“Who wants to be in the U.K.?”Adam Smith for sure, but what about Nassim Taleb
December 11, 2009
Yesterday, the Financial Times newspaper ran a front page story titled, "Who wants to Stay in the U.K.?" The story was in response to the recent one off 50% levy imposed by the British government on bankers' bonuses for the year 2009. The main import of the story was that if the government kept on imposing such taxes and levies on bankers' remuneration then talent will flow out of London to other centres such as Zurich and New York.
So, who wants to be in the U.K.? Why, Adam Smith for sure.
Yes, we are talking about the same Adam Smith, the Scottish philosopher, who invented the science, or rather the philosophy, of Economics two hundred and fifty years ago. Adam Smith the "founder of free market economics", Adam Smith the author of The Wealth of Nations, which according to Alan Greenspan is "one of the great achievements in human intellectual history", Adam Smith the proponent of laissez faire policies for the Government and Adam Smith who first saw the "invisible hand" of the markets lives in the U.K. today.
Take a 20 pound note (£20) and you'll see that at the back of it is the portrait of Adam Smith (1723 - 1790).
Adam Smith rules. He is the reason why there is free market in this world. And undoubtedly free market has been one of the best things that have happened to mankind; all our economic development in the last two hundred years can be attributed to the philosophy of free market.
Of course, one cannot blame him for the kind of free thinking, as far as money matters are concerned, that permeates the financial system today; and not to forget free wheeling, free lunches and of course, free bonuses that's so much the part of our society these days. All this is due to other lesser known, but very generously compensated, practicing philosophers on Wall Street and the City.
And now, two hundred years after his death, as he adorns and embellishes the instrument of value in his land of birth he confronts Alistair Darling, and other European and Anglo-Saxon politicians who dare to think differently. Beware the "invisible hand".
On chapter 16 of his celebrated book, Fooled by Randomness, Nassim Taleb writes that in 2001 while he was spending some time at the Frankfurt airport he was repulsed by the picture of Karl Friedrich Gauss and the Gaussian "bell curve" that was on the 10 Deutsche Mark note. In the same book he goes on to show inappropriate it was for a picture of Gauss to be there on a Deutsche Mark note, given the German monetary history. It is now well known how much Taleb despises Professor Gauss and all things Gaussian. And his books make compelling reading. His arguments are so strong and with a lot of merit.
Taleb frequently lectures in London and his Wilmott-Taleb seminars on Volatility are quite well known in the City. Many option traders swear by him. His ties with the United Kingdom are quite strong. He is a former Visiting Professor at the London Business School, a distinguished Research Scholar at Said Business School, Oxford University and the intellectual guru of David Cameron, the Conservative Party leader in Britain. So we wonder what Taleb will have to say about the portrait of Adam Smith being on a 20 pound note these days. Will he want to live in the U.K. today?
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