India's Post COVID Opportunity | Nassim Nicholas Taleb, Sanjeev Sanyal | India Economic Conclave 202

good evening everyone uh this is an interesting session because what we are going to talk is basically about the post covered opportunity for india and i have two of the most accomplished uh complex theory experts i would say on this panel it's a privilege to actually have both of them on the same panel i have obviously mr sanjeev sanel with me principal economic advisor and i have i think one of the most uh i would say uh serious believers of the complexity theory uh mr nasim talib who has joined us live from us nasim thank you so much uh for joining us from u.s and sanjeev thank you so much for being part of this session thank you for inviting me right uh nothing before i come to you uh you know today is a special day incidentally today is the first anniversary of the first day of the indian lockdown if i can call it the great indian lockdown that happened one year back today was the first day that india went into i think world's most strict lockdown putting 1.35 billion people into their homes locking them up almost for uh eight weeks sanjeev i'll start with you you know today i mean it's one year back whatever happened but how do you reflect on that whatever your actions government took at that point in time uh and at a very short notice the most stringent lockdown on the planet was announced so you're absolutely right it's exactly one year since we went into that big lockdown and reflecting on it i would argue that we did exactly the right thing given the information that we had at that time so let me explain as you just mentioned both nasam and i are complexity theory people and one of the points about complexity theory is that we believe in how to deal with decision making in an environment of utter uncertainty and that's the situation we were in a year ago we had we knew that something bad had happened in china it had spread to italy but beyond that we had very little information and the experts and virologists of that time gave us a very wide range of possible outcomes so in that environment the best thing we thought was to do is to do a full lockdown in order to hedge for the worst possible outcome that could happen now that gave us some time to gather information create some quarantining testing and other kinds of facilities but once we had sort of better information please notice we also began to step by step opening things up through a bayesian updating of information so i think given the information we had at that time the lockdown was the right thing to do after all the virus may well have turned out to be just as bad as as the worst case scenarios were predicting them to be we had no way of knowing whether it would be and we did exactly the same thing with the economic response as well if you remember we were under tremendous pressure to do these grand stimuluses trillions of dollars etc which some other countries uh trotted out but our view right in the beginning was that this was not a sprint it was a marathon where we would have all kinds of unintended consequences and butterfly effects taking place so in that environment it made sense to make your way through more carefully through a sequence of medium-sized uh packages which we ramped up over time but also remember we changed the nature of them i mean in the beginning they were much more about providing a safety net so you know free food providing 100 guarantees to the msmes things like that because that's more of a safety net approach but over time as things were opened up we then switched to ramping up demand but at every stage we again did something very different from other countries we also put a lot of effort into supply side measures and which again reflects our view that we are dealing with uncertainty we need to continuously invest into making the system more flexible and be able to respond in this step-by-step kind of way uh nasim you have a very interesting view on uh you know the way governments have responded to covet and uh you yourself are a coveted survivor so you know the disease i think uh much better than a lot of people who comment on it how would you rate the indian response the way india reacted to kobed i would say uh they did what uh what wise government should do which is in the absence of information you don't take risks you just make sure that you're minimizing risks you have we had no idea what this disease was about and then as our my friend here sanjeev explained as you gain more information then you relax the measures you see if i have absolutely no idea about the safety of the plane i ground it and then as i get more information about the plane i will you know let it fly with caution so basically that's a precautionary principle and i think that that measure was extremely wise and i wish as a matter of fact we had such wisdom here because in the united states we had a severe problem it took us an entire year before the federal government mandated pcrs at the border which could have solved the problem and saved trillions of dollars so basically sometimes even from an economic standpoint being acting quickly can can can help you in the long run and then let me warn about one thing the hindsight explanation you know after a fact you know i didn't need i wasn't sick last year i didn't need health insurance after the fact okay so i paid so much money for nothing yeah it was wasted was the same argument can be used in any situation where someone is acting in a precautionary way by having you know the equivalent of insurance which is taking um for enacting measures and and and of course uh measures and policies that are there to minimize risk for the population right i think that's a compliment for you because he was saying that you know he wishes that the other governments including u.s would have responded the way india did i'll come back to you sanjeev but nasim what i want to know is you know since the time pandemic began everybody has been talking about was this a black swan event so many people have referred to your books and so so first of all what are your comments was this a blackstone event if yes why if no why i see i have a little 10 minute 10 10 12 minutes presentation uh explaining the thinking uh that was in the black swan uh you know it's how i explained in the blacks one that of course it wouldn't be a black swan event it was the black swan itself on