 So Matt today we're reviewing skin in the game hidden asymmetries in daily life by Nassim Taleb. Now if you haven't heard of Taleb he's a scholar, he's a former trader, he's author of the Black Swan and he's most famous nowadays for being a very angry man on Twitter. In fact you know based on his Twitter persona I was kind of expecting this to be a rambling read and for the most part it's lucid and very clearly written although Matt you have queued up for us now an example of Taleb's tweets so the audience knows what we're talking about. A perfect example of this happened on May 4th 2018 from Nassim himself, I treat my friends as temporary pre-enemies, my enemies as temporary pre-friend and my post-friends as permanent enemies. Yes Matt you are now my temporary pre-enemy just so you know and you kind of get a headache just trying to understand what on earth Taleb is talking about for most of his tweets. However the same cannot be said for this book because there's actually a pretty clear thesis or philosophy driving the narrative and that is that society functions best when people have skin in the game that is they put their money where their mouth is they're invested personally in the outcome of whatever they're doing so an example of this is you know a business owner putting their own money into a project a general leading their men into battle or perhaps you know most virtuously a podcaster delivering their takes onto the internet where anyone can hear them and hold them accountable. A large focus of this book is when the inverse happens when you have situations where decision makers are not held accountable at all for their actions for example a CEO who collapses the company but yet walks away with a golden parachute in this case Naseem would say they did not have any skin in the game and he says you can see this in lots of other areas for example foreign policy mishaps or even the recent financial meltdown and another big area of criticism is academic research which we'll get back to later in the show. Taleb's main argument is that we've kind of increased our exposure to these situations where people do not have skin in the game and we were really at a stage where lots of folks aren't held accountable for their actions and can really profit either way and leave others to pick up the pieces. Right there is nothing worse for Taleb than someone who doesn't have skin in the game and I really like this book because for the first time we sort of had a true villain in these readings, the IYI and we'll kind of get back to them in a second and talk about why Taleb just absolutely despises them. The first we wanted to introduce for show this is Random Talkers, the voice you hear right now is Adam, the other voice you hear is Matt and this is a program where we discuss how technology is shaping our future for better and worse. We're available on YouTube or wherever you get your podcasts, really. Make sure to subscribe, leave a comment. We like to hear your views on all of this and let us know if you have any more Taleb tweets for us to read. Now, as I mentioned, there's a villain in this story. It's the IYI or the Intellectual Yet Idiot. Adam, I am so thrilled that we finally have a villain. These IYIs are New Yorker reading, Ted Talk watching, Ivy League attending, Michelin star dining, pseudo-intellectuals, who don't even deadlift. Yes, well, more on the weightlifting later, but essentially Taleb is creating this kind of caricature to refer to this sort of post-war intellectual class that has developed that earns a lot of money, does a lot of seemingly important academic research, but doesn't really contribute anything valuable to society. He has a number of ways where IYIs have messed up the world, essentially. One of the biggest ones he talks about is the impact they've had on foreign policy. He calls this class of IYI the Interventionistas, whereby they've advocated for nation building, for the invasions of Iraq and Afghanistan, and they haven't really paid any consequences for actions. It doesn't affect them particularly if a country is ruined or a government fails. These IYI foreign policy experts can kind of live their gilded life in New York and Washington and not really worry about the consequences of their advice and their research. Speaking of research, one of the things that really resonated with me was this lack of reproducibility in a lot of modern research. I know Adam, you and I, being in the data science field, we see this all the time and go nuts where lots of these IYIs run studies that really don't mean anything, that aren't statistically significant, and claim that they've solved the world's problems. Yeah. I think Taleb is really getting at the lack of accountability that these researchers have, where they can produce findings that are filled with technical jargon, full of equations, but don't really add any actual value to the world. A lot of times, if it's a psych study, it might not reproduce, or it might just be such a jargon filled paper that no one can really understand or apply it, and it doesn't connect to the real world in any meaningful fashion. Taleb is really kind of going after this intellectual class because he sees them as kind of attaining these high positions of prestige. They're distinguished professors at Ivy League universities, but they're not actually contributing anything. They're not risk-takers. There's no kind of accountability for their research that they have to deal with if they're wrong. Instead, they kind of win evil way. One analogy I'd like to make here is that IYIs are sort of the consultants of the world. They come in, they make a recommendation, it may save your business, or it may cause it to collapse, but the consultant gets paid either way. They truly have no skin in the game. We've actually seen this in a couple of other areas before. We recently read Kathy O'Neill's Weapons of Math Destruction and talked a lot about the compass algorithm, which is an algorithm that seeks to predict recidivism in crime, and in that case, the designers of the algorithm clearly had no skin in the game. Classic IYIs because they were never going to be subjected to any of the errors their model happened to make. I think