How Debt Ruins Systems

Black Swan author Nassim Nicholas Taleb on fragility, centralization, and capitalism


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

A finance professor at New York University and a research scholar at Oxford, 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 are not designed to account for rare and catastrophic events. Among other things, the book presciently cautioned that oversized and unaccountable banks using flawed investment models could trigger 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, Taleb's predictions came to pass. 

Taleb doesn't identify as a libertarian, but he often sounds like one. He supported Ron Paul in the 2012 presidential election and has cited the libertarian economist Friedrich Hayek as an influence. He has called New York Times columnist Thomas Friedman "vile and harmful," and he coined the phrase "Stiglitz Syndrome" after Nobel Prize–winning economist Joseph Stiglitz, referring to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions. The economists Paul Krugman and Paul Samuelson are among Taleb's other Nobelist bêtes noire.

Taleb's new book, Antifragile: Things that Gain with Disorder, 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 TV Editor in Chief Nick Gillespie sat down with Taleb in January for a wide-ranging discussion about debt, technology, the banking system, capitalism, and why he'll never take writing advice from "some academic at Cambridge who sold 2,200 copies." Video of this interview can be seen at

reason: What is antifragility and why is it so important?

Nassim Nicholas Taleb: Antifragility is something that likes volatility and likes variation, likes turmoil, likes stress—up to a point. The opposite would be robust. Robust is like a rock. It doesn't care. Diamond is perfectly robust. What is antifragile gains from disorder and may even need disorder for fuel. 

reason: You talk about it in terms of materials, but antifragility applies more to systems or living organisms, right?

Taleb: Exactly. What people fail to understand—and this is what libertarians tend to pick up rather quickly—is that even when you read Adam Smith, you have this illusion that the economy functions like a machine. But it's not like a washing machine. A washing machine needs maintenance. It's more like a cat than a washing machine. A human body needs some stressors. And everything organic and complex communicates with the environment via stressors.

reason: Is it kind of a fractal system?

Taleb: Exactly. It's fractal because you have layers. Like the restaurant business. It's composed of restaurants. And for the restaurant business to be robust—or perhaps antifragile—you need every single restaurant to be fragile. It's the opposite of Nietzsche's "What doesn't kill me makes me stronger." What kills me makes others stronger.

(Interview continues below video.)

reason: Because they learn?

Taleb: They learn from your mistakes. You have evolutionary forces where the individuals sacrifice for the collective. It works within your biological system. You're composed of cells. If you harm some cells, your overall health will improve. 

reason: Most people would say when you have a system and if there's a contagion in it, if there's a cancer in it, if there's some kind of stressor that starts taking over, it's going to spread to the whole system. This is what we hear about the banking system, the financial crisis. You're arguing that a robust or an antifragile system is capable of seeing this part of the system being cancered and learning from it.

Taleb: To cite the great Yogi Berra, a good antifragile system is a system in which all mistakes are good mistakes. And the bad system is one, again to paraphrase Yogi Berra, where you tend to make the wrong mistakes. Let's compare the banking system to, say, transportation. Every plane crash makes the next plane crash less likely and our transportation safer. Now, with the banking system, [a failure] leads to increased probability of failure of an entire system. That's a bad system.

reason: What's the best way to stop that so you're not allowing the problem to replicate throughout the system?

Taleb: What fragilizes an overall system? Three things: One, centralization. Decentralization spreads mistakes, makes smaller mistakes. Decentralization is where we converge with libertarians. A second one is low debt. The third is skin in the game. 

reason: Paul Krugman, one of your great friends or nemeses, just recently wrote that these trillion-dollar deficits don't matter. 

Taleb: All these economists, let's put it this way: Risk is not their thing. 

Debt leads to fragility. We've discovered since the Babylonians that debt has systemic consequences whereas equity doesn't. Let's say that you have two brothers. One of them borrowed and they both had predictions about the future—forecasts. One brother borrows. The other issues equity. The one who borrows will go bust if he makes a mistake. The one who issues equity will fluctuate but will be able to survive a forecast error. 

reason: But is it also true that the brother with equity can never really have that big payday?

Taleb: For him! But overall the system is well distributed. There's an accounting equality. Debt traditionally has blown up systems and has been very good for governments to wage war. I'm not against credit. I'm against leverage. 

reason: So you give me a loan and I say I'm going to pay you back and that gives me the ability to get something in the short run that will help me produce more in the long run. That's OK? 

Taleb: Banking started [like this]: You're going to Aleppo, Syria, and Florence and you're going to send me some silk. You trust me, and my correspondent in Aleppo would pay you the minute I get my silk—that kind of transaction. That's called letter of credit, where you have debt conditional on some commercial transaction being completed. And it also allows people to finance some inventory, provided the buyer is a committed buyer. That kind of facilitation of commerce is how it all started—the letter of credit—and it developed very well.

Before that we had debt in society and it led to blowups in Babylon, and then they had to have debt jubilees. Then of course the Hebrews also had debt jubilees. And of course, they say neither a borrower nor a lender be. The Romans didn't like debt. The Greeks didn't like debt, except for a few intellectuals. Intellectuals for some reason, like Mr. Krugman, like debt.

