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Inequality and Skin in the Game

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Re: Inequality and Skin in the Game

#61

Post by aeorgnoieang »

bbctol wrote: post #6

I think the distinction between those who have "skin in the game" and those who survive on arbitrary indicators of prestige is an important one culturally , but especially as applied to Trump, I still think it's weird Taleb doesn't address any distance between perceived skin in the game and actual. Saying "Trump's a businessman who takes real risks, Krugman's just a writer who will never answer for mistakes" ignores…

> see Ross Douthat's career

Anything specifically that one should see or do you just not like him or his writing?

Re: Inequality and Skin in the Game

#62

Post by vannevar »

yummyfajitas wrote: post #56
vannevar wrote: post #55

Earlier quoted context omitted.

Taleb talks about a couple of articles he wrote, but unfortunately does not cite them, nor does he provide any details from them that would support your assertion that they "prove" anything, mathematically or otherwise. And none of the third-party articles linked from the footnotes contains any such critique of Piketty.

You're right, Piketty is correct because Taleb did not format his citations in the manner you desire.

Not what I said. I didn't say Piketty was correct, only that your assertion was unsupported by the evidence you presented.

FYI, I believe this is the paper you were referring to: https://arxiv.org/pdf/1405.1791.pdf

The gist of the paper as far as I can tell is that when sampling fat-tailed distributions, it's easy to 'miss' outliers on the tail that would significantly change the average observed. So in Piketty's historical analysis, the rise in inequality might simply be due to better samples as data becomes easier to get. If you actually read the book, though, it's not clear that data became uniformly better over time---there's some indication that recent data actually became worse. It's also clear from the book that Piketty's conclusion wasn't based solely on aggregations of equality data, but also historical returns on capital that would not be subject to Taleb's bias. In short, at best, Taleb offers an alternative explanation for the historical inequality data. More of a caveat than a refutation.

Re: Inequality and Skin in the Game

#63

Post by bbctol »

bko wrote: post #51
bbctol wrote: post #6

I think the distinction between those who have "skin in the game" and those who survive on arbitrary indicators of prestige is an important one culturally , but especially as applied to Trump, I still think it's weird Taleb doesn't address any distance between perceived skin in the game and actual. Saying "Trump's a businessman who takes real risks, Krugman's just a writer who will never answer for mistakes" ignores…

Yes Trump did make most of his money using borrowed funds and leverage. However, the lenders in that case have skin in the game and the debtors presumably exert some restraint on Trump. Trump did have his credit on the line as well as whatever personal assets he pledged. For every high profile bankruptcy there were likely many more in which everyone made out, otherwise no one would extend him any credit. Bankruptcy l…

So I'm not criticizing Trump here per se (I mean I really dislike him, but that wasn't what I was getting at.) My point is more that this distinction between "skin in the game"/"no skin in the game" that Taleb portrays as binary is really quite murky, and people's perceptions of who's taking risks are affected by factors other than the truth. I agree that bankruptcy laws often add value, but that wasn't the point; they add value precisely because they reduce the "skin in the game" of the person going bankrupt, whereas Taleb had indicated that Trump had shown his risk-taking by losing his own money. And it's exactly this idea that leasing out one's name, putting one's reputation on the line, turning yourself into a celebrity could also be considered having "skin in the game" that makes this distinction murky: isn't that what Taleb's IYIs do? Aren't all columnists, academics, journalists and so on playing in the same system, and self-promoting as a form of hustling their way to the top? It depends more on your perspective than on any objective definition of "skin in the game."

Also with respect to Trump being "successful on his merits"... being born into hundreds of millions is better than most connections. More importantly, Taleb isn't talking about success/failure on one's own merits, but taking on risk, and I think that's one of his better points. That's the difference between the "skin in the game" concept and judging based on some abstract idea of meritocracy: people understand that Trump was given advantages in his life, but they respect him because (they perceive!) he's opened himself up to risk and put those earnings, unfairly gotten as they may be, on the line.

Re: Inequality and Skin in the Game

#64

Post by bbctol »

aeorgnoieang wrote: post #61
bbctol wrote: post #6

I think the distinction between those who have "skin in the game" and those who survive on arbitrary indicators of prestige is an important one culturally , but especially as applied to Trump, I still think it's weird Taleb doesn't address any distance between perceived skin in the game and actual. Saying "Trump's a businessman who takes real risks, Krugman's just a writer who will never answer for mistakes" ignores…

> see Ross Douthat's career Anything specifically that one should see or do you just not like him or his writing?

This is unfair of me; there are lots of pundits as bad as him or worse, but he's become the designated punching-bag on parts of the internet of people who thought Trump would never make it. Throughout the primaries, he was incredibly dismissive towards anyone who thought Trump had a chance, mocked the idiots who didn't see the obvious truth that Marco Rubio would win every primary, responded to every Trump dip in the polls with "I TOLD YOU SO I TOLD YOU SO I TOLD YOU SO YOU DIDN'T BELIEVE ME," then predicted that Rubio and Cruz would never endorse Trump, then predicted someone else would snatch the nomination at a contested convention... and still has a job for the New York Times, educating the masses on what the future holds. No punishment for being wrong: no skin in the game.

