Overview:
Nassim Nicholas Taleb introduces the concept of “skin in the game,” emphasizing the significance of personal involvement and responsibility in various aspects of life. He stresses that relying solely on others to solve problems may not yield the best outcomes, and individuals should actively engage and take ownership of their actions and decisions.

Historical Context:
Taleb cites the example of Ramses XII and how his rule was praised initially but later faced criticism from the public. This illustrates that reputation and legacy are subject to change over time, and individuals should not rely solely on external validation or accolades.

Personal Experience and Connection to Lebanon:
Taleb acknowledges his Lebanese heritage and the influence of his upbringing on his perspectives. He mentions his heavy accent and the perception of his Armenian background, highlighting the importance of embracing one’s identity and experiences.

Skin in the Game Principle:
Taleb emphasizes the idea of “skin in the game,” asserting that individuals have no right to make decisions or express opinions unless they are directly affected by the consequences. This principle encourages personal responsibility and discourages empty rhetoric or uninformed judgments.

Revolution and Women’s Rights:
Taleb expresses his belief that the ongoing revolution in Lebanon should prioritize women’s rights and address gender inequality. He acknowledges the challenges in this area and calls for progress in promoting equality and justice for women.

Technical Difficulties:
Taleb experiences technical difficulties with the microphone and audio equipment, leading to interruptions during his presentation. He addresses these issues and ensures that the audience can hear him clearly.

S-Vendor and Cosmetics:
Taleb mentions the concept of S-Vendor, referring to individuals who often engage in sales pitches and promote cosmetic products. He observes that these individuals typically wear shirts and ties and may attempt to persuade others to purchase their products.

Patronage and Empty Suits:
Patronage refers to the practice of appointing individuals to government positions based on personal connections rather than merit. Empty suits are individuals who hold positions of authority but lack the necessary skills or knowledge to perform their duties effectively.

The Problems with Patronage:
Patronage leads to the appointment of incompetent individuals to positions of power, resulting in poor decision-making and ineffective governance. It creates a culture of corruption and rent-seeking, where individuals seek personal gain at the expense of the public good. Patronage stifles economic growth and innovation by preventing talented individuals from reaching their full potential.

Socialism and Patronage:
Socialism, which emphasizes collective ownership of the means of production, often leads to patronage and rent-seeking behavior. Socialist systems can become breeding grounds for corruption and cronyism, as individuals seek to benefit from their connections to those in power.

Solving Patronage:
The solution to patronage lies in promoting individual freedom and libertarianism, which emphasize the rights of individuals to make their own choices and pursue their own interests. Localism, which emphasizes the importance of local decision-making and self-governance, can also help to reduce patronage by increasing accountability and transparency in government.

Libertarianism and Anarchism:
Libertarianism, as a political philosophy, does not apply to anarchism. The Arabic language lacks a word for libertarian, implying a lack of understanding of the concept in that culture.

Size and Scale:
The size of a political system significantly impacts its applicability and effectiveness. A system that may work well on a small scale, such as in a country with a small population, may not be suitable for a larger scale, such as a country with a large population. Examples are given, comparing Dubai to Saudi Arabia, Cyprus to Greece, Switzerland to Germany, and Singapore to China, illustrating the influence of size on governance.

Local Newspapers as Indicators of Well-being:
Examining local newspapers can provide insights into the state of a country. Newspapers that focus on local issues such as water, electricity, and community involvement, rather than political conflicts, may indicate a well-functioning society.

Globalization and Local Problems:
Globalization can lead to the magnification of local problems, such as weather, water, and electricity, due to their interconnectedness. Focusing on these local issues, rather than global conflicts, is more beneficial for the well-being of citizens.

Goethe’s Perspective on the Roman Empire:
Goethe, the German poet and philosopher, was more interested in the mundane aspects of the Roman Empire, such as water management and infrastructure, rather than its political struggles.

Centralized vs. Decentralized Systems:
Complex systems have three types: centralized, decentralized, and distributed. Centralized systems have a single leader or authority figure. Decentralized systems are made up of independent entities that interact with each other. Distributed systems are composed of nodes that are connected to each other but do not have a central leader.

