Thursday, April 24, 2008

Fooled by Randomness: some thoughts

I read and wrote about Nassim Taleb's The Black Swan some time ago; now I'm reading his Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets.

I'm struck by the application of his ideas to environmental and ecological issues. It seems as if we're placing most of our societal bets on growth, a bet that has played well for centuries. Given the current news, though, those seem like some of the investment bets Taleb describes as foolhardy. A prudent "investor" (citizen or business person) at this stage in the Earth's development might place most or all money on bets that can't lose much. Betting on the ability of the planet to absorb more growth, on nonrenewable energy sources to remain plentiful, or on technology to increase efficiencies sufficiently yet again seems like a risky bet, given the news of the day (and year and decade).

That's consistent with the precautionary principle; do check out THE YEAR IN IDEAS: A TO Z.; Precautionary Principle from The New York Times.

What do you think?

For more on Taleb's book, see words by Andrew Gelman, Wikipedia, and James Glassman.

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2 Comments:

Blogger curiouscat said...

Small Is Beautiful: Economics As If People Mattered by E. F. Schumacher might be of interest. http://www.schumachersociety.org/

28 April, 2008 07:14  
Blogger Bill Harris said...

Thanks, John. I read that book for the first time this past winter, and I did find it interesting. I don't know that I studied it well enough to know how much I agreed with his ideas, but he did give me new things to think about.

28 April, 2008 15:57  

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