Tag Archives: Nassim Taleb

Bring on the radicals

“You are a radical!” In my brooding teenage years, my father would mean this as a criticism. In the world we grew up in, being average was a good thing: the backbone of society was the middle class: ethnic majority, a high school diploma or a run-of-the-mill college degree, a steady job, a mortgaged apartment, 2.3 children and a trade union membership card. That’s where you wanted to be: in with the sensible people, under the protection umbrella of NATO and the European welfare state.

The dream of stability and social inclusion of a large chunk of the population (if certainly not all of it) was good while it lasted. But it seems like the hegemony of moderate thinking came with one very big string attached: the collective inability to recognize the rise of global problems (rampant inequalities, climate change, the feral rich, the surveillance society) and deal with it effectively, thinking out of the box. It is not so much a matter of knowledge (though of course we do need more, better knowledge); for at least some of those problems the science is there, as Stewart Brand pointed out (see also the video above). The cognitive capacity of the median elector, not so much.

So what do we do? In terms of response speed and value for money, far and away the best option is to call in the radical thinkers, and give them much more latitude and resources. We have some unused capacity there: as Vinay Gupta recently pointed out, many of the really important problems and most of the candidate solutions to attack them are being investigated by many interesting people. Almost all of them are poor, because their projects lie outside the fundable sphere (by this Vinay means that they are practically unthinkable by the sensible, dominant middle class decision makers in academia, business and government). That capacity could be used to shape an almost evolutionary policy response: give these people the space to prototype their ideas, deploying a lot of them in a controlled testing environment, each with limited funding. Try everything: geoengineering, space colonization, energy-sufficient communities, reputation as currency, you name it. Then drop what does not work, and follow up on what does. Iterate. Nassim Taleb would call this angling for positive Black Swans: each of these ideas has a small probability of bringing about enormous, off-the-scale benefits, so they should all be made small investment in, not cutting ourselves out from those benefits.

Given all that, we should all hail NESTA’s recent call for the radicals that could potentially transform British society. It is the first time I see the R-word used with a positive meaning in a public policy context. And it is no surprise it’s NESTA (the British National Endowment for Science, Technology and the Arts), whose CEO Geoff Mulgan is one of the most interesting policy makers that I know of. The call is not very operational: there are no significant resources, or explicit plans to give the radicals some true leverage. But it is a start. I forecast a wave of increasingly radical thinking in public policy, as scientists and policy wonks hang out more together, and some of the hybris of the former rub off onto the latter. Let’s hope it’s not too late.

Economist pride

There is no denying that we economists are hardly everyone’s favorite characters. Our discipline is known as “the dismal science”; we are accused, in a more or less implicit fashion, of supporting the worst excesses of rogue capitalism; some of the most senior and best known members of the profession are known by the media with comic books supervillain nicknames like “Doctor Doom” (Nouriel Roubini) or “The Black Swan” (Nassim Taleb). This does not happen to linguists or astronomers.

Just like science in general, economic science has its share of skeletons in the closet: ideologies that were given a coverage of objectivity; wildly off-the-mark forecasts; policy prescriptions that failed to prevent, and even caused, much suffering and poverty. But just as many were the intellectual victories, the extraordinary inventions, the valuable contributions to human prosperity. I think this dualism is inevitable, because political economy is the offspring of moral philosophy: Adam Smith, that many regard as the father of the discipline, wrote a Theory of moral sentiments that he cared for just as much as for the more famous Wealth of nations. And moral philosophy is no walk in the park: it is a minefield, in which you have to make terrible choices with every step you take. Liberty or equality? Meritocracy or stability? Like Jedi Knights in Star Wars, moral philosophers and their cousins, economists, are always exposed both to the light and the dark side of the Force.

Recently I chanced to read Joseph Stiglitz’s Towards a General Theory of Consumerism: Reflecions on Keynes’s Economic Possibilities for Our Grandchildren (in this book and Elinor Ostrom’s Governing the Commons. Stiglitz deploys standard neoclassical theory like a true master to illuminate a problem we don’t think enough about: why is it that, though they could in principle afford to, modern societies do not choose to work less, exchanging some consumption for leisure time. Among other things, Stiglitz shows how elementary extensions to the standard model lead to reverting its result: for example, in a two-sector model it is not always true that increasing salary in one of them leads to an overall reduction of labour supply. To me, that inspires awe for the power and the flexibility of the model, and not a little embarassment for the unsophisticated way it is often wielded in common political discourse.

