It is Dec 24th, Christmas Eve and it is a good time as any to reflect on the happenings of 2008. Immediately what comes to mind is the recovery of the fifth and, hopefully, last victim of the landslide in Bukit Antarabangsa in Kuala Lumpur, Malaysia.
Her name was Mary. She was a Sri Lankan maid. One can imagine how those last moments may have been for her.
Was she awakened by the horrifying “loud boom” as described by witnesses? Did she then find herself trapped, in severe pain and shock, gasping for air and struggling to claw her way out? Might her first thoughts have been about the three children under her charge (later rescued) or her own home and family back in Sri Lanka?
Indeed, we know so little of Mary, an immigrant who left behind a family, a mother, a father, possibly siblings, cousins, aunts, uncles, nephews, nieces and grandparents, who will moan her sudden and tragic loss. But the epitaph of Mary sorely needs to be written.
For her story is our story. It is the story of a person, lacking education, employment or financial access, striking out for strange shores to seek out a better life, in order to survive and maybe thrive.
Mary’s death may not even deserve a footnote in our history, as most of us are mere voyeurs to the tragedy of Bukit Antarabangsa, the same way we would be to a pileup on the highway.
The media persists to refer to the 14 destroyed houses as “bungalows” – and not as they, more accurately, should be called “homes”.
I guess to call them homes would connote they were once filled with real people who were loved and cared for, not the materialistic troves of branded stuff and locked safes of the indulgent.
Overheard at a recent house-warming was the callous commentary: “Well, rich people who want to live up in the hills had it coming.” Or worse still “It was all karma, they got rich through suspicious and corrupt means.” Our knee-jerk, defensive disdain suggests a deep psychosis.
If the landslide happened in a squatter area full of illegal immigrants, among whom was one named Mary, would we have cared?
Need we step back only a generation or two or three, to realize that we are all descendants of those who struggled to make this place our home, even as some of us continue to chase bungalow-sized dreams.
Do we not all share the same aspirations for a better life on a daily basis?
Why do we continue to bicker over the preferred rights of some over others? Aren’t we all of common immigrant stock, no matter which boat we came on, or when that arrived? More rights for some only makes it seem all wrong for others.
We should care – really care – for those among us who suffer – whether they be rich or poor, working class or marginalized, citizens or immigrants. For it is the same boat we’re all on, and we sometimes have no control over the tides or storms that befall us. Victims, of whatever standing, we all matter.
In the darkness, buried under rubble, and heaving her final breaths, might Mary’s last thoughts have been: “Please someone care enough to find me. I matter.”
Nassim Nicholas Taleb’s book The Black Swan: The Impact of the Highly Improbable argues that we should never ignore the possibility or importance of rare, unpredictable events.
Here are excerpts of his interview with McKinsey Quarterly:
The Quarterly: For people who haven’t read The Black Swan, can you quickly summarize what they should know to understand your point of view on recent events in global financial markets?
Nassim Nicholas Taleb: Before Europeans discovered Australia, we had no reason to believe that swans could be any other color but white. But they discovered Australia, saw black swans, and revised their beliefs. My idea in The Black Swan is to make people think of the unknown and of the potency of the unknown, particularly a certain class of events that you can’t imagine but can cost you a lot: rare but high-impact events.
So my black swan doesn’t have feathers. My black swan is an event with three properties. Number one, its probability is low, based on past knowledge. Two, although its probability is low, when it happens it has a massive impact. And three, people don’t see it coming before the fact, but after the fact, everybody saw it coming. So it’s prospectively unpredictable but retrospectively predictable.
Now that we’re in this financial crisis, for example, everybody saw it coming. But did they own bank stocks? Yes, they did. In other words, they say that they saw it coming because they had some thoughts in the shower about this possibility—not because they truly took measures to protect themselves from it.
