Guest Post: Cameron, Nasim Taleb and cutting debt

Writing for The Real Asset Co, Will Bancroft asks whether David Cameron’s apparent appreciation for Nasim Taleb’s deep aversion to debt, really is being shown in the apparent austerity measures.

Nasim Nicholas Taleb, author of the bestselling book The Black Swan, has been a favourite philosopher and financial commentator of ours for some time. He is rumbustious and abrasive, but remarkably difficult to dislike. So it was pleasantly surprising to see David Cameron and him having an intellectual love in during an open debate at the Royal Society in February 2010. Since that time we had heard murmurs that Cameron and Taleb had become close having significant overlap in their world views.

Nasim Taleb has a deep aversion to excessive amounts of debt and leverage within the financial system, because leverage and debt brings inordinate amounts of risk and exposure to unforeseen events and changes in the markets. Debt and risk are described as synonymous.

Mother nature does not like debt. The opposite of debt is redundancy. I have two lungs… and one spare kidney… That is the opposite of debt; spare parts. If we let economists manage mother nature, they’d give one lung to everyone, and then you’d borrow your time for breathing…it would be ‘optimal’. Why should we have to carry two lungs? …Mother nature can show us how to build a robust system. A system that can withstand huge deviations and stay standing.

You don’t need to be an economist to understand this; anyone with a mortgage or other debts will likely appreciate it all too well. We had hoped that any intellectual alignment between the two might produce positive results in how the British economy is managed given our concerning national debt obligations.

Cameron and Taleb working together

If truth be told we had not appreciated just how close Cameron and Taleb had become, or the fact that the mathematician and philosopher is now a key adviser to 10 Downing Street. In a recent documentary on Radio 4, the Economist’s Political Correspondent, Janan Ganesh, sheds new light on this relationship. Taleb has described David Cameron as ‘extraordinary’ and ‘the best thing we have left on this planet’. He is featured in a scene in the documentary on Hampstead Heath with two of the Prime Minister’s key policy advisers, Steve Hilton and Rohan Silver.

Maybe Britain was alright after all, and David Cameron was a man who appreciated ‘Black Swan’ thinking and would lead us out of our vulnerable debt-laden plight. The last few months of strength in the UK gilt market has been welcome, especially for George Osborne. ‘Risk free’ seemed to still apply to our national debt. But, has Cameron really been getting our economic house in order?

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