Nassim Nicholas Taleb writes „Skin in The Game“


Intellectuals Or Idiots

Nassim Nicholas Taleb
He simply knows everything - better

This is no professional translation (1)In my opinion, English should become the EU's first official language. It is therefore only logical that I myself publish my texts in English as well. Unfortunately, my skills are far below the level of my mother tongue. I therefore use the translation engine deepl. com, which has set a new standard for online translations. For quality assurance I have the texts translated back and forth, but is not perfect. In addition, unfortunately, I am not able to recognize all the mistakes nor to judge the linguistic "elegance". 

My Friend

No one who knows me would be surprised if Nassim Nicholas Taleb were my friend. We have a lot in common: we spoil it easily with everyone, we think that academics are bean counters and are quite convinced that there is a truth: ours. The label IOI (intellectual or idiot), which Taleb throws at more or less every "deserved" intellectual from Stephen Pinker to Paul Krugman, could also be from me - well: who sits in the glasshouse ...


He would be my friend (if he were), but not because of any "similarities" in the contempt for the world, but because otherwise we hardly come together in a single point. Also not right: practically we would find together already in some points, but never in the derivation, justification, argumentation, and finally also not in the style. 

Taleb is a babble head; formerly busy publishers for such cases lektors, nowadays it's printed how it gets into the mailbox. Who would want to edit a sniper like Taleb? Who could do it anyway? Once, for fun, I took his most recent book and deleted all sentences that contained off-topic betise, Latin, Greek or Arabic saying wisdoms and other regulars' table spices, look-aheads or recourse, for instance to his book Antifragilität: the book shrank from 384 to 48 pages. 

What is still in it then? 

Let's look at the main message first. Taleb believes that only those people should be able to make decisions about those things that could be affected by the effects of those decisions: when things go wrong. "Skin in the gam"e, risking one's own skin, that is for him a central condition for the mechanics of the world to come back into balance. Tbd: every gambler risks his skin! Every killer. Every destroyer of the world. 

As for myself: I am  an unteachable early adopter, and what have I not suffered from it already! Principle banana: Product matures with the customer – that is me. My admin always beats his hands above his head when I have installed an UpDate again without waiting for the third patch. But I'm also happy to take risks in other ways, unfortunately - without being aware of it. I just do it. You could also call it "unwise". It's true that Taleb relativizes in many cases: he prefers the one who risks his skin, he'd rather trust him, after all he has something to lose. In this respect he, Taleb prefers Donald Trump, who boasts of having been bankrupt with a billion dollars in losses, to any Wall Street shark who puts his risks in someone else's portfolio. Now such a billion-dollar loss could also be the result of large-scale stupidity –, but the message is clear though: we all have heard of stories that the world is set up in a way that those who made bad decisions were not affected by the results.

We see that there might be something to his argument, but it is also all sorts of rotten about it. I once built a house, and since then I know one thing for sure: you have to keep planning and doing separate. If you are too deeply involved, you no longer have an overview of the whole thing. But maybe Taleb wouldn't contradict that at all. He says: OK, if you have planned a house, and it collapses over the head of your builder and buries him, then you too should be the one to die. So in principle it's about responsibility and above all about the fact that in the world as we have organized it, responsibility is no longer materialized. Worse still: that the profits are privatized and the losses are socialized. What is there to say against this complaint?

Well, perhaps the following: in the world as it is organized, EVERY decision will be against interests and will have "consequences". It is in the nature of decisions that they have consequences, and the bigger society, the bigger the consequences. Windmills or bypass roads MAY influence property values, or in other words: If you want to drain the swamp, don't ask the frogs. It would be very unlikely that anything would be decided if every decision-maker had to share the consequences of the respective loss group - we also know enough examples of this. And one more thing: often enough, decision-makers have "skin in the game"; this is called corruption. 

One could perhaps say: in some of his "worldly judgments" one could follow Taleb plus/minus, for example he advocates a radical environmental protection. Although his dedication to Ron Paul, the or a spiritus rector of the tea party movement, is somehow irritating. On the other hand his "attitude" is hardly bearable. He also knows that, quoting those who think he is arrogant in agreeing with him, he justifies his arrogance: "Unfortunately, I know." In order to understand this more precisely, you have to take a look at his biography. His own academic training, an MBA from Wharton and a Ph.D. from a Grand École (Paris-Dauphine), qualifies him as a member of the very club that he' s dragging his feet on, so that no eye stays dry. "He is currently Honorary Professor of Risk Analysis at New York University's Polytechnic Institute and Visiting Professor of Marketing (Cognitive Science) at London Business School. He was Professor at the University of Massachusetts Amherst, Associate Professor of Mathematics at the Courant Institute of New York University, and a faculty member at the Wharton School. ... Taleb is fluent in English, French, Classical Arabic and Lebanese Arabic, speaks Italian and Spanish, and reads classical texts in Greek, Latin, Aramaic and Hebrew as well as in Canaanese script" (Wikipedia).  A master of the universe; no wonder it goes to his head.

