Wednesday, March 05, 2014

Quote of the Day: Success in all endeavors is requires absence of specific qualities

Success in all endeavors is requires absence of specific qualities. 1) To succeed in crime requires absence of empathy, 2) To succeed in banking you need absence of shame at hiding risks, 3) To succeed in school requires absence of common sense, 4) To succeed in economics requires absence of understanding of probability, risk, or 2nd order effects and about anything, 5) To succeed in journalism requires inability to think about matters that have an infinitesimal small chance of being relevant next January, ...6) But to succeed in life requires a total inability to do anything that makes you uncomfortable when you look at yourself in the mirror.
This is from mathematician, philosopher, author and my favorite iconoclast Nassim Nicolas Taleb from his collection of Aphorisms, Maxims & Heuristics.

Let me add my two cents. I will piece together, like a jigsaw puzzle, anecdotally of what I think as interrelation from these variables.

#2 or the "absence of shame at hiding risks" would seem as not only relevant or applicable to much of the banking sector but generally (but with a few exceptions) to other financial market participants as well, including both sellside and buyside institutions. Think Wall Street (and their equivalents worldwide).

#4 I believe represents the essence of the mainstream “economics”. Shout enough statistics and or economic models (technical/econometric gobbledygook) for one to be reckoned as practicing “economics” by the uninformed public (who has little understanding of economics) overwhelmed by mathematical abstractions. Never mind if the practitioner/s have been entirely blind to the "risks" from "2nd order effects". 

Of course #4 is related or tied to #2; in the context that # 4 (the ideological foundation for the absence of risks) serves as justification for the actions of #2 (blatant hiding of risks). 

Think of "mania" or the frantic bidding up of asset prices regardless of risks of ballooning debt underlying such bidding binge, where "euphoria" has mostly been premised on statistical growth stories or from the prospects of more central bank support.

#5 (or the focus on the sensational rather than to the relevant) could most likely be part of the design to promote the interests of the entrenched political-economic order. When people see or tunnel at the sensational at the expense of the relevant then they are most likely to become complacent or dismissive of "risks". For instance, the mainstream have been oriented to see property booms as equivalent to economic growth, while disregarding the 2nd order effects of soaring property prices to the economy (via dramatic changes in relative price levels) and to politics (benefits the asset holders at the expense of to the non-asset holders that becomes part of the issue underlying the inequality controversy).

#2, #4 and #5 are linked in the sense that these sectors most likely constitute the central bank-banking-government cartel. 

Moreover, #3 is connected to #5 in that this represents the indoctrination process. The absence of common sense (and critical thinking) makes #5 (mainstream journalism) credible and reliable sources of information. And this applies, as well as, to the extent of ideas promoted by #2, #4 and #5 that becomes popular knowledge or mainstream dogma.

And finally, when a vast majority of the population becomes agreeable or complacent to #2, #4 and #5, then #1 appears easy to be implemented. This via social policies of financial repression (where inflationism is part of) which entails the (direct and indirect) redistribution of resources from society to the political class helped by their allies #2, #4 and #5 (also #3), who are also beneficiaries, in the "absence of empathy" transfers.  

And when a crisis occurs #5 blame such economic-financial malaise on "greed" from capitalism. But #2 and #4 gets a bailout from the government and or from the central bank, deepening further the financial repression policies.

#6 now depends on where you stand. 

So when Mr. Taleb in another quote (117th) from the same source says "there is this prevailing illusion that debt is a renewable source", then such illusion signifies a product of the 5 "absence of specific qualities" ingredients of "success".


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