Tag Archives: randomness

Scalable or Non-scalable

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One of the concepts I was introduced to in Nicholas Taleb’s The Black Swan that I’ve found particularly apt as it applies to my life is the idea of professions being either “scalable” or “non-scalable.”

Non-scalable professions are defined as those with a built-in cap on how much one can earn in pursuing them. A dentist’s recompense is directly related to the number of people he can see in a day, and that number is limited. A watch repairman’s income is likewise related to the number of watches he can repair in a day. Both examples require the worker to be physically present to perform the services they provide. Obviously this category includes all “regular” jobs that pay hourly or salaried wages. When you agree to the hourly rate or the salary, you are in essence capping the amount of income you will receive. Revenue depends on your continuous efforts in the job. This kind of work is largely predictable and, according to Taleb, not Black- Swan driven. They belong to a place he calls “Mediocristan.”

Scalable professions, on the other hand, are those which have no such cap, where you do the same amount of work for one person as you do for one million. Like, say, writing a novel. (grin) Other professions in this category would be entrepreneurial activities, scientific research, venture capitalists, stock traders, etc. The quality of your decisions is more important then the continuity of your efforts. These sorts of professions belong in the land of “Extremistan.”

“A scalable profession,” says Taleb, “is good only if you succeed.”

“They are competitive, produce monstrous inequities and are far more random, with huge disparities between efforts and rewards — a few can take a large share of the pie, leaving others out entirely, through no fault of their own.”

Furthermore, scalable professions, such as book writing or movie making are vulnerable to what Taleb calls “contagion” which is a fancy word meaning everyone is  jumping on the bandwagon because everyone else is doing it. Everyone is reading it, seeing it, so I want to, too. Maybe out of curiosity, maybe so I can know what they’re talking about and give my opinion, maybe, as Taleb suggests, because I feel like I belong to something, since it’s by imitating, (so he says) that we get closer to others.

The contagion concept is only an entertaining side issue, though. I’m more interested in the “monstrous inequities,” which  Taleb says is largely a result of our globalization and ability to record, print, communicate, mass produce and market certain products. He used the following thought experiments regarding two different types of randomness to make his point.

Take a thousand, randomly selected people and add in someone who weighs three times the average. He will account only for about a half a percent of the weight of the entire population. Even if you took the heaviest biologically possible person, he would still only represent a tiny fraction of the whole. That’s a non-scalable comparison. In Mediocristan, “when your sample is large, no single instance will significantly change the aggregate or total.” In other words, “particular events don’t contribute much individually — only collectively.”

In contrast, consider the net worth of the thousand people just weighed. Add to them the net worth of Bill Gates (approx $80 billion according to Taleb at the time of writing). Of the combined wealth of the thousand and one in our sample, Gates’s fortune represents 99.9% of it.

That’s a huge — extreme — difference!

Taleb also used the illustration of book sales, so of  course I couldn’t leave that out. This time you randomly select 1000 authors. If you add in J.K. Rowling, who at the time of writing had sold several hundred million Harry Potter books, her record buries that of the other thousand authors who collectively have a few hundred thousand readers at most. This is Extremistan.

This same extreme discrepancy can also be found in academic citations, media references, income, elections, etc. Taleb calls them “social matters” because they are man-generated and informational, rather than things dependent on the limitations of the physical.

“In Extremistan, the inequalities are such that one single observation can disproportionately impact the aggregate, or the total.”

Which is probably why a lot of people think that writers in general make a lot of money!

Adjusting to the Unpredictable

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One of the things that has so intrigued me about reading The Black Swan is that it seems like each new section brings up another thought-provoking idea that leaps off the page at me. Yes! I think. That IS how it is.

Or, No, wonder I was having problems with such and such. Or… Wow what a fantastic doctrinal analogy!

As I’m going back through earlier sections which I’ve already read, I’m finding nearly every page dog-eared. Just in the prologue, I came upon the notion that instead of trying to predict Black Swan events (seeing as they are, by definition, unpredictable) we should instead be seeking to adjust to their existence.

That thought alone triggered a rush of thoughts. How do you adjust to the unpredictable? You adjust to the Justice of God, to use a phrase often uttered by my pastor. You adjust to His justice first through salvation, and second through consistently being filled with the Spirit and growing in knowledge of His word. Because of Christ’s work on the cross, the Father’s justice has been satisfied and is therefore free to bless us when we believe in and appropriate that work for ourselves. He gives us His own righteousness and places us in union with His Beloved Son, and as a result we share everything His son has. (Meditate on that concept for a little bit!)

The more we learn, the more our thinking is changed to His, increasing our  capacity to receive the blessings He wants to give us. He is for us. He decreed everything that would ever happen to us, and it all fits into His purpose.

Whatever happens may not be predictable from my view, but to God, who is outside of time, it’s already happened. Just like the fact that from my side He’s conforming me to the image of His son even now, whereas from His I’m already conformed.

If you can really get your mind around those facts and live in them, there’s not much that can unsettle you. So then Black Swan’s don’t really matter. Because to God there are no Black Swans. What I love about this book is the crack it’s putting into the facade the world throws up — a facade that people know things, that things are getting better, that we have control, that there are experts and the rest of us better listen to them, that we can have security and safety and surety…

When really, who could have predicted 911? When the cold war ended, who could have predicted that the next big threat was going to be muslim extremists operating out of primitive villages in the Hindu Kush?

