economics – Waving, not drowning

by Nassim Nicholas Taleb

I’ve just started reading this, and wanted to say TYPOS before I forgot. Not that I could forget, there’s one every couple of pages. Which is annoying, as there is clearly good stuff in here, from which this detracts – those formulae that I can’t quite follow through, is that a typo, an error by the author, or just me being dim? Hmm… I shall report more as I get further in…

Right, we’ve finished it now. Taleb is certainly opinionated – very opinionated about other people and their views, at times, and personally I felt this rather detracted from the writing. Keep it for the Twitter wars, mate, really.

The book is a compilation of a number of papers, some of them quite technical, about the subject matter. Throughout, I ran into the issue mentioned in the first paragraph – typos are rife, and quite disturbing in the middle of formulae or proofs.

Much of what Taleb says, however, is important, even if he does rather aim at getting in his retribution first against his perceived opposition. He’s quite right, fundamentally, about the difference between probability and reality: in the real world, there are no probabilities – things happen, or they don’t. Probability expresses our uncertainty, not a real-world property of objects (perhaps quantum mechanics aside – although by some interpretations, this is just as true there, too). So we need to be very very careful when we apply simple to manipulate theorems of probability (such as the Gaussian distribution) to real-world problems, especially when we are making high-impact decisions based on the result of those manipulations. Examples abound, but the most dramatic is perhaps the Value at Risk (VaR) calculations that were supposed to keep our financial institutions “safe” during market turbulence, and which so spectacularly failed to do so in the 2008 financial crisis.

Tough for me to review this book usefully. I’m pretty mathematically smart, but I still couldn’t follow all of the arguments. I’m sure others with more of the appropriate background could do so, but in this case I’m not sure it went far enough. Replacing VaR by Extreme Value Theory is all very well to talk about in principle, but you’re going to need a lot more detail to make it practical, for example.

Three stars, in the end, for the sound argument, counterbalanced by TYPOS and unnecessary sarcasm from the author.

Poverty Safari: Understanding the Anger of Britain’s Underclass by Darren McGarvey
My rating: 4 of 5 stars

This book is a scream of rage at modern Western society. McGarvey manages to do this while acknowledging that the same society contains the seeds of the solution. He also sees very clearly the processes that create the problems.

Darren McGarvey was brought up on one of the most challenging estates outside Glasgow in the 1990s. Except that “brought up” is an exaggeration – better to say he survived an often personally dangerous childhood with an alcoholic and depressive mother, a father he fell out with, bullying an everyday fact of life, addiction to drugs, alcohol and fast food an everpresent reality. Behind this all, he contends, are the brutal battering from the stresses of extreme poverty.

He’s fairly unflinching in his views of the world – judging all by the standards he came to recognise as reality, from the highest to the low:

“People who are convicted of crimes very rarely think the law has been applied fairly to them. This is as true of serial killers as it is of petty thieves. Most people find it hard to accept even the most banal forms of legal responsibility. Think how indignant drivers get when they receive legitimate parking tickets or speeding fines. Everyone always has a good reason as to why they are the exception to a rule they are being subjected to and it’s very rare that a person holds their hands up and accepts culpability. Most people believe their circumstances are unique and that the rules shouldn’t apply.”

He holds no truck with the press, and their relentless middle-class approach to the world:

“On the day women were legally obliged to provide proof of their rape to claim benefit designed to ease the burden of in-work poverty on their children, the national news was dominated by a family who felt hard done by because they were fined £60 for taking their daughter to Florida. I’m not saying both parties do not have the right to feel equally aggrieved at their respective circumstances, but surely one deserves more prominence than the other in the public mind?”

or:

“Being underclass is to sit, day after day, and scroll through a news feed full of Guardian articles that are confirming things you knew were the case 20 years prior. ‘Study finds children living in dysfunction can’t learn’, ‘Experts say sugar is addictive’ or, my personal favourite, ‘Survey discovers the arts is dominated by middle class people’.”

His tough mindedness and his honesty are sometimes challenging, but I think he would say he doesn’t care – he’s trying to get a message across, and he does what he needs to do in order to ensure it sticks. Each chapter is part of a thread, telling a story to deliver his message. It certainly changed my views on what the lived experience is like today in Britain for many people:

“Much like the school curriculum, where your value is derived not only from your ability to think and reason but also from your willingness to submit to a process, the conversation about decision-making in your own community follows a similar pattern. You must engage within the parameters set by the people who are really in charge.”

I also came away better informed on the complexities and difficulties that lie behind the simplistic phrases and glib generalisations of those in the “poverty industry”, who often tacitly need the problems to continue to justify their roles and funding. However, McGarvey isn’t afraid also to challenge those in poverty themselves, encouraging them to take personal responsibility – if only because actually there are no “quick wins” coming from politicians or the third sector.

View all my reviews