page 307 explained it's uh you know tells you that this is almost unavoidable because the structure of the world in which we live today so let me quickly uh come may i run now through the presentation yeah sure yeah great so so let me uh explain the the the the the center of the idea of the of the black swan and as explained in the book and the black one being part of the inserto the five volume uh so far five volume book plus technical papers and uh academic work uh associated with it so the the center of the idea is the difference between what i call mediocritin and extremistat so let me explain the difference we are used to variables like mediocristan that vary but not too much so just to explain um you know to give you the thought experiment in the beginning of the black swan if i gather a thousand people invite them you know to new york and there was there's a lot of you know room in hotels in new york okay so it could be a good idea put them on a scale and weigh them and then i add to that scale a rare event a consequential rare event the largest possible person i can find on a planet how much of the total that person represent or in other words how much will the total change peanuts point three percent maybe maybe point four percent if i had the heaviest person on the planet okay now uh if if i have 10 000 people it'll be 0.04 so basically when you have a large sample uh and and you have a lot of a lot of a lot of variables so you have a it's an environment in which exceptions do not cost you much they can happen they do not represent a big share of the total now when i move to extreme stand it's a complete different class of random variables and that's not one that was examined in schools too much by the people who know statistics 101 but your grandmother knows very well what's going on so in extremist and okay things can be determined by the extreme let's play the same thought experiment and have the same thousand people we brought them to new york randomly from the planet and let's take their net worth total net worth if you're lucky you get two hundred thousand dollars give it given you know what's going on on the planet and some areas on the planet where people you know don't make a lot of money so uh you get to maybe a million dollars if you're lucky in that sample total net worth and then you adjust pesos okay so the fluctuation in the price of amazon in the last nanosecond exceed the net worth of the balance right so basically he'd be 100 percent okay and and or you can take everybody you know they have four or five people representing uh 90 some percent of the total wealth i mean the the the bottom uh net worth i mean the bottom three four billion have less than uh you know in total the net worth and bet of bezels so you realize what's going on with concentration so you have concentrated random variables so i posited in the black swan that you have a switch towards extremist stand by a lot of things coming even more from extremists and owing to what well from the fact that we no longer have islands and when you switch from an island to a continent when we join island together okay you have a drop of diversity and an increase of winner take all effects so take i mean in the old days no connectivity the google would not have survived harry potter would not have been read in lebanon okay 100 years ago so the and then the same thing then therefore will apply to pandemics and that was on the black swan you explain how pandemics will experience that winner taking effects as we are increasing connectivity we are more the more connected we are and let's see of course sanjeev's specialty complexity theory the more you have to look at it from a standpoint of of complexity theory or theory associated with it there are seven or eight different branches but they all converge at the same point that you have networks and these networks lead to concentration okay so just like we had opera singers making a good living in the 1800s okay and then by 1995 pavarotti and a few others were making 90 of the income same thing for soccer players for sorry uh you call it uh football players right then in uk english so so basically so the same happened so now let's look at the effect of connectivity on diseases there are villages in the uk this is 330 years okay but in fact it's i can go to 600 years there are villages in the uk in in in england okay they were reached by the bubonic plague between 300 and 600 years later just to tell you that connectivity was low and of course the americas were not reached by the demonic plague you see because you had the island effect today we have no longer have an island effect so think about the classes of diseases we are about to have and how different they are from what we're used to traditionally that is you know that you got you got more from extremists and because basically because of connectivity you have conferences that bring people from the whole world to las vegas like you have pe you have you literally have conferences and i've attended some where people come from 120 countries okay so and then think about it three days later you're redistributing a disease to three to 120 countries so so what you have so the bubonic plague at this fastest was traveling 30 miles a day okay and look what's happening today so basically um we live in a different world more from extremists and with winner take all effects for diseases meanwhile meanwhile meanwhile meanwhile our grandmothers know that at least my grandmother my grandfather my grand uncle as well they understand the point but some people who learned a little bit of statistics immediately things in terms of mediocre stan so whatever called a fortune cookie science or fortune cookie thinking when this fellow when in the beginning of kovid we were fighting fighting this misunderstanding of the properties of multiplicative things as compared to static you know non-multiplicative risks for example this fellow was saying oh we don't shut down the country for swimming pool death we have about 3 000 americans die every year drowning in a swimming pool compared to at the time you had only like 10 people that died of covet so they couldn't understand why we're more concerned of course by covet than swimming pool death or fall from ladder same mode of magnitude between three and four thousand a year because if i drown in my swimming pool my neighbor is not likely more likely or less likely to