From 600+ conversations with the world’s leading thinkers.
Uncertainty creates a strategic incentive for a rational man to go to war. That's not necessarily a mistake as, at the moment, people may wish they had better information, but they may also realise they've made the optimal choice.
Markets have an incredible capacity to forget, so who knows if it will stay like that… Markets forget, they get over-leveraged, they extend themselves, we will see other bubbles.
The key for the development of the poor is to include them in the democratic process as well as in the market economy. Therefore, inclusion is the key for getting rid of poverty. Political inclusion… social inclusion… environmental inclusion… education and knowledge inclusion… network inclusion… all these types of inclusion which are taken for granted by people who are inside the growth process.
Concepts like democracy and human rights will always remain fairly abstract if you cannot feed your family. It is therefore important to ensure that job creation, and protecting livelihoods occurs early on in the process.
Fundamentally, the real way to tackle bubble-formation is through careful understanding and regulation of how financial products are created and traded, not necessarily regulating the capital structure of the markets themselves.
We run the very real risk now, not of going back to the 1970s, but of going back to the 1930s or 40s with economic and financial collapse, massive pandemic, and real-world wars.
Because of connectivity, India has increased mobility. People from Orissa work in Gujarat, people from Gujarat can start businesses elsewhere. Because of telecommunications, a farmer can now get information on seeds and fertilisers.
The traditional sources of capital for ideas — investment, charity, rich relatives, grants — are nowhere near sufficient to the number of good ideas in the world. Now, the internet has democratized this, and you don't need to be wealthy to be a patron. You can help bring something to life with $10 because you like the project, not because you see it as a financial return.
The genius of the classical economists was to think of economics and politics as the same. Remember, in Smiths' Day, there was no economics faculty, it was political economy. We may need to go back to that.
Before you think about the alpha, you have to think about the client's beta.
Typically, when you ask a business person about their progress, their immediate response tends to revolve around growth figures – 'We're 20% up from last year' – under the assumption that growth equates to robustness and sustainability. However, empirical evidence doesn't support this assumption.
Most risk managers on Wall St, and practically all staff members in institutions like the Fed, IMF and elsewhere do not understand the statistical properties of risk. I think the notion that the time-series of market moves in large complex markets is not a normal distribution has largely sunk-in.