this is kind of summed up by a quote in the book, which is, in academia, there is no difference between academia and the real world. In the real world, there is. Right. Tulev is actually a part-time professor, but you wouldn't know this given how dismissive he is of academia. He really thinks that knowledge comes from tinkering rather than reasoning in an academic journal. That knowledge that is discovered by a kind of practice and through business might be later formalized in academia, but that's not where it really comes from to begin with. In his views on education, he's very similar to someone like a Peter Thiel, who has a lot of disdain for traditional higher ed, and basically says, you learn from doing. For Tulev himself, this came by working on Wall Street as a trader. That's kind of where he learned about probability and risk management, those sorts of areas. He didn't learn it from some sort of abstract discussion in a classroom, and Tulev really argues that you kind of need to go beyond the comfort zone of a college lecture to actually learn something particularly useful. We should call out though, it's not just academics who can be IYIs. We actually have a great example, which is the Bob Rubin trade. So Bob Rubin was the treasurer secretary under Bill Clinton, and during his time as treasurer secretary, he argued very strongly against the regulation of derivatives, and later happened to find himself as the chairman of Citigroup, whereby he basically brought the company to complete collapse, had to be bailed out by the government, and you would think, okay, given these two monstrous mistakes, he's probably in the poor house now. Unfortunately, it turns out he received over $126 million in cash and stock during his time at Citigroup, so complete opposite of skin in the game here. Yeah, Tulev calls out these IYIs as basically winning either way, and Bob Rubin is the perfect example of that. But don't worry, there is hope. We're not doomed to be ruled by these unaccountable IYIs. In fact, Tulev says we need to kind of return to the olden days, the classics, if you will, and back to a time when risk takers were valorized. Risk takers were kind of the heads of society, the most respected people in society. And Tulev is really a student of history, the classics in particular. One discussion he talks about is the idea that Roman emperors often led their armies into battle. They were willing to go down with the ship, they led from the front. They didn't kind of hide at the back like interventionista foreign policy experts who make terrible decisions and have no accountability whatsoever. Yeah, I really love this point whereby very few Roman emperors actually died in their death bed. They died on the battlefield. Now, the only counterpoint I would have to this is that life expectancy back then wasn't necessarily long, so maybe it wasn't such a big risk as we would see it today. Yes, I think Tulev's kind of valorization of risk takers makes a lot of sense of how a lot of tech leaders are looked at today. People like Steve Jobs in past years or Elon Musk right now, whereby they're really seen as having the skin in the game. It matters to them personally whether or not the product succeeds or fails. For Elon Musk, for instance, you have SpaceX and Tesla, whereby Elon would take tremendous financial losses if those companies go belly up. He's not somebody like Bob Ruben who just wins even way. I think that element of risk is why Elon appeals to a lot of people, even though he can be rude and brash and not particularly pleasant, but the risk-taking aspect is something people really identify with. Adam, I agree that when Tulev is talking about tech that this is right, but I only think it applies to the tech leaders. I actually think there are a ton of IYIs as tech workers today. It's a relatively safe environment. It's very difficult to say who's making a contribution to the business. I think it's very different than a role like trading, which is a little bit more individualistic in my mind and clearer to say who's having a real impact. But Tulev praises startup culture I think very correctly, although he makes a great distinction between rent seekers who are basically just making business plans and trying to get their ideas out there, not really doing anything versus the real thing, which would be the folks who are starting their own companies, who are putting it all on the line. These are different than the people who are just trying to get bought out next month. Right. It's kind of the doers versus just the funding seekers, in other words. When Tulev's talking about these risk takers, he has some counterintuitive ideas, I would say. One of them is that he praises traditional duels, Alexander Hamilton style, where if you had an argument with someone, you'd take 12 steps, turn around and sort it out that way. Tulev actually argues that these duels had a pretty beneficial social purpose in that they forced the participants to have skin in the game rather than fighting their disputes through proxies, if you will, by solving a duel or solving an issue through a duel, which just involves two people, you avoid vast swathes of others getting drawn into this conflict, and you just keep the issue to the people who really care who have skin in the game. I thought that was kind of a counterintuitive intake, which maybe I didn't agree with at first, but when you kind of hear his reasoning, it sort of makes sense. Yes, Adam, I agree. After reading this, I didn't expect this point to really resonate with me, but I kind of came away agreeing with him. In some ways, I thought it made a good analog to the example of mutually assured destruction with nuclear arms, whereby if you have wars that you're finding in proxy countries, let's say Vietnam, that's very easy to do, but if it comes down to the idea that you're going to be obliterated yourself, maybe you're a little less likely to engage in that activity. Yes, speaking of sort of nuclear danger, as you might expect, difficult to ride a bestseller nowadays without invoking Donald Trump in some regard, and Trump does get mentioned here as sort of a quintessential risk taker. Teleb, I think, makes a really good point, but