drown in her or his swimming pool as a matter of fact maybe less likely okay because as as uh as me here observed you know people become more conscious at if i have a car accident my neighbor is less likely to have a car accident or equally likely but not going to be more likely okay however if i if i get covet you bet the odds of my neighbor getting coded has increased and that's with multiplicative effects and we have something called scale transformation if the risk for an individual is low the risk for a collective is higher because of these multiplicative effects so you got to take these things seriously now economically we live in a world that has fragility to it increasingly and you can see it from uh and that was i mean i'm revising stuff i did in the black swan a few years later okay um using data from 2018 and and it's basically we have the same rate of natural catastrophes as we did in the past but the cost of gdp has increased markedly because of connectivity think about what's happening today in a swiss canal okay it's the same space canal as it was a hundred years ago or 150 years ago when delicious did it but think of traffic today the impact on world gdp of of this waste canal okay being blocked today as compared to 50 years ago even even 20 years ago because the more trade and the more connectivity the more the weakest link affect us and here natural catastrophes have played a larger larger role now it's what i call this large movie theater with a small door effect so economically this is why the impact some things can be greater but this is not all bad news now let's look at how where the ancients dealt with it the ancients had a huge uh lee developed mechanism of lockouts not lockdowns lockouts quarantines the minute they heard of a rumor of any uh you know any disease spreading anywhere they enforce quarantine laws so for example the ottoman empire you wanted to go from india to the anywhere controlled by the ottoman you had somewhere between seven and 18 days of quarantine depending on what they deemed was a risk and that lasted for hundreds of years between the habsburg empire this is a called the lazaretto between and and it was peppered the whole border between the habsburg and the ottoman empire was peppered with places like that where they put you in for 40 days up to 40 days it's called the quarantine you know because it was up to 40 days when they put the travelers so just to make sure that what little connectivity they had did not harm them as much as what happened during justinian's plague and of course the great plague in the 1300s so so basically they understood so now let's say our the ancients understood how to do it every port had quarantined this is in venice for example some are nicer of course the italians always have things nicer than other mediterranean but it's the same concept applied everywhere around the mediterranean marseille genoa beirut has a neighborhood called the quarantine because all the ships had to be uh had to sail start to beirut and people had because of the ottoman ottoman law had to be quarantined so now what's happening i conclude with the following that something tells me that something in the east and the east i count myself as a mediterranean as part of the east because this is our block of culture we do not like toronto science so i don't want to say that our grandparents of course would have understood the difference between uh kovid and drowning in the swimming pool that something is multiplicative they probably would not be able to articulate it but they understood it likewise they had moral values that have been absent in northern europe during this so something tells me that the countries that did well through covet would continue to do well in the future whether economically health-wise medically or i would say ethically so because this idea of geronticide of killing the elderly is absolutely absent in eastern and indian and mediterranean culture and and you can see with the respect we have for the elders whereas europe's decided to say okay at some point let's do herd immunity and let the elderly die people don't realize that the word senator means elderly in latin and the world shake in arabic means the eldest so your seniority in society is inverse to what it is today in traditional societies and you keep the others because their wisdom because at least they can explain to you that this policy is wrong and we're losing that so that was my conclusion and and and uh thank you very much for letting me uh present the main points of the black swan and and and and and to insist that is there something that's not the black swan it is a pandemic thank you right nasim i'll come back to you but the key takeaway sanjeev from what nasim just mentioned is that the obviously uh with the kind of connectivity that we have we are going to deal uh we'll keep getting into situations where we'll have to deal with such pandemics but i think the most important point that he made and i think probably you can throw some light on it from indian point of view because obviously there have been discussions that uh while india is vaccinating the elderly people and you know the workforce which is actually moving around probably spreading the disease they are not receiving the vaccines what i'm hearing from nasim is actually quite contrary to that argument that we should actually start vaccinating the elderly first first of all your response on that so i just heard the wonderful presentation and let me show you how almost all the things that he talked about um are parallel in many ways to the way we think about it and the kinds of policies we take so for example the in the beginning of his presentation he talked about the fact that look the world is becoming increasingly more connected right and their network effects and the transmission consequently of shocks is much faster and more powerful the unintended butterfly effects etc will therefore be also you know quite more frequent and so on now how does this inform the way we make policy now first of all note that pandemics and viruses are the own not the only kind of these shocks they're all kinds of other such shocks so you can have financial shocks we are hyper connected and you know financial shock in one part of the world transmit through the rest you can have supply chains break down you just have a problem right now in the suez 100 years ago this would have been