The Stability Paradox: Suppressed Volatility Leads to Fragility

What to Tell the Foreign Policy Makers

In this passage from Antifragile, Taleb argues against policies that suppress political volatility. The descriptions and predictions reflect the book’s publication period.

To summarize, the problem with artificially suppressed volatility is not just that the system tends to become extremely fragile; it is that, at the same time, it exhibits no visible risks. Also remember that volatility is information. In fact, these systems tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. Although the stated intention of political leaders and economic policy makers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to Black Swans. Such environments eventually experience massive blowups, of the type seen in Figure 3, catching everyone off guard and undoing years of stability or, in almost all cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm to both economic and political systems.

Seeking stability by achieving stability (and forgetting the second step) has been a great sucker game for economic and foreign policies. The list is depressingly long. Take rotten governments like the one in Egypt before the riots of 2011, supported by the United States for four decades in order “to avoid chaos,” with the side effect of a coterie of privileged pillagers using superpowers as a backstop—identical to bankers using their “too big to fail” status to scam taxpayers and pay themselves high bonuses.

Saudi Arabia is the country that at present worries and offends me the most; it is a standard case of top-down stability enforced by a superpower at the expense of every single possible moral and ethical metric—and, of course, at the expense of stability itself.

So a place “allied” to the United States is a total monarchy, devoid of a constitution. But that is not what is morally shocking. A group of between seven and fifteen thousand members of the royal family runs the place, leading a lavish, hedonistic lifestyle in open contradiction with the purist ideas that got them there. Look at the contradiction: the stern desert tribes whose legitimacy is derived from Amish-like austerity can, thanks to a superpower, turn to hedonistic uninhibited pleasure seeking—the king openly travels for pleasure with a retinue that fills four Jumbo jets. Quite a departure from his ancestors. The family members amassed a fortune now largely in Western safes. Without the United States, the country would have had its revolution, a regional breakup, some turmoil, then perhaps—by now—some stability. But preventing noise makes the problem worse in the long run.

Clearly the “alliance” between the Saudi royal family and the United States was meant to provide stability. What stability? How long can one confuse the system? Actually “how long” is irrelevant: this stability is similar to a loan one has to eventually pay back. And there are ethical issues I leave to Chapter 24, particularly casuistry, when someone finds a justification “for the sake of” to violate an otherwise inflexible moral rule.2 Few people are aware of the fact that the bitterness of Iranians toward the United States comes from the fact that the United States—a democracy—installed a monarch, the repressive Shah of Iran, who pillaged the place but gave the United States the “stability” of access to the Persian Gulf. The theocratic regime in Iran today is largely the result of such repression. We need to learn to think in second steps, chains of consequences, and side effects.

More worrisome, U.S. policy toward the Middle East has historically, and especially since September 11, 2001, been unduly focused on the repression of any and all political fluctuations in the name of preventing “Islamic fundamentalism”—a trope that almost every regime has used. Aside from the fact that killing Islamists compounds their numbers, the West and its autocratic Arab allies have strengthened Islamic fundamentalists by forcing them underground.

Time for American policy makers to understand that the more they intervene in other countries for the sake of stability, the more they bring instability (except for emergency-room-style cases). Or perhaps time to reduce the role of policy makers in policy affairs.

One of life’s packages: no stability without volatility.