As I was reading this book, I couldn’t help thinking how there is a lack of coherence and flow, but as I read along, I also realized it’s the very same lack of flow that makes it feel like you are having a conversation with the author.
I enjoy Taleb’s witty, bold and fearless style. He is arrogant, no doubt about it, but he is not hypocritical and doesn’t shy away from calling a spade a spade.
Skin In the Game
The main idea is that the best systems are the ones that have symmetry in upside and downside. If there is an incentive to an upside, there should be skin in the game – proportional disincentive to the downside as well. In modern times, many systems and professions have hidden asymmetries by having no skin in the game.
Modern day thinkers, bankers, economists, politicians, journalists and many others only gain from the upsides and face no consequences if they turn out to be wrong. The systems where not only incentives are aligned with actions, but the downsides are also disincentivized are the most robust and ethical.
These are the systems that have best endured the test of time. The author also argues time is the ultimate stress test. If something has been around a long time, it is bound to be around for a long time. This is due to the agents’ skin in the game that would keep it going.
This is why, when in doubt, we should apply the ‘Grandma’ test to ideas and to detect BS. Will your grandma agree with this?
Systems and evolution tend to weed out failures over time and are self-correcting. This is also true of societies. Warring societies tend to work out their issues over time in a way that benefits all parties and usually do not need intervention.
‘Interventionistas’ (Interventionists – stronger countries intervening in the matters of weaker countries) have more often than not, made matters worse for all parties involved. One, it’s hard to determine interactions in complex societies with certainty from outside. Second, interventionists don’t have to live with the consequences of their actions. The people on the receiving end are the ones who bear the brunt of their failures while for the interventionists, it’s just another day at the office.
War Mongers of past had literal skin in the game – the kings and their military advisors had to lead from the front in wars. They were the most affected in war scenarios. That’s not the case with bureaucrats and advisers today.
The author extends this idea to everyday life and to ethics. The most ethical and courageous people are the ones with the most skin in the game. The people brave enough to stand up for their beliefs often have to pay a heavy personal price. Virtue and ethics without skin in the game is just cheap signaling. So, look out for how the people you decide to follow choose to live their lives and steer clear of advice of those career advisors with no skin in the game.
Radical change often needs only a few people with skin in the game. A small number of courageous and virtuous people who put their skin in the game can topple the most powerful regimes. A small intolerant minority can sometimes call the shots for entire countries.
Guidance for thriving in the professional world 