an academic problem to somebody sitting in delhi but it's not i mean it will mess up all kinds of production systems around the world just because one ship got stuck somewhere on the swiss so these are now things that transmit through these networks around the world now this is a good context in which in which we can think about atman bharath self-reliant india if you translate it loosely into english is very often presented as some sort of a return to pre-1991 you know import substitution this is totally not the case i have absolutely no interest in driving around in an ambassador car but we do think that you d you need to invest much more into resilience than you would if you were taking a sort of more neoclassical kind of view of the world so unlike for example what many economics textbooks will tell you or many mba courses will teach you complexity theory people are not merely concerned with efficiency we are just as concerned with resilience because our worldview is naturally all about random shocks and things going wrong so consequently we think a lot about this and so let me show you how atman nirvan bharath can be thought of in a different way so just one second are you somewhere suggesting that too much of efficiency is actually counterproductive without taking into account random shocks yes right nasim you want to add to that you are saying something it's very simple if you go if you if you drive uh 50 miles an hour you'll be okay arriving to destination if you drive 500 miles an hour the the the odds of getting to destination become zero so so so this idea of speed for example so the fastest way to drive maybe 50 miles per hour you see or 60 miles or 100 miles per hour not 500. likewise the most efficient way it's effectively there's a difference between cosmetic efficiency what i call pseudoefficiency and risk adjusted efficiency if you adjust by risk okay you know so you get different results and that's the resilience that our friend is talking about right so let me explain this let me explain it exactly in these ways about a year ago we discovered that india for all its fame as a you know pharmaceutical to the world producing generics for the world and so on we were totally dependent on single source uh the single sources particularly in china for certain apis and inputs into our pharmaceutical industry now if we for example now what we are doing is trying to encourage at least the key ones to be made in india now this is not protectionism in the traditional way what we are really trying to do is to increase the resilience of a globally competitive industry this is not import substitution in the neheruvian sense at all and so same sort of concept goes for example in our view of social capital you know india has survived this shock at least in part because of our social capital the fact that even today our family systems and traditions etc are intact anybody here will be able to tell you that you know family was a very important part of it and that is again what nasim was talking about we have ingrained in our culture this idea of protecting family but also the older members of the family they can't be sacrificed so to speak for efficiency which maybe some other northern european societies may be willing to do we won't do it because it would be a breakdown of our family contract so to speak would you agree nasim exactly i mean the whole the whole idea is that of intergenerational commitment okay for example i would like i treat my parents in a way that i would like my children to treat me and my my grandchildren to feed my children so you have so these packs these intergenerational pacts that have arise in the east okay with what we call the silver rule of the golden rule uh that have uh unfortunately been eradicated by a bad economic culture that spread in northern europe over the past whatever since you know classical economy neoclassical economics you know what i call the naive version of it started spreading there the fact that we believe in efficiency we believe in uh but but it can't be too naive that's a point right coming back to the post covered opportunity for india and nassim i want to know your views here you know one part is how india responded uh to the threat of covet in fact today as we speak we are uh dealing with almost if i may use the word second wave but the way i look at it the economy is moving uh things are moving we don't require a national lockdown the way we did last year uh so obviously a lot of uh thought process has gone beyond uh behind this whole mechanism and sanjeev will come to you for that but nothing what i want to know is you mentioned that the companies and countries which were effective in dealing with kobed are going to do better in the coming decade or in the coming years if you can elaborate on that point exactly so i've classified things in four categories those who did uh well uh undercove it and do well in the future those who did well undercover but we're not sure because you know it could be a transitory those who did poorly undercove it like dentists but or or plastic surgeons or you know your family doctor but will do well later okay because the demand or or tourism for example and then of course the category those who did poorly undercove it and we'll do poorly uh after so let's focus on the first two categories those are the dwell under coded uh anyone and technology will tell you okay that that coven has been a blessing for them and i'm gonna give an example of of two kind of people there's this waiter of uh you know in the restaurant i go too often who of course uh new york uh you know shut down the restaurant lost their job so called up to say hey can i offer some help are you kidding what i'm making three times at least the money i was making before say what say yes how delivery my friend so you have two kind of people those who when they're hit uh with something and at the individual level okay they sit down and wait for the government to come rescue them okay and they become hopers and then you have category of people say okay there gotta be some money to be made there let's make lemonade out of this lemon there got to be some opportunity there's got to be winds let's build windmills okay so that category of people and and you see around i i saw a friend another friend same thing he has a gym and of course jim were hit the hardest in america and uh because you can't go to the gym you still can't