Black Swans Part II

Last week, we introduced Taleb’s definition of black swans; rare, unpredictable ‘unknown unknowns’ in military terms, with major impacts, exploring historical examples that reshaped society post-event. This week I’m going to introduce a fictional black swan and how to react to them but before that the unpredictable part of Taleb’s definition needs some modifications. True black swans by Taleb definition are not only rare but practically non-existent outside of natural disasters such as earthquakes. To discuss a black swan, I am going to change the definition a bit and say these events are unpredictable to most observers but predictable or at least imaginable to some. Taleb would likely call them grey swans. For instance, Sputnik was known to the Soviets, but an intelligence failure and complete surprise to the rest of the world. Nikola Tesla anticipated the iPhone 81 years ahead of time. 9/11 was known to the perpetrators and was an intelligence failure. Staging a significant part of your naval fleet in Pearl Harbor during a world war and forgetting to surveil the surrounding area is not a black swan, just incompetence.

With that tweak out of the way, we’ll explore in Part II where Taleb discusses strategies to mitigate a black (grey) swan’s major impacts with a fictional example. His strategies can be applied to pre-swan events as well as post-swan. Pre-swan planning in business is called contingency planning, risk management, or, you guessed it, black swan planning. They include prioritizing redundancy, flexibility, robustness, and simplicity, as well as preparing for extremes, fostering experimentation, and embracing antifragility.

Imagine a modern black swan: a relentless AI generated cyberattack cripples the Federal Reserve and banking system, wiping out reserves and assets. Industry and services collapse nationwide and globally as capital evaporates, straining essentials, with recovery decades away if ever. After the shock comes analysis and damage reports, then the rebuilding begins.

The Treasury, with no liquid assets, must renegotiate debt to preserve global trust. Defense capabilities are maintained at a sufficient level, hopefully hardened, to protect national security, while the State Department reimagines the world to effectively bolster domestic production and resource independence while keeping the wolves at bay.

Non-essential programs, from expansive infrastructure projects, research, federal education initiatives, all non-essential services are shelved, shifting priorities and remaining resources to maintaining core social and population safety nets like Social Security and Defense. Emergency measures kick in: targeted taxes on luxury goods and wealth are imposed to boost revenue and redirect resources. Tariffs encourage domestic production and independence.

Federal funding to states and localities is reduced to a trickle. States and municipalities must take ownership of essential public services such as education, water, roads, and public safety. The states are forced to retrench and innovate, turning federal scarcity into local progress.

Looking ahead, resilience becomes the first principle. Diversification takes center stage, with the creation of a sovereign wealth fund based on assets like gold, bitcoin, and commodities, bolstered by states that had stockpiled reserves such as rainy-day funds, ensuring financial stability. Local agriculture, leaner industries and a realigned electrical grid, freed from federal oversight, innovate under pressure, strengthening a recovery. Resilience becomes antifragility, the need to build stronger and better in the face of adversity. And finally, the government must revert to its Lockean and Jeffersonian roots, favoring liberty and growth over control, safety, and stagnation: anti-fragility.

Source: The Black Swan by Nassim Nicholas Taleb, 2007. Graphic: The Black Swan hardback cover.

Chagall and Expressionism

Art critic Raimond Cogniat described Marc Chagall as an artist of opposites, a painter who thrived in the interplay of form and color, color and meaning. Chagall infused his paintings with love and happiness, crafting worlds that felt both fantastical and deeply alive. He shaped reality from his feelings, “making it conform to his inner spiritual logic,” even if, as he once confessed, he wasn’t entirely conscious of his process.

Born Moishe Shagal in 1887 in Vitebsk (now Belarus), Chagall grew up in a Jewish enclave within the Russian Empire. He later embraced France as his adoptive home, blending his Eastern European roots with French artistic flair. Though he briefly explored Cubism during its peak in the early 20th century, he thankfully abandoned that style to carve his own path as an expressionist. Vivid, otherworldly colors, and exaggerated forms defined his style, while his Jewish heritage, evident in depictions of shtetl life, fiddlers, and biblical scenes, remained his anchor. His 1912–1913 painting The Fiddler is said to have inspired the title of the musical Fiddler on the Roof.

