Thanks for the great article, Joan. His anecdotes were telling. The points that most impressed me were:
... any complex system has a tradeoff between efficiency and robustness.
... economic theory bizarrely assumes stability by assuming that economies have a propensity to equilibrium. That in turn gives them a bias in policy prescriptions to favor more efficiency and not even think about stability. Yes as Richard Bookstaber stressed in his book Demon of Our Own Design, highly efficient systems are prone to catastrophic failures, since disruptive processes propagate through the system too quickly for anyone to stop them. Taleb also argue that robust systems, like biological systems, are inefficient by virtue of having extra capacity (two kidneys, for instance).
Share-price-linked CEO pay has led to underinvestment and short-termism, which produces more short term profits at the expense of stability and reliability. And if you do that across an entire economy, it isn’t hard to see that this over-optimization has led to much more fragility. We now have extended supply chains and the media has identified potential catastrophic points of failure, such as China having a stranglehold on rare earths. And even absent disaster scenarios, we also have an ongoing, hidden tax of things not working as promised but it being too costly in terms of time and money to get that rectified... [emphasis mine]