An interesting comment from Nassim Taleb at today’s New Yorker Summit. He argues that even 1980s level of economy-wide debt are intolerable today, in part because of the Internet:
We have to be a lot more careful going forward, because we have globalization, the internet, and operational efficiency — which cannot accommodate debt.
I have been thinking a great deal about this, largely because of a writing project related to tightly-coupled systems, in Charles Perrow’s sense, and the consequences of disappearing slack. I’m assuming that is the point Nassim is making, in which case I mostly agree, although I’m not sure I would go all the way to his binary conclusion.
Nevertheless, it is a point well worth making: We live in a world with less slack than ever, whether you’re thinking in epidemiological or financial terms (and they are analogous), and that has immense consequences for runs, of whatever variety.
Originally published at Paul Kedrosky’s blog and reproduced here with the author’s permission.