10 Principles for a Black Swan-proof world

He considers the economic breakdown a Black Swan and today published an article in the FT outlining ten principles for a Black-Swan proof world. Obviously these principles are focused on economic affairs, but I think they provide useful for anyone thinking about climate change too.

Climate change, and particularly the worst-case scenario of catastrophic and abrupt climate change, is certainty large-impact, hard-to-predict, and beyond the realm of normal expectations.

Below I've reproduced Talib's ten principles. You can find the full article here. They take some imaginative thinking to apply to climate change, but I was very amazed about how smart and reasonable each one of them appeared.

1. What is fragile should break early while it is still small.

2. No socialisation of losses and privatisation of gains.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

4. Do not let someone making an "incentive" bonus manage a nuclear plant - or your financial risks.

5. Counter-balance complexity with simplicity.

6. Do not give children sticks of dynamite, even if they come with a warning.

7. Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence".

8. Do not give an addict more drugs if he has withdrawal pains.

9. Citizens should not depend on financial assets or fallible "expert" advice for their retirement.

10. Make an omelette with the broken eggs.

He concludes:

"Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news. In other words, a place more resistant to black swans."