The Importance of Bottom-Up Approaches:
Bottom-up approaches are more likely to succeed than top-down approaches. Top-down approaches rely on a single leader or authority figure to make decisions, which can be problematic. Bottom-up approaches allow for more input from individuals and groups, which can lead to better decisions.

Examples of Successful Bottom-Up Approaches:
The Westphalia Treaty of 1648 and the Congress of Vienna in 1815 are examples of successful bottom-up approaches. These treaties were negotiated between different groups of people, rather than being imposed by a single leader.

The Importance of Organic Systems:
Organic systems, such as DNA and cells, are more resilient than mechanical systems. Mechanical systems are more likely to break down when they are subjected to shocks or stresses. Organic systems are able to withstand shocks and stresses, and they can even benefit from them.

DNA and Cells:
DNA is not a blueprint, but rather a bottom-up system. Cells communicate with each other and make decisions based on the information they receive from their neighbors. This process of communication and decision-making leads to the development of complex organisms.

Social Dilemma of Fishing:
Elinor Ostrom’s research revealed that people can agree on sustainable fishing practices when they are part of a small, closed group. Overfishing occurs when individuals prioritize personal gain over the collective well-being of the group.

Trust and Cooperation:
In closed environments like airport lounges, trust is fostered due to the limited number of people and the presence of security measures. This trust enables individuals to feel comfortable leaving their belongings unattended.

Scale and Political Systems:
Political principles can vary depending on the scale of governance. Localism, or the idea of decision-making at the smallest possible level, can prevent extreme ideologies from dominating larger political systems.

Scale Transformation and Tribal Interactions:
In certain Arab tribes, hospitality is extended to visitors in small numbers. However, when the number of visitors exceeds a certain threshold, the tribe may become hostile. This phenomenon, known as scale transformation, highlights the importance of considering the impact of scale on human interactions.

Border Closures and Trust:
Closing borders can foster a sense of trust and safety among individuals within a country or community. The Wolf Voyager Project demonstrated that wolves, without any formal governance, can establish social hierarchies and maintain order within their packs.

Switzerland’s Federal Agreement:
Switzerland’s civil war ended in 1848, leading to a federal agreement among cantons, resulting in no further bloodshed and no involvement in external wars.

The Phoenicians’ Preference for Autonomy:
The Phoenicians prioritized their autonomy and well-being over engaging in wars or conflicts.

France’s Impact on Syria:
France’s arrival in Syria caused disruption and instability, leading to the decline of Aleppo, one of the wealthiest cities in the world. The French imposed administrative changes and regulations, creating tensions and contributing to Syria’s problems.

The Principle of Kumbaya:
The idea of resolving conflicts by emphasizing shared identities and singing “Kumbaya” is insufficient and fails to address the root causes of disputes.

The Principle of “Better Neighbors Than Roommates”:
People tend to have better relationships when they are neighbors with clear boundaries and limits, rather than living together as roommates.

The Bayan Principle:
The Bayan principle emphasizes the importance of small, decentralized, and autonomous municipalities, especially along religious and geographical lines.

Historical Examples of Autonomy and Decentralization:
The Syrian opposition and regime met in Switzerland, showcasing its role as a neutral ground for discussions. Lenin and imperialists sought refuge in Switzerland, demonstrating its significance in international diplomacy.

Stability in Switzerland:
Nassim Nicholas Taleb highlights the stability of Switzerland as an example of how borders and diversity can lead to stability. He emphasizes that the more borders a country has, the more people tend to agree and cooperate. In Switzerland, the presence of four languages and two religions creates a sense of local autonomy and reduces conflicts.

Yugoslavia and Local Problems:
Taleb contrasts Yugoslavia with Switzerland, highlighting the lack of bloodshed in Switzerland compared to Yugoslavia. He argues that when political and geographical borders align, there is less bloodshed. While local problems exist within Switzerland, there is a lack of major conflicts due to the distributed nature of the country’s governance.

Corruption in Municipalities vs. Centralized Government:
Taleb suggests that corruption is more visible in municipalities compared to centralized government. He argues that people tend to focus on corruption in the government, but the real corruption often lies within circles of individuals who stay in power for extended periods. In contrast, municipalities have more visible mistakes and are subject to greater accountability.

