Skin in the Game by Taleb (audio)
Taleb is back with another book. It has interesting, but poorly organized ideas. Fortunately, it is mercifully short acting more of a summary of his previous work (I only read Antifragile). I don't think I could handle much more virtiol.
First, the interesting parts.
The thesis of "Skin in the Game" is that decision makers need to be subject to the downsides that arise from their bad decisions, not just the upside of their good ones. Skin in the game used to be normal: some kings and emperors would fight on the front lines. Lords traded personal risk for prominence. In modernity, many decision makers, such as bureaucrats that make decisions on whether or not to go to war, are shielded from their actions. He makes some interesting arguments:
- Big companies want employees to be family men. Because they have more dependents and thus debt. So they are less likely to leave.
- Cato’s injunction: it's better to have someone ask why you don’t have a statue rather than why you do.
- VR can never be compelling since there's no downside risk to you. You have no skin in the game. (This might be a leap I'm taking).
- The Silver Rule - negative version of the golden rule: don’t do to others what you wouldn’t want them to do to you. He expands on the definition of "you", which is interestingly applied in the plural as well, to individuals, families, tribes, countries. This is the libertarian version of the Golden Rule.
- Static vs. dynamic inequality: an important distinction. Wealth inequality is not itself bad. It would be fair if people rotated through the wealth classes over their lifetimes. Taleb claims that they do (which I highly doubt) and this is his critique of Picketty.
- But the fact that the market permits the prince become the pauper is an example of skin in the game. And actually this status loss is super relatable to people (eg. Trump).
- Taleb is in favor of parsimony, and suspicious of an argument defended by too many data points. This is his critique of Pinker's "everything is awesome" narrative.
- Lindy effect - for some non-perishable things, the longer something exists the longer it will continue to exist.
- Peer reviews are problematic because your peers aren’t necessarily the right judges. Instead, time is the only judge. (I agree in theory, but in practice, time takes too long).
- Religion can affect actions and words. To the extent that religions affect words, Taleb is fine with it. He claims most modern religions affect words only, and there is no function difference between a Catholic and an Atheist.
- Claims that Atheists like Dawkins & Harris don't properly understand the distinctions between various kinds of belief. In practice, everyone has some "religious" practices like honoring the dead.
- Rationality of a belief makes no sense. The only rationality that makes sense, is that of an action, any only from the standpoint of survival. That which helps you survive is rational. From this perspective, whether or not you can explain something has no bearing on whether it’s rational or not.
- Good reminder: correlation between deaths matters. Even though Ebola kills fewer people than bathtubs, it’s still a bigger risk because it's an infectuous disease, and so has huge downside.
- Loss aversion isn't an irrational bias. It's rational to be fearful of ruin.
- Summary statistics are often misleading. “Never cross a river if it is on average 4ft deep”.
Taleb concludes with thought provoking advice:
- Never engage in virtue signaling;
- Never engage in rent-seeking;
- You must start a business. Put yourself on the line, start a business.
I take issue with the tone in which the book is written. Taleb's level of hatred towards some ideas and people, especially Steven Pinker is quite funny and jarring. Whole chapters, such as the one devoted to Intellectuals Yet Idiots, come off as a giant rant. He makes a lot of ridiculous claims which deserve to be ignored or made fun of:
- He insults people as "not even weightlifters". I think this is a reference to his obsession with deadlifting.
- Taleb uses “domestication" as an insult. But the flip side is that this is the basis of a functional social system.
- He claims that employees are just like slaves. But employment is at-will on both sides, and the trend today is away from "lifer"-dom.
- He disparages academics because "talk is cheap", yet writes many books with pompous names.
- He claims that public speakers get nervous because of the stage lights in their eyes.
- Made up words like econophaster, psychosophaster and scientism aren't winning him any favors.
Taleb is a provocoteur. But why? His ideas are actually quite academic and intellectual, so he's not trying to appeal to populist masses. So who is his target audience? Who knows? Anyway, I listened to this book, and it was probably more worthwhile than listening to podcasts, but that's a pretty low bar. I can't really recommend you do the same, so here are some interesting names that Taleb mentions instead:
- Herb Simon - bounded rationality: people are fundamentally limited. (I've been meaning to read him since being a CMU student.)
- Gerd Gigerenzer - many things appear illogical but are actually done for good reasons.
- Ken Binmore - the word “rational” is ill defined. It’s all about revealed preferences.