Global Strategy - blog

Nassim Nicholas Taleb agreed to give ‘a boring philosophy lecture' at LSE approximately six months ago, discussing mainly epistemology. Retrospectively not surprisingly, the focus of his attention was shifted to our contemporary financial turmoil (which also resulted in a flood of spectators and a spillover room). Hence the name of his lecture, ‘Decisions, Probability and Beliefs: beware Mickey Mouse probability'. The details of his argument are available and discussed elsewhere .

Interestingly, his point is not communicated by the quality or articulateness of his argument, but rather by City and Wall Street devastation. Presently, issues concerning public policy and economics are raised even in the mainstream press. What is even more interesting is the apparent inability of the public sector to meaningfully steer the financial markets, as suggested by Taleb.

What came into my mind was that... Ok, banks are freely allowed to be ‘free market', ‘capitalist' etc. in the good times. When s*it hits the fan, they cry for the tax-payers to bail them out, right? In this vein, the really interesting question is: what role does intentionality play in this setting? In other words, are banks consciously on one hand taking huge risks (aspiring for high profits), and simultaneously protecting themselves from insolvency by selling mortgages? What a handy strategy - engineers might even appreciate a technical name for that, such as ‘bankruptcy filtering'.

Whatever the name of the phenomenon, Taleb's agenda seems to be (apart from the obvious ‘total reshuffling of financial sector') the illumination of the fields of finance, economics and policy by effectively detaching them from academic orthodoxy. By using modern medicine as an example of a discipline to have emerged from the ranks of practitioners (barbers), rather than blood-letting imposters (academics), he makes a powerful statement of the future of our understanding of ‘knowledge' itself. In his words, we do not need more ‘doctors killing patients'. Quite the opposite, what we do need is the ability to say: ‘I don't know'. This seems to be the hardest art of them all.