a lot of the appeal of Donald Trump is that he does have this kind of entrepreneurial background, and he did go bankrupt. He has scars, he's had skin in the game, and that sort of appeals to people in a way that perhaps his critics did not understand around the time of the election. Yeah, Teleb says it's really okay to lose a billion dollars as long as it's your own money, and the Democrats and the media really attacked Donald Trump because of these business failures, all of these bankruptcies, but really to the American public, a lot of folks just thought it made him feel like a survivor, and while the media wanted to attack these issues, a lot of people out there could identify with these problems, and it made Donald Trump seem authentic to them. Yes, Trump was absolutely one of them, he wasn't part of this kind of secluded academic class on one of the coasts, and I think it's worth noting that Teleb's book has a positively Trumpian tone to it in many cases. He doesn't just attack IYIs in general, he attacks them personally and calls them out by name. People like Steven Pinker or Ben Bernanke, former chairman of the Federal Reserve, are all kind of called out by Teleb for particular punishment for that poor writings and poor use of statistics and whatnot. I only hope that we're included among that set one day, Adam. It will be an absolute honor to be eviscerated by Teleb and one of his books, but so far, I don't think Teleb has really told us anything, but we didn't know before we started writing this book. He's kind of writing to his base, to his audience, and by taking potshots at academics, potshots at intellectuals reading the New Yorker, you're really kind of just playing to your own base, you're preaching to the choir in many regards, and I think everyone can generally agree with the concept that economic risk takers in society should be rewarded for their entrepreneurial spirit. But as Teleb kind of dives more into this idea of skin in the game, the idea that you should put your money where your mouth is, and kind of have your incentives aligned in any kind of venture, he does come out with, I think, some sort of counterintuitive conclusions that will kind of get into a little bit more. So one of these ideas that Teleb brings up is that of the intransigent minority. This is a minority group that really, really cares about something, they're intransigent, they're not willing to move on it, can kind of bend the majority to their will if the majority is more flexible on a particular issue. So one kind of example of this he brings up is with lemonade, where Teleb is drinking lemonade one day and he notices that this lemonade is kosher, and he kind of thinks about why that is. Why does the lemonade company make kosher lemonade? What sense does that make? And he realizes that there's sort of an intransigent minority of people who really care that their food is kosher. And because most of us, we don't carry the way, for example, if you're not Jewish, say whether or not your food is kosher, that means that the intransigent minority is kind of able to kind of shape the well of the food market or the food manufacturers, lemonade manufacturers, you know, to their beliefs. And so we all end up drinking kosher lemonade because a small group of people cares about it and the majority is kind of ambivalent either way. Yes, I spent the most time on this chapter in particular just trying to wrap my head around it, because I thought it was a really interesting idea. And to be clear, having an intransigent minority is not a bad thing. In the example of the kosher lemonade, I don't care either way whether I'm drinking kosher lemonade, but if someone cares very deeply, then it kind of makes sense that the entire marketplace could be shifted towards this type of kosher food. And I hope we get the number right, but I believe Taleb says it's only about a 3% stake needed from an intransigent minority to shift the majority. And there's a couple other examples. So for example, we see this in book banning, whereby most people may simply say, I don't care if a book is banned either way. But frankly, I wasn't going to read it. And I don't mind if you ban it. So even though only a small amount of people want to ban a book, it ends up getting banned because the majority is just ambivalent to its status. And likewise, you see this in other things, like for example, revolutions, whereby only a very small portion of the population is willing to riot in the streets, but the majority doesn't care who's leading the government either way. And therefore, a revolution can happen. Right. So Taleb gives kind of historical examples, you know, when he's talking about things like book banning, like kind of classic examples. But I think you can kind of spin this concept of the intransigent minority forward towards, you know, the modern day. I think, for example, in California in the Bay Area, you see it a lot with Nimbism, whereby you have property owners who are really working very, very hard to protect their home value. A lot of their wealth is tied up in their home. They need that value to grow, at least maintain itself. And so they're going to really fight against new builds and new developments kind of in concert with environmentalists. And whereas the vast majority of people here will probably want housing to be built, they want lower rents, you know, you have this intransigent, very organized minority that is kind of able to maintain the status quo. I think you also see it with things like emissions regulations, where most people are not particularly paying attention to it. They don't really have a strong opinion on what kind of the exact number should be in regulation. But if you have this group of people who kind of have the luxury of caring and who are very kind of invested in the regulation, you'll see them really be able to work to drive the law versus kind of a vast majority of sort of in the dark. Yeah, one thing I think IYIs can be really good at in lots of instances is obfuscating the true motivations or the true outcomes, I should say. So for example, in the case of the environmental regulation we just chatted about, I really think people would feel differently about some of