Nassim Nicholas Taleb, celebrated author of the Black
Swan: The Impact of The Highly Improbable and, before
that, Fooled By Randomness: The Hidden Role of Chance in
Life and in the Markets, has got a new book out.
Like its predecessors, The Bed of Procrustes:
Philosophical and Practical Aphorisms, will resonate
strongly with risk practitioners in the insurance and
Perhaps more importantly, this time Taleb's philosophy is
served up in bite sized chunks, so we could all get around to
reading it. (Be honest, you haven't read it, but how many times
have you cited the Black Swan yourself, or nodded sagely when
someone else dropped it in to the conversation?)
Taleb has a healthy disregard for financial services people
and the journalists that write about finance, describing them
variously as imbeciles, empty suits and philistines. But this
new work wasn't written as a collection of aphorisms simply to
help unimaginative dunces like us "get it".
Taleb says he is also rescuing the aphorism from the
triteness with which it has become associated - the sort that
is woven and framed on the wall of that Bed &
Breakfast in Brighton perhaps?
Aphorisms, proverbs, short sayings and epigrams are the
earliest literary form - often integrated in poetry, he says.
"They carry the cognitive compactness of the sound bite (though
both more potent and more elegant than today's down-market
version), with some show of bravado in the ability of the
author to compress powerful ideas in a handful of words -
particularly in an oral format."
By the way he defines a nerd as someone who asks for an
explanation of an aphorism.
The standalone, compressed thoughts collected in his
Procrustes book should not need explanation. They "revolve"
around Taleb's main idea of how we deal, and should deal with
what we don't know - the ideas more deeply discussed in his
earlier books. And, importantly, the same ideas that have
enabled him to amass a fortune from trading and risk taking:
he's no dime store aphorist.
Back to the book.
Why Procrustes? In Greek mythology Procrustes was the cruel
owner of an estate near Athens. He would abduct travellers,
give them a good feed and then invite them to stay in a special
bed he had reserved for them. He wanted the bed to fit them to
perfection, so if they were too tall he chopped their legs off
to fit; if they were too short he stretched them on a rack.
(And you thought the B&B in Brighton was bad!)
Every aphorism in the book is about a procrustean bed of
sorts, he says in the book's preface. "We humans, facing limits
of knowledge, and things we do not observe, the unseen and the
unknown, resolve the tension by squeezing life and the world
into crisp commoditized ideas, reductive categories, specific
vocabularies, and prepackaged narratives, which, on the
occasion, has explosive consequences."
So much of what he says could be aimed directly at the
insurance underwriter, the broker, the modeler, the investor,
the corporate risk manager, and the chief executive.
In fact, try attributing each of these examples to any of
the aforementioned people above:
To bankrupt a fool, give him information.
In science you need to understand the world; in business
you need others to misunderstand it.
An erudite is someone who displays less than he knows; a
journalist and consultant, the opposite; most others fall
somewhere in between.
It is as difficult to avoid bugging others with advice
on how to exercise and other health matters as it is to stick
to an exercise schedule.
Randomness is indistinguishable from complicated,
undetected, and undetectable order; but order itself is
undistinguishable from artful randomness.