0:33 Intro. [Recording date: July 10, 2017.] Russ Roberts: Our topic for today is the manuscript version of his next book, so there may be some things in this conversation that don't make it into the final version. And this is his 7th appearance on EconTalk. Nassim, welcome back to EconTalk. Nassim Nicholas Taleb: Great, thank you. I'm very honored to come back. Russ Roberts: I want to start with a somewhat lengthy quote about Robert Rubin. I think you called this example the Rubin trade. You say, Robert Rubin, a former Secretary of the U.S. Treasury, one of those who sign their names on the banknote you just used to pay for coffee, collected $100 million dollars in bonuses 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 check. He invoked uncertainty as an excuse: Heads, he wins; tails, he shouts, 'Blacks won.' Nor did Rubin acknowledge that he transferred risk to taxpayers. Spanish grammar specialists, assistant schoolteachers, supervisors in tin can factories, vegetarian nutrition advisors, and clerks for assistant district attorneys were "stopping him out", that is, taking his risks and paying for his losses. But the worst casualty has been free markets, as the public, already prone to hating financiers, started conflating free markets and such higher order form of corruption and cronyism, when in fact it is the exact opposite: it is governments that make these things possible by the mechanisms of bailouts. Now, listeners will know that's a long-time theme of mine as well, so of course I'm going to like it. But I like this general point about what you call a "Rubin trade": that, when it goes well, you earned it, but when it doesn't go well, "Oh, I can't predict the future." So, talk about that a little bit. Nassim Nicholas Taleb: Well, I mean it's something more general than that Citibank bonus scheme. Something that you can detect and generalize and detect in society. Whenever a person can transfer risks into the future and against immediate payments--and these things happen in modernity because we tend to judge people on numbers: there's no survival involved. So, it's not what I call ergodic, something I hoped you'd bring up; and people are currently more and more evaluated based on metrics rather than evaluated by reality itself. So, for example, let's take a politician. A politician has an incentive to increase GDP (Gross Domestic Product)--that's a metric--or reduce unemployment, short-term of course--that's a metric. And of course increase the risk of blow-ups[?] in the future. So, you don't have--if the person was running his own farm, he would not treat it the same way. Why? Because the skin in the game that they have is very cosmetic. So you can generalize about the situation. I mean, I generalize policy-makers, you say Iraq [?], you pay no downside, so visibly[?] want to engage in policies that are good for you and of course you don't care but the taxpayers care or the soldiers, you are not a soldier, you care about the Iraqis. So that's chronic and has been increasing noticeably since the Second War. Russ Roberts: I want to disagree a little bit with the 'skin in the game' for politicians. It seems to me there's a big difference between a President's skin in the game and, say, a Senator voting for some resolution related to that war. So, it's true that George Bush's children didn't die in that war. And he didn't die in that war: he was not literally at risk, or his family. But his historical reputation is. Nassim Nicholas Taleb: [?] But that's not enough. Go ahead. Russ Roberts: I was just going to say, it's less so. The politicians who supported the war, who wrote an op-ed for it, the academics, say, or the pundits--they have some historical costs. It's rather remarkable how little, especially--we're talking about foreign politics, but in economics, it's remarkable how many stupid things you can write and they get forgotten because you are smart or whatever is the right metric that other people use, or the metric they think is the right metric. But it seems to me in the political realm, you don't want to rely on dictators, who clearly have a survival incentive. Nassim Nicholas Taleb: Well, actually, the argument I bring. You--we cannot solve the problem by thinking, the situation as it is, by saying, 'Okay, we have politicians that think any differently because we have a democracy.' We've got to think of the optimal structure. The optimal structure is when a person is penalized, long-term, from an action. And, that only happens in a decentralized system. For example, the mayor of a town or the mayor of a small village in Switzerland has to live there; and if he fails, his reputation--he has more skin in the game than a bureaucrat in Washington, whose action cannot be identified. And I tried to solve that problem under the following principle: it is vastly easier to macro-BS than micro-BS. So, there is a structure change you can make to accommodate this problem, accommodate the absence of skin in the game. Let me mention one thing, before we continue the conversation. For a lot of people, skin in the game is confused for an incentive; whereas in this discussion, skin in the game is largely disincentive. Russ Roberts: Well, incentives can go either way. But you are making the point that you don't just have an incentive to do the right thing: you have a disincentive to avoid the wrong thing. Nassim Nicholas Taleb: Disincentive or punishment. Or actually--and what I [?] in the introduction, it's not just an agency problem--in other words, disalignment of interests. It is an absence of a filter. Because the way skin in the game has worked traditionally is as a, not just as much as a deterrent as an idiot filter. Because a lot of people are just stupid--he cannot do anything, he's [?] because they don't understand their own interest. I mean, we know that. Look at the LTCM people--Long Term Capital Management. They were trading their own money, okay. They of course were diluted[?], so you can't really add[?] that they had skin in the game. And they were--for many of them, most of them had skin in the game. So, the point is that it's a filter. And I explain in the beginning of the book is that the reason you don't have that many car accidents is because--in addition to being in a car, driving yourself, is a deterrent--you can't go very fast because you'd kill yourself--but also because a lot of bad drivers are in a cemetery. So, at some point they stop killing people. Russ Roberts: Right--they are removed from the distribution. For sure. Nassim Nicholas Taleb: Exactly. It is a filter. So, skin in the game is a filter for a lot of things. And that's what people have missed traditionally in the treatment of that notion. And effectively most of the book is about that filter.