these initiatives if instead of being presented as, you know, a small fringe environmental group who cares about saving the environment, we instead posed it what it really is, which is here is a tax on externality. And like, let's lay that out for people and let them decide. And I think that would put a lot more skin in the game on some of those issues in particular. Yes. I think there are other areas too in tech where kind of an early adopter kind of minority has a lot of skin in the game. When I think about like the development of cryptocurrencies, for example, you know, that's a situation where you have a really enthusiastic and transient minority that is kind of setting the rules of the game for these cryptocurrencies, whereas the vast majority of people are not particularly paying attention and will only be affected by these decisions years from now. And they might look back and kind of wonder why they weren't consulted or really part of the process. And it's because they're not part of this minority that really, really cares about the topic. And so my kind of takeaway from this section is that Taleb is a really big believer in the power of a small determined minority to change the world by having skin in the game by really caring about an issue that can really kind of set the agenda of how that issue is legislated, regulated, what have you. And he doesn't really give a value judgment on this of whether it's good or bad, he just kind of says it isn't something we need to be aware of. Now, for all his talk of, you know, minorities generating revolutions and what have you, Taleb in many ways is kind of a conservative, you know, he's a really kind of cautious in the way that he says we should look at the world. And one of the ideas he brings up in this book, which is kind of written about in past books and sort of rehashed here is that of the precautionary principle. And the precautionary principle basically says that we need to be very, very aware of the tail risks associated with some kind of chain, you know, the black swan event, how could things really, really go wrong when we do something. And for that reason, he basically says most of the time, you know, if they weren't doing it in the classical, you know, ancient Greek times and Roman times, we need to be pretty wary of making any kind of change nowadays, you know, we need to be very cautious. And it's better to sort of not act on a technology than introduces technology that's going to make the world substantially worse, you know, through some sort of major systemic overflow of risk. Taleb is a really tough character to classify. He's sort of part conservative, part libertarian, and really just doesn't fit into any of these boxes we have established today. I think one of the ideas behind the precautionary principle that he really believes in and says throughout the book is that really successful people say no to almost everything, right. And kind of looks at this is if you want to be successful, you should generally be saying no because the upside of these things just isn't worth it. And one area that he's really been attacked on lately that he believes in strongly is this idea of GMOs. And so this comes out through the example of golden rice. And golden rice for those who may not know is rice which has been fortified with different vitamins, etc. And it's been done through genetic engineering. And Taleb says, you know, we don't really know what's going to happen. The risk of something going wrong is so great that it just doesn't make sense for us to be releasing this stuff into the wild. And so that's why I think you would say he's definitely like quite conservative on this and very different than a lot of the, you know, think tank IYIs that you may see out there claiming that you need to, you know, have your golden rice. The one other thing I'll say on this is that the funny thing is that he also is very focused on, you know, sort of putting your money where your mouth is, right. And the idea here is that a lot of these IYIs who are saying you should eat golden rice, we should ship golden rice to people in impoverished nations are not putting it on their own dinner table. Yes, they're buying all organic whole foods, they're not going to be serving up golden rice anytime soon. And it's funny because we'd seen golden rice before actually when we read Ray Kurzweil's book, The Singularity is Near, where Ray really advocates for GMOs as being a way to kind of lift people out of near starvation to really extend lifespans that kind of thing. And it was pretty funny to see Taleb bring up the same topic but with the absolute opposite reaction. And I think one of the reasons why Taleb gets attacked on GMOs is because he doesn't necessarily have, you know, a direct kind of scientific master plan of how this would go wrong. You know, he can't really tell you exactly how the systemic risk would occur. He's more sort of acting on this general precautionary principle of you shouldn't introduce a massive unknown, you know, into a wild about fully understanding its effects, but he couldn't tell you exactly why it's going wrong. And I know he hates economists, but I would say the concept of opportunity costs sort of comes to mind here, whereby I would say, you know, it's easy to just kind of say GMOs might be bad, we should stop them. But there is a cost to that. And that is, you know, the kind of lack of nutrients that people are getting right now, the shortened lifespan, you know, the poor development in children because they're not getting enough nutrients early on in life. And I think Taleb sort of ignores that side of a conversation and mainly focuses on sort of systemic risks of GMOs. So for me at least, I sort of disagreed with him on his views here. Yeah, I guess it all comes down to how much of a tail risk you see associated with these GMOs. If you think they could ruin the food supply or something of that nature or cause, you know, massive cancer in 20 years, then you would simply say it's not worth it. If you don't think those things are very likely or almost impossible to happen, then it makes a lot more sense to eat the golden rice. Right. And my point would be that the food supply is often ruined