The unpredictable power of randomness

This article first appeared in the Sunday Mail on 2 February 2020

Renowned philosopher Nassim Taleb brings his matrix of uncertainty
to Cyprus

Scholar of Risk and Probability, philosopher, mathematician, former stock trader and best selling author Nassim Nicholas Taleb probably has the best job title in the world: Flâneur. That is, at least, how he describes himself on his Twitter profile. Loosely defined as a lounger, an idler a flâneur has more recently come to represent someone who is “an observer of society”.

When not meditating in cafes across the world, Taleb is also Professor of Risk Engineering at NYU whereas before that, in keeping with inventive titles, he had been Professor in the Sciences of Uncertainty at the University of Massachusetts Amherst.

So when last week he descended on Cyprus, the land of soaring risk, not to mention of the improbable, it was a big deal. He was here at the commendable initiative of the ambitiously named Institute for the Future at the University of Nicosia for the launch of the Makridakis Open Forecasting Center.

Taleb is a preacher of Randomness. His best selling books The Black Swan (2007) and Fooled by Randomness (2001) explored the hidden role of chance in life and in markets. They remain seminal texts on how every one of us but especially business people should factor unpredictability into our strategies.

He professes that we do not know very much, especially about the future, and worse still that we actually think that we can know and forecast the future based on grand theories and models.

With the confidence of someone who reportedly made his fortune betting against the US real estate boom in 2007 he nonchalantly dismisses academics, journalists, bureaucrats and experts, especially those engaged in economic forecasting.

Aphoristically and often not too clearly – with number bursts too fast for non-worshippers of mathematics – he is nonetheless entertaining in his brutality. He deconstructs perceptions of success and explores case studies where luck outsmarts skill and vision. He claims a Central Banker may lower interest rates, a recovery may ensue, but we do not know whether he caused it or if he slowed it down. We can’t even know, Taleb says, that he didn’t destabilize the economy by increasing the risk of future inflation.

Turning on CEOs, whose skills Taleb dissociates from the results of the companies they are tasked to run, he says they take a small number of large decisions but external factors play a far more considerable role in the outcome. CEOs are not entrepreneurs, he adds, but ‘empty suits’ that are just good at playing the part.

He calls on audiences not to fall for bullshit and to discount advice from people who don’t have ‘skin in the game’ i.e. something to lose. He detests those economists who love to theorise and engage in false solidarity with the oppressed while consolidating their privileges. More so those civil servants, who, he claims, as non-risk takers end up getting rich from public service. In his book Skin in the Game (2018) he is particularly scathing of the former US Treasury Secretary Tim Geinther for being overly rewarded after he left office after having bailed out the banking industry with taxpayer money.  

At some point in Nicosia, the attending Speaker of the House of Representatives and the Minister of Transport stood up and left mid lecture within seconds of each other. Their departure betrayed a customary combination of Cypriot ignorance and arrogance rather than any meaningful protestation to what they may have heard. When another attendee later twitted that the two officials had left abruptly, a true-to-form Taleb remarked “Bureaucrats, I was told, find my lectures very painful’.

Yet Taleb was himself adviser to the IMF and to former UK Prime Minister David Cameron. In the early part of the previous decade as a frequent Downing Street visitor Cameron had considered him his intellectual guru. But things turned sour with the British press when remarks Taleb made about the 2008 financial crash – an unpredictable black swan high-impact event – were distorted to imply that he considered such events useful. He countered that what he had said was that attempting to control the cycle was futile but it was necessary for citizens to become robust to them, to be immune to their impact. Taleb criticised the British media and stopped granting interviews altogether. He declined to be interviewed in Cyprus too.

The Lebanese-American philosopher courts controversy and clearly enjoys his iconoclastic persona. He is certainly not modest. At the beginning of his presentation in Nicosia he put up his name in English on the screen and underneath the translation for Taleb: “Philologos” which in Greek means “lover of the word, seeker of knowledge”.

