I gave myself Antifragile for Christmas. My wife wrapped it up after I handed her the Amazon box. I've been happily reading the book for the past few days.
The subtitle of Nassim Nicholas Taleb's lastest work (he wrote The Black Swan) drew me in: "things that gain from disorder."
What a marvelous notion.
Fragile things break when stressed. Robust things stay the same when stressed. And antifragile things benefit when stressed -- like Hydra, which grows two heads whenever one is cut off, or bones, which get stronger when they support heavy weight.
Several chapters in, Taleb is well on the way to converting me to embracing the glory of antifragility. It fits with my Taoist leanings. But is somewhat (or maybe a lot) at odds with my progressive politics.
Taleb isn't a fan of big bureaucratic government.
However, neither is he a fan of big bureaucratic corporations. Taleb persuasively argues that failure, mistakes, errors, and other unpredictable events not only aren't a problem for antifragile systems, they make those systems stronger.
Yet here we are once again, anxiously watching politicians in Washington grapple with a serious fiscal problem, waiting until the last minute to find a possible way to deal with it, our economy poised to nose-dive if agreement can't be reached between leaders of two political parties who rarely agree on anything these days.
I saw the title of this New York Times op-ed before I saw the author's name. "Stabilization won't save us" made me think, this sounds like something Taleb would say. I was right. He wrote the piece, beginning with:
THE fiscal cliff is not really a “cliff”; the entire country won’t fall into the ocean if we hit it. Some automatic tax cuts will expire; the government will be forced to cut some expenditures. The cliff is really just a red herring.
Likewise, any last-minute deal to avoid the spending cuts and tax increases scheduled to go into effect on Jan. 1 isn’t likely to save us from economic turmoil. It would merely let us continue the policy mistakes we’ve been making for years, allowing us only to temporarily stabilize the economy rather than address its deep, systemic failures.
Stabilization, of course, has long been the economic playbook of the United States government; it has kept interest rates low, shored up banks, purchased bad debts and printed money. But the effect is akin to treating metastatic cancer with painkillers. It has not only let deeper problems fester, but also aggravated inequality. Bankers have continued to get rich using taxpayer dollars as both fuel and backstop. And printing money tends to disproportionately benefit a certain class. The rise in asset prices made the superrich even richer, while the median family income has dropped.
Overstabilization also corrects problems that ought not to be corrected and renders the economy more fragile; and in a fragile economy, even small errors can lead to crises and plunge the entire system into chaos. That’s what happened in 2008. More than four years after that financial crisis began, nothing has been done to address its root causes.
Our goal instead should be an antifragile system — one in which mistakes don’t ricochet throughout the economy, but can instead be used to fuel growth. The key elements to such a system are decentralization of decision making and ensuring that all economic and political actors have some “skin in the game.”
I really like the idea of embracing mistakes. The "gotcha" game in politics is disgustingly unproductive. Every time I hear another mention of the State Department failing after the successful Benghazi attack, I feel like screaming at whoever is making that claim, have YOU ever made a mistake, dude?!
Mistakes are part of life. Chaos is a part of life. Disorder, unpredictability, bad shit happening -- these are all parts of life.
Antifragile systems thrive on all of this. Fragile systems don't. Unfortunately, the United States economy is excessively fragile at the moment. The fiscal cliff (or fiscal slope, take your pick) threatens it.
Like Taleb says, it'd sure be nice to know that whatever politicians in Washington, D.C. do or don't do, whether they make wise or foolish decisions, whether they do the right or wrong thing, our country would continue to prosper.
But if it doesn't, for either a brief or lengthy period, I like Taleb's mention of "skin in the game."
If Republicans won't compromise with Obama; if they persist with anti-growth policies; if they refuse to raise the debt ceiling and cause the U.S. credit rating to be downgraded -- they they need to own what they've broken.
Must be some way to tie politicians' compensation/reputation/power to key economic indicators, like inflation, unemployment, interest rates, national credit rating. If the GOP screws these up, Republican politicians should pay the price.
I'm looking forward to reading the rest of Antifragile. Taleb is a highly creative thinker.
I like his in-your-face blunt writing style, though I can understand why some reviewers don't. Am sure I'll have more to blog about once I get further in his book.