Tag: Economy

How to Profit From Chaos

Nassim Taleb on CNBC talking about his new book, Antifragile: Things That Gain from Disorder.

The key message is you need volatility, you need stressors in the system, and you need companies and you need markets who can survive those stressors and thrive by them. Exactly. We need to encourage people to take certain classes of risk. We need more small fluctuation and fewer big crises. In fact we have the exact opposite. Things are smooth but with big — very quickly.

Four rules

Remember the first one is the economy, don't mistake the economy — the economy is more like a cat than a washing machine. The second rule is small is beautiful because it is less fragile. decentralize that small. Third rule is skin in a game to make sure that nobody's antifragile at the expense of others. And a fourth rule … make sure that bailouts help individuals, not companies.

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Government Getting Bigger

Larry Summers in the Financial Times:

For the next three months the US will debate the merits of growing versus shrinking government. But for the next three decades it will confront the reality that major structural changes in the economy will compel an increase in the public sector’s fraction of the total economy unless there is a substantial scaling down in the functions that the federal government has long performed. How government can best prepare for the pressures that will come, and how greater revenues can be mobilised without damaging the economy, are the great economic questions for the next generation.

Reihan Salam with a follow up:

One serious potential concern is that when we focus exclusively on direct expenditures, we encourage the growth of government’s power via other less visible channels, a theme of Raghuram Rajan’s provocative Fault Lines.