Spitznagel & Taleb On Inequality, Free Markets, & Inevitable Crashes

The two men recently sat down to discuss Spitznagel’s new book, The Dao of Capital, as well as their reactions to and criticisms of Thomas Piketty’s book (transcript of their conversation here):

Taleb:

• First that intervention — in general, whether medical, governmental, or other — has side effects and needs to be treated exactly as we do with other complex systems: only when extremely necessary.
• Second, counter to naïve conservatism, nature is not conservative, it destroys and creates species every day, but it does so in a certain pattern: Its destruction has the effect of isolating the system from large-scale harm. It does not try to preserve the past; it only tries to preserve the system.
• Finally, liberty is not an economic good, but an existential one. The economic good is a mere bonus. The argument that liberty is good for economic activity or for growth of the system feels lowly and commercial (an argument used by consequentialists). If you were a wild animal, would you elect to be in a zoo because the economy is better over there than in the wild?  Liberty is my raison d’être.

Spitznagel:

• Yes. The Daoist scholar Zhuangzi once said, upon being offered the prime ministership about 2,500 years ago, “Would the dead and adorned turtle in the king’s palace not prefer to be alive and free in the mud? So too would I.”
• Here’s how I would reconcile my own position with yours: I agree that liberty is an end in itself, and is not to be valued merely as an instrumental means to something else. But precisely because of that, even if hypothetically you could convince me that a certain government intervention in the market were extremely necessary, as you say — for instance, would likely lead to greater economic growth or lower unemployment — I would still reject it on principle, because my support for property rights and a sphere of individual autonomy free from political meddling is not ultimately based on a utilitarian criterion. By all means, let’s brainstorm and see if there are ways to alleviate these problems and provide relief to the suffering. But any proposal that involves using coercion on unwilling citizens should be off the table. Anything else is a slippery slope to what we have today from these serial crises. To say this by no means demonstrates that I’m an ideologue or unscientific.
• What we get from this is a self-organization that often seems chaotic to our myopic eye, yet when we take a step back we can see how the ecosystem ultimately and optimally steers itself. It was Zhuangzi, as I discuss in my book, who first articulated this idea of spontaneous order — whereby order naturally emerges from bottom-up individual interactions when things are left alone rather than from top-down control — a concept developed later by Menger and Hayek. We live in an economic age where we’ve simply lost our ability to look at the world in this way, though I suspect we’ll be reminded of it again sooner rather than later. Perhaps our takeaway from economic crises will finally be different the next time around.