Later on debt came back to Europe with the Reformation and it was mostly to finance wars. The industrial revolution was not financed by debt. California was not financed by debt; it was financed by equity. So debt is not necessary. You can use it for emergencies. Catholic societies—Aquinas was against debt and his statements were stronger than the Islamic fatwa against debt.

We have learned through history that debt in the form of leverage can blow things up. Debt fragilizes. Now what we have had in this economy is a growth of debt mostly financed indirectly by governments. Because if you blow up, we're going to be behind you.

reason: So this is the problem of too big to fail, which went from being a worry to being inscribed in official policy?

Taleb: Exactly. When you're a banker and you have the upside but no downside, what are you going to do? Create the maximum number of loans that don't blow up often, and collect your bonuses. 

You're paying for his downside. This, to me, is not capitalism. It is a misunderstanding of basic rules. Skin in the game started with Hammurabi, led later on to eye-for-eye, and led to the Golden Rule.

reason: You talk about decentralization. One of the most fascinating things in the global economy in the last 50 years—you could argue over the past 1,000 years—is that in many ways it's becoming more and more decentralized. Certain types of knowledge are more decentralized than ever before. Economies compete in a way that they didn't before; countries can no longer force investors to keep their money in a particular currency, in a particular geographic location. Even as we're facing a global crisis, is globalization generally a good thing?

Taleb: It is if you know how to handle it—if you let firms fail.

There is something called the island effect. In nature, an island will have a higher number of species per square meter than a continent; it's actually proportional to the square of the area. We've lost the island effect. Now you have Google dominating the whole planet. It's not a problem. The thing is that if we stop letting these firms fail when they become ill, they can get large enough to dominate government. Now, computer firms I'm not worried about.

reason: Why aren't you worried about computer firms? 

Taleb: Because it's a competitive environment. Google is a product of a competitive environment.

reason: So we can see the end of Google on the horizon.

Taleb: We can see the end of Google, and it doesn't make a difference. It makes no difference for you and I. If Google fails tomorrow, there will be something else, don't worry. The government won't save them. And I don't think they'll fail, for that reason: They know the government won't save them. But you can have some centralization/concentration. That's not the problem. 

The problem we have had in almost all Western countries is that nominally they say they are decentralizing, but effectively they've [given] more and more power to the central government. You want decisions to be spread out. Government debt is a result of centralization, and typically the cause of more centralization. It's a very bad circle.

reason: I suspect one of the reasons you are as popular as you are is that in the United States it's rare for an intellectual, particularly one who is good at math, to also have any sense that history has something to teach us. You decided at an early age you were interested in becoming a philosopher. Talk about that and how that linked into the work you're doing.

Taleb: I wanted to be a philosopher from the beginning, but there was civil war in Lebanon. I left. I came back from France and I realized I had too many books to read. And I loved reading but I hated to be given books to read because if you're bored with it you lose the option. I like the optionality of switching to finding your own path rather than being in a straitjacket of university. 

Then I realized that I had better study something more technical. I continued two lives, one technical and one nontechnical. The technical led to options trading. And the option trading led to a doctorate related to probability theory applied to options, and in some obscure stuff. 

reason: What is your goal as a public figure?

Taleb: I don't want to be a public figure. After Black Swan, for the first six months, nine months, one year, I was thinking it was nice to go to Davos. And then I didn't like it, so I came back home and became a private figure.

reason: Why didn't you like it?

Taleb: Too many empty suits. And also, what's my profession? It's to write books. I only write articles to explain some of the ideas of the books. I do technical papers and books. And everything else I do is because a publisher wants me to write op-eds. 

reason: Let me put it differently: What are you hoping that your ideas add to the public understanding of how a good society would work better, and what kinds of mistake to avoid?

Taleb: It has already led to beautiful results. With [U.K. Prime Minister] David Cameron, when I was contacted by him and his administration, to go before, to help—I told him, "Listen, I'm not a public intellectual, but we can talk about my ideas through my books. I'm not going to write articles, and we're going to have a conversation." It led to being demonized by sections of the British public—who cares?—and as well as here. But it had an effect.

I say people can pick up these ideas very quickly. My point is to have a systematic approach to making decisions under incomplete information and under incomplete understanding of things, and build a society that doesn't blow up if someone makes a mistake, which is the same thing. Society seems to think I have unique attributes. I'm not the first person to think of these matters. It's just that I've devoted my life to furthering the cause intellectually. 

reason: When you think about the future are you optimistic? Are you pessimistic? Or is that the wrong way to approach it?

Taleb: It's the wrong way to view it. My view of the future is you don't have to be right, you have to have a dominant strategy to act as if you were pessimistic. I don't want the pilot of the plane to be optimistic. But I want the flight attendants to be extremely optimistic. So it's functional. I don't believe in beliefs. 

reason: You talk about how pilots who are too comfortable with their knowledge—they're bad pilots, the ones who make the errors. 

