The Black Swan and Me Part 3

An excerpt from Daniel Kahneman's latest book "Thinking, Fast and Slow" shows me how randomness not skill rewards and punishes economic markets and stock portfolios.  An yet, we hold onto the illusions that it is skill and business acumen that rewards the lucky ones and lack thereof that punishes the unlucky ones.

This article also leads me to think that the Occupy Movement is on the correct path leading to the real culprits in the world's economic melt-down. Those who demanded our tax dollars bail them out and additionally demanded we reward them for their excessive failures are the REAL Perpetrators of our current economic mashing of the middle class and poor.

Taleb's second principle for a Black-Swan-Robust society (p. 374, 2nd ed.):
"2) No socialization of losses and privatization of gains.  Whatever may need to be bailed out should be nationalized; whatever does not need a bailout should be free, small, and risk-bearing.  We got ourselves in to the worst of capitalism and socialism.  In France, in the 1980s, the socialists took over the banks.  In the United States in the 2000s, the banks took over the government. This is surreal."

Taleb's third principle for a Black-Swan-Robust society continues (p. 374-375, 2nd ed.):
"3)People who were driving a school bus blindfolded ( and crashed it) should never be given a new bust.  The economic establishment (universities, regulators, central bankers, government officials, various organizations staffed with economists) lost its legitimacy with the failure of the system in 2008.  It is irresponsible and foolish to put our trust in their ability to get us out of this mess.  It is also irresponsible to listen to advice from the "risk experts" and business school academic still promoting their measurements, which failed us (such as Value-at-Risk).  Find the smart people whose hands are clean."

And finally, Taleb's fourth principle for a Black-Swan-Robust society (p.375, 2nd ed):
4) Don't let someone making an "incentive" bonus manage a nuclear plant---or your financial risks. Odds are he would cut every corner on safety to show "profits" from those savings while claiming to be "conservative>"  Bonuses don't accommodates the hidden risks of blowups.  It is the asymmetry of the bonus system that got us here.  (Bold here is mine) No incentives without disincentives: capitalism is about rewards and punishments, not just rewards."


I've read somewhere, perhaps you can find the source, that if the government in 2008 had given every adult American the bailout money it gave to Wall Street we each would have gotten over $100k.  The bail-out money was our tax dollars being used by the government to buy the Wall Street boys a "new bus" as Taleb might say.  Imagine how robust our economy would have been with the bailout given to each of us individually to spend as we wanted or needed.   And I contend the economy would still be robust today had the government "of the people, by the people, and for the people" done so!