Taleb may not be the Socrates type of “I know that I know nothing” philosopher, but he is convincing when exposing the fragility of human knowledge and identifying the asymmetries of markets. For those not into economics or probabilities the audacious flâneur hassomething less uncertain and more reassuring to say: “What fools call ‘wasting time’ is most often the best investment”.



The Cult of Business Awards

This article was first published in the Sunday Mail on 19 January 2020

Last month the Royal Swedish Academy of Sciences in Stockholm bestowed its international award, the Nobel Prize, on economists, physicists and chemists in recognition of academic, cultural and scientific advances. Next month at the Dolby Theatre in Los Angeles the Academy of Motion Pictures Arts and Sciences will dish out golden statuettes to actors, editors and directors for outstanding artistic achievement in a long list of categories. The Oscars are in their 92nd year, the Nobel in its 118th.

Sport too has its range of award ceremonies. FIFA, the world football governing body, celebrates excellence through its annual Best Players awards, though here sportsmen and sportswomen are judged primarily on the metrics of their performances rather than on any subjective assessment.

It was inevitable that the world of entrepreneurship would at some point catch up. Business very quickly saw the utility of embracing the idea of having its own award system and ceremonies for its champions. In the competitive world of corporate sales nothing sells services or products better than the deification of its leading salesmen.

Globally there’s an array of business award platforms where market force celebrity status can be attained. Most, like Forbes and Fortune, merely measure corporate sizes and value, others, like the International Business Awards, known as the Stevies, recognize entrepreneurial achievement in a range of industries.

Awards help businesses generate value. Not so much in terms of what they produce or actually do but more, to paraphrase the cultural theorist Mark Fisher, in terms of “the perceptions of, and beliefs about, their future performance where all that is solid melts into PR”.

Indeed awards tell a public relations story. They create myths about people and their companies that are embraceable and saleable. On the side they also do wonders in motivating disgruntled employees particularly at times of difficult labour relations and economic austerity.

In Cyprus too various business awards have sprung up in recent years. Business being business and Cyprus being Cyprus, the concept has been stretched to manifestations of pantomimic pomp and self-patting that would bring shame to the Dolby Theatre crowd on Hollywood Boulevard.

Sure the bosses of economic growth and profitability deserve to be acknowledged and celebrated. In any case profit is not exclusive to business. Oscar awards help sell tickets and Netflix subscriptions; a Nobel Prize boosts book sales and Ballon d’Ors definitely help sell football kits.

There’s nothing wrong with acknowledging those who deliver innovation especially when it is in the public interest. Nor is it inappropriate to celebrate those business leaders who excel in corporate social responsibility though not the kind that serves to deflect from the harm their businesses do.

Yet, intuitively, something does feel wrong about awards for leadership or outstanding achievement in banking or the oil industry where leaders may have navigated banks or corporations out of trouble at the expense of the taxpayer or the environment. Or about awards for a currency exchange set-up honoured for developing obscure financial machinations. Or perhaps for a land developer who has snaked round planning and environmental regulations to construct monstrosities that disfigure natural landscapes.

I recently received an email alerting me to a company’s candidacy in some business award category and – politely of course – soliciting my vote. It turns out that the award will be weighted 50% on public votes and 50% by committee decision. I was immediately put off by their presumption to embroil me in their PR stunt and in a voting process that could easily be corrupted.

It may be that the company is worthy and innovative and its management leadership has a social conscience but if it has to stoop that low as to cajole for my vote to secure the acclaim then clearly it is a company focused on its image rather than its integrity. It means it is willing to risk me thinking of them that way for the mere prospect, if they win, that their future emails will gloat about the award I had chosen not to help them secure.

Encouragingly there was an occasion in the years after the Cypriot economic crisis when an established local businessman declined to be considered for a business award arguing that he could not step up to a podium to receive it while he was laying-off staff and cutting salaries.

In the cycle of economic booms and busts the proliferation of business awards and the worshiping of entrepreneurs reflect the undisputed dominance of capitalist doctrine. That’s where we are. The dark side is that the cult seems to be morphing into a widely celebrated religion.