8:25 Russ Roberts: So, what do you think of this argument that you should underpay certain professions, say, teachers and doctors--I don't think either one is underpaid--but the argument might go that you want to underpay them because you want to attract people who are motivated less by the money and more by the intrinsic reward of helping other people. And, since they don't have any skin in the game, in the sense that if you do a bad job teaching arithmetic or English, reading, literacy, you are not going to bear the price 30 years later when that kid can't really function very well. So, you want to have people who are intrinsically motivated. Do you think that's a good argument? Nassim Nicholas Taleb: Not really. I don't think that we should decide on compensation. I think the market system should decide on compensation. We just, as a society should decide on boundaries, on extremes. Just like we focus on, we want the government to focus on law enforcement--which is risk management--focus on defense--which is risk management--focus on the big things that cannot be solved by individuals--risk management. Likewise we just have to make sure, make sure that there is appropriate skin in the game and that the market functions the way it wants to function. Now, it sort of happens that with doctors there is some skin in the game but sometimes things get gamed--because, again, you have metrics with doctors, or you have metrics for hospitals. So I think may be gamed. But still we are a lot better off with the system the way it is now, thanks to Port's Law[?], than a sort of like trying to get together and have meetings or try to organize these professions from the top. Russ Roberts: Of course, I agree with you. You are speaking to the converted-- Nassim Nicholas Taleb: Of course, of course. Russ Roberts: But, if you were starting a private school and were the Principal of it, would you consider underpaying--the reason I'm thinking about this is--I'm going to pick another fun example from the book: You suggest that I should pick a surgeon, if I have a choice between a thin-rimmed eyeglass, classic, movie-casting version of a surgeon versus somebody who looks more like a butcher--kind of a slob, pants, shirt's not quite tucked in, speaks with an uneducated accent, say, Brooklyn, Brooklynese--that I should go with the butcher. I shouldn't go with the suave guy. Nassim Nicholas Taleb: I am saying, yeah--conditional on someone having, you know, two people having equal--you have one, looks like a movie actor who you cast in a movie as to represent a surgeon, and the other one looks like a butcher. Conditional on both of them having the same, say, status in the hospital and being offered as to, you know, alternatives, I'd pick the one who looks like the butcher. I mean, so, that's the idea. Why? Of course, the argument that everything that shines is not gold. But also, there is another selection argument: That person who doesn't look like a surgeon probably suffered more because of this bias, and has more to say. And generalize, mostly I would say of course, concerned with scientific papers, as I notice that all the great scientific arguments can be written on a napkin. And then, you see people who write papers that look very scientific and have the right jargon, and then confuse you enough that you forget what the central point is. And make you also forget that the entire thing can be developed in a much more intuitive way. If I underpay someone for a job, or if someone is underpaid for a job, or accept lower compensation for a function that person has soul in the game. Not just doing it for the money. And you don't want people doing a job for the money. So, so I agree with you--underpaying, if I were to pick two compensation schemes, I would pick the one that underpays people a little bit, simply because signaling mechanism and this and that simpler[?]. Yes.

12:46 Russ Roberts: Let's talk a little bit about employment. We may have talked about this in the last episode, but it's so interesting I just love it. Talk about the example of flying to Germany for Oktoberfest--I've contracted out my private plane and I've got a pilot coming and he informs me the day before that he's gotten a better offer and he's going to do something else. Nassim Nicholas Taleb: Exactly. The reason we have employees--and that, again I credit conversation with you--is, the reason is not because an employee has, you know, is cheaper, delivers things better. It's because an employee has a lot more to lot. He has skin in the game. In other words, he has something to lose more than that specific job. So, if--and they also have signaled to us, employees, by being employees, someone who was an employee for 35 years, or for 25 years in a large corporation, they signal to us that they are not free. And it's great. So, you have an employee; it's inefficient; but, it's a good risk-management pool because you know that they are not going to let you down when you need them the most. They are always going to be there when you need them in an emergency. And that, you can get in a market system that is entirely built on subcontractors and [?] contracts. And that is sort of like, to me it's sort of a footnote to Coase. The reason we have corporations is to avoid having legal contracts. But that version, that the person, the employee, is not someone who escapes that notion of contract is to me quite central. And to me, why we have employees? Because you want to own some people. And just like we have, a lot of people have country houses that they don't use, is much more efficient to stay in a nice hotel, because they want to know that that place, they can go to it whenever they want to. If they woke up at midnight and decide to drive to a country house, they can do that. They won't do it, but they would like to know they can do it. So they don't want to share. And that's quite central this idea of skin in the game. And that was also a risk management tool, that the Romans--the Romans practically have discovered so many things--practically--I would say, almost everything, in one way or another. So the Romans figured it out because they never let a free person be a steward in a big state. They wanted a slave. What's the reason? Because you can punish a slave. If you own a slave--punish a slave. So, the person is caught cheating, the punishment is much harsher for a slave. So the steward[?] most typically a slave. Russ Roberts: Yeah, that was very deep. I thought about Joseph in the Book of Genesis, when, he is the steward of Potiphar's house. And you are thinking: Why is this lowly person given this control? He's really smart, was one answer; but it's not enough. It's that ability to punish down-side. And of course, as a result of it Joseph ends up in prison, really, in what appears to be a life sentence, but manages to get out. But the point about having a slave versus an employee is a really interesting one. And it highlights something--and we talked about this in another one of our conversations. And it's so trivial, but it's so deep, because it's so easily misunderstood. And the way you phrased it is: Probabilities aren't the same as expectation. The odds of something being remote is not enough to mean you don't have to worry about it. Because it depends on the consequences of that remote thing happening, not just the probability. So, being wiped out by your slave, or being able to punish your slave is really very powerful because it's the magnitude, not just the probability that matters. And I think that's just an incredibly--it's incredibly obvious--but it's very deep because people forget it all the time. They say, 'That's just a low-probability event.' Well, but if you die when it happens, it's more important than if you don't die. Nassim Nicholas Taleb: Exactly. And here--if you look at it--it's, you need a slave because you need someone who can be punished by a mistake. And an employee is going to, never going to be able to come back, if he develops a reputation, better reputation. Nobody would hire him or her. But a free person can always manage, because-- Russ Roberts: Well, you can only fire an employee, but you can torture a slave. I mean, it's not a very attractive thought, but that's the point. Nassim Nicholas Taleb: Yeah, yeah, it's true, but an employee, by firing an employee, you actually have more to lose than just the job. Russ Roberts: Oh, for sure. But-- Nassim Nicholas Taleb: A contractor, you fire a contractor, he finds another client. An employee has more downside. Russ Roberts: Oh, agreed-- Nassim Nicholas Taleb: And typically these are people who want to stay in the job for the long run. They trade their freedom for real liability.

