Too many people in the world don’t have skin in the game, according to Nassim Nicholas Taleb. And because these people often make vital decisions in government or make “expert” forecasts, this leads to disaster. As a finale to his Incerto series of books on risk and uncertainty, Skin in the Game is a slender and incisive book that exposes hidden “asymmetries” in life.
One of the biggest problems in society is that people from government bureaucrats to economists make decisions that don’t affect them personally, meaning that there’s no downside or risk for them. This lack of skin in the game, which was introduced in Taleb’s previous book Antifragile, leads to flawed decisions that can seriously affect lots of people in society. Bankers are a major example, as after the 2008 financial crisis, major American banks received massive bailouts despite being responsible for causing massive financial harm. Also, pundits often make predictions or advocate for actions such as military action in which they don’t personally carry out. Journalists (a bit unfairly to me though obviously I would say that) are another target of Taleb’s as are university academics.
While not as long as the Taleb’s previous books, Skin in the Game features lots of brief and compelling lessons and observations.
For instance, societies in which inequality have ergocity or dynamism are better than that with static inequality, where the wealthy never change and the rich always stay rich. I’m thinking this applies to places that are dominated by old money families. If wealth is giving you fewer options, then clearly you are doing it wrong. What is ration is that which allows for survival.
Taleb also raises the point of the intolerant minority which can disproportionately influence society by skewing preferences or even rules. He gives the example of the widespread availability of halal food in Europe, even though Muslims are a small minority. His point is that sometimes a minority with specific preferences or bias, in this case towards non-halal food, can cause a majority to change their preference to accede to the minority’s preference. Another example is the use of “Happy holidays” instead of “Merry Christmas” in many parts of the US due to atheist or non-Christian complaints.
Taleb also sums up the key ideas in the Incerto series, which besides having skin in the game, include via negativa in which you eliminate all the bad options and being antifragile in the sense of thriving or being resistant to shocks from change.
I admit the somewhat random structure of the chapters made the book feel a little slight in terms of the lessons. Antifragile was more lengthier and featured more interesting lessons in my opinion. However, I think Taleb would prefer people read all of his Incerto books rather than just one.
Taleb is not shy with his arguments and ideas and even if you don’t agree with most of what he says, there is a strong chance you will find his arguments interesting.