Saturday, April 9, 2016

Taleb Strays From His Expertise: Persowning

Hint: no.

Let's fisk and see if there's any coherence at the end.

I hadn't heard of gyrovagues and they do sound kind of cool. Useless, though. Seem just as pointless destructively as productively. If it works for them, then good on them, but I wouldn't give them anything that wasn't going to waste if I didn't.

In the West, Saint Benedict of Nurcia, their greatest detractor,
[Citation needed]. Sorry, don't trust him. Seems like this is now a hit piece on Benedict. As far as I'm aware, nobody forces you to be a monk, so Benedict's rules should be judged entirely by how well they serve monasticism. Given its longevity, it seems to work well.

In the West, Saint Benedict of Nurcia, their greatest detractor,
[Relevance needed].

Why were they banned? They were, simply, totally free. [...] 
Complete freedom is the last thing you would want if you have an organized religion to run.  Total freedom is also a very, very bad thing for you if you have a firm to run
Respect status: total loss.

Let's just take it for granted that continuing to work for me is irrational, so I'm going to have to chain anyone who makes the mistake of accepting my job offers. This is how I build a healthy institution.
I wonder if this will have any relevance to Benedict. Did he want to fence in monks who desired to return to the wider community?
I chain my employees down if and only if I'm afraid of Gnon's judgement, meaning I already know I'm judged guilty but want to put off the reckoning. Gnon's interest rates are not exactly generous. If I'm building a strong institution, I make it as easy as possible for my folk to leave, so it's necessary to create conditions such that they demand to stay.

And of course monks are put through a probation period of one year to see if they are effectively obedient.
Shocking news: obedience is good for some people. Quite a few, in fact.

In short, every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom.
[Precision needed]. So vague he might mean something non-stupid. Namely, that I do in fact trade certain behaviour concessions in exchange for offering a wage.
How do you own these people? First, by conditioning and psychological manipulation; second by tweaking them to have some skin in the game, forcing them to have something significant to lose if they were to disobey authority –something hard to do with gyrovague beggars who flaunted scorn of material possessions. In the orders of the mafia, things are simple: made men (that is, ordained) can be wacked if the capo suspects lack of allegiance, with a transitory stay in the trunk of a car –and a guaranteed presence of the boss at their funerals. For others professions, skin in the game come in more subtle form.
[Precision needed]. I too can spout some generalities, promising description later, then change the subject and forget. I don't get published for doing so, though, because I want my words to have value, not my name.

Also, I strongly object to equating having something intentionally destroyed with losing something. That's deterrence, not skin in the game. Skin in the game is risk/reward as opposed to no risk/reward, not status quo/risk.

You are a very modern person, having attended many conferences and spoken to consultants, you believe the company is a thing of the past: everything can be organized through a web of contractors. It is more efficient to do so, you are certain.
Looks like I'm very modern, guys. All hip and shit.

The Sheikh and his retinue fell in love with Bob’s manners
This of course happens all the time. 10% of pilots took off time for Sheikh-related reasons last year. Which is why the airline planned for it happening, it being forseeable.
For this to work for Taleb, it has to be a complete surprise to the airline. The risk is uninsurable only because it's unforseeable.
The offer is so generous that it covers whatever penalty there is for a breach of a competing contract by Bob.
Normal firms of course routinely see defect bonuses well in excess of the prescribed penalties, which is why they set the penalties so low. They're stupid, you see. So very stupid.
You kick yourself.
But perhaps not for the reason Taleb wants me to.
Consider the chain reaction: if your plane doesn’t take off,
But don't consider it too far, or you might realize that a non-puppet human being can see this coming just as Taleb can, and not hopelessly let it happen.
Or alternatively, the reason it's good to give examples is it frequently reveals that what you're saying makes no sense. I suggest not forging ahead regardless, however. Did Taleb get paid for this?
You make a few phone calls and it turns out that it is easier to find an academic economist with common sense and ability to understand what’s going on than find another pilot, that is, an event of probability zero.
So we have a world, according to Taleb, where pilots regularly get poached, but the probability of anyone planning for these poachings is literally zero.

Alternatively, he believes these poachings don't happen because employers dealt with it by 'owning' all the pilots.
You start thinking: well, you know, if Bob were a slave, someone you own, you know, these kind of things would not be possible.
Me in particular? No, I start thinking like a sports league and maintain a bench for spare pilots to chill.
Contractors are too free; they fear only the law. 
And you see, the law can't apply arbitrary penalties. The penalties, by assumption too low to deter pilot Bob, can't be raised. That's just impossible.
But employees have a reputation to protect.
Contractors, not being protected (rightly or wrongly) by EEOC regulations, of course never have to worry about their reputation. Being unable to sue for wrongful dismissal and thereby apply penalties, makes them much safer.
And they can be fired.
It is of course illegal to put non-performance clauses in non-employee contracts.
Lovers of paychecks are lazy … but they would never let you down at times like these.
When I'm hiring for my strong firm, I definitely want someone who chronically lets me down rather than someone who only lets me down on a weird fluke.
 So employees exist because they have significant skin in the game
[Citation needed]. [Buzzword detected]. Buzzphrase, more precisely.
a penalty for acts of undependability, such as failing to show up on time.
Taleb repeats so I must repeat: it is of course illegal to put on-time requirements in contracts. I bet, like sexuality and motherhood status and voting pattern, it's illegal to even ask about punctuality during a contract negotiation and hope they're honest with you.

