مقدمه بخش سوم دنده‌های اینسرتو

Prologue, Part 3 T he Ribs of the Incerto

Seven pages per sitting, seven pages annum is the perfect rate—Rereaders need rereviewers

Now that we’ve outlined the main ideas, let us see how this discussion fits the rest of the Incerto project. Just as Eve came out of Adam’s ribs, so does each book of the Incerto emerge from the penultimate one’s ribs. The Black Swan was an occasional discussion in Fooled by Randomness; the concept of convexity to random events, the theme of Antifragile, was adumbrated in The Black Swan; and, finally, Skin in the Game was a segment of Antifragile under the banner: Thou shalt not become antifragile at the expense of others. Simply, asymmetry in risk bearing leads to imbalances and, potentially, to systemic ruin.

The Bob Rubin trade connects to my business as a trader (as we saw, when these people make money, they keep the profits; when they lose, someone else bears the costs while they do their Black Swan invocation). Its manifestations are so ubiquitous that it has been the backbone of every book of the Incerto. Whenever there is a mismatch between a bonus period (yearly) and the statistical occurrence of a blowup (every, say, ten years) the agent has an incentive to play the Bob Rubin risk-transfer game. Given the number of people trying to get on the money-making bus, there is a progressive accumulation of Black Swan risks in such systems. Then, boom, the systemic blowup happens.

The hidden risk transfer is not limited to bankers and corporations. Some segments of the population play it quite effectively. For instance, people who live in those coastal areas that are prone to hurricanes and floods are effectively subsidied by the state—hence taxpayers. Although they play victims on television after an event happens, they and the real estate developers are getting the benefits others pay for.

THE ROAD

We will be guided by what is most lively. The ethics side is straightforward, as part of the general Fat Tony–Isocrates asymmetry, and I have gone deeply into the matter thanks to a highly argumentative collaboration with the philosopher (and walking companion) Constantine Sandis. Tort law is equally straightforward, and I had thought it would occupy a large section of this volume, but it will thankfully be minimal. Why?

Tort law is insipid to those who don’t have the temperament that takes one to law school. For, prompted by the fearless Ralph Nader, a coffee table in my study accumulated close to twenty volumes on contract law and torts. But I found the topic so dull that it was a Herculean task for me to read more than seven lines per sitting (which is the reason God mercifully invented social media and Twitter fights): unlike science and mathematics, law, while being very rigorous, doesn’t offer surprises. Law cannot be playful. The mere sight of these books reminds me of a lunch with a former member of the Federal Reserve Board, the kind of thing to which one should never be subjected more than once per lifetime. So I will dispatch the topic of torts in a few lines.

As we intimated in the first paragraphs of the introduction, some nonsoporific topics (pagan theology, religious practices, complexity theory, ancient and medieval history, and, of course, probability and risk taking) match this author’s naturalistic filter. Simply: if you can’t put your soul into something, give it up and leave that stuff to someone else.

Talking about soul in the game, I had to overcome some shame as follows. In the Paris episode of Hammurabi at the Louvre, when I stood in front of the imposing basalt stele (in the room with Koreans with selfie sticks), I felt uneasy not being able to read the stuff and having to rely on experts. What experts? This would have been fine if it was a cultural journey, but here I am professionally writing a book going very deep into that stuff! It felt like cheating not knowing the ancient text the way it was read and recited at the time. In addition, one of my episodic hobbies is Semitic philology, so I had no excuse. So I have been distracted by an obsession to learn enough Akkadian in order to recite Hammurabi’s law with Semitic phonetics, sort of having some soul in the game. It may have delayed the completion of this book, but, at least, when I mention Hammurabi, my conscience doesn’t make me feel I am faking anything.

AN ENHANCED DETECTOR

This book came after a deep—nonacademic—unplanned flirtation with mathematics. For after finishing Antifragile, I thought of retiring my pen for a while and settling into the comfortable life of a quarter university position, enjoying squid-ink pasta in bon vivant company, lifting weights with my blue-collar friends, and playing bridge in the afternoon, the kind of tranquil, worry-free life of the nineteenth-century gentry.

