The Black Swan & the Benedict Option

The idea is to make enough food to feed yourself and your family/community, right? Not to get wealthy, just to survive.

What about the urban poor in the midst of such a catastrophe? What of our responsibilities to our fellow creatures. I'm a little concerned that our hunkering down might have more than a smidge of selfishness to it -- not that it would be the wrong thing, necessarily, but how might we respond to the very real needs of the other in such a circumstance? Just saying.
Hippimama

Rod's right, Pestrovia, for a small, family farm you don't need bees. They can easily pollinate the acreage they need to feed themselves plant by plant by hand themselves in as many weeks. As to the weather, unpredictable monsoons and droughts, that's what the hose pipe is for. Farmers have been irrigating crops for quite a while now.

Barry

Who sees Black Swans today? What are they?

Taleb believes that "Black Swans" are rare and consequential events that are only predictable in retrospect, and we humans will always fail in guessing the next Black Swan because:

Domain specificity (we can think only in the context in which the subject is presented)

Confirmation bias (our desire to reaffirm our prior beliefs rather than contradict them)

Narrative fallacy (our weakness to use compelling stories to understand and so we use past information on random events)

Silent evidence (our failure to account for what we cannot see – the losers, the extinct)

Ludic fallacy (misunderstanding natural randomness to be casino randomness that can be calculated, and our willingness to oversimplify the real world to fit models that are not true)

Epistemic arrogance (we overestimate what we know, but underestimate the depth of our ignorance – yet what we don’t know, our unread books, are more important than what we do know, our read books)

It will be interesting to spot which of these errors we see in this combox! Personally, I always fall for the Narrative fallacy.

Taleb's method to avoid the consequences of Black Swans: first, quit trying to guess them! Next...

1) Get yourself into the river of life where massive positive contingency might occur but downside risk seems acceptable.

2) Don't look for the precise and the local... but work hard to let contingency enter your working life. In other words, don’t get trapped in a rut. Be willing to change rapidly (examples: Be ready to quit your job. Meet different people. Read what nobody else is reading).

3) Seize any opportunity, or anything that looks like an opportunity that has reasonable downside risks. But don't think it's going to come along again; rather, watch for something else.

4) Be aware that most of life is just luck, and that you never hear about the losers, only the winners, so be conservative 80% of your life to cover your needs and then take big risks with the remaining 20%. Don’t get discouraged when risks rarely pay off. Just keep plugging away, knowing failure is most likely.

5) Never trust “experts” or think anybody knows anything. Nobody has a clue, because Black Swans can hit at any time and upset the conventional wisdom.

Confirmation bias and narrative fallacy are the errors I'm most susceptible to.

Rod, I'm reading Wendell Berry's essay "Faustian Economics" in the May 2008 Harper's. You would enjoy reading it if you haven't seen it already. Here's a relevant quote on the question of a small farm:

Perhaps our most serious cultural loss in recent centuries is the knowledge that some things, thought limited, are inexhaustible. For example, and ecosystem, event that of a working forest or farm, so long as it remains ecologically intact, is inexhaustible. A small place, as I know from my own experience, can provide opportunities of work and learning, and a fund of beauty, solace, and pleasure - in addition to its difficulties - that cannot be exhausted in a lifetime or in generations.

>>>>
What about the urban poor in the midst of such a catastrophe? What of our responsibilities to our fellow creatures. I'm a little concerned that our hunkering down might have more than a smidge of selfishness to it --
Posted by: Hippimama | April 12, 2008 5:04 PM
>>>>

If nothing else, by becoming self sufficient in food production, those already prepared and hunkering down will not be competing with the urban poor for the limited resources available to them.

About having a farm in tough times: my grandmothers have very different memories of the Depression, because one grew up on a farm during that period and the other grew up in a city. (Both were farmers by adulthood.) The one who was a city girl during the Depression remembers it as a horrible time of poverty and hunger that's still tough for her to talk about. The one who lived on a farm says times were tight, but it didn't really affect them that much, because they had their own garden, meat, and eggs right there just like they always did. Luxuries from town may have been scarce because there was no money, but food wasn't.

