Skin in the Game

Highlights

Page 317

Don’t tell me what you “think,” just tell me what’s in your portfolio.

Page 333

But never engage in detailed overexplanations of why something important is important: one debases a principle by endlessly justifying it.

Note: I feel like the debt book does this

Page 386

So we tried that thing called regime change in Iraq, and failed miserably. We tried that thing again in Libya, and there are now active slave markets in the place.

Note: If you discuss Libya, discuss Syria too

Page 393

advocating regime changes implies also advocating slavery or some similar degradation of the country

Note: Syria

Page 456

(that same unseen and unforecastable Black Swan and that same very, very stubborn author),

Note: What a dude

Page 469

The move took place mostly because of the overbureaucratization of the system as paper shufflers (who think work is mostly about paper shuffling) overburdened the banks with rules—but somehow, in the thousands of pages of additional regulations, they avoided considering skin in the game.

Note: Don’t just say SITG. Tell us how you would have modified Dodd-Frank

Page 479

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

Page 482

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

Note: I fear that this entire book is filled with platitudes like this. A reader will go through 50of these proclamations, feeling very smug about how smart they are compared to the “elites”

Page 574

Nobody embodies the notion of symmetry better than Isocrates, who lived more than a century and made significant contributions when he was in his nineties.

Note: You’re a wise orator if you agree with Taleb. If not you’re an ivory tower academic

Page 624

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

Page 639

There is another point: we may not know beforehand if an action is foolish—but reality knows.

Note: Wow. Inanity trying to masquerade as something profound

Page 660

Forecasting (in words) bears no relation to speculation (in deeds). I personally know rich horrible forecasters and poor “good” forecasters. Because what matters in life isn’t how frequently one is “right” about outcomes, but how much one makes when one is right. Being wrong, when it is not costly, doesn’t count—in

Page 683

I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

Note: Like fidget spinners?

Page 686

“Survival talks and BS walks.” Or as Fat Tony would put it: “Survival tawks and BS wawks.”

Note: Hilarious

Page 692

And there are other risks (of the type academics shun) that we cannot afford to not take.

Note: Citation needed. Which academics? When? What did they say? Why were they wrong?

Page 711

At the time of writing, science has been taken over by vendors using it to sell products (like margarine or genetically modified solutions)

Note: Gmo alarmist

Page 775

Many kids would learn to love mathematics if they had some investment in it, and, more crucially, they would build an instinct to spot its misapplications.

Page 782

Given that regulations are additive, we soon end up tangled in complicated rules that choke enterprise. They also choke life.

Note: Pah

Page 797

Some of us believe that freedom is one’s first most essential good. This includes the freedom to make mistakes (those that harm only you); it is sacred to the point that it must never be traded against economic or other benefits.

Note: Some of us believe… therefore it is sacred. No other explanation needed

Page 848

Having an assistant (except for the strictly necessary) removes your soul from the game.

Note: Facepalm

Page 867

his name on a mathematical finance technical journal (Wil–mott), which at the time of writing is undoubtedly the best. “Egomaniac” is good for the product. But if you can’t get “egomaniac,” “arrogant” will do.

Note: He points this out, but not the opposite. The quality of the Economist doesn’t suffer for not having writers names

Page 886

If you want to study classical values such as courage or learn about stoicism, don’t necessarily look for classicists. One is never a career academic without a reason. Read the texts themselves: Seneca, Caesar, or Marcus Aurelius,

Note: Caesar wasn’t a stoic. Gtfo noob

Page 890

For studying courage in textbooks doesn’t make you any more courageous than eating cow meat makes you bovine.

Note: Hamfisted analogy

Page 919

In that sense, decentralization and fragmentation, aside from stabilizing the system, improves people’s connection to their labor.

Note: Reminds me of management consultants who show up and say “decentralise!” And then 3 years later “centralise!”

Page 925

The scene of the painting is Sisamnes’s son dispensing justice from his father’s chair, upholstered with the flayed skin as a reminder that justice comes with, literally, skin in the game.

