Nassim Taleb Talks Antifragile, Libertarianism, and Capitalism's Genius for Failure

The best-selling author of The Black Swan talks about his new book and why most public intellectuals aren't worth a damn.

Nassim Nicholas Taleb is a former trader and hedge fund manager, a best-selling author, and a groundbreaking theorist on risk and resilience.

Taleb drew wide attention after the 2007 publication of The Black Swan: The Impact of the Highly Improbable, which warned that our institutions and risk models aren't designed to account for rare and catastrophic events. Among other things, the book cautioned that oversized and unaccountable banks using flawed investment models could bring on a financial crisis. He also warned that the government-sanctioned housing finance agencies, Fannie Mae and Freddie Mac, were sitting on a "barrel of dynamite."

One year after The Black Swan was published, a global banking crisis was brought on by the very factors he identified.

Taleb doesn't identify as a libertarian, but he often sounds like one. He has argued that we need to build a society where major actors have "skin in the game" and our public intellectuals can bloviate without subjecting the rest of us to the consequences of their bad ideas. He supported Ron Paul in the 2012 presidential election and has cited the libertarian economist Friedrich Hayek as an influence.

Taleb has called New York Times columnist Thomas Friedman "vile and harmful" and coined the phrase the "Stiglitz Syndrome" after Nobel-prize winning economist Joseph Stiglitz, which refers to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions. Paul Krugman and Paul Samuelson are among Taleb's other Nobel laureate bête noires.

Taleb's new book is Antifragile: Things that Gain with Disorder, which argues that in order to create robust institutions we must allow them to build resilience through adversity. The essence of capitalism, he argues, is encouraging failure, not rewarding success.

Reason's Nick Gillespie sat down with Taleb for a wide-ranging discussion about why debt leads to fragility (5:16); the importance of "skin in the game" to a properly functioning financial system (10:45); why large banks should be nationalized (21:47); why technology won't rule the future (24:20); the value of studying the classics (26:09); his intellectual adversaries (33:30); why removing things is often the best way to solve problems (36:50); his intellectual influences (39:10); why capitalism is more about disincentives than incentives (43:10); why large, centralized states are prone to fail (44:50); his libertarianism (47:30); and why he'll never take writing advice from "some academic at Cambridge who sold 2,200 copies" (51:49).

Produced by Jim Epstein; camera by Epstein and Anthony L. Fisher.

Approximately 56 minutes.

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  • Bam!||

    OT: Cokie Roberts just attacked term limits on ABC's "This Week." Democrats really would like Obama to rule forever. Fuckers.

  • Sevo||

    Hey, she has a point! Do *you* want to hear the words "President Biden"?

  • Killazontherun||

    Why, yes I do. What anarchist wouldn't?

  • Kyfho Myoba||

    Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

  • JohnD||

    Well that theory is gonna get a workout.

  • mad libertarian guy||

    They see Team RED on the ropes, and feel like they would have a shoe-in to get long-term power. They are despicable fucking toads.

  • T o n y||

    Term limits are antidemocratic. There may be some virtue to having an elected official in office for an extended period of time. Maybe not. But the people should be able to choose.

  • ||

    It has been explained to you repeatedly, fuckstain, that we do not live in a democracy. You live in a Constitutional Republic, where your rights are protected despite the will of the majority.

  • T o n y||

    I have a right to term limits?

  • ||

    NO, idiot.

    You said "antidemocratic" like it's a bad thing.

    I was pointing out, AGAIN, that we don't live in a democracy, NOR should anyone want to.

  • T o n y||

    Congratulations for graduating 8th grade civics hour. I think that there ought to be a good reason for subverting democratic majority will. So far you've yet to explain why doing so for the purpose of term limits is a good thing. I've put up a strike against them: that they are undemocratic. What's your argument in favor of them? Or are you going to continue lecturing me on the basic semantics of government?

  • ||

    As I posted earlier today.

    The career politician is THE greatest threat to this nation. The need to get reelected devolves into, among a host of other things, politicians buying votes by promising free shit their constituents. Please note the $16T debt and $120T in unfunded liabilities. It will always be so, unless you eliminate the need to be reelected. I propose:

    A Constitutional Amendment limiting our Congressmen to a single term (length TBD) with votes of confidence every year or two.

    It takes much of the "politics" out of governance while maintaining accountability to the constituency.

  • T o n y||

    There you go. Jesus it's like pulling teeth.

