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Ten principles for a Black Swan-proof world
Nassim Nicholas Taleb, Financial Times
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.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”…
The writer is a veteran trader, a professor at New York University’s Polytechnic Institute and the author of “The Black Swan: The Impact of the Highly Improbable”
(8 April 2009)
Also at Common Dreams
Homer-Dixon: Make room for doom and gloom
Thomas Homer-Dixon, Globe and Mail
Scorning pessimists as ‘Cassandras’ is destructive: Reckless optimism is what got us into this mess and it may take worry and prudence to get us out, argues Thomas Homer-Dixon, who has edited a new collection of essays on potentially coming calamities.
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Fear is bad, according to conventional wisdom. Our economy is in trouble, we hear, because banks are too afraid to lend and consumers and companies too afraid to spend. Less lending and spending further depresses the economy, which begets more fear. And to top it all off, some analysts irresponsibly exploit these fears for their own ends, by arguing that the crisis may get far worse before it gets better, and in the process sensationalize and exaggerate the problem.
But, in this case, conventional wisdom is wrong. The truth is that fear is good. The economic crisis we’re facing is not at root the result of too much fear but of too little. If we had been more afraid for our economic well-being, we would have saved more, borrowed and speculated less, and been more cautious about letting financial wizards make bets with our money using opaque mathematical models.
Today, if we were more afraid for our futures and those of our children, we would be doing much more to address potential problems – such as climate change and nuclear terrorism – that could derail our societies tomorrow.
(6 April 2009)
Related: Pessimists don’t get a free pass
Save the Holocene!
Alex Steffen, World Changing
The Anthropocene is a proposed new geological era, meant to signal the idea that we’ve changed the Earth’s biosphere and climate so dramatically that we’ve left the Holocene, the interglacial period that began 12,000 years ago.
It’s a catchy (if grim) concept, but one whose utility I find myself seriously questioning. I don’t doubt the magnitude of human impact on the planet. Quite the opposite. I think we consistently underestimate the degree of disruption we’ve already caused by altering the raw biological function of nearly every corner of the Earth and changing the chemistry of its atmosphere, oceans and soils. Very little “wild” anything remains, and all that does remain exists at our sufferance and will endure only with our conscious commitment. None of this, it seems to me, is really a matter of much debate. It’s just how the world is now.
(6 April 2009)
Symbiont or Parasite?
Frank Gifford, EntropyPawsed
Last week, Bonnie posted a writing on this blog about health and dis-ease. She included the following,
Webster’s New Twentieth Century Dictionary defines “health” as “physical and mental well-being; soundness; freedom from defect, pain or disease.” Although cited as “obscure,” in the same dictionary the first definition of dis-ease is “uneasiness; distress.”
I have seen much dis-ease over the years that, in my view, is directly related to dis-connection from a sense of place, from Mother Earth, from each other, and from our inner emotional and spiritual selves.
At the risk of misinterpretation, I conclude the Mother Earth connection Bonnie referred to was a symbiotic one; not a parasitic one. In hopes of furthering the conversation, I pose this question; is Homo sapiens sapiens symbiont or parasite to the Earth? Corollary to that, is symbiosis with Earth a necessary condition for human good health? Should we as individuals strive towards this condition?
The Onelook.com online Dictionary defines symbiosis is “the relation between two different species of organisms that are interdependent; each gains benefits from the other ” Again from Onelook.com, a parasite is an “organism that lives in or on a host (another animal or plant); the parasite obtains nourishment from the host without benefiting (the host and may injure or) kill.. the host ”.
To me, it does not seem much of a stretch to consider Earth a living super-organism, along the lines of the Gaia Hypothesis proposed by James Lovelock. http://en.wikipedia.org/wiki/James_Lovelock
(2 April 2009)