Ostrom tells of the efforts of several human communities, from Switzerland to the Philippines, in coordinating to manage common resources like fisheries, forests or irrigation systems. Successes, failures, institution provision through self-organization and reform attempts from outside are analyzed with theoretical rigor, explanatory power, radical thinking and empathy.

Joseph, Elinor, thanks. This is the Light Side economics, the one I wanted to study as a young man and that makes me proud of being somehow related to great thinkers like yourselves. If you organize a parade to affirm the pride of being economists – modeled on the Gay Pride, which seems to have worked well – you can count on me to show up.

Economist pride (Italiano)

Inutile negarlo: noi economisti non siamo simpatici alla gente. La nostra disciplina è soprannominata “la scienza triste”; veniamo accusati, in modo più o meno velato, di complicità con i peggiori eccessi del capitalismo di rapina; alcuni dei più famosi e rispettati esponenti della professione si sono visti affibbiare dalla stampa soprannomi da supercriminale dei fumetti, come “Dottor Destino” (Nouriel Roubini) e “Il Cigno Nero” (Nassim Taleb). Non mi risulta che questo succeda ai linguisti o agli astronomi.

La scienza economica, proprio come la scienza in generale, ha i suoi scheletri nell’armadio: posizioni ideologiche a cui è stata data una copertura di pretesa oggettività; previsioni completamente sbagliate; prescrizioni di politica economica che hanno causato molta povertà e sofferenza. Ma altrettante sono state le vittorie intellettuali, le invenzioni straordinarie, i contributi di valore alla prosperità umana. A mio modo di vedere, questo dualismo è inevitabile, perché l’economia politica nasce da una costola della filosofia morale: Adam Smith, da molti considerato il fondatore della disciplina, scrisse una Teoria dei sentimenti morali a cui teneva almeno quanto alla più famosa Ricchezza delle nazioni. E la filosofia morale non è un pranzo di gala: è un campo in cui devi fare scelte terribili ad ogni passo. Libertà o eguaglianza? Meritocrazia o sicurezza? Come i Cavalieri Jedi di Guerre Stellari, i filosofi morali e i loro cugini economisti sono sempre esposti sia al lato luminoso che a quello oscuro della Forza.

Di recente mi è capitato di leggere Towards a General Theory of Consumerism: Reflecions on Keynes’s Economic Possibilities for Our Grandchildren (in questo libro) di Joseph Stiglitz e Governing the Commons di Elinor Ostrom. Stiglitz usa da maestro la teoria neoclassica per illuminare un problema su cui si riflette troppo poco, e cioè il perché, pur potendoselo permettere, le società moderne non scelgano di lavorare meno, rinunciando a un po’ di consumi in cambio di tempo libero. Tra le altre cose, Stiglitz mostra come semplicissime estensioni del modello standard conducano a ribaltarne le previsioni: per esempio, in un modello a due settori non è necessariamente vero che l’aumento del salario in un settore conduce a una riduzione dell’offerta complessiva di lavoro. In me questo suscita ammirazione per la potenza e la flessibilità del modello e un certo imbarazzo nel riscontrare quanto male venga utilizzato nella discussione comune.

Ostrom racconta gli sforzi di diverse comunità umane, dalla Svizzera alle Filippine, nel coordinarsi per gestire in modo sostenibile risorse comuni come tratti di mare pescoso, foreste o sistemi di irrigazione. Successi, fallimenti, episodi di auto-organizzazione e tentativi di riforma dall’esterno sono analizzati con rigore teorico, potenza esplicativa, radicalità, empatia.

Joseph, Elinor: grazie. Questa è l’economia del Lato Luminoso, quella che volevo studiare da ragazzo e che mi rende orgoglioso di essere, nel mio piccolo, un lontano parente dei grandi pensatori come voi. Se organizzate una parata per rivendicare l’orgoglio di essere economisti – un po’ sul modello del Gay Pride, che ha funzionato bene – contate su di me.