In a 1963 speech to an American audience, Chagall reflected on his philosophy: “Any moral crisis is a crisis of color, texture, blood and the elements, of speech, vibration, etc.—the materials with which art, like life, is constructed. Even when mountains of color are piled on a canvas, if one can discern no single object even through great sound and vibration, this will not necessarily give authenticity.” To Chagall, authenticity was more than paint; it demanded the infusion of human experience, blood, and the essence of nature.

Source: Chagall by Raimond Cogniat, translated by Ann Ross, 1977. Graphic: The Fiddler, Chagall, 1912-1913. Public Domain

Black Swans Part I

Black swans are rare and unpredictable events, what the military calls “unknown unknowns“, that often have significant, domain-specific impacts, such as in economics or climate. Despite their unpredictability, societies tend to rationalize these occurrences after the fact, crafting false narratives about their inevitability. COVID-19, for instance, ripples across multiple domains, beginning as a health crisis but expanding to influence the economy, legal systems, and societal tensions. As a human-made pathogen, its risks should have been anticipated.

Black swans throughout history are legendary. Examples include the advent of language and agriculture, the rise of Christianity (predicted yet world-changing), and the fall of Rome, which plunged the Western world into centuries of stagnation. Islam (also predicted), the Mongol conquests, the Black Death, and the Great Fire of London shaped and disrupted societies in profound ways. The fall of Constantinople, the Renaissance, the discovery of America, the printing press, and Martin Luther’s Reformation brought new paradigms. More recently, the Tambora eruption (“the year without a summer”), the Great Depression, WWII brought unforeseen disruptions to economies and geopolitics, the Manhattan Project, Sputnik, the fall of the Berlin Wall, and the rise of PCs and the internet altered the trajectory of human progress. Events like 9/11 and the iPhone have similarly reshaped the modern world. While black swans may be rare, they are not inevitable. We should expect moments of dramatic collapse or unanticipated brilliance to recur throughout history.

Nassim Taleb, author of the 2007 book The Black Swan, suggests several approaches to mitigate the effects of such events without needing to predict them. His recommendations include prioritizing redundancy, flexibility, robustness, and simplicity, as well as preparing for extremes, fostering experimentation, and embracing antifragility: a concept where systems not only withstand shocks but emerge stronger.

Through the lens of history, black swans appear as a mix of good and bad, bringing societal changes that were largely unanticipated before their emergence. As history has shown, predicting the impossible is just that: impossible. What might the next frontier be, the next black swan to transform humanity? Could it be organic AI, a fusion of human ingenuity and machine intelligence, unlocking potential but posing profound risks to free will, societal equilibrium, and humanity’s very essence? (Next week—preparing for a black swan: an example.)

Natural Law—Point Counterpoint

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The notions of right and wrong, justice and injustice, have there no place. Where there is no common power, there is no law; where no law, no injustice.” — Leviathan by Thomas Hobbes

Thomas Hobbes saw human nature as a cauldron of chaos. In his state of nature, life is “nasty, brutish, and short,” a “war of all against all” where self-preservation is the only natural law. Shaped by Thucydides’ tales of strife and Machiavelli’s ruthless pragmatism, Hobbes cast man’s self-interest as a destructive force that casts morality aside. His remedy to avert chaos: a towering sovereign, ideally a monarch, to crush anarchy with an iron fist. The social contract trades liberty for security, forging laws as human tools to bind the beast within. Yet Hobbes stumbled: he failed to grasp power’s seductive pull. He assumed his Leviathan, though human, would rise above the self-interest he despised, wielding authority without buckling to its corruption.

Reason, which is that law, teaches all mankind…that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions.” — Second Treatise of Government by John Locke

John Locke painted a gentler portrait of man than did Hobbes. He rooted natural law in reason and divine will, granting all people inherent rights to life, liberty, and property. His state of nature is peaceful yet imperfect, marred by the “want of a common judge with authority,” leaving it vulnerable to human bias and external threats. Optimistic, Locke envisioned a social contract built on the consent of the governed, protecting these rights through mutual respect and laying the groundwork for constitutional rule. Where Hobbes saw a void to be filled with control, Locke trusted reason to elevate humanity, crafting government as a shield, not a shackle.

