There is no freedom without noise — and no stability without volatility

(by Sam Behseta)

A recent article by Nassim Taleb and Mark Blyth in Foreign Affairs is in a sense a black swan itself mainly because despite Taleb’s familiar statistician-bashing verbiage, the piece is deeply pro-statistics, especially in its thematically promoting the role that understanding uncertainty must play in policy-making, here in conjunction with the revolts in the Arab world. I am not interested in commenting on the whole black swan debate, as it has been done to exhaustion, most informatively in the editor of the Forum’s personal blog. The reality is the black swan is used everywhere (recently, in this lively piece by Nicolas Quint in the French newspaper Liberation on the Dominque Strauss-Kahn affair.)

Taleb and Blyth are on the money when they write:

Variation is information. When there is no variation, there is no information. This explains the CIA’s failure to predict the Egyptian revolution and, a generation before, the Iranian revolution.

The main point of the paper is that guarding despots under the argument of preserving stability, specifically in the Middle East, is just dumb. This sort of macro approach to policy making is what intrigued the CIA under Eisenhower’s administration to plan and execute the notorious 1953 coup d’état against Mohammed Mosadegh, the highly popular Iranian prime minister. The aftermath of the coup was largely felt throughout and after the 1979 revolution. Also, in the case of Iran, the same mistake of backing up the Shah’s regime at all costs was repeated over and over again right to the brink of the revolution: in his December 31st 1977 visit to Tehran, Jimmy Carter made a toast to the Shah and quite famously called Iran an island of stability. This is at the time that Iranian prisons were literally filled with anti-shah political dissenters, and there were daily protests out on the streets of Tehran and other major Iranian cities. In the case of Egypt, the zero-variance approach to keep the dictator around manifested itself to some embarrassingly low points when the U.S. policy makers were unsure if it were time to acknowledge the Egyptian revolution right before the symbolic mass gatherings in Cairo’s Tahrir square. To that end, Taleb and Blyth’s message is quite liberating when they state:

There is no freedom without noise — and no stability without volatility.

(Sam Behseta is a professor of mathematics at California State University and the executive editor of Chance magazine.)


2 Responses to “There is no freedom without noise — and no stability without volatility”

  1. 1 Dick Merkleinn May 22, 2011 at 4:38 am

    The issue for me…a novice at statistics…seems more common sensical than statistical. At its essence, it’s a call for complete transparency by those with political and financial power to openly acknowledge and accept uncertainties that are inevitable in these complex fields. That doesn’t mean they shouldn’t be dealt with, but it does mean that ignoring them or hoping they’ll go away can lead to major crises that can be catastrophic. It seems common sense to recognize that small problems or uncertainties are easier to manage or to control than larger ones. Isn’t reluctance to accept total transparency simply human aversion to the embarrassment that anyone in power fears when problems or uncertainties occur that appear to threaten their competency or authority? Isn’t that why those in power fear transparency? And isn’t that why all governments and all
    financial systems, including capitalism, socialism, etc., are
    averse to transparency?

  2. 2 Dick Merklein May 22, 2011 at 10:59 am

    My previous comment failed to address Behseta’s clear endorsement of Taleb and Blyth’s statement that “variation is information. When
    there is no variation, there is no information”. This, for me, is the statistical aspect of his blog…i.e…uncertainty should be recognized and valued as new information, not as a problem to be eliminated, but as a new insight increasing our understanding and knowledge.

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