Now, a black swan can be a negative event like a banking crisis. It also can be positive: inventing new technology, making new discoveries, meeting your mate, writing a best seller, or developing a cure for cancer, baldness, or bad breath. In The Black Swan, I say that in the historical and socioeconomic domain, black swans are everything. If you ignore black swans, you’ve got nothing. And I showed that the computer, the Internet, and the laser—three recent technological black swans—came out of nowhere. We didn’t know what they were, and when we had them right before our eyes we didn’t know what to do with them. The Internet was not built as something to help people communicate in chat rooms; it was a military application and it evolved.
So these things have a life of their own. You cannot predict a black swan. We also have some psychological blindness to black swans. We don’t understand them, because, genetically, we did not evolve in an environment where there were a lot of black swans. It’s not part of our intuition.
The Quarterly: Say a little more about the relationship between black swans and the global financial crisis.
Nassim Nicholas Taleb: I warned in The Black Swan against some classes of risk people don’t understand and against the tools used by risk managers—tools that could not fully capture the properties of the world in which we live. The financial crisis took place because people took a lot of hidden risks, which meant that a small blip could have massive consequences.
In fact, I tried in The Black Swan to turn a lot of black swans white! That’s why I kept going on and on against financial theories, financial-risk managers, and people who do quantitative finance. I warned that they were dangerous to society.
The Quarterly: What are your concerns with statistics and portfolio theory?
Nassim Nicholas Taleb: The field of statistics is based on something called the law of large numbers: as you increase your sample size, no single observation is going to hurt you. Sometimes that works. But the rules are based on classes of distribution that don’t always hold in our world.
All statistics come from games. But our world doesn’t resemble games. We don’t have dice that can deliver. Instead of dice with one through six, the real world can have one through five—and then a trillion. The real world can do that. In the 1920s, the German mark went from three marks to a dollar to three trillion to a dollar in no time.
That’s why portfolio theory simply doesn’t work. It uses metrics like variance to describe risk, while most real risk comes from a single observation, so variance is a volatility that doesn’t really describe the risk. It’s very foolish to use variance.
The Quarterly: What would your ideas look like in practice for, say, a manufacturer?
Nassim Nicholas Taleb: If risk doesn’t cost you a lot, take all the risk you can. That’s how economic growth is generated. Don’t fear being aggressive if that only costs you a little. Do more trial and error. Learn to fail with pride, comfort, and pleasure.
But try to have less downside exposure by building more slack into your system through redundancy, more insurance, more cash, and less leverage. Imagine a shock. What will happen if there’s a shock? How many months could you keep operating?
The problem is, Wall Street penalizes companies that have more of this kind of insurance, because they are going to lag behind companies that don’t take on the expense. I see this in my investment business. But you know what? The people who insured against catastrophes are still standing today. The other people are bust. So don’t fear overinsurance for your downside, even if you lag behind as a result.
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Psychology Today Nov/Dec issue has a great piece about rumours: The 8½ Laws of Rumor Spread by Taylor Clark and an accompanying solutions sidebar: When the Rumor Hits Home – What to do if you find yourself the subject of a rumor by Jay Dixit.
Clark cites an impressive panel of rumour experts including Barbara and David Mikkelson of hoax-busting site snopes.com, Martin Bourgeois, a rumour researcher at Florida Gulf Coast University, Nicholas DiFonzo of Rochester Institute of Technology, sociologist Duncan Watts, Chip Heath, Stanford business professor and co-author of Made To Stick, and Ohio University psychologist Mark Pezzo.
Her 8.5 rules:
1. Successful rumours needle our anxieties and emotions.
Example rumour: When Hurricane Katrina struck New Orleans in 2005, water wasn’t the only thing that flooded the city. Grim rumours flourished: Sharks have infested the water! Terrorists planted bombs in the levees! Murdered babies and piles of corpses filled the Superdome!
2: Rumours stick if they’re somewhat surprising but still fit with our existing biases.