already. You know, there's oftentimes famine, there's oftentimes hunger, and GMOs seem like a solution to that. It's not like we're in some wonderful utopia right now where everyone has enough to eat. And I think Taleb really kind of ignores that other side of the argument when he's writing about those. Well, one interesting thing he does focus on is the reasons we have this famine or this hunger in the world. And really, he points to it mostly being a transportation problem. And I love this way of thinking about this because for me personally, it's kind of how I like to break down problems, which is to say, where is the cost actually coming from? Like if we looked at the food chain, we actually find that if we make golden rice, it's not necessarily cheaper to produce than traditional rice. Nothing really changes. That something like 80% of the cost of the rice is due to the transportation of that rice. And if we could solve that, we could ship them normal, even organic rice and include some vitamins that won't cause all kinds of ecological problems. Yes. I think that's a valid point, although I think we'll just have to sort of agree to disagree, perhaps, on the golden rice. As is obvious from his views on GMOs, Taleb is something of a traditionalist, I would say. And he talks a lot in this book about something that has existed for millennia and something that is completely misunderstood by the YIs and the ivory towers who dismiss it out of hand. And that is religion. In many ways, this book is a strong defense of the purpose of religion, the need for religion, the reason people have religion. And I think Taleb is pretty compelling in this regard. Yeah, I would apply one of the arguments to religion that Taleb loves to talk about, which is the Lindy effect. So for those of you who may not know, the Lindy effect is this idea that things that have been around a while are anti-fragile, they are going to continue to exist in the future. So you simply ask how long something has existed. And you can say, well, it will be around for at least that long. So in the example of religion, if it's been around for 2000 years or 5000 years, you can simply say, oh, it'll be around another 2000 years or another 5000 years. And the idea there is that, you know, religion is something that is inherent to humanity. It's been around the dawn of humanity. And it's silly for some of these futurists to kind of envision a world in which religion doesn't play some major role. Yes, I think you can critique the Lindy effect by pointing out that things like slavery have also been around for a number of years. But the general point that Taleb is making is that, you know, if something has been around for a while, there's probably a reason for it, there's a reason why people have it. Yeah, I think the idea behind this is that the customs of religions are not meaningless. They're not irrational. And there's a lot of reason that they exist. For example, by having sacrifice, by having that skin in the game, if you will, the rituals of religion become meaningful. And that he would also say, a religion is in some ways, you know, part of the market, there are market forces, which are enacted on religion, thereby the religions which allow people to prosper are the religions which have remained around today. Right, it wasn't like we were just given the major world religions of today. And that's how it's always been. When you think about religions as coming out of many religions centuries or thousands of years ago, Taleb would say that these ones have been kind of chosen for a reason, they've kept on for a reason. One of the things he says about religious customs is that they're often basically simple rules against tail risks. So for example, when you look at a lot of the rules that religions have on food, the reason for that is because by following those rules, they're able to practice good hygiene, you know, avoid illnesses, avoid disease from poorly prepared meat and what have you. And these customs that IYIs sort of would mock or sort of wonder why they're still relevant really do have a purpose. And there's a reason they're written down and there's a reason why people follow them and that we should kind of respect and understand them rather than just saying that religion is an artifact of millennia ago and why do we have it anymore. Yeah, Taleb would definitely say that people need the community that religion brings together. And he also believes that the ethics that we have largely due to some of these religions don't really scale well, that they exist very well on a local level. But if you try to apply them broadly, they fall over and says, you know, this is in large part why, you know, when the West starts doing, you know, nation building activities, that type of intervention, they usually fall down because they're trying to meld together different cultures which simply don't fit and that left to their own devices, these tribes and these groups will be able to work out their differences without all the violence and all the destruction that you see in modern history. Yes, he basically says that kind of small close-knit communities work well because people have skin in the game, you know, they're invested. And if you try and scale that up to, you know, a huge kind of national level, it doesn't really work. Taleb is a big defender, for example, of kind of the federal system of government in the United States, where you do have a local government that people are kind of invested in, but then that kind of scales up to the state and federal level, rather than just having kind of a federal government that dictates to everyone below. One of the interesting points he makes in this book relates to the Israeli-Palestinian peace process, where he says that the Palestinians have actually been severely harmed by the West being so involved. You know, he kind of thinks that all the Western leaders who've tried to kind of make their name by forging a peace agreement have actually sort of hurt the Palestinians in the long run as if they had been kind of left to their own devices with Israelis, they would have kind of figured things out themselves. And I think a lot of the writing that Taleb does on the value