17:59 Russ Roberts: No, it's the same argument I make--the hierarchy you are suggesting is contractor:employee:slave. And as you--employee is getting close to slave because they have more at stake than contractor. But not as much as a slave. But, it reminds me of this argument I sometimes make about football coaches or general managers in sports. They are very risk averse. And yet they are in this highly competitive business. And it's hard to understand why they are so risk averse. But the answer is: There's a decent chance that if they mess up, they'll never get that job again. There are only 30 of them, say, or 32, depending on the sport. And as a result, they act very cautiously. You could say, 'Well, what's the worst thing that could happen, that doesn't work out? The strategy or the trade or the draft pick?' But it matters because the outcome isn't just unlikely. It's unlikely with effectively a death sentence: in employment, you may not be able to get that job ever again. Nassim Nicholas Taleb: Yeah. That's--but in fact, I may observe somewhere that we have many more slaves today than we did in Roman times. Because in Roman times, slaves were actually sometimes freer. Russ Roberts: And why are we so slave-burdened today? Nassim Nicholas Taleb: Because we have a more complex system than need more [?]. An employee is practically a slave. I mean, you think about it in these terms. Right? He can't say what he thinks--he'd get fired. He can[?] go on Twitter and curse at someone else. There are a lot of things he can[?] do. But it's not there that they're a slave, because they have to show up and give you their time, 9-5, or 9-6, or sometimes 8-10, 10 at night. So, they have to give you so much, and they are scared. With a slave, in Roman times, of course they have downsides--they could be beaten, they could be crucified-- Russ Roberts: Those are two negative things-- Nassim Nicholas Taleb: But a slave at a time--if you damage a slave, you can't sell them, so you lose market value. And with an employee, it's not the same. So it's quite--I haven't written much about it in Skin In the Game, of course, there are so many other topics. But I'm certain that we have more people who are independent today than we did in Roman times. Russ Roberts: It's an interesting argument. You do bear some costs if you fire your employees all the time. I mean, people are less excited to work for you. Nassim Nicholas Taleb: That's true. But they are--an employee is--okay, someone who sold you his work unconditionally, saying, okay, you are going to report to him and come back, or sometimes there is nothing to do, they still have to show up. So--or, maybe you have employees who are freer. But that's a typical standard. Why is that so? Well, because you want people who are not free. And this is why we have the school system, to basically teach people to not be free, between 8 and 4 p.m. Russ Roberts: It's practical. Nassim Nicholas Taleb: This is how it works. Russ Roberts: It's practice. Nassim Nicholas Taleb: Yeah. So they are broken in young, and they learn. And so you have employees.

21:21 Russ Roberts: Let's talk about the honorable life. You say the following. You say, Most people you run into in real life, bakers, cobblers, plumbers, taxi drivers, accountants, tax advisers, garbage collectors, dental cleaning assistants, carwash operators--not counting Spanish grammar specialists--pay a price for their mistakes. So, here I am--I have a great life, by the way; I'm very lucky and blessed. But I don't know how honorable it is, in that I don't have much skin in the game. I mean, I could do a bad or better job interviewing my guests, but I'm kind of just chitchatting here. Nassim Nicholas Taleb: No, no, but you are not transferring risks to others. You see? I've never seen you give economic advice--in the sense of, I mean, you argue about economic systems; I've never seen you tell people to buy S&P because it's going to rise tomorrow. I've never seen you hide risks, seen you do anything that hides risks for the[?] collective. Never seen you, you know, engage in actions for which you, you know, don't pay for the downside. Because you don't inflict an outside on society. So that's okay. A plumber doesn't inflict any tail risk on the rest of us. So, it's not--so these people are honorable in the sense that they are calibrated. They take no more than what they give. Russ Roberts: So, let me take an inversion--a version--of economic policy where I do sometimes state an opinion. And I do sometimes invoke skin in the game on the other side. I'm just wondering what you think of my side. So, when people say that the minimum wage, we're going to raise the minimum wage to $15/hour, it's not going to hurt the poor because it just--we have a lot of evidence, we claim, that it doesn't. And I say, 'Well, I'm not sure your evidence is correct; and I'm not sure you've looked at all the relevant margins'--as you would point out, the metrics you use are kind of blunt, like how many jobs there are; you don't look at hours off and you don't look at training; you don't look at how nice people are to each other. There's all kinds of aspects of on-the-job experience that could be hurt by the minimum wage that you ignore. And you have no skin in the game--you are an economist advocating for the minimum wage. You could be imposing horrible costs on people without any knowledge of it. And they come back to me and say, 'Yeah, but you are just going to sit around and do nothing. You have nothing positive to add. You are just a complainer and a cynic.' What should I say? Nassim Nicholas Taleb: I think these are neither you nor your enemies have [?] skin in the game, which is fine. But the person who advocates a minimum wage, you see, in case there are adverse consequences, will not be paying for it. So it's much better to let people who have skin in the game decide on whether there should be minimum wage. And if you ask unemployed people making currently $0 whether there should be making a theoretical a theoretical $15 or $25, whatever minimum wage you want to set--if you ask the unemployed, okay--then you should take their answer seriously, because they have skin in the game. Where currently you have intellectuals, who have a job, who just want, because of the virtue signaling or maybe to feel better, maybe to feel, to give themselves that aura of feeling good because they did something good. And so you have a lot of fakes--true fakes or confused people--advocating actions, you know, that feel good to them. Because hey, of course, they think that it improves society, or on the surface it doesn't[?] improve society. Like, you, I believe that a minimum wage would definitely, is a cause of more employments or robots or jobs going to places where the wages are lower. So, you have to have--see unemployed who should decide, or unemployed, or people who are subjected to these minimum wage or wages close to the minimum who should decide. Not some intellectual at CUNY (City University New York) making $250,000 a year. Russ Roberts: Well, I think some of them are motivated for good reasons. I like to think they are. So, I'm going to give them the benefit of the doubt, at least in the short run. Nassim Nicholas Taleb: Okay, but let me tell you one thing here. If you think that there should be a minimum wage, then you should pay--people who think there should be minimum wages should voluntarily pay everybody around them the difference between whatever they are getting and that minimum wage. And, when you go to McDonald's, you should leave a $3 tip or $4 tip to the person. If that's really what they want to do, they should do it themselves. I've discussed in a book that the [?] behavior on the part of people who always have ideas of how things should be but in fact don't pay for it themselves. Like, they argue about privilege, class privilege, but they themselves privileged; and they don't pass their wealth to others. They want higher taxes on others but not--they don't want to give more to charity. Russ Roberts: I think their defense would be--I don't find it, I'm not sure I find it compelling, but they'll argue, 'Well, I'm willing to chip in as long as other people are forced to, and then I'll be happy doing it.' So, that would be their claim. Nassim Nicholas Taleb: Yeah, but that's a weird argument. Virtue should be unconditional. It should not be conditional. In other words, 'I'm going to save people from drowning only if other people save people from drowning.' That's not an argument that can stand on [?]. I don't know any ethical system that is based on something like that.

