Nicholas Taleb offers his lessons from the current financial crisis and ways to avoid future meltdowns. He starts off well enough and his final destination is worthwhile:
A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.
But he also goes jumps the rails with an overly stringent antipathy to leverage and lines like:
It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean. [emphasis added]
Such belief in smart people who will save us from ourselves can be easily misused by those who prefer to avoid “socialization of losses and privatization of gains” by emphasizing the former through universal health insurance and bailouts, and by limiting the latter through compensation limits and death taxes.
“Capitalism is about rewards and punishments, not just rewards,” Taleb writes. No company is too big to fail. While people learn to navigate a world with few certainties, it would be helpful if politicians, journalists, and academics stop pretending those certainties are more common.
