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Even today, monarchs derive their legitimacy from a social contract that requires physical risk-taking. The British Royal family made sure that one of its scions, Prince Andrew, took more risks than “commoners” during the Falkland war of 1982, his helicopter being in the front line. Why? Because noblesse oblige; the very status of a lord has been traditionally derived from protecting others, trading personal risk for prominence—and they happened to still remember that contract. You can’t be a lord if you aren’t a lord.
What is a tail? Take for now that it is an extreme event of low frequency. It is called a “tail” because, in drawings of bell-curve style frequencies, it is located to the extreme left or right (being of low frequency), and for some reason beyond my immediate understanding, people started calling that a “tail” and the term stuck.
happen. As one old alcoholic ruddy-faced English banker told me when I graduated from school, volunteering career advice: “I give long-term loans only. When they mature I want to be long gone. And only reachable long distance.”
We had to wait for the great baseball coach Yogi Berra to get another such dynamic rule for symmetric relations: “I go to other people’s funerals so they come to mine.”
Fat Tony’s terms: don’t give crap, don’t take crap. His more practical approach is Start by being nice to every person you meet. But if someone tries to exercise power over you, exercise power over him.
Because what matters in life isn’t how frequently one is “right” about outcomes, but how much one makes when one is right.
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.
Primo, artisans do things for existential reasons first, financial and commercial ones later. Their decision making is never fully financial, but it remains financial. Secundo, they have some type of “art” in their profession; they stay away from most aspects of industrialization; they combine art and business. Tertio, they put some soul in their work: they would not sell something defective or even of compromised quality because it hurts their pride. Finally, they have sacred taboos, things they would not do even if it markedly increased profitability.
The typical answer is: taxes. Once you become a U.S. citizen, you will have to pay taxes on your worldwide income, even if you live overseas.
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.
Mercury was the most multitasking, sort of put-together god, as he was the boss of commerce, abundance, messengers, the underworld, as well as the patron of thieves and brigands and, not surprisingly, luck. The group invited him to join them and offered him the turtles to eat. Detecting that he was only invited to relieve them of the unwanted food, he forced them all to eat the turtles, thus establishing the principle that you need to eat what you feed others.
I worked once for a U.S. investment bank, one of the prestigious variety, called “white shoe” because the partners were members of hard-to-join golf clubs for proto-aristocrats where they played the game wearing white footwear.
In reality, my skin lies in a broader set of people, one that includes a family, a community, a tribe, a fraternity. But it cannot possibly be the universal.
You just select everything non-GMO, provided the price difference is not consequential. And the price difference appears to be small enough to be negligible, as (perishable) food costs in America are largely, up to about 80 or 90 percent, determined by distribution and storage, not the cost at the agricultural level. And as organic food is in higher demand, thanks to the minority rule, distribution costs decrease and the minority rule ends up accelerating in its effect.
First, under Islamic law, if a non-Muslim man marries a Muslim woman, he needs to convert to Islam—and if either parent of a child happens to be Muslim, the child will be Muslim.fn3 Second, becoming Muslim is irreversible, as apostasy is the heaviest crime under the religion, sanctioned by the death penalty. The famous Egyptian actor Omar Sharif, born Mikhael Demetri Shalhoub, came from a Lebanese Christian family. He converted to Islam to marry a famous Egyptian actress and had to change his name to an Arabic one. He later divorced, but did not revert to the faith of his ancestors.
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.
So we summarize this chapter and link it to hidden asymmetries, the subtitle of the book. Society doesn’t evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, tea and cucumber sandwiches, or polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere—and someone with soul in the game. And asymmetry is present in about everything.fn6
At the time of writing, firms stay in the top league by size (the so-called S&P 500) for only about between ten and fifteen years. Companies exit the S&P 500 through mergers or by shrinking their business, both conditions leading to layoffs.
If the company man is, sort of, gone, he has been replaced by the companies person. For people are no longer owned by a company but by something worse: the idea that they need to be employable. The employable person is embedded in an industry, with fear of upsetting not just their employer, but other potential employers.fn2
Roman families who customarily had a slave for treasurer, the person responsible for the finances of the household and the estate. Why? Because you can inflict a much higher punishment on a slave than a free person or a freedman—and you do not need to rely on the mechanism of the law for that. You can be bankrupted by an irresponsible or dishonest steward who can divert your estate’s funds to Bithynia. A slave has more downside.