And as Biggs says, it has to be the small, diversified, self-sufficient kind of farm. In an economic crash, the 5000-acre grain farmer won't be any better off than his stockbroker.

The Black Swan idea reminds me of a favorite quote from computer programmer Paul Graham:

"The most valuable truths are the ones most people don't believe.
They're like undervalued stocks. If you start with them, you'll have
the whole field to yourself. So when you find an idea you know is good
but most people disagree with, you should not merely ignore their
objections, but push aggressively in that direction."

This post and the comments put me in mind of the dystopian science fiction book "A Canticle for Leibowitz," which tells a story set in the American southwest after a nuclear war, in which a Catholic monastery acts as a kind of beacon in a future dark ages. I recommend it.

The biggest warning sign nowadays for me is the idea that "we humans are fundamentally in control of the future and/or nature and its processes." This is, I believe, based upon a narrow reading of empirical science's effects, and a naive belief that, even though there have been bad side effects before, there won't be any in the future, or our knowledge will grow at a rate that will outstrip the bad consequences that this same knowledge inevitably generates as a "side effect." Basically, this is a kind of epistemic arrogance, as mdavid said above.

This epistemic arrogance, I believe, stems from two paradoxically opposed failures: first, to understand ourselves as part of our environment; and second, the failure to understand ourselves as creatures, not lords, of the universe, but equally and simultaneously as privileged creatures, who complete nature, perhaps as stewards.

We imagine, in some kind of perverse Cartesian dualist way, that we are "above" what we experience with our bodies; and the isolated mode of scientific knowledge (which sees only through mathematical models and formulae) allows us to imagine ourselves supreme, to forget that we did not make ourselves. In fact we are instead stewards, keepers, of creation--simultaneously a part of and to some degree different from creation--and this tension is intimately tied into being human.

It's in the fittingness of this tension between this "being a part of nature" and "being stewards" that health lies, maybe?

I highly recommend this site, just in case the "Black Swan" turns out to be the Walking Dead.

http://www.zombiesurvivalwiki.com/?t=anon
Zombie Survival & Defense Wiki - Zombie Survival & Defense Wiki

A black swan in action, from Joel Aschenbach -- in tomorrow's Post:

http://www.washingtonpost.com/wp-dyn/content/article/2008/04/11/AR2008041103328.html?hpid=opinionsbox1

"Joe Lykken, a theoretical physicist at the Fermilab research center in Illinois, tells a story about something that happened in 1990. A Fermilab visitor, an English fellow by the name of Tim Berners-Lee, had a new trick he wanted to demonstrate to the physicists. He typed some code into a little blank box on the computer screen. Up popped a page of data.

Lykken's reaction: Eh.

He could already see someone else's data on a computer. He could have the colleague e-mail it to him and open it as a document. Why view it on a separate page on some computer network?

But of course, this unimpressive piece of software was the precursor to what is known today as the World Wide Web. "We had no idea that we were seeing not only a revolution, but a trillion-dollar idea," Lykken says.

Now let us pause to reflect upon the fact that Joe Lykken is a very smart guy -- you don't get to be a theoretical physicist unless you have the kind of brain that can practically bend silverware at a distance -- and even he, with that giant cerebral cortex and the billions of neurons flashing and winking, saw the proto-Web and harrumphed."

mdavid basically wrote what was to be my response, but did a better job than I ever would have.

Rod, Black Swan is definitely worth a close reading. Few books will alter your thinking as much as this book. I have long been familiar with many of the ideas in his book, especially those from behavioral economics. Kahneman and Tversky (whose heuristics mdavid outlined above) have started a revolution in economic thinking that has turned neo-classical economics on its head. The idea of "rational actors" in an economy has been thoroughly debunked, in my opinion.

