Skin in the Game: Hidden Asymmetries in Daily Life (Incerto)

by: Nassim Nicholas Taleb (0)

#1 NEW YORK TIMES BESTSELLER • A bold work from the author of The Black Swan that challenges many of our long-held beliefs about risk and reward, politics and religion, finance and personal responsibility

In his most provocative and practical book yet,
one of the foremost thinkers of our time redefines what it means to understand the world, succeed in a profession, contribute to a fair and just society, detect nonsense, and influence others. Citing examples ranging from Hammurabi to Seneca, Antaeus the Giant to Donald Trump, Nassim Nicholas Taleb shows how the willingness to accept one’s own risks is an essential attribute of heroes, saints, and flourishing people in all walks of life.

As always both accessible and iconoclastic, Taleb challenges long-held beliefs about the values of those who spearhead military interventions, make financial investments, and propagate religious faiths. Among his insights:

• For social justice, focus on symmetry and risk sharing. You cannot make profits and transfer the risks to others, as bankers and large corporations do. You cannot get rich without owning your own risk and paying for your own losses. Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations.
• Ethical rules aren’t universal. You’re part of a group larger than you, but it’s still smaller than humanity in general.
• Minorities, not majorities, run the world. The world is not run by consensus but by stubborn minorities imposing their tastes and ethics on others.
• You can be an intellectual yet still be an idiot. “Educated philistines” have been wrong on everything from Stalinism to Iraq to low-carb diets.
• Beware of complicated solutions (that someone was paid to find). A simple barbell can build muscle better than expensive new machines.
• True religion is commitment, not just faith. How much you believe in something is manifested only by what you’re willing to risk for it.

The phrase “skin in the game” is one we have often heard but rarely stopped to truly dissect. It is the backbone of risk management, but it’s also an astonishingly rich worldview that, as Taleb shows in this book, applies to all aspects of our lives. As Taleb says, “The symmetry of skin in the game is a simple rule that’s necessary for fairness and justice, and the ultimate BS-buster,” and “Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them.”

The Quotes

You will never fully convince someone that he is wrong; only reality can.

Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.

The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding,

The Reviews

I found it very odd that a man who describes himself as a “flaneur, meditating in cafes across the planet, [who] is currently Distinguished Professor at New York University” would spill so much ink heaping snide derision upon the “educated “idiots” of academia. People living in glass houses should not throw stones.Taleb attempts to side-step his obvious hypocrisy by reminding the reader ad nauseam that he is a former options trader. If Taleb were opining about matters related to his real-world financial trading experiences, that would be a fair point. But most of Taleb’s observations have nothing t do with either his real-world observations or his academic training. At least the economists whom Taleb excoriates have the good sense to stick to economics.For example, Taleb argues that the EPA is unnecessary because (according to Taleb) the mere threat of civil litigation is sufficient to prevent corporations from polluting our water and air. Unlike Talab, who was a 10 YO boy living in Lebanon when the EPA was enacted, I grew up in a pre-EPA American steel mill town during the 1950s and 1960s. I know from my own experience that after the EPA was passed in 1970, the sky over my town turned from brown to blue and my bronchitis went away. Moreover, I know from my 30+ years of experience as a lawyer, that the threat of civil litigation has little, if any, deterrent effect on polluters. So, based on my own “skin in the game” in the form of scared lung tissue and actual litigation experience, I know Taleb is both wrong and guilty of spouting the very sort of BS that he derides throughout his book.I do not mean to suggest that I disagree with everything (or even most) of that the author has to say. Taleb does have a lot of interesting and thoughtful observations. He’s obviously very smart.However, he apparently unable (or too lazy) to organize his thoughts into a coherent body of work. This 223 book has 7 parts and 19 chapters, each of which has numerous sub-parts, many of which are less than a single page. The author's ideas appear to be unrelated and presented in a random fashion. It was interesting, but not very worthwhile.

I loved Fooled by Randomness and Black Swan and seriously disliked the Antifragility. I am very glad to say that with the Skin in the Game Taleb is back. Opinionated, at times rude and angry, but someone you feel you should listen to.When I buy books I usually read one star reviews. Some of them are crap (my book arrived with six missing pages!), but some give you a pretty good idea of what you are going to find. There is one star review that gets close to 5000 words limit, followed by the long thread of comments exchange where the replies by the original author get, again, to the said limit. If someone gets that fired up by the book that he regurgitates thousands of words - it's well worth a few bucks and I simply must read it.Anyway, as always with Taleb, I now have a new reading list based on his footnotes. Yes, he comes across as an angry man. Yes, he has irrational dislike of academics (as do I) and policy makers. Yes, some of his statements are contradictory and yes, sometimes he goes too far in his arguments. But this is exactly what makes books worthwhile the time spent reading them. Contradictions have to be sorted, but to do so you have to think about the subject and come to your own conclusions, and this involves effort, and this is what makes books stimulating.I highly recommend this book.

If you hate BS, this is the book for you. Stop being "bullied" for what you think by academics and journalists who have no skin in the game. They have nothing to lose by being wrong (Think Viet Nam, Syrian, the 2008 economic melt down). Trust the do-ers who suffer the consequences for being wrong ( business people who take risks), This book has to be studied. It follows from Mr. Taleb's previous work which provides the science and mathematics behinds this work. It requires a "deep dive" and understanding. A casual book reviewer or journalist would not have an easy time reviewing this book. Be prepared to study, the results are very rewarding not matter what your field of interest.

Skin in the Game: Hidden Asymmetries in Daily Life (Incerto)
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