Local Governance and Minority Rule:
Taleb discusses the concept of local governance and its role in stability. He highlights the example of Tocqueville’s analysis of America, emphasizing that democracy often starts with federalism and local governance. Villages and states were initially not democratic but interacted with each other in a democratic manner, leading to the emergence of democracy.

Majority Rule and Minority Oppression:
Taleb discusses the issue of majority rule and minority oppression. He uses the example of Iraq and Haiti to illustrate how majority rule can lead to oppression of minority groups. He also mentions the oppression of Shia Muslims in Saudi Arabia as an example of minority oppression.

Sectarianism in Saudi Arabia:
Saudi Arabia has a significant Shia population in the oil-rich Shari’a region. The Shias experience oppression from the top levels of government, similar to the oppression experienced by Shias under Saddam Hussein’s regime. The Saudi government claims there is no sectarianism, but this is misleading as the Shias are not treated equally and are not in control of the country’s resources.

Minority Rule:
In the United States, a minority group (0.3%) who follow kosher dietary restrictions has a disproportionate influence on the food industry. This “minority rule” phenomenon occurs when a minority group has strong preferences and is willing to pay a premium for their preferred goods or services, leading to a market shift towards those products. Minority rule can sometimes lead to a “tyranny of the minority,” where the minority group’s preferences are imposed on the majority.

Majority Rule:
The application of majority rule can lead to post-colonial studies and support for minority groups seeking independence or self-determination. However, applying the same principles in different contexts can lead to accusations of fascism or racism. Europe is a region where majority rule is prevalent, leading to a lack of nuance and fractal layers in societal dynamics.

Sectarianism in Lebanon:
The discussion then shifts to sectarianism in Lebanon, which will be covered in a subsequent section.

Lebanese Political Decentralization:
Emphasizes the importance of decentralization in political systems, advocating for a village-based election system in Beirut. Opposes the imposition of a single identity or language on a diverse population, highlighting the value of localism and cultural diversity.

Shared History and Culture of the Middle East:
Presents a theory of cultural and genetic continuity among various regions of the Middle East, including Lebanon, Turkey, Syria, Italy, and Iran. Suggests that common food, customs, and mentality indicate a shared heritage and historical connections among these regions.

Trade and Soft Power in Phoenician History:
Emphasizes the Phoenicians’ preference for trade over war, highlighting their economic prowess and diplomatic skills. Explains how their strategy of offering a percentage of their wealth to invaders, such as Nebuchadnezzar, allowed them to preserve their autonomy and prosperity.

Ponzi Schemes and Financial Engineering:
Introduces the concept of Ponzi schemes and their inherent instability. Explains that Ponzi schemes rely on taking money from new investors to pay off existing investors, leading to an unsustainable cycle. Warns that financial engineering practices can exacerbate the risks associated with Ponzi schemes.

Government Debt and Printing Money:
Distinguishes between government debt and Ponzi schemes, arguing that governments have the ability to print money to repay their debts. Questions the notion that Lebanon’s printing of its own currency constitutes a Ponzi scheme, suggesting that it may be a necessary measure in the current economic crisis.

Historical Perspective on Debt and Interest:
Discusses the historical aversion to debt and interest in Islamic law, tracing it back to ancient Mesopotamia and the Code of Hammurabi. Explains that periodic debt cancellations or jubilees were common in ancient Babylon to prevent the accumulation of unsustainable debt.

Printing Dollars in Lebanon:
Raises concerns about the possibility of Lebanese banks printing US dollars, highlighting the potential consequences of such a move. Questions the role of banks in the global economy and their impact on monetary stability.

Crowding Out and Ponzi Schemes:
Ponzi scheme: the state encourages people to deposit money in banks, then uses this money to pay interest to earlier depositors. Crowding out: the government’s debt reduces the availability of funds for private investment.

Central Government’s Role:
The central government’s job should be to develop the economy, not kill the local economy. Increasing interest rates benefits only those involved in the Ponzi scheme.

Budget Deficit:
The budget deficit is not as large as people think because the government hides losses.

