If there is one thing we can learn from the headlines of the past week or so – Market Plunge Baffles Wall Street, Size of Spill in Gulf of Mexico is Larger Than Thought, ‘Amateurish’ Bomb Defused in Times Square—it is that we cannot reliably forecast the future, that the world is bound to surprise us, frequently in unpleasant ways, and that, as the poet Robert Burns wrote, the best laid schemes of mice and men oft go awry.
Shit, as they say, happens.
And yet we keep on devising those well-laid schemes, don’t we? We extrapolate the future based on the past. We imagine that we can make useful economic forecasts (because now we have more data than we did before). We imagine that regulation will protect use from the meltdowns of markets (as well as off-shore oil drilling platforms and nuclear power plants). We imagine that the Department of Energy can lead us to a clean energy future, or that scientists can make geo-engineering safe. We imagine that we understand things better than we do. And we forget the words of that other poet, John Lennon, who wrote that “life is what happens to you while you’re busy making other plans.”
So the timing is excellent for this week’s updated version of The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb, which includes a new essay called “On Robustness and Fragility.” I’ve haven’t read the essay yet, but Taleb discussed the book and much more with my friend Russ Roberts, the Hayekian economics professor, at EconTalk. Their 67-minute conversation is never dull. [click to continue…]
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