Taleb: Exactly. You have to have paranoid pilots, stressed all the time. So technology, it weakens; the [Federal Aviation Administration] figured out it makes flights less safe. 

But again I take a stance against knowledge. Knowledge isn't what runs society. Knowledge is largely a narrative that comes after we do facts. There is so much we narrate and so much that we do without the complete theory of things. This is my central idea. 

reason: Talk a bit more about capitalism. A lot of people think that what's great about capitalism is that it creates incentives that lead to success. Actually capitalism in your view is about decentralization, about creating disincentives and failing early. 

Taleb: Since Hammurabi we've had civilized society, people living together. We're only able to do that when people are accountable for their mistakes.

reason: Where are the signal incidents of decentralization that's leading to better outcomes, broadly speaking? Where do you see that either in the United States or in the West or in particular pockets and subcultures?

Taleb: Take Switzerland as a culture, where nobody can name the president easily but they can name the president of France. This is a good society because you have a lot of volatility—but at the local level, the lower level, micro level, translating to macro level stability. So Switzerland is a well-decentralized system.

The problem is size. As size gets larger you have some gains of economies of scale, whatever it is. But you have some losses in governance, in a lot of other things. 

reason: The more homogenous you become the easier it is to be wiped out. 

Taleb: To make big mistakes and to be wiped out; this is the island effect at work. What we have had in this country is the progressive rise of central government. Particularly, deficits are the work of central government. [Scottish philosopher David] Hume figured it out. He said: Small states and city-states, they love commerce. And large governments love war. And that's what justifies large government—war. There is no justification for large government other than war. And they're not good at it.

reason: You say that you're not a libertarian, but a lot of this overlaps with what's considered libertarianism. So why aren't you a libertarian? 

Taleb: I'm a risk-based person. My libertarianism would be not demotic libertarianism—the philosophical libertarianism that freedom comes as a first good—so much as I want errors to be multiplied. 

reason: So it's a kind of John Stuart Mill. You like the idea of experiments in living.

Taleb: Exactly. Errors need to be multiplied. That's it. I'm more of a left-wing conservative, if you want. 

reason: Ayn Rand called libertarians right-wing hippies.

Taleb: There you go. So left-wing conservatives—that would map exactly. In a way, I'm conservationist. I want to not break things that have been around for a long time, things that have their own logic. [Successes] come from tinkering, not from some radical transformation of things.

reason: It's curious that you are so popular in the business market, because business books will end each chapter with bullets points about what this chapter was about.

Taleb: The minute I'm bored writing I stop. Particularly with The Black Swan, [the idea was to] make sure that no content of any section can be discovered without surprising the reader somewhere. Textbooks bore you. Critics hate it because they want to skim books. People who read will not hate it. I'm an empiricist. If I sell 3 million copies of a book writing in some way, I'm not going to be lectured about style. Of course the critics come in and they tell you it's a mess. The Black Swan sold more probably in a day than they sold in a lifetime.

reason: But you're not going to say that the market is always right, and that 50 million Elvis fans can't be wrong?

Taleb: No. My point is that someone who just arrived in a limo does not take lectures on finance from someone who just took the subway. That's the idea. You can take ideas, maybe, but you don't take instructions about how to write a book. So if you want to write a book, either take instructions from the Harry Potter lady or take instructions from Seneca, who survived 2,000 years. But definitely not from some academic at Cambridge who sold 2,200 copies.

My idea of living is taking risks for causes. The more I do, the more I feel good about myself.  

NEXT: Israeli Apology a Sign of Turkey's Clout, Turkish Prime Minister Says

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  1. In a way, I’m conservationist. I want to not break things that have been around for a long time, things that have their own logic. [Successes] come from tinkering, not from some radical transformation of things.

    Never have wiser words been spoken.

    1. That’s similar to Hayek’s point in The Fatal Conceit.

    2. Horse and buggy — automobile = radical transformation
      Dirigible — airplane = radical transformation
      Conventional ordnance — atomic bomb = radical transformation

      Three of the things that have, or have led to, the most positive advances in the last millennium were radical transformations.

      1. Horse and buggy — automobile

        In the sense of getting the worst of pollution out of the cities, sure. Personally, I see the automobile more as an individualizing of the collectivizing train.

      2. The change from dinosaurs to mammals was a radical transformation. Also, it was gradual, incremental, and the result of much field testing.

        However, they were not created de novo like the SEC, Chinese state farms, or the French revolutionary calendar system.

      3. How convenient to your point that you define “radical transformation”. A man transforming into a solar system is a radical transformation. . . a multiwheel vehicle changing from a horse powered motive source to a mechanically horse-powered motive source is innovation not radical transformation.

        1. Yeah, because that’s the only difference in a horse-drawn buggy and an automobile. Nevermind the steering, brakes, electrical systems and several other components that dramatically changed almost overnight.

          And “a man transforming into a solar system” is a theoretical, unles you know something I don’t know. The three things I listed are real-world examples of what most people would have certainly called a radical transformation in the day they occurred.


          1. You’re both incorrect.

            This is a radical transformation.