FX Reserves:
The government holds a large amount of FX reserves, but these reserves earn zero interest or even lose value.

Lebanese Law:
Lebanese law allows banks to make losses of up to 4% that are not visible in the data.

Conclusion:
The Lebanese banking system is a Ponzi scheme that is harming the local economy. The government hides losses and uses the law to allow banks to make losses that are not visible in the data.

What is a PEG?:
PEG stands for “currency peg,” a fixed exchange rate system where a country’s currency is pegged to another currency or a basket of currencies.

PEG’s Impact on Argentina:
Argentina’s experience with the PEG on the Argentinean dollar from 1991 to 2001 resulted in disastrous consequences. Unemployment soared from 6% to 16%, and the country eventually abandoned the PEG in 2001. The PEG is now widely discredited, especially for countries with weak currencies.

Lebanon’s PEG System:
Lebanon’s currency is pegged to the US dollar, which makes it much more expensive than its neighbors. This has led to a lack of commercial relationships with neighboring countries, except for oil. The Euro’s decline in value has exacerbated Lebanon’s economic woes.

Problems with PEGs:
PEGs can be costly to maintain, requiring significant financial resources. They can lead to instability and crises if not managed properly. They stifle economic growth by preventing the currency from adjusting to market forces.

Alternatives to PEGs:
Instead of rigid pegs, countries can opt for more flexible exchange rate systems that allow for some fluctuation. This approach provides stability without eliminating all volatility, allowing for predictability while maintaining some flexibility.

Conclusion:
The PEG system in Lebanon has contributed to the country’s economic difficulties. A more flexible exchange rate system could provide a better balance between stability and economic growth. The challenges faced by Lebanon serve as a cautionary tale for countries considering currency pegs.

The Current Situation:
The Lebanese banking system is in a state of crisis, with banks unable to meet their obligations to depositors. The state has not prevented banks from continuing their operations, even though they are not acting rationally. As a result, depositors are losing money and the economy is suffering.

Sovereignty:
Lebanon has relinquished its sovereignty to the banks, which are not subject to the same regulations as other businesses. This means that the banks can do whatever they want, even if it is harmful to the economy.

The Distribution of Wealth:
A small number of people have benefited from the banking crisis, while the majority of people have lost money. 50% of the deposits in Lebanese banks are held by just 1% of the population. This means that a very small number of people have a disproportionate amount of wealth and power.

A Proposed Solution:
The government could implement a “haircut” on bank deposits, which would reduce the amount of money that depositors can withdraw. This would help to stabilize the banking system and prevent further losses. The haircut could be implemented gradually, starting with the largest depositors.

Localism and Political Systems:
Localism, when implemented geographically rather than based on sectarian lines, can prevent many problems. Belgium and Switzerland have successfully used localism to solve issues. Localism should be done on a geographical basis, with freedom for sectarianism and non-sectarianism.

Ponzi Schemes:
Ponzi schemes in Lebanon must stop, as they are unsustainable and harmful to the economy. Solutions exist for those who benefit the most from Ponzi schemes, and these solutions should be implemented. Stopping the Ponzi scheme in Lebanon will cause economic hardship due to the country’s reliance on it.

Subsidiarity Principle:
The principle of subsidiarity, which originated with the Roman Empire and was adopted by the Catholic Church, dictates that decisions should be made at the lowest level possible. If a local level cannot handle a decision, it moves up to the provincial level, and so on. This principle ensures that decisions are made by those most affected by them.

Bitcoin as a Decentralized Currency:
Bitcoin’s decentralized nature eliminates state control over money. This fosters trust and encourages people to transact directly with each other, bypassing traditional banking systems.

Comparison of Centralized and Decentralized Networks:
Centralized networks are vulnerable to manipulation and errors, while decentralized networks like Bitcoin are more secure and reliable. Bitcoin’s distributed structure prevents any single entity from having excessive control.

Benefits of Blockchain Technology:
Blockchain’s transparency and immutability ensure the safety and security of transactions. It eliminates the risk of manipulation or fraud, providing a trustworthy financial system.

