Conversations With History

It’s a problem familiar to anyone who has walked the hills: finding the easiest path from A to B. That is typically time to break out the topographic map and plot a course over the contour lines that never exceed your best sustainable gradient; to find the route you can walk without having a heart attack. That was the metaphor that suggested itself as I reviewed a friend’s book manuscript, whose thesis is simple: the world, he argues, is running out of cheap energy, peace and food.

He thinks the old order is fading. Unless we find a way to ‘transition’ to a new set of arrangements the world is doomed to a bleak future. For starters, the Pax Americana is falling apart. Security, even if it can be continued, will become more expensive and uncertain.

Secondly, Green politics is delaying the transition to sustainable nuclear energy. If we go back to a windmill world we’ll live at a windmill standard. Lastly, he argues that the world rather than warming may in fact be cooling, which if true would drastically reduce the amount of land available for productive cultivation. See that loaf of bread on your table? You may remember it fondly one day. If all three hit then the party is over.

Whatever one thinks of his particular predictions the central question it raises is evergreen: how does one survive or prosper in a discontinuity? The question is equivalent to Naseem Taleb’s formulation of fragility and anti-fragility.

“Simply, antifragility is defined as a convex response to a stressor or source of harm (for some range of variation), leading to a positive sensitivity to increase in volatility (or variability, stress, dispersion of outcomes, or uncertainty, what is grouped under the designation “disorder cluster”). Likewise fragility is defined as a concave sensitivity to stressors, leading a negative sensitivity to increase in volatility. The relation between fragility, convexity, and sensitivity to disorder is mathematical, obtained by theorem, not derived from empirical data mining or some historical narrative. It is a priori.”

Them’s a whole lot of words. Larry Prusak of the Harvard Business Review writes ” I am unqualified to evaluate Taleb’s use of statistics and probability (few are, to judge from the long list of technical papers on his CV) and even if I had the right education for it, I couldn’t manage a full defense in the space of a blog post.” But he gets the sense.

Essentially anti-fragile things get stronger with stress or competition while fragile things try to stay the same and build up stresses and eventually break in the process.

But the two most important words in the Taleb definition are “convex” and “concave”. A convex set is one in which you can go from any point to any point while remaining in the same set. You never leave it. But a concave set is different in one important way: you must sometimes leave the set to reach another part of it.

Convex

Concave

In an anti-fragile set you can move to better solutions without traversing a discontinuity. By contrast, in a fragile solution set, the system has to “break” or exit the set to get to the next resting place. In terms of our hillwalking metaphor, the fragile climber must traverse a route where he must risk a heart attack to get to the next safe place.

There’s ample evidence to suggest the world is changing. We learn from the New York Times that online courses are going to hammer the academy; from Kofi Annan that it is “too late” for military intervention Syria; from Foreign Affairs that R2P (“responsibility to protect”) is possibly discredited; that we may never have the time to detect an Iranian atomic weapon; that a worldwide front of totalitarian countries is coalescing; that Northern Lebanon is burning; hear from Mortimer Zuckerman that we are in worse than the Great Depression, we are in the Great Illusion; or that the military is wargaming a nuclear failed state in Korea. If the old world is passing away, if the maps are being redrawn then we have to ask: are we really safe?

Or are we in transition and if so, who is managing the transition from the old to new? Who is plotting the minimum energy path across the contour lines? Who is ensuring that our solution set is convex and does not depart into the concave wilderness of crisis and war? Who?

No one obvious is performing this task for the simple reason that the institutions which are supposed to manage these changes are themselves part of the changing system. They do not stand outside of things. They’re in the soup like the rest of us.

Thus, those think the EU or the Obama administration or Ben Bernanke will “save us” are probably going to be disappointed. It’s hard enough to save Cyprus. It may be impossible to “save” Syria. Who’s going to bet they’re gonna save you?

Yet people do win through. History shows that the world keeps spinning; even though the needle jumps the track a few times. This means there exists in the world as it is anti-fragile elements that given enough time will fix stuff and rebuild. If the world comes to the brink it never really ends.

How does it achieve this? Probably because elements of the current institutional system, parts of the academy, sections of the government, trends in culture, etc may constitute, albeit unconsciously the adaptive system that will succeed.

But although we are probably going to “make it” we are hard pressed to say how. One is tempted to say that any institution that claims to plot, with determinate accuracy, the solution to the problems of the world is almost certainly wrong. Yet we have great confidence that, in interaction with the facts, and given a modicum of intelligence, we will almost certainly get it right in the end.

This suggests the idea that the intractability of the problem arises from missing information. We need information that has not yet arrived to find the solution to the coming crisis. Humanity isn’t playing a game of Solitaire with itself. It’s playing against reality across the table. That is why a central planner who “knows the answer” to the future is probably in error. He cannot know the answer yet; he cannot even guess it until the player opposite turns his card.

That further suggests that the best strategy consists in knowing how to read the cards and having a pile of chips handy. History is replete with stories of commanders who, when faced with the uncertain, created a contingency force and waited to see what rumbled out of the mist. It didn’t always work, but knowing how to play and having a stash worked better than betting blind, as if one knew what would happen when one didn’t.

The problem with most political institutions is that they are almost congenitally incapable of responding to a problem by saying “I don’t know”. Thus they spend on solutions as if they knew what the solutions were. Rather than building up a reserve they go into deficit. They bet the farm, spend all their chips, and then too often, they bet wrong. By acting beyond the actual extent of their knowledge institutions become fragile because they are Too Smart To Be Wrong (TSTBW).

We have to learn how to be Smart Enough to Know We Don’t Know.

Will the dire predictions in my friend’s book come true? Who knows. But it is not the specific predictions in it but the attitude it conveys that is probably its most important message. The world is an uncertain place. Just because we’ve enjoyed 70 years of peace and prosperity doesn’t the the Party won’t end.

You can plan on living the Life of Julia, the cradle to grave scenario beloved by the central planners, but the odds are that you can’t.