27:23 Russ Roberts: Let's switch gears for a minute. One of my favorite parts of the manuscript is that I shouldn't have an assistant--because I'm not very good at delegating. I tend to do a lot of things myself. I get some help with EconTalk and a few other things I do, but a lot of it I do myself. Even though I say to myself, 'Wouldn't it be more efficient if I could just get someone to do some of these tasks for me?' What's your thought on that? Nassim Nicholas Taleb: The whole idea that time is money[?]; people keep complaining all the time that it's the most valuable commodity, that time is important. And yet they waste that commodity doing things that they shouldn't be doing. So, if I had an assistant, I'd be forced to have meetings. I'd be forced to do things just because I had an assistant, a full-time assistant. But I don't do it: I employ people for specific tasks. See, if you want someone to wash your car, you hire someone to wash your car. You don't have someone and that person takes care of your life. And I've noticed that that effectively allows me to have a lot of free time--because my commodity is free time. Now, free time, there is serendipity; everyone can have a different idea. And also, because I like to procrastinate: I like to sit on things. I sat on Black Swan for 20 years. There's scientific papers I've been sitting on now for 25 years. So, I like to sit on things; and it has always paid for me. You sit on things, and then when you are certain then you just write them down. And also, it avoids that noise. It's a sort of good noise filter. It's the same as not reading unconditionally the newspaper. You can read the newspaper but it has to be driven by the news, not driven by, you know, a sense that you have a newspaper in your hands. So, it's the same thing with books. The same thing with a lot of things. So, you [?] you need a filter. So, if you don't have an assistant, you are not industrializing your life; so you have more soul in the game, activities that you are engaged in. And it's more in line with your true, deep preferences. Russ Roberts: I like that idea.

29:37 Russ Roberts: I'm going to take another point here which I was a little bit uneasy about, which you might expect. You wanted to say something nice about protectionism, and you wanted to defend being an artisan. So, talk about why there's an argument for protectionism on the basis of artisanship. Nassim Nicholas Taleb: Okay. The point is as follows. I have already argued against what I call unfettered globalization in The Black Swan, saying it is going to cause big systemic effects: particularly that these are driven by governments themselves who prop up large companies. And the Crisis came largely from that. So, you have a large continent which has many fewer species per square meter than a small island. See? So, that effect is of course we are feeling it, because Google, you know, operates in Zimbabwe. So, basically there are no borders for large animals, and you have a [?] that's huge. That may work, conditional on the winner-take-all effects operating properly and the big person going bust. But typically they get [?] as governments and they manage to not go bust. So, this is where I thought that globalization was causing some distortions in the system. And then--remember, I'm fundamentally a localist, someone who believes in a bottom-up system, not top down. And globalization leads to corporations being like large governments. So, this is how we started. But then I realized there was a second element and validation that people failed to understand: that you have to ask the people what do they want. Do they want more flat screen TVs, cheap plastic TVs, or an extra 12 shirts made in China at half the price they were paying for them 20 years ago in nominal terms? Or, do you want--is that what you want, or do you want to have a job? So, if you are a shoemaker, your interest isn't so much in the money as in making shoes. And your ego is in making shoes. So, that's my argument with this globalization--is that, in the discussions, very little of that is brought up: that maybe their preference is to have a job and derive some kind of ego satisfaction from seeing their product. That's why the artisans: the artisan is in it of course a little bit for[?] the money, but mostly because they have a very synchronized[?] life: it's not a 9-to-5 thing where at 5 o'clock, that's it; it's finished. It's what continues after. They would like--first of all, it's part of their persona--and also, they like when they go out to the store to see perhaps the shoes they made, themselves. And that's where the big--that's not discussed. So that's the idea of soul in the game--people may want to have soul in the game. Russ Roberts: Well, I think they do. I think they want their shoes and eat them, too. They want to have the freedom to make their own shoes, so they're going to keep out foreign shoemakers; but they want to be able to pay a low price for the clothes and the flat screen TV. So there's this natural impulse to use the state to keep out competitors so I can have my kind of life. It's a problem. It's a trade-off. Nassim Nicholas Taleb: No, no, no. There are degrees. And this, I may disagree with some of the areas. When people say they are against globalization--and people are quite confused in what they mean by globalization. Do they mean that we shouldn't go back to a closed country as Japan did? Okay? And, of course, that's [?] civilization; or within a country close every state, and every state needs to be self-sufficient? Or, does it mean: Just take care of a few strategic things to make sure things don't go out of control? And nobody has been able to explain to me what they mean by 'pro-globalization' or 'anti-globalization.' Because, even when people call themselves pro-globalization, are not in favor of open borders for people for free travel. Russ Roberts: In general. There are a few exceptions. Nassim Nicholas Taleb: In general, yeah. So they are very confused. These discussions are very confused. So, my point is that I am in favor of globalization. I am in favor of some kind of specialization. But, at the same time, if people want to vote in a certain way, and you have to understand their preferences. You have to understand why they may like to see their own shoes in the store. Maybe they want, they have other things in life than just their economic bottom line. But, at the same time, their economic bottom line is a substantial concern. But it's not 100%. Russ Roberts: I couldn't--I agree with that completely, of course. Nassim Nicholas Taleb: But then, you go back to Adam Smith; you go to all these people. Nobody has ever defined capitalism as just unfettered, unconditional pursuit of money. Russ Roberts: Absolutely. Nassim Nicholas Taleb: Nobody has defined it that way. Russ Roberts: And that's a really bad system, by the way. So, yeah. We don't want that. But freedom of choice, which includes the freedom to give up money to something you love, or the freedom to--I just want to make sure we don't spend too many resources and too much time allowing me to decide what you can buy. I think that's the tradeoff. But I take the point about artisanship. My wife likes to shop at the local food co-op, and I think there's some emotional advantage for her--not for me, particularly, but emotional advantage, beyond the taste of the food, in the fact that it's grown locally--or at least she thinks it is and probably is. But that's a luxury. That's a very expensive habit that most of the world can't afford. Nassim Nicholas Taleb: I'm not sure it's very expensive; and I'm not sure the system, the way it is now, is very efficient. This is what I have discussed. I've said it 10 years ago--I mean, it was published more than 10 years ago, in The Black Swan. But I figured out, 10, 15 years, 20 years ago, that effectively what seems to be efficient is not efficient. What seems to be efficient is highly risk someone. Russ Roberts: Possibly. Nassim Nicholas Taleb: But again, if I'm not--again, I'm not in favor of transforming every single individual into an artisan. But at the same time, you have to listen to people to want to have a soul in their merchandise, not just economic growth.

