Skin in the Game

by Nassim Nicholas Taleb

  So long as society is getting richer, someone will try to sell you something until the point of degradation of your well-being, and a bit beyond that.

  NEXT

  The next chapter will present the rule of no verbal threat through the history of the experts of the craft, the sect of the Assassins.

  Dead horse in your bed—Friendship via poisoned cake—Roman emperors and U.S. presidents—A living enemy is worth ten dead ones

  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, with the knowledge that he owes his life 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.

  AN OFFER VERY HARD TO REFUSE

  There is this formidable scene in the Godfather when a Hollywood executive wakes up with the bloody severed head of his cherished race horse in his bed.

  He had refused to hire a Sicilian-American actor for reasons that appeared iniquitous, as while he knew the latter was the best for the role, he was resentful of the “olive oil voice” that had charmed one of his past mistresses and fearful of its powers to seduce future ones. It turned out that the actor, who in real life was (possibly) Frank Sinatra, had friends and friends of friends, that type of thing; he was even the godson of a capo. A visit from the consigliere of the “family” neither succeeded to sway the executive, nor softened his Hollywood abrasiveness—the fellow failed to realize that by flying across the country to make the request, the high-ranking mobster was not just providing the type of recommendation letter you mail to the personnel department of a state university. He had made him an offer that he could not refuse (the expression was popularized by that scene in the movie).

  It was a threat, and not an empty threat.

  As I am writing these lines, people discuss terrorism and terrorist groups while making severe category mistakes; there are in fact two totally distinct varieties. The first group are terrorists for about everyone, that is, for every person equipped with the ability to discern and isn’t a resident of Saudi Arabia and doesn’t work for a think tank funded by sheikhs; the second are militia groups largely called terrorists by their enemies, and “resistance” or “freedom fighters” by those who don’t dislike them.

  The first includes nonsoldiers who indiscriminately kill civilians for effect and don’t bother with military targets, as their aim isn’t to make military gains, just to make a statement, harm some living humans, produce some noise, and, for some, find a low-error way to go to paradise. Most Sunni jihadis, of the type who take incommensurable pleasure in blowing up civilians, such as Al Qaeda, ISIS, and the “moderate rebels” in Syria sponsored by former U.S. president Obama, are in that category. The second group is about strategic political assassination—the Irish Republican Army, most Shiite organizations, Algerian independence fighters against France, French resistance fighters during the German occupation, etc.

  For Shiites and similar varieties in the Near and Middle East, the ancestry, methods, and rules originate in the order of the Assassins, itself following the modus of the Judean Sicarii during Roman times. The Sicarii are named after the daggers they used to kill Roman soldiers and, mostly, their Judean collaborators, due to what they perceived as the profanation of their temple and the land.

  I have the misfortune to know a bit about the subject. My high school, the Franco-Lebanese Lycée of Beirut, has a list of “notable” former students. I am the only one who is “notable” for reasons other than being the victim of a successful or attempted assassination (although I have enough Salafi enemies and there is still time to satisfy such requirement—skin in the game).

  THE ASSASSINS

  The most interesting thing about the Assassins is that actual assassination was low on their agenda. They understood non-cheap messaging. They preferred to own their enemies. And the only enemy you cannot manipulate is a dead one.

  In 1118, Ahmad Sanjar became the sultan of the Seljuk Turkish Empire of Asia minor (that is, modern-day Turkey), Iran, and parts of Afghanistan. Soon after his accession, he woke up one day with a dagger next to his bed, firmly planted in the ground. In one version of the legend, a letter informed him that the dagger thrust in hard ground was preferable to the alternative, being plunged in his soft breast. It was a characteristic message of the Hashishins, aka Assassins, making him aware of the need to leave them alone, send them birthday gifts, or hire their actors for his next movie. Sultan Sanjar had previously snubbed their peace negotiators, so they moved to phase two of a demonstrably well planned-out process. They convinced him that his life was in their hands and that, crucially, he didn’t have to worry if he did the right thing. Indeed Sanjar and the Assassins had a happy life together ever after.

  You will note that no explicit verbal threat was issued. Verbal threats reveal nothing beyond weakness and unreliability. Remember, once again, no verbal threats.

  The Assassins were an eleventh- through fourteenth-century sect related to Shiite Islam, and were (and still are through their reincarnations) violently anti-Sunni. They were often associated with the Knights Templar as they fought frequently on the side of the crusaders—and if they seem to share some of the values of the Templars, in sparing the innocent and the weak, it is likely because the former group transmitted some of their values to the latter. The chivalric code of honor has, for its second clause: I shall respect and defend the weak, the sick, and the needy.

  The Assassins supposedly sent the same message to Saladin (the Kurdish ruler of Syria who conquered Jerusalem from the Crusaders), informing him that the cake he was about to eat was poisoned…by themselves.

  The ethical system of the Assassins held that political assassination helped prevent war; threats of the dagger-by-your-bed variety are even better for bloodless control.* They supposedly aimed at sparing civilians and people who were not directly targeted. Their precision was meant to reduce what is now called “collateral damage.”

