a surprise will be a Black Swan event; but just for the turkey, not for the butcher.
mother of all harmful mistakes: mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in the social sciences.
In most of their history, Genoa and Venice were competing for the Eastern and Southern Mediterranean like two hookers battling for a sidewalk.
We were very close to the mother of all catastrophes in the 1960s when the United States was about to pull the nuclear trigger on the Soviet Union. Very close. When we look at risks in Extremistan, we don’t look at evidence (evidence comes too late), we look at potential damage: never has the world been more prone to more damage; never.6 It is hard to explain to naive data-driven people that risk is in the future, not in the past.
In the markets, fixing prices, or, equivalently, eliminating speculators, the so-called “noise traders”—and the moderate volatility that they bring—provide an illusion of stability, with periods of calm punctuated with large jumps. Because players are unused to volatility, the slightest price variation will then be attributed to insider information, or to changes in the state of the system, and will cause panics. When a currency never varies, a slight, very slight move makes people believe that the world is ending. Injecting some confusion stabilizes the system.
Indeed, confusing people a little bit is beneficial—it is good for you and good for them.
The longer one goes without a market trauma, the worse the damage when commotion occurs.
What is plaguing us in the United States is not the two-party system, but being stuck with the same two parties. Parties don’t have organic built-in expiration dates.
We saw that absence of fire lets highly flammable material accumulate. People are shocked and outraged when I tell them that absence of political instability, even war, lets explosive material and tendencies accumulate under the surface.
The anti-Enlightenment political philosopher Joseph de Maistre remarked that conflicts strengthen countries. This is highly debatable—war is not a good thing, and, as the victim of a brutal civil war, I can attest to its horrors. But what I find interesting—and elegant—in his reasoning is his pointing out the mistake of analyzing losses from a given event and ignoring the rest of the story.
volatility is information.
One of life’s packages: no stability without volatility.
Remember that you need a name for the color blue when you build a narrative, but not in action—the thinker lacking a word for “blue” is handicapped; not the doer. (I’ve had a hard time conveying to intellectuals the intellectual superiority of practice.)
Modernity starts with the state monopoly on violence, and ends with the state’s monopoly on fiscal irresponsibility.
we have managed to transfer religious belief into gullibility for whatever can masquerade as science.
For a classic example of iatrogenics, consider the death of George Washington in December 1799: we have enough evidence that his doctors greatly helped, or at least hastened, his death, thanks to the then standard treatment that included bloodletting (between five and nine pounds of blood).
anything in which there is naive interventionism, nay, even just intervention, will have iatrogenics.
For a theory is a very dangerous thing to have.
Noise is what you are supposed to ignore, signal what you need to heed.
In science, noise is a generalization beyond the actual sound to describe random information that is totally useless for any purpose, and that you need to clean up to make sense of what you are listening to. Consider,
access to data increases intervention, causing us to behave like the neurotic fellow.
The more frequently you look at data, the more noise you are disproportionally likely to get (rather than the valuable part, called the signal); hence the higher the noise-to-signal ratio. And there is a confusion which is not psychological at all, but inherent in the data itself. Say you look at information on a yearly basis, for stock prices, or the fertilizer sales of your father-in-law’s factory, or inflation numbers in Vladivostok. Assume further that for what you are observing, at a yearly frequency, the ratio of signal to noise is about one to one (half noise, half signal)—this means that about half the changes are real improvements or degradations, the other half come from randomness. This ratio is what you get from yearly observations. But if you look at the very same data on a daily basis, the composition would change to 95 percent noise, 5 percent signal. And if you observe data on an hourly basis, as people immersed in the news and market price variations do, the split becomes 99.5 percent noise to 0.5 percent signal. That is two hundred times more noise than signal—which is why anyone who listens to news (except when very, very significant events take place) is one step below sucker.
Owing to domain dependence, we forget the need to check our map of the world against reality.
There are ample empirical findings to the effect that providing someone with a random numerical forecast increases his risk taking, even if the person knows the projections are random.
