I am with Dale that a lot of what Taleb says is his own breed of irrational mystical mumbo jumbo. I would claim that even his "Black Swan" claim to fame is a misnomer, since a lot of smart people saw it coming and warned about at least parts of it. True "Black Swan" is a gamma ray burst striking Earth from black hole in other galaxy - no prediction and puff we are all gone.
With that said, I believe that businesses are driven into fragility through our ever optimized economical landscape. One example is cash. A business that holds cash (and not debt) is much more resistant to downturn. However, everything in business world pushes businesses to hoard debt and not cash. Cash does not earn high returns, so business' ROE is lower leading to lower valuations. Cash does not contribute to growth leading again to lower valuations. Cash makes business attractive as a takeover target. Cash does not make tax writeoffs. And so on. There are a lot of other examples: high-leverage, derivatives and derivative hedges, single product concentration, just-in-time sourcing and production, agile workforce management, etc. Most of these make sense when everything is going fine, but when low probability economic state occurs, the "common state" policy breaks spectacularly.
Unfortunately, I am not sure there is a solution to this. Some businesses will stay "old school" conservative and will be less affected by uncommon events. But overall the drive is towards more efficiency and optimization, which brings a lot of fragility. :( |
