#1 NEW YORK TIMES BESTSELLER • 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 … 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 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 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.”
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Nassim Taleb is one of my favourite writers even though he has to to be one of the most annoying public intellectuals on this planet. Come to think of it, if there is intelligent life on other planets, Taleb is certain to give their public intellectuals a run for their money. Taleb’s arrogance flies off the page as he makes sure that the reader knows just how smart he is. But that is exactly the reason why we should read books in the first place; to learn from people that may have information that we do not or a way of interpreting information that we all have in common. And if we are lucky, those people will be smarter than we are and will be able to teach us something that we did not know before.
While Skin in the Game is seen as the third book of a series about risk as it follows the very good, The Black Swan, and Antifragile, I tend to side with the author and consider it to be the fifth book of a series that begins with Fooled by Randomness and The Bed of Procrustes.
I would actually start reading Taleb by going to the first book, Fooled by Randomness. In that book, Taleb shows his affinity to philosophy and history by using Herodotus’ story about Solon and Croesus to illustrate his ideas about luck. I may be biased because my grandfather used the same story on me and I have used it on my kids but I think that it is appropriate for everyone to understand that lesson. Anyone interested can download a free or very low priced Mobi or EPub version of, The Histories, and follow along with Taleb as he takes the readers to an essential life lesson that all need to know. Essentially, the first book is about how randomness fools people into thinking that they are more competent than they really are and how it fools them into making some very grave errors that usually wind up ruining their lives. What I was impressed by was the story of how the book was written. Taleb already had most of the ideas and references in his head and did very little research to add more material. That excuses Taleb’s real or perceived arrogance in my book and I will always be grateful for some of the new information but mostly the more refined way that I learned to look at reality.
Before I get to Skin in the Game, let me point out a book of Taleb’s that is often neglected. My then-twelve-year-old son picked up The Bed of Procrustes at my local bookstore and wound up reading and debating the ideas in it for several hours. It was clear that many of the aphorisms confused him because he lacked the knowledge to integrate them into a coherent picture of the way he saw the world. But enough got him to reconsider what he believed to be true and made him ask questions. I must have consumed two or three cups of coffee arguing about some of the points and made more than a few trips to the shelves to find a book that would illustrate the points that Taleb was making. I wound up buying three of the books and eventually picked up several copies when the book was discounted for clearance. They were intended to be gifts for people who usually get annoyed when I make some of the same points that Taleb did so that they could get a better handle on the fact that there is a great more diversity of thought than is commonly assumed and that in order to move forward, people need to sacrifice more than a few sacred cows that they falsely believed in.
Skin in the Game is Taleb’s latest attack on fraudulent public intellectuals who are little more than charlatans or simply people who lucked into being at the right place at the right time. His message is that unless these people have a personal stake in their pronouncements and actions they are best left alone and ignored by the ordinary individual who just wants to live a good and rational life. Anyone who has seen all of the talking heads on CNN or Fox knows exactly what Taleb means when he points out that those ‘educated philistines’ have been wrong on everything from Stalinism to low-carb diets. As he points out, “These interventionistas and their friends in the U.S. State Department helped create, train, and support Islamist rebels, then “moderates,” but who eventually evolved to become part of al-Qaeda, the same, very same al-Qaeda that blew up the New York City towers during the events of September 11, 2001.” To Taleb, it is clear that these arrogant morons were unfamiliar with the Athenian Isocrates, the wise orator who, “warned us as early as the fifth century B.C. that nations should treat other nations according to the Silver Rule. He wrote: ‘Deal with weaker states as you think it appropriate for stronger states to deal with you.'” But in a world where wisdon is rare and facts are negotiable few will either care or understand the point.
Taleb needs to be read by everyone who is interested in rationality and wants to have a better understanding of risk. There will be plenty of things that you can disagree with and a few might be legitimate. But the power of Taleb comes from the fact that what you can honestly disagree with is quite rare.
Interesting point of view that should get more consideration by everyone making decisions and relying on the advice of others.
Nassim Taleb has a brilliant mind and thankfully shares his wisdom with us when handing are investments over to another without really exploring all options