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Antiplanner Books #6: The Black Swan

Jul 27

2007

“The Impact of the Highly Improbable” is the subtitle of this strongly antiplanning book by a Lebonese-American investment banker named Nassim Nicholas Taleb. The thesis is that the world is most heavily influenced by large, unpredictable events, so any efforts to plan based on what we know or try to forecast are doomed to failure.

The most salient example offered by Taleb has to do with investing: “In the last fifty years,” he says, “the ten most extreme days in the financial markets represent half the returns.” In other words, half the gains in the Standard & Poors 500 took place in just ten days out of fifty years (roughly 12,000 days of trading). Thus, anyone who says they have a sure-fire method of earning profits through investing (as several Nobel prize winners have claimed) is simply deluding themselves or their clients.

If what Taleb says is true — and he offers a mixture of evidence from Chaos theory, probability, and other mathematical fields — then any efforts to do long-range planning, whether for cities, regions, or some other area, will simply fail. At best, the planners will plan for the wrong things. At worst, they will lock the areas they plan into an obsolete pattern.

Unfortunately, I can’t recommend this book to people who think like me, in terms of numbers and hard facts. Instead of focusing on such facts, Taleb presents a mixture of autobiography, history, math, and fiction. He comes off more like an Ishmael-like guru. Some people like books like that; I don’t.

A couple of glaring problems. First, he defines “black swans” as an event that is rare, has an extreme impact, and — while unpredictable — leads people to “concoct explanations after the fact, making it explainable and predictable.” But the metaphor of the black swan doesn’t fit. His inspiration is a story that Europeans believed all swans were white — until they got to Australia and found a black swan. Okay, that might have been unpredictable, but it hardly had an extreme impact on history.

Second, he devotes a whole chapter to the intimate details of an author, Yvegnia Krasnova, whose book was a black swan — that is, it was rejected by numerous publishers and then, when finally published, turned out to be a big hit. In the very next chapter, he reveals that the story is fiction — there was never any such author. Yet he proceeds to devote substantial parts of three more chapters to this fictitious author. Why — when there are so many real-life examples of authors whose books were rejected and yet turned out to be big hits? It is as if Taleb wants to share stories he has heard but doesn’t want to do the reseach needed to verify them.

So I fully agree with Taleb’s thesis, yet I find his method of presenting it to be repugnant. If you liked Ishmael, you will probably find The Black Swan fascinating. Otherwise, just remember the name “black swan” and use it whenever anyone says they want to write a 10-, 20-, or 50-year plan for your city.

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Reprinted from The Antiplanner