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 reinsurance business.
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.