2) The Great Recession was caused by lack of SITG. In his irreverent style, Taleb describes the “Bob Rubin Trade” - former US Secretary Treasury making $120M+ at Citi over the 10 years up to ’08 then bailing the bank out after the crash, transferring risk to taxpayers: no SITG
3) Architects build to impress other architects, not to create the optimal user experience, because they’re not living and working in the buildings they design. Their downside comes in the form of not impressing their peers, so that’s what they optimize for: no SITG
4) People without SITG seek complex solutions. Practitioners, those with SITG, look for simple heuristics and what leads to results. Can be seen with government employees, consultants, economists, etc: no SITG
5) Because employees don’t have SITG to optimize for the best possible outcome for the company/institution, they instead optimize for their boss/job assessment, leading to things like the 2008 crash, juicing quarterly earnings, the Vietnam War, the War on Terror: no SITG
6) Diplomats and politicians with no SITG cause more trouble than they solve with things like Israel/Palestine and Syria. Taleb thinks that people with SITG care more about having good food, drink, and weather at their family parties than geopolitics or grand principles: no SITG
7) Inequality & SITG – wealth is seen as zero-sum in countries with rent-seeking, taking from Peter to pay Paul. In countries with SITG, where wealth comes from risk-taking, wealth is seen as positive-sum, benefitting everyone (Interesting to see this philosophy in crypto): SITG
8) People with SITG care much more & are able to move the needle (crypto again). Taleb calls them the intolerant minority. E.g. it only takes a small % of population to be kosher for manufacturers to make everything kosher. Same with a single large seller of stock: SITG
9) The Lindy effect – the longer something has been around, the longer it’s likely to stay around (crypto again with bitcoin vs other coins). Things that have been subjected to time and survived having SITG are likely worthwhile, like your grandparents’ advice: SITG
10) Taleb quotes a nice maxim that epitomizes the Lindy effect. From Alfonso X of Spain, or El Sabio, “Burn old logs. Drink old wine. Read old books. Keep old friends.”: SITG
11) Taleb’s main point is to AVOID TAIL RISK. Having SITG ensures that people avoid the Black Swan events that lead to death, loss of all $, etc. Religion, in Taleb’s view, is useful to teach society rules that lead people away from tail risk, towards survival – Lindy again: SITG
12) Back to tail risk, Taleb made money by making many bets that each had a small % of high upside (tail profits) and no bets that could wipe out (tail risks) his whole portfolio. As he says, volatile things are not necessarily risky and vice versa: SITG
13) Useful real-world examples here are not playing Russian Roulette, where you’ll win 83.33% of the time, or not crossing rivers that are, on average, 4 feet deep. Avoiding that Black Swan event, surviving (Lindy again), not worrying about average returns is everything: SITG
14) Evolution has led us to be wary of low-probability, high-risk events, like a lion attack on the savannah. Taleb ends the book with another wise maxim, “rationality is avoidance of systemic ruin”: SITG
15) In sum, look at what people do and not what they say and be wary of the opinions of those w/o SITG. W/ SITG, take risks that have potential high upside and avoid Black Swan events. SITG is definitely worth a read and looking forward to reading more of @nntaleb’s Incerto. /fin
