Decision makers and opinion makers need to have skin in the game to face the adverse implications of their decisions. It is easy to design frameworks and solutions when consultants and fly-by-night solution providers do not have their skin in the game and they have no concern because they are not going to feel the pain of costs and failures of their decisions. Pakistan history is replete with people who enter, make monumental decisions and vanish without feeling the adverse pain and implications of their decisions.
Shaukat Aziz simply vanished after plunging the country with huge spiraling energy costs due to imported consumer electrical appliances and vehicles. These energy shortages would plunge the country in severe blackouts for the next 5 years. General Kayani is now safely immune to the fall out of his 6 years as chief. Gen Musharraf is safely secluded in Emirates.
Where is the skin in the game of Hafeez Shaikh who vanished with Gen Mush. What is the skin in the game of Zulfi Bokhari, Raza Baqar?
In contrast. we have most politicians whose skin in the game with their properties, families, businesses and a great stake in the future of the country. The Bhutto family paying with their lives of ZAB, BB, Murtaza Bhutto, Shahnawaz Bhutto. Bilawal et al are here with personal stake. We have Zardari spending years in prison under Mush's rule and fighting for his property and businesses in the courts today. We have NS with his business and properties at stake in the court cases. Their skin is in the game.
A Book Review on Skin in the Game by Nassim N. Taleb (New York, NY: Random House), 2018
Skin in the Game is a book about asymmetries in life, in society, in history, in beliefs. Written by Nassim Nicholas Taleb, a former options trader turned probability thinker via his own skin in the game, the book is also about the consequences of such asymmetries. It explores four main topics “according to how deep the author wants to go into a topic, not to make life easy for the critics to write reviews” (p. 44). The main topic is that of symmetry in human affairs, expanded into a second—related—topic of symmetry in information sharing in market-type transactions. A third topic is the exposition of a survival-bound definition of rationality. The fourth—and most overarching—topic is uncertainty and knowledge reliability, especially in regards to risk management in the marketplace, war, business, etc.
Hawkish politicians and reckless bankers never face the consequences of their actions – but they should, according to this arresting book
Skin in the Game is Nassim Nicholas Taleb’s fifth book. He presents it sometimes as part of a triptych with his earlier works The Black Swan and Antifragile, and at other times as a continuation, each book “just as Eve came out of Adam’s ribs”, seeding the central idea of the next. The Black Swan, a soaraway success praised for its prophetic power and intense relevance, looked – just before the financial crash of 2007 – at “high-impact, unexpected” events; at those disasters that result when you underestimate the complexity of systems and, at its simplest, when you assume that because you’ve never seen one, black swans don’t exist.Antifragile, which had more of a pop-philosophy feel, advised how to take advantage of modern randomness and volatility. Skin in the Game has more in common, in the way its ideas are structured and their application, with Black Swan. Yet a style runs strong and consistent through each of the three books, trenchant beyond all imagining, and is its own kind of wit. Every economist, journalist, book reviewer, professor, anyone who is not part of an “active and transactional life” is an inveterate idiot, unless he or she is one of a handful Taleb respects, who also seem to be his very close friends. “I am never bothered by normal people,” he says, though given the emphasis he puts on his “fuck-off” wealth, the reader might be permitted to wonder how many normal people he engages with.“It is the bull***tter in the ‘intellectual’ profession who bothers me. Seeing the psychologist Steven Pinker making pronouncements about things intellectual has a similar effect to encountering a drive-in Burger King while hiking in the middle of a national park ” Taleb is riotously discourteous and extremely thin skinned, still taking issue in his footnotes with the negative review he received in this paper for Antifragile. The effect is arresting: it can be extremely good fun. The combination of fearlessness, self-belief and immodesty adds up to charisma on the page; Taleb is the festival messiah you’d follow into a river until the drugs wore off.The argument of the new book is also immediately attractive: if you have no skin in the game, you shouldn’t be in the game. “If you give an opinion, and someone follows it, you are morally obligated to be, yourself, exposed to its consequences.” Hawks in the White House should not be taking decisions about bombs in Iraq when they