Nassim Nicholas Taleb speaks on "How India Can Achieve Anti-fragile Growth" | IEC 2019

good evening so we at times network in planning our products understand our consumers study our consumers the so called decision-making Indians and we figured that Indians for a long time post-independence right up to the 90s where what we call passive optimists passive optimists who were people who believed that things are going to be good and they're not going to do much about it but things will get good by them by by itself I mean the action part was a little missing and then in the 90s with the balance of payment crisis I am eff conditions we got pushed out of our socialistic protectionist ik cocoon and got pushed into the world of competition into the real world of uncertainty posed that I think it is desire for a better life which has sort of kept that drive on and we have come a long way from being passive optimists to something else but I think somewhere on the way a lot of us still remain caught between becoming active players many of us I think are still in the stage of demanding crybabies it's always about the government it's always about policy it's always about waiting for the budget it's as if you know you're waiting for the referee to set the game forgetting that it's the players us who need to sort of go out there and do things to win the match and that I think is what we felt that when we are looking at setting an agenda for the nation to take us to the next level besides and beyond policy and government and other people and the leaders and parents who will do something for us what do we as people as citizens need to do and that's where we felt that we needed to bring somebody who is an expert on uncertainty probably the world's foremost on risk Nassim Taleb Nassim has you know has has come everything in in a reverse order he started his life as a trader did a great job with risk-taking options trading at the age of 44 he retired and then in a meanwhile he also did a PhD and he got into more and more into academics he started writing and of course his his essays and books are you know our major bestsellers translated into over 40 languages and then from writing general essays he started going technical and followed it up with 75 plus mathematical technical papers I was quite surprised to hear that yesterday and he's basically somebody who's is of course a renowned professor but he's he refuses to be you know typecast as an expert or an intellectual who's just giving you advice from from from theory than from practice over to you sir I'm gonna be talking about skin in the game and how a few things the mainly that education sort of distract you from growth how formal education that is how nothing coming from the state really in general work maybe in India does but I'm gonna be talking in general maybe it doesn't work and things like that so let me start with my background so I started as a trader doing that kind of crazy stuff and then later on became a professor okay so I didn't I did it and in that sequence and typically when I do it in the other sequence you get different results sort of like if you wash your shirt then iron it you get different results from one if you iron your shirt then wash it later okay so it's the same so it's best defendant so you view the world differently and you're very skeptical of academia in general some things work some things don't but you know which one you know exactly what you want what you need what your needs are and and which way you should be heading so the yeah so I'm gonna be talking about why the world is different for us practitioner and what damage can come from the the top-down solutions usually brought about by people who don't have what I call skin in the game and I'll define a few minutes so let's first talk about the expert crisis and I explain to your skin in the game in terms of that crisis a friend of mine I when I retired from training as you can see in the slides and in the back the you know to become this I didn't decide to become a professor to become a professor I just did it because I was incapable of doing anything else and my wife wanted me out of the house alright so we came professor or this so a friend of mine in the same situation it was a former partner at Goldman Sachs same age group same situation he decided to lose his money very slowly in the restaurant business in New York so and what I learned from him is the following that the there are two ways to judge a restaurant one of them is your plastic credit card the other one is awards and the two are two different things they are awards in the restaurant business followed by a gala dinner raaah now in December you know when when people gain weight you know that period so and during the year restaurants are granted prizes the best tandoori in town the best tandoori uptown the best sushi you soft music the best you know French was classically mean all kind of categories and my friend noticed that very few restaurants made it to the gala dinner there are often out of business before so what's happening there what happened there that if you're judged by the market okay if you're subjected to evolutionary pressures okay you have subjected to different dynamics then if you're judged by peers which is why we have a an expert problem that's now emerging being judged by peers anything judged by peers is eventually gonna rot so when we look at the the plumber for example when you look at the plumber how our plumber judged there's a committee of you know of plumbers at a year-end gives them you know bonus buy recommendation letters and stuff like that like academics know who judges plumber you so you know very quickly if a plumber is incompetent who judges dentists same way if you walk into a dentist office and come out without teeth you've got problems then you realize there's no competence so some fields have an expert problem okay and some fields don't because when you judge an economist you have no idea if what they know is relevant because they're not judged by reality they don't have what I call skin in the game if they're wrong they survive policymakers in Washington they can cause a war in Iraq and if they're wrong thing 100,000 people yet survive that doesn't work it doesn't work that