We humans prefer the simplicity of straight-line linear systems; we would like the world to behave in an orderly, predictable fashion. Would that it was so!
The line ‘Gradually, Then Suddenly’ comes from Ernest Hemingway’s 1926 novel, ‘The Sun Also Rises’ and is in response to the question “How did you go bankrupt?” and is quoted often in financial circles re unforeseen risk.
When you push a linear system twice as hard, it moves twice as far. Double the input, double the output. However, if you push a nonlinear system twice as hard, it might not move at all—or it might take off like a rocket… or fall off a cliff.
Many non-linear systems have a gradual phase with hidden, latent build: small, even invisible changes, faint signals easily ignored or explained away, incremental drift masked by ongoing bias toward assumptions of continuous normalcy. Then a seemingly sudden phase transition, a tipping point is passed and suddenly what was true is no longer true, solid ground morphs into quicksand.
Imposing linear expectations on non-linear circumstances can happen in both upside and downside situations. Grey Swan events are crises that may seem to unfold overnight yet whose root cause can be found in a slow, gradual erosion of standards. On the upside, the challenge is when we believe we are doing the right things, yet nothing seems to be changing. How long do we continue the good fight before throwing in the towel? Not quit when success is just around the next bend in the road? How do we separate weak signals from the noise? We’ve all heard of the economist who ‘correctly predicted 5 of the last 3 recessions’ and the Vietnam era saying: ‘Would the last person to leave please turn off the light at the end of the tunnel?’
Sorry, no simple answers, just more thoughts: smooth gains can mask unseen risk, and flat results can hide unseen gains. We over-trust or normalize even improbable patterns (Madoff’s string of unlikely results, both in amount and in consistency!), we undervalue or discount ‘out of sight’ compounding: the artist whose decade of hard work (that we don’t see) leads to becoming an ‘overnight’ sensation.
Closing Quotes:
“A linear vision of the future is a dangerous illusion in a non-linear world.” – Ray Kurzweil, ‘The Singularity Is Near’
“The greatest shortcoming of the human race is our inability to understand the exponential function.” – Albert Allen Bartlett, 1923-2013
“We have a habit of assuming that the future will be a smooth extrapolation of the past. Nature has no such obligation.” – Murray Gell-Mann, 1929-2019, Nobel Prize for Physics, 1969
“The heights by great men reached and kept were not attained by sudden flight, but they, while their companions slept, were toiling upward in the night.” – Henry Wadsworth Longfellow, 1802-1887, ‘Paul Revere’s Ride’
“The turkey is fed by the butcher every day for a thousand days… every single feeding will expand the bird’s belief that it is the general rule of life to be fed by friendly members of the human race… until the Wednesday before Thanksgiving.” – Nassim Nicholas Taleb, ‘The Black Swan/Fooled by Randomness’
As always, I share what I most want and need to learn. – Nathan S. Collier
Note: Every effort has been made to properly source any 3rd person material. I am, however, a voracious reader. If anyone finds any unattributed material, pls let me know asap and I will be delighted to give credit where credit is due.
“All intelligent thoughts have already been thought; what is necessary is only to try to think them again.” – Johann Wolfgang von Goethe, 1749-1832
