Attack of the Black Swan
For thousands of years, everyone knew that swans were white.
This remained the case until European explorers “discovered” Australia in the late 18th century and encountered, for the first time, a black swan.
Of course, a black bird is of little consequence, but the “black swan” (as described by Nassim Nicholas Taleb in the book of the same name) illustrates a fundamental problem with the way we learn about the world, which is to say primarily by observation and experience.
In other words, we don’t know what we don’t know.
Black Swans can be dangerous because we think that we do know. We assess risk based on our understanding of the possibilities, but fail to realize that there are possibilities we don’t yet conceive of.
With the benefit of hindsight, we review what has occurred and determine an explanation for it. Looking back, we “get it”; it all makes sense, now! But yesterday’s Black Swan wasn’t apparent at the time. Tomorrow’s Black Swan will not announce its arrival today.
The history of our planet is that of a succession of Black Swans. Our existence continues to turn on them.
Looking back, we understand why Hitler rose to power and how he was subsequently toppled. We see the iPhone as a natural progression from the flip phone of 1998 and the flip phone as a natural progression of the operator-driven home telephone of the 1950s. We witness the development of the airplane and the internet and the antibiotic.
Each of these events radically altered the course of history. Each of them seems obvious in hindsight; none were obvious leading up to their inception.
We see Black Swans in our personal stories as well. For instance, back in 2006, I came within mere seconds of not meeting my future wife.
I visited my orthopedic surgeon following a bilateral knee arthroscopy; he prescribed physical therapy and sent me up front to check out with the receptionist. She wrote down a name and as I recall it, I had already turned and started walking away when I realized that their therapist was a solid thirty-minute drive from my apartment. I turned back and asked the receptionist if she could recommend someone closer to my home?
Now some may see that as fate or divine intervention, but whether or not a benevolent force guided my hand that day, the point is that my life was forever changed in the course of my asking a receptionist a simple question. My dating life, to that point, had been pretty much a string of spectacular failures. Never in my wildest imagination could I have predicted that I meet my future wife.
I find it fascinating to look around and view our lives in terms of the Black Swan. Ever since I’ve encountered it, I see it everywhere. The Black Swan is worth reading for its development of this idea alone. Briefly, Taleb says:
“Black Swan logic makes what you don’t know far more relevant than what you do know. Consider that many Black Swans can be caused and exacerbated by their being unexpected. Think of the terrorist attack of September 11, 2001: had the risk been reasonably conceivable on September 10, it would not have happened. If such a possibility were deemed worthy of attention, fighter planes would have circled the sky above the twin towers, airplanes would have had locked bulletproof doors, and the attack would not have taken place, period. … Isn’t it strange to see an event happening precisely because it was not supposed to happen?
The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events. But we act as though we are able to predict historical events, or, even worse, as if we are able to change the course of history. We produce thirty-year projections of social security deficits and oil prices without realizing that we cannot even predict these for next summer … What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it.” — Nassim Nicholas Taleb
Take a few minutes to reflect upon your own life; how many truly significant events — whether positive or harmful — were genuinely expected prior to their happening?
The point isn’t that we should try to anticipate a Black Swan event occurring; the point is that we cannot anticipate them.
This doesn’t have to be scary.
As I see it, the takeaway is that we simply acknowledge this fundamental limitation of our human nature, as we make decisions about our lives and what we hope to accomplish.