Eventually, like a diplomat, he begs for another location when time comes for a reshuffle. Returning to the home office means loss of perks, having to revert to his base salary—a return to lower-middle-class life in the suburbs of New York City, taking the commuter train, perhaps, or, God forbid, a bus, and eating a sandwich for lunch! The person is terrified when the big boss snubs him. Ninety-five percent of the employee’s mind will be on company politics … which is exactly what the company wants. The big boss in the board room will have a supporter in the event of some intrigue.
Freedom entails risks—real skin in the game. Freedom is never free.
If you were profitable you could give managers all the crap you wanted and they ate it because they needed you and were afraid of losing their own jobs. Risk takers can be socially unpredictable people. Freedom is always associated with risk taking, whether it leads to it or comes from it. You take risks, you feel part of history. And risk takers take risks because it is in their nature to be wild animals.
Well, the higher you go in that business, the more insecure you get, as losing an argument to a lesser person exposes you more than if you lose to some hotshot.
Being ethical comes at a huge cost to others.
Society likes saints and moral heroes to be celibate so they do not have family pressures that may force them into the dilemma of needing to compromise their sense of ethics to feed their children.
The vulnerability of heads of households has been remarkably exploited in history. The samurai had to leave their families in Edo as hostages, thus guaranteeing to the authorities that they would not take positions against the rulers. The Romans and Huns partook of the practice of exchanging permanent “visitors,” the children of rulers on both sides, who grew up at the courts of the foreign nation in a form of gilded captivity.
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.
doctorates are typically hierarchy-conscious, and I abide by Cato’s injunction: he preferred to be asked why he didn’t have a statue rather than why he had one.
Pascal’s wager, which stipulates that believing in the creator has a positive payoff in case he truly exists, and no downside in case he doesn’t.
Arguments that Trump was a failed entrepreneur, even if true, actually prop up this argument: you’d even rather have a failed real person than a successful one, as blemishes, scars, and character flaws increase the distance between a human and a ghost.fn2 Scars signal skin in the game.
percent.fn3 This is visibly not the same for the more static—but nominally more equal—Europe. For instance, only 10 percent of the wealthiest five hundred American people or dynasties were so thirty years ago; more than 60 percent on the French list are heirs and a third of the richest Europeans were the richest centuries ago. In Florence, it was just revealed that things are even worse: the same handful of families have kept the wealth for five centuries.
Aristotle, in his Rhetoric, postulated that envy is something you are more likely to encounter in your own kin: lower classes are more likely to experience envy toward their cousins or the middle class than toward the very rich.
In the more rural past, envy was rather controlled; wealthy people were not as exposed to other persons of their class. They didn’t have the pressure to keep up with other wealthy persons and compete with them. The wealthy stayed within their region, surrounded by people who depended on them, say a lord on his property. Except for the occasional season in the cities, their social life was quite vertical. Their children played with the children of the servants.
If you say something crazy you will be deemed crazy. But if you create a collection of, say, twenty people who set up an academy and say crazy things accepted by the collective, you now have “peer-reviewing” and can start a department in a university.
Instead of hitting him as a conversation starter, as I would have done in 1921, I pulled my cell out and took his picture while calmly calling him a “mean idiot, abusive to lost persons.” He freaked out and ran away from me, hiding his face in his hands to prevent further photographs.
After Pope John Paul II was shot in 1981, he was rushed to the emergency room of the Agostino Gemelli University Polyclinic, where he met a collection of some of the most skilled doctors—modern doctors—Italy could produce, in contrast with the neighboring public hospital with lower-quality care. The Gemelli clinic later became the preferred destination for the pontiff at the first sign of a health problem. At no point during the emergency period did the drivers of the ambulance consider taking John Paul the Second to a chapel for a prayer, or some equivalent form of intercession with the Lord,
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My friend Rory Sutherland claims that the real function of swimming pools is to allow the middle class to sit around in bathing suits without looking ridiculous.
