Black Swan talking
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Nassim Nicholas Taleb Angry (video excerpts)
News Night, BBC via The Real News
Nassim Nicholas Taleb angry with economists. The interviewer was just a journalist clueless about his ideas but he got them across anyway by ignoring her questions.
(posted 24 October 2008, but aired earlier)
It's a lot more fun to hear Taleb than the usual talking heads. Also posted at YouTube.
The REAL Maverick: Present Economy worse than Depression (video clip)
PBS Newshour via YouTube
10/21/08: PBS NEWS HOUR Interview with Nassim Nicholas Taleb, famous economist and author of "The Black Swan" and Dr. Mandelbrot, professor of Mathematics. Both say that the present economy more serious than the Great Depression, and the economy during the American Revolution.
(21 October 2008)
Taleb on Black Swans
Russ Roberts, Library of Economics and Liberty
Nassim Taleb talks about the challenges of coping with uncertainty, predicting events, and understanding history. This wide-ranging conversation looks at investment, health, history and other areas where data play a key role.
Taleb, the author of Fooled By Randomness and The Black Swan, imagines two countries, Mediocristan and Extremistan where the ability to understand the past and predict the future is radically different. In Mediocristan, events are generated by a underlying random process that is normally distributed. These events are often physical and observable and they tend to cluster around the middle. Most people are near the average height and no adult is more than nine feet tall.
But in Extremistan, the right-hand tail of events is thick and long and the outlier, the seemingly wildly unlikely event is more common than our experience with Mediocristan would indicate. Bill Gates is more than a little wealthier than the average. The civil war in Lebabon or the events of 9/11 were more worse than just a typical bad day in the Beirut or New York City.
Taleb's contention is that we often bring our intuition from Mediocristan for the events of Extremistan, leading us to error. The result is a tendency to be blind-sided by the unexpected.
Another long interview at FORA. -BA
Nassim Nicholas Taleb: the prophet of boom and doom
Bryan Appleyard, Times (UK)
When this man said the world’s economy was heading for disaster, he was scorned. Now traders, economists, even Nasa, are clamouring to hear him speak
... The central point is that we have created a world we don’t understand. There’s a place he calls Mediocristan. This was where early humans lived. Most events happened within a narrow range of probabilities – within the bell-curve distribution still taught to statistics students. But we don’t live there any more. We live in Extremistan, where black swans proliferate, winners tend to take all and the rest get nothing – there’s Bill Gates, Steve Jobs and a lot of software writers living in a garage, there’s Domingo and a thousand opera singers working in Starbucks. Our systems are complex but over-efficient. They have no redundancy, so a black swan strikes everybody at once. The banking system is the worst of all.
“Complex systems don’t allow for slack and everybody protects that system. The banking system doesn’t have that slack. In a normal ecology, banks go bankrupt every day. But in a complex system there is a tendency to cluster around powerful units. Every bank becomes the same bank so they can all go bust together.”
... Taleb believes in tinkering – it was to be the title of his next book. Trial and error will save us from ourselves because they capture benign black swans. Look at the three big inventions of our time: lasers, computers and the internet. They were all produced by tinkering and none of them ended up doing what their inventors intended them to do. All were black swans. The big hope for the world is that, as we tinker, we have a capacity for choosing the best outcomes.
... And you and me? Well, the good investment strategy is to put 90% of your money in the safest possible government securities and the remaining 10% in a large number of high-risk ventures. This insulates you from bad black swans and exposes you to the possibility of good ones
Above all, accept randomness. Accept that the world is opaque, majestically unknown and unknowable. From its depths emerge the black swans that can destroy us or make us free. ...“You find peace by coming to terms with what you don’t know.”
(1 June 2008)
Long, entertaining article that Taleb likes ("Most representative overall profile") according to Taleb's website.