A Black-Swan-Robust World

While the United States and the world struggle through the worst economic times since the 1930s, advice is coming in from all sides on how to prevent a repeat of the current debacle. Neoliberal Chicago school economic ideas championed for decades by Milton Friedman and his followers—and brought to full bloom under George W. Bush—are now in well-deserved disrepute, but where do we go from here?

Kim Stanley Robinson has written persuasively about considering post-capitalist economic options. The IEET’s Jamais Cascio has offered a future scenario describing resilience economics.

Now Nassim Nicholas Taleb, author of Fooled by Randomness and the international bestseller The Black Swan, provides his “Ten Principles for a Black-Swan-Robust World.”

Originally published in the Financial Times, and reposted online (with a slightly modified title) by Edge.com, here are the ten principles Taleb recommends:

1. What is fragile should break early while it is still small.

2. No socialisation of losses and privatisation of gains.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks.

5. Counter-balance complexity with simplicity.

6. Do not give children sticks of dynamite, even if they come with a warning.

7. Only Ponzi schemes should depend on confidence.

8. Do not give an addict more drugs if he has withdrawal pains.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.

10. Make an omelette with the broken eggs.

I’m just offering the heading for each principle, and you’ll need to go to one of the links above to read the full explanation. Taleb’s advice seems like basic common sense. But considering how little of that has been in evidence in recent years, how confident should we be that such obviously valuable changes in behavior will be adopted?