Writing

I will always remember my encounter with the writer and cultural icon Susan Sontag, largely because it was on the same day that I met the great Benoit Mandelbrot. It took place in 2001, two months after the terrorist event, in a radio station in New York. Sontag who was being interviewed, was pricked by the idea of a fellow who “studies randomness” and came to engage me. When she discovered that I was a trader, she blurted out that she was “against the market system” and turned her back to me as I was in mid-sentence, just to humiliate me (note here that courtesy is an application of the Silver rule), while her female assistant gave me the look, as if I had been convicted of child killing. I sort of justified her behavior in order to forget the incident, imagining that she lived in some rural commune, grew her own vegetables, wrote on pencil and paper, engaged in barter transactions, that type of stuff.

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One of the problems of the interventionista –wanting to get involved in other people’s affairs “in order to help”, while genuinely wanting to do good, results in disrupting some of the peace-making mechanisms that are inherent in human’s affairs, a combination of collaboration and strategic hostility. As we saw in the prologue, the error continues because someone else is paying the price.

I speculate that had IYIs (intellectuals yet idiots) and their friends not gotten involved, problems such as the Israeli-Palestinian one would have been solved, sort of –and both parties, especially the Palestinians would have felt to be better off. As I am writing these lines the problem has lasted seventy years, with too way many cooks in the same tiny kitchen, most of whom never have to taste the food. I conjecture that when you leave people alone, they tend to settle for practical reasons.

People on the ground, those with skin in the game are not too interested in geopolitics or grand abstract principles, but rather in having bread on the table, beer (or, for some, nonalcoholic beverages such as yoghurt drinks) in the refrigerator, and good weather at outdoors family picnics. Also they don’t want to be humiliated in their human contact with others.

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Skin in the Game is necessary to reduce the effects of the following divergences that arose mainly as a side effect of civilization: action and cheap talk (tawk), consequence and intention, practice and theory, honor and reputation, expertise and pseudoexpertise, concrete and abstract, ethical and legal, genuine and cosmetic, entrepreneur and bureaucrat, entrepreneur and chief executive, strength and display, love and gold-digging, Coventry and Brussels, Omaha and Washington, D.C., economists and human beings, authors and editors, scholarship and academia, democracy and governance, science and scientism, politics and politicians, love and money, the spirit and the letter, Cato the Elder and Barack Obama, quality and advertising, commitment and signaling, and, centrally, collective and individual.

But, to this author, is mostly about justice, honor, and sacrifice as something existential for humans.

Let us first connect a few dots of items the list above.

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You who caught the turtles better eat them (Ipsi testudines edite, qui cepistis) goes the ancient adage.

The origin of the expression is as follows. It was said that a group of fishermen caught a large number of turtles. After cooking them, they found out at the communal meal that these sea animals were much less edible that they thought: not many members of the group were willing to eat them. But Mercury happened to be passing by –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.

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When people get rich, they shed their skin-in-the game driven experiential mechanism. They lose control of their preferences, substituting constructed preferences to their own, complicating their lives unnecessarily, triggering their own misery. And these are of course the preferences of those who want to sell them something. This is a skin-in-the-game problem as the choices of the rich are dictated by others who have something to gain, and no side effects, from the sale. And given that they are rich, and their exploiters not often so, nobody would shout victim.

I once had dinner in a Michelin-starred restaurant with a fellow who insisted on eating there instead of my selection of a casual Greek taverna with a friendly owner operator, his second cousin as a manager and his third cousin once removed as a receptionist. The other customers seemed, as we say in Mediterranean languages, to have a cork plugged in their behind obstructing proper ventilation, causing the vapors to build on the inside of the gastrointestinal walls, leading to the irritable type of decorum you only notice in the educated upper classes. I note that, in addition to the plugged corks, all men wore ties.

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The best enemy is the one you own by putting skin in his game and letting him know the exact rules that come with it. You keep him alive, in the knowledge that he owes this to your benevolence. The notion that an enemy you own is better than a dead one was perfected by the order of the Assassins, so we will do some digging into the work of that secret society.

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Looking the Part

Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin built, delicate hands, a measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts an Ivy League diploma, both for his undergraduate and medical schools.

The second one looks like a butcher; he is overweight, with large hands, uncouth speech and an unkempt appearance. His shirt is dangling from the back. No known tailor in the East Coast of the U.S. is capable of making his shirt button at the neck. He speaks unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth. The absence of diploma on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria.

Now if I had to pick, I would overcome my suckerproneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional of having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks.

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(Background. The Black Swan explains the domain-dependence of expertise: why the electrician, dentist, are experts, while the journalist, State Department bureaucrat, and macroeconomist are not. Since then, there has been a global movement against the pseudo-expert, the serial incompetence of a certain class of babbling and pompous operatives across bureaucrato-academic professions. Which leads to the question: who is the real expert? Who decides on who is and who is not expert? Where is the metaexpert? Time it is. Or, rather, Lindy.)

Lindy is a deli in New York, now a tourist trap, that proudly claims to be famous for its cheesecake, but in fact has been known for the fifty or so years of interpretation by physicists and mathematicians of the heuristic that developed there. Actors who hung out there gossiping about other actors discovered that Broadway shows that lasted, say one hundred days, had a future life expectancy of a hundred more. For those that lasted two hundred days, two hundred more. The heuristic became known as the Lindy Effect.

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There is inequality and inequality.

The first is the inequality people tolerate, such as one’s understanding compared to that of people deemed heroes, say Einstein, Michelangelo, or the recluse mathematician Grisha Perelman, in comparison to whom one has no difficulty acknowledging a large surplus. This applies to entrepreneurs, artists, soldiers, heroes, the singer Bob Dylan, Socrates, the current local celebrity chef, some Roman Emperor of good repute, say Marcus Aurelius; in short those for whom one can naturally be a “fan”. You may like to imitate them, you may aspire to be like them; but you don’t resent them.

The second is the inequality people find intolerable because the subject appears to be just a person like you, except that he has been playing the system, and getting himself into rent seeking, acquiring privileges that are not warranted –and although he has something you would not mind having (which may include his Russian girlfriend), he is exactly the type of whom you cannot possibly become a fan. The latter category includes bankers, bureaucrats who get rich, former senators shilling for the evil firm Monsanto, clean-shaven chief executives who wear ties, and talking heads on television making outsized bonuses. You don’t just envy them; you take umbrage at their fame, and the sight of their expensive or even semi-expensive car trigger some feeling of bitterness. They make you feel smaller.

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