way it was plumbers it doesn't work that way of the restaurant owners it doesn't work that way with you you have PNL therefore you are subjected to evolutionary pressure you have skin in the game so what has happened recently is that people suddenly started getting fed up with those without skin in the game and said Anthony what you see behind is the mind of an economist on a clear day because they don't have a routine pressure so they're gonna look for complicated stuff so they put complicated stuff on complicated stuff and talks and words on top of words and math and bad math over you know and then they go in circles so it becomes a circular loop of experts judging one another without any survival there's no P&L if there's no P&L it doesn't count that's what you learn as a trader you see but it doesn't mean that all economists are bad a lot of economists have traded and successful successfully and there's stuff like that but I'm saying that their fields that are rotten even although the people in them are not so now this will bring us to education as some unpleasant you know consecrated if they were good traders I think they wouldn't go and become economists also in economists would someone who really is an expert that tell me what didn't happen so this is sort of like the background that can explain what has happened it's not that both brexit with other things with what we call the general rebellion against experts that people you know the people in you okay they love Europe but Europe and Brussels are not the same thing governments and bureaucrats are not the same thing so you start having an environment dominated by bureaucrats you know you have the failure of these evolutionary pressures so sorry is there a way I can see my slides on this technical but the so but it's a technical difficulties always very good for someone who deals with errors and now certainty okay so the so that breaks it yes so here we're seeing what happened was breaks it first of all these people are boring to start with okay so they don't vote people don't like to vote for people who are boring they're not subjected to evolutionary pressures and what's worse slides are disappearing all the time yeah on this slide the and so we don't see evolutionary pressure and people have detected it so let's go back a little bit in history at no time in history have more people been able to rise to prominence without being risk takers at no point in history whether economic or anything why because governments now represent fifty to seventy percent of GDP in the Western world before the represented five to ten percent of GDP we never had what we have today is that a whole class of people not accountable because if they make a mistake they still survive but people detect it in history arose when you took more risk than others Julius Caesar first in battle two-thirds of Roman emperors died a violent death and the remaining one-third could have been poisoning you see same thing with economic risk taking so this is the background we're facing today is that we have so many people who don't get it in these bureaucrats that the crowd respects risk takers just like when you see this picture I took in Jaipur two years ago when I was there the the peacock the peacock boasts his wrists aching by showing the tail that's a handicap just to tell you look in spite of all of that I can survive so this is the environment in which we live today and let's see how it led to the election of Trump so I was watching was I was writing skin in the game so just to explain skin in the game is part of the collection called insert oh the five volumes and I was writing the last volume skin in the game watching television with a sound off please keep my slides on this alright so and suddenly it hit me looking at this picture the debate for the primary Republican primary it hit me that Donald Trump was gonna win but I didn't know why there's something about him that was real why was he real ah the New York time had been on a smear campaign publishing that the fellow lost a billion dollars of his own money now guess what to lose a billion dollars of your own money okay it means you have skin in the game and if you know soldiers those wounded and more what do they do they show their scar okay because there's nothing wrong with failure and risk-taking in the eyes of the crowd if it's your own money okay for a New York time person or an intellectual or it's a failure because intellectuals don't know how to handle failure they don't understand that life is managing failures but in the real world failure is part of and parcel of the process and it made him real he probably was a bad stur but he was real compared to the other people who or not and people detected that so people are starting to detect sir something wrong in an environment dominated by bureaucrats so therefore when you think about it we have now a lot of virtual signaling hey you know what save the environment don't wash your sheets is for the hotel to save money all right save the environment do this do this go join an NGO say no no no no no virtue is not their virtue is when you take risk for the sake of the collective because just as a soul a fallen soldier is not dishonored by the fact that she or he got hurt okay an entrepreneur should not be dishonored by the fact that she or he failed and matter of fact if you need something is a culture of success and a culture of risk-taking okay don't be afraid of errors now we have a lot of small little errors we survived them okay we're gonna be better off and that's how life goes okay when bureaucrats and people come in from the top they don't get it why because the education system does not like failure so they instill in people very bad habits so that was my first point about skin in a game as a filter if you don't have that filter if you don't have the kind of punishment as a filter in society society cannot function and even though people may fail they still should need to consider it as a badge of honor which is where when people start talking to me about gross and stuff like that I look at them si no you don't get it all these micro things are just like background furniture there's one rule that will tell you whether you're gonna grow or not and we're gonna