Nassim Taleb Warns Americans Should "Fear The 2% - The Intellectuals & Politicians"

Via Esquire.com,

People ask me my forecast for the economy when they should be asking me what I have in my portfolio. Don’t make pronouncements on what could happen in the future if you’re immune from the consequences. In French, they use the same word for wallet and portfolio.

I have never, ever borrowed a penny. So I have zero credit record. No loans, no mortgage, nothing. Ever. When I had no money, I rented. I have an allergy to borrowing and a scorn for people who are in debt, and I don’t hide it. I follow the Romans’ attitude that debtors are not free people.

I carry euros, dollars, and British pounds. What I do with my money is personal. People who say they give it to charity, that’s a no-no in my book. Nobody should ever talk about a charitable act in public.

Better to miss a zillion opportunities than blow up once. I learned this at my first job, from the veteran traders at a New York bank that no longer exists. Most people don’t understand how to handle uncertainty. They shy away from small risks, and without realizing it, they embrace the big, big risk. Businessmen who are consistently successful have the exact opposite attitude: Make all the mistakes you want, just make sure you’re going to be there tomorrow.

Don’t invest any energy in bargaining except when the zeros become large. Lose the small games and save your efforts for the big ones.

There’s nothing wrong with being wrong, so long as you pay the price. A used-car salesman speaks well, they’re convincing, but ultimately, they are benefiting even if someone else is harmed by their advice. A bullshitter is not someone who’s wrong, it’s someone who’s insulated from their mistakes.

What is in his wallet? Euros, dollars, and British pounds.

There is less “skin in the game” today than there was fifty years ago, or even twenty years ago. More people determine the fates of others without having to pay the consequences. Skin in the game means you own your own risk. It means people who make decisions in any walk of life should never be insulated from the consequences of those decisions, period. If you’re a helicopter repairman, you should be a helicopter rider. If you decide to invade Iraq, the people who vote for it should have children in the military. And if you’re making economic decisions, you should bear the cost if you’re wrong.

Ninety-eight percent of Americans - plumbers, dentists, bus drivers - have skin in the game. We have to worry about the 2 percent - the intellectuals and politicians making the big decisions who don’t have skin in the game and are messing the whole thing up for everybody else. Thirty years ago, the French National Assembly was composed of shop owners, farmers, doctors, veterinarians, and small-town lawyers—people involved in daily activities. Today, it’s entirely composed of professional politicians—people who are just divorced from real life. America is a little better, but we’re heading that way.

Money can’t buy happiness, but the absence of money can cause unhappiness. Money buys freedom: intellectual freedom, freedom to choose who you vote for, to choose what you want to do professionally. But having what I call “fuck you” money requires a huge amount of discipline. The minute you go a penny over, then you lose your freedom again. If money is the cause of your worry, then you have to restructure your life.

The best money I’ve ever spent has been spent on books. The stupidest thing I’ve ever spent money on? Books. Also, I cannot understand why anyone would spend any amount to enhance their social status.

If nobody’s paying my salary, I don’t have to define myself. I find it arrogant to call yourself a philosopher or an intellectual, so I call myself a flaneur and I refuse all honors. As Cato once said, it’s better to be asked why there is no statue in your name than why there is one.

Comments

38BWD22 Sat, 04/21/2018 - 12:20 Permalink

 

Taleb is a smart man.  Read and listen. 

And I agree completely re eschewing debt.

Skin in the Game is an excellent book.  As are all of his.

Dapper Dan Fredo Corleone Sat, 04/21/2018 - 14:26 Permalink

'I cannot understand why anyone would spend any amount to enhance their social status'

 

It use to be it was obvious who in the community was wealthy, now you just can't tell.    " Easy credit, don't pay till next year, no credit no problem, your house is your bank, dollar down and 10 years to pay and you can have a Bass boat!" 

 

I’d like to live as a poor man with lots of money. –Pablo Picasso

Death to the money changers

In reply to by Fredo Corleone

puckles Dapper Dan Sat, 04/21/2018 - 19:40 Permalink

During the Great Depression, people actively hid their (remaining) wealth. That often meant getting rid, often at a loss, of places in the Hamptons, etc. (yes, the Hamptons were big back in the teens and 20's as well--read The Great Gatsby), and buying somewhat smaller places to live as a primary home, without too much lavishness, although some servants were still around.  My maternal grandparents managed with a couple, and then a houseboy during the war, and then a couple again postwar. This was part of the active destruction of wealth during the Depression, and one not much remarked upon.  People did not want to stand out much during those years, and for many years afterwards.  Debt was considered sinful.

They did not change their habits after the war much at all, although they finally got new cars (Cadillacs, because Packards were no longer made).  They still re-used Christmas wrap, and kept a jar of (renewed) bacon drippings in the fridge until they died.  My paternal grandfather bought his final car, a Caddy limo, in 1964; he bequeathed it to his butler/chauffeur in 1993, when he died. The chauffeur was overjoyed (and probably at the relatively minor money bequest as well); the thing looked like a new car.  Older money was rarely flashy to begin with, and learned to be far less so with time.  Would that it were still that way.

 

 

In reply to by Dapper Dan

keep the basta… puckles Sun, 04/22/2018 - 01:59 Permalink

Thanks Puckles. Comforting to read of sanity. Have just sold my parents country home and the agents have been spitefully enraged and underpriced its market value and its a class issue.  Sold for much more than they expected, as usual.