            1. According to one of my kids (way back when, as a toddler): Trans-folders!

          2. Not a “radical” difference.

            1. So a new propulsion, steering, braking and electrical system for lighting among other things wouldn’t have been viewed as “radical”?

              Jeez, man. Just admit it would have been and move on.

              1. No. Again you selectively represent something like a modern Honda with an early 20 century carriage. They had steering systems, breaking systems, and in some cases “lighting”. Rudimentary modernization is not “radical”.
                Buy a dictionary and get out of the basement. Radical is about fundamental change in a short time, not major change over decades.
                I don’t even remember what the original point was . . . what a radical sidetrack we’ve taken.

              2. No. Again you selectively represent something like a modern Honda with an early 20 century carriage. They had steering systems, breaking systems, and in some cases “lighting”. Rudimentary modernization is not “radical”.
                Buy a dictionary and get out of the basement. Radical is about fundamental change in a short time, not major change over decades.
                I don’t even remember what the original point was . . . what a radical sidetrack we’ve taken.

              3. This is not a radical transformation.

          3. Nevermind the steering, brakes, electrical systems and several other components that dramatically changed almost overnight.

            How is it radical? Electricity did not exist until cars were invented? Perhaps you mean light bulbs. How is a steering wheel radical? The wheel was not yet invented by that time? No one thought to use a wheel to run something before this? Automobiles sprang from the head of Zeus? Perhaps you mean internal combustion engines.


            Technolgies generally undergo a long period of evolution. It just *appears* like magic to some people.

      4. He’s talking about a power taking a system by the horns and making huge centralized decisions…

        One can say in the case of horse and buggy to car – that was a gradual transformation that occurred over a time period that was worked up to with many prior inventions – that’s not “radical transformation from a centralized powers decision making”.

        I think a radical transformation in this case is “Glass Steagal thrown under the bus” – 1999 I think it was.

    3. The financial crisis was a result of tinkering with a system that has an inherent catastrophic flaw, namely, the currency monopoly, which everybody (including Taleb) wants to tip-toe around.

  2. Is there anything worth reading on Pages 2 and 3?

  3. Dude seems to know whats going on over there. WOw.

  4. I like the concept but “antifragile” seems like a lousy word to describe it. He needs to come up with something catchier.

    1. Robust?

      1. Er, no:

        Nassim Nicholas Taleb: Antifragility is something that likes volatility and likes variation, likes turmoil, likes stress?up to a point. The opposite would be robust. Robust is like a rock. It doesn’t care. Diamond is perfectly robust. What is antifragile gains from disorder and may even need disorder for fuel.

        1. creative destruction might do.

        2. Robust:
          d capable of performing without failure under a wide range of conditions

          1. Except what he’s describing is something that does not perform well in stagnation.

        3. Nassim Nicholas Taleb: Antifragility is something that likes volatility and likes variation, likes turmoil, likes stress?up to a point. The opposite would be robust. Robust is like a rock. It doesn’t care. Diamond is perfectly robust. What is antifragile gains from disorder and may even need disorder for fuel.

          Is it just me, or does this just sound like an intellectual talking to hear himself? Of course robust is a type of antifragility. It merely reacts differently to very particular stimuli.

          The opposite of antifragile is fragile. You know, something that does not like volatility, variation, turmoil or stress under any circumstances. Whereas, robust is like Honey Badger. He just doesn’t give a fuck.

          Sorry if I sound crochety, but to me, this sounds like bloviating.

          1. I’m reading the book right now.

            I still haven’t decided if I like it yet. The whole idea of coming up with a catch phrase and using it to simplistically explain everything, you know the Gladwell approach really annoys the hell out of me.

            Anyway, what he does is place anti-fragile on a spectrum with fragile on the opposite end and robust in the middle.

            Black Swan Management 101: nature (and nature-like systems) likes diversity between organisms rather than diversity within an immortal organism, unless you consider nature itself the immortal organism, as in the pantheism of Spinoza or that present in Asian religions, or the Stoicism of Chrisippus or Epictetus. If you run into a historian of civilizations, try to explain it to him.

            1. My takeaway is that the best systems aren’t the ones that don’t fail, but the ones that fail constructively, or have room to improve in unexpected ways, like the market.

              I read part of the Kindle preview, so I’m an expert.

              1. From the interview, it seems that the best systems arent ones that fail, but that subunits fail. Like the restaurant example: The restaurant industry is strong because individual restaurants are allowed (even encouraged) to fail.

                1. Yes, individual species may be fragile but evolution is very anti-fragile.

                  If individual restaurants are made robust, like say during in the old communist regime, the overall system is weaker or stagnant.

                2. Well, it’s more than that. The other subunits have to be improved by the failure, not made worse off. AIDS, for example, is the failure of a subunit (white blood cell) that makes all the other units worse off.

                  1. Perhaps the distinction is whether there is a possible replacement for the failing component – there is none in the case of an immune system but an industry has constituent firms that can be replaced if they fail.

                  2. But might that be because you’re using a relatively short time span to decide what’s helpful to the larger unit. Given a longer time span might not the other subunits working within the larger system or unit develop a response that makes the subunits and larger unit more resilient?

