DLD09 live

1. Reflection on a Crisis

   Tags: dld· dld09  -  3 comments

   Thomas is providing a more summarized view of this panel over here. This is a very complex panel and as Nassim says during it, fragile system do break as in the live blogging is not as easy as some of the other panels. I encourage you to come back once the video is up and really watch this one for a better experience. ;)

   
   

   • Nassim Taleb (Author)
     
   • Daniel Kahneman (Princeton University)
     
   • Moderation: John Brockman (edge.org)
     

   Notes from from the session:
   

   
   
   • Ideas are bad for you
     
   • rationalism affected medicine for a long time
     
   • medicine was theoretical
     
   • whenever you have theory you despise evidence
     
   • when you practise you work on experience
     
   • how can medicine fool people for such a long time
     
   • just look at the data
     
   • it is a profession which makes claims - and what is the difference to astrology?
     
   • look at the data and the data messes up at rare events
     
   • rare events are like a pilot which does not know about storms
     
   • financial profession where made aware of the storm
     
   • How would you know that a rare event is going to happen?
     
   • he looked at data for island and said "oh my god they are going to blow up"
     
   • hidden risk taking: take a lot of risk on a rare event
     
   • I had to get a phd so people would listen to me
     
   • society is going to be way more exposed to rare events in the future as we create more and more complex (but efficient) systems
     
   • anything fragile will break and bust up
     
   • did take his intuition of mother nature
     
   • mother nature build us to have backups, you do have spare parts
     
   • economic system does not have spare parts too costly
     
   • explaining why useless models are actually use and why they are so hard to get rid of
     
   • think of the weather forecast which does a very good job of forecasting the weather
     
   • one thing it does not do: it does not do hurricane
     
   • even in areas where there are a lot of hurricanes people use weather forcast
     
   • famous organisational psychology example of the swiss army sending out a patrol which goes out for three days out and gets lost, they come back and say thankfully we had a map, but this not a map of the alps but something else, yes - but we had a map! = a useless map still contributes to confidence
     
   • I like to take on new challenges
     
   • I want to change to world so it is resistant to these forecast errors
     
   • wants to nationalize the banks because they cant be trusted - they make make bets on hurricanes
     
   • "the world is gonna break and establish itself in a way to resist forecasting error"
     
   • the ancient world did not like debt
     
   • debt makes you a lot more vulnerable
     
   • Internet introduces a new layer of complexity, making it again more fragile
     
   • mismatch of timescale between a person and society
     
   • banks cannot be trusted on risk taking
     
   • have the freedom for people to take all the risk they want but we should make sure that society has never to bail them out
     
   • why are we bailing banks out?
     
   • look back at Rome
     
   • why do people buy insurance for cars and house but not on their other assets like a portfolio?
     
   • "because it is too costly" - but please explain the inconsistency
     
   • people without insurance will blow up

   • What are you going to tell the people in Davos?
     
   • What did banks did with the bailout? Payed their bonuses to their "key employees" plus doubled up and increased the risks
     
   • We have enough evidence of people misusing the system: profits are theirs, losses are ours
     
   • this is why he wants to clean the system
     
   • second: he does not like governments
     
   • third: he is here because he cancelled another event, they teach portfolio theory like they always did although we know it is bad
     
   • like with
     
   • in case of an airplane crash: first you stop, then you investigate, not continue to do so
     
   • calling for a boycott which still teach portfolio theory
     
   • there is a short term appeal of what you want people to give up which is hard to do without giving them an alternative

   • religion works because in ancient time anything what takes you away from your doctor prolongs your life
     
   • therapeutic nihilism: killing is better than doing nothing
     
   

   Nicole Simon
   Complex systems are fragile and will break - how to deal with this?

   January 27, 2009
   01:09 PM