The author of the economics high-seller, The Black Swan, has given a fairly fierce denunciation of US government fiscal policy in recent years. In fairness, he probably is not just beating up the current holders of office, but previous ones too.
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Taleb on the stimulusSeptember 25th, 2010 |
 5 comments to Taleb on the stimulus |
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Interesting article, but I’d really prefer to read the actual text of Taleb’s speech than this watered-down version of it. It seems to me that this article isn’t “fierce” enough, although I suspect that the actual speech might have been.
Taleb’s two popular books are both recommended reading for all libertarians. He is a fierce critic of economics as a social science. Given that the stimulus package is an attempt at applied economics – that is, performing certain actions (the stimulus) in the aim of achieving a specific outcome (economic recovery) – it is not surprising that Taleb does not approve.
Contrast this to Krugman, who when asked about what book influenced him most replied: Isaac Asimov’s ‘foundation’ series of books. Why? Because it is about how social scientists save the universe.
Peter, it’s all good to criticize economics as a social science, especially macroeconomics – micro gets some undeserved bad rap. I cannot, however, second your recommendation of Taleb’s books. He is a gas bag whose big insight and claim to fame seems to be “low-probability events can happen”: financial systems bubble up, wars get started, obscure authors become famous. His other “contribution” is that experts can be overconfident and biased. All true, and not exactly earth-shaking – but also notice that he is magically exempted from all the scorn he heaps on others. He is a permabear, the proverbial stopped clock who predicts all sorts of things, and then trumpets the ones that do come true. He never ties himself down with time-frames – when something he predicts (and he predicts LOTS of things) does not happens, he says “Not yet!” Eric Falkenstein says about him: “I could imagine Taleb teaching a statistics class to freshman and instead of starting with the arithmetic mean and standard deviation, asking ‘what was the probability of an airplane taking down the World Trade Center on September 10, 2001?’, and waxing poetic about how ‘we just don’t know!” Students might think such talk is much “cooler” than boring formulas, but such confused thinking leads nowhere in particular and can be indulged indefinitely without producing anything useful, as Taleb demonstrates.”
Now he’s on the quasi-Austrian band-wagon because he sees that Keynesian policy’s popularity has peaked out for the current cycle, and he’s re-positioning to remain relevant. His criticism of Obama policy may agree with the general sentiment on this blog, but he’s mostly a salesman of books.
My favorite gem of his is (link here:
“Now he’s on the quasi-Austrian band-wagon because he sees that Keynesian policy’s popularity has peaked out for the current cycle, and he’s re-positioning to remain relevant.”
Everything you say may be true, Plamus (I haven’t read any of Taleb’s books, so I can’t comment about them), but it seems to me that getting more relatively high-profile people like Taleb onto the anti-Keynsian bandwagon (for whatever reason) is a Good Thing.
Laird, I agree – nothing wrong with a man saying the right thing, even if it’s for the wrong reasons. Taleb definitely has name recognition – he can do some good with it.
What I was taking issue with was Peter’s recommendation of Taleb’s books. The man (Taleb, not Peter) has every right to sell his snake oil; I have the right to call it as I see it. To me, he’s the Kevin Trudeau of finance. He pitches to a different niche and his mumbo-jumbo is good enough to rope in not just Joe Sixpack, but also your average better educated non-financial professional, but that’s about the only difference. Other than that, the same Cassandra hissy fits, the same selective history, the same “You must read my next book ($29.99 + S&H) to understand this, it’s all in there.”, which turns out to be the same rehashed “One cannot predict the future, but I did, many times too!” crap, seasoned with Benoit Mandelbrot’s fractal finance LSD trips (the two have a paper together, by the way).
Caveat emptor.