Tag Archives: Nassim Nicholas Taleb

Capitalism 2.0

plant_curveFlaneur and creator of the black swan theory Nassim Nicholas Taleb has written an engaging article for Edge describing the principles of what he calls Capitalism 2.0:

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

Taleb’s highly bombastic style may not be to everyone’s liking but I rather enjoy the iconoclastic tone of both The Black Swan and Fooled by Randomness. Both are highly recommended – especially as they have direct relevance to thinking about the near future.

[image from James Jordan on flickr]

Andrew Marr on “anti-news”

It’s well worth listening to Andrew Marr’s latest edition of Start the Week in which he goes back over some of the best interviews and guests of the year.

He chooses to focus on “anti-news” – developments and trends that don’t make the headlines but nevertheless have a huge long term impact on the way we live our lives. Futurismic stuff, in fact.

Topics include human identity, bioscience, genetic predetermination, information technology, black swans, and the morality of nanotechnology.

Listen to the podcast here or on BBC iPlayer (available for the next six days).

Black swans and the Fourth Quadrant

Statistician and economist Nassim Nicholas Taleb has written an essay on what he calls the Fourth Quadrant, or the statistical “danger zone”. It’s in depth and I found it technically challenging to understand: but I felt it was well worth it in the end. Seriously, go read it, it makes you feel cleverer. The gist:

Statistics can fool you. In fact it is fooling your government right now. It can even bankrupt the system (let’s face it: use of probabilistic methods for the estimation of risks did just blow up the banking system).

Taleb rails against the misuse of statistical economics that has lead us to our current economics woes. Also check out the various responses to Taleb’s essay by assorted luminaries.

[essay on Edge.org][image from BotheredByBees on flickr]

Forecasting the future

I’ve mentioned this lecture series before, but the Long Now Foundation had two recent lecturers, Paul Saffo and Nassim Nicholas Taleb, give us their takes on forecasting future trends.

Paul Saffo gives us his rules for forecasting, starting off with a great description of the “cone of uncertainty” that is involved in any sort of forecasting.  He goes on to discuss how humans get the future so wrong – among them are the linear expectations we have, whereas change isn’t linear, but instead moves in more of an “S” curve.

Nassim Nicholas Taleb gave a very humorous talk on how change happens.  He’s got a book out called “The Black Swan,” a book I’ve ordered and look forward to reading.  The title comes from the old European idea that swans were only white, therefore things that were impossible were “as likely as a black swan,” this phrase being enshrined in Shakespearean dialogue, among others.  Until people got to Australia.  They’ve got black swans.

Taleb’s talk focused on the human bias in forecasting – how we use data solely taken from survivors and success stories.  Everyone wants to hear how so-and-so made millions in the dot-com boom-and-you-can-too, but no one wants to hear how my Uncle Ernie lost a million bucks.  Especially if you’re interested in his descriptions of the psychology involved, “Mediocristan” and “Extremistan” are fascinating topics.

Give the blogs a read, and there are certainly worse ways you can spend a couple hours than by listening to the podcasts on the way to work (Taleb and Saffo).

(image via flickr user kamoda)