see it is you have enough risk-taker tinkering because you probe uncertainty not by studies and theory as we're gonna see next you probe our certainty by trial and error and tinkering and let's see how I think but you know a system definitely in India because you know I have studied and grown up and made a career in India and I think in many other parts that incentivizes children to sort of study a particular type of get a degree and then go into a job and then be part of a bureaucracy and fill in the slots pick the things that you're supposed to do and go home get a salary and that's the general structure of most of at least what we know here in India and I'm sure that's the way exert has been and I somehow will it sort of incentivize because I'm I'm more interested in getting a job so we're gonna now see how when we talk about the UK Britta or whatever you want to call it Great Britain or England stuff like that when it was England how did they pull out of poverty they didn't pull out of poverty thanks to Whitehall or policymaking they pulled out of poverty thanks to adventures and risk-taking okay and we're going to see how you probe uncertainty yeah the Whitehall culture is what probably sort of led to the Indian civil services and that's the most coveted job today I mean people want that or something like that within the private sector even corporate jobs are not about you know risk-taking jobs I mean at least bulk of people want jobs which are to sort of just give them a job exactly it came after and and you're gonna see a very easy statistic Korea was poor and had low level of education then Korea got rich and then education went up Switzerland when it was the richest country in Europe and probably in the world had the lowest level of college graduates of Europe now that's that's that's against what we believe okay but doesn't mean they don't have education we're gonna see the type of education they had the technique on which I'm gonna next let's see how you prove uncertainty how bad we are to probe uncertainty with intellect but we're lot better with our hand by trial and error you recognize this object behind me it's not a bagel it's a wheel it's about six thousand years old why on earth did it take so long to get this okay to get the wheel implemented on a suitcase I'm old enough okay and I'm remember my friend Mark Mobius or my friend or we've met a few times you remember I'm sure the days were going to a private plane you had to lift the luggage because there's no such contraption no I remember long walks in JFK Airport because it was very long right long Watts lived in suitcases because I was too cheap to spend a dollar when I was a student on trolley ok so why did it take so long ok so now you would think it's an anecdote maybe it's that application that something could stare at us for six thousand years and the application comes later right because remember the Sumerians 2400 BC had the wheel and the Egyptian build the pyramids was the wheel so these people have built the pyramids in Mexico practically all of Latin America or was loud Latin America was South America and Central America had no wheels supposedly so they were building this corn maze they over feed people corn maze and someone whooping them that's it that was you know the way they built they didn't have the wheels to you know did they really not have the wheel like us it was staring at them this is a Mexican center of the central Mexican Museum or something like that toys was real animal they knew about the wheel but they could use it for children's toys and never hit them they could use it you know to help build the permit okay so we're not good with internets thinking to be staring at us for a long time we're gonna look believe me it's gonna get worse next ten minutes is gonna get a lot worse or and then probably will get better all right so the so let me give you one one thing to make you even is make it even worse in in in practically all my books I talk about books and finance that are non Charlotte anak now Charlotte anak means you know it doesn't tell you how to make money it tells you how not to lose money that's what I call via negativa so how you can tell a charlatan a good chess player tells you how not to lose that's what they do try not to lose right and and a good trader try not to lose okay and that's it so they don't know how to make money anyway so it's called what I learned losing a million dollars and needless to say the book went out of print I lobbied to have it reprinted okay and it went out of print again all right and I bought a lot of stock okay so so the fellow was giving his life story I was a bit trader as you can see it probably can you know I had hair at a time though but I was a bit and then there was actually in the same pit I was I was training the fellow lost a million dollars trading something called green lumber okay so he knew everything about green lumber he had every report on lumber he knew everything about fabrication of lumber he knew everything about weather systems he knew everything about the man GDP this this econometric model thing about we lumber yet he lost all his money trading it in the pit there was a fellow and he was famous because he would get divorced every four years and lose half his money every time okay but he made a lot of money trading green lumber and his name I think was a Jerry Siegel or something like that famous in the pit of Chicago one day the narrator discovered that Jerry Siegel who made his fortune in lumber didn't know that green lumber wood lumber that was freshly cut he thought that was painted green now I could make so much money steadily through the years in spite of divorces they'd be the richest person and a merc ah he knew a lot of stuff about green lumber but not the stuff you think you need to know from the outside and that's central about skin in the game in other words there is a lot of knowledge about but there's a lot of dollars you get from the inside as a practitioner that you will not see from the outside sitting on the university writing papers and reading papers and transmitting your knowledge via papers versus knowledge transmitted via survival now that will take us into one more dimension I thought it's going to get a little worse