will remain in their air-conditioned houses with their 2.2 children whatever the result. Bankers are in the “Bob Rubin trade”, named after the former secretary of the US Treasury, who “collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any cheque – he invoked uncertainty as an excuse. Heads he wins, tails he shouts ‘Black Swan’.”There are fools of randomness and crooks of randomness, but Taleb’s corrective is the same: they must have skin in the game. This is needed to ensure they think well, so that they learn from their mistakes, and because systems learn and species evolve by weeding out failure. Those who don’t succeed must face ruin, or death (this dances around a bit, as correctives will when you’re ranging freely in your references between a lecture agent who once pissed you off and the ancient text of Hammurabi); whatever, something bad. So far, so appealing: most sensible people have agreed for some time that bankers need personal liability if they’re going to make responsible choices.Perhaps already it sounds too broad; yes, doctors have skin in the game, having professional pride and reputation, severe legal consequences for error, a deep understanding of complex systems, and centuries of accrued ethical standards. But the proposition that bureaucrats, being separated from the consequences of their decisions (no skin in the game), are the ultimate social ill is hard to sustain; if you accept that systems are complex, then subsidiarity – devolving decisions down to the lowest civic level at which they can be made, where everyone’s skin is involved – can only be a partial solution. The statement that “the most egregious contributor to inequality is the condition of a high-ranking civil servant or tenured academic, not that of an entrepreneur” is very easily falsifiable by referring to the real motor of inequality, the distribution of profits between capital and labour, driven by chief executives and shareholders who want values maximised – people whose skin is very much in the game of driving down wages. There’s a case to be made for balance. You wouldn’t want homicide law to be written by the mother of a murdered child.It’s in this book’s details that the flaws reveal themselves. “Prince Andrew,” we learn, “took more risks than ‘commoners’ during the Falkland [sic] 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.” If this gels with nothing you’ve ever thought or heard about Prince Andrew, it’s because it’s not true. He did fly a helicopter, so it was certainly more dangerous than not going to war at all; but the Argentinians had scant anti-aircraft capability. The ground was far more fraught with risk.A section on how a whole population can submit to the preferences of a tiny, stubborn minority is fascinating only from a great distance. Taleb hypothesises a family of four in which one member will only eat non-genetically modified food. It is easier for the whole family to go that way; soon, because of barbecues and whatnot, the neighbourhood starts to buy non-GMO to accommodate them, the shop starts to sell only that food, and so on. The least flexible dominate the most, because the former will only eat some things while the latter will eat anything. Then we learn that in the UK, “where the (practising) Muslim population is only 3% to 4%, a very high proportion of the meat we find is halal. Close to 70% of lamb imports from New Zealand are halal. Close to 10% of Subway stores carry halal-only meat (meaning no pork), in spite of the high costs of losing the business of ham eaters (like myself).”In fact, New Zealand produces halal lamb almost exclusively (98%), because of trade deals with the Middle East, and Subway’s halal stores are part of a policy since 2007 to take account of the local demographic when opening, resulting in 200-odd stores in north-east London, Birmingham and other places where the average Subway shopper is far more likely to be Muslim than 3%. Taleb’s conclusion – via some other observations on tolerance, religion and politics – that the “West is currently in the process of committing suicide” is just silly. More saliently, it goes against his own precepts: every idea that sounds as if it might work in the abstract fails in the particular, and more to the point, he has no skin in this game. He’s not the one who has to get on a bus wearing a hijab and be yelled at by some partially educated thug who didn’t want his rogan josh to be halal.In one section, Taleb reveals the best advice he ever received, which was not to have an assistant: it is slightly incongruous, neither reinforcing, exemplifying nor adding complexity to his argument. But it is enlightening in one sense: it might help if he got one.• Skin in the Game: Hidden Asymmetries in Daily Life is published by Allen Lane. To order a copy for £17 (RRP £20) go to guardianbookshop.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min p&p of £1.99.
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