Eg rumour: President George W. Bush supposed quote: “The problem with the French is that they don’t have a word for ‘entrepreneur.’” Fits in with belief that Bush is a klutz.
3: Easily swayed people are more important than influential people in passing on a rumour.
Kids, like some adults, are credulous, and credulous people make rumours go. Eg rumour: Bubble Yum was made with spider eggs.
4: The more you hear a rumour, the more you’ll buy it — even if you’re hearing that it’s false. Eg rumour: Barack Obama is secretly a radical Muslim who refuses to say the Pledge of Allegiance and was sworn into the Senate on the Qur’an. Repeating a rumour, or even hearing its denial repeatedly, makes people believe it comes from a credible source.
5: Rumours reflect the zeitgeist.
Rumours have the greatest chance of multiplying when the topic is current. Eg rumour: When you flash your brights at an oncoming vehicle without its lights on, you might be inviting a gang member to kill you. It’s always in mid-Sept when the rumour surfaces. Headlights are on people’s minds. That’s why you never hear it in the dead of winter or the height of summer.
6: Sticky rumours are simple and concrete.
Vivid details stick in the mind. Eg rumours: We only use 10 percent of our brains. The Great Wall of China can be seen from space. People swallow eight spiders a year in their sleep.
7: Rumours that last are difficult to disprove. Eg: Loch Ness monster. Reason: It’s a big lake.
8: We are eager to believe bad things about people we envy.
Celebs are easy targets and we are eager to believe the worst to prick the bubble of adulation around them.
8.5: Sometimes, there is no “why”.
Often, we tell remarkable tales to build relationships or show off our yarn-spinning prowess — not necessarily because we think they’re true.
Clark’s rules borrow heavily from Chip and Dan Heath’s book “Made To Stick”, which I recently got my hands on. They postulate that ideas that stick must be Simple, Unexpected, Concrete, Credible, Emotional and turned into a great Story. (In short and cornily S.U.C.C.E.S.s)
(Photo credit: Brian Watters)
Dixit’s sidebar quotes DiFonzo on some solutions:
1. DON’T LIE. If the rumour is true, don’t try to deny it. If people are motivated, they’ll figure out the facts.
2. DENY THE RUMOUR IF IT’S FALSE. “A denial still raises questions in people’s minds, but properly done, it helps inoculate people against believing a false rumour.”
3. USE A TRUSTED NEUTRAL THIRD PARTY TO REFUTE THE RUMOUR. “When Proctor & Gamble had a terrible time with false rumours alleging they were Satanists, they recruited Christian religious leaders to help refute the rumour.”
4. PROVIDE A POINT-BY-POINT REFUTATION. The more specific and concrete you are, the more likely it is your refutation will be believed and remembered.
5. PROVIDE A CONTEXT FOR WHY YOU’RE REFUTING IN THE FIRST PLACE. Don’t just deny a rumour in a vacuum, saying, “Bob Talbert is not a member of the mafia,” “I am not a crook,” or “My products are safe.” People will wonder why you’re saying this and may conclude you’re trying to cover something up.
Better to do as Barack Obama did and explain, “You may have recently heard right-wing smears questioning Obama’s Christian faith. These assertions are completely false and designed to play into the worst kind of stereotypes. The truth is that Barack Obama is a committed and active Christian.” By explaining why he was refuting the rumours, Obama provided a context that made his denial more believable.
Additionally, I would suggest some rules of my own on the use of social media in fighting rumours:
1. KEEP EMPLOYEES INFORMED: Your staff may be the prime source of a damaging rumour. Keep them informed either through your internal blog or wiki. Do a one-to-one if you have to.
3.CULTIVATE STRONG RELATIONSHIPS WITH THE MEDIA: When a rumour is about to break, sometimes the only thing that can prevent it going viral is your credibility with news editors. Work on those relationships, so they count when it matters. Otherwise…
4.BE PREPARED: Have planned responses ready. A well-written holding statement released quickly can turn the tide to your side right from the start.