We understand childproofing, but not forecaster-hubris-proofing.
What makes life simple is that the robust and antifragile don’t have to have as accurate a comprehension of the world as the fragile—and they do not need forecasting.
Curiosity is antifragile, like an addiction, and is magnified by attempts to satisfy it—books have a secret mission and ability to multiply, as everyone who has wall-to-wall bookshelves knows well. Nero
wisdom in decision making is vastly more important—not just practically, but philosophically—than knowledge.
Stoicism makes you desire the challenge of a calamity. And Stoics look down on luxury: about a fellow who led a lavish life, Seneca wrote: “He is in debt, whether he borrowed from another person or from fortune.”
Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.
An intelligent life is all about such emotional positioning to eliminate the sting of harm, which as we saw is done by mentally writing off belongings so one does not feel any pain from losses. The volatility of the world no longer affects you negatively.
Things can be taken away from us—not good deeds and acts of virtue.
if you have more upside than downside, then you may be harmed by lack of volatility and stressors.
Many of the “doers” turned “thinkers” like Montaigne have done a serial barbell: pure action, then pure reflection.
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.
If you dislike someone, leave him alone or eliminate him; don’t attack him verbally.
The legendary investor Ray Dalio has a rule for someone making speculative bets: “Make sure that the probability of the unacceptable (i.e., the risk of ruin) is nil.” Such a rule gets one straight to the barbell.
The strength of the computer entrepreneur Steve Jobs was precisely in distrusting market research and focus groups—those based on asking people what they want—and following his own imagination. His modus was that people don’t know what they want until you provide them with it.
The option is an agent of antifragility.
antifragility equals more to gain than to lose equals more upside than downside equals asymmetry (favorable) equals likes volatility. And if you make more when you are right than you are hurt when you are wrong, then you will benefit, in the long run, from volatility (and the reverse).
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.
the volatility of life helps provide information to us about others, but also about ourselves.
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.
Another business that does not care about the average but rather the dispersion around the average is the luxury goods industry—jewelry, watches, art, expensive apartments in fancy locations, expensive collector wines, gourmet farm-raised probiotic dog food, etc. Such businesses only care about the pool of funds available to the very rich.
No one at present dares to state the obvious: growth in society may not come from raising the average the Asian way, but from increasing the number of people in the “tails,” that small, very small number of risk takers crazy enough to have ideas of their own, those endowed with that very rare ability called imagination, that rarer quality called courage, and who make things happen.
both governments and universities have done very, very little for innovation and discovery, precisely because, in addition to their blinding rationalism, they look for the complicated, the lurid, the newsworthy, the narrated, the scientistic, and the grandiose, rarely for the wheel on the suitcase. Simplicity, I realized, does not lead to laurels.
The Soviet-Harvard illusion (lecturing birds on flying and believing that the lecture is the cause of these wonderful skills) belongs to a class of causal illusions called epiphenomena. What are these illusions? When you spend time on the bridge of a ship or in the coxswain’s station with a large compass in front, you can easily develop the impression that the compass is directing the ship rather than merely reflecting its direction.
radix malorum est cupiditas
lack of vigilance is not the cause of the death of a mafia don; the cause of death is making enemies, and the cure is making friends.
The important difference between theory and practice lies precisely in the detection of the sequence of events and retaining the sequence in memory. If life is lived forward but remembered backward, as Kierkegaard observed, then books exacerbate this effect—our own memories, learning, and instinct have sequences in them. Someone standing today looking at events without having lived them would be inclined to develop illusions of causality, mostly from being mixed-up by the sequence of events. In real life, in spite of all the biases, we do not have the same number of asynchronies that appear to the student of history. Nasty history, full of lies, full of biases!
We are suckers for the sophisticated.
from the master aphorist Publilius Syrus: “poverty makes experiences” (hominem experiri multa paupertas iubet).
I wonder why people don’t make the epiphenomenal association between the wealth of a country and something “bad,” say, decadence, and infer that decadence, or some other disease of wealth like a high suicide rate, also generates wealth.)
