The Black Swan by Nassim Nicholas Taleb

Trying to be provocative is not very interesting, but as Taleb actually has something very interesting to say it is easy to ignore his teenage way of writing.

Anyone who knows me understand that I would read a book where one of the first pages contains this gem: “Why do we keep focusing on the minutiae, not the possible significant large events, in spite of the obvious evidence of their huge influence? And, if you follow my argument, why does reading newspaper actually decrease your knowledge of the world?”

The theme of the book is how we deal with the things that never have happened before. How do we prepare for what we cannot know, especially if these are really massive events? But it is not done in a very structured way and it is one of these books that seems to focus more on sales on airports than actually contribute to some new thinking. It is entertainment, not education.

However, the use of models (by social scientists and economists) are dealt with in a brilliant way from time to time, and the book provides a lot of material for inspiration. It is inspiration of the best kind (i.e. when the author writes about an important issue, but you disagree with much of what is written…)

One of my favorites is on page 280 “Economists often invoke a strange argument by Milton Friedman that states that models do not have to have realistic assumptions to be acceptable – giving them license to produce severely defective mathematical representations of reality. The problem is of course that these Gaussianizantions do not have realistic assumptions and do not produce reliable results. They are neither realistic nor predictive.” This might be the only thing future students will learn about much of the national/political economy from the end of the 20^th Century… ;)

The issue on how we deal with things we have never seen before is very real in the case of climate change, we need to act before we have seen the consequences and with an issue that society was not made to deal with. Usually we create rules and regulations after the problem appears, but this is not possible this time as we might only have one chance.

PS
The cover of the book I bought in India is really nice, no text at all just the white and black swan, very simple...