Tuesday, November 8, 2011

Taleb On Risk and Incentive

The promise of “no more bailouts,” enshrined in last year’s Wall Street reform law, is just that — a promise. The financiers (and their lawyers) will always stay one step ahead of the regulators. No one really knows what will happen the next time a giant bank goes bust because of its misunderstanding of risk.

The Romans even figured out how to deter cowardice that causes the death of others with the technique called decimation: If a legion lost a battle and there was suspicion of cowardice, 10 percent of the soldiers and commanders — usually chosen at random — were put to death.

http://www.nytimes.com/2011/11/08/opinion/end-bonuses-for-bankers.html?_r=1

In this same line of thought - how about the politicians don't get paid unless they keep the budget balanced?

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