Extremistan

 

Taleb’s Extermistan thesis

 

 

 

The central point is that we have created a world we don’t understand. There’s a place he calls Mediocristan. This was where early humans lived. Most events happened within a narrow range of probabilities – within the bell-curve distribution still taught to statistics students. But we don’t live there anymore. We live in Extremistan, where black swans proliferate, winners tend to take all and the rest get nothing – there’s Bill Gates, Steve Jobs and a lot of software writers living in a garage, there’s Domingo.

 

 

As the economy becomes digital, feedback is stronger, and the inequality and power law is greater

 

 

Complex systems are full of interdependencies— hard to detect— and nonlinear responses. “Nonlinear” means that when you double the dose of, say, a medication, or when you double the number of employees in a factory, you don’t get twice the initial effect, but rather a lot more or a lot less. Two weekends in Philadelphia are not twice as pleasant as a single one— I’ve tried. When the response is plotted on a graph, it does not show as a straight line (“linear”), rather as a curve. In such environments, simple causal associations are misplaced; it is hard to see how things work by looking at single parts.Man-made complex systems tend to develop cascades and runaway chains of reactions that decrease, even eliminate, predictability and cause outsized events. So the modern world may be increasing in technological knowledge, but, paradoxically, it is making things a lot more unpredictable.