Hobbes and Locke clash at the fault line of power. Hobbes’s sovereign, meant to tame chaos, reflects the rulers’ thirst for dominance, but his naivety about power’s effect cracks his foundation. Locke’s ideals, morality, reason, rights, empower the ruled, who yearn for liberty after security sours. Hobbes missed the flaw: rulers, driven by the same self-interest he feared, bend laws to their will, spawning a dual reality—one code for the governed, another for the governors. Locke’s vision of freedom and limited government inspires their soul, while Hobbes’s call for order fortifies their bones with courts, police, and laws of men. The U.S. Constitution marries both, yet scandals tip the scales: power corrupts, and liberty frays as safeguards buckle under the rulers’ grip.

Hobbes and Locke both accept the imperfection of man but take different paths to mitigate that imperfection with workable safeguards. Hobbes insists on the rule by law but drafted by imperfect man and applied with a Machiavellian indifference with no solution for absolute powers corrupting influence. Locke also chooses to rule by law but guided by morality, God and the will to depose of despots.

Sources: Leviathan, Thomas Hobbes; Second Treatise of Government, John Locke. Graphic:Original Leviathan frontispiece, a king composed of subjects, designed with Hobbes’s input.

Light, Color, Sisley

Great art is the interpretation of great beauty. Art without aesthetic is something rawer, more fleeting, an attempt to conjure emotions that challenge the intellect but not necessarily feed the soul. Picasso and Pollock jolted the mind, often with a visceral, nihilistic force. Alfred Sisley, though, honored the soul, developing and refining an impressionistic palette of light and color on landscapes that captured nature’s beauty and humanity’s place in it throughout his career.

Alfred Sisley was born in Paris in 1839 to a prosperous English expatriate family. At 20, in 1859, he left for London to study business, prepping to succeed his aging father, then 58. But over four years there, he skipped lectures, haunting museums instead, captivated by art. Back in Paris by 1862, his parents relented, letting him trade commerce for canvas. Soon after, he met Monet, Renoir, and Bazille, and together they took to painting ‘en plein air’, in the open air, chasing light, color, and atmosphere over precision. From these outings, Impressionism took root.

Sisley found inspiration and tranquility in the rural Seine Valley, just tens of miles from Paris, where he painted some of his most enduring landscapes. In The Terrace at Saint-Germain, Spring (1875), near his home, he bathes the valley in a tender, radiant light, blending nature and humanity into a soul-soothing vista. His works, unwavering in their beauty, stand as a testament to art’s power to nourish the spirit, a tribute to life’s grace.

Source: Sisley by Cogniat, translated by Sachs, 1979. Graphic: The Terrace at Saint-Germain, Spring by Sisley, 1875. Walters Art Museum, Baltimore.

Howling Through Europe

During the Italian Renaissance, a cultural rebirth fueled optimism and propelled civilization to new heights. Yet, in stark contrast, werewolf and witch trials, often culminating in gruesome executions, cast a superstitious shadow over the cold, rugged rural regions of France and Germany from the 14th to 17th centuries.

One notorious case revolves around Peter Stumpp, dubbed the “Werewolf of Bedburg.” In 1589, near Cologne in what is now Germany, Stumpp faced accusations of lycanthropy during a spree of brutal murders and livestock killings. Under torture, he confessed to striking a pact with the devil, who allegedly provided a magical wolf-skin belt that allowed him to transform into a wolf. He admitted murdering and cannibalizing numerous victims, including children. Stumpp’s punishment was as horrifying as his alleged crimes: he was beheaded and burned, alongside his daughter and mistress, who were also implicated. His severed head was later mounted on a pole as a grim public warning.

In a striking counterexample, a case from 1692 in present-day Latvia and Estonia challenges the typical narrative. An 80-year-old man named Thiess of Kaltenbrun confessed to being a werewolf, not to wreak havoc, but to protect his community. He claimed he and other “werewolves” battled witches, even journeying to Hell and back to secure the region’s grain supply. The court, skeptical of his tale and possibly viewing him as delusional (perhaps an early case of clinical lycanthropy), rejected the death penalty and sentenced him to flogging instead.