Note: I wonder how inclined he would be to rule against the king

Page 967

I didn’t do mathematics to solve a problem, just to satisfy a fixation. But I never expected the following effect. It made my bull***t detector so sensitive

Note: How awesome. Tell us more about how amazing you are

Page 970

Seeing the psychologist Steven Pinker making pronouncements about things intellectual has a similar effect to encountering a drive-in Burger King while hiking in the middle of a national park.

Page 972

It is under such an oversensitive bull***t detector that I have been writing this book.

Note: I feel like the people this appeals to are the folks impressed by Trump because “he doesn’t talk like a politician”

Page 973

And since we are talking about books, I close this introductory section with that one thing I’ve learned from my time in that business. Many book reviewers are intellectually honest and straightforward people, but the industry has a fundamental conflict with the public, even while appointing itself as representative of the general class of readers. For instance, when it comes to books written by risk takers, the general public (and some, but very few, book editors) can detect what is interesting to them in a certain account, something those in the fake space of word production (in other words, nondoers) chronically fail to get—and they cannot understand what it is that they don’t understand because they are not really part of active and transactional life.

Note: This book is awesome and if any reviewer says otherwise they’re wrong

Page 055

Journalists who “analyze” and predict

Note: Economist Brexit

Page 107

One expert salesman candidly explained to me: “If I buy the client, someone working for the finance department of a municipality who buys his suits at some department store in New Jersey, a bottle of $2,000 wine, I own him for the next few months. I can get at least $100,000 profits out of him. Nothing in the mahket gives you such return.”

Page 136

The ethical is always more robust than the legal. Over time, it is the legal that should converge to the ethical, never the reverse. Hence: Laws come and go; ethics stay.

Page 219

Putting Shiites, Christians, and Sunnis in one pot and asking them to sing “Kumbaya” around the campfire while holding hands in the name of unity and fraternity of mankind has failed. (Interventionistas aren’t yet aware that “should” is not a sufficiently empirically valid statement to “build nations.”) Blaming people for being “sectarian”—instead of making the best of such a natural tendency—is one of the stupidities of interventionistas.

Note: I feel like asking him to STFU. it’s so infuriating to see him talk with contempt about others when he himself is far from perfect

Page 353

(Fughedabout scientific and academic intuitions and snap judgments; they don’t work, and your standard intellectualization fails with complex systems, though your grandmothers’ wisdom doesn’t.)

Note: Vagueness. Wtf is grandmothers wisdom

Page 360

I offered him a glass of that type of yellow sugared water with citric acid people sometimes call lemonade,

Note: Jesus

Page 431

“Big Ag” (the large agricultural firms) does not realize that this is the equivalent of entering a game in which one needed to not just win more points than the adversary, but win 97 percent of the total points just to be safe. It is strange to see an industry that spends hundreds of millions of dollars on research-cum-smear-campaigns, with hundreds of these scientists who think of themselves as more intelligent than the rest of us, miss such an elementary point about asymmetric choices.

Page 450

I dropped by the office of Raphael Douady, a friend I wanted to prevent from working, that is, engaging in an activity that, when abused, causes the loss of mental clarity, in addition to bad posture and loss of definition in facial features.

Note: Pah enna oru humour

Page 469

Pizza is the same story: it is a commonly accepted food, and, outside a gathering of pseudo-leftist caviar eaters, nobody will be blamed for ordering it.

Note: It’s so annoying to read this shade thrown at strawmen

Page 508

Genes follow majority rule; languages minority rule. Languages travel; genes less so.

Page 526

Under these two asymmetric rules, one can do simple simulations and see how a small Islamic group occupying Christian (Coptic) Egypt can lead, over the centuries, to the Copts becoming a tiny minority. All one needs is a small rate of interfaith marriages.

