I just listened to this in the car, and I must say it was really interesting. A lot of what Taleb said struck me as very insightful. Especially intriguing was his idea for fixing the economic crisis: Since any bank that is deemed too big to fail is going to have to be bailed out by tax payer money, the tax payers are the true stock holders/risk takers behind that bank. So the solution to this issue is to institute a law that prohibits any bank or company that is too big to fail from paying out any bonuses (alternatively, perhaps all profits from such banks/companies goes directly to the tax payers). This would provide a direct financial incentive for banks to stay small enough that they aren't targeted by this law.<p>I found that very intriguing. I don't know if it would work in practice, but it seems perfectly doable, and it does seem like it could work.<p>Edit: Here's a transcript of the relevant section:<p>It's very simple; you take the convexity and you certify whether company sales--you don't know if it's going to fail, but you know, should it fail, the taxpayer has to bail it out? Yes/No? If you think the taxpayer would need to bail it out, if it fails, then automatically the employees can no longer can no longer get bonuses. De facto, potential civil servants. And you can't play the long option game at the expense of taxpayers. Remember, my ethics problem is someone who owns the option at the expense of taxpayers or someone else. That would automatically force companies to be of such size as they won't be bailed out. It's a very nice pact you make with a company. You say: You can do whatever you want, you can pay each other as much as you want, we don't care. Provided we don't deem that you are to be bailed out. Now, of course, it's a gray area, a large gray area. For a lot of companies we know it's very visible. We know we are going to bail them out. Therefore they are civil servants. And now by putting caps on how much banks can pay in bonuses, people are moving to hedge funds, the risk is slow into hedge funds, and these are not to be bailed out. Great; let them go. Exactly. So, I am not asking to regulate society. So, government can use something to protect citizens from large corporations. Not exactly a rent directly in proportion to their size. It's an interesting way to limit their size organically, in theory at least. It's a way to discourage them from growing because they realize that if they do they will lose their opportunities for the upside. Exactly. They no longer can use the option, it's the option of society. Or do what I call the Bob Rubin. Bob Rubin had $5 million in bonuses, retroactively financed by the taxpayer. We have to eliminate the Bob Rubin problem.