          2. Bloviating? Dude managed to write an entire book devoted to his neologism.

            1. I watched several of his lectures a month back or so, and found his slides and work worth one insight not difficult to observe, so I tend to agree with you to a degree.

              However the OTHER university snoots require ten million words to explain a single common sense notion. He admits as much, that he went on this truly boring and long explanation because that’s what is required for any other of the dummies in the sick system to notice.

              His main thrust was: In a concentrated system danger of collapse or destruction is present because highly unusual events “cannot be predicted”.

              So he shows his single squiggly line graph chart of say 5o years with minor fluctuations and spikes, and then there is the anomaly spike up nearly off the top of the page 100X any other fluctuation.

              That near vertical spike in the data is the dangerous “unpredictable anomaly” that can decimate the collectively concentrated system.

              It was very nice of him to claim the spike cannot be predicted, and thus let all the criminals off the hook. I bet he gets invited to every cocktail party or is very safe from the usual hate filled missives.

              So that’s what he says – break it Ma Bell for competition because to big to fail concentration yields system wide collapse dangers when the bubble bursts…

              No **** Sherlock !

          3. No, sounds more like a Sufi poet than an academic.

    2. It’s not as if he invented the term fragility.

  5. Semantics…..antifragile, robust, reward success, encourage failure…..

    Apt descriptions of a free market obtained by looking at it from different angles. Build resilience through adversity sums it up nicely.

    In other words; Stop fucking with the market and let it work. Invariably fucking with the market means the retarded cousin of a potentially successful model surviving at the expense of the robust.

    1. I should have added inbred to retarded.

      1. How about, “let them fail, no bailouts!”

        You’re broke, the answer is FILE FOR BANKRUPTCY, now get the hell out of my congressional office.

        Our problem is of course, the destructive and should have remained illegal “newly modified laws for crooks of the last few decades” already created a starving leveraged spiderweb of precarious cliff hanging…

        So they swore if they didn’t bail humpty dumpty would die. So they bailed out the eggheads.

        Then they made an even wobblier egghead superpac set atop a tipping and crumbling wall that the plunge protection team is having a hard time holding up.

        Yeah, expect nothing but more stupid crime and more crashing crap – if it finally wipes them out they will transfer the wipeout to anyone and everyone else, covertly and overtly with lies.

  6. That was an excellent interview.

    1. Indeed it was, and I am surprised at all the flak from other commenters. Taleb is making core libertarian points to a wide audience. He should be cheered.

      Taleb also reminds me of Michael Rothschild’s Bionomics. It would be interested to read a discussion between the two of them. Of course Krugman dismisses bionomics.

      1. Of course he does.

        Ecosystems don’t need top men like Krugman to design or direct them. In fact,do so fucks them up.

      2. While many people claim to understand evolution, intellectually, few truly grasp the concept. As Daniel Dennett cogently argues in Darwin’s Dangerous Idea, what makes evolution as a paradigm so “dangerous” is that it destroys the millennia-old concept of the Cosmic Pyramid (i.e. Chaos is brought to Order through application of Mind, which in turn, finds its origin in God). He argues that natural selection, as an algorithmic process, proves that Order can arise from Chaos without Mind.

        Orthodox economists like Krugman hate, hate, hate this idea because it renders them as mere observers of a dynamical system, as opposed to the manipulator of a fully-known deterministic model.

        Just as a Lamarckian biologist would be laughed out of today’s Academy, Krugman and his disciples should receive nothing but derision, for their intellectual errors stem from the same hubris.

        1. While many people claim to understand evolution, intellectually, few truly grasp the concept.

          I’m probably one of those people that don’t truly grasp the concept. In any case, one thing people seem to forget is that the majority of evolutionary lines run into a dead end and become extinct. This is also true of societal evolution.

        2. Sorter version.

          Krugman et al are economic creationists.

          1. Yep, and Thomas Sowell said as much in Knowledge And Decisions. He called it “animist” thinking about social processes.

            Digest Sowell and you can have some fun at the expense of the typical college atheist.

        3. This is an excellent related book: Laws of the Game: How the Principles of Nature Govern Chance by Manfred Eigen and Ruthild Winkler. It discusses how combinations of simple rules and chance can produce very complex systems.

        4. Actually, Lamarck was (almost) right, depending on the scale of observation. It turns out that environment actually does influence genetic expression, even further than 3-4 generations remote.

      3. I hope you didn’t read my comments as “giving him flak”. It certainly wasn’t meant to be that way, except for this passage: [Successes] come from tinkering, not from some radical transformation of things.

        I just disagree with that premise because I see successes coming from both, be they improving on a production system or developing an atomic bomb from whole cloth.

        And yes, it was an outstanding interview and Taleb espouses libertarian principles in an outstanding manner. I just took exception to that one passage.

        1. How about the great success concerning
          ” 911 has changed everything ! ”
          said the salivating hog troughers and those desperate to shake off the “cold war mentality” (whatever).

          So there you have a media and talking head and politician absolute declaration that “in this hour, the world has radically changed (transformed of course) forever..

