A Critique of Nassim Taleb’s The Black Swan: The Impact of the Highly Improbable
The economy is a constantly changing work of art. It depends on different factors from the consumer’s choice to the global market. From country to country the state of their economy can be seen through many walks of life. All countries have the elite and the poor. In America and other industrialized countries the middle class is shrinking and in underdeveloped countries the economy is starting to take off. Developed countries are dealing with the effects of industrialized business leaving and many are becoming service economies. The economy is also becoming more of a global economy instead of focusing on one country. Since it has moved to become globalized economies in other areas of the world are booming. They offer cheaper labor and because of transportation goods can be shipped all over the world.
As economies develop and change we need to look at the factors that influence this. Weather, resources, location and labor prices are a few examples of this. Another influence is government policies. There are three types of economies: command, market and mixed. In a market economy. In a command economy the government controls the economy. It decides what will be produces, wages and prices. Socialism and Communism are examples of a command economy. In a market economy the economy is controlled by individuals. In a pure market economy the government is absent from the economy. A mixed economy has element from both a command and market economy. The economic decisions are made by the people but the government plays a role in the resources. Most developed countries today have a mixed economy.
In his book, The Black Swan: The Impact of the Highly Improbable, Taleb discusses key impacts on the economy from rare events. I choose to focus on his section titled The Ten Principals for a Black-Swan-Robust Society. In this section he wrote 10 “principals” on how to run an economy post crisis. The principals he created makes sense and are easy to follow. I found most of them to be relatable to my life.
The first principal reads, “What is fragile should break early while it’s still small” (Taleb). This means that something should not get so large that it cannot fail. If it were to fail it would be catastrophic to the economy. The US government has spent billions of dollars trying to bailout the economy. In the 2000’s so far the government has passed bills to bailout the bank and auto industries. It was said that if they were allowed to fail it would destroy the US economy. The Stimulus Package from 2009 was almost 800 billion dollars, this was given to companies to create jobs. It did not create the amount of the jobs that were originally projected.
The second principal states, “No socialization of losses and privatization of gains” (Taleb). This means “do not socialize losses and privatize gains” (Maital). When looking at if something should be bailed out the amount of risk...