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Big Government, Big Business Both Evil: 'Black Swan' Taleb

Both big business and big government should be viewed as evils and threatening the real engine of economic growth, which is small business, author Nassim Taleb told CNBC Friday.

Nassim Taleb
Photo by: YechezkelZilber
Nassim Taleb

Riffing off an aphorism in his new book, "The Bed of Procrustes," which calls opposing big government while supporting big business "inconsistent and corrupt," Taleb said in an interview that problems confronting the economy are political and economic.

"They're both very bad, particularly big government. Big government ends up like socialist states," he said. "They end up favoring large corporations that have a lot of employees. That kills growth from small companies who cannot get to Washington, they cannot get lobbyists."

"The problem I have is that Republicans love big business and Democrats love big government, and I hate both big business and big government," he added.

Famous for his earlier release, "The Black Swan," Taleb advocates investors devote large portions of their portfolios to safe assets and smaller portions to higher-risk plays—rare occurrences, such as the appearance of previously unseen black swans.

His latest work is a collection of aphorisms, or short sayings, regarding his philosophy on a variety of subjects, particularly on the economy, politics and the capital markets.

"My idea is that you should focus on the small guy, the small businessman," he said. "Large corporations become fragile and later on will require a bailout, while these people—hairdressers don't get bailouts, restaurant owners don't get bailouts, companies in Silicon Valley don't get bailouts...These people don't have lobbyists in Washington."

Procrustes is a figure from Greek mythology—the son of Poseidon—who adjusted people's bodies to fit an iron bed he kept in his house. For those too tall for the bed, he would cut down their legs, and for those too short he would stretch them.

Taleb compares the "financial establishment" to Procrustes, who could have adjusted his bed to fit his guests rather than the reverse.

"They're trying to change the wrong variables," he said. "Instead of changing models or accepting limitations on their models, they have an idea in their head and the world has to fit to it."