go to a gym and so i called them up he said they're making a fortune um setting up gyms in people's homes okay and i luckily i bought the equipment before you know this distortion supply chain because you still you can't buy weights here they're all made in china and you have to wait six months anyway so so you have category of people so you can generalize to companies some companies have done well undercover so and i think that uh some individuals have thrived even you know family-wise on the covet they know how to work uh zoom home office so the first category those who did dwell on the covet and will do well in the future also as i said apply for countries the countries have done the best are asian countries who showed a lot of maturities in dealing with it they understand liberty even australia i mean okay so maybe it's not very connected so they benefited from uh being an island but nevertheless they showed uh that people in that part of the world whether north or south have shown an extremely high amount of wisdom and then you see the foolishness from sweden to the united states on the trump to the to the the northern europe uh other parts some other parts like northern like like like france in france now under macron so you see the foolishness of what's happening and the lack of understanding of the urgency and and these false dichotomies oh they think oh no you know it hurts the economy to have to have it doesn't hurt the economy to have locked down the chinese proves that you help the economy by having lockdowns provided you react quickly so that first category i think of countries that did well and then let's look at companies that did poorly undercove it and do poorly in the future they are going to be some permanent changes in both consumer habits okay and professional practices like for example the covet you know effect is seen in real estate where you have uh uh the the an extraordinarily large amount of uh real estate for supply some you know uh supply the new york office space because uh an office is a great place to work but but but if you can work from home you can the the combination allows you to have a smaller office space and larger home office so that reallocation is going to be completely because this is a little bit of because of non-linearity it's going to be very destructive to new york city we already see crime rising we see a white collar flight we see real estate prices collapsing in new york city and this ozar would be permanent i don't understand why people should put up with two and a half hour commute if they can work on wednesday thursday and friday out of their house so for and and they understand and and and i think the real estate prices understand that very well the problem of cities like new york is that as we saw in the 70s there's a feedback loop that as people cut out of new york you end up with the elements the dangerous elements in new york completely uncontrolled and uh so at least to to so so that some areas are going to be hurt permanently by it some areas help permanently by it and one one one part of the economy that's going to be heard very badly without any recovery is the the the u.s education okay because let's think about it now people have learned that i can take a class from probably the best statistician in the world at the india indian statistical institute while sitting in my home in new york rather than go to a local university and pay 70 000 a year okay so so you have a substitution that will that will that will uh change uh u.s education which has been too expensive and and its dominance is unjustified given that most of the faculty is from other countries that's an interesting point uh nassim what i want to know is uh uh sorry essentially what i want to know is uh like nasim rightly mentioned that if you get lemon you want to make lemonades or you can crib about it the various measures that indian government has taken you know right from atlanta to pli schemes to even the vision which we saw in the budget and it's quite clear that the next decade is actually going to be a decisive decade for india one is are we conscious about this and are we actively pursuing certain policies uh which can actually create post covered opportunities for india and if yes then how so i think many of the things he just mentioned here definitely inform the way we think about the world there's no question that the post-covert world is not a re-inflation of the pre-covered world i mean it'll have its own technology consumer behavior geopolitics you know all kinds of things that will supply chains will change and so on and the key thing here is to understand that there is no way i as a policy maker can guess where this is all going so what do i do so what we have opted to do is to do this huge amount of supply side measures i know you know many people are puzzled why is it that in the middle of all of this is the indian government putting in so much effort in doing supply side measures deregulation uh privatization labor laws farm law changes and so on you know we have been criticized from quite quite a lot you know this is not the right time to do this but in fact we would argue this is the right time to do this uh because if you're going to go through go into the complete darkness you want your factor market to be factor markets to be as flexible as possible to be able to take advantage of the changes that are going to happen and as no way as i said i can predict where this will go i can take a few bets like through pli schemes and so on but overall many of the jobs opportunities of the future are unknown what do i do as a policy maker well i can put in maybe some physical infrastructure which is likely still to be relevant you know airports and things like that i don't think airports are just about going to go obsolete they could but i think they'll be still relevant so i can invest in airports i can invest in power production and and renewables and things like that maybe so we are by the way putting in huge amount of effort as you know into infrastructure physical infrastructure we can put in some resources into health that's clearly something that's that's important irrespective of the pandemic but by and large what we need to do is to open things up so that they can be an adjustment to the new environment taking advantage of natural creative destruction so to speak and of course leveraging um you know the animal