Nassim Nicholas Taleb is an awesomely successful investor, public intellectual and author of many best sellers. The wiki page on NNT says that–
“Taleb criticized the risk management methods used by the finance industry and warned about financial crises, subsequently profiting from the late-2000s financial crisis. He advocates what he calls a “black swan robust” society, meaning a society that can withstand difficult-to-predict events. He proposes what he has termed “antifragility” in systems; that is, an ability to benefit and grow from a certain class of random events, errors, and volatility as well as “convex tinkering” as a method of scientific discovery, by which he means that decentralized experimentation outperforms directed research.”
The Economist published a brief piece by him in 2010 titled, “The World in 2036: Nassim Taleb looks at what will break, and what won’t .” It has aged pretty well, and I suspect that he’s largely accurate. Here it is.
Paradoxically, one can make long-term predictions on the basis of the prevalence of forecasting errors. A system that is over-reliant on prediction (through leverage, like the banking system before the recent crisis), hence fragile to unforeseen “black swan” events, will eventually break into pieces. Although fragile bridges can take a long time to collapse, 25 years in the 21st century should be sufficient to make hidden risks salient: connectivity and operational leverage are making cultural and economic events cascade faster and deeper. Anything fragile today will be broken by then.
The great top-down nation-state will be only cosmetically alive, weakened by deficits, politicians’ misalignment of interests and the magnification of errors by centralised systems. The pre-modernist robust model of city-states and statelings will prevail, with obsessive fiscal prudence. Currencies might still exist, but, after the disastrous experience of America’s Federal Reserve, they will peg to some currency without a government, such as gold.
Companies that are currently large, debt-laden, listed on an exchange (hence “efficient”) and paying bonuses will be gone. Those that will survive will be the more black swan-resistant—smaller, family-owned, unlisted on exchanges and free of debt. There will be large companies then, but these will be new—and short-lived.
The world will face severe biological and electronic pandemics, another gift from globalisation.
Religious practice will experience a revival, seen as a conveyor of robust heuristics, cultural values and rituals. Science will produce smaller and smaller gains in the non-linear domain, in spite of the enormous resources it will consume; instead it will start focusing on what it cannot—and should not—do. Finally, what is now called academic economics will be treated with the same disrespect that rigorous (and practical) minds currently have for Derrida-style post-modernist verbiage.
One thought on “The World in 2036 – Nassim Taleb”
“Currencies might still exist, but, after the disastrous experience of America’s Federal Reserve, they will peg to some currency without a government, such as gold.”
Oh the irony!
Wasn’t “the disastrous experience of America’s Federal Reserve” enough experience in promise to pegging to gold? I wonder what NNT means by “they will peg”. who/what is the “they”? Are these “they” some kind of altruistic entity?
“some currency without a government, such as gold.”
-so close, yet so far.