Reflection on a Crisis

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