Voting Capacity

Why European Parliament elections matter

This article was published on May 16 2019 in Issue 3 – Volume 16 of the Cyprus Center
for European and International Affairs newsletter ‘In Depth’.

Nicholas Karides

A citizen’s relationship with the voting process is contingent on their understanding of their country’s history and of the state of its politics. Above all, however, it is founded on the citizen’s notion of how they can affect change.

Citizens who vote in national parliamentary elections usually have a good grasp of their legislature’s role and work, but what prompts them to actually make the trip to the polling station is that they feel that their vote will make a difference.

Similarly, when it comes to the European Parliament elections later this month, the ninth such process since 1979, the motivation to vote is likely to hinge on one’s understanding of the history and current state of the European Union. But mostly it will depend on whether European voters feel that their vote will make any difference.

Will it make a difference in terms of boosting their country’s voice in Europe, or in charting the future direction of what is a deeply troubled European Union? Indeed will it make a difference in terms of confirming or salvaging any collective faith in the idea of European integration?

The answer is Yes, a little bit, but still enough for it to matter. And it matters because Europe matters.  As with so many things about Europe, its underrated success is matched by its understated bit-by-bit progress. It is a progress that voters have come to take for granted, not paying attention. But it does matter in almost every aspect of their lives from the economy to security and from their data protection to their environment’s protection.

These elections are emerging as an undeclared silent referendum on how much more or how much less ‘Europe’ citizens want. If they do turn out to vote in numbers it will mean that the Germans and the Greeks, the Poles and the Portuguese, and at the time of writing the British too, consider that we must address our amassing problems collectively even if elements of European decision-making remain democratically deficient.

It is true that the European Parliament itself suffers from this deficiency. Though clearly a force for good it does not yet function as a full-fledged parliament. Unlike national parliaments it has limited power in initiating legislation, a role almost exclusively reserved for the European Commission. But it matters that it is there. It is the closest Europeans have in terms of a substantive representation of the will of the people as it continues to carve its space in favour of the citizen.

But for it to begin to matter more citizens must back it by equipping it with representatives that are able to strengthen its scope and role. Had the European Parliament had a greater say over the last decade, the banking excesses and the austerity which triggered Europe’s downward spiral may have been easier to tame. The distortions of the European Council’s decisions could have been checked and a greater solidarity between member states would have been achieved.

Democratic deficits breed citizen indifference which then results in the citizens’ knowledge deficit. Britain had to suffer the post Brexit referendum ordeal to realize the deep awareness deficit that existed across the country about EU affairs. Years of deliberate neglect by successive UK governments about the European Union and its role in actually making the UK stronger made millions of British voters susceptible to outrageous lies. They became convinced that Europe didn’t matter, that it wasn’t necessary and that it was holding the UK back.

Standard Eurobarometer results from 2007 show that only 17 percent of Britons felt that they were “well informed” about EU matters. Ten years later, in post-referendum 2017, that figure was up to 47 percent.

In 2016 the majority of Leave voters had been misled by sinister, unqualified politicians who got to hijack and distort the debate on Europe. They were also let down by years of deliberate neglect from their elected governments. In contrast the majority of Remain voters knew that the European Union was not working but they still thought that it was good for Britain to stay in and to affect any change by participating, not by abandoning. Now, in 2019, Remainers have – within a short timespan – come to learn more about the value of the European Union than some of their most ardent federalists on the continent.

Brexit showed that an absence of awareness of EU affairs allows anti-Europeans to hijack the public debate and impose their dark narrative. These opportunistic, sinister, unqualified politicians are now everywhere, a swelling wave of nationalism at odds with the values and principles that the European Union.

It is one thing for Democracy to be deficient; it is another thing for it to be asleep. For a few decades a tired and disinterested citizenry has been hypnotised. To address the deficiencies they now have to snap into action.

Voting in the EP elections will be an affirmation of the admittedly unfashionable but still necessary process of deeper European integration against the dark forces of populism and unthinking nationalism. In this, citizens have a much greater capacity to make a difference than they may think.



The Journey Begins