The Black Swan will give you some idea, I hope, of how bankrupt GOP economic ideology is (his earlier book, Fooled by Randomness, is even better in this regard), but it will also make you a better and more careful thinker (as it did me).

Heck, Taleb even inspired my pseudonym on this blog. Always be skeptical of your methods and assumptions and, by all means, become aware of how "heuristics" work. It is a great, great tool.

At any rate, the book cannot be more highly recommended.

Okay, tried posting about this earlier but my laptop keeps eating my comments. I hate technology.

Anyway, my question was: Doesn't anyone see a concerted effort by the powers that be to take control of the US food supply?

Black Swan number one: NAIS or the National Animal Identification System, aka: farm registry. A system of computer chips used by government agencies to keep track of privately owned livestock. Look it up. It is way to complicated to try to explain in a blog comment although I did try in the comment I lost. Google "Granny Miller" as well as NAIS. She has done several pieces on it.

Black Swan two: Monsanto and the trashing of biologically diversity. This company is manufacturing sterile seeds. You won't be able to save seed from your own plants to replant if you buy them from large seed companies. Once again, see "Granny Miller" . I hate to be a walking billboard but she is, as I said in the "lost post" one of the people Obama warned us about, a rural Pennsylivanian with a great deal of wisdom to dispense.

Black Swan three: Outsourcing food easily made in the US. Can you say poisoned dog food. and toothpaste and who knows what else. Logically it is simply easier to trace food manufacturing problems if the food is being made where it is being consumed. And without international incident. Did any one catch the exchange with Bush and China recently? It went sort of like this:

Bush: We'd all really appreciate it, China, if you'd quit trying to poison us over here.

China: You'd better not make any waves about that or we will ask for the money you owe us, take away all the banks we own in your country and quit making cheap toys for you all.

Bush: Oh! Never mind.

Black Swan three: There is a research center on Plum Island NY that does research on hoof and mouth disease. It is an actual island, according to media reports. This presumably assists in keeping the disease away from cattle. I'm sure everyone has read about plans to smack it right down in cattle country. Evidently, now that George has helped his oil buddies, he intends to help the Texas cattle barons. I don't believe Texas was mentioned as a possible relocation site for the lab.

And we have the bee problem and the oil shortage and the corn shortage and I have heard there is no longer a surplus of wheat stored on US soil. Any one of these things is not truly catastrophic, although potentially harmful, but all coming together? Wake up and smell the home-grown organic tea.

And just for the record, I am a huge fan of conpiracies, they are so much fun to speculate on. But this can't all be chalked up to stupidity and coincidence, can it?

The Black Swan will give you some idea, I hope, of how bankrupt GOP economic ideology is

Well, Taleb certainly doesn't focus on GOP ideology -- if that's the message you're getting from his book (rather than skepticism about all grand economic plans from all sides), that reflects bias on your part.

Hmmm...if I understand this theory, then if what we know doesn't get us, this 'Black Swan' phantasmagora tells us that something we don't know and don't expect...must?

The theory seems to me a watered down occultism, even enlisting the Manichaean colors of black and white. (I guess if the intent is to prop up a more broadly Manichaean outlook and theorem, that's not a problem.)

Of course trying to make a living in an occupation where you have little or no experience is difficult if not impossible. Change requires transition, transition requires risk but change and even major change is certainly possible. I'm glad I didn't have to cross the country in covered wagons with family and all possessions. Our ancestors were truly incredible courageous people. We talk about these things that aer modest as if it's like exploring new parts of the world. Even in the country, cities are generally nearby, you don't need to make a living on farming. However, some level of homesteading; gardening and few chickens, goats and pigs can save money for the budget, enrich your family's experiences and improve the quality of the food you eat. Your children will benefit from the first hand efforts of beginning to homestead. It's not easy but it's worthy. Making things easy and convenient is what got us into this trouble in the first place. Our goals should be the good, the true and the beautiful, not "the quick, the easy and the convenient". Why is our retirement fund more important than the skills we teach our children. Security and risk avoidance is not an actual virtue, it's a modern mindset.

