The ethics of betting against suckers will be discussed in Book VII, but there are two schools of thought. To Nero one should first warn people that they are suckers, while Tony was against the very notion of warning. “You will be ridiculed,” he said; “words are for sissies.” A system based on verbal warnings will be dominated by non-risk-taking-babblers. These people won’t give you and your ideas respect unless you take their money.
Further, Fat Tony insisted that Nero take a ritual look at the physical embodiments of the spoils, such as a bank account statement—as we said, it had nothing to do with the financial value, nor even the purchasing power, of the items, just their symbolic value. He could understand why Julius Caesar needed to incur the cost of having Vercingetorix, the leader of the Gaul rebellion, brought to Rome and paraded in chains, just so he could exhibit victory in the flesh.
There is another dimension to the need to focus on actions and avoid words: the health-eroding dependence on external recognition. People are cruel and unfair in the way they confer recognition, so it is best to stay out of that game. Stay robust to how others treat you. Nero at some stage befriended a scientist of legendary status, a giant for whom he had immense respect. Although the fellow was about as prominent as one could get in his field (in the eyes of others), he spent his time focused on the status he had that week in the scientific community. He would become enraged at authors who did not cite him or at some committee granting a medal he had never received to someone he judged inferior, that impostor!
Nero learned that no matter how satisfied they could be with their work, these hotshots-who-depended-on-words were deprived of Tony’s serenity; they remained fragile to the emotional toll from the compliments they did not get, the ones others got, and from what someone of lower intellect stole from them. So Nero promised himself to escape all of this with his small ritual—just in case he should fall prone to the hotshot’s temptation. Nero’s spoils from what he called the “Fat Tony bet,” after deducting the cost of a new car (a Mini) and a new $60 Swatch watch, amounted to a dizzyingly large amount sitting in a portfolio, the summary of which was mailed to him monthly from (of all places) a New Jersey address, with three other statements from overseas countries. Again, it is not the amount but the tangibility of his action that counted—the quantities could have been a tenth, even a hundredth as much and the effect would remain the same. So he would cure himself of the game of recognition by opening the envelope containing the statement and then going on with his day, oblivious to the presence of those cruel and unfair users of words.
But to follow ethics to their natural conclusion, Nero should have felt just as proud—and satisfied—had the envelope contained statements of losses. A man is honorable in proportion to the personal risks he takes for his opinion—in other words, the amount of downside he is exposed to. To sum him up, Nero believed in erudition, aesthetics, and risk taking—little else.
As to the funds, to avoid the charity trap, Nero followed Fat Tony’s rule of systematically making donations, but not to those who directly asked for gifts. And he never, never gave a penny to any charitable organization, with the possible exception of those in which not a single person earned a salary.
Loneliness
A word on Nero’s loneliness. For Nero, in the dark days before the economic crisis of 2008, it sometimes caused him pain to be alone with his ideas—wondering at times, typically Sunday nights, if there was something particularly wrong with him or if there was something wrong with the world. Lunch with Fat Tony was like drinking water after an episode of thirst; it brought immediate relief to realize that he was either not crazy, or at least not alone in being crazy. Things out there did not make sense, and it was impossible to convey it to others, particularly people deemed intelligent.
Consider that of the close to a million professionals employed in economic activities, whether in government (from Cameroon to Washington, D.C.), academia, media, banking, corporations, or doing their own private homework for economic and investment decisions, fewer than a handful saw it coming—furthermore, an even smaller handful managed to foresee the full extent of the damage.
And of those who saw it coming, not a single one realized that the crisis was a product of modernity.
Nero could stand near the former World Trade Center site in downtown New York, across from the colossal buildings housing mostly banks and brokerage houses, with hundreds of people running around inside them, expending gigawatts of energy just moving and commuting from New Jersey, consuming millions of bagels with cream cheese, with insulin response inflaming their arteries, producing gigabytes of information just by talking and corresponding and writing articles.
But noise it was: wasted effort, cacophony, unaesthetic behavior, increased entropy, production of energy that causes a local warming up of the New York area ecozone, and a large-scale delusion of this thing called “wealth” that was bound to evaporate somehow.
You could stack the books and they would constitute an entire mountain. Alas, to Nero anything in them that deals with probability, statistics, or mathematical models is just air, in spite of evidence that and evidence this. And you learn more in a few lunches with Fat Tony than from the social science sections of the Harvard libraries,1 with close to two million books and research papers, for a total of 33 million hours of reading, close to nine thousand years’ worth of reading as a full-time activity.
Talk about a major sucker problem.
What the Nonpredictor Can Predict
Fat Tony did not believe in predictions. But he made big bucks predicting that some people—the predictors—would go bust.
Isn’t that paradoxical? At conferences, Nero used to meet physicists from the Santa Fe Institute who believed in predictions and used fancy prediction models while their business ventures based on predictions did not do that well—while Fat Tony, who did not believe in predictions, got rich from prediction.