What I didn’t forecast is that my dream of a tranquil life lasted only a few weeks. For I exhibited no skills whatsoever in retirement activities such as contract bridge, chess, lotto, visits to the pyramids in Mexico, etc. I once, by happenstance, tried to solve a mathematical brain teaser, and it lead to five years of compulsive, time-invasive mathematical practice, with the obsessive bouts that plague people inhabited with problems. As usual with these things, I didn’t do mathematics to solve a problem, just to satisfy a fixation. But I never expected the following effect. It made my bullt detector so sensitive that listening to well-marketed nonsense (by verbalistic people, especially academics) had the same effect as being put in a room with instances of randomly occurring piercing and jarring sounds, the type that kill animals. I am never bothered by normal people; it is the bulltter in the “intellectual” profession who bothers me. Seeing the psychologist Steven Pinker making pronouncements about things intellectual has a similar effect to encountering a drive-in Burger King while hiking in the middle of a national park.

It is under such an oversensitive bull***t detector that I have been writing this book.

THE BOOK REVIEWERS

And since we are talking about books, I close this introductory section with that one thing I’ve learned from my time in that business. Many book reviewers are intellectually honest and straightforward people, but the industry has a fundamental conflict with the public, even while appointing itself as representative of the general class of readers. For instance, when it comes to books written by risk takers, the general public (and some, but very few, book editors) can detect what is interesting to them in a certain account, something those in the fake space of word production (in other words, nondoers) chronically fail to get—and they cannot understand what it is that they don’t understand because they are not really part of active and transactional life.

Nor can book reviewers—by the very definition of their function—judge books that one rereads. For those familiar with the idea of nonlinear effects from Antifragile, learning is rooted in repetition and convexity, meaning that the reading of a single text twice is more profitable than reading two different things once, provided of course that said text has some depth of content. The convexity is implanted in Semitic vocabulary: mishnah, which in Hebrew refers to the pre-Talmudic compilation of oral tradition, means “doubling”; midrash itself may also be related to stamping and repeated grinding, and has a counterpart in the madrassa of the children of Ishmael.

Books should be organized the way the reader reads, or wants to read, and according to how deep the author wants to go into a topic, not to make life easy for the critics to write reviews. Book reviewers are bad middlemen; they are currently in the process of being disintermediated just like taxi companies (what some call Uberized).

How? There is, here again, a skin-in-the-game problem: a conflict of interest between professional reviewers who think they ought to decide how books should be written, and genuine readers who actually read books because they like to read books. For one, reviewers command an unchecked and arbitrary power over authors: someone has to have read the book to notice that a reviewer is full of baloney, so in the absence of skin in the game, reviewers such as Michiko Kakutani of The New York Times (now retired) or David Runciman, who writes for The Guardian, can go on forever without anyone knowing they are either fabricating or drunk (or, as I am certain, in the case of Kakutani, both). Book reviews are judged according to how plausible and well written they are, never in how they map to the book (unless of course the author makes them accountable for misrepresentations).

It took close to three years for Fooled by Randomness to be understood as “there is more luck than you think,” rather than the message people were getting from reviews: “it is all dumb luck.” Most books don’t survive three months.

Now, almost two decades after the first installment of the Incerto, I have established ways to interact directly with you, the reader.

ORGANIZATION OF THE BOOK

Book 1 was the introduction we just saw, with its three parts.

Book 2, “A First Look at Agency,” is a deeper exposition of symmetry and agency in risk sharing, bridging commercial conflict of interest with general ethics. It also introduces us briefly to the notion of scaling and the difference between individual and collective, hence the limitations of globalism and universalism.

Book 3, “That Greatest Asymmetry,” is about the minority rule by which a small segment of the population inflicts its preferences on the general population. The (short) appendix for Book 3 shows 1) how a collection of units doesn’t behave like a sum of units, but something with a mind of its own, and 2) the consequences of much of something called social “science.” Book 4, “Wolves Among Dogs,” deals with dependence and, let’s call a spade a spade, slavery in modern life: why employees exist because they have much more to lose than contractors. It also shows how, even if you are independent and have f*** you money, you are vulnerable if people you care about can be targeted by evil corporations and groups.

Book 5, “Being Alive Means Taking Certain Risks,” shows in Chapter 5 how risk taking makes you look superficially less attractive, but vastly more convincing. It clarifies the difference between life as real life and life as imagined in an experience machine, how Jesus had to be man, not quite god, and how Donaldo won the election thanks to his imperfections. Chapter 6, “The Intellectual Yet Idiot,” presents the IYI who doesn’t know that having skin in the game makes you understand the world (which includes bicycle riding) better than lectures. Chapter 7 explains the difference between inequality in risk and inequality in salary: you can be richer, but then you should be a real person and take some risk. It also presents a dynamic view of inequality, as opposed to the IYI static one. The most egregious contributor to inequality is the condition of a high-ranking civil servant or tenured academic, not that of an entrepreneur. Chapter 8 explains the Lindy effect, that expert of experts who can tell us why plumbers are experts, but not clinical psychologists, why The New Yorker commentators on experts are not themselves experts. The Lindy effect separates things that gain from time from those that are destroyed by it.