36:56 Russ Roberts: Let's talk about taking advice from people. Of course, as you like to point out about me--it's kind of you to suggest that I don't the kind of advice that has downside risk or imposes costs on others at my own benefit. But, a lot of times in life we are forced to accept advice or we get advice from, say--I've been thinking about doctors lately; my parents are both old, and thank God they are alive, but they are in their 80s and they get a lot of advice that I always wonder whether it is good advice or whether it's somebody with a hammer looking for a nail. So, you write, Beware of the person who gives advice telling you that a certain action on your part is "good for you." It's also good for him. While the harm to you doesn't directly affect him. Remember that when you visit a medical office. You'll be facing someone who in spite of his authoritative demeanor is in a fragile situation. He is not you, not a member of your family. He has no direct emotional loss should your health experience degradation. His objective is naturally to avoid a lawsuit, something that can prove disastrous to his career. Now, a lot of doctors, I think, are offended by that: 'Do you think I only care about losing in a lawsuit?' Nassim Nicholas Taleb: Actually, a lot of doctors like that point. Russ Roberts: Hah, hah, hah. Why? Nassim Nicholas Taleb: And actually, originally it was made by one of my friends. Because they themselves do not like the perverse system, actually--the tort system--that of course helps us a lot. But let's consider the following situation. We know that statins, and I wrote about it in Antifragile; I was attacked but this turned out to be true; that statins are in fact[?] very harmful. They have iatrogenics[?], harmed by the healer[?], and they carry ultimate[?] risks for people who take them. But, say, a doctor does not prescribe statins for a person who visits him or her; and the person has a heart attack in a parking lot on the way back to the car. The doctor is going to be sued. Okay. Or, you know, you prescribe statins or the person drops dead maybe 6 weeks later, say, okay. So, on the other hand, if you prescribe statins, you are never going to be sued for that heart attack. So this is risk management for the doctor that is not optimal for the patient. See? A doctor is unaware of it. A lot of them are aware of it. But they are still trapped because the system is not favorable to true treatment of risk. So--and at least for medication, at least for a lot of things. Now, this comes from pharms [pharmaceuticals]. And Antifragile explained the following: that, if a person is slightly hypertensive, ever-so-slightly hypertensive, the number needed--they are going to treat you--but the number needed to treat are like, uh, huge. In other words, treat 67 persons to cure 1. Okay? Whereas if a person is very ill, it is 100% effective to treat that person. Or, 95% effective. So, but, let's think about it in terms of probability distribution. People one standard deviation away are way, way, way too many compared to people 5 standard deviations away. And medicine is not interested in 5 standard deviations away. They are interested in a person who is just slightly ill, one sigma away from normal. And so, the doctor is sort of like, or perhaps an assistant, where they have to treat these people, you see, and give, and over-medicate them, and high-risk, the [?] risk--you have gain and then the person suffers later; that's none of your problem. So, that risk transfer takes place. And has taken place in many situations with statins, with a lot of classes of drugs. But you don't see it with cancer. Because cancer, you in the tail of the distribution already; and medicine seems to work very well in the tail of the distribution.

41:16 Russ Roberts: I want to ask you about something very different for a minute, because I'm just thinking about--one of the interesting things you write about in your book is that each of your books grows out of a small part of the book before. I have some of that in my own work, as well, and it's very rewarding: You have an idea, you write about it for a paragraph; and you realize two years, five years that you've got a lot more to say and end up writing a book about it. Do you have any regrets about things you wrote in your old books, or about things you wish you hadn't said, or the things you've learned--that are mistakes you've made? You're very confident--you are the most confident humble man I know. Nassim Nicholas Taleb: Okay. I have made a lot of local mistakes in my books, but I went back and corrected almost all of them, without anybody knowing. Like, for example--but they are very small mistakes, like thinking that Dawkins was the real thing. And now I think he is a BS vendor. So, I had to go back and remove Dawkins from my [?] books, or references to Dawkins. In that sense. So I've done quite a bit of that. Not quite a bit, but I've done some of it. But, I have not--what I regret is something different. For example, Skin in the Game is nothing but a symmetry [asymmetry?] in risk bearing. So if someone bears a risk, the other person bears a reward. It's like an option, where someone has the up side, the other one has the down side. So, I naturally thought the idea fit in Antifragile; and I wrote maybe 20, 30 pages on the subject at the end of Antifragile. And then I didn't realize that most people don't remember what's at the end of a book. Or, many people don't read the final parts of a book. And I was lucky that at least they read the middle part, because most of the cited[?] material is in the middle part. So, that was a mistake. That was a strategic mistake. I should not have discussed skin in the game in Antifragile. I should have known immediately that the subject is important enough to be treated on its own. So, these are the things I regret. Now, technical mistakes--aside from [?] I made a couple more mistakes, let me confess. At the beginning I was very excited about psychology, experimental psychology. But I was excited about it thinking they could yield answers. And there, with time, I just realized that it was not, didn't have the solidity[?] I was hoping for. Russ Roberts: Do you have any blind spots? That you know of? Nassim Nicholas Taleb: Blind spots? Blind spots. Typically, yes. Let me tell you [?]. If I get excited about someone's ideas, I get very excited. And I am often wrong. If I am completely repelled by someone and what that person stands for, I have never regretted it. Russ Roberts: Well, that could be a blind spot. That could be a blind spot. Nassim Nicholas Taleb: Mmmm--no, because there's something about the [?]