Antifragile: Things That Gain from Disorder (27 page)

Social scientists and economists have no built-in consciousness of iatrogenics, and of course no name for it—when I decided to teach a class on model error in economics and finance, nobody took me or the idea seriously, and the few who did tried to block me, asking for “a theory” (as in Semmelweis’s story) and not realizing that it was precisely the errors of theory that I was addressing and cataloguing, as well as the very idea of using a theory without considering the impact of the possible errors from theory.

For a theory is a very dangerous thing to have.

And of course one can rigorously do science without it. What scientists call phenomenology is the observation of an empirical regularity without a visible theory for it. In the Triad, I put theories in the fragile category, phenomenology in the robust one. Theories are superfragile; they come and go, then come and go, then come and go again; phenomenologies stay, and I can’t believe people don’t realize that phenomenology is “robust” and usable, and theories, while overhyped, are unreliable for decision making—outside physics.

Physics is privileged; it is the exception, which makes its imitation by other disciplines similar to attempts to make a whale fly like an eagle. Errors in physics get smaller from theory to theory—so saying “Newton was wrong” is attention grabbing, good for lurid science journalism, but ultimately mendacious; it would be far more honest to say “Newton’s
theory is imprecise in some specific cases.” Predictions made by Newtonian mechanics are of astonishing precision except for items traveling close to the speed of light, something you don’t expect to do on your next vacation. We also read nonsense-with-headlines to the effect that Einstein was “wrong” about that speed of light—and the tools used to prove him wrong are of such complication and such precision that they’ve demonstrated how inconsequential such a point will be for you and me in the near and far future.

On the other hand, social science seems to diverge from theory to theory. During the cold war, the University of Chicago was promoting laissez-faire theories, while the University of Moscow taught the exact opposite—but their respective physics departments were in convergence, if not total agreement. This is the reason I put social science theories in the left column of the Triad, as something superfragile for real-world decisions and unusable for risk analyses. The very designation “theory” is even upsetting. In social science we should call these constructs “chimeras” rather than theories.

We will have to construct a methodology to deal with these defects. We cannot afford to wait an additional twenty-four centuries. Unlike with medicine, where iatrogenics is distributed across the population (hence with Mediocristan effects), because of concentration of power, social science and policy iatrogenics can blow us up (hence, Extremistan).

A main source of the economic crisis that started in 2007 lies in the iatrogenics of the attempt by Überfragilista Alan Greenspan—certainly the top economic iatrogenist of all time—to iron out the “boom-bust cycle” which caused risks to go hide under the carpet and accumulate there until they blew up the economy. The most depressing part of the Greenspan story is that the fellow was a libertarian and seemingly convinced of the idea of leaving systems to their own devices; people can fool themselves endlessly. The same naive interventionism was also applied by the U.K. government of Fragilista Gordon Brown, a student of the Enlightenment whose overt grand mission was to “eliminate” the business cycle. Fragilista Prime Minister Brown, a master iatrogenist though not nearly in the same league as Greenspan, is now trying to lecture the world on “ethics” and “sustainable” finance—but his policy of centralizing information technology (leading to massive cost overruns and delays
in implementation) instead of having decentralized small units has proven difficult to reverse. Indeed, the U.K. health service was operating under the principle that a pin falling somewhere in some remote hospital should be heard in Whitehall (the street in London where the government buildings are centralized). The technical argument about the dangers of concentration is provided in
Chapter 18
.

These attempts to eliminate the business cycle lead to the mother of all fragilities. Just as a little bit of fire here and there gets rid of the flammable material in a forest, a little bit of harm here and there in an economy weeds out the vulnerable firms early enough to allow them to “fail early” (so they can start again) and minimize the long-term damage to the system.

An ethical problem arises when someone is put in charge. Greenspan’s actions were harmful, but even if he knew that, it would have taken a bit of heroic courage to justify inaction in a democracy where the incentive is to always promise a better outcome than the other guy, regardless of the actual, delayed cost.