People of some means have a country house, which is inefficient compared to hotels or rentals, because they want to make sure it is available if they decide they wanted to use it at a whim.
You will almost never have an issue going to a hotel on a whim. If you're allowed to demand of it, the market provides. You will have difficulty decorating your hotel exactly to your liking, however. Moreover, inhabiting a place that's yours feels different than inhabiting a temporary place. Perhaps Taleb has difficulty appreciating that things can have subjective differences, and those subjective impressions can be valuable.
By having been employees they signal a certain type of domestication.
Oh boy we might be getting to the point.
This is true, but this isn't 'how to own someone' this is 'how to find someone who has been trained to seek ownership.'
Evidence of submission is displayed by having gone through years of the ritual of depriving himself of his personal freedom for nine hours every day, punctual arrival at an office, denying himself his own schedule, and not having beaten up anyone. You have an obedient, housebroken dog.
Speaking of subjective goods, submission is not economically efficient. Even if I accept that contractors are riskier, then I will find that the risk premium is exceeded by cost and competence savings. Employers want submissive employees because it makes their genes think they're more likely to get laid if they have underlings, resulting in happy tingles.

At the time of writing, firms stay in the top league by size (the so-called SP500) only about between ten and fifteen years. Companies exit the SP500 through mergers or by shrinking their business, both conditions leading to layoffs. Throughout the twentieth century, however, expected duration was more than sixty years.
As the economy grows, economic transitions accelerate. Wanna bet Taleb assumes all is held equal?
But the technological revolution that took place in Silicon valley put traditional companies under financial threat.
As the economy grows, revolutions occur more frequently, as there are more economic actors with more money, thus many more opportunities for revolutions.
A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man –that is, he has skin in the game
A company man is someone who feels he has skin in the game, regardless of his actual exposure?
For him contracts can be too costly to negotiate, they entail some amount of transaction costs, so you incorporate your business and hire employees with clear job description because you don’t feel like running legal and organizational bills every transaction.
If Coase in fact thought this, as opposed to Taleb projecting it onto him, then Coase does not deserve Taleb's praise. Shocking news: employee contracts are contracts. They're simply long-term contracts.

It is of course illegal...etc etc make long term contracts with non-employees.
A free market is a place where forces act to determine specialization and information travels via price point; but within a firm these market forces are lifted because they cost more to run than the benefits they bring.
[Citation needed]. When companies do something economically puzzling, 99.9% of the time it's because of regulations. Maybe it really is illegal to have certain kinds of contracts, making employees the only option.
Why? Because you can inflict a much higher punishment on a slave than a free person or a freedman –and you do not need to rely on the mechanism of the law for that.
It genuinely is illegal to self-serve certain legal remedies, even when it's more efficient. I advocate retroactive validation. Go to a magistrate, say, "I'd like to whip my treasurer," and if you have the right contract, the magistrate automatically says yes, later checks into it anyway, and applies punishments if it doesn't check out. If an otherwise upstanding citizen shoots a bastard, assume they were in the right and let them go - but also double-check, to be sure, and haul them back if necessary.

Taleb appears to think it's impossible for the law to change its mind about allowing whipping etc. Or lacks imagination?
In a world in which products are increasingly made by subcontractors with increasing degrees of specialization,
"In a world that has increasingly figured out how to get around braindead self-serving regulations that made employeeship necessary..."

The best slave is someone you overpay and who knows it, terrified of losing his status.
Should work, yeah. Except, to say everyone is overpaid is merely a mistake. Market prices are relative.
Returning to the home office means loss of perks, having to revert to the unchanged base salary, and the person is now a total slave –a return to lower middle class life in the suburbs of New York City taking the commuter train, perhaps, god forbid, a bus, and eating a sandwich for lunch!
Yes, those with short time horizons are easily hackable. The only issue is how common short time horizons is. ProTip: when playing chess, think more than zero moves ahead. In life, thinking of your next move is harder due to the increased complexity, so humans tend to shirk it even more, making them easy prey for those like me with the capacity to think two moves ahead or more.

He could protect himself by admitting his vulnerability and attaching himself to a formal sponsor, who would think ahead for him. But since this is necessarily admitting his follower status and injurious to his pride, he traps himself into an even more injurious situation.

Firms had a love-hate with these two types as they were unruly –traders and salespeople were only manageable when they were unprofitable, in which case they weren’t wanted.
This seems to be genuine ideological or cultural retardation. Firms have a love-hate relationship with the only employees that are truly valuable? Stupid. Abysmally stupid.

On the contrary, rather than wanting to replace these ones, firms should be firing everyone else constantly. (I would handle it differently, but one step at a time.) HR - real HR, not deal-with-gov-regs-HR - should be trying to justify the presence of every employee round-robin, and if they can't, find out how necessary they are by firing them. Constantly clear cruft, or it will build up and choke your firm. Alternatively, feed a forest-fire analogue like excess undergrowth.