Note: LOVE JIHAAAAD

Page 540

So all Islam did was out-stubborn Christianity, which itself won thanks to its own stubbornness. For before Islam, the original spread of Christianity in the Roman empire was largely due to … the blinding intolerance of Christians; their unconditional, aggressive, and recalcitrant proselytizing. Roman pagans were initially tolerant of Christians, as the tradition was to share gods with other members of the empire. But they wondered why these Nazarenes didn’t want to give and take gods and offer that Jesus fellow to the Roman pantheon in exchange for some other gods. What, our gods aren’t good enough for them? But Christians were intolerant of Roman paganism. The “persecution” of the Christians had vastly more to do with the intolerance of the Christians for the pantheon of local gods than the reverse. What we read is history written by the Christian side, not the Greco-Roman one.

Note: Already knew this by reading Roman history and Sapiens

Page 575

Let us conjecture that the formation of moral values in society doesn’t come from the evolution of the consensus. No, it is the most intolerant person who imposes virtue on others precisely because of that intolerance. The same can apply to civil rights.

Page 625

This is in fact the incoherence that Kurt Gödel (the grandmaster of logical rigor) detected in the United States Constitution while taking the naturalization exam. Legend has it that Gödel started arguing with the judge, and Einstein, who was his witness during the process, saved him.

Note: According to the other guy it is not true

Page 656

For, at the battle of Cannae, he remarked to Gisco, who was concerned that the Carthaginians were outnumbered by the Romans: “There is one thing that’s more wonderful than their numbers … in all that vast number there is not one man called Gisgo.”

Note: Editor pls

Page 700

The mean-field approach is when one uses the average interaction between, say, two people, and generalizes to the group—it is only possible if there are no asymmetries. For instance, Yaneer Bar-Yam has applied the failure of mean-field to evolutionary theory of the selfish-gene narrative trumpeted by such aggressive journalistic minds as Richard Dawkins and Steven Pinker, with more mastery of English than probability theory.

Note: Please tell us what these flaws are instead of just insulting these people

Page 740

Why were they banned? They were, simply, totally free. They were financially free, and secure, not because of their means but because of their lack of wants. Ironically, by being beggars, they had the equivalent of f*** you money, which we can more easily get by being at the lowest rung than by joining the income-dependent classes.

Note: Nice

Page 832

Had economists, Coase or Shmoase, had any interest in the ancients, they would have discovered the risk-management strategy relied upon by Roman families who customarily had a slave for treasurer, the person responsible for the finances of the household and the estate. Why? Because you can inflict a much higher punishment on a slave than a free person or a freedman—and you do not need to rely on the mechanism of the law for that. You can be bankrupted by an irresponsible or dishonest steward who can divert your estate’s funds to Bithynia. A slave has more downside.

Page 907

What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing.

Page 948

We have been witnessing the same problem in the U.S. attitude toward Saudi Arabia. It is clear since the attack on the World Trade Center (in which most of the attackers were Saudi citizens) that someone in that nonpartying kingdom had a hand—somehow—in the matter. But no bureaucrat, fearful of oil disruptions, made the right decision—instead, the absurd invasion of Iraq was endorsed because it appeared to be simpler.

Page 995

To make ethical choices you cannot have dilemmas between the particular (friends, family) and the general.

Page 136

When I saw Donald Trump in the Republican primary standing next to other candidates, I became certain he was going to win that stage of the process, no matter what he said or did.

Note: Easy to say after the fact

Page 155

who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think, and … 5) whom to vote for.

Note: How the fuck is this dude lumped in with the “rest of us”

Page 169

those who want to “nudge” us into some behavior—much of what they would classify as “rational” or “irrational” (or some such categories indicating deviation from a desired or prescribed protocol) comes from their misunderstanding of probability theory and cosmetic use of first-order models. They are also prone to mistake the ensemble for the linear aggregation of its components—that is, they think that our understanding of single individuals allows us to understand crowds and markets, or that our understanding of ants allows us to understand ant colonies.

Note: Take a concrete example and break it down

Page 179

The IYI pathologizes others for doing things he doesn’t understand without ever realizing it is his understanding that may be limited. He thinks people should act according to their best interests and he knows their interests, particularly if they are “rednecks” or from the English non-crisp-vowel class who voted for Brexit.