          Now see how great that was for all of us ?

  7. One of the absolute worst aspects of our current culture is widespread risk aversion. As much as I despise Trump, I have to admire his willingness to fail spectacularly and go right back at it.

    The history of business is filled with successful people who failed big prior to getting it right, but it seems as if a lot of people look at any sort of failure as lethal.

    1. Serious question: how many people failed big prior to succeeding in the past compared to now as a % of successful businessmen? History is filled with examples of wealthy people of meager beginnings that made it by being persistent and not letting their failures stop them from refining their products/starting over completely. Modern time may have a few examples, but risk aversion has created a generation of wealthy cronyists, rent-seekers and legacy billionaires.

      There aren’t nearly as many risk-takers, and much innovation is done by committee. I fully blame our “NCLB”-mentality when it comes to business/government relationships and a culture that tells innovators that their best path to success is to go to work for a big company for the security and benefits.


      1. I actually met the people who invented microwave popcorn in the form that we have it today. It was their second iteration because the first iteration crashed and burned. They were on their last dime getting the second version out and it became a huge success. Now they are incredibly wealthy and have ventured into other businesses where they have multiplied their earning from the initial popcorn success.

      2. Or you can call it the managerial revolution.

      3. Time to get my Hofstede on. Take a look at the countries compared by cultural dimensions. As a rule, the 3rd-World shitholes of Africa, Asia, and Latin America score high on “Uncertainty Avoidance” (UAI). Euro-Socialistland also scores high in UAI. The U.S. is somewhere in the middle. Interestingly, China’s UAI is very low, which makes sense if one is familiar with the strong entrepreneurial spirit in Chinese culture. (Not even Maoism could hold it off for long.) The culture with the highest UAI is Japan, which until the Meiji Restoration, was a 3rd-World shithole where most of the populace lived in poverty and society was organized for the benefit of a privileged few. Indeed, without America’s creative economy to fuel the engine of the Government-zaibatsu-Organized Crime axis; xenophobic, resource-poor, and risk adverse Japan would return to shithole status.

        1. Thanks for that. I wonder how much of that is actually cultural or institutional? Those examples you gave of nations that are high on the UAI tend to have inherently restrictive institutions, be they an overly domineering system of regulation/legislature that create an imbalance of power between labor and those that innovate and form businesses (Europe) or have oppressive governments that covertly steal wealth through graft and corruption that cause entrepreneurs to leave for greener pastures (African, Latin and Asian dictatorships/juntas). China’s being low is likely the result of their government’s change in philosophy over the past 25 or so years toward an industrial and technological player. I think you pretty much nailed Japan’s situation.

          Again, thanks for that. I’ll read it some time soon.

          1. I wonder how much of that is actually cultural or institutional?

            I believe Hofstede would answer “both”. His work focuses on how culture shapes institutions. He argues that a culture with a high UAI will create institutions, like bureaucracies, to minimize what their culture sees as the negative effects of risk.

            As for China, I would argue that its low UAI stems from a much deeper place in Chinese history. Taoism is all about being comfortable with ambiguity and being flexible due to ignorance of future events. Indeed, Lao Tsu wrote that “governing a nation is like frying a panfish”. I’m sure you appreciate the simile, but for the culinarily impaired, when frying a small fish, you don’t move it too much or the fish will fall apart. As an aside, my wife makes a mean fried bream.

            1. I didn’t know any of that about China. Thanks for the insight, dude.

              I also wonder what that scale would have looked like 25 years ago…100 years ago and 250 years ago. I bet the results would be pretty similar in Africa, Latin america and Asia but woud be totally different in the US and especially Europe going back a century or more.

              1. I thought it was interesting how similar the scores for the UK and US are.

                Maybe it wouldnt have been that much different 100 or 250 years ago.

                1. The UK’s always been a bit of an outlier in Europe. I think it has a lot to do with being an island nation as well as their higher level of success (in it’s own way) with Colonialism.

                2. I find more interesting that the UK’s UAI is 10 points lower than the USA’s. My off-the-cuff theory is that the greater role of religion in American culture leads to a higher UAI than the UK’s, maybe?

                  1. Doubtful. The UK has a state religion and there’s been an influx of hard-line Muslims into their country as well as a massive growth of Hindus and Sikhs the last 25-30 years, while religion in America has become more and more of a personal and/or less influential part of Americans’ daily lives.

                    I’m fairly religious, so I may have blinders on about religion in America.

                    1. The UK has a state religion

                      Right, and like most European countries with a state religion, the average Joe gives fuck-all about it. My Brit friends always go on and on about how the popular view of America is that of frothing-at-the-mouth evangelical zealots. Indeed, from their point of view, the Colonies was where they sent all their “religious crazies” (Puritans, Methodists, Baptists, etc.) As for the children of the Raj, they’re not “mainstream” enough to have that much influence on British cultural values.

                      In America, religion plays a greater role in the culture, precisely because it’s a personal institution as opposed to a state institution.