of communities does kind of relate back to the election. We mentioned Trump earlier. And I think a lot of the kind of backlash against academics is the fact that they don't value communities. They don't kind of see any sort of reason for people to be emotionally invested in their small town in the Midwest or a flyover state, essentially. But Taleb, I think, understands why people care about them because they have skin in the game they are invested. Yeah, there's a really kind of interesting description given here whereby someone says, I'm a socialist at the local level, and I'm a libertarian at the federal level. And, you know, it's just a spectrum in between. I would say that's something that Americans really understand that IYIs don't get at all. Yeah, when we talk about the future, we often don't think of religion as being a big part of it. But Taleb sees religion as being important for cultural norms, have reasons for existing, they're useful. And they aren't likely to be discarded by virtue of the Lindy effect. And they've been around for thousands of years. They're likely here for a reason. And one of the things that Taleb repeats constantly through this book is that IYIs don't get it. These intellectuals, yet idiots, don't understand why religion is important. They don't value these communities. And it causes them to systematically misunderstand what people are upset about, particularly in the age of Trump. So, Taleb repeats a few times that people who call for equality rarely go out of their way to interact with those of the lower social classes. So, in the famous example he gives, there's a student attending Amherst and they're calling out the privilege that exists in society. And he says, well, you know, if you're so worried about privilege, simply give up your spot to that minority student standing behind you. But of course, that student isn't going to do that. And so, you know, as a classic example of sort of not putting your money where your mouth is. And really, he calls out some really other great points, which is that in the past, people of the higher social classes oftentimes lived in mansions where they had lots of servants and people running around. And, you know, even their own children often interacted with the children of their servants who happened to be of different social class. And so, you know, this sort of melding of different social classes occurred much more regularly than happens today and that oftentimes people now are sequestered into groups of their own social class. And because of this, you know, people have really sort of lost touch with different folks across, you know, that economic strata, if you will. And he really goes out of his way to encourage people to, you know, really sort of break down these barriers. So, he kind of uses his own example where he says, you know, I go weightlifting with, you know, cabbies and whatnot. I'm not sort of limited to this ivory tower set that you would expect me to be interacting with. Yes, Telebro really portrays himself as kind of being the everyman. You know, he'll go out drinking with anyone. He doesn't care. He's not one of these elites in the ivory tower who, you know, only talks to other academic intellectuals. I do think he makes some valid points here about, you know, even if the differences and kind of classes are perhaps less obvious now in society, society might in some ways be more divided in terms of the extent to which kind of the elites actually interact with those beneath them. I think he's really calling out here a lot of what we would potentially say is virtue signaling, whereby people will make very strong points about how they are committed to equality. They want to eliminate inequality. They care about, you know, diversity and hiring and what have you. But they won't necessarily kind of live their values through the people they actually spend time with. And like you said, the example of, you know, if you're so concerned about privilege, why don't you give up your spot in this prestigious academic institution? I think it's actually a pretty good one. I mean, a lot of people would be unwilling to actually make that kind of sacrifice. One thing Telebro gets into when he is criticizing the hated intellectual class is that misunderstanding as he puts it of income inequality. So we mentioned that Telebro has the Trumpian characteristic of calling out people by name. Here he goes after Thomas Piketty, whose book on kind of capital was really held up by sort of the elite class of portraying kind of the dangers of increasing income inequality and the devastation of the recon society. Of course, Telebro says that much of his book is completely junk. It's nonsense. The statistics are bad. And Piketty is really looking at things from a static point of view, looking at the distribution of income at a single point in time, rather than looking at how people are actually willing to or able to move kind of up and down through the income spectrum over the course of their careers and lives. So one thing that really surprised me in this book was a figure that was quoted that about 10% of Americans will spend at least one year of their life in the top 1%, which is kind of incredible to me. You know, when I personally think about this as rather static and unchanging, actually it's quite dynamic. It's not like we can look at a group of people and assume that, oh, this is the elite. This is the 1%. Now, this is changing all the time. Yeah. And I think this is one of the reasons why Telebro kind of admires the dynamic American system of a savior one you find in Europe. Another statistic that kind of closely relates to that is that more than half of all Americans will spend at least one year in the top 10%. And what Telebro is really saying here is that you kind of have to think of this as a dynamic system rather than the static point of view that Picardia and Co are looking at. In Europe and in France and in Italy, you have this problem where the wealth is really inherited by a small number of families who kind of keep it over the years, but even the decades of centuries. Whereas in America, you know, you might have kind of extreme inequality and a static sense of the 1% are earning