Review of Nassim Taleb’s Antifragile

We all know what “fragile” means.  But what is the opposite of fragile?

If you are like me, your instinctive response would be “robust” or perhaps “durable.”  But you would be wrong.

Something that is fragile is damaged by an unexpected shock, whereas something that is robust or durable is able to withstand it.  To be robust is to be neutral to shocks.

But what do you call the true opposite of fragile—something that actually benefits from shocks?

As Nassim Taleb points out, there is no word in English (or in any other language, ancient or modern) that conveys this idea.  So he invented one—antifragile—and wrote an entertaining and enlightening book around the concept.

Taleb is at times playful and even self-effacing in his writing and at other times insufferably arrogant (“non-meek” in his words).  But he is always—and I mean always—thought provoking.

Years ago, before Taleb become something of a celebrity, I picked up his original Fooled by Randomness and had something of a “eureka” moment.  Taleb put into words (and numbers) many of the abstract ideas about risk and randomness that I instinctively felt yet couldn’t articulate (he had that effect on a lot of people, it would turn out).  In particular, I had always mistrusted the Value-at-Risk metric and its offshoots that had been crammed down my throat as an undergraduate finance student.  It registered on my “bulls_t detector”, to borrow one of Taleb’s earthy phrases, and history would vindicate this gut reflex with implosion of the financial system in 2008.

I still consider Fooled to be his best book, and if you have never read Taleb’s work that is where I would recommend you start.  But Antifragile: Things That Gain From Disorder expands on the concepts in Fooled and its follow-up The Black Swan and goes far beyond financial markets into a more general theory of randomness and volatility and their importance in life and nature.  “Living things are long volatility,” he emphasizes often.

Perhaps Taleb’s greatest gift as a writer is his ability to speak in metaphors, the best of which is his analogy of the Procrustean Bed (see my review of Taleb’s The Bed of Procrustes).

Procrustes was a nasty little fellow from Greek mythology who would invite guests into his home and then either stretch or amputate parts of their legs to make them fit just right in his guest bed.  In Taleb’s analogy, much of the modern world is a Procrustean bed of sorts.  People, markets, and economic systems are contorted to fit tidy theories.

But in Antifragile, Taleb goes beyond this “square peg in a round hole” argument to a larger critique of “soccer moms” (both figurative and literal) who naively attempt to make the world safer by “sucking randomness out to the last drop.”  Doing this provides the illusion of safety while actually making us less resilient and more fragile.  In other words, not only are scraped knees and bruises ok, they are an essential part of growth.

Many readers misunderstand Taleb’s core message.  They assume that because Taleb writes about unseen and improperly calculated risks, his objective must be to reduce or eliminate risk.  Nothing could be further from the truth. 

If anything, Antifragile is a celebration of risk and randomness and a call to arms to recognize and embrace antifragility.  Rather than reduce risk, organize your life, your business or your society in such a way that it benefits from randomness and the occasional Black Swan event.

Taleb’s own life is a case in point.  He had the free time to write Fooled, The Black Swan and Antifragile because—in his own words—he made “F___ you money” during the greatest Black Swan event of our lifetimes, the 1987 stock market crash.   And to demonstrate that Taleb’s trading style is antifragile, had the 1987 crash never happened, Taleb would not have been materially hurt.  His trading style puts little at risk but allows for outsized returns.

In what may seem somewhat disturbing to some readers (and Taleb himself is disturbed by it as well), what makes a system antifragile is that its individual pieces are perishable.  Natural selection—the survival of the fittest—requires that the unfit are allowed to fail.

Using the example of restaurants, the restaurant sector is robust because the failure of any one restaurant does not affect the others.   And the restaurant sector is antifragile because the remaining players actually learn and grow from witnessing the mistakes made by the failed restaurant.

Now, compare this to the banking system.  The world banking system is inherently fragile because the failure of one bank leads to contagion that can cause the failure of other banks and of the system itself.

The importance of failure to an antifragile system is a recurring theme to the book.  As individuals and as a collective, we learn more from mistakes than from successes.  In a capitalist system, you need a replenishable  supply of entrepreneurs willing to take risks.  For every failed business idea, our knowledge base expands.

Taleb goes so far as to advocate we treat ruined entrepreneurs in the same way we honor dead soldiers, “perhaps not with as much honor, but using the same logic.”

As Taleb explains, just as “there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner), likewise there is no such thing as a failed entrepreneur  or failed scientific researcher.”   Their sacrifice makes the system stronger.

