Contents
- Rule 1: Being alive means taking risks
- Rule 2: Cheating is dishonorable
- Rule 3: We’re stupid when we don’t put skin in the game.
- Rule 4: Systems learn by getting rid of unnecessary parts
- Rule 5: Silver beats gold
- Rule 6: Listen to the advice of those who risk themselves giving this advice.
- Rule 7: Be open about your shortcomings
- Rule 8: Always do more than you say
Risk makes us feel alive. This applies to work, relationships, and even everyday decisions that we make every day. When something important is at stake, we are more involved in the process. Businessman and author of the new economic bestseller Risking Your Own Skin. The Hidden Asymmetry of Everyday Life Nassim Nicholas Taleb talks about the rules of risk.
“Skin in the game is not just about being honest, financially successful, and managing risk. This is also necessary in order to understand the world, ”says Taleb in a new book. At first glance, this seems like a rather chaotic set of thoughts, examples and theses. But if you read and grasp the structure, you can make many useful discoveries. Taleb suggests not to confuse the concept of «skin in the game» in his understanding with the way it is understood in society and the world of finance. It’s about symmetry, about how we pay if something goes wrong.
Risk, justice, symmetry, rationality, the distribution of information into «reliable» and «nonsense» — our world is filled with all this. And if you understand this, you can understand it and learn how to manage your life. Nassim Taleb puts forward several provocative and bold theses-rules, which are based on the requirement of «skin in the game.»
Rule 1: Being alive means taking risks
Imagine that you are participating in a pilot study. Several wires are connected to your brain, and you get some kind of “experience”. It seems to you that everything actually happened, although it is just a virtual reality, a mental experience. Alas, such an experience cannot be compared with the present. Only a professor of philosophy, who never risked anything, would argue with this: why can’t it be compared, after all, experience has been gained and experienced?
Because life is about self-sacrifice and taking risks. And if the experience does not contain a moderate dose of the first in the presence of the second, it will not become life. If an adventure doesn’t involve risk and loss from which you may (or may not) recover, it’s not an adventure. Reality calls for danger.
Rule 2: Cheating is dishonorable
All actions aimed at simplifying the work, to «cheat» or squeeze more «efficiency» out of it, in the end you will be turned away from this work.
Craftsmen put their souls on the line: they work primarily for existential reasons, and only then for financial and commercial reasons. They combine art and business. The craftsman will not sell a defective product, otherwise his pride will be hurt. “The scoundrel goes the short way, the virtuous the long way,” Taleb concludes.
Rule 3: We’re stupid when we don’t put skin in the game.
“Are you familiar with the idea of ‘patemata matemata’ (learning through pain)? Consider the reverse concept: learning through thrill and pleasure.
A person has two brains: one works when he puts the skin on the line, the other when he does not. Skin in the game makes the boring less boring. When you put your skin in the game, boring routines are no longer boring. If you invest in a company, the super-boring reading of the notes to the financial statement (where everything is written as it is) suddenly stops being so boring.
When risk arose in my life, a second brain suddenly woke up in me, so that I could effortlessly analyze and take into account the probabilities of complex sequences. When a fire starts, we run faster than any competition.»
Rule 4: Systems learn by getting rid of unnecessary parts
The risk transfer mechanism hinders learning. You will never convince someone that he is wrong — only reality can do this. In fact, reality does not care whether it convinces someone or not. Only survival matters.
The curse of modernity is that there are more and more people among us who explain better than they understand. And they explain better than they do. So education is not exactly what we teach prisoners in maximum security prisons, called schools. In biology, learning is what passes the filter of selection from generation to generation and is imprinted at the cellular level.
“I insist: the skin in the game is more of a filter than a deterrent. Evolution can only take place if there is a risk of extinction.” People don’t learn much from their own and other people’s mistakes. Rather, it is the system that learns by selecting those who are less prone to certain class of errors and eliminating the rest. Systems learn by getting rid of their “extra” parts. Law of evolution!
Rule 5: Silver beats gold
The laws of Hammurabi are engraved on a basalt stele that stood in the central square of Babylon 3800 years ago. The 282 paragraphs have one leitmotif: they establish symmetries between interacting people so that no one can impose a hidden tail risk on others.
What is a «tail»? This is a rare extreme event. This is a vulnerability that will inevitably surface later and hit the innocent. But according to Hammurabi’s prescription, she will also hit the author: «if the builder built an unstable house and he collapsed and killed the owner, this builder should be executed.» We are more familiar with the derivative of this law: «an eye for an eye.»
The silver rule formulated by Isocrates, Hillel the Elder: «Do not treat others as you would not like to be treated.» The golden rule from Matthew sounds similar: do to others the same way you want to be treated to you. Taleb believes that the silver rule is better than the golden one: we do not decide for another what is good for him, but we do our own thing. We are much clearer what is bad and what we would not like in relation to ourselves.
Rule 6: Listen to the advice of those who risk themselves giving this advice.
This rule is a consequence of Rule 5. There are always fools around us from chance and scammers from chance (uncertainty): the first lacks understanding, the second is driven by perverted motives.
The first, the fool, takes risks he does not understand, mistaking past successes for skills. The second, the fraudster, transfers the risk to others. By concluding a one-time deal, the merchant does not correlate his interests with yours and may hide something from you. Fools are not fiction: there are people who do not know what is in their interests and what is not. But the fooled reality rejects itself.
Rule 7: Be open about your shortcomings
“I usually watch TV with the sound off,” Taleb writes. — Seeing Donald Trump in the Republican primaries, I was convinced that he would win the internal party elections, regardless of what he said and what he did. Moreover, it will win precisely because it has obvious shortcomings.
Trump is real, and the people — we are talking about people who take risks, not lifeless analysts who do not put their skin in the game — always vote for the one who injured himself with an ice pick for real. We prefer a real loser to a successful individual. Reputation stains, scars and flaws increase the distance between a living person and a ghost.
Rule 8: Always do more than you say
And precede words with action. Because it was and will be so: action without words wins over word without action. Otherwise, you will resemble the insidious infection of modernity, a lot of «intellectuals»: those who sit in the rear, but behave as if they are fighting on the front lines.
Source: N. Taleb “Risking your own skin. The hidden asymmetry of everyday life” (Hummingbird, Azbuka Atticus, 2018)