  ASSASSINATION AS MARKETING

  Those readers who may have tried to get rid of pebbles in their shoes (that is, someone who bothers you and doesn’t get the hint) might know that “contracts” on ordinary citizens (that is, to trigger their funeral) are relatively easy to perform and inexpensive to buy. There is a relatively active underground market for these contracts. In general, you need to pay a bit more to “make it look like an accident.” However, skilled historians and observers of martial history would recommend the exact opposite: in politics, you should have to pay more to make it look intentional.

  In fact, what Captain Mark Weisenborn, Pasquale Cirillo, and I discovered, when we tried doing a systematic study of violence (debunking the confabulatory thesis by Steven Pinker that we mentioned earlier, holding that violence has dropped), was that war numbers have been historically inflated…by both sides. Both the Mongols (during their sweep across Eurasia in the Middle Ages) and their panicky victims had an incentive to exaggerate, which acted as a deterrent. Mongols weren’t interested in killing everybody; they just wanted submission, which came cheaply through terror. Further, having spent some time perusing the genetic imprints of invaded populations, it is clear that if the warriors coming from the Eastern steppes left a cultural imprint, they certainly left their genes at home. Gene transfer between areas happens by group migrations, inclement climate, and unaccommodating soil rather than war.

  More recently, the Hama “massacre” in 1982 of Syrian jihadis by Assad senior caused documented casualties (by my estimation) at least an order of magnitude lower than what is reported; the rest came from inflation—numbers swelling over time from two thousand to close to forty thousand without significant new information. Both the Syrian regime and its enemies had an interest in numbers being inflated. Interestingly the number has continued to climb in recent years. We
will return to historians in Chapter 14, where we show how empirical rigor is quite foreign to their discipline.

  ASSASSINATION AS DEMOCRACY

  Now, political life; if the democratic system doesn’t fully deliver governance—it patently doesn’t, owing to cronyisms and the Hillary Monsanto-Malmaison style of covert legal corruption—we have known forever what does: an increased turnover at the top. Count Ernst zu Münster’s epigrammatic description of the Russian Constitution explains it: “Absolutism tempered by assassination.”

  While today’s politicians have no skin in the game and do not have to worry so long as they play the game, they stay longer and longer on the job, thanks to the increased life expectancy of modern times. France’s caviar socialist François Mitterrand reigned for fourteen years, longer than many French kings; and thanks to technology he had more power over the population than most French kings. Even a United States president, the modern kind of emperor (unlike Napoleon and the czars, Roman emperors before Diocletian were not absolutists) tends to last at least four years on the throne, while Rome had five emperors in a single year and four in another. The mechanism worked: consider that all the bad emperors—Caligula, Caracalla, Elagabalus, and Nero—ended their careers either murdered by the Praetorian Guard or, in the case of Nero, dead by suicide in anticipation. Recall that in the first four hundred years of empire, less than a third of emperors died a natural death, assuming these deaths were truly natural.

  THE CAMERA FOR SKIN IN THE GAME

  Thanks to the camera, you no longer need to put horses’ heads in boutique hotels or villas in the Hamptons to own people. You may no longer even need to assassinate anyone.

  We used to live in small communities; our reputations were directly determined by what we did—we were watched. Today, anonymity brings out the a**hole in people. So I accidentally discovered a way to change the behavior of unethical and abusive persons without verbal threat. Take their pictures. Just the act of taking their pictures is similar to holding their lives in your hands and controlling their future behavior thanks to your silence. They don’t know what you can do with it, and will live in a state of uncertainty.

  I discovered the magic of the camera in reestablishing civil/ethical behavior as follows. One day, in the New York subway underground corridor, I hesitated for a few seconds trying to get my bearings in front of the list of exits. A well-dressed man with a wiry build and neurotic personality started heaping insults at me “for stopping.” 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.

  Another time, a man in upstate New York got into my parking spot as I was backing into it. I told him it was against etiquette, he acted as an a**hole. Same thing, I silently photographed him and his license plate. He rapidly drove away and liberated the parking spot. Finally, near my house, there is a forest preserve banned to bicycles as they harm the environment. Two mountain cyclists rode on it every weekend during my 4 P.M. walk. I admonished them to no avail. One day I calmly took a dozen pictures, making sure they noticed. The bigger guy complained, but they then left rapidly. They have never returned.

  Of course, I destroyed their pictures. But I never thought handhelds could be such a weapon. And it would be unfair to use their pictures for web-mobbing. In the past, bad deeds were only transmitted to acquaintances who knew how to put things in perspective. Today, strangers, incapable of judging a person’s general character, have become self-appointed behavior police. Web-shaming is much more powerful than past reputational blots, and more of a tail risk.