That’s the price you pay by associating people to a specific P/L, turning individuals into profit centers, meaning no other criterion mattered.
That's the price of mixing feel-good maybe-necessary employee type people with the actual production floor. The same thing happens if you try to make engineering and HR get along. Everyone who has real work to do hates admin.

(intimating that the accounting did not add to the bottom line of the firm)
They don't. 99% of what they do is keeping the government off the firm's back. It's not meet to blame the accountant for this, though.

However, it's pretty hard to correctly match the number of accountants to the hours of accounting that need to be done. Being as it's a survival issue, it's best to have too many than too few, meaning accountants spend a lot of time getting paid to browse the web.

Meaning it's better to subcontract, as a large accounting firm can average out the vagaries of individual firms and end up with much less waste.

the people you meet when riding high are also those you meet when riding low and I saw the fellow getting some (more subtle) abuse from the same accountant before he got fired, as he eventually ran out of luck.
So the one example Taleb can conjure is a producer who was likely unproductive? Yes, I've also noticed unproductive persons tend also to be rude. Probably insecurity. Secure folk can psychologically afford to be magnanimous.
If you were profitable you could give managers all the crap you wanted and they ate it because they were afraid of losing their jobs.
Another probable malignancy. Punishing folk for things beyond their control only decreases morale, literally the most important resource to any group. However, it makes the higher managers feel like they can control it, so they do it anyway. Much prefer monkey shit-flinging to studying risk management, and do you blame them? Their subordinates enable them by not quitting. Their stockholders don't demand audits. Their customers are mainly looking for the bigger sucker, and don't need real service.

Those who use foul language on social networks (such as Twitter) are sending an expensive signal that they are free –and, ironically, competent.
As above, when I'm building a strong firm, I obviously want all the incompetent people so they don't challenge my authoritah. Luckily, I have no ability to tell rudeness from swearing, so you can be rude without swearing and I won't notice a thing.

ironically the highest status, that of free-man, is usually indicated by voluntarily adopting the mores of the lowest class.
Taleb hasn't heard of counter-signalling?

Loss Aversion
Is rational, so piss off.
Ironically, in my debates, I’ve seen numerous winners of the so-called Nobel in Economics (the Riksbank Prize in Honor of Alfred Nobel) concerned about losing an argument. I noticed years ago that four of them were actually concerned when me, a nonperson and trader, called them publicly a fraud. Why did they care?
I do have to admit that distinguishing loss from a not-loss seems to be an uncommon skill. I frequently abuse the separation between loss and perceived loss for trolling.

"Yeah? What can you not do today that you could do yesterday? What exactly did I cause you to lose?" Yes, I do this to their face. Online I can't make them squirm - they realize they lost so they disengage. In person they get stuck between admitting they were wrong and groping around for some lame sophistry.

You would think that the head of the CIA would be the most powerful person in America, but it turned out that he was more vulnerable than a truck driver… The fellow couldn’t even have an extramarital relationship.
I remember when I used to think that. Almost a decade ago now. Is Taleb way behind the curve or am I some sort of visionary genius?
I decided to deliberately train wisdom. It worked. However, it's very hard constantly seeing those older and supposedly more professional than I am being more foolish than I. I have been in the market for a mentor, but unfortunately mentors need to know more than I do, not less.

...and then I got bored. It became clear Taleb was never going to get to the point. Apparently, to own a  person, first have some cash flow, then find a person who is scared to not be owned and then don't reject them. Given he supposedly wrote a whole article about it, you'd think there would be more to it than some failures to test abstract ideas against concrete reality.

No, Benedict never returned. He wanted to status posture, and being anti-Christian isn't as dangerous as being, say, Mencius Moldbug.

Who knows if Taleb knows whether economic growth accelerates economic change? All I know is it apparently accelerates Taleb changing the subject. We might all have ADHD because Prussian school trains it, but also because we have follow nonsense like this.

I'm not seeing any coherent theme here. Taleb willfully misrepresents some things, then insults employees a few times (if probably rightly, also probably from Prussian school), then misapprehends certain corporate pathologies as Just the Way the World Is. Also almost everything he said is either wrong or meaningless. Very little metal in this ore.

Still, not zero. Perhaps firms want to keep wages secret so they can keep everyone thinking they're overpaid? It's not completely impossible, although it has to explain why so many complain about being underpaid, in that case. Maybe there's some industry localization? E.g. when you pay minimum wage it's hard for not everyone to know what you're paying, then the sex-obsessed murder monkeys get the clever idea that if they all complain about being underpaid, their boss might actually get fooled into thinking they're underpaid.

(Though in fact McDonald's employees were underpaid until recently, as measured by turnover and customer service: they were shooting themselves in the foot. There's that angle too.)

More metal: gyrovagues. Ironic that Taleb dances through such a vague essay that starts with such a name. Regardless, I now know they exist and can look them up. That said I'm beginning to think Taleb hates journalist bullshit due to the competition, not because he hates bullshit like I do.

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