. All it takes is n of 1, of BS vending, you know? Just like society doesn't let you steal or kill more than once without categorizing you: don't wait for law of large numbers. So, if a person has one instance of BS-ing, you realize, it takes 1 to make you a BS vendor, you see; but it takes an infinite number of sayings to make you a non-BS vendor. So it's sort of like a Black Swan problem. Russ Roberts: Explain that. What do you mean? Nassim Nicholas Taleb: There's an asymmetry. So, for example, maybe that you lead you to a minority rule-- Russ Roberts: If you'd like-- Nassim Nicholas Taleb: which seems to me the most substantial part of the book-- Russ Roberts: Okay-- Nassim Nicholas Taleb: in that we have the algebra, the decision-making, is very different from what people expect. And you know that in statistics if I add one asset coming from a fat-tailed distribution to a portfolio of a thousand assets that come from thin-tailed distribution, the ensemble will be fat-tailed. So, all it takes is one. Just like, if you have contaminated--you drop a glass of contaminated water into a big jar, the whole jar will be contaminated. You see? But if you drop--the reverse, you know--and also[?] doesn't make it contaminated. So no matter how much you mix with contaminated water, it will be contaminated--of course, up to a point. And that can lead to a minority rule, which has in my--first of all it has been downloaded several million times, so I know it has led to some impact-- Russ Roberts: Your essay--you are talking about your essay on the topic. Nassim Nicholas Taleb: My essay on the topic; and of course a chapter in a book. And I cheated a bit writing this book, because I've posted a lot of things online, and organized the book based on the excitement brought by the chapters. Of course, not 100%. So, I put in the beginning things that sort of were downloaded and translated a lot. And the minority rule is as follows. It all started in Boston, where I noticed that a few, there were a few orthodox Jews who showed up at a party; and that I wanted to serve a lemonade, but I was worried. I said, 'Oh, let me check if it's kosher.' Sure, they don't get non-kosher foods to sell: 'Don't worry, it's going to be kosher.' [?] said, 'Well, okay, all lemonade over here is kosher, so don't worry.' And I looked at the bottle: effectively it was kosher. Well, that's a minority rule, because a non-kosher person can eat kosher, but a kosher person cannot eat non-kosher. So you have an asymmetry. So, if you have, the population rises over a certain percentage--and that percentage can be tiny--all food is going to be kosher. Russ Roberts: As long as the costs of making them kosher are not too high. Nassim Nicholas Taleb: Exactly. Russ Roberts: So, the cheeseburger is out; but the Coca Cola, which is shocking, is kosher, even though it had secret formula that for years was allegedly only revealed to one rabbi who was sworn to secrecy, would verify and certify that it is indeed kosher. But that was for a tiny proportion of the population. But everybody was drinking the same cola. Nassim Nicholas Taleb: Exactly. So, if you translate that into just general social behavior, then if someone is coming from Mars and telling [?] stores what people drink, will have the illusion that everybody is an orthodox Jew. So, [?] their general preference is to have kosher. The minority rules applies to so many things. For example, the same of course, dietary. Dietary, the same applies to Halal; but also a medical thing. If you have one person on the plane who cannot stand peanuts or has an extreme allergy to peanuts, that's it: the whole plane will be peanut free. And [?] analyze, enforce that rule. Russ Roberts: I just have to note that Southwest, which is an incredibly successful airline, serves peanuts with abandon. But the point is true: that you are generally--you could find another snack. If there was a death risk, a life-and-death risk for peanut travellers, they are generally going to be cautious and find an alternative. Nassim Nicholas Taleb: Exactly. Find an alternative. Have cashew nuts or whatever, if the costs are not big. Or give them pretzels, as Delta does.

49:28 Russ Roberts: Talk a little bit about the Lindy effect. What is the Lindy effect? Nassim Nicholas Taleb: Actually, this is my most--to me, my most disturbing point. And then perhaps the happiest one. And it is [?] made me change my mind about some of the psychology research. What the Lindy effect is, is as follows. They are environment[?], or there are things, there are items, there are ideas, there are units that have a life expectancy that increases with time. So, for example, a Broadway show that has been around for 300 days is likely now to have a life expectancy of 300 additional names, total 600-- Russ Roberts: Hamilton-- Nassim Nicholas Taleb: the 3-year one-- Russ Roberts: Hamilton is going to play forever. It's going to play forever. Nassim Nicholas Taleb: Or, for a while. Russ Roberts: A long time. Nassim Nicholas Taleb: Exactly. So, you can use that rule for decision-making. When I was asked to predict the future, once, about 4 years ago by The Economist, they thought that I would answer with some kind of offensive discourse. But, then I told them, 'You know, the future, it's easy to predict the future. You take the present as baseline and remove from the present everything that was not there 25 years ago; and that allows you to see what will happen in 25 years.' Now, I'm not saying the world is not going to be technological. But, current technologies are going to be displaced by other technology. So, this is how you can apply the Lindy effect in your own decision making. Take companies--companies that are not in the S&P 500 [Standard and Poor's 500 stock index] tend to be Lindy; those in the S&P 500, less Lindy. And you can figure out that if a company, the company's survival increases with time. Up to a point, of course. And the same with technologies. Now, of course, you should also, you should put a condition: the person be healthy, we are talking about life expectancy. So, if I take an old man, say, 85 years old and he's very healthy, his 10-year-old grandson is likely to survive him. But if the grandson is sick, no, he's not likely to survive the old man. You see? Likewise if you a technology is very old but sick, it may not survive. So, this allows us really to see the structure; and that comes from fragility--directly from the idea of Antifragile. Is that: fragility is what doesn't like randomness, doesn't like volatility. But for us, when we model, time and volatility are the same thing. Russ Roberts: What's the implication of the Lindy effect, say? I love what you have to say about journalism. Like, what does it, you kind of-- Nassim Nicholas Taleb: My point is that--okay. I'm going to be blunt. Fooled by Randomness is close to 20 years old. Okay? Fooled by Randomness is close to 20 years old. Now, why did it survive? Because over time, I took out of Fooled by Randomness everything that was contemporary. Everything that was local. So, when I'm writing--and I'm writing Skin in the Game--the way to write if I want my book to survive 20 years from now, I make sure it's readable for someone today; and would have been interesting for someone 20 years ago. So, if it's interesting today and would have been interesting 20 years ago, odds are it is going to be interesting 20 years from now. Russ Roberts: Well, I'm in a very small minority, I think. Because, whenever I mention your name at a cocktail party, people always say, 'Oh, The Black Swan is a great book.' And I say, 'Yeah, I liked it a lot. But I liked Fooled by Randomness better.' So, this is why I'm clearly using the Lindy effect--unknowingly. Right? Nassim Nicholas Taleb: Yes. And the book has survived. Although you could say there are chapters of, and a larger pool of things called the Incerto. Russ Roberts: Yeah? Nassim Nicholas Taleb: The Incerto, is, you know, all the books are part of the same--like Skin in the Game is Volume 5 of the Incerto. Russ Roberts: Yeah? And therefore? Nassim Nicholas Taleb: So, it's sort of like we are talking about chapters of the same book. Russ Roberts: Yeah. That's true. Nassim Nicholas Taleb: So, you have the Incerto, that will survive, or won't survive--not just a specific sub-portion of it. Russ Roberts: Yeah, I think-- Nassim Nicholas Taleb: Although you may have some sub-portion. You know, some books survive because Volume 1, like Proust's À la recherché. Nobody has read more than Volume 1, that I know. Or at least people claim they have read more, but they usually don't. So the 20, I don't know how many volumes have survived because of Volume 1. Russ Roberts: Yeah, I've read Volume 1. Nassim Nicholas Taleb: 3000 pages. Russ Roberts: I've read Volume 1. I have to confess. But I could pretend to have read more, and no one would know, would they?

