This is an important idea - thinking in dynamics not statics.
A thread on thinking in systems and inequality (all Taleb inspired)
A thread on thinking in systems and inequality (all Taleb inspired)
1/ Measuring quintiles at two points in time does not give you a correct picture of how the system is evolving.
'Who' constitutes quintiles needs to be taken into account.
As long as inequality is dynamic and class mobility is not zero, inequality is fine (feature not bug).
'Who' constitutes quintiles needs to be taken into account.
As long as inequality is dynamic and class mobility is not zero, inequality is fine (feature not bug).
2/ Most people don't realise that wealth creation and wealth distribution is dominated by power laws.
People get rewarded disproportionately for creating enormous wealth and generate large surpluses for others at the same time.
This is good for everyone.
People get rewarded disproportionately for creating enormous wealth and generate large surpluses for others at the same time.
This is good for everyone.
3/ @nntaleb defines the three main flaws of interventionistas
- think in statics not dynamics
- think in low, not high dimensions
- think in actions never interactions
Read this for more details:
medium.com/incerto/on-neo…
- think in statics not dynamics
- think in low, not high dimensions
- think in actions never interactions
Read this for more details:
medium.com/incerto/on-neo…
4/ This is a good place to start reading on statics vs dynamics in looking at inequality.
medium.com/incerto/inequa…
medium.com/incerto/inequa…
5/ Taleb makes the following two remarks:
- true equality is equality of probability (not outcome)
- skin in the game prevents the system from rotting (by removing elements that fail)
- true equality is equality of probability (not outcome)
- skin in the game prevents the system from rotting (by removing elements that fail)
6/ Static v Dynamic inequality
"Static inequality is a snapshot view of inequality; it does not reflect what will happen to you I the course of life."
"Dynamic (ergodic) inequality takes into account the entire future and past life."
"Static inequality is a snapshot view of inequality; it does not reflect what will happen to you I the course of life."
"Dynamic (ergodic) inequality takes into account the entire future and past life."
7/ Creating dynamic inequality:
"You do not create dynamic equality just by raising the level of those at the bottom, but rather by making the rich rotate –or by forcing people to incur the possibility of creating an opening."
"You do not create dynamic equality just by raising the level of those at the bottom, but rather by making the rich rotate –or by forcing people to incur the possibility of creating an opening."
8/ Skin in the game as a mechanism to ensure that equality is being preserved.
"The way to make society more equal is by forcing (through skin in the game) the rich to be subjected to the risk of exiting from the one percent."
"The way to make society more equal is by forcing (through skin in the game) the rich to be subjected to the risk of exiting from the one percent."
9/
"Dynamic equality assumes Markov chain with no absorbing states
Our condition here is stronger than mere income mobility.
Mobility means that someone can become rich. The no absorbing barrier condition means that someone who is rich should never be certain to stay rich."
"Dynamic equality assumes Markov chain with no absorbing states
Our condition here is stronger than mere income mobility.
Mobility means that someone can become rich. The no absorbing barrier condition means that someone who is rich should never be certain to stay rich."
10/ The most concise way to put it is the following:
"Dynamic equality is what restores ergodicity, making time and ensemble probabilities substitutable."
Read about time and ensemble probabilities here:
medium.com/incerto/the-lo…
"Dynamic equality is what restores ergodicity, making time and ensemble probabilities substitutable."
Read about time and ensemble probabilities here:
medium.com/incerto/the-lo…