    I think there are virtues to elected representatives building institutional knowledge and dangers to having them all be newbies, in addition to the greater problem of term limits being a subversion of democratic choice.

  • ||

    You could make the terms longer. 8-10 Years for a senator and 4-6 for a representative. They'd be staggered, so there's not a bunch of neophytes all at once.

    institutional knowledge = how to obtain more power at the expense of the constituency

    You put "democracy" on a pedestal. People don't choose what's best for the nation. They choose who is promising them the most free shit at someone else's expense.

  • VG Zaytsev||

    The problem with term limits is that the only leverage that voters have over politicians is voting them out of office. Longer terms of office dilute that effect and term limits nullify it in their last term.

    So they're great if you think politicians should be able to enact laws with complete disregard for the wishes of the public.

    Things like tax increases, gun restrictions and increased regulations.

  • ||

    Completely agree. That's why you have votes of confidence every year or so. You can boot him if he sucks and is still beholding to his constituents, but he is only running against his record...no need to raise money buy votes.

  • Paul.||

    I think there are virtues to elected representatives building institutional

    Institutional knowledge in government is the greatest threat to free people.

    It allows for entrenchment, manipulation of rules and corruption. Newbies in government keep things fresh.

  • Rufus J. Firefly||

    You can transfer knowledge and experience...Tony. Man should not have indefinite access to power. Basically, Tony loves entrenched power. It's democratic, you know?

  • Sam Grove||

    You must then take the position that democracy is an unalloyed good.
    Also, that term limits can't be enacted by democratic means.

    There are other laws that are also undemocratic, such as ballot access laws.

    IAC, a republic was established, not to promote democracy, but to protect the rights of all people, not just those in a majority.

    Do you think democracies should be able to oppress minorities?

  • Brutus||

    I'm leery of gimmicks like term limits. I much prefer a strict adherence to the Constitution, which, properly applied, limits elected and appointed officials far, far more than any restrictions put on their time in office.

  • JohnD||

    How's this Tony. If Democratic Majority ruled, blacks might still be slaves, and gays couldn't marry. There would be no Obama Care since the majority of people were against it.
    As for a good reason for it, who gets to decide what's a good reason?
    I could go on, but surely you get the point.

  • T o n y||

    Feel free to defend term limits on their merits, but recognize that the are a restriction on democratic freedom. They are a legal restriction on people's democratic will. Some rights are defensible in this way. We've recognized that certain constitutional rights are to be protected from simple majorities. I'm not so sure that restricting people's will to elect who they want to an office is among these.

  • Cytotoxic||

    people's will to elect who they want to an office

    Dipshit doesn't understand what rights are.

  • Marshall Gill||

    Tony, I know that since you don't have two brain cells to rub together you won't understand but did you know that the Athenians voted for Socrates to die for "corrupting the youth"?

    As you have been told repeatedly, Democracy is two wolves and a sheep voting on what is for dinner.

  • T o n y||

    It is truly bizarre how hostile you guys are to democracy.

    It's almost like you don't give a shit about the will of the people and think we should be ruled by a set of authoritarian principles.

  • ||

    No, the government is ruled by the authoritarian principles. The PEOPLE can do as they wish provided they don't infringe upon the rights of others.

    And you, of all people, being gay, should be thanking your luck stars we don't live in a democracy. Because until just recently, the majority felt it was okay to discriminate against you.

  • T o n y||

    Noting that certain individual rights ought to be above the whims of simple majorities is not an argument for term limits.

    But if you insist on arguing against something nobody's claiming (that everything ought to be up to simple majority vote), it's quite evident that you don't believe majority rule for routine matters of governance to be an ideal, but a threat to your more authoritarian preferences.

  • ||

    I answered your question above.

    Simple majority rule if perfectly acceptable, PROVIDED the legislation falls within the limits of the Constitution AND you are not stomping on the rights of one individual to the benefit of another.

  • ||

    Shorter Tony: Democracy r teh great when everybody agrees with me!

  • Sam Grove||

    Democracy is not liberty. Government is established to enforce the limits of liberty which is equality of rights.

    Government, then, to be legitimate, must be restrained from violating the rights which it is set to defend.

    Democracy is merely populist government and is not a guarantee of liberty any more than any other type of government.

  • Sam Grove||

    But term limits cannot be established except by majority vote.

  • Paul.||

    Feel free to defend term limits on their merits, but recognize that the are a restriction on democratic freedom.

    So is the first amendment. What's your point?