54:49 Russ Roberts: So, we're out of time. We're going to close with a--I want you to talk a little bit about complexity versus simplicity. And, you mentioned earlier that good science can be written on a napkin. That put me in mind of the 700-page Ph.D. thesis in the humanities. My thesis--for better or for worse; I don't think it was a very good work; but it was 70 pages. People always say to me, 'Only 70 pages?' as if that's somehow meant it wasn't serious or thoughtful or whatever. But I think in economics today, there's a big premium put on mathematical sophistication, on econometric sophistication. And there's been a big pushback from, I think, left-leaning folks, about what they call 'Econ 101'--simple ideas that they, say, disdainfully, like demand slopes downward or incentives matter. Or that somehow we are misleading our undergraduates because we only teach them the simplified--what they would call simplistic version of economics. And you have some nice things to say in defense of simplicity. So, why don't we close with that? Nassim Nicholas Taleb: Well, let me say two things. The first one is that typically that when something is sophisticated, or appears sophisticated, it's not. Okay. Often, when you take--I've discussed two books--Piketty's book and Pinker's book. And these books are full of data--so, charts and pages and data, and the charts and data, they miss elementary points of statistic significance. In both cases, although Piketty should have known better--aside from other flaws, of course, in both books. So, a lot of people make a career doing cosmetic science--and cosmetic science looks [?]. But I'm going to speak in defense of mathematics, because mathematics--it's not because it's mathematical that you should reject this branch of economics. It is because it is cosmetically mathematical. Because, mathematical points do not require something as complicated as all these things it goes through. Something mathematical can be explained very simply. See? Plus, I think there are things that can only be expressed mathematically. You can't because it becomes [?]; and as I write in the Introduction, I say that lawyers and mathematicians are the only people who really have a precise definition of the things that they talk about, because they define them very, very, very, very narrowly, and very specifically. So, just based on that, you need mathematical work. But it doesn't mean it has to be complicated. So, that's the first thing. The second one is that, when you are[?] employed and do not have skin in the game, you don't have to act and look like someone employed, you see--sorry, when you are employed and have skin in the game, you have to look at someone employed. Like me, I am not employed so I don't have to look like someone employed. And, if you are employed people do not judge you based on the end result. They are going to pick a metric. And the incentive to game a metric is always going to be there. And the metric that fools people the most is the appearance of sophistication. So, you put a lot of--if you write a book or a thesis or anything, a lot of citations at the end that are not neatly. And actually, I cheated in Fooled by Randomness. The first version of Fooled by Randomness had no citations. It was very short. Very, very simple. But I realized--'Hey,' someone said, 'you know what? Nobody is going to give it to students.' So I went in and just put random citations in the back. I went to my library, saw what books I have, [?] citings, okay, and added it. And put a little section commenting on the research and literature. And then suddenly all the professors, you know, who discovered that, you know, they are not rich, it's not because of them; it's because of randomness--and if someone is richer than they are, it's because he was lucky. So they all started giving it to students. So, in fact, I played that game a little bit, and have to confess.

59:26 Russ Roberts: After we completed our interview, Nassim wanted to add a few footnotes. And so we're going to have another brief conversation here. Nassim, what would you like to add? Nassim Nicholas Taleb: Well, the first thing is, when you think, when you see someone writing a book called Skin in the Game and was going to [?] that vaguely as a topic, you would assume that the book would go chapter after chapter about the theme and explain the idea of skin in the game. That's not what I do. So, what do you think I do? Russ Roberts: I'm not sure. What you do is you open up your brain and some stuff falls out; and you write it down. It's related to skin in the game. Well, go ahead. Nassim Nicholas Taleb: So, here, I'm really looking--so I think I'm going to give it for a subtitle something like: The Underlying Matrix of Daily Life. Because, I think--so you go dig in the foundation of daily life, to see traces of skin in the game, or asymmetries and relations and how you can think of complex systems in these terms. So, in fact, it's not so much about skin in the game, per se. The first 40 pages explains skin in the game. It's largely about things that are very counterintuitive and very unexpected that stem from it. It's like--in religious matters, why is it we have sacrifice in religion? Why is it--why the minority rule? Why is it that, for instance, we have more slaves than we did in the past? All these topics, about 17 or 18 of them, come from it. Come from the fact that you cannot have a well-functioning social life without regulation, some kind of organic regulation of these asymmetries. Russ Roberts: So, you are arguing that [?] social norms and behaviors, religious institutions, etc., emerge as a way to cope with the asymmetries and risk profile that is going to otherwise exist. Nassim Nicholas Taleb: Exactly. And also, we have, because asymmetries can be very vicious, sometimes because we have, like, the establishment of norms that come from the preferences of a very small number of people. So, there are a lot of things that come. It's mostly a book on asymmetry. It's about asymmetries in society and what outcomes you get from these asymmetries. Russ Roberts: So, do you want to expound on that minority rule a little bit more? Nassim Nicholas Taleb: Well, the minority rule is quite central because it sort of explains why--well, I mean, things get established. I mean, we argue that have something to answer now about whether, why do we have handicapped bathrooms and stuff like that. And, and, these are very costly. But it is because we are driven--it's not, when you do economics and think in terms of aggregates, you have a feeling [?] is determined by an arithmetic average. It's not. Some kind of nonlinear function. So, if you do your calculus that way, you no longer see anything non-economical about [?]. Russ Roberts: Yeah; I just don't know how common they are. I think the point you made earlier, when we talked about it before, is that: If the costs are low enough, obviously you want to make more people happier than fewer people. And so, the example you give in your essay--it's really inexpensive to make orange juice kosher and you get the tiny proportion of people who drink orange juice who care about kosher will then buy it; you don't need to have two separate kinds. And that's because there's nothing about kosher orange juice that's going to deter the non-kosher-keeping consumer. I just don't know how widespread those kind of phenomena are. I think there are some. Nassim Nicholas Taleb: Once you look at--if you read the book's details you see things that I myself think about what[?] except the last minute while writing, from the way we consume stuff on planes. And some things are quite costly. Building a bathroom, a handicap bathroom--making something handicap compatible--is very costly. And it's quite worldwide, whether you have a large government or, as in [?], very small communes. Russ Roberts: But the standard argument there is different, I think, than the one that you are invoking in your manuscript. Which is--the standard argument for the political power of minorities is that even in so-called democracies where majority rule plays some role, they are not majority rule systems, literally. Almost all no democracy--no democracy in modern times--is. So, there's a set of institutions that lead to political outcomes. And, given those institutions, minorities with intense preferences will often get their way, in a way that might be surprising, even though they were only a small minority. And that argument, I think, is different from your argument. That argument is--I think it's associated with Mancur Olson--is that the majority, the 99% of the people who don't grow sugar cane or sugar beets, they don't care. They do care about the fact that anything with sugar is more expensive because we restrict sugar with quotas. But it's a small effect. And, given the transaction costs of politics, they just suck it up and take it. But if you grow sugar beets or sugar cane, the impact on you is enormous; so you have a big incentive to be vocal. That's the standard argument for why political minorities are politically powerful. If you-- Nassim Nicholas Taleb: It's exactly the same. We have the exact same mechanism. Russ Roberts: Why? Nassim Nicholas Taleb: It's the same. Mathematically, you notice it's the same nonlinear function. And the cost matters very little in almost all these situations. It's simply that you tend to think that when you aggregate stuff, you are using a linear averaging, when in fact it's nonlinear. And nonlinearity produces the same effect. Now, the details, of course, vary. Here, it's not only that of course some special interest group care about profits than you do about your small little pennies, and they are much better organized; and of course we can put details on that. But the function is pretty much--the concept is invariant: whenever we are in the presence of some nonlinear payoff, things are very different. And I apply that to markets, by showing how markets are determined by minorities, not by--the most motivated minorities, not by the aggregate. And the minorities can be very small. Very, very small.

