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Knowledge, Risk, and the Surprised Banker: A Conversation with Alex Pollock

with Alex J. Pollock

Longtime Law and Liberty contributor Alex Pollock joins this edition of LibertyLawTalk to discuss his new book Finance and Philosophy.

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on October 10, 2018 at 23:29:13 pm

As a philosopher, this whole podcast once again shows that economics and finance are completely abstract and relative socio-sciences. Which nobody actually understands, except as a gambler of relative stakes. Insurance, biology, metaphysics, even history - these all have an anchor, making relative assessments comparable and accessible to everyday folks. But economics and finance do not truly function as sciences, whether metaphysical or not. They simply float, arbitrarily. As a PHD in Philosophy and History, I am still amused at why I cannot grasp fundamental economics and finance; but I understand how my bank and the corner store works. You folks never define your terms or how these interact. PS I am a huge fan of L&LTalk

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tim fitz
on November 20, 2018 at 12:12:31 pm

First of all, I'm coming here from EconTalk. So happy I found this!

Tim - Coming at this from the finance profession, I wholeheartedly support your notion that economics is not a "hard science," but instead a social science. It is often (but not always) quite good at providing ex post analysis, yet as a discipline ostensibly having prescriptive powers, its reach more often than not exceeds its grasp.

Finance I would argue, is a bit less of a black art, and to some degree it generates predictable outcomes that have real utility in both the public and private sectors. Even then, the performance of a financial instrument is inextricably tied to future events that we are ill-equipped to predict. Both of these fields suffer from the belief that they can reliably provide value through their predictions.

You might enjoy Nassim Taleb's Fooled by Randomness as deeper dive into some of these questions. It, and his book The Black Swan, forever changed my understanding of financial markets and economics. You might also appreciate his drawing on philosophy and behavioral sciences throughout his books.

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Charlie Atwill

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