  • Rufus J. Firefly||

    What will? If the majority of people are immoral clown then they should have the right to vote the same asshole every single time? You worry about experience yet what do you get for career politicians? John Kerry? The Kennedys?

    Fuck that. Cap the SOB's. They ain't serving you Tony. Best you remember that. You want civics? Get the people to share into the real power.

    Love Tony. One second his huffing and puffing about anti-democratic stuff and the other he does nothing but sleep on his back serving the government on the clock.

  • T o n y||

    I fail to see how cycling in new elected officials, while denying people the choice of keeping the old ones, solves any of those problems. Term limits are a gimmick, instituted by people who don't win as often as they wish they would. If the people are ignorant clowns then they will get the government they deserve. I don't see how it will be any better by ceding their will to a gimmick dreamed up by other clowns.

  • dj kumquat||

    tony 1, fran -1.

    tony scores for issuing unbiased thought experiment. fran loses for having thought experiment go over his head. docked a point for arrogance and rudeness.

  • Sevo||

    T o n y| 1.20.13 @ 2:18PM |#
    "Term limits are antidemocratic."

    Yes they are, shithead.
    Amazing! A complete sentence without any dishonesty!

  • Brutus||

    The Constitution is undemocratic, as is, say, the Senate. So?

  • DarrenM||

    Term limits are antidemocratic.

    I agree with regards to the House and Senate. I think bureaucrats and lobbyists would have more influence, too. However, with the Presidency there is too much power invested in a single person. Term limits are a check against an individual having time to accumulate too much power.

  • entropy||

    Anti-democratic? Yes.

    Democracy is 2 wolves and a lamb voting on what to have for dinner. Mob rule is not libertine.

    What if 51% of the country votes to throw all the homos and the mexicans in jail if they don't vacate our jurisdiction by 5 PM?

    Will of the people?

  • JohnD||

    Of course she did. She is a moron.

  • Mike M.||

    OT: you won't hear this anywhere in so-called "mainstream media", but Russia is in the middle of its worst winter in 75 years. Record low temperatures, parts of the east buried under ten feet of snow, the works.

    I guess "global warming" didn't make it to the entire globe apparently!

  • Xenocles||

    Dude, it's "climate change" now. That way any perceived deviation supports the theory.

  • mad libertarian guy||

    Yep. If it's hotter than average, it's global warming. If it's colder than average, it's climate change.

    It's a catch-all. It's meant to be that way. That way they are never wrong.

  • Live Free or Diet||

    When I was in school, any theoretical statement that didn't have a way to be proven wrong was marked "insufficient hypothesis."

  • sloopyinca||

    ^^Climete Denier!!!^^

    Kill the heretic! Kill the heretic!

  • Live Free or Diet||

    Kill the heretic! Kill the heretic!

    It's true, I tend to be rather late rubbing blue mud in my navel, though when necessary I can do it with deep solemnity.

  • T o n y||

    Climate change can be proven wrong. Demonstrate that the earth isn't warming.

  • ||

    "Prove God doesn't exist..."

  • Paul.||

    Don't have to. There's no scientific obligation to prove a negative.

  • T o n y||

    It's not a negative claim. In fact global warming denierism is a very outlandish positive claim: that all the world's scientific bodies are engaged in a conspiracy to deceive us for some convoluted purpose.

  • Brutus||

    Did you miss the thread a few days ago about the climate alarmist that concurred that no significant warming had occurred in 15 or so years, and that no models had predicted that?

  • T o n y||

    Global warming is an adequate description of the phenomenon but may confuse simpletons who think it means that it will always be warmer everywhere. The consequences of global warming may include extreme effects such as colder-than-average local weather. At any rate "climate change" was promoted by right-wing propagandists who thought it sounded less scary.

  • sloopyinca||

    So a result of "warming" is cooling?

    I'm sure this sounds normal in your bizarro-universe.

  • T o n y||

    As I said, simpletons.

  • Cytotoxic||

    Only simpletons call BS on BS.

  • sloopyinca||

    ^^Said without a hint of irony.^^

  • SlowburnAZ||

    To be fair, when you're talking about averages on a global scale, some colder-than average instances are to be expected in localized areas, are they not?

    The real problem is with the phrase, "climate change." Without climate change, humans probably wouldn't even exist. The negative connotations that go along with "climate change" are what the real simpletons cling to, so they can say "See, the climate is changing! We MUST do SOMETHING about it!"