massive salaries, but there's movement within that group. Some people fall out of it. Some people join in. And that's what Telebro really sees as being kind of the best system to have. Telebro, of course, skewers the academics. I think he's really playing to his audience here when he kind of makes fun of the intellectual class and all that kind of misbehavior and their poor decisions and the fact they're out of touch with reality. But I do think academics are sometimes defensible. I don't think all academic research is worthless. I think some of it is quite useful. I think there are academics, for example, who've been able to kind of leave universities and work in the private sector and be extremely successful. I mean, you look at the founders of Google for one example of that. And so I think a lot of times, Telebro is kind of screwing this caricature of academia, but you need to kind of be careful to say that not all intellectuals are as bad as he's making out. Yeah, I think he makes somewhat of a distinction between intellectuals in the sense of being a, let's say, a PhD in physics versus having a PhD in economics. So Adam, now we have to talk about your field, economics, which gets absolutely eviscerated in this book. Yes, Telebro dislikes all academics, but he hates economists. And so if there's one group of economists who are called out for a particular amount of vitriol, it is undoubtedly the behavioral economists of people like Richard Baylor, who have kind of written about nudge theory and irrationality and behavior and that kind of thing. And I think what Telebro really hates about these particular economists is their hubris. The fact that they are willing to just brand people as acting irrationally for what he sees as no good reason. So while I mostly agree with Teleb here, I do think it's worth calling out that the behavioral economists such as Thaler or Kassman or some of these other folks really are an improvement over some of their predecessors in that they actually tried to apply economics to human behavior. They didn't pretend that there was some sort of computer robot machine who was just going to act as economists thought. I would say that perhaps older style macroeconomics were correct and they made some sort of microeconomic corrections, but agree that behavioral economists measure things in a very artificial odd way and then say that they have truly captured reality. Yeah, I think one of the things that Teleb would say is that the behavioral economists are very quick to just dismiss people's actions as irrational rather than considering that perhaps the theory is wrong by calling those actions irrational. One of the things he talks about is that a lot of times these economists will do kind of single shot experiments. They'll ask a group of participants how much would you pay to insure against losing a certain sum of money tomorrow. And they'll basically say that these people are way too risk averse. They're giving up way too much. This is irrational behavior. But what Teleb points out is that the game is not played once. We're dealing with a series of say micro risks over time that are going to kind of compound. You have a small chance of something going wrong when you drive to work every day for instance. And so the risk from any individual trip is tiny, but over time it sort of accumulates. And because those risk accumulations arise, we are very, very sensitive to these small risks because we know about this kind of compounding effect of risks over time. And therefore, it's not irrational to kind of guard against what he would call these tail risks using the precautionary principle that we mentioned earlier. Instead, it's actually the rational thing to do and it's what kind of keeps people alive in the long run. Yeah, he makes the distinction here that these tail risks are something your grandmother would get. And academic doesn't understand them, but a grandma does. Because just like you're saying, there are things that accumulate over time. So when you tell people, oh, there's a small percentage chance this happens and then are shocked to find you believe they, you know, in quotes behave irrationally, the reality is that they've learned that these small fractions of a percent of things happening will eventually happen given enough time and react that way instead of the academic setup of the experiment. Yes. And he makes fun of economists who make fun of us basically. So one of the examples Taleb uses is when he compares the number of deaths from Ebola to something really, really trivial, like the number of deaths from Ebola last year might be equal to the number of people that kind of tripped over their coffee table and died. And he says that a lot of economists or sort of academics will kind of call out for people for worrying about Ebola by saying that the number of deaths is equal to this, you know, other really trivial risk. But what Taleb says, you know, the common person understands the layman understands and the academic doesn't is that Ebola is a very different type of risk to, you know, tripping over your coffee table. A coffee table is kind of an isolated, it's very, you know, clearly defined risk where the distribution is extremely narrow. But Ebola, you know, if it spreads represents, you know, a systemic risk, it could turn into something absolutely tremendously dangerous. And people get that, but economists don't. And that's why people are actually rational to worry about something like Ebola, which could turn into something systemic, rather than something like tripping over your coffee table, which is, you know, very kind of narrowly defined and unlikely to suddenly, you know, afflict an entire population. I think the really hard thing here is figuring out which items have that systemic risk. Like we all understand that there's that interesting relationship that goes on. But, you know, if I was asking you to estimate the probability of something like Ebola wiping out humanity, I think we would all kind of get it wrong, which is maybe sort of the point of the black swan theory. But I think the hard part is that, as you said, when we think about golden rights or something like that, it's also weighed against the harm