N N Taleb: Connectivity Has Created The Winner-Take-All Effect

In his recent conversation with Stephen Wolfram at the Wolfram Summer School 2021, Nassim Taleb discussed how connectivity has created the winner-take-all effect. Here’s an excerpt from the conversation:

Okay the difference that we have today is that the tails are more important and let me explain how that happened, and this has to do with connectivity which is the most important thing for economics is connectivity.

So to explain the dynamics and why things are getting more fat-tailed let’s say that you’re an opera singer in, and that’s the example I’ve used, in Naples in the 1800s.

You have a good life because nobody can transport goods from New York, namely singing, so people can sing in Milan and they don’t… no threat to you.

So therefore you’re gonna have the income, local income, determined locally. Now let’s say that someone invented something called the vcr or stuff like that where suddenly now you’ve been displaced by audiovisual, and they didn’t have planes and now people can fly and go to Milan, New York other places to see other opera singers.

Now that creates a winner take all effect or a smaller and probably the let’s say perceived to be the best, we’ll take all the money. This applies to practically everything like Google today taking all the money for browser worldwide, or in the past no farmer could take all the money for farming worldwide, you’re very local so things are being delocalized in many respects.

You can watch the entire conversation here: