Meet the Black Swan (Part 1 of 3)

One of the unlikeliest bestsellers of 2007 was a book called The Black Swan: The Impact of the Highly Improbable by Lebanese mathematician, Professor Naseem Taleb. In it he persuasively argues that the way we understand history and reality is completely wrong. As much as economists and pundits try to predict the future, what really matters is highly unpredictable events which have a massive but unforeseen impact on the world.

Taleb claims that the most important fact to note about history is, “The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.” He claims that most of the key events of modern history from World War I to the 1974 Oil Shock to the September 11, 2001 terrorist attacks caught the so-called experts completely by surprise, making a mockery of their claims to special insight and expertise.

This happens at a global level and also on a micro level. One example he gives is the case of Bethlehem Steel. In 1989, it was lauded on the cover of BusinessWeek as the best managed company in America. In 2001, it was bankrupt, the victim of a new mini-mill technology that fell outside of its experience but was employed to devastating effect by new rivals. This also reminds me of the way the Internet has managed to cause havoc with traditional media businesses in recent years. It might seem inevitable now, but just a few short years ago no one would have expected that newspapers would be a dying form of media all over the Western world.

The name ‘Black Swan Event’ comes from the medieval certainty that all swans were white. Back then, a ‘black swan’ was regarded as a metaphor for something which is impossible. Yet when the Dutch explorer Willem De Vlamingh discovered black swans in Western Australia in 1697, he upended accepted knowledge about the ‘impossibility’ of the Black Swan. Its meaning then changed to mean something that was considered impossible but came to pass anyway. Taleb provides numerous examples which suggest that these ‘outlier’ events exert an enormous influence on history and every area of human endeavor, repeatedly illustrating that we are all truly ignorant about how the world operates.

According to the author, humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don’t know. We are, therefore, unable to truly estimate opportunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the “impossible.” This means we are continually surprised by the randomness of the world, when history should have taught us to expect it.

Naseem Taleb’s way of looking at the world seems of particular value to anyone interested in Indonesia’s tumultuous politics and history. But I will restrict myself more narrowly than that. In the next two posts, I want to look at all the Black Swans which have floated across the waters of the Indonesian TEFL industry since 2010 and engage in some conjecture about what this should tell us.

The black swan- a symbol of unpredictability

The black swan- a symbol of unpredictability

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