by Nassim Nicholas Taleb
The final part (for now?) of the Incerto series. While only half the length of The Black Swan and Antifragile it packs maybe 1/10th the wallop. It’s still a highly enjoyable and elucidating read, but it felt like the final straightaway of a race.
NNT talks about his books shouldn’t be able to summarized. If you can summarize a book down to a few sentences, what is the point in the rest of the book? Instead he likes to think his book contains a central generator, from which ideas are are spawned which makes up the entirety of the book.
Incerto Generators:
Fooled By Randomness - Humans are bad at detecting what is and isn’t random.
The Black Swan - Highly improbable (though not as improbable as bell curve statistics would have you think, hence fat tails) and high impact events dominate history. These events can invalidate or wipe out everything that came before. You can look at 1 million white swans and think “all swans are white”, but it only takes seeing 1 black swan to obliterate that idea permanently.
Antifragile - To survive black swans you must not just be able to survive volatility, but to benefit from it by having a convex (capped downside, uncapped upside) relationship to it.
Skin in the Game - Don’t tell me what you think, tell me whats in your portfolio. For incentives to work you can’t just give upside but must also risk downside. If there is a limited window when the incentives are in play, the structure can be gamed by hiding long term risk with short term profit.
The quote below reminded me of one of the main reasons I wanted to move to Silicon Valley in the first place, which was my hatred for business casual dress codes. I always felt that business casual prominently displayed the lack of seriousness the company had for performing work that others would actually find useful. My personal thought experiment was if the Einstein of your field wanted to work at your company but would only do so wearing PJ’s, you would find out real quick which companies actually matter and which are just pretenders.
“Presence of skin in the game does away with the cosmetic. It’s absence causes multiplicative nonsense.”
“Kids with rich parents talk about “class privilege” at privileged colleges such as Amherst - but in one instance, one of them could not answer Dinesh D’Souza’s simple and logical suggestion: Why don’t you go to the registrar’s office and give your privileged spot to the minority student next in line?
Clearly the defense given by people under such a situation is that they want others to do so as well - they require a systemic solution to every local perceived problem of injustice. I find that immoral. I know of no ethical system that allows you to let someone drown without helping him because other people are not helping, no system that says, “I will save people from drowning only if others too save other people from drowning.”
Which brings us to the principle:
If your private life conflicts with your intellectual opinion, it cancels your intellectual ideas, not your private life.
And a solution to the vapid universalism we discussed in the Prologue:
If your private actions do not generalize, then you cannot have general ideas.
This is not strictly about ethics, but information. If a car salesman tries to sell you a Detroit car while driving a Honda, he is signaling that the wares he is touting may have a problem.”