Tag Archives: nassim taleb

More Tooleb Nonsense Debunked

Nassim Nicholas Tooleb, the angry flâneur who blocks and insults people on Twitter, continues to demonstrate being the intellectual-yet-idiot that he is, in a recent Medium post Inequality and Skin in the Game:

The author Joan Williams, in an insightful article, explains that the working class is impressed by the rich, as role models. Michèle Lamont, the author of The Dignity of Working Men, whom she cites, did a systematic interview of blue collar Americans and found present a resentment of professionals but, unexpectedly, not of the rich.

It is safe to accept that the American public –actually all public –despise people who make a lot of money on a salary, or, rather, salarymen who make a lot of money. This is indeed generalized to other countries: a few years ago the Swiss, of all people almost voted a law capping salaries of managers . But the same Swiss hold rich entrepreneurs, and people who have derived their celebrity by other means, in some respect.[ii]

Tooleb just pulls this out of his butt, like he does for most of the stuff he writes. This is wrong for so many reasons:

1. The ‘American public’ includes salaried individuals. Its like those liberals who say they want unity but then attack the rich.

2. 60% of American workers are ‘white collar’, and hence typically earn a salary instead of a wage. So by Tooleb’s logic that would mean a lot of workers despise their own success.

3. Again with the overgeneralizing. It is really ‘all’..did he literally poll every single person? The part about Michèle Lamont and Joan Williams of HBR is unconvincing, because Tooleb doesn’t cite percentages or an actual study. Here is the Joan Williams HBR article: https://hbr.org/2016/11/what-so-many-people-dont-get-about-the-u-s-working-class:

Michèle Lamont, in The Dignity of Working Men, also found resentment of professionals — but not of the rich. “[I] can’t knock anyone for succeeding,” a laborer told her. “There’s a lot of people out there who are wealthy and I’m sure they worked darned hard for every cent they have,” chimed in a receiving clerk. Why the difference?

So Tooleb links to an article that mentions a book, The Dignity of Working Men, which gives a single anecdotal example of supposed resentment, yet Tooleb generalizes this to mean ‘all’. The rest of the Joan Williams article is about the 2016 election and Hillary.

4. Tooleb refutes his own argument by mentioning the Swiss vote, writing “This is indeed generalized to other countries: a few years ago the Swiss, of all people almost voted a law capping salaries of managers.” If such a generalization were true, wouldn’t the vote have passed unanimously?

Here are the actual results of the vote:

Swiss voters on Sunday decisively rejected a proposal to cap “fat cat” pay, in a ground-breaking referendum on the issue.

Final results showed that votes against carried the day by 65.3% to 34.7% in favour. David Roth, the president of Switzerland’s Young Socialists and the referendum’s leading sponsor, said: “We’re disappointed [we] lost today.”

So in Tooleb’s distorted world, 35% = ‘all public’. Close enough. lol What a clown. And it was socialists who backed the referendum, further evidence Tooleb is not the libertarian or anarcho capitalist many think he is but rather a liberal or socialist pretending to be one. Even in 2011, when I began writing articles critical of Tooleb, I suspected he was a liberal, and this further confirms it.

5. Many workers aspire to be promoted and to move up the ‘corporate ladder’ to become managers. Why else are there so many books, articles, websites, and seminars about getting raises and promotions?

In addition, someone without skin in the game –say a corporate executive with upside and no financial downside (the type to speak clearly in meetings) –is paid according to some metrics that do not necessarily reflect the health of the company; these (as we saw in Chapter x) he can manipulate, hide risks, get the bonus, then retire (or go to another company) and blame his successor for the subsequent results.

Execs are paid more because they have a bigger responsibility. Execs have skin in the game in the form of stock and stock options. Incompetence is the job of the board of directors to determine, with appropriate action taken if necessary. In some cases such as Enron and Wolrdcom, this fails, but such extensive fraud is uncommon, partially because of severe criminal penalties. Tooleb wants to take this further by turning all executives into civil servants and having the government regulate compensation, which is what Obama tried to do in 2009 with the financial sector. He’s advocating a bigger regulatory role for the federal government but without explicitly saying so.

Continuing on, he writes:

You do not create dynamic equality just by raising the level of those at the bottom, but rather by making the rich rotate –or by forcing people to incur the possibility of creating an opening.

The way to make society more equal is by forcing (through skin in the game) the rich to be subjected to the risk of exiting from the one percent
Or, more mathematically

He subscribes to the belief in ‘finite wealth’, that in order for someone to become wealthy an existing wealthy person must lose his spot, which is one of the most common misconceptions held by people who are naive about economics. It never occurs to him that the total wealth can rise, as has been the trend forever, and hence more people can become wealthy. Liberals want to make the pie equal; conservatives seek to enlarge it.

So instead of ‘spread the wealth’ as Sanders would say, it’s ‘rotate the wealth’. Again, diversion and subterfuge. He wants rich people to forfeit or squander their money on stupid, risky endeavors in order to have ‘skin in the game’.

Also, where is the incentive to create personal wealth if it’s going to go away just as quickly as it came? One of the reasons people accumulate wealth is for peace of mind and stability for both themselves and their families.

Our condition here is stronger than mere income mobility. Mobility means that someone can become rich. The no absorbing barrier condition means that someone who is rich should never be certain to stay rich.

Wrong again. People are getting rich all the time, everyday. Of the Forbes 400 list, 70% are self-made:

Yet Forbes said that wealth in America has become far more meritocratic over time. It said that in 1984, “less than half of those on The Forbes 400 were self-made; today, 69 percent of the 400 created their own fortunes.”