These trials often hinged on confessions extracted through torture, blurring the lines between truth, projection, vengeance, and superstition. Historians still debate the reality behind the accused: Were they serial killers, convenient scapegoats for unsolved crimes, or individuals afflicted by psychological conditions like lycanthropy—a disorder marked by the delusion of transforming into an animal? In his 1865 work, The Book of Were-Wolves, Sabine Baring-Gould analyzed cases like Stumpp’s, arguing that while superstition inflated their legend, they may have been rooted in real incidents: gruesome murders or societal fears run amok.

Source: The Book of Werewolves by Baring-Gould. Werewolf Trials by Beck, History, 2021. Graphic: Werewolf Groc 3.

Americana

Norman Rockwell, a name synonymous with American Realism, was a master of meticulous detail, yet he never failed to brush a thread of whimsy and rustic existence onto the canvases of his iconic paintings.

Norman Rockwell, an iconic painter of American life, was born on 3 February 1894 into a comfortable New York City family. His father, a lover of Charles Dickens, often sketched illustrations from books, planting early seeds of creativity in young Norman. His mother, overprotective yet proud of her English heritage, spoke often of her artistic but unsuccessful father, whose unrealized dreams seemed to echo in the household. Art wasn’t just a pastime for Rockwell; it pulsed through him, and by age 12, he had resolved to draw for a living, though painting would come later in his journey as an artist.

As a teenager, Rockwell pursued artistic training at the National Academy of Design and later at the Art Students League, where he studied under the influence of Howard Pyle, the renowned illustrator of boys’ adventure tales. Pyle, who had founded the school’s philosophy through his own teachings and legacy, left an indelible mark on Rockwell, shaping his lifelong passion for weaving narrative into art. Before he turned 16, Rockwell landed his first commission—four Christmas cards—a modest start for a boy already dreaming big. By 18, he was painting professionally full-time, his talent unfolding with the quiet determination of youth finding its purpose.

In 1916, Rockwell began his legendary run with The Saturday Evening Post, creating covers that would grace the magazine for the next 47 years. Over that span, 322 of his paintings became what the Post proudly dubbed “the greatest show window in America.” Through these works, Rockwell offered a mirror to the nation—sometimes nostalgic, often tender, always human—reflecting everyday moments that resonated deeply with millions.

While his career soared with the Post, city life never suited him. In 1939, he traded New York’s clamor for the rolling hills of Vermont, and later, in 1953, settled in Massachusetts. These rural landscapes became his muse, dominating his canvases for the first three decades of his career. Rockwell was no haphazard artist; he was methodical, even obsessive, following a rigorous six-step process to bring his visions to life: brainstorming ideas, sketching rough outlines, photographing staged scenes with real people, crafting detailed drawings, experimenting with color studies, and only then committing paint to canvas. Each step was a labor of love, a tip of the hat to the America he loved.

At the heart of his art was a simple, profound drive. As Rockwell himself put it, “Without thinking too much about it in specific terms, I was showing the America I knew and observed to others who might not have noticed.” His paintings weren’t just pictures, they were invitations to see the beauty in the ordinary, the dignity in the overlooked; we see not just an artist, but a storyteller who believed in the quiet goodness of people, brushstroke by brushstroke.

Source: The Norman Rockwell Treasury by Thomas S. Buechner, 1979. Norman Rockwell Museum. Graphic: The Tattooist by Norman Rockwell, 1944, The Brooklyn Museum.

Engraver of Wood:

Gustave Doré, widely regarded as the greatest illustrator of the 19th century, produced meticulous and exquisite works that continue to captivate audiences today, particularly his illustrations for the Bible and Dante’s Divine Comedy. Born, raised, and deceased in France, Doré began his artistic pursuits at the age of six and started illustrating classic literature at twelve using lithography. By nineteen, he embarked on his lifelong mission to illustrate the world’s greatest books, transitioning to woodblock engravings. It is estimated that he created over 10,000 engravings during his lifetime.

