Saturday, May 25, 2013

Book review: Antifragile

Antifragile: Things that gain from disorder
Author: Naseem Nicholas Taleb

This 500+ pager can be summed up by this one line : What does not kill you, will only make you stronger. Huh! Sounds familiar? Indeed it is. However Taleb does deserve credit to give a name to this phenomenon. Taleb also deserves praise for recognizing its vitality. The book shines as Taleb lists instances found in nature, observed in human past and present where Antifrgaility is commonly observed.

What is Anti-fragility?
Anti-fragility is a very simple phenomenon that can be explained by this simple example (paraphrased from the book): There are two brothers, one of them works in a 9-5 desk job while the other one works as a cab driver. Both have been working for over 30 years. While the first one has a steady monthly income, sick leaves, vacation days, insurance etc,  the second one's  income varies from one day to another. There is no guarantee for the second brother that there would be client on a given day and if he falls sick, there is no pay. Taleb analyzes these two brothers in detail and then rightly claims that the first brother is fragile while the latter is Antifragile. Say some extremity happens, such as the economic depression that we saw in last few years, the first brother would be laid off and would find difficult to get a new job as his skills are now obsolete in the current competitive market. Being used to a steady income, now he feels afraid/depressed to the sudden change in situation. At the same time, the second one has been living a life of uncertainties, he is much more averse to the swings in income; his lifestyle includes saving for rainy days, preparing for extremities etc.

Antifragile elements/concepts are the ones that are more risk averse, they will not only survive adverse conditions but even come out stronger. Antifragility has the power to withstand change, welcome it and then adapt to it. Antifragile has strong deep roots, their foundations are solid. They are built to last.

Taleb  goes further in extending the definition of Antifragility. According to Taleb, nuclear power is antifragile and he uses the recent Japan earthquake disaster to  prove his point. The Japan nuclear power plant was considered to be highly resilient, it was designed to withstand any natural/manmade calamity observed in Earth till date, until the Earthquake hit. Taleb has two important points here (a) One can not accurately predict the risk. There could always be a bigger earthquake, a worse Tsunami or who knows a meteor hitting Earth. Second, (b) The foundations of nuclear technology are weak. There is no safe means to dispose off the nuclear waste, its production requires high control and safety standards and no matter how much we anticipate, there could always be risks beyond our expectations that could threaten the production and things around it. Taleb thus argues that nuclear power production is fragile while power production from renewable sources is antifragile.

 Nuclear power is considered a necessary evil to meet the current energy needs, a shortcut until we figure out how to scale up renewable sources etc.  By doing this, Taleb is also making a stronger claim: Any shortcut whose sole justification is to meet today's demands at whatever cost are fragile things and they will hurt us back, one way or another. These things will perish eventually and may take with them anything or everything. Through numerous examples, Taleb argues that antifragility is pervasive and ignoring it will have consequences that we may not like.

Antifragility and us

If we break it down to lay man terms, Taleb is arguing is something that has been known for generations. Get out of your comfort zone, if things become too cozy, it is time for change; these are known adages, easy to acknowledge but difficult to execute.  Be independent, be simple.

Do not be afraid of failure. Failure makes us antifragile, provided we learn from it. Next time, we understand it better and then overcome it. As you can guess, Taleb has high praise for the silicon valley startup culture where people are not afraid of taking risks and building things. Consequently, Taleb has a lot of disdain for those in the financial industry. Being an economist himself, he is able to look through their complex models and devices and see how they are all geared up for short term profits, their assumptions are prone to risks and hence will fail eventually. Taleb gloats with pleasure and claims that the economic depression in 2008 was a good thing. For one, it proved him right as he was rooting for the house of cards to fall down, but his uber point is that it exposed the fragility of the entire system.

Through antifragility, Taleb is also arguing for a change in lifestyle for all of us. He insists that we should make risk a part of our lives instead of something to hide it under the rug or behind the curtain.  Taleb argues that we should identify fragile things in our day to day lives and then shun them.  One example, he cites it the 24 hr breaking news phenomenon of our news channels. Terrorism now accounts for less than 1% of deaths while diabetes/heart attacks is somewhere around 10%. Yet, the coverage is exactly reverse. We rarely get to hear about things that actually matter to us such as policy. These news sources are making us fragile, they are hiding the genuine risk we face. News channels in its present form must be changed.

The critics of Antifragility

Critics have argued that Taleb wants us to live like cavemen. Their point is that doing things completely in antifragile manner would result in giving up all forms of technology, would result in zero advancement and we will be back in dark ages.  To some degree, they are right. Antifragility does impose some severe restrictions, but calling us to live like cavemen is simply blind exaggeration.

In an antifragile world, there are always exceptions and it is completely fine to have exceptions, completely acceptable to have deviations away from mean But the moment, we accept the state during an exception as the normal state, that is when it leads to trouble. In the two brother's case, having a steady job is good but not for 30 years. One should be in a given state and then adapt to move to a different one. That adaptation will require learning, advancement and eventually bring progress both to the individual and society in large.

My critic of the book comes when Taleb applies the phenomenon to anything and everything. Taleb despises theoretic academicians as he claims that they just write papers to increase their bibliography. Taleb justifies killing of Socrates as he was just preaching things in a round about manner without adding anything to it. Taleb claims information is antifragile but data is antifragile but does not offer any concrete means to differentiate between the two. He bends every other theory out there that works and brings it under the fold of antifragility.  At many points in the book, especially in the later part, Taleb comes off as a salesman trying desperately to sell a product.  While it is true that there are several American academia is very much driven by publishing but it is not the only purpose, it is true that antifragility is a global concept but it is not an only one. This overemphasis makes this book verbose and makes one question the phenomenon than accept it willingly, thus doing more harm.

Even with its drawbacks, the book is still a must read. It asks us to move back to our foundations, realize what makes us strong and what hurts us and implores us to understand this phenomenon and internalize it. If we ignore it, we will surely perish.

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