skin in the game is when you're subjected to evolutionary pressures ok so let's say that you I'm gonna quiz you you go to a hospital and you need to have there's a great surgery brain surgery you do it will enhance your sense of humor not that you need it but let's say that you decide to go do it you go you interview doctors and a hospital it's a very delicate operation in your brain you have the choice between two doctors the first doctor you're in New York the first doctor looks like a butcher thick fingers you are in his office you don't see the diploma when you don't see the diploma of a doctor it means the fellow went and turned to some undergraduate school you never heard about okay otherwise it wouldn't put it ok and of course thick fingers speaks with a thick New York accent from Brooklyn even worse New Jersey may be all right ok and could have been like out of a soprano all right and then ok in the same rank and the hospital there is another person you would hire for Bollywood if you want to represent the doctor Harvard agrees that they don't hide like you know so on however alumni think they would you walk in you know it's Harvard around dressed impeccably silver rimmed glasses speaks upper-class English and now you have to choose between these two surgeons for your brain operation who would you pick the second one the doctor the doctor who looks like a doctor that's a problem on their skin in the game and you know the problem if you ask bureaucrats to to pick someone they put the second one but let's think about it if you don't look the part you got to be very very good to survive okay because there is skin in the game in that profession you see you you you mate you have one error as a brain surgeon guess what your history maybe not one err maybe two errors but you know at the second or third one your history you you you you go become real estate investor or something alright so or you economists alright so so the yeah so you realize that under skin in the game when there's a filter of reality people don't have to look the part they gotta be real and as a matter of fact I will tell you if someone looks apart it is suspicious for me very suspicious okay so when I see a doctor who looks like a butcher to me it's comforting to say in spite of all the prejudice you have to overcome in your life okay so there is this current game and Bureau can never pick that now let's translate that into projects from a good business plan if it looks good guess what don't invest in it you see it has to be you know if something natural you see because people who are good at something they're not good at marketing themselves and packaging and and giving you words like that so this is and here is the main drawback of bureaucracies that there's no feedback from reality no P&L you're gonna go to the one who looks like a doctor who's got ability skill I seem but you're basically saying that you know you don't want kids to go to school beyond a point to colleges and you know get you know become the role that they need to play and in a country like India where we are sort of short of resources are you saying that college education may not really be the you know that that whole I mean college education are we gonna see now teacher seems about habits I know we know very well from from lawyers the the big lawyers that those who go to Harvard they go to government the big rain makers in New York they went to law school you never heard of okay see so I'm not saying that education is bad I'm saying that education is one component overblown by the educational system and overblown by things experienced there's so many element and this is what I'm saying it's not particularly no Hayek said it in a different format some Peter said it in a different format a lot of people said in a different format but the whole idea is if I observe reality and when I'm saying it studies from the World Bank showing that level of education in the country does not cause growth in GDP in Egypt that causes the reverse okay what causes education is GDP now of course we're gonna now look at which education is important what made Switzerland Switzerland what made the UK the UK what makes China China yeah there we go what makes China China all right what makes these countries grow next step is what I call the philosopher philosophic philosopher's stone is what turns what lead into gold is exactly the opposite of what Wall Street you give them gold they give you lead all right now here's a reverse okay so let's talk about the Philosopher's Stone okay and let's see the modes of the way two ways we can probe reality and approach things okay I was an option trader so this links to my option trading very simply if I have an option I have more upside than downside I don't have to understand the environment okay because on balance I'll make money so for example when I start investing in gold recently I wasn't particularly interested in world I started looking someone showed me gold stocks and some gold stocks were such that if gold rises their value would go up more then it would go down if gold goes down so the symmetry there's an asymmetry where you make more if you're right then you lose if you're wrong this is called trial and error is one form of asymmetry so optionality I call optionality so let's let's see where what businesses for example have made a lot of money not knowing what's going on Pharma do you think Pharma I got rich because they understood the biology so much okay they're eight hundred thousand authorized drugs in history there are about 100 thousand on the market today of these they're less than 200 drugs that are used today for what they're designed for okay what happened is that you have optionality when you develop a drug we take let's say I've never someone just informed me of drug called viagra but you know what was it was it designed that they have a committee a bureaucrat the signing already gonna do next enhance the lives of people who go into retirement no what happened it was simply an over if a blood pressure medicine gone wrong okay so you have a side effect of your mistakes okay because your mistakes can either harm your little or make you a lot of money okay so that is a business that knows how to probe uncertainty and effectively