Re: Inequality and Skin in the Game

#65

Post by antisthenes »

sosodaft wrote: post #39
skylan_q wrote: post #35

Earlier quoted context omitted.

"capitalism" That word is the problem. It means something different for every person. To you it means one thing, to him it means another. When people criticize capitalism their arguments are always convincing because you project your own negative connotations into the word.

Well said. It always pains me to see people criticising capitalism for easy points, when despite its flaws it has brought us an age of unprecedented equality and prosperity. That's not to say it's necessarily the best "system" for the future, but tearing it down because it is the Establishment and tearing down the Establishment is cool is counterproductive.

> It always pains me to see people criticising capitalism for easy points, when despite its flaws it has brought us an age of unprecedented equality and prosperity.

That's an achievement of a hockey-stick rise in exploitation of fossil fuels and energy use per capita, not some esoterically defined system called capitalism.

Just about the only core tenet of capitalism are strong protections of property rights. All of the negatives typically associated with capitalism are due to failures in regulation (over or under) and the irrationality of human beings and their policies.

Re: Inequality and Skin in the Game

#66

Post by golergka »

sqrt wrote: post #59
golergka wrote: post #31

Earlier quoted context omitted.

CS degree? I was completely sure Markov chains were high school material

I'd be shocked if more than 5% (and even that's a stretch) of fresh high school graduates in the US knew what a Markov chain is.

So? General population is an abysmally low benchmark in any country. People from 5% of top high schools sounds about right for an article like this.

Re: Inequality and Skin in the Game

#67

Post by PavlovsCat »

sosodaft wrote: post #39
skylan_q wrote: post #35

Earlier quoted context omitted.

"capitalism" That word is the problem. It means something different for every person. To you it means one thing, to him it means another. When people criticize capitalism their arguments are always convincing because you project your own negative connotations into the word.

Well said. It always pains me to see people criticising capitalism for easy points, when despite its flaws it has brought us an age of unprecedented equality and prosperity. That's not to say it's necessarily the best "system" for the future, but tearing it down because it is the Establishment and tearing down the Establishment is cool is counterproductive.

And while we're communicating, you're also completely ignoring the time axis. Global warming and other neat things on the horizon, anyone? We can't even be arsed to take that seriously. We have super awesome equality because progress wasn't exponential for millenia, no, capitalism came up with that, and when civilians get murdered more or less nilly-willy, and we wreck our long-term prospects for material comfort and social cowardice you just keep having polite conversation about the table cloth and think that's civilized. You can talk about how the masses do or think this or that, but you can't deal with any sort of discussion with bite it seems. When people are having dinner and someone suddenly kills their wife, or "just" the maid or some random stranger, you can continue eating, and I can call it out.

Re: Inequality and Skin in the Game

#68

Post by collyw »

pitaj wrote: post #54
collyw wrote: post #47

Earlier quoted context omitted.

"it has brought us an age of unprecedented equality and prosperity" People say this, yet when I have traveled in some of the poorest countries in the world (Zambia and Nepal for example) they seem a lot more capitalistic than Europe / the US. It seems to bring some people wealth at the expense of others.

What do you mean by "capitalistic"?

http://lmgtfy.com/?q=capitalistic

Re: Inequality and Skin in the Game

#69

Post by tomhoward »

gbog wrote: post #29
jdpigeon wrote: post #8

This guy's writing style is insufferable. Basically, 'let me introduce an abstract, technical concept, criticize the reader for not knowing it, and then not define it until halfway through the article' Dropping words like 'Markov Chain' in a Medium post without any context or explanation just makes the author seem like he wants us to think he's smart.

For me as a French reader, Taleb's writing style feels familiar, just like French sentences translated in English: long and constructed sentences with articulations, and some soft punch inside. Maybe it is not the proper style for English native speakers, but it feels a clear and well organised writing style to me. On a higher level, Taleb's thought may have weaknesses, some contradictions, some unmomtivated leitmoti…

Interesting. Taleb was educated at the Grand Lycée Franco-Libanais, a French school in Beirut, Lebanon [1], then at the University of Paris [2].

[1] https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb#Early_li...

[2] https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb#Educatio...

Re: Inequality and Skin in the Game

#70

Post by eldavido »

curun1r wrote: post #60

Speaking personally, having "skin in the game" matters very little to me when it comes to resenting those who have achieved great wealth. What matters to me is someone's effect on the rest of society. It matters how someone made their money but it also matters who else benefitted from that person's success and who else suffered. For instance, I don't begrudge Larry Page or Sergei Brin their billions. Neither had much…

A lot of hedge fund and private equity guys make money by doing necessary things management is unwilling, or politically incapable, of doing.

Unprofitable businesses, by definition, destroy their owner's wealth. Saying an unprofitable business has to continue operating is basically saying, "I think business owners have to operate charities", which is something I don't believe. Sometimes the best thing is the big job cut, at least that way, the employees, landlords, lenders, etc. can all start fresh, and put whatever bad situation exists today, behind them.

I think of private equity as corporate garbage collection. Sometimes adjustments is painful.

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