Know what you don't know

The book is all about how little we know; even if we know something, how thoughtless we are; and, if we sit back and introspect, how limited are our powers of reasoning. There are, therefore, two reasons to read the book. One, you are a masochist and enjoy being hit on the head at the end of each paragraph. Two, you have an open mind, are willing to listen to alternative thoughts and are confident enough not to be angered by someone continually implying that you, along with most others, are a silly fool. If you are an economist, there is an additional reason for reading it; if you agree with some of what the author is saying, you may actually end up becoming a monk and giving up your discipline altogether, unless, of course, you are an economist who believes in enabling systems and do not prescribe what should be done by others. In other words, if you are not a policy wonk, you will wish you had written it.

Taleb has an aggressive style, pokes you in the eye and is usually disrespectful of most famous thinkers and socially successful people. So, if you are wearing a tie do not go near him; if you are a financial expert or an economist in a bank or a financial institution, stay away from him. There are, however, a handful of people he loves and respects. The book is easy reading (I quite like the bantering style) but often you have to read large parts of it many times to fully comprehend what is being said. And that is because some of the discussions are so different from what we are used to.

For instance, according to the book, acquiring knowledge is not about knowing more things. It is more about knowing precisely how much one does not know. Pushing out the frontiers of knowledge is tantamount to increasing the set of things you are sure you do not know. From "I think I know this" you move to "I am certain I do not know this part of what I thought I knew". The significance of such an approach to knowledge is that you have a whole new way of approaching the decision-making process in an uncertain world. You stop making decisions relying on what you "think" you know but start taking decisions to cover yourself regarding what you do not know.

Though everyone can read the book""would have said "must" but the book has made me sceptical of everything I say""it is extremely subtle at times and needs to be read and re-read to fully comprehend what the author is saying. The main point of the book is that the world is driven by rare events. Hence, the law of averages and the Gaussian bell curve, which deal with events around the hump of the curve, do not help us predict change. Not surprisingly, the author states, no one predicted the exact, or even approximate, time of the demise of the Soviet Union. This was not simply because our model for prediction was wrong; it was because we cannot predict social change as they are brought about by rare events, and often, a combination of rare events making the whole change even more unlikely before it actually happens.

Perhaps the book will be read by some serious policymaker and be moved by it. Perhaps that will set a new trend in how to reform economies and societies. If what the book says is accepted by the policymaker, she will know immediately that it is dangerous to direct the economy towards a Utopian goal. There are too many unknowns lurking round the corner for her to know how the next few years are shaping up. Thus, while it is all right to plan one's own life the way one wants, it is silly to plan the way a society, or economy, will look in the future. Indeed, what the policymaker can do at best is to ensure that she builds a society flexible enough to accept change and move on, making the best out of whatever happens and not try to predict what will happen.

The book is a call to arms for all those who are sceptical of what they know and are willing to stand up and say that they do not know. But then that is what distinguishes some from the others, those management gurus and famous people who claim to have identified the path to success, knowledge and fulfilment.

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The Black Swan
The Impact of the Highly Improbable

Nassim Nicholas Taleb
Allen Lane
Price: 495; Pages: 366