Nicholas Nassim Taleb Looks at the World

A decade or so ago Nicholas Nassim Taleb rose to intellectual prominence by promoting the theory of Black Swans. By that he meant that whatever you or the government are preparing for, whatever you have predicted, is unlikely to happen.

Thus, when a catastrophic event happens it will most likely be something that no one imagined before. If our government officials had had sufficient imagination to predict 9/11, they would have been prepared and could have prevented the attack. If that had been the case, the nation, Taleb’s theory suggests, would simply have suffered a different kind of attack, one that we had never imagined.

Taleb is a serious if not a great thinker. Currently, he teaches risk engineering at NYU. He predicted the financial crisis of 2008, the Brexit vote and the American presidential election. 

One enjoys reading him because one always enjoys reading people who think clearly and well. The following remarks come from an interview he did for an Indian newspaper, The Hindu. We discovered them in the Zero Hedge blog.

We begin with Taleb on Barack Obama. Did Obama fix the financial system and save the American economy? Have we entered a new age of economic prosperity? Has Donald Trump inherited a great economy?

Taleb does not think so:

The last crisis [2008] hasn’t ended yet because they just delayed it. [Barack] Obama is an actor. He looks good, he raises good children, he is respectable. But he didn’t fix the economic system, he put novocaine [local anaesthetic] in the system. He delayed the problem by working with the bankers whom he should have prosecuted. And now we have double the deficit, adjusted for GDP, to create six million jobs, with a massive debt and the system isn’t cured. We retained zero interest rates, and that hasn’t helped. Basically we shifted the problem from the private corporates to the government in the U.S. So, the system remains very fragile.

Why did Trump win? What was his appeal? Taleb suggests that whereby an Obama spoke over and above people, Trump spoke directly to them. Obama was a master of obfuscation, who larded it over with noble sentiments. Trump is down-to-earth:

When Trump was running for election, I said what he says makes sense to a grocery store owner. Because the grocery guy can say Trump is wrong because he can see where he is wrong. But with Obama, he can’t understand what he’s saying, so the grocery man doesn’t know where he is wrong.

And also:

Whereas Obama behaved like the Archbishop of Canterbury, and was going to do good but people didn’t feel their lives were better. As I said, if it was a shopkeeper from Aleppo, or a grocery store owner in Mumbai, people would have liked them as much as Trump. What he says makes common sense, asking why are we paying so much for this rubbish or why do we need these complex taxes, or why do we want lobbyists. You can call Trump’s plain-speaking what you like. But the way intellectuals treat people who don’t agree with them isn’t good either. I remember I had an academic friend who supported Brexit, and he said he knew what it meant to be a leper in the U.K. It was the same with supporting Trump in the U.S.

Taleb also agrees with an idea, proposed here and in other places, that politics is now being defined by a revolt against intellectual elites:

The intellectual class of no more than 2,00,000 people in the U.S. don’t represent everyone upset with Trump. The real problem is the ‘faux-expert problem’, one who doesn’t know what he doesn’t know, and assumes he knows what people think. An electrician doesn’t have that problem.

He sees a problem in the class of people who believe that they are experts and intellectuals, but who aren’t. One suggests humbly that the function of a magazine like The New Yorker is to persuade people that they are intellectuals and experts when they are not.

Taleb continues, suggesting that the revolt against the ruling elites is not the same as fascism:

Well, with Trump, Modi, Brexit, and now France, there are some similar problems in those countries. What you are hearing is people getting fed up with the ruling class. This is not fascism. It has nothing to do with fascism. It has to do with the faux-experts problem and a world with too many experts. If we had a different elite, we may not see the same problem.

And also:

I think you have to draw the conclusion that there is a global riot against pseudo-experts. I saw it with Brexit, and Nigel Farage [leader of the U.K. Independence Party], who was a trader for 15 years, said the problem with the government was that none of them had ever had a proper job. Being a bureaucrat is not a proper job.