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Skin in the Game: Hidden Asymmetries in Daily Life Audible Audiobook – Unabridged
Number-one New York Times best seller
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 asymmetrically 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 have 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."
- Listening Length8 hours and 20 minutes
- Audible release dateFebruary 27, 2018
- LanguageEnglish
- ASINB077BSK9LC
- VersionUnabridged
- Program TypeAudiobook
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Product details
Listening Length | 8 hours and 20 minutes |
---|---|
Author | Nassim Nicholas Taleb |
Narrator | Joe Ochman |
Audible.com Release Date | February 27, 2018 |
Publisher | Random House Audio |
Program Type | Audiobook |
Version | Unabridged |
Language | English |
ASIN | B077BSK9LC |
Best Sellers Rank | #5,961 in Audible Books & Originals (See Top 100 in Audible Books & Originals) #2 in Business Ethics (Audible Books & Originals) #3 in Philosophy of Society #5 in Social Philosophy |
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1) Uncertainty and the reliability of knowledge (b/s detection, theory vs practice, cosmetic vs true expertise, etc).
2) Symmetry in human affairs (fairness, justice, responsibility, reciprocity). e.g.: to get the rewards you must also get some of the risks; not let others pay for your mistakes.
3) Information in transactions
4) Rationality in complex systems.
The main aspect of "Skin in the game" (SITG) - a phrase probably made popular by Warren Buffet - is, in Taleb's view, about matching disincentives to incentives. For Taleb, SITG isn’t purely incentives (e.g.: just having a share of some benefits). It is SYMMETRY in both UPSIDE and DOWNSIDE. Taleb makes this important aspect extremely explicit since the very beginning of the book (page-4).
If some actors pocket rewards from a policy they enact or support (without accepting risks/downside), various economists consider it to be a problem of "missing incentives". In contrast, for Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, others are stuck with the risks. Forcing SITG corrects this asymmetry (you cannot make profits and transfer the risks to others as some large corporations do; bankers being bailed out by the public are the antithesis of SITG). Actors, per Taleb, must always bear a symmetric cost when they fail the public (this is SITG!). A fund manager that gets a percentage on wins, but no penalty for losing is incentivised to gamble with his clients funds. Bearing no downside for one's actions, means that one has no "Skin In The Game"
A few insights from the book:
- Having exposure to the real world, with upside and downside, is the best (often the only) way to learn.
- EXPOSURE TO REAL WORLD CONSEQUENCES beats Intellectualizing. Employed intellectuals, professional academics, or bureaucrats are rarely in love with thoughts & ideas. They are primarily in love with orthodoxies in their respective fields.
- There are some risks we just cannot afford to take (e.g.: systemic risks). There are some risks we cannot afford to NOT take.
- Intelligentsia have no downside for their actions (no SITG).
- There is no evolution without skin in the game. Note how most academics (Economists, Psychologists, Sociologists, Social Scientists, etc) can be wrong for so long, while MOST businesses cannot (except the likes of Goldman Sachs and others, provided the Government bails them out when they mess up)
- Government intervention, in general, tends to remove SITG, to weaken robustness in complex (economic, social, financial) systems.
- Interventionists don't suffer the consequences of their bad actions, policies, etc
- About the real world: think in dynamics, not statics. Think in high, not low dimensions. Think in terms of interactions as well as actions.
- SITG doesn’t literally mean an eye for an eye. It just means there is a downside large enough (for individuals) to protect the overall system.
- We know far more what is bad than what is good. Therefore, when treating others: no bad actions > good actions as a rule.
- Universal behavior is great on paper, disastrous in practice. Why? We are local and practical animals, sensitive to scale. The small is not the large; the tangible is not the abstract; the emotional is not the logical. Most behaviors do not scale. Family members are not friends and random people on the street are not friends. What's worse: the general and abstract tend to attract self-righteous psychopaths.
- Avoid taking advice from someone who gives advice for a living, unless there are also penalties for their bad advice.
- The doer wins by doing, not convincing. e.g. if someone is trying to convince you how cool their life is then it is not cool
- How often you forecast correctly is not so important. What matters more is which outcomes you can forecast correctly. The payoffs matter more.
- SITG can help with solving black swan problems. That which has survived over time, with SITG, has proven its robustness.
- People with SITG bring simplicity. People with SITG have no benefit for added complexity. Therefore be careful of people without SITG proposing complex solutions for a problem. They have incentive to seem sophisticated instead of just solving the actual problem
- The average behavior of the market participant will not allow us to understand the general behavior of the market.
- Careful of people who want more regulations as they have incentive to complexify it, so they are more needed.
- People can be largely collaborative except when institutions get in the way.
- Whenever there is a mismatch with "bonus period" (e.g.:1 year) and "statistical blowup" (e.g.:10 years) people will transfer as much risk as possible to the future (get the bonus in 1yr, worry about blowing up much later)
- Learning is rooted in repetition and convexity, reading one book twice is often more useful than two books once.
- Professional reviewers tend to want to impress other reviewers while normal people just say their opinions, so be careful of professional reviewers as they have a lack of SITG
- Freedom entails risks, real skin in the game. Freedom is never free
- Data does not imply rigor
- Never pay for complexity of presentation when all you need is results.
- Change for the sake of change is frequently the enemy of progress (inverse of the Lindy effect)
- You can criticize what a person said or what a person meant. One is honorable, the other is embarrassing
- Virtue is what you do when nobody is looking. Virtue is not something you advertise.
- Survival comes first, truth, understanding, and science later.
The book is written in short chapters with his important conclusions separated and printed in italics. This makes for easy reference and makes his key ideas more digestible. Some of the biggest values in the book are his originality and independence of thought- he very proudly asserts his ideas and backs them up with the thinking that he had to have done on his own in order to defend them. He is also reality centered- which is very rare with today's intellectuals. He demonstrates this by showing that if something continually works, it can't be stupid. He shows experience gained by doing is far more valuable than by conclusions drawn only from reasoning. This is in sharp contrast to most other writers of today who when confronted with a conflict between their ideas/ worldview and reality, are quick to dispense with reality. Taleb shows that one of the prime benefits of having skin in the game is it keeps people tied to reality.
Another key idea he shares is related to the Lindy effect and the importance of recognizing the asymmetry of outcomes. The lindy effect states that something that has been around for a while is more likely to stay around (experience over rationalism) and how overlooking asymmetrical outcomes will inevitably end in ruin by underestimating the severity of tail risk.
My two biggest gripes are his attitude that employees are slaves and that virtue consists of sacrificing for the collective. He seems genuinely concerned with the average worker and is definitely not shy about attacking the "experts", but also calls pretty much anyone other than an entrepreneur a slave. Perhaps it is because I fall squarely into this category, but the idea that people who work for others are slaves undermines the entire system of capitalism- capitalism is the only system that prevents slavery, in principle. And while I agree wholeheartedly with his attack on big government, it does not make sense to me how much emphasis he places on individuals and entrepreneurs but then also states the importance of sacrificing to the collective.
Highly recommend, along with his previous books. Very thought provoking from an all too rare independent thinker.
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Ele utiliza alguns conceitos explorados em seus livros anteriores, embora seja possível a compreensão do texto sem a leitura prévia de Cisne Negro e Antifrágil.