Collective Intelligence and Localism:
Lebanon’s collective intelligence surpasses individual intelligence, making it well-suited for localism. Localism empowers municipalities to make decisions and manage resources at a local level, fostering greater accountability and efficiency.

Practical Applications of Cryptocurrencies:
Cryptocurrencies, like Apple Pay, facilitate seamless transactions without government interference. They eliminate the need for intermediaries, reducing transaction costs and increasing accessibility.

Embracing Bitcoin and Cryptocurrencies:
Encouraging the adoption of Bitcoin and cryptocurrencies can help Lebanon overcome its current financial challenges. Educating the public about cryptocurrencies is crucial to drive widespread acceptance and understanding.

Local Government and Decision-Making:
Decentralized decision-making through local governments allows municipalities to address local issues effectively. Granting municipalities autonomy over resources like water and electricity promotes innovation and efficient management.

Learning from Successful Models:
Georgia’s transformation serves as a successful example of drastic reforms and rapid progress. Lebanon can draw inspiration from Georgia’s experience to implement positive changes.

Geopolitics and the Revolution:
The Lebanese revolution is influenced by two factors: the increased understanding of global issues enabled by social media and geopolitical dynamics. People are tired of focusing on periods of peace and famine and are now more aware of local and global events. The revolution is fueled by people who thrive in wartime rather than peacetime.

The Role of Intellectuals:
Nassim Nicholas Taleb believes that intellectuals should not have a stronger role in the Lebanese situation. He argues that intellectuals tend to become socialists and favor state intervention, which is not beneficial for Lebanon. The only exception is the Rose Revolution of Georgia, where intellectuals opposed socialism due to their experience with its negative effects.

The Ponzi Scheme and the Bank of Lebanon:
Taleb highlights the Bank of Lebanon’s Ponzi scheme as a significant problem contributing to the country’s economic woes. He emphasizes that the more liquidity is drawn from the scheme, the larger the burden becomes.

Taleb’s Role and Political Involvement:
Taleb asserts that his role is to teach statistics and systems and enjoy local delicacies, not to engage in politics. He believes that pouring water on someone’s head (a Lebanese expression for trying to influence someone) is ineffective, and his nature prevents him from political involvement. He criticizes the pressure groups and intellectuals who actively participate in politics.

Intellectuals and Socialism:
Taleb expresses his dislike for intellectuals who support socialism and favor state intervention. He believes that these intellectuals will eventually become socialists, which is detrimental to Lebanon’s progress.

Intellectuals and Localism:
Nassim Nicholas Taleb’s dislike for intellectuals stems from their tendency to engage in irrelevant discussions. Taleb emphasizes the need to focus on solving practical problems rather than engaging in intellectual debates. He argues that localism, if implemented correctly, can be beneficial for Lebanon. Taleb suggests that a localist country’s president should have a limited role, similar to a clerk welcoming people at the airport.

Political and Economic Issues:
Taleb questions the motivations behind the implementation of the PEC (Parallel Exchange Rate) in Lebanon. He suggests that it might have been a result of incompetence rather than malice. Taleb proposes that the PEC should be stopped and the Madoff scheme eliminated to improve the economic situation for young people. He believes that removing the PEC would remove the incentive for people to send their children to school.

Solutions for Lebanon:
Taleb suggests that Ramses, a prominent Lebanese figure, should have adult supervision to ensure responsible decision-making. He recommends that the history and economics department be given the task of analyzing the potential consequences of removing the PEC.

Brief Introduction:
A speaker asks Nassim Nicholas Taleb if Switzerland is anti-fragile, and to what.

Switzerland’s Diverse Economy:
Taleb highlights Switzerland’s economic diversity, emphasizing that they excel in various sectors. He specifically mentions the nation’s ability to continue selling watches even during crises, demonstrating resilience and adaptability.

Summary of Speaker 00’s Remarks:
Speaker 00 connects the concepts of localism and Ponzi schemes, but the connection is not immediately apparent. The speaker promises to elaborate on this connection later in the presentation.

Interruption and End of Broadcast:
Speaker 09 announces the end of the live broadcast of the economic meeting at the University of Qadis Yusuf. The broadcast transitions to a newscast.