Imagine you are a chicken, your owner takes very good care of you. 1,000 days go by making you convinced that your owner loves you and will never do anything bad to you. Until the 1,001 day when the illusion of safety breaks and you end up on someone’s dinner plate.
It does not make sense, the chickens level of trust in its owner was at its highest level when it was killed. Some would say if the chicken wasn’t so foolish to believe it was special or unique, maybe it would have been spared the feelings of betrayal.
This is a Black Swan.
People used to think swans were only white until they saw a Black Swan.
Taleb covers a topic called mediocristan. Let’s say we weigh a few thousand people and at the extreme end of that sample is the heaviest person in the world. Even if that individual was 2,000 pounds, they would only account for less than half a percent of the total weight of all the people we weighed.
It shows that even a crazy outlier like a 2,000 pound person doesn’t overwhelm the average. The mediocre measurements of the average person do mostly represent all measurements quite well.
Now, if you do the same experiment but with wealth and include one billionaire in that list. That billionaire would account for almost 99% of the total wealth of all people in the sample. Here the outlier overwhelms everything else, Taleb calls this extremistan because as it rewards a few people really well but leaves basically nothing for the others.
Taleb says that the modern world is composed of circumstances that are geared towards extremistan. This is because money is just a number in someone’s book and is mostly digital. The modern economy is a winner takes all system. A few people make a lot of money.
If it was more like the weight example you wouldn’t expect the outliers to be so wild. But, because they are it shows how unpredictable the environment we are living in really is.
When was the last time you saw shelves of books about people who failed.
Taleb said something along the lines of – take a look at the cemetery it is quite difficult to do so because people that fail don’t usually write memoirs and if they did the publishers would not return a phone call.
9/11 one of the biggest Black Swan events, before 9/11 there was no lock on cockpit doors. Before 9/11 if someone had come up with the idea for putting a lock on a cockpit door, they likely would have gone unnoticed in history with little recognition because no catastrophe had happened up to that point.
Also, if you would have gone to airlines with that idea you likely wouldn’t have been taken too seriously. They would have said that the airlines don’t have money for things such as bullet proof doors etc.
A paradox about knowledge by Yuval Noah Harari states: “ knowledge that does not change behavior is useless, but knowledge that changes behavior loses its relevance.”
Therefore, all the measures and precautions taken after 9/11, that does nothing to improve our odds against another Black Swan event.
If anything it might lure us into a false sense of security.
Ironically being born is a Black Swan, there is a 1 in 400 trillion chance of being born.
(Ideas from Nassim Nicholas Taleb and https://www.youtube.com/@ApertureThinking)
-BH
The Black Swan Blog 