Some strange quirk in the cosmic order of things led to Landmark shipping me Piketty’s ‘Capital in the Twenty-First century’ instead of Rana Dasgupta’s Capital! I kept the book (yet to read it though) because economic disparity has been an interest area for a while now, I had touched upon it in the context of AI and job loss in Artificial Humanity. Reading The Black Swan has only accelerated this interest.
Taleb divides the world into Mediocristan and Extremistan to point out the extent of predictability in the context. Mediocristan can safely use Gaussian distribution, (bell curve) but in Extemistan, that’s dangerous. From what I understand, given that there’s no real limit upper limit of scale, individual wealth will increasingly behave in a more Extremistan way. To quote his own example, “You randomly sample two persons from the US population. You are told that they earn jointly a million dollars per annum. What is the most likely breakdown of their income? In Mediocristan, the most likely combination is half a million each. In Extremistan, it would be $50,000 and $950,000.” He states that almost all social matters are from Extremistan. (more…)