But what is crucial is that as a trader on Wall Street he has made so much money that he is independent and does not need to sing any other song than his own. This may have advantages, but it also leads to a certain loss of control: not in the sense that he has no control over himself (well, who knows), but in the sense that the social control of his oversized ego is missing, a necessary corrective for his hubris. He insults God and the world: economists, researchers, politicians, journalists; but it would be a mistake to pinpoint his "skin in the game" precisely in this,  because nobody can harm him! Taleb has taken off, not from this world. Very much the question (and because he is not my friend, I cannot judge) whether there are any criticisms at all that reach him. It doesn't have to be a mistake that those chair poopers, those IOI, who play the bullshit bingo of the world don't reach him,  that simply nothing seems to reach him, that is the colliery he pays. This babble of "Skin in the game", at any rate, which was occasionally interspersed with correct assertions, would have urgently needed a corrective. 

When I say "babble", it's not immediately clear what that means. His fans might call it brilliant, ingenious or sparkling. You could call it positively "association clouds", negatively it might be to characterize it as argumentation grist – Taleb talks like that, in one piece (the omission points in the quote are trifles):

"Perhaps there is a kind of translation mechanism that eludes our understanding, with distortions at the level of the thought process that are factually necessary for something to work. Basically, with a certain mechanism, the technical term for it is distortion-variance dilemma, you often get better results if you make mistakes, for example, if you easily miss the target while shooting. .. In "Antifragility" I have shown that making certain mistakes is the most rational thing you can do if the mistakes don't cost much because they lead to discoveries. (See graph ..) In a flawless world there would be no penicillin, no chemotherapy, almost no drugs, and probably no people. That is why I have spoken out against the state dictating to us what we should do. Evolution alone knows whether something wrong is really wrong, provided that someone has put his skin at risk in order to make selections possible. 

What is religion about? 

I am therefore of the opinion that religion exists to further strengthen the management of tail risks from generation to generation, because its binary, unconditional rules are easy to communicate and enforce. We have survived despite tail risks. So our survival can't be entirely accidental (2)see also: Robert Altman, Nashville... »We've must be doing something right to last 200 yeeeaaaarrs!«; note by IvD. Remember that "Skin in the Game" means not paying attention to what people say, but only to what they do and to what extent they are willing to hold their heads for something. Let survival perform its miracles. 

Superstition can be a vector of risk management rules.

We have the telling information that people who hold superstitious beliefs have survived. To repeat, don't do anything that has enabled you to survive just like that. For example, Jared Diamond cites the constructive paranoia of the inhabitants of Papua New Guinea, whose superstition prevents them from sleeping under dead trees. Whether it's superstition or something else, perhaps there is a deep scientific understanding of probability that keeps them from doing so doesn't matter as long as they don't sleep under a dead tree. And if you have a vision that people are likely to work to make decisions, then I can tell you something: Over 90% of the psychologists involved in decision making, including regulators and researchers such as Cass Sunstien and Richard Thaler, have no idea of probability and are trying to destroy our efficient organic persecutory delusions." 

The assertion that making mistakes is rational is quite funny, since it is part of the definition of the mistake that it is wrong. At least one would have to say therefore that with an error also coincidentally something correct may develop, straight the statistician should make clear however: in the relationship 1:xn! We cannot claim a rational for such a "successful" error either, otherwise it would have to be like that, that intentional errors lead to desired results. And the yardstick of "survival" does not reveal any higher qualities either: Who does not survive everything - and in the long run we are all dead. On the other hand, anyone who wanted to blame a superstition for a chance hit rate would also have to complain about the wrong shots: either or.  

His argumentation becomes somewhat delicate when it comes to the influence of minorities. He sets the example that meetings in Germany are held in poor English as soon as a person in the room does not speak German. I myself have often complained about this. I have long been of the opinion that Europe should introduce English as the first official language. But as long as this is not the case, I will fight with my hands and feet against the naughty conveniences of English native speakers, by the way also because in such meetings the level of argumentation often drops dramatically due to linguistic restrictions, or native speakers realize positional advantages that are not justified in the matter. The example, however, is harmless, measured by the scattering effects caused by "minority terror" in other topics. A minority must only be sufficiently persistent, then the majorities would already adapt: see gender talk, vegetarian or kosher food offers, narrow ties and short confirmation jackets (which were actually enforced by ONE Tagesschau-anchorman, Jens Riewa) or the wearing of beards. And if, argumentatively prepared in such a way, we were now to speak of Islam ..., Taleb sums it up as follows: "The West is in the process of committing suicide."       

Fed by the unmanageable breadth of his knowledge - especially statistical and mathematical knowledge - Taleb sorts the world on a different, own, "higher" level, and he doesn't give a shit whether someone understands it or not. Worse still, because he sold millions of copies, he believes that he serves to millions of intelligent people, while at the same time it is clear to him that at best these millions have understood what a "black swan" is, but otherwise his books are mainly on the shelf. I myself would not claim to understand Mr. Taleb or my friend Nassim in all his deliriums; there are these kinds of friends who are only there to make you angry about them.

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