I recently finished reading The Black Swan, by Nicholas Nassim Taleb. The man is a force of nature. Reading Swan feels like reading a little of Godel, Escher, Bach, a little of Black Holes and Baby Universes, and a dose of Gladwellian flavor, but with a distinct scientific rigour aftertaste, which is very kind on the mental palate. Of course, Taleb's work revolves around economics and financial markets, but like a satellite orbiting its planet, its readings and conclusions are distinctly un-finance-like, and have the benefit of excellent, readable, and entertaining prose; narrative, both as personal or historical anecdote and as fiction; and compelling insights to the nature of the black swan.
There is little negative I can say about this book. It's the best work of nonfiction I've read in months, perhaps years. Taleb is a master wordsmith and is erudite without being pedantic. In fact, his humour often stems from making fun of pedants, most of whom end up being French. The amazing amount of reading and knowledge that needs to be packed into a brain such as Taleb's to write this book is humbling, and it is also what makes this book so engrossingly interesting, because the author weaves together stories and scientific hypothesis like a composer matching oboes to organs. What could have been a dry academic paper or a boring technical primer (think Roubini's Crisis Economics) comes alive instead as a true work of literary--nonfiction--art.
As to the book's main topic, the black swan--and its black sheep cousin, the grey swan--is a very interesting topic in its own right. It's certainly worthy of deeper study, at the very least the college level, as it is a subject woefully absent from the contemporary economic and finance conversation. Ironically, the book even briefly touches on the then as-yet-not-occurred economic crisis, in a footnote, where Taleb quickly notes how extraordinarily risky the obligations of certain American quasi-public mortgage-securitising companies are; a note that may have perhaps earned a smart and opened-eyed reader of the hot-off-the-press edition some shorting money. Of course, reading this book in 2011 it is easy to be cynical about the black swan (as in, "duh!"), but in 2007, when the book came out, Taleb mainly had to reference the S&L crisis, the crash of 1987, and the collapse of LTCM in 1998, crises so contained that few readers my age would even know or remember them, unless they had, as I did, studied them in classroom settings. So it is easy to see how, had the book come out at a different time--even five years prior--it may have been roundly dismissed and forgotten. This, another "Godel-Escher-Bach" recursive irony; The Black Swan itself is a black swan. Thankfully, though, the book came out when it did, and has brought at least some attention to the black swan phenomenon, which, sadly, the financial industries have gone right back to ignoring.
In closing, I would recommend this book to anyone who has a yearning for great prose, great philosophising, great storytelling, or great fun. Of course, some literary or scientific maturity is called for; this is not Twilight. Set your standards high. You will not be disappointed.
Monday, June 13, 2011
The price of oil and other stories
I randomly checked out Steiner's book $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better from NYPL one day I was perusing the first floor nonfiction in the Mid-Manhattan library. Although I enjoyed reading about the different effects the inevitable climb of oil prices would have on our economies and our lives, I was ultimately a bit disappointed at the light and perhaps overly optimistic conclusions, the awkward ordering and thin analysis, and lastly the bouncy, overused journalistic prose--what Nicholas Nassim Taleb has termed "the journalistic prevarications of contemporary narrative nonfiction".
Leaving aside the "clear April morning"s and such, perhaps the most obvious hole is, perhaps intentionally, the total political havoc the increase in the cost of oil will cause, at least in this country. Truth be told leaving this out may be a good decision, because that is a whole set of different books, and this one is focusing on the economic effects. Even there, though, Steiner doesn't go far enough. He outlined his and others' predictions--clearly, I will say, and sometimes convincingly--but sometimes the proposed solutions are either, as I said, overly optimistic, or flat-out impossible.
For example, Steiner describes how the airline industry will shrink, and how the rail system will expand as oil prices climb. That was done well. However, getting to the automobile industry, the same misconceptions and misinformation that plague current pop mechanics about the future of automobiles plague Steiner's work. The truth is hydrogen vehicles are and will remain a fiction, because there is no known way to cost-effectively mass-produce, or re-engineer, a true replacement to the automobile as we know it--too many of its actual components (resins, chemicals, plastics), if not its fuel, depend on the existence of cheap petroleum. Steiner does not address this issue. Nor does he address the problem with hydrogen, mainly that it is also a fossil fuel (manufactured from natural gas), but also that it is vastly difficult to transport and store.
As a side note, I also felt the order Steiner chose--six-dollar gas, eight-dollar gas, et cetera, up to twenty-dollar gas--was not only rather strangely conceived but also skirted the issue of thirty-, forty-, fifty-dollar gas, and so on. I would have preferred organisation according to sector. Also, I would have preferred to know what happens beyond twenty-dollar gas. Granted that at twenty-dollar gas, a barrel of oil will cost something like $400, which may well be beyond the plateau of what the marketplace will feasibly accept. However, many indispensable items will still continue to be manufactured exclusively from oil, especially most types of plastics, medicines, and chemicals. There is no replacement for petroleum in the foreseeable future, and as long as oil is recoverable somewhere, recovered it shall be. Even as a barrel soars past the $500 mark.
Still, I laud Steiner's effort as one of the first serious investigations into perhaps the most pressing issue the world economy will face this century. Already we can see workarounds popping up, which is heartening, and Steiner does a good job of expanding on those that are known, and sheds light on some that are not as ubiquitous.
Leaving aside the "clear April morning"s and such, perhaps the most obvious hole is, perhaps intentionally, the total political havoc the increase in the cost of oil will cause, at least in this country. Truth be told leaving this out may be a good decision, because that is a whole set of different books, and this one is focusing on the economic effects. Even there, though, Steiner doesn't go far enough. He outlined his and others' predictions--clearly, I will say, and sometimes convincingly--but sometimes the proposed solutions are either, as I said, overly optimistic, or flat-out impossible.
For example, Steiner describes how the airline industry will shrink, and how the rail system will expand as oil prices climb. That was done well. However, getting to the automobile industry, the same misconceptions and misinformation that plague current pop mechanics about the future of automobiles plague Steiner's work. The truth is hydrogen vehicles are and will remain a fiction, because there is no known way to cost-effectively mass-produce, or re-engineer, a true replacement to the automobile as we know it--too many of its actual components (resins, chemicals, plastics), if not its fuel, depend on the existence of cheap petroleum. Steiner does not address this issue. Nor does he address the problem with hydrogen, mainly that it is also a fossil fuel (manufactured from natural gas), but also that it is vastly difficult to transport and store.
As a side note, I also felt the order Steiner chose--six-dollar gas, eight-dollar gas, et cetera, up to twenty-dollar gas--was not only rather strangely conceived but also skirted the issue of thirty-, forty-, fifty-dollar gas, and so on. I would have preferred organisation according to sector. Also, I would have preferred to know what happens beyond twenty-dollar gas. Granted that at twenty-dollar gas, a barrel of oil will cost something like $400, which may well be beyond the plateau of what the marketplace will feasibly accept. However, many indispensable items will still continue to be manufactured exclusively from oil, especially most types of plastics, medicines, and chemicals. There is no replacement for petroleum in the foreseeable future, and as long as oil is recoverable somewhere, recovered it shall be. Even as a barrel soars past the $500 mark.
Still, I laud Steiner's effort as one of the first serious investigations into perhaps the most pressing issue the world economy will face this century. Already we can see workarounds popping up, which is heartening, and Steiner does a good job of expanding on those that are known, and sheds light on some that are not as ubiquitous.
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