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On Nassim Taleb’s Ten principles for a Black Swan-proof world

http://www.ft.com/cms/s/0…?nclick_check=1

Nassim Taleb‘s latest from the Financial Times titled Ten principles for a Black Swan-proof world provides a brief insight into what Taleb believes caused our current financial crisis and what might prevent a similar crisis going forward.

I’ve excerpted those principles below (pushing the fair-use envelope a bit, perhaps). All italics are NNT’s.

Before delving into Taleb’s ten, I’d like to suggest that NNT’s principles can be (and should be) boiled down to more simpler structural problems/observations. Taleb’s folksy expressions make for useful analogies, but they needlessly complicate some simpler realities:

  • Government-made negative externalities [1, 2, 7] — Legal constructs like corporations and limited liability companies are exploited to offload risk to the public. This subsidizes risks resulting in agents (CEOs, Managers, etc.) taking more and more chances with other people’s money. This is related to the principle-agent problem, which Taleb indicts in [4]. The Ponzi aspect of all of this is intrinsically tied to our leveraged financial system, which is inextricably tied to our centralized, fiat-“money” banking system. To me, this is the biggest point that I’ve yet to see Taleb make — centralized fiat currency is a fragile entity that is inherently leveraged (out of thin air) but can be used to build complex systems of finance. This won’t tend to break early (as we’ve seen). To kill the leverage you have to kill the source of it, which is our centralized non-robust banking system!
  • The Authority Complex [3, 4, 6, 9] — we need a great deal more skepticism in our system and we should not have such centralized power. The problem here is the authority complex — the so-called experts all pontificate to the “ignorant” masses. The masses are too busy or too confused by the magical words of the experts to deduce that the experts don’t know what they are talking about. And like any good con, the con-artistsexperts are able to trick the masses into giving them all the power. I would argue that NNT’s #9, which more or less argues that we should question authority and not trust experts, completely negates NNT’s #6, which suggest that we should be protected from ourselves. Well who is going to protect us when we can’t trust the would-be protectors? That is a problem.
  • Robust complex systems have simple base units that scale [5, 8, 10] — This is the biology angle that is exemplified by metabolic rate scaling over 27 orders of magnitude. A robust system requires simplicity at it’s base. Accounting is a good example of this. Accounting can get incredibly nuanced and complex but can always be brought back to debits and credits. The simplicity of this fundamental rule still enables incredibly complex book-keeping, but puts a governor on the system. You can’t make up assets without creating corresponding credits to the books.

    Compare this to our non-simple, non-robust banking system that holds as it’s core principle the notion of stability in prices and jobs while allowing for unlimited credit (money creation). Not simple.

    Simplicity lends itself to ease of understanding and puts a governor on shenanigans. It’s this fundamental simplicity that enables massive scalability and the emergence of complex systems that are robust.

I’m afraid I might have gotten overly complex in the above. I think what Taleb wants is an organic financial system, one that starts from real economic transactions between human beings and scales upwards from there. Thus, the solution is pretty simple. The base unit is the individual. Fictitious business entities that exist apart from owners are made illegal. No systemic credit structures, which fundamentally follows from the base unit being limited to the individual. This is because such a system would have decentralized banking that would evolve out of whatever needs such an organic economy would require.

This would be the (completely free) market solution, which incidentally most closely mimics biological systems. After all, where in biology do you see stuff created out of thin air (like Corporations or fiat currency)?

And life has been getting along fine for untold millions of years with a simple base units that are the molecules that make up DNA.

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. …

2. No socialisation of losses and privatisation of gains. …

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. …

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. …

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. …

6. Do not give children sticks of dynamite, even if they come with a warning . … Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. …

8. Do not give an addict more drugs if he has withdrawal pains. …

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. …

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. …

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

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More Insight on Erwan Le Corre and the Methode Naturalle

http://naturalathletics.b…ral-method.html

For all things Erwan Le Corre, MovNat, Methode Naturelle, Georges Hebert that I’ve been tracking, be sure to see this Link Repository

Searching around for more information on Erwan Le Corre, Georges Hebert, the Methode Naturale, MovNat, and parkour led me to extensive and informative post by Rafe Kelley written in August of 2007. Rafe trained with Erwan Le Corre in France and has a background in many athletic endeavors including CrossFit and parkour.