I recall a heuristic I used in my previous profession when hiring people (called “separate those who, when they go to a museum, look at the Cézanne on the wall from those who focus on the contents of the trash can”): the more interesting their conversation, the more cultured they are, the more they will be trapped into thinking that they are effective at what they are doing in real business (something psychologists call the halo effect, the mistake of thinking that skills in, say, skiing translate unfailingly into skills in managing a pottery workshop or a bank department, or that a good chess player would be a good strategist in real life).2
People we call ignorant might not be ignorant.
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. So I saw the less is more in action: the more studies, the less obvious elementary but fundamental things become; activity, on the other hand, strips things to their simplest possible model.
As Yogi Berra said, “In theory there is no difference between theory and practice; in practice there is.”
Religions often use the equivalent method to help adults get out of trouble, or avoid debt. But intellectuals tend to believe their own b***t and take their ideas too literally, and that is vastly dangerous.
An idea does not survive because it is better than the competition, but rather because the person who holds it has survived! Accordingly, wisdom you learn from your grandmother should be vastly superior (empirically, hence scientifically) to what you get from a class in business school (and, of course, considerably cheaper). My sadness is that we have been moving farther and farther away from grandmothers.
Nobody worries that a child ignorant of the various theorems of aerodynamics and incapable of solving an equation of motion would be unable to ride a bicycle.
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.
The theory is the child of the cure, not the opposite—ex cura theoria nascitur.
As Dan Ariely once observed, we cannot reverse engineer the taste of food from looking at the nutritional label. And we can observe ancestral heuristics at work: generations of collective tinkering resulting in the evolution of recipes. These food recipes are embedded in cultures. Cooking schools are entirely apprenticeship based.
Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation, therefore allowing one to escape the journalistic-style pressure of modern publish-and-perish academia to produce cosmetic knowledge, much like the counterfeit watches one buys in Chinatown in New York City, the type that you know is counterfeit although it looks like the real thing.
There, it is all order and beauty, Luxe, calme et volupté
Much of all of this is a religious belief in the unconditional power of organized science, one that has replaced unconditional religious belief in organized religion.
studying the chemical composition of ingredients will make you neither a better cook nor a more expert taster—it might even make you worse at both. (Cooking is particularly humbling for teleology-driven fellows.)
If the reader wonders why fideism is epistemologically equivalent to pure skepticism about human knowledge and embracing the hidden logics of things, just replace God with nature, fate, the Invisible, Opaque, and Inaccessible, and you mostly get the same result.
Collaboration has explosive upside, what is mathematically called a superadditive function, i.e., one plus one equals more than two, and one plus one plus one equals much, much more than three.
When I was in business school I rarely attended lectures in something called strategic planning, a required course, and when I showed my face in class, I did not listen for a nanosecond to what was said there; did not even buy the books. There is something about the common sense of student culture; we knew that it was all babble.
When engaging in tinkering, you incur a lot of small losses, then once in a while you find something rather significant. Such methodology will show nasty attributes when seen from the outside—it hides its qualities, not its defects.
Let me stop to issue rules based on the chapter so far. (i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so; (iv) Make sure you are barbelled, whatever that means in your business.
Formal thinkers and theorizing theorizers tend to write books; seat-of-the-pants people tend to be practitioners who are often content to get the excitement, make or lose the money, and discourse at the pub. Their experiences are often formalized by academics; indeed, history has been written by those who want you to believe that reasoning has a monopoly or near monopoly on the production of knowledge.
If you want to understand how vapid are the current modernistic arguments (and understand your existential priorities), 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 … As usual, an ancient, here Seneca, detected the problem (and the difference) with his saying “We do not study for life, but only for the lecture room,” non vitae, sed scolae discimus, which to my great horror has been corrupted and self-servingly changed to fit the motto of many colleges in the United States, with non scolae, sed vitae discimus as their motto, meaning that “We study [here] for life, not for the lecture hall.” Most of the tension in life will take place when the one who reduces and fragilizes (say the policy maker) invokes rationality.