The Cellar - Black Swans

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- - Black Swans (http://cellar.org/showthread.php?t=23260)

Quote:

The bestselling economist Nassim Nicholas Taleb argues that we can’t make the world financial system immune to shocks –– but we can make sure it’s much more robust by building randomness into our planning.
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Let me summarise my ideas of how Mother Nature deals with the Black Swan. First, she likes redundancies. Look at the human body. We have two eyes, two lungs, two kidneys, even two brains (with the possible exception of company executives) - and each has more capacity than is needed ordinarily. So redundan*cy equals insurance, and the apparent inefficiencies are associated with the costs of maintain*ing these spare parts and the energy needed to keep them around in spite of their idleness.

The exact opposite of redundancy is naive optimisation. The reason I tell people to avoid attending an (orthodox) economics class and argue that economics will fail us is the following: economics is largely based on notions of naive optimisation, mathematised (poorly) by Paul Samuelson - and these mathematics have contributed massively to the construction of an error-prone society. An economist would find it inefficient to carry two lungs and two kidneys - consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first "outlier". Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys - since we do not need them all the time, it would be more "efficient" if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.

Almost every major idea in conventional economics fails under the modification of some assumption, or what is called "perturbation", where you change one parameter or take a parameter henceforth assumed to be fixed and stable by the theory, and make it random. Take the notion of comparative advantage, supposedly discovered by David Ricardo, and which has oiled the wheels of globalisation. The idea is that countries should focus on "what they do best". So one country should specialise in wine, another in clothes, even though one of them might be better at both. But consider what would happen to the country if the price of wine fluctuated. A simple perturbation around this assumption leads one to reach the opposite conclusion to Ricardo. Mother Nature does not like overspecialisation, as it limits evolution and weakens the animals.

This is what I've been thinking for a long time... very weak animals.

link

Very acute thinking here. We have wound our societies up to near maximum optimisation. We have awfully little redundancy in case of mishap.
It applies at most levels - people's finances, companies running on just-in-time inventory, cities with only a few days worth of food in them.
This year a dinky little volcano is Iceland shut down a big chunk of global air traffic; strange consequences rippled around the planet. There are dozens of potential hazards much worse than some volcano no one can pronounce - solar storm, asteroid, plague, nuclear exchange, or even just a coincidence of minor glitches at crucial places like oil refineries.

I probably shouldn't think about this too much.

Food is the biggie. Our grain, vegetables, and cattle have all been optimized to the point where a catastrophic failure based in one little virus or insect could cause wholesale disaster.

Bees.

That or a supervolcano.

swans? what?

I think we should all be growing our own food. At least a tomato plant!

I would argue that having two eyes is not redundant - nor is having two ears. And why do we have only one heart, if that's so important? Who makes these decisions?

And, while I'm at it, I've long felt that we need more fingers, but on various parts of our bodies.

Quote:

Originally Posted by Cloud

I think we should all be growing our own food. At least a tomato plant!

My tomatoes died a horrible and unproductive death. But our bell peppers are doing fantastic. Tell you what, I'll grow the bell peppers, you grow the tomatoes, and we'll ship each other... wait--dammit!

Quote:

Originally Posted by HungLikeJesus (Post 673586)

I would argue that having two eyes is not redundant - nor is having two ears.

You would if you lost one.

I was temporarily without the services of one eye for a while. The second eye is not just back-up. Binocular vision makes 3-D processing possible. Likewise for the second ear.

Two works better, but it's a hell of a lot easier to get along with one, than none.
I have one ear that doesn't work for shit any more. It's a pain in the ass, but I'm certainly glad the other one works some.