Following the schedule of our reading calendar.
The book enters now its final part: “The Ethics of Fragility and Antifragility” and it does so with a long and powerful chapter that conveys probably the core of Taleb’s ideology.
It is centered on what he calls:
(…) the malignant transfer of fragility and antifragility from one party to the other, with one getting the benefits, the other one (unwittingly) getting the harm (p. 375)
This is the oposite of Heroism, which is the sacrifice for the sake of others, and is made acute by modernity and the knowledge economy.
This is similar to what in economics is called the agency problem, the dilemma that arises when one is acting in behalf of other’s people and is tempted to maximize its own interests at the expense of the represented people.
The problem is everywhere in our society. Private firm executives that manage stoke-holder’s money, politicians that manage tax payers money, consultants and advisers, hedge fund managers, rating agencies, etc… All these people in the eyes of Taleb are despicable:
(…) if you don’t take risks, there is nothing you can do that makes you grand, nothing. And when you take risks, insults by half-men (small men, those who don’t risk anything) are similar to barks by nonhuman animals: you can’t feel insulted by a dog. (p. 380)
The only solution to this problem is “skin in the game”. Only those whose risks are aligned with their words are worth being listened. Only those who get the benefits and the downfalls of their actions are to be trusted:
Never ask anyone of their opinion, forecast, or recommendation. Just ask them what they have -or don’t have- in their portfolio. (p. 389)
Fat Toni has two heuristics:
First, never get on a plane if the pilot is not on board.
Second, make sure there is also a copilot. (p. 381)
that pickup two basic strategies to cope with the complexity of the world: skin in the game and redundancy.
The problem is that the modern world is going away and away from them and modern big corporations are the metaphor of this process. Limited liability corporations, heavily criticized by Adam Smith in the “the origin of wealth”, are machines of transferring antifragility from the whole of the society to a minority with the connivance of the politicians.
A corporation does not have natural ethics; it just obeys the balance sheet. The problem is that its sole mission is the satisfaction of some metric imposed by security analysts, themselves (very) prone to charlatanism. (p. 404)
Only, a sense of honor can lead to commerce. Any commerce. (p 405)
The chapter is full of examples and interesting reflexions. It is really worth reading in its entirety and can be red independently of the rest of the book.