that we have of inaction today. Yeah. And to elaborate on this book, it's kind of purposefully inflammatory, you know. He's writing to an audience. He's trying to make you interested in what he's saying. And for that reason, you know, he maybe kind of exaggerates, you know, his vitriol against economists, especially because when you read a lot of a book, he actually applies a lot of, you know, basic economic theory and a lot of his writing. There's one section, for example, where he talks about how companies basically structure compensation to increase retention of their employees. They might give you, say, a company car or they'll send you somewhere that's cheaper to live but give you a really high salary so you can live really, really well and do that in an effort to basically buying talent to the company and really disincentivize you leaving. And Taleb kind of presents this as if it's some sort of amazing insight, but only he is gleaned from studying corporations. But, you know, compensation structure is basically a pretty basic part of labor economics. It's something that economists, I think, understand pretty well. And so Taleb, I think, a lot of times presents at their core relatively simple concepts, but he kind of gives you the illusion of some kind of grand reveal that only his genius could really give you, which, you know, sometimes falls a little flat, I think, in this book. But overall, I would say that I enjoyed this book a lot more than I expected to. Only really knowing about his Twitter persona coming in, I'd never read the black swan, I kind of flipped through it in a bookstore, as I think, you know, half of readership might have. I didn't really know what to expect. But for the most part, it's really entertaining. And I think the points Taleb makes about incentive alignment, skin in the game, are pretty solid and applicable. Adam, I am in the same camp as you. However, I did read the black swan. So I had a little bit of information going into this book. But I feel like, you know, over the years, I've kind of started to associate Taleb more with his Twitter feed, just as you have. And then, you know, now to sort of be refreshed by this writing was awesome. Like, I really enjoyed the book. I felt like it was captivating and compelling throughout. The points he makes are super clear. They're very coherent, unlike some of the odd tweets that I read at the beginning of the show. And I think he just kind of is a person who is amazing at calling out the issue of the age, right? So he's someone who can say, here are all the problems with modern society and really does that quite well. If there was any critique of the book I would give is that, you know, I would like more detail on the solution. I think he would also probably argue back that, you know, part of having complicated problems is that it's even more complicated to have a solution. And so I shouldn't expect that. But, you know, just from my perspective, he's so good at identifying the problem, I would have loved more information on what he thinks we could do as a solution. Yeah, I agree with all of that. I do think he is usually extremely entertaining. There's a section where he is forced to visit a Michelin star restaurant. And we get a couple pages on how he absolutely despises the experience, which was kind of hilarious. But sometimes he does sort of verge into self parity. I don't know if you know this map, but he's into weightlifting. He only mentions it. I have heard of this before. He only mentions it about 100 times through the book. And so Taleb telling you about his like Manly Man lifestyle like does get a little bit tiresome after a while. He does a lot of things that like a caricature of Taleb would do. One of the things he talks about in this book is the code of Hammurabi as kind of a originator of modern ethics. And Taleb makes sure to remind you that he actually went and learnt the language so he could make sure to sort of read and pronounce the text properly. So you know he's done all of his scholarly work here. He just has skin in the game, Adam. He does certainly have skin in the game. It's sort of interesting now that kind of his worker has gotten a bit older to see him reflect on how people have sort of abused it. Especially when we talk about finance for example, where he basically says now that you know people say you know if I win that's my own genius. If I lose well it's a black swan event. And people basically abuse the notion of black swan events to justify basically their own poor risk management, which is kind of a negative side effect I think of his writing. I agree, Adam. I think that Taleb has done such a good job perhaps even naming it the black swan that this is something that's just really sticky and meme worthy in people's minds. And it leads to folks who like yourself may have not read the book to tank the idea and use it incorrectly. And I think you see this all the time in society whereby you have these ideas that people think they should be familiar with and sort of warp them into something the original author didn't intend. Yeah, so black swan is the perfect sort of event that an IYI would skim over in the New Yorker and then try and use in you know polite conversation and get it completely wrong. One other thing to mention before we close is that Taleb absolutely hates book reviewers. He sees them as useless middleman. He sort of lumps them in with journalists at large who he views as only trying to kind of impress each other rather than actually imparting any truth to the general public. But I would like to say that we are not professionals. We are not writing New York Times. We are podcasters. And therefore I think we will be exempt from Taleb's IYI for the most part. In any case, I would highly recommend this book. I think it's an interesting read. Taleb is kind of a tricky as tough character but I think he makes a number of really valuable points here around skin in the game and kind of the need to enlighten incentives and be invested in whatever you're doing. This has been Random Talkers, available on YouTube, revgate your podcast app. Make sure to subscribe, leave a comment. Thank you very much for listening, and we'll see you next time.