Book 6, “Deeper into Agency,” looks for consequential hidden asymmetries. Chapter 9 shows that, viewed from the standpoint of practice, the world is simpler and solid experts don’t look like actors playing the part. The chapter presents BS detection heuristics. Chapter 10 shows how rich people are suckers who fall prey to people complicating their lifestyle to sell them something. Chapter 11 explains the difference between threats and real threats and shows how you can own an enemy by not killing him. Chapter 12 presents the agency problem of journalists: they will sacrifice truth and build a wrong narrative because of the necessity to please other journalists. Chapter 13 explains why virtue requires risk taking, not the reputational risk reduction of playing white knight on the Internet or writing a check to some nongovernmental organization (NGO) who might help destroy the world. Chapter 14 explains the agency problem of people in geopolitics, and historians who tend to report on wars rather than peace, leaving us with a deformed view of the past. History is also plagued with probabilistic confusions. If we got rid of “peace” experts, the world would be safer and many problems would be solved organically.

Book 7, “Religion, Belief, and Skin in the Game,” explains creeds in terms of skin in the game and revealed preferences: how atheists are functionally indistinguishable from Christians, though not Salafi Muslims. Avoid the verbalistic: “religions” are not quite religions: some are philosophies, others are just legal systems.

Book 8, “Risk and Rationality,” has the two central chapters, which I elected to leave for the end. There is no rigorous definition of rationality that is not related to skin in the game; it is all about actions, not verbs, thoughts, and tawk. Chapter 19, “The Logic of Risk Taking,” summarizes all my tenets about risk and exposes the errors concerning small-probability events. It also classifies risks in layers (from the individual to the collective) and manages to prove that courage and prudence are not in contradiction provided one is acting for the benefit of the collective. It explains ergodicity, which was left hanging. Finally, the chapter outlines what we call the precautionary principle.

Appendix: Asymmetries in Life and Things

Table 2 • Asymmetries in Society. Where we left off in Antifragile.

No Skin in the Game.

Keeps upside, transfers downside to others, owns a hidden option at someone else’s expense.

Skin in the game.

Keeps his own downside, takes his or her own risk.

Skin in the game of others, or soul in the game.

Takes the downside on behalf of others, or for universal values.

No Skin in the Game.

Bureaucrats, policy wonks.

Skin in the game.

Citizens.

Soul in the game.

Saints, knights, warriors, soldiers.

No Skin in the Game.

Consultants, sophists.

Skin in the game.

Merchants, businessmen

Soul in the game.

Prophets, philosophers (in the pre-modern sense)

No Skin in the Game.

Large corporations with access to the state

Skin in the game.

Artisans

Soul in the game.

Artists, some artisans

No Skin in the Game.

Corporate executives (with suit)

Skin in the game.

Entrepreneurs

Soul in the game.

Entrepreneurs/Innovators

No Skin in the Game.

Scientists who play the system, theoreticians, data miners, observational studies.

Skin in the game.

Laboratory and field experimenters.

Soul in the game.

Maverick scientists who take risks with conjecture at distance from common beliefs.

No Skin in the Game.

Centralized government.

Skin in the game.

Government of citystates.

Soul in the game.

Municipal government.

No Skin in the Game.

Copy editors.

Skin in the game.

Writers, (some) editors.

Soul in the game.

Real writers.

No Skin in the Game.

Journalists who “analyze” and predict.

Skin in the game.

Speculators.

Soul in the game.

Journalists who take risks and expose frauds (powerful regimes, corporations), rebels.

No Skin in the Game.

Politicians

Skin in the game.

Activists.

Soul in the game.

Dissidents, revolutionaries

No Skin in the Game.

Bankers.

Skin in the game.

Hedge fund traders.

Soul in the game.

They would not engage in vulgar commerce.

No Skin in the Game.

Seeks awards, prizes, honors, ceremonies, medals, tea with the Queen of England, membership in academies, handshake with Obama.

Soul in the game.

Highest-even onlyaward is death for one’s ideas or positions: Socrates, Jesus, Saint Catherine, Hypatia, Joan of Arc