You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble, perhaps even go bust. Why? Someone who predicts will be fragile to prediction errors. An overconfident pilot will eventually crash the plane. And numerical prediction leads people to take more risks.
Fat Tony is antifragile because he takes a mirror image of his fragile prey.
Fat Tony’s model is quite simple. He identifies fragilities, makes a bet on the collapse of the fragile unit, lectures Nero and trades insults with him about sociocultural matters, reacting to Nero’s jabs at New Jersey life, collects big after the collapse. Then he has lunch.
1 The only exception in that social science library is a few small sections in the cognitive science literature—some of it works.
CHAPTER 10
Seneca’s Upside and Downside
How to survive advice—To lose nothing or gain nothing—What to do on your next shipwreck
A couple of millennia before Fat Tony, another child of the Italian peninsula solved the problem of antifragility. Except that, more intellectual than our horizontal friend, he spoke in a more distinguished prose. In addition, he was no less successful in the real world—actually he was vastly more successful in business than Fat Tony, and no less intellectual than Nero. The fellow was the stoic philosopher Seneca, whom we mentioned earlier was the alleged lover of Nero’s mother (he was not).
And he solved the problem of antifragility—what connects the elements of the Triad—using Stoic philosophy.
Is This Really Serious?
Lucius Annaeus Seneca was a philosopher who happened to be the wealthiest person in the Roman Empire, partly owing to his trading acumen, partly for having served as the tutor of the colorful Emperor Nero, the one who tried to whack his mother a few chapters ago. Seneca subscribed to, and was a prominent expositor of, the philosophical school of Stoicism, which advanced a certain indifference to fate. His work has seduced people like me and most of the friends to whom I introduced his books, because he speaks to us; he walked t
he walk, and he focused on the practical aspect of Stoicism, down to how to take a trip, how to handle oneself while committing suicide (which he was ordered to do), or, mostly, how to handle adversity and poverty and, even more critically, wealth.
Because Seneca was into practical decision making, he has been described—by academics—as not theoretical or philosophical enough. Yet not a single one of his commentators detected in Seneca the ideas about asymmetry that are central to this book, and to life, the key to robustness and antifragility. Not one. My point is that wisdom in decision making is vastly more important—not just practically, but philosophically—than knowledge.
Other philosophers, when they did things, came to practice from theory. Aristotle, when he attempted to provide practical advice, and a few decades earlier Plato, with his ideas of the state and advice to rulers, particularly the ruler of Syracuse, were either ineffectual or caused debacles. To become a successful philosopher king, it is much better to start as a king than as a philosopher, as illustrated in the following contemporary story.
Modern members of the discipline of decision theory, alas, travel a one-way road from theory to practice. They characteristically gravitate to the most complicated but most inapplicable problems, calling the process “doing science.” There is an anecdote about one Professor Triffat (I am changing the name because the story might be apocryphal, though from what I have witnessed, it is very characteristic). He is one of the highly cited academics of the field of decision theory, wrote the main textbook and helped develop something grand and useless called “rational decision making,” loaded with grand and useless axioms and shmaxioms, grand and even more useless probabilities and shmobabilities. Triffat, then at Columbia University, was agonizing over the decision to accept an appointment at Harvard—many people who talk about risk can spend their lives without encountering more difficult risk taking than this type of decision. A colleague suggested he use some of his Very Highly Respected and Grandly Honored and Decorated academic techniques with something like “maximum expected utility,” as, he told him, “you always write about this.” Triffat angrily responded, “Come on, this is serious!”
By contrast, Seneca is nothing but “this is serious.” He once survived a shipwreck in which other family members perished, and he wrote letters of practical and less practical advice to his friends. In the end, when he took his own life, he followed excellently and in a dignified way the principles he preached in his writings. So while the Harvard economist is only read by people trying to write papers, who in turn are read by people trying to write papers, and will be (hopefully) swallowed by the inexorable b***t detector of history, Lucius Annaeus, known as Seneca the Younger, is still read by real people two millennia after his passing.
Let us get into his message.
Less Downside from Life
We start with the following conflict. We introduced Seneca as the wealthiest person in the Roman Empire. His fortune was three hundred million denarii (for a sense of its equivalence, at about the same period in time, Judas got thirty denarii, the equivalent of a month’s salary, to betray Jesus). Admittedly it is certainly not very convincing to read denigrations of material wealth from a fellow writing the lines on one of his several hundred tables (with ivory legs).