  In Book 2 of Plato’s Republic, there is a discussion between Socrates and Plato’s brother, Glaucon, about the ring of the Gyges, which gives its holder the power to be invisible at will and watch others. Clearly Plato anticipated the later Christian contrivance “you are watched.” The discussion was whether people behave in a right manner because they are watched—or, according to Socrates, because of their character. Of course we side with Socrates, but we will even go beyond, by defining virtue as something that goes beyond pleasing the watchers, and can actually irritate them. Remember that Socrates was put to death because he would not compromise his standards. More on that, in a few chapters, when we discuss real virtue.

  * It appears that what we read about the Assassins can be smear by their enemies, including the apocryphal accounts according to which their name comes from consumption of hashish (cannabis in Arabic), as they would get into a trance before their assassination.

  I never said that I said—No news is mostly news—Information flows in both directions

  HOW TO DISAGREE WITH YOURSELF

  In the summer of 2009, I partook of an hour-long public discussion with David Cameron, who was in the running for, and later became, the U.K. prime minister. The discussion was about how to make society robust, even immune to Black Swans, what structure was needed for both decentralization and accountability, and how the system should be built, ce genre de trucs. It was an interesting fifty-nine minutes around the topics of the Incerto, and I felt great communicating all the points in bulk for the first time. The room in the elegant Royal Society for the Arts was full of journalists. I subsequently went to a Chinese restaurant in (London’s) Soho to celebrate with a few people when I received a phone call from a horrified friend. All London newspapers were calling me a “climate denier,” portraying me as part of a dark anti-environment conspiracy.

  The entire fifty-nine minutes were summarized by the press and reported from a tangential comment that lasted twenty seconds taken in reverse of the intended meaning. Someone who didn’t attend the conference would have been under the impression that that was the whole conversation.

  It turned out that I presented my version of the precautionary principle during the conversation, worth restating here. It asserts that one does not need complex models as a justification to avoid a certain action. If we don’t understand something and it has a systemic effect, just avoid it. Models are error-prone, something I knew well with finance; most risks only appear in analyses after harm is done. As far as I know, we only have one planet. So the burden is on those who pollute—or who introduce new substances in larger than usual quantities—to show a lack of tail risk. In fact, the more uncertainty about the models, the more conservative one should be. The same newspapers had lauded The Black Swan in which this very point was fleshed out clearly—so visibly the attack had nothing to do with the point I was making, rather they wanted to weaken Cameron by demonizing me. I realized that they would have found another reason to tarnish me no matter what I said.

  I managed to defend myself by making a lot of noise, and, with explicit legal threats, forced every newspaper to publish my correction. Even then someone at The Guardian tried (unsuccessfully) to tone down my letter by showing that it was some type of disagreement with what I said, not a correction of their misrepresentation. In other words, they wanted me to say that I was disagreeing with myself.

  The London newspapers were actively misrepresenting something to their own public. Someone who read the paper was mistaking the journalist for an intermediary between him- or herself and the product, the piece of news. But if I eventually set the record straight, thanks to my bully pulpit, many can’t do the same.

  So clearly there is an agency problem. There is no difference between a journalist at The Guardian and the restaurant owner in Milan, who, when you ask for a taxi, calls his cousin who does a tour of the city to inflate the meter before showing up. Or the doctor who willfully misdiagnoses you to sell you a drug in which he has a vested interest.

  INFORMATION DOESN’T LIKE TO BE OWNED

  Journalism isn’t Lindy compatible. Information transmits organically by word of mouth, which circulates in a two-way manner. I
n Ancient Rome, people got information without a centralized filter. In the ancient Mediterranean marketplaces, people talked; they were the receivers and the purveyors of news. Barbers offered comprehensive services; they doubled as surgeons, dispute-resolution experts, and news reporters. If people were left to filter their own rumors, they were also part of the transmission. Same with pubs and London coffee houses. In the Eastern Mediterranean (currently Greece and the Levant), condolences were the source of gathering and transmission—and represented the bulk of social life. Dissemination of the news took place at these gatherings. My social grandmother would have her “rounds” of visits of condolences some days in Beirut’s then-significant Greek Orthodox community, and knew practically everything down to the most insignificant details. If the child of someone prominent flunked an exam, she knew it. Practically every affair in town was detected.

  Unreliable people carried less weight than reliable ones. You can’t fool people more than twice.*1

  The period of time that corresponds to reliance on one-sided accounts such as television and newspapers, which can be controlled by the mandarins, lasted from the middle of the twentieth century until the U.S. election of 2016. At that point, social networks, allowing a two-way flow of information, returned the mechanism of tidings to its natural format—Lindy had to strike. As with participants in markets and souks, there is a long-term advantage to being dependable.

  Further, such an agency problem as that of the current press is systemic, as its interests will keep diverging from that of its public until the eventual systemic blowup as we saw with the Bob Rubin trade. As an illustration: I was less frustrated by the misinterpretation of my ideas than by the fact that no reader would have realized that 99 percent of my discussion with Cameron was about things other than climate change. If the former could have been a misunderstanding, the latter is a structural defect. And you never cure structural defects; the system corrects itself by collapsing.*2