take aspirin it started as a fever reducer then someone discovered pain killing properties okay that's a bonus and today is used for neither so let me now show the the Philosopher's Stone for me is this idea that was trial and error you can make gold out of environment you don't understand with the following thought experiment we hire two buses the first bus goes to universities around Mumbai and rounds up every chemist you can find we'll just hijack on I mean legally right so so we'll bring them here to the hotel the chemists the second bus goes around Mumbai outside restaurants and the minute you see people who are overweight and well dressed I think I qualify all right you hijack them and bring them here so we have two groups of people people who are overweight and well-dressed but notnot understand chemistry and people who know chemistry inside out the professors of chemistry so fifty by fifty we decide what's your favorite dish sorry Bertie Nvidia okay we take a biryani and we say we're gonna now improve on the recipe for biryani so you give the chemist the recipe so the chemists going to our equations for it to improve on a recipe for very Ani the other people what do they do they randomly add something this is uncertainty if it tastes good you rush it up okay yeah maybe visibly they're good at tasting they're overweight like me all right and they like restaurants all right so and if it doesn't taste better we have nothing to lose you give the stuff to the chemist who they won't know better because they're intellectuals right so and then who at the end will win the competition of improving on Brioni the chemists or the thinkers the thinkers a trial and error okay now if we look at history the Industrial Revolution did not start with Whitehall it started with thinkers not only it started with thinkers but we had the recipe just like the wheel we had the recipe for the steam engine from hero of Alexandria lying down for a couple of thousand years that nobody put two and two together you had adventures completely uneducated who did it okay likewise Pharma trial-and-error no of course they dress it up later so this is what I call lecturing birds how to fly education has a lot of good but a lot of it is lecturing burns hard to fly by making you believe that all these results come from education rather than they come from a culture of tinkering they built in culture in society for tinkering and trial and error okay how do you foster that how do you sort of get to a place and I think for us in India the favorite example is next door in China they were like us and now they are a lot ahead of us so what what changed there one their education to their top-down system of government you know decentralized control there was a very interesting China is a long story okay there's a very interesting story of the studies of China by a fellow called Joseph Needham who studied the technology Chinese technology like 13 volume book or something like that and and he's the first person to study China and he detected one thing with the Chinese he said they discovered all these technologies before they had the scholars you know the the Imperial Palace where they had these scholars mandarins then the minute they had the scholars correspondent with the time Europe discovered tinkering and trial and error and kept going with it what we call tech neighbors is a system a you need both you need thick nay and you needed mister me the problem is any country that wants to grow nice nickname more than epistemic techni is with the thing curring you know the cuisine the the recipes that are built in society hands on that are transmitted so apprenticeship is a german miracle what's a german miracle is it like university based 50% of german goes for mentorship switzerland still it's a system where you have someone for three years as an apprentice in anything even just to change the light bulb they have apprenticeship for that you see italy all these workshops all these countries so this is where we're gonna go and critique university education you need to train people young with a good high schools but do not push people into university education i went back to university education to get a doctorate after a career in training it was so much easier you see it was easier I knew exactly what I want I knew precisely what I wanted okay and although it's mathematical it was you know it was still better for me that way then go study and then go find myself unemployed or driving an uber with a PhD in sociology okay you want the exact reverse because not only that but PhD in sociology not only is what we call disguise unemployment driving an uber but guess what he's not gonna be the best driver you see so this is where we're gross comes from a culture of tinkering so it's not just my idea about 15 or 20 researchers are involved in that okay and I have a slide here to show you that basically what was the first slide here on the left is because you have a free option from reality if I you know try to discover something via knowledge versus if I try to discover something by incurring because you have the option ality you do so much better by thinking you can do computer simulation and of course we have professionals that are driven by tinkering today like computer science and look how well your IT is doing it's not doing wild because universities Steve Jobs okay then go to university then finish University Mark Zuckerberg then finish University the guy from Microsoft you know versus the same thing and so and and the other guy called Larry over there so only a lot of these guys or those who want University and finish and stuff so it is not so what happened is that the problem we have an illusion that professors want you to believe that so and I went through the history of architecture for example a lot of these heuristics were present since the Romans in the great architectural you know format without university knowledge the minute they started training architects teaching and geometry which really didn't happen till late they had built cathedrals without geometry they had their own tricks okay the minute they learned geometry then they gave us the ugliest architecture from a Soviets that I mean you can see everything that was built by after