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Amazon Summary
About Author
Author Presentations
Other Book Summaries
Contents
Highlights
My Highlights
Intelligence Of The Lindy Effect / Redefinition Of Rationality
Skin in the game helps to solve the Black Swan problem and other matters of uncertainty at the level of both the individual and the collective: what has survived has revealed its robustness to Black Swan events and removing skin in the game disrupts such selection mechanisms. Without skin in the game, we fail to get the Intelligence of Time (a manifestation of the Lindy effect, which will get an entire chapter, and by which 1) time removes the fragile and keeps the robust, and 2) the life expectancy of the nonfragile lengthens with time). Ideas have, indirectly, skin in the game, and populations that harbor them do as well.
In that light— that of (causal) opacity and revelation of preferences— the Intelligence of Time under skin in the game even helps define rationality— the only definition of rationality I found that doesn’t fall apart under logical scrutiny. A practice may appear to be irrational to an overeducated and naive (but punctual) observer who works in the French Ministry of Planning, because we humans are not intelligent enough to understand it— but it has worked for a long time. Is it rational? We have no grounds to reject it. But we know what is patently irrational: what threatens the survival of the collective first, the individual second. And, from a statistical standpoint, going against nature (and its statistical significance) is irrational. In spite of the noise funded by pesticide and other technological companies, there is no known rigorous definition of rationality that makes rejection of the “natural” rational; to the contrary. 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.
A system with skin-in-the-game requirements holds together through the notion of a sacrifice in order to protect the collective or entities higher in the hierarchy that are required to survive. “Survival talks and BS walks.” Or as Fat Tony would put it: “Survival tawks and BS wawks.” In other words:
What is rational is what allows the collective— entities meant to live for a long time— to survive.
Not what is called “rational” in some unrigorous psychology or social science book.* 4 In that sense, contrary to what psychologists and psycholophasters will tell you, some “overestimation” of tail risk is not irrational by any metric, as it is more than required overall for survival. There are some risks we just cannot afford to take. And there are other risks (of the type academics shun) that we cannot afford to not take. This dimension, which bears the name “ergodic,” is belabored in Chapter 19.
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The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding, or better at explaining than doing.”
What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing.”
I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist. If that saying doesn’t convince you of the fatuousness of left vs. right labels, nothing will.
Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.”
Those who talk should do and only those who do should talk.”
The difference between successful people and really successful people is that really successful people say no to almost everything,”
Courage is the only virtue you cannot fake.”
You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.
“For studying courage in textbooks doesn’t make you any more courageous than eating cow meat makes you bovine. By some mysterious mental mechanism, people fail to realize that the principal thing you can learn from a professor is how to be a professor—and the chief thing you can learn from, say, a life coach or inspirational speaker is how to become a life coach or inspirational speaker. So remember that the heroes of history were not classicists and library rats, those people who live vicariously in their texts. They were people of deeds and had to be endowed with the spirit of risk taking”
“If you do not take risks for your opinion, you are nothing.”
“You do not want to win an argument. You want to win.”
“Start by being nice to every person you meet. But if someone tries to exercise power over you, exercise power over him.”
“Don’t tell me what you think, tell me what you have in your portfolio.”
“Entrepreneurs are heroes in our society. They fail for the rest of us.”
“Beware of the person who gives advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.”
“Finally, when young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro-level, my suggestion is: 1) Never engage in virtue signaling; 2) Never engage in rent-seeking; 3) You must start a business. Put yourself on the line, start a business.”
“Scars signal skin in the game.”
“A saying by the brothers Geoff and Vince Graham summarizes the ludicrousness of scale-free political universalism. I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist.”
“How much you truly “believe” in something can be manifested only through what you are willing to risk for it.”
“Alexander said that it was preferable to have an army of sheep led by a lion than an army of lions led by a sheep.”
“No person in a transaction should have certainty about the outcome while the other one has uncertainty.”
“The only definition of rationality that I’ve found that is practically, empirically, and mathematically rigorous is the following: what is rational is that which allows for survival. Unlike modern theories by psychosophasters, it maps to the classical way of thinking. Anything that hinders one’s survival at an individual, collective, tribal, or general level is, to me, irrational.”
“Let us return to pathemata mathemata (learning through pain) and consider its reverse: learning through thrills and pleasure. People have two brains, one when there is skin in the game, one when there is none. Skin in the game can make boring things less boring. When you have skin in the game, dull things like checking the safety of the aircraft because you may be forced to be a passenger in it cease to be boring. If you are an investor in a company, doing ultra-boring things like reading the footnotes of a financial statement (where the real information is to be found) becomes, well, almost not boring.”
“It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.”
“If you want to study classical values such as courage or learn about stoicism, don’t necessarily look for classicists. One is never a career academic without a reason. Read the texts themselves: Seneca, Caesar, or Marcus Aurelius, when possible. Or read commentators on the classics who were doers themselves, such as Montaigne—people who at some point had some skin in the game, then retired to write books. Avoid the intermediary, when possible. Or fuhgetaboud the texts, just engage in acts of courage.”
“People who are bred, selected, and compensated to find complicated solutions do not have an incentive to implement simplified ones.”
“Decentralization is based on the simple notion that it is easier to macrobull***t than microbull***t. Decentralization reduces large structural asymmetries.”
“making some types of errors is the most rational thing to do, when the errors are of little cost, as they lead to discoveries. For instance, most medical “discoveries”are accidental to something else. An error-free world would have no penicillin, no chemotherapy…almost no drugs, and most probably no humans. This is why I have been against the state dictating to us what we “should”be doing: only evolution knows if the “wrong”thing is really wrong, provided there is skin in the game to allow for selection.”
“what you learn from the intensity and the focus you had when under the influence of risk stays with you. You may lose the sharpness, but nobody can take away what you’ve learned. This is the principal reason I am now fighting the conventional educational system, made by dweebs for dweebs. Many kids would learn to love mathematics if they had some investment in it, and, more crucially, they would build an instinct to spot its misapplications.”
“Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.”