A Night With Nassim Taleb
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Introduction (via Joe Weisenthal @ Business Insider)
Eliot Spitzer was not robust because a single sex scandal derailed his career.
Nouriel Roubini is robust because he has vulva castings on the wall of his apartment, and it doesn’t derail him at all.
Understand this dichotomy, and you’ll begin to understand Nassim Taleb’s conception of a robust society where we wouldn’t have financial
crises like the one we just came through.Still don’t get the significance of the Spitzer and Roubini examples?
Ok, let’s use a financial example.
When Jerome Kerveil lost billions for SocGen, it wasn’t because his trades specifically cost the firm billions. It was because, in the process of liquidating $50 billion or so of assets, the bank depressed the market to such an extent that they lost billions.
Had SocGen and Kerveil been a tenth of its size, that same liquidation wouldn’t have cost the bank much at all.
Thus SocGen was not robust, but a similar firm 1/10th as big would have been.
Favorite Excerpts
There were two names he insisted I include: Paul Krugman and Thomas Friedman.
“Paul Krugman is a danger to society!”
“He uses the wrong mathematics, that’s how I knew he was a fluke.”
Why? It’s because Krugman is pushing to create a society that is less robust. Taleb, who characterizes himself as a libertarian, even goes one step further: “The definition of a robust society: where Paul Krugman could exist without harming others.”
Even worse though is Krugman’s fellow NYT pundit, Thomas Friedman, who with his book about globalization, “is the biggest danger.”
April 16th, 2010 at 12:21 am
I just discovered your blog. I really like your website by the way. But the more I read from Taleb, the more I dislike him. The ideas brought from his books are nothing original and some statisticians were right for bringing him on task for some of his nonsense in the journal American Statistician. The way he demonizes certain scholars is just reprehensible. Calling Paul Krugman “a danger to society” is another example of this.