Too many books

This is a book written by the sort of person who divides the world into:
1) mostly idiots
2) a few geniuses

Which, I suppose, is fitting, because one of the central tenets of this book is that we don't live in Mediocristan, anymore, like the cavemen did. That was a world where most things were about average. In modern times, as a side-effect of communications technology, we live in Extremistan.

The title comes from the fact that black swans were thought (by English-speakers anyway) to be impossible. They weren't just rare before, they were absolutely never seen. Up until the point where they were discovered in Australia in large numbers.

So, a "black swan" is something that past experience would absolutely not prepare you for. The Great Depression was a Black Swan; if you had looked at previous economic history, especially in America, there was no precedent for an economic downturn becoming that bad. The currency crisis in 1998 was a Black Swan. The distinguishing features of them are that (1) they're important, (2) they're unpredictable, and (3) past experience will not prepare you for them.

Human height doesn't have Black Swans; the tallest man ever was only slightly taller than the previous record holders. Wealth is subject to Black Swan effects; the richest man in the world can be far richer than the rest of us, far richer even than the second richest. The heaviest person on the planet may weigh 5 or even 10 times as much as I do. The person on the planet with the most book sales, has millions of times more than the average writer. The highest IQ on the planet is no more than twice mine. The most read blog on the planet has many orders of magnitude more people reading it than this one, and it may have gone from unknown to preeminent very, very fast.

Taleb's point is that our strategies for investing, setting government policy, and so forth are based on the idea that there won't be anything happening in the near future that's completely unexpected and out of the realm of previous possibility. We won't see the dollar collapse. We won't try to sell US bonds (i.e. borrow money from the world market), and find that not enough people want to buy them. We won't see rapid climate change. These aren't even good examples, of course, because I can imagine them.

So, the problem with a book like Taleb's is, that while he may be correct, one begins to wonder, 'so what?' It's not that it doesn't matter, but what can I do about it? He gives a pretty impressive personal example, from his own life. He grew up in Lebanon, at a time when the Lebanese were taught in their schools that their country was an exception to the region, tolerant of religious diversity and able to remain stable. Which had been true for centuries, up until the point that it wasn't.

What impressed him most, was that the cab drivers seemed to understand that something unpredictable was happening, but the government ministers (including his own father) seemed to believe they knew what was happening, and what wouldn't happen. The cab drivers, it turned out, were closer to the truth. His conclusion: our education and instincts are both made for Mediocristan, the world of phenomena like height, weight, and IQ, which have a bell-curved distribution. The modern world, however, is driven by things like wealth, fame, and market share, which are winner-take-all realms where a very few dominate the rest utterly.

The correct conclusion, according to Taleb, is to accept the limitations of your knowledge and intuition, and instead of trying to predict Black Swans, just live with them. Don't try to pick the winning small-cap stock, just invest in many of them, knowing that a very few will take off and the rest will crater. Don't expect our insurance industry to function during Black Swan disasters; it's models are built for Mediocristan, and will fail. Don't expect to be able to pick the next Harry Potter or Da Vinci Code; give a chance to many authors and reap the rewards of the very few hits. Don't expect to be able to predict what will happen to your country, just be prepared to leave if it need be.

At times, Taleb's opinion that nearly all revered thinkers are idiots, still stuck in Mediocristan, grates. He is in the grip of a Big Idea, and such people have at times a monomania. On the other hand, his writing is crisp, funny, and fast-paced, and if you can move a Big Idea book along at a rapid pace, you deserve some credit. Taleb would be a fun person to debate over a good meal and a glass of wine. This is the best compliment one can give a nonfictional author. I approve.