Among his most celebrated works are the engravings for the Vulgate Bible, also known as La Grande Bible de Tours. This collection includes 139 plates depicting scenes from the Old Testament and 81 plates from the New Testament. Featured in the attached graphic is his illustration of Isaiah 27, portraying God (often interpreted as Jesus in Christian theology) slaying Leviathan, symbolizing the ultimate triumph of good over evil.

Source: Gustave Doré Engravings by Alpine Fine Arts, 1995. Graphic: Destruction of Leviathan (Isaiah 27, colorized) by Gustave Doré, 1866, licensed by Gwengoat.

Locke and Jefferson

John Locke’s theory on the social contract is a cornerstone of his political philosophy and western democracies, as outlined in his work “Second Treatise of Government.” According to Locke, the social contract is an agreement among individuals to form a government that will protect their natural rights to life, liberty, and property. The social contract is a compromise between man’s inherent natural rights and the need to preserve and protect those rights.

Thomas Jefferson, in his Declaration of Independence builds on Locke’s concepts, tweak is probably a better word. Locke writes that people have “natural rights” to “life, liberty, and estate” (property), and if a government violates these, it’s “dissolved,” giving people the right to form a new one. Jefferson writes into the Declaration its famous “life, liberty, and the pursuit of happiness”—swapping “property” for a broader, aspirational feel. Locke’s idea that government derives legitimacy from the “consent of the governed” shows up when Jefferson lists grievances against King George III, arguing the king’s abuses justify breaking away. And Locke’s justification for revolution—“when a long train of abuses” threatens these rights, people can resist—mirrors Jefferson’s “whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it.”

Locke’s key points in his Second Treatise:

  1. State of Nature: Locke believed that in the state of nature, individuals are free and equal, governed by natural law, which dictates that no one should harm another in their life, health, liberty, or possessions. Anarchy with adherence to God’s moral code.
  2. Natural Rights: Locke argued that individuals have inherent rights to life, liberty, and property. These rights are inalienable and must be protected by any legitimate government.
  3. Consent of the Governed: Locke emphasized that government derives its authority from the consent of the governed. People agree to form a government to protect their natural rights, and this consent is the basis of political legitimacy.
  4. Limited Government: Locke’s social contract theory advocates for a government with limited powers, designed to serve the common good and protect individual rights.
  5. Right to Revolution: Locke believed that if a government becomes tyrannical and or violates the social contract, the people have the right to revolt and establish a new government that will better protect their rights.

Source: Second Treaties of Government by John Locke, 1690. Graphic: John Locke by Godfrey Kneller 1697.  Public Domain.

Hundred Days

Napoleon Bonaparte, reeling from his disastrous Russian campaign of 1812 and suffering significant losses to the Sixth Coalition in 1813, faced a decisive defeat at the Battle of Leipzig in October of that year. With his options exhausted and his army depleted, Napoleon abdicated his throne on 11 April 1814, and was exiled to Elba, a small island off the coast of Tuscany.

After approximately ten months in captivity, Napoleon executed a daring escape on 26 February 1815, orchestrated by loyal supporters and a small contingent of soldiers. He landed in France and marched triumphantly into Paris on 20th of March, reclaiming his title as Emperor and ushering in his second reign. This brief resurgence, however, ended with his defeat at the Battle of Waterloo on 18 June 1815, at the hands of the Duke of Wellington and Prussian Field Marshal Gebhard Leberecht von Blücher. The victorious Anglo-Prussian forces entered Paris on 7th of July restoring King Louis XVIII to the French throne and effectively concluding Napoleon’s reign—later dubbed the “Hundred Days” (20 March to 8 July) in historical accounts.

Unable to flee to the United States as he had hoped, Napoleon surrendered to the British Navy and was transported to England. From there, he was exiled to the remote island of Saint Helena in the South Atlantic, arriving there on 15 October 1815. He spent his final years there, dying on 5 May 1821.

Source: Napoleon by André Castelot, 1991. Graphic: Battle of Waterloo by William Sadler, 1815 (Public Domain).