    To prevent climate change would be the epitome of unforeseen consequences, as if we could even do that.

  • Brutus||

    Surprised? Tony even confuses exits with entrances.

  • Sosalty||

    Don't forget to check out "Fracking" on (TV) Access this Tues.1/22 9E.T. Ah yes, if only there were a trace of consistency in logic by the Tonys, I might be pursuaded.

    Save the kiddies:? Gun Free Zones
    Save utopian climate:? Ban Fracking
    Obama cares:? Labor particiapation rate

  • ||

    Are you going to deny that when the report came out last week stating that last year was the warmest on record in the US that all your AGW buddies weren't touting it as incontrovertible proof of Climate Change?

  • T o n y||

    They didn't need that bit of data to prove climate change. There are more than enough lines of evidence without it.

  • ||

    Almost makes you wonder if the rest of the evidence is so overwhelming why you would need to focus so heavily on one data point. Then again, it's also hard to understand the Malthusian hysterics about the urgency of addressing warming since none has occurred since right around the time Kyoto was adopted. Just a short-term reversal of the longer-term trend, of course. We know this because temperature data collection was 100% accurate 100, 200, even 500 years ago, so we have a really, really good idea to within tenths of a degree centigrade what the global temperature was. It's well modeled. By models that predicted the global temperature should currently be 2 or 3 degrees higher than it actually is.

    SCIENCE!

  • Sam Grove||

    Tony, evidence please. No appeal to a fictional consensus.

    Of course the globe has warmed. Duh.

    And within the limits of natural variation.

    There is no smoking gun of anthropogenic warming. AGW is below the noise level.

  • Live Free or Diet||

    I even heard someone talk about evidence from it being "too average." Piffle, it got down to -6°C here last night. I did not miss it failing to make it down to -13°C, which is about average this time of year in BC.

  • Xenocles||

    Too average, huh? Now that's funny right there.

  • Brutus||

    It's like the Left's critiques of the free market:

    * Prices going up? GOUGING!!
    * Princes going down? CUTHROAT CAPITALISM!!
    * Prices stable? PRICE FIXING!!

  • RickC||

    Actually, hasn't it moved on to climate weirding or some such shit. See, the frigid winter in Russia just proves the AGW theory. The iron law as it were.

  • Brutus||

    It's a religion, actually a denomination of the religion of Statism.

  • ||

    Hey, hey, hey...

    Weather should not be confused with climate change...

    ...unless it's hot weather.

  • Palin's Buttplug||

    And Australia is seeing its hottest summer on record.

    http://www.bbc.co.uk/news/world-asia-21072347

  • Live Free or Diet||

    I was going to reply with a link about climate change causing an increase in teen acne and prostitution, but I can't find it now.

  • Sernylan||

    Boooooosh?

  • Brutus||

    That goes without saying.

  • Sam Grove||

    And Australia is seeing its hottest summer on record.

    And so?

    How far back does the record go in Australia?

    How extensive is the measuring system?

    The global anomaly has been flat for sixteen years.

  • Rufus J. Firefly||

    Up here in Quebec near-record snow falls, snow squalls, etc. and wicked temperature variances. We go from +2 to -30 in a span of a week.

  • DarrenM||

    I guess "global warming" didn't make it to the entire globe apparently!

    One year does not make a trend. Global warming (and cooling) has been around for a few billion years now. There's not reason to think this will change any time soon. The real question is what we do about it. IMHO, we will adapt. Where some places will get worse, other will get better. For one thing, maybe Greenland will become green again.

  • The Late P Brooks||

    The essence of capitalism, he argues, is encouraging failure, not rewarding success.

    We're going to need to make some changes in the educational system, because that is not a lesson currently permitted in the curriculum.

  • RickC||

    The essence of capitalism, as with life in general, is that there can be no success or gain or real learning without taking risks. That seems a little different from what Taleb said. It's not that we need to encourage failure or reward seeking so much as we need to teach the reality of consequences, or allow the world to teach the reality of consequences without stepping in to make things all better instantly.

    Spencer wrote how the end result of protecting men from folly was to populate the world with fools. Well, I see a lot of foolish people in the world today and the number seems to grow each year in direct proportion to the ever expanding nanny state.

    People keep talking about making the world safer but what they really mean, as I see it anyway, is that they want to live consequence free lives. In other words, they want to avoid reality.