1:06:21 Russ Roberts: But let's think about that for a minute. There's a whole range of family types in America right now. There are people who live on their own. There are people with foster children. There are people with a few children. There are old people who live by themselves. There's young people who are just starting off in their careers. And so, if you are one of those people and you want to buy a car, there's a huge range of choice for you. Right? And that's not driven by--I don't think--these phenomena that you are talking about. Nassim Nicholas Taleb: It is. It is largely driven--everything in micro is driven by minorities. The reason we don't drive stick shifts is because of the minority rule. And the automatic shift is vastly more expensive--or it used to be vastly more expensive. Now, of course, the costs came down. So, even at a micro level of the product you are driven by minority rule. Because the [?] the majority is silent. So the [?] is that either they don't matter, they don't aggregate, or they don't count. Because they are below a threshold. You have to exceed a threshold for your preferences to count. Russ Roberts: Yeah. It used to be that you had a choice between automatic or stick shift. Now it's basically, you get automatic. Nassim Nicholas Taleb: You get automatic. And also, the new generation doesn't know how to drive stick shifts. Russ Roberts: Correct. Yeah, my children don't know how. Nassim Nicholas Taleb: Yeah. So, these things get established. They are initially traded by some minority rule. And things continue. But there is another thing I want to discuss that's quite potent. Russ Roberts: Sure. Nassim Nicholas Taleb: And particularly that I actually learned about it on your program. And it actually contradicts some things--[?] it doesn't contradict you, it sort of answers some of your criticisms of my idea of anti-globalization. And, it is the Ostrom fisheries argument. That, effectively, we have the illusion that the world is some universal place--that a country is a large village and of course the world is like a large country. That's not how it works. And the best metaphor is one that my collaborator in complex systems, a physicist named [?], brought, is in a paper called "Good Fences Make Good Neighbors." In fact, you notice that roommates have different relationships: they are going to fight a lot more than neighbors. Because, you'd rather than, say, floor-mates--you have your own dorm room and someone else has his own room. So, if we look at how things work, effectively you have ethics, ethical sort of rules, that are never quite universal. They are vaguely universal but they are what Jewish ethics calls 'thin blood and thick blood.' And in the book, I describe it as a, the problem of the Swiss. For example, when we were traders, when I was a trader, I had a very, very, very complicated and very stiff ethical rules. You can never rip off, or rip off in the sense of a trader sense--you can never overcharge another trader. You had to be transparent. You had to be up front. You had to disclose your inventory. You cannot hurt another dealer in that community if you want to continue. Because that's how the game worked. But, you could conceal your inventory from, what we call the 'Swiss' at the time. And the 'Swiss' were those foreigners, you see? Clients of Swiss banks, of course: that's how the term, what this term originated from. And, but, these guys, you could have different rules of ethics. And effectively, if you look at different rules of ethical systems, you always have a boundary. But now, of course we should not have these boundaries. But, it tells you that things work a lot better if you build units and then have a fractal relationship between units--so things are organized fractally, of course. And then they have, like, a fractal relationship. So, I have a relationship with my cousin. And my cousin and I have as a unit, say, as family, would have a relationship with other families. And then, of course, the group as a whole have a relationship with another structure, and so forth. And then, and also, picked it up, by noticing that the Tragedy of the Commons disappears, effectively, with, you know, with scale. I mean, it disappears-- Russ Roberts: [?] with scale. Nassim Nicholas Taleb: Yeah, yeah, with-- Russ Roberts: Small enough that you can have a set of norms that restrain the problems of free-riding on a commons. Nassim Nicholas Taleb: Exactly. And I looked at it in Antifragile, actually. Initially. With the notion of nonlinearity. Like, the sum of some convex function as a different structure. And of course, this is what's behind my ideas on not restricting but sort of like organizing things along a local level, and restricting globalization. Russ Roberts: So, I disagree with you. Let me lay out why I think that's not applicable. And I'm going to first tell a story, I've told before I'm pretty sure, which is when my children were collecting baseball cards when they were younger, my oldest son would propose some trade that would exploit his younger brothers. And they had to go the Commissioner--that was me--to get that trade approved. Because I did not want my son to do what you might call "sharp dealing"--trying to get the best possible price from his brothers who were less informed than he was. So, as a parent in a family; I am a strong egalitarian; I am a bit of a socialist. I am a paternalist. I certainly don't want those rules extended beyond the family. And so in that sense I agree with you that there are norms and rules that are much more local rather than global. I don't think that has anything to do with globalization as an economic phenomenon. At least the way, I understand it. Could be it has something to do with the way other people understand it-- Nassim Nicholas Taleb: Mainly because. Yeah. Let me make [?] here: is that usually people who discuss globalization bundle it with other notions such as universalism. Russ Roberts: Yeah, that's true. There's a little bit of that. Nassim Nicholas Taleb: Because of the application of that sort of Continental or the sort of French-style enlightenment idea, reversibles[?]. So, the universal in my opinion kills the particular. That's I'm closing parentheses.