Tuesday, July 27, 2010

Nassim Taleb on Government Deficits

Some highlights from Taleb's interview with Businessweek on the dangers of government deficits, debt, and complex regulation.

Businessweek:  What are are potential sources of fragility or danger that you're keeping an eye on?

Taleb:  "The massive one is government deficits. As an analogy: You often have planes landing two hours late. In some cases, when you have volcanos, you can land two or three weeks late. How often have you landed two hours early? Never. It's the same with deficits. The errors tend to go one way rather than the other. When I wrote The Black Swan, I realized there was a huge bias in the way people estimate deficits and make forecasts. Typically things costs more, which is chronic. Governments that try to shoot for a surplus hardly ever reach it.

The problem is getting runaway. It's becoming a pure Ponzi scheme. It's very nonlinear: You need more and more debt just to stay where you are. And what broke Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out of suckers."

Businessweek:  Do you have any thoughts on the U.S. financial reform package?

Taleb:  "I don't like complicated regulation. I think we should not need financial reform. What we need is definancialization. What we need to do is break the financial community's grip on society. And you can do it very easily by transformation of debt into equity. Banks have an interest in building debt, but equity in society is vastly more stable than debt.

So the problems have not been addressed. They're making something that was complicated even more complicated. We need some fundamental reforms rather than a very, very precise guideline on how you should behave."

Businessweek:  What are you working on now?

Taleb:  "My next book is about beliefs, mostly. How we are suckers and how to live in a world we don't understand."

Saturday, July 24, 2010

The Sad State of New York

Very few doubt the importance of personal freedom, however we often forget about the imporance of economic freedom, which always leads to a better quality of life.  A lack of freedom, both personal and economic, is therefore the reason New York State is deteriorating.

As shown by the Mercatus Center study, Freedom in the 50 States: An Index of Personal and Economic Freedom, New York State is lagging in all categories of freedom.

Fiscal Policy Ranking: New York is dead last.

Regulatory Policy Ranking: New York is seventh to last.

Economic Freedom Ranking: New York is dead last.

Personal Freedom Ranking: New York is third to last.

Overall Freedom Ranking: New York is dead last.

The study summarizes:

"New York is the least free by a considerable margin, followed by New Jersey, Rhode Island, California, and Maryland"

Thursday, July 15, 2010

The Dangerous Supreme Court Nominee

Captain Pete Hegseth of Vets for Freedom breaks down the dangerous nominee, outlining her blatant hypocrisy and obvious intellectual dishonesty:

Monday, July 12, 2010

Unintended Consequences of the New Health Care Law

As usual, Congress fails to see the unintended consequences of the new health care law, as outlined by Michael D. Tanner:

Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law

Government is already to blame for health care costs that many find unaffordable.  This is yet another example of government intervention creating unintended consequences that will lead us further down the road to serfdom.