10 Principles for a Black Swan-proof World - by Nassim Nicholas Taleb(NNT)

I will strongly recommend you to read his book "Fooled By randomness" to understand the following passage. This was released by NNT at time of recent financial crisis. Black swan is preferred as an event which is unexpected, but we can't denied its presence. We have to prepared for such events.

website of NNT http://www.fooledbyrandomness.com/

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.
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.

Principles 1, 2, 7 are more talking about Governing externalities. Nothing should ever become too big to fail. Those people in high positions (like CEO, managers etc) are taking more risk with people's money because their risk is subsidized. These people must consider their responsibilities because after fault has been done that must not be socialized, that is people are not required to pay for their sins.(as we have seen bailouts of Lehman……..). While in banking system which is built on fiat money, is very much fragile and so that there is no need of confidence in that, we just require kill the leverage, that is we need to kill the source of it, which is our centralized non-robust banking system.

Principles 3, 4, 6, 9 are more related to Authoritative constraints. We need to understand that our decision making should not be affected by external factors, specially those whom we called "experts"! because we can easily become confused by their magical words.

Principles 5, 8, 10 are talking about the SIMPLICITY, we need to understand it because it is very basic biology of nature also.

i know you are becoming impatient or confused. If you have read NNT's book then you will easily understand it.

NNT gave 10 principles to protect our world. This is particularly about making way for CAPITALISM 2.0 by helping "what needs to be broken break on its own, converting debt into equity, marginalizing the economics and business schools establishments, shutting down the "Nobel" in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties."

"then we will see an economic life closer to out 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." - by NNT.