Nassim Taleb is at it again with his usual brilliance...about the positive real options that randomness brings in business and in science.
I am convinced that the future of America is rosier than people claim â€” I've been hearing about its imminent decline ever since I started reading. Take the following puzzle. Whenever you hear or read a snotty European presenting his stereotypes about Americans, he will often describe them as "uncultured", "unintellectual" and "poor in math" because, unlike his peers, they are not into equation drills and the constructions middlebrows people call "high culture". Yet the person making these statements will be likely to be addicted to his Ipod, wearing t-shirts and blue jeans, and using Microsoft Word to jot down his "cultural" statements on his (Intel) PC, with some Google searches on the Internet here and there interrupting his composition. Well, it so happened that the U.S. is currently far, far more tinkering an environment than that of these nations of museum goers and equation solvers â€” in spite of the perceived weakness of the educational system, which allows the bottom-up uncertainty-driven trial-and-error system to govern it, whether in technology or in business.
It fosters entrepreneurs and creators, not exam takers, bureaucrats or, worse, deluded economists. So the perceived weakness of the American pupil in conventional and theoretical studies is where it very strength lies â€” it produces "doers", Black Swan hunting, dream-chasing entrepreneurs, or others with a tolerance for risk-taking which attracts aggressive tinkering foreigners. And globalization allowed the U.S. to specialize in the creative aspect of things, the risk-taking production of concepts and ideas, that is, the scalable and fat-tailed part of the products, and, increasingly, by exporting jobs, separate the less scalable and more linear components and assign them to someone in more mathematical and "cultural" states happy to be paid by the hour and work on other people's ideas. (I hold, against the current Adam Smith-style discourse in economics, that the American undirected free-enterprise works because it aggressively allows to capture the randomness of the environment â€” "cheap options"â€” not much because of competition and certainly less because of material incentives. Neither the followers of Adam Smith, nor to some extent, those of Karl Marx, seem to be conscious about the role of wild randomness. They are too bathed in enlightenment-style causation and cannot separate skills and payoffs.)
The world is giving us more "cheap options", and options benefit principally from uncertainty. So I am particularly optimistic about medical cures. To the dismay of many planners, there is an acceleration of the random element in medicine putting the impact of discoveries in a class of Mandelbrotian power-law style payoffs.