Too Short for a Blog Post, Too Long for a Tweet 504

 

Here are a few excerpts from a book I recently read, "Skin in the Game: Hidden Asymmetries in Daily Life," by Nassim Nicholas Taleb.

I have a tendency to watch television with the sound off. 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. Actually, it was because he had visible deficiencies. Why? Because he was real, and the public—composed of people who usually take risks, not the lifeless non-risk-taking analysts we will present in the next chapter—would vote anytime for someone who actually bled after putting an icepick in his hand rather than someone who did not. Arguments that Trump was a failed entrepreneur, even if true, actually prop up this argument: you’d even rather have a failed real person than a successful one, as blemishes, scars, and character flaws increase the distance between a human and a ghost.

Scars signal skin in the game.

When, on leaving office, Barack Obama accepted a sum of more than $40 million to write his memoirs, many people were outraged. His supporters, statists who were defending him, on the other hand, were critical of the rich entrepreneurs hired by the subsequent administration. Money is greed, for them—but those who did not earn the money via commerce were illogically exempt. I had a rough time explaining that having rich people in a public office is very different from having public people become rich—again, it is the dynamics, the sequence, that matters.

A certain class of theoretical people can despise the details of reality. If you manage to convince yourself that you are right in theory, you don’t really care how your ideas affect others. Your ideas give you a virtuous status that makes you impervious to how they affect others. 

Likewise, if you believe that you are “helping the poor” by spending money on PowerPoint presentations and international meetings, the type of meetings that lead to more meetings (and PowerPoint presentations) you can completely ignore individuals—the poor become an abstract reified construct that you do not encounter in your real life. Your efforts at conferences give you license to humiliate them in person.

In the Eastern Mediterranean pagan world (Greco-Semitic), no worship was done without sacrifice. The gods did not accept cheap talk. It was all about revealed preferences. Also, burnt offerings were precisely burnt so no human would consume them.

You will not have an idea about what people really think, what predicts people’s actions, merely by asking them—they themselves don’t necessarily know. What matters, in the end, is what they pay for goods, not what they say they “think” about them, or the various possible reasons they give you or themselves for that. If you think about it, you will see that this is a reformulation of skin in the game.