after geometry and what was before use of geometry we've known about euclid for twenty three hundred years nobody cared about it the Romans found it shameful to study in geometry they said is for the Greeks for for those who wanna you know just sit down and talk we build things and look at stuff built with technique the I visited in France the bridge built by the Roman 2,000 years ago the Ponte god I bet you nobody today can build a bridge of that sophistication it's still standing show me a bridge in New York that we don't have to replace every 35 40 years what do you think about the Indian cultural bias against this whole thing technique because you know according to the four classes the Warner system we put the Brahmins on top and the sudras at the bottom the people who thinker are the sudras and the people who are professors and teachers and pundits are the Brahmins what do you think about that okay so when I studied societies to look at you remember in the beginning I said were the first society that doesn't have its first acre at the top actually I was lying right there are two societies that didn't have as risk takers at the top the first one was the French Revolution they granted something called noblesse to hope because to be a nobleman you had to be fighter and protect people and still in UK in the Falklands War they had Prince Giroux take more risks they force them to take more risk than other people say you're a lawyer you got to take more risk that was a fact people accepted lower class system provided the federal took more risk okay so the first exception is right before the French Revolution they had been granting something called noblesse dahab which means that novelty for Magistrate's people who didn't get involved in war before evolution and that people start writing they said he's not better than me okay because he doesn't take more risk and the second exception is India I could not find any other one where people didn't have the highest rank now for the Arab there's something very interesting for the Arabs okay I'm Christian Lebanese so I'm amis I know Anna you know I'm not you know proposing Sharia but but we started when I was study Taria I noticed for the Arabs it is shameful to make money without taking risk not only and the highest rank was to the merchants the highest status and the Silk Road they opened the Silk Road does this is the dimensions they feed you they take risk for you so not only it's a warrior that was respected but also the risk the economic risk taker to the point that it still today Sharia bans you from making money without taking risk you see you cannot be rich without taking risk and people detected in Switzerland they wanted to rebel against the CEO who really doesn't take risk the CEO making a lot more money than the employees never against entrepreneurs because they know that entrepreneur takes risks deserves to make as much as she or he wants to make the CEO know they're just rising in the corporation so maybe you should cap their earning and they had a referendum that failed but nevertheless they had a referendum so comes to India I'm not an expert on India all right it's my ninth visit I know I'm much more now knowledgeable about food and stuff like that about India but there's one thing I tell you okay if you want to grow forget about these bureaucratic measures don't go ask the government to make you grow ask people to make risk static risk make it respectable to take risk make it a badge of honor to fail like in Silicon Valley we have the highest bankruptcy rate in the world in America it's a most vile and people fail seven times they hate you not feel seven times you twice yours you're new comer okay and the second highest bankruptcy rate and we have in states as a restaurant business and so far when I've never seen a restaurant crisis okay what kind of crisis but now the banking crisis and now the restaurant crisis I think there's a time button given their mayor but I want to sort of ask you that one question that we spoke about that is of very very great importance inside India it's a special subject called reservation government jobs and seats in government colleges in higher education we have a system of reservation by castes our social classes and almost 50% of a lot of these result by quota what do you think about that because how does that okay part of anti fragile this is part of anti fragile this discussion and part as an anti fragile I discussed the notion of overcompensation by showing for example that countries that got rich Singapore our country whenever you look at countries in a group in a certain cultural group okay you want to find the richest one find the one that has no resources okay like do PI's don't you know a much better in Saudi Arabia all right I'm sure you know nobody goes Saudi Arabia for pleasure Dubai and Dubai is the only place that does have oil right so all that cluster Singapore okay you look at the Chinese speaking world Singapore has no resources where's the one has no resources and I went back that finishes absence an overcompensation so I will not talk about India because of my lack of qualification and also political understanding but I'll talk about United States which is similar think where we have protected minorities if you have a minority status in America you have to be hired the worst thing that can happen to you is to be classified as minority why because true you're going to get a job but guess what if again it's a story of showing the surgeon maybe not in surgery because it surgery doesn't have these protection but when you see a minority if you know that's easy it's easier for her or him to get that job because she or he is a minority you're never gonna patronize that person so the worst thing you could do is protect people because it's a curse and you know from perception and the second point is it prevents overcompensation they got away to help but the last thing you need is to give a handicap in that game to give people that handicap you gotta find some other ways you see and in America if you look at people that thrived there could have been classified as minorities but they chose not to or didn't want to and they you do very well this is over compensation it's the same mechanism by which