Kelley’s experience in CrossFit is of interest to me because CrossFit is often billed as a generalist fitness regiment. However, my four month CrossFit stint was enough to tell me that, as much as CrossFit may be better than any number of other training styles, it still misses the mark as far as a wholistic, generalist training regiment. Perhaps what bothers me most about CrossFit is the combination of a handed-down-on-high workout routine (centralized, highly structured model) with an ostensibly generalist slant to training. In other words, there’s a dogmatism and borg-like quality to CrossFit which is a huge put off to me. I’d be incredibly curious to know if there are serious athletes who aren’t in some way vested in the CrossFit infrastructure who have converted entirely to CrossFit. It just seems to rigid and one-size-fits-all to me. Sure, one-size may fit most, but I wonder if the rigidity of CrossFit is more about converting the masses and expanding the franchise. Just feels like something got lost in the mass expansion.

Excuse the tangent. The meat of his post is Rafe Kelley’s, which I am heavily quoting below:

This is the post I intended to open this blog with a statement about what I know about the Methode Naturelle as my training in Methode Naturelle is going to be the focus of this blog. Up until this spring my primary training focus had been parkour dating back to march of 2005, before that it was gymnastics though with substantially less dedication, and before that it was basketball and before that martial arts. I am now at the point that I can say that the Methode Naturelle has superseded parkour in my training as parkour superseded gymnastics, for me it is more primal more vital more complete like when I started training parkour I have the feeling of how in the world did I miss this before. Why didn’t I ever follow through on my desire to mix parkour training and self defense and why did I yearn for barbells, kettlebells etc when I had so many rocks and logs available to me, what possessed me to waste beautiful sunny days inside training crossfit?

So I am at the point were wish to dedicate my training to the Methode Naturelle and I wish to also help other people follow the same or a similar path. The complication though is that my understanding of the Methode Naturelle is still very incomplete I hesitate to call my training Methode Naturelle, I think of it rather as Methode Naturelle inspired. Imagine for instance you wanted dedicate your life to Muay Thai training but had only had a four-day seminar on it to base your training on. I do think that the Methode Naturelle is bit easier to explore on your own, the principles are relatively simple though the degree of depth possible is seemingly limitless. So the purpose of this post is to explore what I do infact now about the Methode Naturelle. …

The idea of training to have the essential capacities of our hunter forager ancestors had appealed to me ever since I started parkour. It was my goal to eventually open a school teaching what I saw as the original warrior arts. …

The aim of the Methode Naturelle is to develop a complete and healthy human being physically, mentally and morally through the training of the vital natural capacities of the human species that were necessary for our survival as hunter foragers. … The motto of the Methode Naturelle is etre forte pour etre utile meaning be strong to be useful. The training of the Methode Naturelle is not to reach an aesthetic goal or to win an athletic competition it is to prepare the individual to be a strong useful person capable of helping him or herself and the others around them in wide variety of situations.

The vital movement capacities of the Methode Naturelle are to walk, run, jump, climb, quadruped, balance, swim, lift, carry, throw and defend.

A Methode Naturelle training session should be between 20 and 60 minutes and include as many of the natural capacities as possible (generally). The ideal conditions for Methode Naturelle training are in a natural environment with as much of the body exposed to the elements as possible while maintaining modesty. Which is not to say you cannot train the Methode Naturelle in the city or a gym or with shoes on only that this training is not the ideal.

Training should be daily or close to it.

A Methode Naturelle session maybe natural or methodically which is to say one might simple start moving through there environment looking for ways to practice all of the natural capacities for a given time period or one might instead plan out specific route hitting specific capacities or even build a specific course to train each capacity. The obstacle courses seen throughout the world in military training are derived from this last method.