At what age is it appropriate to start worrying little kids about what has been discussed here?

When it is time to initiate them into being an adult (skipping adolescence as much as possible) so they can begin to reflect on their vocational choices.

"This is pure speculation" refers to speculation in commodities, not speculation on my part. I'm actually quite confident of my analysis.

Stuart Buck: "Well, Taleb certainly doesn't focus on GOP ideology -- if that's the message you're getting from his book (rather than skepticism about all grand economic plans from all sides), that reflects bias on your part."

I was merely pointing out that Taleb relies on the insights of behavioral economics, which _I believe_ has overturned many of the assumptions of the neo-classical economics on which GOP economic ideology is largely based. In other words, I was offering my opinion. Like most economists, I am aware of being biased but not of all my biases. (And I'm a paleocon by the way.)

Here's a question that bugs me as I contemplate buying a farm as a safe haven for my family: are such actions sufficiently Christian? Yes, we have a vocational responsibility to our families, but also we have vocational responsibilities to our communities. I was living in London finishing my PhD when the British government told all UK residents to stockpile enough food and water to last three days, in case of terrorist attack. I thought about doing this, but, in the end, realized it was pointless. The problem was that my neighbors weren't the kind of people who were going to heed these announcements. So let's say I had food/water for three days, and an incident happened. What am I going to do, hoard my supplies, but deny anything to the five year old in the apartment next door because her parents don't have supplies? And the ten year old downstairs? And the infant upstairs? Pretty soon my three days of family supplies will be enough to get my apartment block through about one afternoon. In other words, when taking evasive action to protect my family, for it to work, I have to turn my back on my community. And I think buying a farm out of town is replicating the same situation on a wider scale. I wonder - really wonder, I don't know, I'm only suggesting a question - whether such family-o-centrism is moral. If it isn't, then it's key that any articulation of the new Benedictinism must be clear and resolute that the movement aspires to save communities, to work and organize and prepare as a community, and not merely as an isolated nuclear family.

Chris, I often wonder the same thing you are wondering. The original Benedict and his gang, were, of course, single men. Their thought was to go apart and save the world through the effects of their prayer and not necessarily their food supply. A man with children has a different outlook on life. Yes, he should seek first to protect his family, but then he should look to his neighbors. Here's a better example--Almonzo Wilder (Laura Ingalls Wilder's husband). As a young man out on the praire, he had saved corn/wheat seed for the next year's planting. During the long winter, many families in the area ended up having to eat their seed. As a young, healthy, single man he choose instead to risk his life going into the nearest big town to buy food for his neighbors. So yes, the "salvation of the world" or at least survival of your apartment block, neighborhood, culture, is going to need both. The families who have at least enough food to get them through most of the Long Winter, and the young men who will sacrifice for the families by going out into the apocolypse to get whatever other supplies are needed. And I would hope the families safely left behind whould be praying hard for those out in the world.

Living in the country does not equal isolationism. It may seem that way to someone who's reference point and paradigm is a city. It's like saying that Walmart is better than a small country store. Instead of having hundreds or thousands of shoppers at a time there may only be a few people coming in and out of the country store at a time. Frankly it's easier to build relationships when there's only a few people in the store who you greet than shopping at Walmart. A small town is still a town. I don't believe our Christian calling requires us to live in a city of at least a million people for example. I think it's a false arguement.
If however, you were moving into the wilderness isolated from all civilization then it could be a different moral equation. Most places in the country are not isolated, they just have a more modest density. So I guess the moral, theological question is pointed to what population density and lifestyle is most conducive to raising a healthy Christ-centered family. That's a question I think all of us families can and do grapple with against some of the practical and cultural challenges as well.