Old money still has it in the blood. Comfort for the soul matters.

in melbourne, they have zero understanding of old money, and no respect, where back to sydney for a day get massive respect. When I lived in Sydney, I remember going up the street during renovation in jeans and  favourite tee shirt washed out black to purplish with some holes worn in over the shoulder and the old-money women smiled at me.

In reply to by puckles

keep the basta… puckles Sun, 04/22/2018 - 01:59 Permalink

Thanks Puckles. Comforting to read of sanity. Have just sold my parents country home and the agents have been spitefully enraged and underpriced its market value and its a class issue.  Sold for much more than they expected, as usual.

Old money still has it in the blood. Comfort for the soul matters.

in melbourne, they have zero understanding of old money, and no respect, where back to sydney for a day get massive respect. When I lived in Sydney, I remember going up the street during renovation in jeans and  favourite tee shirt washed out black to purplish with some holes worn in over the shoulder and the old-money women smiled at me.

In reply to by puckles

Endgame Napoleon FireBrander Sat, 04/21/2018 - 13:09 Permalink

Even twenty years ago would have been better. At this point, our politicians have no “skin in the game.” But their campaign donors—and the highly paid lobbyists who write the bills—have even less skin in it, thanks to the politicians. It is a perfect circle of cronyism, like so much in the USA of today.

This guy is wise—a wise man. He is right about debt and freedom. Even the early US settlers were often indentured servants, not citizens with economic freedom and an array of constitutionally inscribed rights. 

But starting out with no money, it is near impossible to stay completely out of debt in the era of low-wage, high-turnover, temporary, part-time and 1099-gig jobs, especially without a second income, with rent consuming more than half of your pay. 

It was probably more brutal—but more straightforward—to achieve self sufficiency in the true debt-slave era that the early US settlers faced, the ones not literally enslaved anyway.

Today, people can get a job that appears to offer a means to cover a full range of basic household bills, but it is usually an illusion—just another substance-less churn job. 

By contrast, the people who hold the few decent-quality jobs keep two of them under one roof, making them more risk averse than any other generation. Fewer people who have the capital to start businesses are risking it.

Like he says, one bad decision can wipe out money, so you can see why they decline to take risk, particularly when they can dominate the high-paying, salaried jobs. But there is less job creation in the era of assortative mating, which seems to magnify rational risk aversion.

Like in the time of kings, people are trying to build moats around family wealth. With all of the women in the workforce, despite all the talk about careers, there is less enterprise and more focus on safety for some.

The private-sector economy provides safety for the upper-crust families, and the government provides a safety net via multiple layers of socialism for the part-time-working parents at the bottom of the economic pile.

In reply to by FireBrander

east of eden Endgame Napoleon Sat, 04/21/2018 - 15:19 Permalink

Prisoners, from England and France, had to work 7 years as indentured 'slaves' in the colonies, with no pay, until they received their freedom. After that, if they had any energy left, they could 'try' to make a life for themselves.

Not saying that 'prisoners' are the best of the people on earth, but they are way fucking better than the chattering and captured classes in ole 'mother England'.

Mother England my arse.

In reply to by Endgame Napoleon

keep the basta… east of eden Sun, 04/22/2018 - 02:05 Permalink

Oh Yeah?? no doubt the english  did work their 7 years off and be free.

The irish and the black were run by the english and jewish slavers  and never free, bred and their childrens children were still slaves. I have mitochondria in that game, mine from Ireland is in the black slave lines from an irish girl relative long  past. a Collins girl.

In reply to by east of eden

BullyBearish PT Sat, 04/21/2018 - 18:30 Permalink

we are currently trading our creative and physical labors for BCUs...behavioral control units, now known as dollars because they have set up a closed system that mandates the use of dollars, which they create out of thin air and have as many as they need to buy/bribe whomever they need to keep the corrupt system going...

       pray for sound money, End the fed,

       remove the source of their power

In reply to by PT

Oldwood Deep Snorkeler Sat, 04/21/2018 - 13:15 Permalink

The most valuable thing you own is the ability to accurately assess risk.

Not just knowledge but intuition, to KNOW when someone is LYING to you, because virtually ANYONE telling you what you want to hear IS.

Virtually our entire WORLD economy is about selling safety from risk, something nearly impossible to acquire over any sustained period of time. They hide risk, bury it in collective risk like a AAA MBS, or otherwise make us PAY for the eventual consequence of the calamity, while actually depriving us of the ability to defend ourselves, deluding us with bullshit and incremental cast to our wealth, prosperity and liberty.

Lied to.

In reply to by Deep Snorkeler

east of eden Oldwood Sat, 04/21/2018 - 15:27 Permalink

There was an article I read the other day, and the gist of it was what most people will do to find 'acceptance' in the pubic arena. The source of all their lying is very complex, but, I think what it amounts to is this.

Before permanent settlements where agriculture was the main livelihood, you had a world full of hunter-gatherers. Now in the world of the hunter-gatherer, there was no time for mind games, and certainly no space for the people that we today identify as 'psychopaths'. Psychopaths do have 1 skill, and that is that the can carry on a very large number of 'deceits' in the brain, simultaneously. Those would be the people that became 'naturally selected' in an early agrarian community.

The hunter-gatherers on the other hand, had no time for deceits, or even very much ability at all to 'process' 20 different 'hypothesis' when faced with life and death danger. Either you acted, or you died. Simple as that.

So, in a lot of ways, our so called 'agrarian settlements' have provided the rich soil for these psychopaths to flourish, because there are always goofs and idiots they can pretty on.

In reply to by Oldwood