if you want to remember my lecture if I'm gonna speak if I force you to make an effort to understand me guess what you remember my better as the lecture so because of our conversation just like when I work in a cafe I concentrate better because the background noise over compensation so that works in many fields that's the topic of anti fragile but I'm glad you asked me about that subject because you're really harming people by giving them that kind of cosmetic satis so it got to be done something gotta be done definitely but but there gotta be other routes I think mahir if I can sort of throw the floor open for a couple of questions yeah okay there's somebody there political Islam as a risk for the economy global economy political Islam I think okay I okay so so I'm gonna say something because I don't go to Saudi Arabia and I traveled here without going via Dubai not without a reason is i I discovered one very interesting thing Tripoli in Lebanon used to drink because it was Sufi okay and then suddenly it became very religious I don't know if you've seen what happened in Lebanon was a riot I would rise are different from Iranian riots because I rights are more like a nightclub dancing all right where people do they do y'all got no more English stuff so Tripoli as the bastion of of Salafis in Lebanon they had disc jockeys and people dancing so you know you're entitled to ask what has happened they said we were bone dry another penny came from Saudi Arabia over the past 18 months and all it took is 18 months to transform people from Salafis into separate rock music and separation of church and state they're still committed all it took is 18 months in Tripoli can you believe it so so basically I wrote a lot about it was minority rule I believe that maybe 1% of that population is has this bent and and and so it doesn't take much sort of like when you asked me about gross it doesn't take much to have gross all you have to do is in cursors thinking forget about the rest the rest or economists is going to give you models and all that nonsense and you know you know to employ economists is good probably for employment but but the it's always small tricks and here's a very simple trick was NBS came and told the Wahabis okay you guys you know what you got nothing stopped so I think makes me a lot more positive about the future of the region it's very the fellow was very excited he's from Tripoli and he says look at this dancing 18 months you have emphasized a lot on this speaking so my daughter has just entered into college how do i inculcate risk-taking in in in a young girl she's 18 okay so so what I said in anti fragile and as a reaction basically to answer a question like that one is what should I do with my life when a lot of people who are 18 sometimes they want to help the world they say well there's poverty in the world my parents are rich were privileged this is this that let me help the world so they go into an NGO and I tell them listen if you want to help yourself you want to help the world you want to help your parents you want to help do one thing start a business we're tired of people who are shooting for salaries start a business particularly if your parents are rich and you can fail you must start a business so that is that's what I would say sorry what I mean I discovered one thing as a shock because I I came to I went to America about 40 years ago and I discovered children was one thing about I came from a court attrition family in Lebanon and if I'm seven or eight years old having a lemonade stand my grandmother would have you know heart attack see me all right they said you'll your status is selling lemonade by the street okay we go to America and the sort of rite of passage of kids learned at age eight to sell lemonade to have a lemonade stand but then again that's America that's why the anglo-saxon world overcame that inhibition with the Industrial Revolution so this is all you need to do with teach people to start a business or at age eight lemonade stand I mean they end up with two $3 gain and they buy themselves whatever they want so I was shot again to see how prevalent it was in America and it was not I grew up in Lebanon yeah up to 17 18 and and and to me open it having doing that was was a bit I would be ashamed if my grandmother saw me or a see so we had to change the culture hi I'm Kurt uh I was also in I was I used to work in London as an investment banker as well then came to India now I run a media and a PR company I wanted to know that what is the impact of all that you've spoken what is the impact of corruption the concept of corruption in in all this because when I speak to my people I mean I'm the head of alumni for the London School of Economics and it's very to people from all over the world they can't understand the concept of corruption and why it's so extent okay so there's one thing about corruption that's quite interesting it's very interesting because America has corruption all right effectively your Geithner you save the bankers but you got the job later the five million dollars a year from the banking system so America has this revolving door where you you have fewer nice of the industry so there's two kind of corruption there is a corruption really that there's I mean it's never good but there's a neutral corruption and there is a the Paolo Paolo Paolo helloo in Brazil okay Polamalu sorry his name in Brazil was a big corrupt politician and whose slogan was okay I steal but I deliver okay and then you have the second part which is worse than corruption is patronage and it's rent-seeking it's a bureaucrat who without stealing much slowed you down simply because they want the privilege they have that stamp you gotta go through that stamp I think that ladder is even more dangerous typically they come together you see typically the the bad part isn't as much the corruption part as much as it is the patronage and the people are you create a job for someone who will slow you down okay so the process becomes bureaucratic and and plus there's another thing one more we have two moments to grab me okay you people had the illusioned in the Western world or everywhere that it's typically people in power who are the corrupt ones in fact it's not so if you want the problem is