My view is simple; the more hands-on we are with God's creation, the better. More dirt, more trees, more animals, more life and more gratitude. That's a little easier to find when you have some elbow room and less concrete. Cities have covered over most of the land with concrete, steel, asphalt and if that's not enough ubiquituous electronics; lights, computers, sound, ads and the rest. It's hard to even see how many stars there are unless you can get at least a little away from the city lights. I'm sure some of you remember a first time when you went camping on a clear night and were so amazed to see an awesome display of stars. When we have the opportunity to be amazed by nature, God's creation, I think that can open our hearts in a deeper way to our relationship with him. If you can't move out of the city, make a real effort to spend time away from all of it just to take in God's creation. There's no better way to put life back in perspective.

pyrrho, Taleb would probably say this upward trajectory reflects a narrative bias

I said this was my weakness, right :-)? Watch me dig my hole deeper...

Taleb is a guy who can look at the upward trajectory of natural selection (billions of inputs for millions of years) and still say it is random? Here's a man who goes so far in his skepticism he will soon say the multiplication table reflects a "narrative bias." Now that's bias!

My view: science is the limit of skepticism, but Taleb doesn't understand science well enough to know where to draw lines (science is Taleb's Epistemic Arrogance, his unread books). Another way to look at the failure of his financial worldview: when the Roman Empire fell, we did not go back to hunter-gatherer days. Since wealth is based on knowledge, it doesn't just vanish into thin air unless you kill every adult. This leads to steady, relentless economic growth over history. It's not for sure, and there are bumps, but it's a good bet, like flying on an airplane.

I enjoy this conversation, too. After reading Swan, I couldn't find anyone who had read it to talk about it with. So I hope you (and Rod) forgive my off-topic-word-pollution.

phyrro: responding to yesterdays post. I think I understand what you are saying. There is no real need to panic because this is simply supply side economics on a huge scale, as many countries join in the rat race. But I think we are comparing apples and oranges, or at least "Empires" and "Winesaps".

You seem to be talking on a macro economic scale, global economy and all that. I am not in any way prepared to try to take on the big dogs
with that issue.I am talking about how the policies that some of the big dogs put into place are going to affect us "dogs in the manger".

I "googled" all over the "interweb" looking for an item on (IIRC) Pakistani cotton farmers committing suicide because Monsanto (again) sold them cotton seed that was sterile. Now the first year's crop came up great. Everybody made money, Monsanto is the hero. But when the farmers planted the next years crop with seed they had saved from the previous year, as they have probably been used to doing for hundreds of years(if not thousands) nothing came up and they were all ruined.
These are real people, not abstrct figures on some chart.

Now whether Monsanto was deliberately duplicitous or thought that the farmers knew how it worked or whether old habits just die hard, it is a bad way to be welcomed into the new agribiz of the 21st century, losing everything you have.

And now say that a new kind of disease comes along and even the geneticlly engineered seed is susceptable. Our good friends, the mhorams and the Chris Roberts families now have their little piece of the Shire. They want to be as self sufficient as possible and decide that they will save their healthiest wheat to replant, as has happened down on the farm for centuries. Only they didn't know that the sterile Monsanto seeds have been packaged under various brands and they will have no grain for the coming winter.

And on a larger scale, Monsanto now has a hard time making enough resistant seed for the demand (say they may not really be gods,) and is charging a price no small time farmer can afford to pay and two more family farms bite the dust, not to mention the others that we don't know about because they don't blog regularly on Crunchy Con.

I won't get into the national animal registry thing this time except to say that it too will drive the small farmer out of business with over regulation, which IMHO has been the plan all along.

And to say that, as an evangelical sort of Christian, who has read the back of the Book, my hope is that me and mine (and a good lot of y'all, I'm sure) won't be here for the worst of it any way. And don't go writing to Rod that I'm saying you're going to hell if you don't see things the way I do. I'm just stating my beliefs, I don't pretend to be God, Monsnto does, remember?

"Mhoram, have you read Hackers and Painter by Graham? If so, what did you think?"