spirits of the private sector so if you listen to what for example the honourable prime minister has been saying recently you know you've got to be able to support wealth creation and innovators and risk takers and of course the frustration then consequently also on that those things that get in the way including bureaucracy which tends to be you know try and slow this readjustment so i think the ideas that that you just heard from nasim are very much uh part of the way we think about very similar lines of thought not surprisingly we are both complex complexity theory enthusiasts so but it is a lot about flexibility dealing with uncertainty randomness and you know unpredictable spread of effects through networks all of this is very much a part of our thinking process right now last year when you visited india for india economic conclave i remember one of your comments that probably countries like india need to create a mechanism where it is easy for companies to fail it is easy for entrepreneurs to fail because then you encourage them to take risks without suffering that kind of heavy uh i would say social and financial costs now in the post covert scenario and like you rightly said that a lot of things are going to change permanently what is your view and which are the sectors where probably we need to focus is even more so i mean now that if you see the sectors that in which failure was a something extremely well accepted the technology where technology failed very well and and when we look at the numbers in america you see all the stock markets rallying the stock market is not rallying technology stocks are rallying and as they're getting they're getting a bigger share of capitalization we're switching the american economy okay has been uh dominated now by technology firms more so than last time so my logic to really explain it uh to our friends uh and and um listening and or watching um is as follows people are afraid of failure so if you take the most active sector okay in the most active country in the world america has the highest bankruptcy rate in the world and in america the sector was the highest bankruptcy rate is technology okay and it's the most vibrant one so now uh this requires completely different way of thinking so and and and europe was displayed by and of course india as well europe is plagued by people who want to help the economy by becoming civil servants okay when you're a good student okay failing is not an option but in real life is completely different so you have to encourage people to fail and if they want to help the planet go start a business okay start a business you're helping the planet a lot more because we need people with the guts to fail you need to make it except socially acceptable for people to try fail try again fail again okay until they succeed and and and without that you're we're not going to get anywhere you end up having good students who you send them to harvard they come back and then they're going to work for a salary it's nice to have people work for a salary but the problem is someone got to generate a salary somewhere and that person is the entrepreneur so the if you if you look at the countries where it's easy to fail you will see growth if you look at country where it's not easy to fail once in a while you see some big investment generated growth and things taper off sanjeev are we doing enough this is a very important point because if the next decade is actually going to decide our destiny uh with median age of 29 uh for indians then i think this is the most important point that he's making what is your response to that i totally agree with it we need a system if if you want a creative destruction based system then we do need to have a system where you allow for continuous failure for those who do not adjust and if they are not flexible they die so that is a that is definitely a very important part of how we think about it also so remember that this government one of the most important reforms it did and put a lot of effort into it was the insolvency and bankruptcy code and uh you know very different from the earlier approach of using a bifr as a warehouse to keep zombie companies alive um in the past that was sort of the correct way to keep sort of jobs alive and assets alike far from it the new approach which is using the insolvency in bankruptcy code take companies through people want to buy it great otherwise liquidate them this actually is a much better thing to do and we need to be willing to do this also at every level so for example while we have done this now for the big companies we need to take this down for example to the lower level where we need to allow very poor people who owe tiny amounts of money a fresh start by declaring bankruptcy now the bankruptcy code incidentally has this provision it hasn't been actualized but i think we now need one of the things we now need to do is to actualize the debt recovery process at the bottom to allow poor people to declare themselves bankrupt now there is obvious misuse in it but then an aadhaar based system can easily limit it but to give people a fresh start after failure at every level of society not just the big industry guys but also the poorest person in the system is a very important part of the process of allowing continuous creative destruction at every level of society so i totally agree with this and of course privatization is also a part of that process um many of these companies were private companies we nationalized them for variety of reasons at a point in time good or bad but i think now the time has come that other than in those areas which we consider strategic and we have listed those out that the private sector these public companies should go out and compete with the private and and and be out there and go through the same creative destruction process it makes the system by the way overall far more efficient just to give an example since we're comparing america with india as it happens to be america for all it allowing all this creative destruction to happen in technology does not allow it to happen in the airlines industry right in india we do as a result of which our airlines are just radically better and yet in the last 20 30 years you know think of the number of indian airlines that have gone bust modi luft jet kingfisher etc and yet there's no doubt that the new airlines like vistara have come and taken that space and our airlines