I commend Taleb on another book well written, and I recommend Antifragile along with Fooled by Randomness and The Black Swan.

The Bed of Procrustes

Procrustes was a character from Greek mythology with an odd sense of hospitality. He would abduct travellers passing by his home, dine with them, and then invite them to spend the night in his guest bed. But being a bit of a perfectionist, he wanted them to fit in the bed just right. So those that were too tall for the bed had their legs chopped off; those that were too short were stretched.

Nassim Nicholas Taleb, the best-selling author of Fooled By Randomness and The Black Swan, is at it again. Late in 2010, Taleb quietly published his third book, The Bed of Procrustes: Philosophical and Practical Aphorisms.

Taleb chose the title carefully. Procrustes was a character from Greek mythology with an odd sense of hospitality. He would abduct travellers passing by his home, dine with them, and then invite them to spend the night in his guest bed. But being a bit of a perfectionist, he wanted them to fit in the bed just right. So those that were too tall for the bed had their legs chopped off; those that were too short were stretched.

In Taleb’s mind, much of the modern world—and modern finance in particular—is a Procrustean bed of sorts. Rather than adjust our models and theories to fit a complex reality, we try to force the real world to fit our models. And when they don’t, rather than accept that the model was faulty, we blame external forces that couldn’t be seen. “It’s not that my model was wrong; it’s just that a black swan came out of nowhere!”

In Taleb’s words,

My use of the metaphor of the Procrustes bed isn’t just about putting something in the wrong box; it’s mostly that inverse operation of changing the wrong variable, here the person rather than the bed…

Since the Enlightenment, in the great tension between rationalism (how we would like things to be so they make sense to us) and empiricism (how things are), we have been blaming the world for not fitting the beds of “rational” models, have tried to change humans to fit technology, fudged our ethics to fit our needs for employment, asked economic life to fit the theories of economists, and asked human life to squeeze into some narrative.

As we’ve come to expect from Taleb, The Bed of Procrustes is full of wit, wisdom, and more than a little sarcasm. But unlike Taleb’s prior works, Bed is not a manifesto for the appreciation of randomness in life, nor is it a critique of the arrogance (and ignorance) of contemporary Wall Street. The Bed of Procrustes is a collection of pithy sayings that has more in common with an Oscar Wilde story or even an irreverent parody of Confucius quotes than with a money and investing book.

Taleb comes across as a bit of an anarcho-libertarian at times. In addition to financial models, he finds many of the facets of normal life to be Procrustean beds: regulations, employment, top-down governments, academia, gyms, commutes, high-rise office buildings, and even marriage and relationships.

Still, The Bed of Procrustes manages to be both thought provoking and wildly entertaining at the same time. Here are some of my favorite aphorisms from the book:

    • “Academia is to knowledge what prostitution is to love; close enough on the surface but, to the non-sucker, not exactly the same thing.”
    • “Social media are severely antisocial, health foods are empirically unhealthy, knowledge workers are very ignorant, and social sciences aren’t scientific at all.”
    • “In science you need to understand the world; in business you need others to misunderstand it.”
    • “Education makes the wise slightly wiser, but it makes the fool vastly more dangerous.”
    • “In nature we never repeat the same motion; in captivity (office, gym, commute, sports), life is just repetitive-stress injury. We are often prone to acclimatize ourselves with unhealthy ways to deal with stress.”
    • “Economics cannot digest the idea that the collective (and the aggregate) are disproportionately less predictable than individuals.”
    • “You never win an argument until they attack your person.”
    • “The characteristic feature of the loser is to bemoan, in general terms, mankind’s flaws, biases, contradictions, and irrationality—without exploiting them for fun and profit.”
    • “To be completely cured of newspapers, spend a year reading the previous week’s newspapers.”
    • “People focus on role models; it is more effective to find antimodels—people you don’t want to resemble when you grow up.”
    • “The three most harmful addictions are heroin, carbohydrates, and a monthly salary. My only measure of success is how much time you have to kill.”
    • “Some books cannot be summarized (real literature, poetry); some can be compressed to about ten pages; the majority to zero pages.”
    • “They think that intelligence is about noticing things that are relevant (detecting patterns); in a complex world, intelligence consists in ignoring things that are irrelevant (avoiding false patterns).”
    • “The best way to spot a charlatan: someone (like a consultant or a stockbroker) who tells you what to do instead of what not to do.”
    • “The main difference between government bailouts and smoking is that in some rare cases the statement ‘this is my last cigarette’ holds true.”