Principle three from Nassim Nicholas Taleb’s ten principles for a “black swan proof” world:
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
Now I’m not even slightly surprised that neither this nor any of the other item’s on Taleb’s list have happened. Nor do I think it would be especially desirable to try. But what I really do find shocking is that there doesn’t seem to have been any movement at all in this direction. Whenever there’s a suggestion that there’s a need for housecleaning and clean hands, apologists for the status quo immediately leap in with the point that you need some veteran people with hands-on experience. And surely you do. But there’s a huge middle ground between firing everyone associated with this fiasco and firing nobody.
And we’ve done the reverse! Lurking beneath the amusing John Stewart versus Jim Cramer faceoff was the reality that even though CNBC is in a sense more discredited than ever, the financial crisis has made it a more influential news source, not a less influential one. Major financial institution CEOs seem to have more access and influence to high-level policymakers than they did before rather than less. And it’s not just that the top levels of economic policymaking haven’t been filled with people who were prescient about the severity of this crisis, nobody at all who was prescient about it seems to have been brought on board.
And it’s not just in the United States. We at least managed to have a change of administrations scheduled for a propitious moment. But outside of Iceland there have been basically no topplings of incumbent governments, no resignations of key officials, no nothing. The behavior is as if the financial system has, like Italy, been struck by a terrible earthquake and now the officials in office need to deal with it. Even the popularity of the term “black swan” seems to entrench the notion that some wild and unpredictable occurrence happened. But while this turn of events is pretty wild, it was unpredictable—plenty of people predicted something similar. And while I don’t think you ever should expect a wholesale turnover in elites and powerful institutions, if a shock this big doesn’t produce some kind of discernable change then I’m not sure what would or could.