Training each of the ten capacities alone is not sufficient one must be able to chain them together. That is to train one capacity directly after the training of another capacity so that there is no rest between them. so the body is forced to learn to adapt to moving easily between different capacities. This can be very challenging; each capacity has specific physiological demands, which must shift when moving to a different capacity. Furthermore one should be able to mix capacities to be able to run, swim and balance while carrying for instance, or defend yourself while balancing, or swimming, or while climbing this of course adds yet another layer of challenge.

The Methode Naturelle aims to develop a generalized physical capacity not specializations. That is to say to it is the belief of the Methode Naturelle that the athlete who is able to run fast, but also far, to lift very heavy weights but also to climb, to defend himself but also to swim is more useful then the athlete who is peerless at any one of these activities but incompetent or even just less competent at the others. The Methode Naturelle is expressly non competitive because competitive sport is seen as not useful, friendly games are fine but the expression of excess that is modern sport is contrary to the goal of usefulness both in the aim to win at all costs and in the requirement for excessive specialization. The Methode Naturelle athlete, will never run with speed of the sprinter nor the endurance of the marathoner, he or she will never develop the upper body strength of the gymnast or the fighting mastery of the martial artist, he chooses instead, to be as good as he or she can at all of these things and more because he or she never knows what capacity will be called on, for him or her to be useful. According to the Methode Naturelle the generalist is the most useful athlete.

It seems to me very easy to adapt the Methode Naturelle towards developing specific attributes. I am not sure how Hebert approached this, however Erwan talked about seeking to always train the areas were you are weakest. I think this applies both to a specific capacity and also the duration, volume intensity of the training, so one might need to work on their overall running capacity or might specifically need more endurance, or more speed. This can be adjusted by including shorter or longer periods of relative rest (walking, balancing etc) the key is not to stop moving or rest completely. A Methode Naturelle session composed of lots of relative rest, and many short high intensity movements will develop strength, speed, and power, one were the pace is relatively constant and as hard as possible for the given session will develop cardio respiratory endurance, and stamina. My impression is that the later style of training is considered the more basic and important. The amount of relative rest and intensity of work is just one of the many ways in which you can vary your stimuli to develop a broad overall capacity. For instance perhaps one is very strong but lacking in accuracy and wishes to work on the throwing capacity, for this individual finding the heaviest rock he or she could and throwing it would be much less beneficial then finding rock that was much lighter and casting it at a challenging target. In the Methode Naturelle one should always adapt ones training in such a way as to strengthen your weaknesses.

One of the things Erwan often said about the Methode Naturelle was it was not a conditioning program like Crossfit, or RKC or similar functional fitness programs. The Methode Naturelle is an entire method for the development of the human animal. In modern athletics we often dichotomize practice vs. conditioning, one develops technique the other develops physical attributes. This dichotomy is false though, doing precision jumps will develop strength, power, and stamina for jumping as well as correct technique, while doing dead lifts or squats will not only increase the strength of the legs but also will develop a specific lifting skill. I believe this dichotomy arises because of specialization, for instance sprinting is to specific a physical capacity to develop the entire ability of the human being so in order to be the best sprinter one must also lift, and jump and do various other drills but when one trains for a complete physical adaptation the distinction between skill and condition disappears almost completely, when your goal is simply an overall adaptation does it matter if your ability to climb is more due to finger strength or more due to correct technique? If one continues to train correctly both skill and condition should advance together.

… What I have seen consistently though is that the athlete with a highly developed overall physical capacity will need very little time to learn the skill of the athlete who focuses on technique. Traceurs often seem obsessed with developing the saut du chat technique for instance and there are constantly questions on how to do it. I train gymnasts though and they will do this technique very well with absolutely no training at all simply when given an obstacle to overcome were this is an appropriate technique. In short fundamental training proceeds technical training in importance.

Related Link on Human Nature and our Hunter-Gatherer, Non-Specialist Evolutionary Roots