Nassim Nicholas Taleb: Economist, Philosopher, Badass

Nassim Nicholas Taleb: the prophet of boom and doom - Times Online:

Last May, Taleb published The Black Swan: The Impact of the Highly Improbable. It said, among many other things, that most economists, and almost all bankers, are subhuman and very, very dangerous. They live in a fantasy world in which the future can be controlled by sophisticated mathematical models and elaborate risk-management systems. Bankers and economists scorned and raged at Taleb. He didn’t understand, they said. A few months later, the full global implications of the sub-prime-driven credit crunch became clear. The world banking system still teeters on the edge of meltdown. Taleb had been vindicated.

I enjoyed this article for three reasons:

1) He was right; that's kind of cool.
2) Explicit critique of the immensely flawed global financial sector.
3) This guy is freakin' awesome. Favorite quotes:

“The only way you can say ‘F*** you’ to fate is by saying it’s not going to affect how I live. So if somebody puts you to death, make sure you shave.”

About Ben Bernanke:

"I wouldn’t use him to drive my car."

About religion:

"Scientists don’t know what they are talking about when they talk about religion. Religion has nothing to do with belief, and I don’t believe it has any negative impact on people’s lives outside of intolerance. Why do I go to church? It’s like asking, why did you marry that woman? You make up reasons, but it’s probably just smell. I love the smell of candles. It’s an aesthetic thing."

There were also some interesting diet tips thrown in:

But the biggest rule of all is his eccentric and punishing diet and exercise programme. He’s been on it for three months and he’s lost 20lb. He’s following the thinking of Arthur De Vany, an economist – of the acceptable type – turned fitness guru. The theory is that we eat and exercise according to our evolved natures. Early man did not eat carbs, so they’re out. He did not exercise regularly and he did not suffer long-term stress by having an annoying boss. Exercise must be irregular and ferocious – Taleb often does four hours in the gym or 360 press-ups and then nothing for 10 days. Jogging is useless; sprinting is good. He likes to knacker himself completely before a long flight. Stress should also be irregular and ferocious – early men did not have bad bosses, but they did occasionally run into lions.

...Which completely justifies my habit of going to the gym only once every three months or so.

Good read.

Thoughts on the Price of Food

I've been following the UN food summit going on now in Rome pretty closely, and to say the least I'm disappointed. Brazil is currently stalling the process because of a row over biofuels, which is really just inane and political. UN Secretary General Ban Ki-Moon has rightfully called on developed nations to minimize export restrictions and import tariffs, but that's ignoring a huge injustice in international agriculture - non-tariff barriers, such as subsidies, that developed countries use to keep domestic agricultural lobbies happy... and in doing so, contribute to widespread hunger and poverty throughout the developing world.

The UK's The Guardian wrote a brilliant and concise editorial about this in 2003 to launch their kickAAS campaign against subsidies. An excerpt:

Giving subsidies to farmers was a brilliant idea that transformed the food shortages after the second world war into a surplus. But it has grown into an institutionalised nightmare preventing developing countries from fulfilling their potential in one of the few areas where they enjoy a natural advantage - agriculture. Europe and the US are the main culprits. It is economic and social madness for Europe to be growing, for instance, subsidised sugar beet when its average cost of production is more than double that of efficient exporters such as Brazil and Zambia. It is only possible thanks to ludicrous subsidies, including protective tariffs of up to 140%. As Kevin Watkins of Oxfam says: "The $1.6bn a year the EU gives to the sugar barons of East Anglia and the Paris Basin generates surpluses that deprive countries such as Thailand and Malawi of markets. Mozambique loses almost as much as a result of EU sugar policy as it gets in European aid."

Subsidies allow wasteful and inefficient agricultural practices to continue in countries whose comparative advantages have long since move to other industries. By continuing to produce agricultural products, developed nations have eliminated the ability for strong agricultural markets abroad.

However, given the current climate crisis our planet is facing, one could argue that the transport needed to import food will add to current high levels of carbon emissions and push food prices even higher. This is a foolish assumption. Subsidized agriculture forces developing to import food. It is estimated that more than $1 trillion will be spent on food imports this year, which economically vulnerable countries bearing the bulk of the cost. It's disgraceful that the food our subsidies have forced then to import costs us more to produce than it would to allow these countries to start their own food industries, where lower cost of production would lower food prices, benefiting us all. And eventually, we could move back to a regionally-based agricultural sectors, allowing domestic markets to continue to thrive while limiting transport and carbon emissions.

The only losers from a loss of subsidies would be the agricultural industry of the developed world. But given that, for example, the US government gave over $8 billion in subsidies in 2004 alone, there's plenty of room to give the economic losers in this situation unemployment benefits or funding for re-education. OR, they could always let them all grow (sugar-based) ethanol, thus curbing both global hunger AND climate change. Shabang.