I couldn’t predict that when I took my mother to the dentist the other day to get her cleared before taking a drug her oncologist wants her to take, that they would going to find decay in one of her teeth and tell us she needs to have it pulled. My mother is nearly 82 and has excellent teeth. Only two tiny cavities and those having appeared only in the last few years. Yet here she is with decay hiding between two of her back teeth.

Nor could I have predicted I’d lock myself out of the house yesterday morning, but that happened too. Nor that today, when I was hanging out the laundry, a sock would drop and Quigley would pounce on it (he hasn’t done that in over a year I think) and I’d spend the next ten minutes chasing him to a standstill so I could get it back. Neither incident remotely measures up to the immensity of a Black Swan event, but in my life at least, they serve to illustrate that you really never know how things are going to come together to completely change the day. Or maybe the week, or month or even the rest of one’s life.

 

The Illusion of Predicting

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One of the things The Black Swan, by Nassim Nicholas Taleb, points out is the delusion we have that we can predict the future. We have all these formulae, formal and otherwise, that we use to do so… Having been involved in stock trading (he was a risk analyst and advisor) Taleb uses that background along with a strong interest in philosophy and science to dissect and consider all the ways we have of assuring ourselves that the world is steady, even and subject to our interpretation and prediction. If we want to avoid some disaster or to bring about some happy result, we have only to follow the recommended course of action, and voila. There we have it.

Not.

In Taleb’s view the world is far more random than most people will admit. I think to some degree this is a product of business, travel, civilization where you have all these organizations of people interwoven. My editors need to estimate how many copies my next book will sell so they will know how many to print, and much paper, etc, to have on hand to do so. They want me to predict how long it will take me so they can get the cover artist started at the appropriate time, get the book in the appropriate catalogue and start the appropriate marketing plan at the right time for the release of the book. Today’s competitive market demands that you begin marketing before the book is out.

In fact, today’s competitive marketing depends a lot on predictions — only one firm will be the one to make the killing on the next celebrity, best-seller, popular technical advance, demand for xyz that no one saw coming. It’s the reason news agencies break stories before reporters have all the facts, hoping to be the one with the scoop. So it’s very important to those in the marketplace to predict the future, to figure out why things happen as they do and then try to emulate those things…

The trouble is, says Taleb, the illusion that all this planning works, is really… well, an illusion. There is more luck involved than anyone wants to admit.

Of course what he calls “random” and “luck,” I see as the sovereignty of God, so it was gratifying, a day or so after I started the book to open my Bible randomly to Isaiah 41:21 where I read:

“Present your case,” the Lord says. “Bring forward your strong (arguments),” the King of Jacob says. Let them bring forth and declare to us what is going to take place; as for the former events, declare what the were, that we may consider them, and know their outcome; or announce to us what is coming. Declare the things that are going to come afterward, that we may know that you are gods; indeed, do good or evil, that we may anxiously look about us and fear together. Behold you are of no account, and your work amounts to nothing; he who chooses you is an abomination.”

“Declare to us what is going to take place… that we may know that you are gods.”

And of course there is this one, too:

“Come now, you who say “Today or tomorrow, we shall go to such and such a city, and spend a year there and engage in business and make a profit.” Yet you do not know what your life will be like tomorrow (let alone a year from now). You are just a vapor that appears for a little while and then vanishes away. Instead, you ought to say, “If the Lord wills, we shall live and also do this or that.” James 4:13-15

And yet, the culture we live in asks us to do the opposite.

The Black Swan

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black swanI first became aware of the existence of The Black Swan by Nassim Nicholas Taleb when my son put it on his Christmas list (last year? the year before?) and I bought it for him. Looking through it casually (the subtitle is “The Impact of the Highly Improbable”) I knew I eventually wanted to read it. Recently my son brought it with him on one of his trips home and told me that he was finished with it for the moment and I could read it. I stuck it on the shelf to await my attention once I’d finished various other books I was involved with.

Recently, finished with One Day in the Life of Ivan Denisovich, I stood in front of my bookshelf in preparation for going to the Y (where I needed a new book to read while I rode the stationary bike) and asked the Lord what I should read next.

Should I start my own Guardian King books as a dear friend recommended I do (I have never read any of my books in entirety since they’ve been published) or something else? The Lord drew my eye to The Black Swan sitting at eye level between Builders of the Ancient World and One Door Away from Heaven. I asked again, specifically, should I read Guardian King or Black Swan? He prompted me to pull Swan off the shelf and open it to the place where I’d left off when Adam had first given it to me (on the first page), where I read, “[the sighting of the first black swan] illustrates a severe limitation to our learning from observations or experience and the fragility of our (human) knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single black bird.”

 I was immediately pulled in: “First, it [the black swan] is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”

 Is this not a perfect description of the first advent? And the second? Nothing in the world points to it, only the Word of God.

 The writer goes on…”A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives…”

 I continued reading, riveted, knowing that there was much here about perception, belief, human bias and our almost total inability to predict the future even though many of our authorities claim to be able to so, all of it showing just how much of a deception the cosmic system really is, and how much more reliable is the word of God. The writer’s premise is that we think we know far more than we do (about the world and life and events) when, in fact, we really know very little… and this fits so into the whole framework of deception… which God has recently pointed out to me as being the “Thing” that I’m to write about (and have been writing about all along) that I knew this would be the next book I’d read.

So I took it with me to the Y and as I mentioned here, I have not been disappointed. I’ve dog-eared page after page and have taken to writing about thoughts generated from reading it in a spiral notebook. It has opened my eyes to so many things — not only with regard to how the cosmic system (of thinking) works, but also why we are so vulnerable to it.

 Naturally, I’ll be blogging more on the subject in the next few days.