Monday, October 20, 2008

Being A Black Swan

If Barack Obama becomes the next President of the United States, I wonder if he could be considered a Black Swan? Here is the definition of Nassim Nicholas Taleb's Black Swan:

First, it is an outlier, as it lies outside of the real of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, the human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

Taleb continues:

I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability." In a footnote he remarks, "The highly expected not happening happening is also a Black Swan. Note that, by symmetry, the occurrence of a highly improbable event is the equivalent of the nonoccurence of a highly probable one.

Barack Hussein Obama, an African American US Senator of only two years, seemed like a long shot when he entered the race. After all, he had the Clintons to defeat, both the powerful former president and senator from New York. Yet, he did so. In the general election he has had to contend with cries of Arab, (as if it was a dirty word) and socialist (as if this too was a dirty word) and terrorist in a post 911 era. Yet, he is ahead in the polls, raising the most of any candidate ever in history.

Who would have thought that the financial crisis would have come to such a head six weeks or so before the general election? Who would have sincerely thought that the economy would trump racism, that which evolved out of a system that might have blighted a less than great country indefinitely? Who would have thought that a senior war hero could be defeated by a young senator with a fine grasp on international politics but has not served his country in war?

While the election has not taken place yet, and we do not know which kind of Black Swan might arise, as the distinction of predictability could go one way or the other, I sincerely hope that the massive momentum that highly favors Senator Obama for becoming the next President of the United States will not be a Black Swan in the reverse. This might be disastrous on many fronts, nationally and internationally, financially and culturally, in times of peace and in war.

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