                    2. Perhaps. But I see that being a smaller and smaller influence in America as time goes by. Look back at how religion influenced business in the past: blue laws, moral codes of conduct, etc. Those are by and large gone from America.

                      I’ve not studied the influence at all, so I’m speaking from a strictly anecdotal perspective.

                    3. As for the children of the Raj, they’re not “mainstream” enough to have that much influence on British cultural values.

                      Just on the takeout menus.

                    4. “In America, religion plays a greater role in the culture, precisely because it’s a personal institution as opposed to a state institution”

                      It also plays a greater role becuase there is no state monopoly and there are therefore a plethora of consumer choices in religion, which means more people will find a religion they care to consume. Thus, weekly church attendance in the U.S. is around 43%, whereas in the UK it is around 10%.

              2. Well, as for 25 years ago, you don’t have to wonder as Hofstede started his research in the late 1960’s. I’m sure his historical data sets are lying around somehwere.

                1. Oh, I assumed it was for a shorter time frame.

                  Meh. I was more interested in the difference from a century ago and the onset of the industrial revolution. I guess that data exists by using data from those times to see what %age of people because entrepreneurs or craftsmen vs laborers.

              3. It’s also interesting how different China and Japan are, particularly in the UAI. True, in the Chinese words reflect ambiguity, but Japan uses the same Chinese characters (plus adds their own phonetics) in their written language.

                How did he come up with these ratings, I wonder?

            2. I’m surprised that China has a low UAI on average. Yeah, they’re good with the market and Chinese social rules have enough ambiguity to drive American batty, but look at their philosophy of government. The Ming dynasty, for example, were textbook stasists.

              Lao Tzu, notably, did not become the state philosopher. Ideally, Confucianism has mechanisms to reduce corruption and over-centralization, but the rulers always seem to leave those parts out of their official interpretations.

              1. There was a poll recently that found Chinese people have a more positive view of the free market than Americans do.

                It’s almost like, having lived under a seriously statist regime, the Chinese are happy that their government is liberalizing over time and is allowing free markets to finally flourish.

                Meanwhile, Americans have lived with the fruits of capitalism and have grown decadent, and therefore don’t realize how horrible statist philosophy truly is.

              2. It’s not Confucianism, per se, but Legalism.

                Indeed, Legalism as a philosophy arose because at many times during China’s history the power of the state was fairly weak. (This “lawlessness” also made a great environment for martial knights to wander the countryside and right wrongs with kung-fu!)

                We also have to remember that UAI isn’t the whole story. China, for example, has a Power Distance Index (PDI) of 80, which means Chinese culture assumes that inequality between people is natural. China’s Individualism (IDV) score is 20, which means the cultural norms are highly collectivist.

                1. From the Legalism wiki:

                  Progressivism, Libertarianism, Anarchism, Marxism-Leninism, Agorism, and Classical Liberalism are modern philosophies that reject core elements of Legalism.

                  Fascism, autocracy, and totalitarianism are ideologies with similarities to Legalism.

                  This list could use a little refinement.

    2. Google Trump + bankruptcy + 1991, 1992, 2004, 2009, & Chapter 11.

      There’s a reason he’s not averse to risk; he never feels the pain.

      Quote: “I’ve used the laws of this country to pare debt. … “

    1. Go Bobcats!

      1. They lost to Denver in the NIT First Round.

        1. So they are exactly as good as Kentucky.

          Still weird that you spell out their school name all the time.

  8. my classmate’s mom makes $66/hr on the laptop. She has been without work for seven months but last month her payment was $14354 just working on the laptop for a few hours. Go to this web site and read more

    1. ^^This^^ is what Taleb was talking about. These people are innovators…sticking Mexican Coke bottles into their orifices for the pleasure of German men and earning a solid profit in the process.

      Would Susan’s classmate’s mom be classified as a fragile, antifragile or robust? My money’s on robust.

      1. I’m going for “sleepy“.

      2. If failure of different parts of her body made her stronger overall, she would be antifragile. As it is, I’d say she’s either fragile or robust depending on how well her body stands up to the strain of her “innovations”.

  9. Nolan. if you think Edith`s blog is something, yesterday I bought a great Jaguar XJ since getting a cheque for $7846 this last four weeks and more than ten thousand this past-month. it’s actualy the most-comfortable job I’ve ever done. I started this 10-months ago and straight away was making more than $78 per hour. I went to this website,

  10. my buddy’s sister-in-law makes $62/hr on the computer. She has been unemployed for 10 months but last month her paycheck was $20013 just working on the computer for a few hours. Go to this web site and read more

  11. as Kenneth implied I am startled that anybody able to profit $7797 in a few weeks on the internet. did you look at this web site

  12. This interview is just like Taleb’s books, facile and full of vague buzzwords. “The island effect,” “fractal,” what a bunch of pseudoscience baloney. Someone gave me “Black Swan.” I tried to read it but could only get three chapters in. It is shallow and poorly thought out. Now it’s “antifragile.” He’s a “left-wing conservative.” Dropping names and talking tough. He’s a snake oil salesman.

    Just because someone’s goofy ideas seem to support your beliefs is not a good enough reason to buy what he’s selling. The magazine is called “Reason” afterall.