are just vastly superior i mean vistara has no equivalent in the u.s i mean the best u.s airlines is just poor is the best word i can use for it this this is this this is uh wonderful because we were playing i mean the three industries uh that were have been helped in america by the government propped up artificially were initially the car industry then the banking industry and now the airline industry or since september 11 airline now second time and you realize that the three industries that are the the the where that is the worst we make the worst cars or made the worst cars for a long time we have the worst i am given a choice i'd rather write than any non-us so so look at the structure of what the exception in america look what happened to them right now this brings me i think to the most important point that you need to make and tell our audience in india are we looking at a solid serious sustainable post covered boom especially in india and across the world i mean it depends on on what happens to the covet part two okay so but i think that uh the the that kovid has given a lot of countries uh i mean i cannot talk specifically for india in general a lot of companies some kind of impetus you know what happened after i don't know if if you're aware what happened after 1945 you had a boom okay some led by investment marshall plan some just like you know boom because uh people start overspending getting out of their house and spending on things okay so uh likewise it's gonna have worldwide uh a worldwide phenomenon if of course conditional on dealing with govit but and and by the story is not over so i don't want to be caught making an unconditional statement but a conditional one conditional on finishing uh being done with scotland but one good thing i would say about uh surviving kovit as you know as well is that now we've learned how to deal the next pandemic so the next pandemic is not going to be as costly and and would be aware of you know its existence what to do early to to kill it and in the egg early on now economically i mean i'm i can't really i'm not an expert on india i'm not an expert on economics i'm a risk person and and of course a mathematical modeler and for complement non-linear systems but but i would say that um the vibes you get from india are are great and then think about it you have learned the pharmaceutical industry in india that can supply the rest of the world and and and india as well with things so you may have you may have some kind of uh uh i would say uh positive shocks for a bunch of industries you know that will to grow and then also as i was saying that the uh um you may have less of a brain drain i mean you guys have been supplying now practically little by little every head of uh us successful technology company was an indian uh ceo at some point gotta stop and keep him in india and the structure of the new world and and as as our friend sanjivo was was saying it's not the reiteration of an old world new world you can hire employees microsoft can hire employees overseas just like you could be a remote in seattle okay working for a company in san francisco you could be remote in uh bangalore or any place in india working for a company in the u.s and and the big mistake donald trump made is by restricting visas he thought he was increasing domestic employment no that's a silly move by restricting visas he encouraged us companies now we know how to work remote so physical presence are no longer that important and so you you're you're gonna be i mean you will depend less on demand from i mean you'll depend of course uh on demand from from overseas but but less uh than demand domestic demand but this would be uh an icing on a cake you see having us companies hire indians who live in india and stay in india and perhaps later on may start their own companies in india so so the the solution you know may come from from from overseas from thanks to zoom and the idea the the the side effect of covet right i mean coven has a lot of bad side effects physically but it has one positive side effect is i'm sitting in new york now talking to you in delhi without having to encourage that lag and and and a lot of companies have employees in india today working for a u.s company because we didn't know before nasim i would say to that is you are missing out on indian food which you love you know my passion for indian food and and and with all respect for indian restaurants in new york you know not the same the yogurt will never they can replicate probably the chicken but the yogurt will never ever be the same for the right time that's true we'll try and have you here as soon as possible sanji we want to add to what he just mentioned well i'm i mean he's right in many things uh on this in this in that obviously there are some things in which we can predict the dynamics to some extent i mean one obvious one is that at least in the technology i have frankly never understood or not never at least certainly in recent times it makes no sense at all because if you don't need to go to your office to get work done why do you need to go to america right so i think this is important because it does mean that we can if we get our policies right be able to compete with the best in the world by staying here and so this requires us to obviously deregulate have sensible tax rates tax policies and so on but it does mean that the technology has now reached a stage that for certain industries we are now super competitive we have to get out there and take advantage of it now whether or not the world itself will go through a boom i don't know because i am well i look in it as complete uncertainty so in that sense i am only playing for simply being as flexible and take advantage of the opportunities as we can assuming that the the way the world will turn out to be could be very you know we don't know whether we are after the first world war or after the second world war so even after the first world war you did get a decade of boom you know the roaring 20s but it did end badly so i continue to be a little more comfort uncomfortable with where the world may end up because i genuinely believe there's no predetermined path but i do think that if we pay attention and and and are flexible and i keep saying that flexibility will always be strength in the medium term in a complex uncertain world i think if we are flexible keep our eyes on the ball and are willing to