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Taleb predicted the 2020 pandemic and the 2008 financial crisis, and The Times called him the most prominent thinker of our time. We introduce you to the ideas of Taleb, which will help you better understand the world
Who is Nassim Taleb and why is everyone talking about him?
Nassim Taleb is an American economist, publicist and Ph.D. of Lebanese origin. First of all, Taleb is known as the author of the books “The Black Swan: Under the Sign of the Unforeseen” and “Antifragile”. Both works became world bestsellers – the total circulation exceeded 10 million copies. In his books, Taleb talks about how unpredictable events determine the state of the economy, and failures lead to success.
Taleb is famous for his predictions of financial and social crises. Before becoming a writer, he earned his living as a forecaster in another industry and was a successful stock trader. On Black Monday, October 19, 1987, when the Dow Jones fell 22,6%, Taleb made about $40 million trading stocks.
Taleb’s ideas became especially popular during the coronavirus pandemic, as the media called COVID-19 a “black swan.” True, the writer himself does not fully agree with this assessment.
Did Taleb really predict a pandemic?
Yes, Taleb spoke about the possible onset of a global epidemic back in 2017. “The biggest risk is new epidemics. The media underestimate this danger and rarely make a fuss about scientific publications that bacterial resistance to antibiotics is growing, or that new strains of viruses are emerging,” Taleb reasoned in an interview in 2017. Three years later, he added that the devastating effect of COVID-19 was due to the fact that many underestimated the epidemic even when the threat became quite obvious. “Neglect turns epidemics into candidates for the new black swans,” said Taleb.
Now Taleb calls the coronavirus epidemic a “white swan”, because it was possible to prepare for it in advance. The writer said: “The Black Swan” is something you don’t expect at all. But they made movies about pandemics! What kind of “black swan” could it be? According to Taleb, the real “black swans” can be called the First World War, the collapse of the USSR, the September 11 attacks and the global financial crisis of 2008.
Not only “black swans”: other ideas of Taleb
Minorities rule the world
Taleb is sure that only about 4% of the population decide how everyone else will live. Those who dictate social and cultural attitudes, he calls the “irreconcilable minority.” “They are ready to put their lives on the line to defend their opinion,” Taleb writes in Risking Their Own Skin. The scientist believes that an active position brings more results than numerical superiority.
Taleb cites the US beverage market as an example. Almost all of them are kosher, although this is only important for 0,3% of the country’s population. On the one hand, this approach simplifies business processes, and on the other hand, it allows to take into account the interests of minorities. Since kosher drinks can be drunk by everyone, their mass production does not infringe on anyone’s interests, and producers can not label products and not separate stalls.
Also, because of the radical minority, GMO products have not yet taken root. If one in four family members is opposed to GMO foods, then the rest will also stop buying them. Corporations do not understand this and spend resources on persuading dogmatists.
According to Taleb, a similar mechanism operates in politics. If only 10% of voters support a radical party, and 30% support a conservative party, this does not mean that the radicals have no chance of winning. The outcome of the vote depends on the undecided voters, it is on them that campaigning should be directed. It is impossible to convince ardent supporters – it is a waste of time.
“Bitcoin is a pyramid scheme for idiots”
“Almost all bitcoin supporters are idiots,” Taleb said in June 2020. He is sure that bitcoin has not justified itself as a means of payment. “A currency should not be more volatile than the goods it can buy. Since the price of bitcoin is unstable, you cannot use it in trading, and this is a failure,” he writes.
In an interview with CNBC, the scientist said that bitcoin will not save from inflation. He advised investors not to get involved in cryptocurrencies and buy land or olives: “If the price of them collapses, then you will at least have olive oil.”
However, until recently, Taleb was not so categorical when talking about cryptocurrency. In 2019, the economist gave a lecture in Moscow, where he said that he would prefer to keep savings in bitcoins rather than dollars. Taleb then believed that the cryptocurrency is able to “insure society against a dystopia in which the state has a monopoly on the currency.”
Taleb’s main books
We tell you which works of the philosopher are worth reading in order to understand his ideas.
“Fooled by Randomness”
The first part of a four-volume philosophical essay. The book explains what luck and probability are from a scientific point of view. Taleb describes cognitive biases that interfere with rational decision making. We see connections where there are none, he says, and complicate problems by refusing to believe in chance.
“Black Swan. Under the sign of unpredictability
At the beginning of the twentieth century, people did not imagine that they would have to survive two world wars, and in the USSR, even in the late 1980s, they planned to build communism by the year 2000. The development of the world is unpredictable, because the future is determined by “black swans” – events that no one expects. The book was published in 2008 and spent 36 weeks on the New York Times bestseller list.
“Antifragility. How to capitalize on chaos
“To succeed, you really need to get out of your comfort zone,” Taleb writes about this in Antifragile. Small stresses make you look for opportunities and constantly stay afloat. In the book, Taleb provides practical advice to help you cope with difficulties and capitalize on problems.
“Risking my own skin. The Hidden Asymmetry of Everyday Life”
Taleb is sure that it is impossible to make the right decisions if “one’s own skin” is not at stake. According to the philosopher, the risk makes us approach the choice consciously. “If there is nothing to lose, then the person will act like a video game character.” In the book, the scientist develops ideas that have already been voiced in previous works.