    1. Finally, a voice of…Reason.

      This guy is a bozo quack posing as some kind of philosopher–economist–guru, reminds me of how Rothbard used bombastic rhetoric (and selective plargiarism of Ayn Rand) to convince a generation of juvenile losers on facebook that “capitalism is anarchy”.

      This is the face of what passes for science in this day and age: a bunch of intellectual snake oil salesmen who don’t know the difference between metaphysics and epistemology and who can’t see why there should be any difference between theoretical physics and zen buddhism.

      Yep, he’s another lefty dilettante posing his brand of rationalistic bs as the latest and greatest of avant garde dandyism.

      1. Wait. I thought he was a righty dilettante.

        1. I guess it’s hard to keep track when you are facile and full of buzz words.

          1. … buzz words like dilettante, and your mom’s basement. I wonder if this kid is a Randroid because he seems to think people go around plagiarizing Ayn Rand. What would really be funny is denouncing someone as a moron who shares so many of your opinions that you suspect they have plagiarized your hero.

    2. I tend to agree with this assessment. He echoes great thinkers but in a Deepak Chopra sort of way that does not apply as he presumes.

  13. up to I looked at the draft that said $9303, I didn’t believe that my sister really bringing in money part-time from there new laptop.. there neighbour has been doing this 4 only 16 months and just now paid for the depts on there place and bought a brand new Mitsubishi Evo. I went here,

  14. “Debt leads to fragility. We’ve discovered since the Babylonians that debt has systemic consequences whereas equity doesn’t. Let’s say that you have two brothers. One of them borrowed and they both had predictions about the future?forecasts. One brother borrows. The other issues equity. The one who borrows will go bust if he makes a mistake. The one who issues equity will fluctuate but will be able to survive a forecast error.”

    This is nonsense. The problem is fractional reserve banking, not debt. If like in the movie “The Producers” you issue more than 100% equity in your firm you will get into the same problems.

    If the situations are identical, say both of the brothers have lost half of the funds obtained from others, then someone has to take the loss. Sure the one brother is ruined on debt if his creditors call in the loan, but those creditors take a 50% haircut. Then again if both brothers held the same cash balance then why would the creditors do that, but not the shareholders? The same happens to the other brother if his investors vote him out with their shares and take their 50% haircut. He loses everything and they take their loss.

    Ponzi schemes happen all the time with equity issuance. However that is illegal. The same Ponzi scheme done with debt however is called fractional reserve banking. Were fractional reserve banking illegal (or ponzie schemes legal) there would be no difference in stability between the two.

    1. No. Fractional reserve banking is not the problem, central banking is. You sound like one of these anarchist dullards who don’t know the difference between the two.

      Fractional reserve banking works wonderfully under a laissez-faire system of free banking, look up George Selgin’s work on the subject. I’ve wondered how you supposedly pure free market anarcho-nihilists rectify your alleged advocacy of laissez-faire and a stateless society with the idea of making fractional reserve banking illegal. In Rothbardian lalaland, who exactly is supposed to make FRB illegal? The mad max anarchist mercenary cops I hired not to kill me, and to keep the evul “banksters” from instituting FRBing? lolz You anarchists should just stay home (in your mom’s basement), nevermind you’re doing that anyway lolzlzolzlzolzzlz

      There’s no such thing as a contradiction. It cannot exist. So observe the alleged dichotomy between anarcho-nihilism and whoever is supposed to outlaw FRBing in anarcho-nihilism land, and discover for yourself which is wrong (in this case, both premises are absurd and false).

      1. You sound like someone who jumps to false conclusions, and therefore cannot be trusted to think correctly. I am not an anarchist, nor an anarcho-nilist, nor a Rothbardian.

        I’m quite familiar with George Selgin’s work. His beliefs about Scottish free market banking are flawed and worthless. Rothbard wrote a devastating takedown of this myth titled “The Myth of Free Market Banking in Scotland”. No, fractional reserve banking does not work wonderfully under any system, whether fiat or commodity based currency, despite your devotion.

        Although Selgin does argue like you, in a trollish manner. In fact to the point that people walk around with T-Shirts on which are written “I Am a Member of a Moronic Cult.” Are you his sock puppet, perhaps?

        Nice off topic rant though on lalaland and mercenary cops.

        BTW, Rothbard actually had proposed a banking scheme identical to Selgin’s as a second best solution in his book “The Case Against the Fed”. Selgin himself is essentially a Keynesian and was a proponent of QE1. So apparently Selgin doesn’t understand the problems with central banking. Read the article “The Selgin Story By Joseph Salerno” to reduce your ignorance in that arena.

      2. Hell, I am not even a libertarian. I for instance believe that the government can justifiably force someone to purchase insurance.

      3. Also see “George Selgin’s Balls-Out, Over-the-Top Ferocious Attack on Rothbardian Banking Theory”

  15. Great interview, Nick… All the best, Jay K.

  16. barrel of dynamite.” One year after The Black Swan was

  17. Fannie Mae and Freddie Mac, were sitting on

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