Ingenuous interventionism is very pervasive across professions. Just as with the tonsillectomy, if you supply a typical copy editor with a text, he will propose a certain number of edits, say about five changes per page. Now accept his “corrections” and give this text to another copy editor who tends to have the same average rate of intervention (editors vary in interventionism), and you will see that he will suggest an equivalent number of edits, sometimes reversing changes made by the previous editor. Find a third editor, same.

Incidentally, those who do too much somewhere do too little elsewhere—and editing provides a quite fitting example. Over my writing career I’ve noticed that those who overedit tend to miss the real typos (and vice versa). I once pulled an op-ed from
The Washington Post
owing to the abundance of completely unnecessary edits, as if every word had been replaced by a synonym from the thesaurus. I gave the article to the
Financial Times
instead. The editor there made one single correction: 1989 became 1990.
The Washington Post
had tried so hard that they missed the only relevant mistake. As we will see, interventionism depletes mental and economic resources; it is rarely available when it is needed the most. (Beware what you wish for: small government might in the end be more effective at whatever it needs to do. Reduction in size and scope may make it even more intrusive than large government.)

Let me warn against misinterpreting the message here. The argument is not against the notion of intervention; in fact I showed above that I am equally worried about underintervention when it is truly necessary. I am just warning against
naive
intervention and lack of awareness and acceptance of harm done by it.

It is certain that the message will be misinterpreted, for a while. When I wrote
Fooled by Randomness,
which argues—a relative of this message—that we have a tendency to underestimate the role of randomness in human affairs, summarized as “it is more random than you think,” the message in the media became “it’s all random” or “it’s all dumb luck,” an illustration of the Procrustean bed that changes by reducing. During a radio interview, when I tried explaining to the journalist the nuance and the difference between the two statements I was told that I was “too complicated”; so I simply walked out of the studio, leaving them in the lurch. The depressing part is that those people who were committing such mistakes were educated journalists entrusted to represent the world to us lay persons. Here, all I am saying is that we need to avoid being blind to the natural antifragility of systems, their ability to take care of themselves, and fight our tendency to harm and fragilize them by not giving them a chance to do so.

As we saw with the overzealous editor, over-intervention comes with under-intervention. Indeed, as in medicine, we tend to over-intervene in areas with minimal benefits (and large risks) while under-intervening in areas in which intervention is necessary, like emergencies. So the message here is in favor of staunch intervention in some areas, such as ecology or to limit the economic distortions and moral hazard caused by large corporations.

What should we control?
As a rule, intervening to limit size (of companies, airports, or sources of pollution), concentration, and speed are beneficial in reducing Black Swan risks. These actions may be devoid of iatrogenics—but it is hard to get governments to limit the size of government. For instance, it has been argued since the 1970s that limiting speed on the highway (and enforcing it) leads to an extremely effective increase in safety. This can be plausible because risks of accidents increase disproportionally (that is,
nonlinearly
) with speed, and humans are not ancestrally equipped with such intuition. Someone recklessly driving a huge vehicle on the highway is endangering your safety and needs to be
stopped before he hits your convertible Mini—or put in a situation in which he is the one exiting the gene pool, not you. Speed is from modernity, and I am always suspicious of hidden fragilities coming from the post-natural—we will further show a technical proof in
Chapters 18
and
19
.

