Jeff Hirsh Read: July 2022
Inspiration: Wanted to read more of Taleb after reading “Black Swan”
Summary
Written with the help of ChatGPT, below is a brief summary to understand what is covered in the book.
“Skin in the Game”, published in 2017 by author, professor, and former options trader Nassim Nicholas Taleb, discusses the concept the concept that those who have a personal stake in the outcome of a situation are more likely to act in a fair and just manner. Taleb argues that this principle is a key element of a healthy society, and that those who make decisions without having skin in the game are prone to reckless behavior and harmful consequences. The book discusses the ways in which skin in the game can be applied to a wide range of areas, including economics, politics, and personal responsibility. It also examines the dangers of over-reliance on experts and intellectualism, and argues that true wisdom comes from practical experience and firsthand knowledge. Overall, the book makes a strong case for the importance of skin in the game in promoting accountability and responsible decision-making.
Unedited Notes
Direct from my original book log, below are my unedited notes (abbreviations and misspellings included) to show how I take notes as I read.
Skin in the game means not financial but has stake in upside and downside of consequences, education without accountability drives academia to fraud/false claims, bureaucracy separates people from consequences of actions, war interventionists persist due to separation from consequences, via negativa: knowledge learns by subtraction (learn what is wrong and filter), do not take advice from people who give advice for a living unless there is a penalty for their advice, those who talk should do and only those who do should talk (sextus empiricus), revolving door to public sector is essentially prospective bribery, conflict of interest not inherently bad so long as congruent downside risk sharing (e.g. journalists who comment on stocks they do not own), it is really minority not consensus that moves the needle in society—minority with soul in the game push against passive other who agree to bend if decently convenient and this is where societies change (also where intolerance grows—from the minority of least tolerant once appease, spirals), dimensionality problem means that as scale in group size, interactions multiples more complex to extrapolating for average of sample to general population misguided, if believe in freedom of speech and tolerance then should you tolerate intolerance or cut off their speech, Bob Rubin trade (CEO of Citi)—can take success and pay then blame chaos on black swan and no consequences (no skin in the game), Putin has a hold b/c more free without having to go through bureaucracy, nudge economists thaler and sunstein fail too see how individual not translate to crowd/market actions, political leaders exemplify lack of skin in the game—intellictuals only insofar as pass exams written by others like them and write papers read by others (a minority of general populace), people resent the static nature of the rich—lack downside and rotation in the rich (particularly in europe), resentment of rich tends to stem from those of middle/upper class envious of those less smart but richer, data is not rigor necessarily (dump data in place of logic/rigor), Lindy Effect=life expectancy lengthens with time, academia is a circular—peer reviews come from like minded people (equally wrong), easier to macroBS than microBS, in hierarchical industries those who don’t look the part likely best b/c overcame perception too, intellectuals and consultants incentivized towards complex not simple, scientism is to science what a ponzi scheme is to investment, hard to claim intellectual virtue when private life conflicts—that is more immoral in many ways, intellectuals without skin in the game exacerbate conflict—people on the ground in communities more practical and could resolve (e.g. israel palestine taken from actual citizens to “diplomats”), be aware religion means very different things to diff people, religion is words vs athiest in action describes most (in most situations athiest and religious person do the same thing), religious in action describes the few (extremists), rationality is that which aids survival, long terms returns of market distinct from individual returns b/c individual lacks infinite pockets (things happen), ensemble probability vs time probability is flaw is social science stats (independent group members not same as individual over time), rationality is the avoidance of systemic ruin, ruin changes probability, multipicative systemic events cannot be conflated with nonmultiplicative
