the black swan of Cairo

Who would have expected Nassim Taleb to write about the Arab spring but he did: in the May/June 2011 issue of foreign affairs. His article (co-author Mark Blyth, a political economist) is behind a pay-wall but you can download a reprint from his website. If ever I become brave enough to try another PhD (I gave up once, it requires lots of free time – unless you are totally obsessive about your subject, potentially good for posterity, definitely a killer of your family life, something I wouldn’t want to mess up) Taleb’s work is gonna be a core part of it.

source: Foreign Affairs article Taleb & Blyth

Foreign Affairs article Taleb & Blyth

Let me quote from the article to share it’s message with you:

Why is surprise the permanent condition of the U.S. political and economic elite? In 2007–8, when the global financial system imploded, the cry that no one could have seen this coming was heard everywhere, despite the existence of numerous analyses showing that a crisis was unavoidable. It is no surprise that one hears precisely the same response today regarding the current turmoil in the Middle East. The critical issue in both cases is the artificial suppression of volatility—the ups and downs of life—in the name of stability. It is both misguided and dangerous to push unobserved risks further into the statistical tails of the probability distribution of outcomes and allow these high-impact, low-probability “tail risks” to disappear from policymakers’ fields of observation. What the world is witnessing in Tunisia, Egypt, and Libya is simply what happens when highly constrained systems explode. Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to “Black Swans”—that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers. Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems….

The policy implications are identical: to make systems robust, all risks must be visible and out in the open— fluctuat nec mergitur (it fluctuates but does not sink) goes the Latin saying. Just as a robust economic system is one that encourages early failures (the concepts of “fail small” and “fail fast”), the U.S. government should stop supporting dictatorial regimes for the sake of pseudostability and instead allow political noise to rise to the surface. Making an economy robust in the face of business swings requires allowing risk to be visible; the same is true in politics….

As Jean-Jacques Rousseau put it, ” a little bit of agitation gives motivation to the soul, and what really makes the species prosper is not so much peace as freedom.” With freedom comes some unpredictable fluctuation. This is one of life’s packages: there is no freedom without noise – and no stability without volatility. 

I’m sure you’re going to hear more from me about Taleb’s perspective on things. It looks like he is getting close to having covered his field of interest from all angles possible. A Glassperlenspiel of  connected and interdependent arguments and viewpoints. For now,  let’s finish with someone who tells you what is more important than a PhD:


About roger henke

Still figuring out the story line that would satisfy myself here. Listening to what my family and friends evoke, what the words I absorb, the images that move me, the movements that still me, point to.
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