change policy and if we maintain social cohesion and keep coming back to social uh capital as an important thing then we are in we are in a great place with that one thing that the what you say is a bonus you get from having uh people work in india for a u.s technology company is the transfer of entrepreneurial spirit and these people will start companies in india you see the the the probably higher people in the u.s but the idea of the world becoming flatter thanks to uh zoom as we're witnessing uh now is it is to be taken seriously you really gotta think of this logical consequence right up i think one word which you mentioned uh which sort of alarmed me and that's why let me ask you straight what is your assessment uh from social point of view from economic point of view policy point of view or even from black swan event point of view is worst behind us at this point in time i mean i mean i don't know i don't know we have a mechanism to deal with uh with uh with the disease okay with this disease we have a mechanism to deal with future disease we have uh people who are unwise in the beginning are becoming wise now like sweden was unwise compared to norway now they're becoming wise you see so uh hopefully so i'm sort of like guardedly optimistic that that uh that we know how to deal even if covet gets worse then we know how to deal with it even brazil you know that that nothing brazil is becoming wiser okay so so so so they are have they are signs you know that of maturity in the world that allows us to deal with these uh contingencies a little better but but but we have to be careful you see that's what i'm saying you have to be careful because we there's a high amount of unpredictability mutations can happen but we have to be careful and i mean on the positive side of course these vaccines can be adapted to the very quickly to the new strains but i will stay careful plus there's one thing that worries me is a segment of the population that is in in worse ignorance than than than the middle uh middle ages like people who refuse vaccine not understanding that kovid the cove vaccines are very risky maybe right but but covet we know has particularly for young people long-term risks that are very serious they've got to take seriously so in a trade-off and then you have segments and press thanks to twitter thanks for social media you have a spread of ignorance that makes me uh you know a little uh more cautious in my assessments of the future right okay let me uh put this to sanji now sanji what is your assessment from indian economy point of view from indian point of view because like nassim mentioned we know better uh how to deal with this pandemic or how to deal with the disease and we are better prepared we have better infrastructure in indian context are you confident that the worst is behind us well in the specific case of second wave but remember we are in a completely different place than where we were a year ago we have a much much better idea of what this disease does uh it turns out it's not as dangerous as maybe the worst case uh forecasts were it is still dangerous but we know in what way to which demographic group we know for example you need to keep track of people's oxygen levels i had never heard of an oxymeter before now everybody in this room will have an idea what an oxymeter is so we have learned to deal with it we now have vaccines and as nasa pointed out these vaccines specifically may not be able to deal with every strain but they can be updated to each strain so again we have some tools in place we have protocols in place so i think as far as specifically this covered episode is concerned we can probably now get away with localized lockdowns and and without having to do something too drastic anymore so that's the good news but as far as the if i'm looking very long term will there be another shock like this and will be again have human beings fail to respond to it i'm quite certain this will happen after all pandemics had happened many times in the past and we still took so long to be able to do things that maybe our ancestors would have considered routine and so i am not so confident that just because we've learned to how to deal with this particular shock we will be you know necessarily better equipped to deal with future shocks unless we begin to change our mindsets itself and you know stop having this you know equilibrium based efficiency model of the world in our heads you know this this is an extremely damaging thing whether you know the the the difference between those who are newest is not that they don't believe in this great equity they just disagree how to reach there one of them thinks that the market will take them to this optimal equilibrium and the socialists think that wise bureaucrats in the planning commission will take them to the optimal equilibrium but they are both believers in the optimal equilibrium the point about complexity theory is that we by we are very suspicious that there is any such thing and the whole world is naturally kind of groping its way into the future and therefore we we prefer this iterative process creative destruction based process um in order to make our way into the future therefore huge premium to the ability to adapt right i think the key takeaway from this session is that we have to be prepared the next catastrophe will come if not pandemic than something else but we need to be ready for that and uh keep working towards probably a better future at least in indian context this decade matters the most to us nasim thank you so much nasim thank you so much for joining us on this session uh sanjeev thank you and uh hope to see you soon in person nassim thank you so much first it'll be my 12th visit to india in a decade and a half and and anytime i'm invited i board the plane absolutely thank you thank you sanji thanks thank you naseem thank you

Channel: ET NOW

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Keywords: Nassim Nicholas Taleb, Nassim Nicholas Taleb India Economic Conclave, Nassim Nicholas Taleb IEC 2021, Sanjeev Sanyal Economic Advisor, Sanjeev Sanyal India Economic Conclave, Sanjeev Sanyal IEC 2021, India Economic Conclave, India Economic Conclave 2021, IED Day 1, India Economic Conclave ET NOW, ET NOW, Times Network, India Economic Conclave Day 1, India Economic Conclave Day 1 2021, IEC, IEC 2021

Id: -fuUEESLKwM

Length: 58min 49sec (3529 seconds)

Published: Thu Mar 25 2021