But I also buy the opposite argument that regulating street signs does not seem to reduce risks; drivers become more placid. Experiments show that alertness is weakened when one relinquishes control to the system (again, lack of overcompensation). Motorists need the stressors and tension coming from the feeling of danger to feed their attention and risk controls, rather than some external regulator—fewer pedestrians die jaywalking than using regulated crossings. Some libertarians use the example of Drachten, a town in the Netherlands, in which a dream experiment was conducted. All street signs were removed. The deregulation led to an increase in safety, confirming the antifragility of attention at work, how it is whetted by a sense of danger and responsibility. As a result, many German and Dutch towns have reduced the number of street signs. We saw a version of the Drachten effect in
Chapter 2
in the discussion of the automation of planes, which produces the exact opposite effect than what is intended by making pilots lose alertness. But one needs to be careful not to overgeneralize the Drachten effect, as it does not imply the effectiveness of removing all rules from society. As I said earlier, speed on the highway responds to a different dynamic and its risks are different.

Alas, it has been hard for me to fit these ideas about fragility and antifragility within the current U.S. political discourse—that beastly two-fossil system. Most of the time, the Democratic side of the U.S. spectrum favors hyper-intervention, unconditional regulation, and large government, while the Republican side loves large corporations, unconditional deregulation, and militarism—both are the same to me here. They are even more the same when it comes to debt, as both sides have tended to encourage indebtedness on the part of citizens, corporations, and government (which brings fragility and kills antifragility). I believe that both markets and governments are unintelligent when it comes to Black Swan events—though, again, not Mother Nature, thanks to her construction, or more ancient types of markets (like the souks), unlike the ones we have now.

Let me simplify my take on intervention. To me it is mostly about
having a systematic protocol to determine when to intervene and when to leave systems alone. And we may need to intervene to control the iatrogenics of modernity—particularly the large-scale harm to the environment and the concentration of potential (though not yet manifested) damage, the kind of thing we only notice when it is too late. The ideas advanced here are not political, but risk-management based. I do not have a political affiliation or allegiance to a specific party; rather, I am introducing the idea of harm and fragility into the vocabulary so we can formulate appropriate policies to ensure we don’t end up blowing up the planet and ourselves.

There is an element of deceit associated with interventionism, accelerating in a professionalized society. It’s much easier to sell “Look what I did for you” than “Look what I avoided for you.” Of course a bonus system based on “performance” exacerbates the problem. I’ve looked in history for heroes who became heroes for what they did
not
do, but it is hard to observe
nonaction;
I could not easily find any. The doctor who refrains from operating on a back (a very expensive surgery), instead giving it a chance to heal itself, will not be rewarded and judged as favorably as the doctor who makes the surgery look indispensable, then brings relief to the patient while exposing him to operating risks, while accruing great financial rewards to himself. The latter will be driving the pink Rolls-Royce. The corporate manager who avoids a loss will not often be rewarded. The true hero in the Black Swan world is someone who prevents a calamity and, naturally, because the calamity did not take place, does not get recognition—or a bonus—for it. I will be taking the concept deeper in
Book VII
, on ethics, about the unfairness of a bonus system and how such unfairness is magnified by complexity.

However, as always, the elders seem to have far more wisdom than we moderns—and much, much simpler wisdom; the Romans revered someone who, at the least, resisted and delayed intervention. One general, Fabius Maximus was nicknamed Cunctator, “the Procrastinator.” He drove Hannibal, who had an obvious military superiority, crazy by avoiding and delaying engagement. And it is quite fitting to consider Hannibal’s militarism as a form of interventionism (à la George W. Bush,
except that Hannibal was actually in battle himself, not in the comfort of an office) and compare it to the Cunctator’s wisdom.

A very intelligent group of revolutionary fellows in the United Kingdom created a political movement called the Fabian Society, named after the Cunctator, based on opportunistically delaying the revolution. The society included George Bernard Shaw, H. G. Wells, Leonard and Virginia Woolf, Ramsay MacDonald, and even Bertrand Russell for a moment. In retrospect, it turned out to be a very effective strategy, not so much as a way to achieve their objectives, but rather to accommodate the fact that these objectives are moving targets. Procrastination turned out to be a way to let events take their course and give the activists the chance to change their minds before committing to irreversible policies. And of course members
did
change their minds after seeing the failures and horrors of Stalinism and similar regimes.