what we call opaque administration's Minister in UK called me up having in a game he said there's something you're missing said what he said I have I'm a minister I had no control of my ministry why are you blaming me putting my skin in the game he said you have employees who've been there for 30 years they can maneuver passive resistance they can do they can do things and they know what's going on so this is the more dangerous thing it's that opaque administration that can slow you down because there there is a divergence of interest between a bureaucrat okay and the general public and to remove that is not easy by naming a new minister you have to do something structural for example Donald Trump figure out something to break that administrative you know hold is move the Department of Agriculture to Iowa which makes sense now break it up move it to Iowa and understand what's going on say okay we're moving to Iowa all right do you break it up so this is what we have a calf Cain administration in the UK that was breaks it you know with all these procedures they were slowing down unelected this is what people are rebelling against so corruption is bad but there's even worse than corruption which is that administrative divergence of interest between someone in administration and and the function of the administration good evening my name is deep just while up a person is undergoing the failures yeah at a time when a person is undergoing some failures how should the his Nia's and das ones behave as we feel attached to him I mean what can we do for him to encourage people to take risk you have to really number one make it non shameful forget the money money to to fail okay and also we have to make that person employable okay so you have a buffer people take risk early on had we waited had Bill Gates waited you know to graduate from Harvard okay he probably would have been a corporate lawyer okay Bill Gates I wouldn't have had Microsoft so you realize that they think so you have to encourage people to take these positions early on in life and at the same time given Lynette a some kind of safety net both always future employment and with some kind of compensation they fail and that's why the state can do like for example some type of very generous employment benefit to those who failed thank you I know context of the law and my flight is tomorrow night sorry yeah you can any more questions from the audience okay I have a question for you action okay I wonder I understand what is it that you make of this growing protectionism that the world seems to be getting into I don't know what's going to happen between the trade war so to speak between US and China you know the jury's still out on that there's still time to go but there really seems to be more sort of inclusion if I can call it that economy once where do you think this situation is going to lead us all into okay so there is something what Trump was running on as a following okay that nobody's against you know free trade but it looks like the idea the benefits from these kind of concentration of there's concentration and inequality coming from free trade large corporations have their shells and the Heather economists spending the story that completely unfettered trade is okay and maybe they say maybe it's not hundred percent free it could be maybe 95 percent free because think about it let's say that you're a shoe maker in Pittsburgh and your identity is vested into that shoe making you lose your job as a shoemaker you lost your identity so of course you're gonna vote for some kind of protectionism not much okay to get that kind of balance plus people don't this I wrote about the new Black Swan by saying that a hundred years ago because we did not have that communications it was impossible to have a Harry Potter so every writer in her or his country would have an audience the day a hundred writers make 60% of the income from writing worldwide you see so that globalization causes more concentration and people detected so maybe we should slow down 95 percent of what we have not 100% to just prevent this cross-border concentration because it's big companies have been benefiting from it like Google like the big publishing houses like the so it's not just us China okay so anymore we have time for just one final question the tenth and then I'll complete with the sentence with a parting wisdom at the back if you can just stand up or Mike will get to you Ravi can we have the mind at the back I just need to get the philosophical part right here I want to get the philosophical part right for a person who is trying to or fails how do we know whether he has given the full in on it and failed or he is basically just given up trying and I mean try it but not really tried it full heartedly sorry I couldn't hear well because of the even I didn't get repeat your question please yeah I'm saying we are saying encourage failures so I say it suppose a person whom you are wanting to give this chance to fail says I tried and failed but did not really put completely inside passionately try to do something and fail when we gave them the chance versus a person who's really fully tried it how do you differentiate snot up to society to decide all right if someone succeeded or not just like the restaurant business okay forget about these Innovation Awards and stuff like that it's your PNL all we're saying that society should be generous towards people who failed okay because I'm an you a failure is a stigma and one more thing to say before I close that most of the problems we have in Western world and I talk as a risk manager now come from one thing not understanding that if you're gonna fail eventually you must fail early not late thank you for listening to me

Channel: ET NOW

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Keywords: india economic conclave, india economic conclave 2019, india economic conclave et now, india economic conclave debate, economic news, indian economy, economic growth on india, economy, nassim taleb, atlanta indian consulate, global economic crises, the economic times, digital india, economic times, economic slowdown, et now, times now, business news, mk anand times now

Id: q0mjrNDe73E

Length: 62min 38sec (3758 seconds)

Published: Mon Dec 16 2019