Skin in the Game (book)
Skin in the Game: Hidden Asymmetries in Daily Life (acronymed: SITG) is a 2018 nonfiction book by Nassim Nicholas Taleb, a former options trader with a background in the mathematics of probability and statistics. Taleb's thesis is that skin in the game—i.e., having a measurable risk when taking a major decision—is necessary for fairness, commercial efficiency, and risk management, as well as being necessary to understand the world. The book is part of Taleb's multi-volume philosophical essay on uncertainty, titled the "Incerto", which also includes "Fooled by Randomness" (2001), "" (2007–2010 ), "The Bed of Procrustes" (2010–2016), and "Antifragile" (2012). The book is dedicated to "two men of courage": Ron Paul, "a Roman among Greeks"; and Ralph Nader, "Greco-Phoenician saint". Asymmetry and missing incentives. If an actor pockets some rewards from a policy they enact or support without accepting any of the risks, economists consider it to be a problem of "missing incentives". In contrast, to Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, the other is stuck with the risks. Taleb argues that "For social justice, focus on symmetry and risk sharing. You can not make profits and transfer the risks to others, as bankers and large corporations do... Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations." The centrality of negative incentives. Actors - per Taleb - must bear a cost when they fail the public. A fund manager that gets a percentage on wins, but no penalty for losing is incentivized to gamble with his clients funds. Bearing no downside for one's actions means that one has no "Skin In The Game", which is the source of many evils. An evolutionary process is an additional argument for  SITG. Those who err and have SITG will not survive, hence evolutionary processes will eliminate (physically or figuratively by going bankrupt etc) those tending to do stupid things. Without SITG, this process cannot work. Examples. Robert Rubin, a highly-paid director and senior advisor at Citigroup, paid no financial penalty when Citigroup had to be rescued by U.S. taxpayers due to overreach. Taleb calls this sort of a trade, with upside gain but no or limited downside risk, a "Bob Rubin trade." Many war hawks don't themselves bear any risks of dying in a war they advocate. Intellectual  Yet Idiot. Intellectual Yet Idiot (IYI) is a term coined by Nassim Nicholas Taleb in his essay by the same name that refers to the semi-intelligent well-pedigreed "who are telling us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for". They represent a very small minority of people but have an overwhelming impact on the vast majority because they affect government policy. IYI are often policy makers, academics, journalists, and media pundits. Taleb points out that being educated and "intellectual" does not always mean that  someone isn't an idiot for most purposes. "You can be an intellectual yet still be an idiot. 'Educated philistines' have been wrong on everything from Stalinism to Iraq to low-carb diets." Taleb dedicates a chapter to IYIs in his book Skin in the Game. Usage. The term was picked up and used late in the 2016 U.S. presidential election by Newt Gingrich when he criticized the negative response Trump received after the first presidential debate stating that "The Intellectual Yet Idiot class is so out of touch with America that they don't even realize how badly they  are doing and how well Trump is doing." Gingrich has mentioned the term multiple times in interviews and speeches since then and has included in his book "Understanding Trump" a chapter called "The Rise of the IYI". The term has since been used extensively and has been cited in numerous periodicals including "The Guardian", "Financial Times", and "The New Statesmen". Jonah Goldberg, in an article from "National Review", references the term in defense of non-liberal intellectuals who have been branded "anti-intellectual" by the Left. Graham Vyse in his article "Democrats Should Stop Talking About Bipartisanship and Start Fighting  from The New Republic" referenced Gingrich's use of IYI as divisive and that until the Republicans become more collaborative, "Democrats need to drop the subject, too, and fight like hell instead." Other ideas. Minority rules. A "stubborn minority" can impose its will on the relatively disinterested majority. A halal eater, for example, will never eat non-halal food, but a non-halal eater isn't banned from eating halal. Thus, a catering company switches to serving halal meat despite its being preferred only by a tiny minority of its customers. Christology. The book delves into Christology. Michael Bonner writes : "Observers who are interested in, or baffled by, the Christological debates of the first five hundred years of Christianity may be shocked by Taleb’s explanation for the Church’s insistence upon the full humanity of Jesus. The short answer is that it was essential for God to have—literally—skin in the game, and that Christ’s full participation in crucifixion, self-sacrifice, and death made him the archetypal risk-taker." Reception and criticism. Branko Milanović wrote that Taleb has created "a full system that goes from empirics to ethics, a thing which is exceedingly rare in modern world ." "The Economist" described reading the book as similar to "being trapped in a cab with a cantankerous and over-opinionated driver." Matthew Syed of " The Times" was "mostly persuaded" by the main argument of the book. "The Guardian" published an ambivalent review, noting that Taleb's "combination of fearlessness, self-belief and immodesty adds up to charisma on the page" but that "every idea that sounds as if it might work in the abstract fails in the particular". Taleb responded with a list of the flaws and "reading comprehension" in the reviews in "The Economist" and "The Guardian" (claiming that  journalists have an agency problem with subjects criticizing their profession for lack of skin of the game). Audiobook. The audiobook version is narrated by Joe Ochman and reached #4 on the Audible.com's nonfiction list in March 2018.