Not yet; it's on my list. I've read all the articles at his website, though. His piece on schools, "Why Nerds Are Unpopular," is brilliant.

Pyrrho, you're right on the money about the rise in commodity prices. I'm amazed that people are swallowing the idea that we're having a food shortage (what happened to all the "critical thinking skills" we're teaching in school in place of reading and math now?), when most stories about farming in my lifetime have been about the surpluses. One year the government is buying dairy cows and sending them to slaughter because excess production is driving milk prices below the guaranteed floor; the next year piles of corn are rotting in the fields because there's not enough storage for it all and the barges can only haul it off so fast. A few years ago, a small glut in hogs dropped pork prices below $.10/pound, 25% of break-even price (and that was when corn was cheap).

And all this surplus comes despite the fact that a lot of farm land that could provide pasture for livestock or be planted to crops is sitting fallow in government set-aside programs like CRP. We could be raising far more food than we are.

Food shortage? You've gotta be freakin' kidding me.

This rate cutting (more specifically, the expectation of rate cutting) is a cause of much of the rise in commodity prices.

James Hamilton recently posted about this relationship:

www.econbrowser.com/archives/2008/03/commodity_price_1.html

I wonder if there's any way to "pop" the commodities bubble....

Quinn: "The whole idea of a Black Swan is that it will not be what we think it is."

Bingo.

As mdavid said above, the general trend (empirically delineated) can become fairly clear over a long period of time. But events are always coming along that alter that trend _temporarily_ in unforeseen ways.

For example, I didn't think the US was headed for bankruptcy in the mid-1990s like many other bearish economists, but what they did not foresee (like the rest of us) was the huge boost in productivity that computers and the internet brought about, and the financial revolution in derivatives and similar instruments, which allowed financial institutions to play the speculative game with exogenous credit for another decade or so because they could pawn off the risk (or so they thought) onto counterparties (other people) or shift it into "structured investment vehicles" out of sight of regulators, etc.

OK, I'll stop now. I'm getting winded.

Anonymous: "Why do I get the feeling that many of the regulars here are going to be heartbroken if we have only an ordinary, unpleasant recession followed by a decent recovery?"

The credit markets have been frozen for more than six months now and nothing the Fed has tried (the TAF, the TCLF, the PDCF) has unfrozen them.

You should be glad you don't know what you're talking about or you would be having trouble sleeping at night. I bet you Bernanke and Trichet are wearing DependsTM to bed every night. They know what the stakes are.

Pyrrho- I'm the anonymous guy who doesn't know what he's talking about.

I remain baffled by the sheer excitement and enthusiasm many posters here are showing for the collapse they're sure is coming.

Frankly, I find much of it laughable. NOT because I think everything is hunky-dory, but because the "solution" to the alleged problems are always the same: a return to the land, and an embrace of blessed simplicity.

If that's the life you want, I wish you well. Go stake out a claim and build the organic Sunnybrook Farm of your dreams. Have an Amish-style barn raising with your neighbors. I admire that spirit.

But of course, posters here are rarely content with changing their own lives. Rather, they insist that the sky is falling unless ALL of us choose the life they idealize.

They insist current levels of Western prosperity are "unsustainable." But humor me- what if it isn't? Suppose, just SUPPOSE, that reserves found in the Gulf of Mexico and in the Dakotas turn out to be everything Chevron and Conoco hope. What if our current levels of consumption ARE sustainable!

I strongly suspect THAT prospect would horrify many Crunchy Cons!

Astorian:

You're attributing a lot of things to me that I never said. These are assumptions on your part.

Look, I'm an Ivy League-trained economist. If I'm a quack, then tell me who isn't?

Trey:

I don't know if you're referring to me, but I'm a contrarian and not a practitioner of "counterknowledge". My kind of contrarian economics has made me a lot of money in the past two decades. Can you say that about the legions of jackasses who lost money in the stock and real estate markets recently? It is they who have been practitioners of "counterknowledge" in recent years.