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According to intellectual provocateur Nassim Nicholas Taleb, all human systems and endeavors fail because they lack “skin in the game”: something to lose if they don’t achieve their goals. We ignore this simple failsafe far too often, but, according to Taleb, it’s the single most important contributor to human progress.
Below are some of his top Skin in the Game quotes with explanations.
Skin in the Game: Hidden Asymmetries in Daily Life
Skin in the Game is the fifth book in Taleb’s Incerto series. The main idea of the Incerto is that the world is fundamentally unpredictable, and Skin in the Game is about the ethics of living in that uncertain world.
The following The Skin in the Game quotes highlight some of his key ideas unpacked in the book.
“What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing.”
Someone who has their “skin in the game” has a vested interest in the outcome of an event and, more importantly, has something to lose. Essentially, Taleb equates skin in the game to risk. The more you have to lose, the more skin you have in the game.
“Courage is the only virtue you cannot fake.”
Taleb defines courage as the tendency to put skin in the game—It’s the willingness to bear the risk and make sacrifices. In Taleb’s eyes, courage is the highest virtue because it’s required in order to do anything good. Anything done to benefit others requires some amount of risk that you must be prepared to bear. Without skin in the game—without true courage—virtue is just empty words. Let’s take a closer look at how this happens.
“Entrepreneurs are heroes in our society. They fail for the rest of us.”
Taleb asserts that entrepreneurship does more to help the world than anything else. The risk it takes to start a business gives you a large amount of skin in the game, which is always a good thing.
Starting a business interacts with the economy at a small scale. There is little chance of doing major damage to the general public, unlike the large-scale systemic impact of government intervention.
Additionally, being willingly paid by customers is the most reliable sign of value because it requires them to sacrifice money—it puts their skin in the game. Every sale means that, at that moment, the customer wants your product more than anything else in the world that amount of money could buy.
In Taleb’s eyes, the most altruistic thing you can do is to start a business, ensure you are generating value by making large profits, then spend those profits generously on others.
“The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding, or better at explaining than doing.”
Here, Taleb is referring to “Intellectuals, Yet Idiots”—members of society who lack skin in the game. He argues that modern society is filled with Intellectuals, Yet Idiots.
Intellectuals, Yet Idiots earn degrees from prestigious universities without ever needing to verify their knowledge in real life, then get jobs that similarly fail to require skin in the game. These are jobs that involve theorizing and giving advice, with no penalty inflicted if their theories and advice are wrong—Taleb lists journalists, consultants, and university faculty members.
Intellectuals, Yet Idiots assume that they know more than they actually do. Without direct consequences for their misunderstandings, Intellectuals, Yet Idiots never have any reason to question their actions and beliefs. For this reason, Taleb asserts that Intellectuals, Yet Idiots make worse decisions than the average laborer.
As firm believers in the potential of human rationality, Intellectuals, Yet Idiots create systems in which educated decision-makers are able to exert influence and in which accountability is a lesser concern. Since they fail to factor in skin in the game, they see distant educated decision-makers as more effective than less educated decision-makers who are directly involved with the consequences of the decisions made.
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Here's what you'll find in our full Skin in the Game summary :
- Why having a vested interest is the single most important contributor to human progress
- How some institutions and industries were completely ruined by not being invested
- Why it's unethical for you to not have skin in the game