Look at Facebook…in the past decade it has created many millionaires and some billionaires. One example is Jeffrey J. Rothschild, an early Facebook employee:

Rothschild started working for Facebook in 2005.[4] He was the oldest person working for Facebook at the time.[4] He became Facebook’s vice president of infrastructure software.[4] In 2012, he owned 18 million Facebook shares.[4]

In 2015, he was worth an estimated US$1.67 billion.[1] He serves on the board of trust of his alma mater, Vanderbilt University.[12] Rothschild is married, and he has three children.[1] He resides in Palo Alto, California.[12]

With recent successes of Uber, Snapchat, Airbnb, Whatsapp, and Tesla, stories like these are becoming increasingly common. Since 2002, the number of billionaires and total wealth has surged, thanks to the information technology industry and other factors:

Tooleb writes:

For instance, only ten percent of the wealthiest five hundred American people or dynasties were so thirty years ago; more than sixty percent of those on the French list were heirs and a third of the richest Europeans were the richest centuries ago. In Florence, it was just revealed that things are really even worse: the same handful of families have kept the wealth for five centuries.[iii]

Large fortunes tend to dissolve, mainly due to marriage, business failure and mismanagement, divorce, and offspring, eroding the fortune over many generations. A family surname (such as Kennedy, Rockefeller, or Rothschild) may be collectively rich, but the wealth per person becomes very diluted as the family grows and splits over many generations. In fact, I don’t think there are any Kennedy, Rockefeller, or Rothschild decedents on the Forbes 400 list. The Waltons are the only familial clan on the list.

Again, it doesn’t matter if rich people remain rich, because total global wealth is growing, as well as rising standards of living.

Tooleb is lauded as some sort of ‘genius’. On Twitter, he fortresses himself in esoteric-sounding philosophical babble and screenshots mathematics that he passes off as his or as original, creating an aura of intellectual impenetrability around him, but when you actually read his stuff, line by line as I have done, most of the time he has no idea what he is talking about. He’s like a Potemkin intellectual, where there is no substance behind the Twitter facade.

Tooleb becomes self-aware, part 2

It looks like Nassim Nicholas Tooleb is becoming self-aware again in a recent Medium post appropriately titled The Intellectual Yet Idiot (in which he expands on his original Facebook post). Just replace all instances of ‘IYI’ with ‘Tooleb’ and it’s a perfect description of him.

For those who think Tooleb is part of the alt-right, he’s not. He’s not even a conservative but rather a liberal pretending to be a libertarian, who frequently attacks the rich and corporations:

What we generally call participation in the political process, he calls by two distinct designations: “democracy” when it fits the IYI, and “populism” when the plebeians dare voting in a way that contradicts his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote, with some equivalence for foreign elite schools, and PhDs as these are needed in the club.

Tooleb doesn’t oppose democracy and populism; rather he believes it’s been corrupted by the rich and corporations, as well as ivy tower elites. He still holds on to the romanticism of the democratic political process.

Here is Tooleb praising India’s democracy while calling Saudia Arabia a ‘very fragile country’:

I know that Saudi Arabia is a very, very fragile country, probably the one that’s most fragile for a lot of reasons. They are more robust to oil revenue to Iran and other countries but not other things. They say oil is x percent of GDP, around 50% but the rest is also linked to oil. It is untenable. You see here in India you do not have governance problems, it is a democracy and that makes you a lot more robust than other countries, definitely more robust than China.

In waging class warfare, pitting the makers against the takers, Tooleb is no different than Bernie ‘wealth spreader’ Sanders.

Tooleb writes:

The IYI has been wrong, historically, on Stalinism, Maoism, GMOs, Iraq, Libya, Syria, lobotomies, urban planning, carbohydrates, gym machines, linear regression, Gaussianism, Salafism, housing projects, and p-values. But he is convinced that his current position is right.

But then he drags Pinker again through the mud as an ‘IYI’:

The IYI is member of a club to get traveling privileges; if social scientist he uses statistics without knowing how they are derived (like Steven Pinker and psycholophasters in general);

This continues in Tooleb’s tradition of attacking experts who are smarter than him (Pinker, Dawkins, etc.).

Tooleb is so blinded by his dislike of Pinker that he fails to see that Pinker, despite being an ‘IYI’, is actually very critical of communism, writing in his book The Better Angels of Our Nature that “…communism was a major force for violence for more than 100 years, because it was built into its ideology.”

As Pinker astutely points out, communism is violent because violence is required in order to achieve and enforce ‘equal outcomes’, in agreement with the blank slate worldview of humanity that mandates equal outcomes, as well as the nationalization of private property. But equality goes against human nature (rich, successful people, including even Hollywood liberals who vote democratic, don’t voluntarily want to forfeit the fruits of their labor to the state) and the ‘natural order’ (productive, intelligent economically rising above the less intelligent, unproductive), necessitating violence to get it.

Here is something else that’s pretty funny, from Nassim Taleb Talks Antifragile, Libertarianism, and Capitalism’s Genius for Failure, in which he says:

Taleb has called New York Times columnist Thomas Friedman “vile and harmful” and coined the phrase the “Stiglitz Syndrome” after Nobel-prize winning economist Joseph Stiglitz, which refers to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions. Paul Krugman and Paul Samuelson are among Taleb’s other Nobel laureate bête noires.

Hmmm…speaking of unaccountably, why hasn’t Tooleb owned up to his own wrong 2009 predictions of hyperinflation?

Unlike last year’s sudden market implosion, inflation isn’t an unimaginable event that few currently anticipate. In fact, many fear inflation right now amid government efforts to goose the economy. Universa’s bet, however, is that inflation will reach levels few expect.

What a spert he is. I was one of the few bloggers who was correct about almost everything since 2011, correctly predicting a continuation of the bull market and low inflation.

If you raise this issue on Tooleb’s Twitter, or question any of his beliefs, he will block you.