    A comedian named Titus had a show some years ago and one episode started off with him explaining the diffence between fathers' and mothers' parenting techniques. Titus recalled how as a toddler he was about to stick his finger in an electrical socket. His mother was about to shoo him away but the father grabbed her and said, "Hold on. Go ahead Titus." After the zap the dad said, "You won't do that again will you?" Dad understood this subject.

  • VG Zaytsev||

    The essence of capitalism, as with life in general, is that there can be no success or gain or real learning without taking risks. That seems a little different from what Taleb said. It's not that we need to encourage failure or reward seeking so much as we need to teach the reality of consequences, or allow the world to teach the reality of consequences without stepping in to make things all better instantly.

    That's not quite right either.

    A free market economy will spontaneously self order in the same way that an ecosystem does. They are both examples of emergent order.

    And failure of individuals and firms is an inherent and inescapable part of that emergence. The point isn't to learn from mistakes at all. The point is to reward success and extinguish failure and the creation of new opportunities.

    It's a dynamic system and at any point in time some new forms will be developing and others dying. Todays struggling firm will be tomorrow's giant and next week's loser.

  • Heroic Mulatto||

    As Taleb rightly points out, Capitalism and entrepreneurship is about risk. Here's a paper by the IMF researching the relationship of culture and risk aversion.

  • Intn'l House of Badass||

    Can any good come out of the IMF?

  • Xenocles||

    If the documentary series "Mission Impossible" is to believed, yes.

  • KPres||

    From the video...

    ...which would you rather have, nationalization of the banks, or moral hazard within the system?"

    As if those are the only two choices. The moral hazard comes from the single centralized currency, not from the size of the banks. But Taleb won't even mention Free Banking. Why?

  • Kyfho Myoba||

    I have found nothing in his work that would indicate that he has been exposed to von Mises or any of the Austrian School, with the possible exception of maybe a little Hayek.

  • Jesus H. Christ||

    I was really fascinated by what Taleb was saying until he got there. Hey, thanks for the false dichotomy!

  • Libertarius||

    Meh...philosophically, he is all over the place. And so are his conclusions.

  • AlmightyJB||

    "Taleb has called New York Times columnist Thomas Friedman "vile and harmful"

    I'll have to watch the video tomorrow, but this factoid is worth at least one book purchase from me.

  • brec||

    I was mildly surprised that Taleb forbore correcting Nick's consistently referring to the book as "Antifragility."

  • Rufus J. Firefly||

    I read Black Swan. It started off well and interesting and then it got weird. Maybe it was the editing but once I was done I felt like Homer after an episode of Twin Peaks.

  • MacKlingon||

    This is from a e-mail I recieved. we are screwed.

    US Fiscal cliff explained !!!


    This puts things into a much better perspective as to the present
    economic situation in the USA.

    Lesson # 1:

    * U.S. Tax revenue: $ 2,170,000,000,000
    * Fed budget: $ 3,820,000,000,000
    * New debt: $ 1,650,000,000,000
    * National debt: $ 14,271,000,000,000
    * Recent budget cuts: $ 38,500,000,000

    Let's now remove 8 zeros and pretend it's a household budget:

    * Annual family income: $21,700
    * Money the family spent: $38,200
    * New debt on the credit card: $16,500
    * Outstanding balance on the credit card: $142,710
    * Total budget cuts so far: $38.50

    Got It?

  • Brutus||

    We can't be broke, we still have checks in our checkbook!

  • trshmnstr||

    Here's where the fun part comes with that analogy.

    This household happens to have contracts with cell phone providers, utilities, and other billers for a total of $1.2M.

    Those bills don't make the household budget today, but they're coming due soon, and good luck paying with that $21k salary.

  • DarrenM||

    Those bills don't make the household budget today, but they're coming due soon, and good luck paying with that $21k salary.

    That's ok, our rich uncle will bail us out. Of course, he has to die first, but we can work something out.

  • gigarath6||

    So if I follow this analogy correctly Iraq, and Afghanistan are our relatives and so we want to kill them to get the inhereitance?

  • ygsrf||

    2013 Happy New Year,NFL,NBA

  • kevinsoy||

    Max. although Jonathan`s stori is unimaginable, on sunday I bought a great Dodge since I been making $9167 this - 5 weeks past and even more than 10 grand last month. this is really the coolest job I've ever done. I began this six months/ago and straight away started bringin home minimum $86... per-hour. I use this great link........ http://BIT40.com

  • dj kumquat||

    taleb: not shacked or tainted by the university clique.

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