Note: I may not know much, but I do know about the Good Friday agreement

Page 189

The IYI subscribes to The New Yorker, a journal designed so philistines can learn to fake a conversation about evolution, neurosomething, cognitive biases, and quantum mechanics. He never curses on social media. He speaks of “equality of races” and “economic equality,” but never goes out drinking with a minority cab driver (again, no real skin in the game, as, I will repeat until I am hoarse, the concept is fundamentally foreign to the IYI).

Note: But I never hang out with any strangers… I’m willing to bet most people don’t

Page 195

The IYI has a copy of the first hardback edition of The Black Swan on his shelf, but mistakes absence of evidence for evidence of absence. He believes that GMOs are “science,” that their “technology” is in the same risk class as conventional breeding.

Note: Yeah I do, so please convince me otherwise. Or just insult me I guess, that works too

Page 209

he has never read Frédéric Dard, Libanius Antiochus, Michael Oakeshott, John Gray, Ammianus Marcellinus, Ibn Battuta, Saadia Gaon, or Joseph de Maistre;

Note: Oh look at me, the authors that I read are the good ones

Page 211

he doesn’t even know the difference between Hecate and Hecuba

Note: Because Taleb has decided this is absolutely vital knowledge

Page 254

the detractors of Donald Trump, when he was still a candidate, not only misunderstood the value of scars as risk signaling, but they also failed to realize that, by advertising his episode of bankruptcy and his personal losses of close to a billion dollars, he removed the resentment (the second type of inequality) people may have had toward him. There is something respectable in losing a billion dollars, provided it is your own money.

Note: But was it his own

Page 267

Visibly, a problem with economists (particularly those who never took risk) is that they have mental difficulties with things that move and are unable to consider that things that move have different attributes from things that don’t. That’s the reason complexity theory and fat tails (which we will explain a few pages down) are foreign to most of them; they also have (severe) difficulties with the mathematical and conceptual intuitions required for deeper probability theory. Blindness to ergodicity, which we will begin to define a few paragraphs down, is indeed in my opinion the best marker separating a genuine scholar who understands something about the world from an academic hack who partakes of ritualistic paper writing.

Note: “They” apparently don’t understand this

Page 275

Consider that about 10 percent of Americans will spend at least a year in the top 1 percent, and more than half of all Americans will spent a year in the top 10 percent.fn3

Note: If this is true it would be massive, but of course no sources are provided.

Page 379

As I mentioned in the past chapter, I have yet to see a bien pensant Cambridge don hanging out with Pakistani cab drivers or lifting weights with cockney speakers. The intelligentsia therefore feels entitled to deal with the poor as a construct; one they created. Thus they become convinced that they know what is best for them.

Note: But Taleb knows

Page 387

DATA, SHMATA Another lesson from Piketty’s ambitious volume: it was loaded with charts and tables. There is a lesson here: what we learn from professionals in the real world is that data is not necessarily rigor. One reason I—as a probability professional—left data out of The Black Swan (except for illustrative purposes) is that it seems to me that people flood their stories with numbers and graphs in the absence of solid or logical arguments. Further, people mistake empiricism for a flood of data. Just a little bit of significant data is needed when one is right, particularly when it is disconfirmatory empiricism, or counterexamples: only one data point (a single extreme deviation) is sufficient to show that Black Swans exist.

Note: This attitude makes it impossible to verify his claims about ergodicity

Page 506

Being reviewed or assessed by others matters if and only if one is subjected to the judgment of future—not just present—others. And recall that, a free person does not need to win arguments—just win.fn2

Page 551

Someone with a high public presence who is controversial and takes risks for his opinion is less likely to be a bull***t vendor.fn4

Note: Like Taleb, coincidentally

Page 570

The reason science works isn’t because there is a proper “scientific method” derived by some nerds in isolation, or some “standard” that passes a test similar to the eye exam of the Department of Motor Vehicles; rather it is because scientific ideas are Lindy-prone, that is, subjected to their own natural fragility. Ideas need to have skin in the game. You know an idea will fail if it is not useful, and can be therefore vulnerable to the falsification of time

Note: Gtfo

Page 594

Of these thirty-nine, I believe that fewer than ten are actually robust and transfer outside the narrowness of the experiment.

Note: Oh he believes

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