Sunday, November 18, 2012

I have been following Nassim Taleb, the author of The Black Swan: Second Edition: The Impact of the Highly Improbable.  I enjoy reading his books and now his essays.  He recent wrote on an essay in the Wall Street Journal Learning to Love Volatility that presents five rules.  I am wondering about his third rule, however, 'Small is beautiful, but it is also efficient."

The example used is that of the elephant and the mouse.  The elephant would break its leg on the slightest fall, while the mouse can fall several feet uninjured.  He also explains that "we need to distribute decisions and projects across as many units as possible, which reinforces the system by spreading errors across a wider range of sources."

My wonder comes about when thinking about the efficiency of a small, decentralized system versus a large centralized system.  I believe that the bottom-up mechanisms that he mentions, such as the cantons in Switzerland are definitely more stable and can involve more feedback into decisions than would authoritarian regimes.  I think though in political systems, though, efficiency is actually not desired.  When a political system is highly efficient, it seems that bad decisions can be quickly made and implemented.  Looking at the Constitution of the United States, it seems clear that many of the subsystems were designed to be small, but also inefficient.  The inefficiency was actually built-in to slow down any bad decisions.