DRAFT: Do No Economic Harm
December 2025 (1120 Words, 7 Minutes)
The economy is often treated as a giant mechanism to be managed and controlled, but this view requires a monumental level of intellectual hubris. Economic intervention, like imposing price controls or handing out subsidies, inevitably stems from the naive belief that one person or small group can grasp and manipulate a system of billions of variables. As we proceed, we will challenge this belief and demonstrate why the humility to not intervene is the highest form of economic wisdom.
Nassim Taleb characterizes modernity as the spirit of an age marked by “naive rationalism,” the mistaken idea that society is fully understandable and therefore must be designed by humans. But before we attempt to design, we must first understand the roots of our current standing.
First of all, we need to understand where economic progress comes from. Why did extreme poverty in the world drop from 75% of the population to 10% in the last 200 years, for example?1 We don’t have evidence of anything remotely comparable in scale happening in human history before.
We didn’t get where we are today thanks to policy makers - but thanks to the appetite for risks and errors of a certain class of people we need to encourage, protect, and respect
Nassim Taleb
This shift wasn’t magic. During the Enlightenment—spanning the 16th and 17th centuries in England and rooted even earlier in the School of Salamanca in Spain—foundational ideas were developed that created the environment for capitalism to flourish. These included constitutionalism, the rule of law, and economic liberalism centered on private property and voluntary exchange.
The right cultural conditions emerged for continuous and quick economic progress. Crucially, this progress relies on something that can seem paradoxical: for the economy to be “antifragile” and undergo evolution, every single individual business must necessarily be fragile and exposed to breaking. As Taleb suggests, evolution needs organisms to die when supplanted by others to achieve improvement.
To better understand economic evolution, the source of our prosperity, we need to understand complexity. The economy is not just complex in the way a car engine is complex. It possesses a fundamentally different quality of complexity: it is emergent and irreducible.
It is emergent because an economy is more than the sum of its billions of participants. You cannot see the big picture by studying the participants in isolation, just as you cannot understand how an ant colony will behave by only studying individual ants. An economy is less like a clock mechanism and more like a giant organism.
This complexity is irreducible because, in order to make accurate predictions about our economy, one would have to simulate every individual consumer’s preferences, every weather event, and every political decision. There is no formula that allows us to skip these steps. Even if we had computers that could use the energy of entire suns, we could not make accurate predictions about our economy. And even if we could—which, again, we absolutely cannot—those predictions themselves would change the nature of the economy, invalidating them.
Complex systems are full of interdependencies - hard to detetect - and nonlinear responses. “Nonlinear” means that when you double the doese of, say, a medication, when you double the number of employees in a factory, you don’t get twice the initial effect, but rather a lot more or a lot less. Two weekends in Philadelphia are not twice as pleasant as a single one - I’ve tried. When the response is plotted on a graph, it does not show as a straight line (“linear”), rather as a curve. In such environments, simple causal associations are misplaced; it is hard to see how things work by looking at single parts.
Man-made complex systems tend to develop cascades and runaway chains of reacctions that decrease, even eliminate, predictability and cause outsized events. So the modern world may be increasing in technological knowledge, but, paradoxically, it is makings things a lot more unpredictable.
Nassim Taleb
The deep, emergent, and irreducible complexity of the economy explains why when economic decision-making and risk-taking was decentralized it accelerated economic evolution. Capitalism empowered individuals to take risks and to use the knowledge that only they have. A free market is a decentralized system because there is no one person deciding how it should behave. Just as the ant queen isn’t directing the individual ants on where to look for food, decentralized capitalism doesn’t direct business on what business model to follow. Consequently, societies can experiment, generate and use vastly more knowledge than they did with centralized systems.
It is because every individual knows little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.
Friedrich Hayek
If a capitalist economy is a large organism, the price system is its nervous system, transporting crucial information to every part of the organism and interconnecting the different parts.
The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; i.e., they move in the right direction.
Friedrich Hayek
Human intervention can cause huge problems when dealing with emergent complex systems. This is due to unpredictable side effects. The deadliest famine in human history was caused, in part, by the hubris of thinking we could eliminate some birds without thinking of side effects.
Today, it is increasingly understood that intervention when it comes to natural ecosystems or medicine is difficult and poses risks. However, this domain-specific understanding doesn’t always translate. The same people who understand that killing an entire species of animal on purpose is an insane idea will often advocate for similar style interventions in the economy.
When authority interferes with economic freedom through price controls, subsidies, or restrictions, they are effectively harming the nervous system of the economic organism. They are telling a lie about reality. They tell people resources are abundant when they are scarce. If we did check recent history, we would realize that price controls almost invariably lead to shortages. Yet, the first thing people demand when a good becomes too expensive is a price control. It is the economic equivalent of treating a fever by smashing the thermometer and celebrating the lack of numbers.
I will admit that sometimes a government needs to intervene in the economy, for example when economic interdependence becomes a national security risk. But I believe that in those cases it should be done with extreme care, nuance, and a study of the past.
In medicine, doctors learn Primum non nocere—first, do no harm. They learn to intervene only when needed, and when they do, to make the smallest cut possible or prescribe the least amount of drugs possible. We have long processes to thoroughly test new drugs before we allow them to be sold. When it comes to the complex system of the human oranism, we have learned to be careful.
It is time we apply this same care to the economy. The economic equivalent of Primum non nocere is the conscious rejection of the planner’s delusion—the acceptance that our role is not to force specific outcomes, but to safeguard its decentralized mechanisms and don’t introduce radical changes that could threaten the ecosystem. The greatest service a policymaker can render is often the restraint to not intervene or to intervene as little as possible.