Two thirds of this book is terrific. Taleb is well read and boisterously backs up his thesis that, without skin in the game, no one should be trusted. The other third is Taleb waving his arms and saying ‘look at me! I don’t have to be beholden to anyone! I’m the best!’
In academia there is no difference between academia and the real world; in the real world, there is.
But never engage in detailed overexplanations of why something important is important: one debases a principle by endlessly justifying it.
Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.
By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.
People who are not morally independent tend to fit ethics to their profession (with a minimum of spinning), rather than find a profession that fits their ethics.
Indeed much of the work of investment banks in my day was to play on regulations, find loopholes in the laws. And, counterintuitively, the more regulations, the easier it was to make money.
A civil servant can make rules that are friendly to an industry such as banking, and then go off to J.P. Morgan and recoup a multiple of the difference between his or her current salary and the market rate. (Regulators, you may recall, have an incentive to make rules as complex as possible so their expertise can later be hired at a higher price.)
Note that thanks to Lindy, no expert is the final expert anymore and we do not need meta-experts judging the expertise of experts one rank below them. We solve the turtles all the way down problem. Fragility is the expert, hence time and survival.
The pre-Socratic thinker Periander of Corinth wrote, more than twenty-five hundred years ago: Use laws that are old but food that is fresh.
Now, while academia has turned into an athletic contest, Wittgenstein held the exact opposite viewpoint: if anything, knowledge is the reverse of an athletic contest. In philosophy, the winner is the one who finishes last, he said.
If you hear advice from a grandmother or elders, odds are that it works 90 percent of the time. On the other hand, in part because of scientism and academic prostitution, in part because the world is hard, if you read anything by psychologists and behavioral scientists, odds are that it works at less than 10 percent, unless it is has also been covered by the grandmother and the classics, in which case why would you need a psychologist?
Journalism is about events, not absence of events, and many historians and policy scholars are glorified journalists with high fact-checking standards who allow themselves to be a little boring in order to be taken seriously. But being boring doesn’t make them scientists, nor does fact checking make them empirical, as these scholars miss the notion of absence of data points and silent facts.
The main theological flaw in Pascals wager is that belief cannot be a free option. It entails a symmetry between what you pay and what you receive. Things otherwise would be too easy. So the skin-in-the-game rules that hold between humans also hold in our rapport with the gods.
In other words, you do not need science to survive (we’ve survived for several hundred million years or more, depending on how you define the we), but you must survive to do science.
To take stock: a situation is deemed non-ergodic when observed past probabilities do not apply to future processes. There is a stop somewhere, an absorbing barrier that prevents people with skin in the game from emerging from it and to which the system will invariably tend. Let us call these situations ruin, as there is no reversibility away from the condition. The central problem is that if there is a possibility of ruin, cost-benefit analyses are no longer possible.
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