The traditional understanding of Stoicism in the literature is of some indifference to fate—among other ideas of harmony with the cosmos that I will skip here. It is about continuously degrading the value of earthly possessions. When Zeno of Kition, the founder of the school of Stoicism, suffered a shipwreck (a lot of shipwrecks in ancient texts), he declared himself lucky to be unburdened so he could now do philosophy. And the key phrase reverberating in Seneca’s oeuvre is nihil perditi, “I lost nothing,” after an adverse event. Stoicism makes you desire the challenge of a calamity. And Stoics look down on luxury: about a fellow who led a lavish life, Seneca wrote: “He is in debt, whether he borrowed from another person or from fortune.”1
Stoicism, seen this way, becomes pure robustness—for the attainment of a state of immunity from one’s external circumstances, good or bad, and an absence of fragility to decisions made by fate, is robustness. Random events won’t affect us either way (we are too strong to lose, and not greedy to enjoy the upside), so we stay in the middle column of the Triad.
What we learn from reading Seneca directly, rather than through the commentators, is a different story. Seneca’s version of that Stoicism is antifragility from fate. No downside from Lady Fortuna, plenty of upside.
True, Seneca’s aim on paper was philosophical, trying to stick to the Stoic tradition as described above: Stoicism was not supposed to be about gains and benefits, so on paper it was not at the level of antifragility, just about a sense of control over one’s fate and the reduction of psychological fragility. But there is something that commentators have completely missed. If wealth is so much of a burden, while unnecessary, what’s the point of having it? Why did Seneca keep it?
As I said concerning the psychologists who in Chapter 2 ignore post-traumatic growth but focus on post-traumatic harm, intellectuals have this thing against antifragility—for them the world tends to stop at robustness. I don’t know what it is, but they don’t like it. This made them avoid considering that Seneca wanted the upside from fate, and there is nothing wrong with it.
Let us first learn from the great master how he advocated the mitigation of downside, the standard message of the Stoics—robustness, protection against harm from emotions, how to move away from the first column of the Triad, that sort of thing. Second step, we will show how he truly proposed antifragility. And, third step, we will generalize his trick into a general method of detection of antifragility in Chapters 18 and 19.
Stoicism’s Emotional Robustification
Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile. Let us return to the story of Damocles’ sword. There is no good news in store, just plenty of bad news in the pipeline. When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat. A rich person becomes trapped by belongings that take control of him, degrading his sleep at night, raising the serum concentration of his stress hormones, diminishing his sense of humor, perhaps even causing hair to grow on the tip of his nose and similar ailments. Seneca fathomed that possessions make us worry about downside, thus acting as a punishment as we depend on them. All upside, no downside. Even more: dependence on circumstances—rather, the emotions that arise from circumstances—induces a form of slavery.
This asymmetry between the effects of good and bad, benefit and harm, had to be familiar to the ancients—I found an earlier exposition in Livy: “Men feel the good less intensely than the bad” (segnius homines bona quam mala sentiunt), he wrote half a generation before Seneca. Ancients—mostly thanks to Seneca—stay way ahead of modern psychologists and Triffat-style decision theorists who have developed theories around the notion of “risk (or loss) aversion,” the ancients remain deeper, more practical, while transcending vulgar therapy.
Let me rephrase it in modern terms. Take the situation in which you have a lot to lose and little to gain. If an additional quantity of wealth, say, a thousand Phoenician shekels, would not benefit you, but you would feel great harm from the loss of an equivalent amount, you have an asymmetry. And it is not a good asymmetry: you are fragile.
Seneca’s practical method to counter such fragility was to go through mental exercises to write off possessions, so when losses occurred he would not feel the sting—a way to wrest one’s freedom from circumstances. It is similar to buying an insurance contract against losses. For instance, Seneca often started his journeys with almost the same belongings he would have if he were shipwrecked, which included a blanket to sleep on the ground, as inns were sparse at the time (though I need to qualify, to set things in the context of the day, that he had accompanying him “only one or two slaves”).
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To show how eminently modern this is, I will next reveal how I’ve applied this brand of Stoicism to wrest back psychological control of the randomness of life. I have always hated employment and the associated dependence on someone else’s arbitrary opinion, particularly when much of what’s done inside large corporations violates my sense of ethics. So I have, accordingly, except for eight years, been self-employed. But, before that, for my last job, I wrote my resignation letter before starting the new position, locked it up in a drawer, and felt free while I was there. Likewise, when I was a trader, a profession rife with a high dose of randomness, with continuous psychological harm that drills deep into one’s soul, I would go through the mental exercise of assuming every morning that the worst possible thing had actually happened—the rest of the day would be a bonus. Actually the method of mentally adjusting “to the worst” had advantages way beyond the therapeutic, as it made me take a certain class of risks for which the worst case is clear and unambiguous, with limited and known downside. It is hard to stick to a good discipline of mental write-off when things are going well, yet that’s when one needs the discipline the most. Moreover, once in a while, I travel, Seneca-style, in uncomfortable circumstances (though unlike him I am not accompanied by “one or two” slaves).
Antifragile: Things That Gain from Disorder Page 18
