Dr. Taleb and the Fallacy of Scale

Dr. Nassim Taleb is a thinker absolutely to be reckoned with;, especially in the realm of statistical meaning and market data. This following is a short bit from his blog, Opacity, found at http://www.fooledbyrandomness.com/notebook.htm.

140 Why Did Communism Fail?

The common interpretation is that communism failed because it did not line-up to human nature, disregarded incentives, free-market matters etc. But I have not heard any commentary attributing a share of the failure to the top-down implementation by gigantic states & the necessity of a large state for that –making nonlinearities & second order effects dominate.

The large state is qualitatively different from the very small municipal state, one in which people have visual contact with those implementing public policy. The large state brings fragility, the small municipality brings robustness. Just as there is a fallacy of aggregation, I believe in the fallacy of scale (because of concavities). Properties change with scale


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