From Nassim Taleb’s “Skin in the Game”
How to Legally Own Another Person.
“In short, every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom. 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 disobey authority—something hard to do with gyrovague beggars who flout their scorn for material possessions.” (p. 96)
“Bob calls you at five P . M . to let you know that he and the copilot, well, they love you…but, you know, they will not fly the plane tomorrow. You know, they had an offer from a Saudi Arabian Sheikh, a devout man who wants to take a special party to Las Vegas, and needs Bob and his team to run the flight. The Sheikh and his retinue were impressed with Bob’s manners, the fact that Bob had never had a drop of alcohol in his life, his expertise in fermented yoghurt drinks, and told him that money was no object. The offer is so generous that it covers whatever penalty there is for a breach of a competing contract by Bob.” (p. 97)
“People you find in employment love the regularity of the payroll, with that special envelop on their desk the last day of the month, and without which they would act as a baby deprived of mother’s milk. You realize that had Bob been an employee rather than something that appeared to be cheaper, that contractor thing, then you wouldn’t be having so much trouble.” (p. 97)
“So employees exist because they have significant skin in the game—and the risk is shared with them, enough risk for it to be a deterrent and a penalty for acts of undependability, such as failing to show up on time. You are buying dependability.” (p. 98)
“Someone who has been employed for a while is giving you strong evidence of submission. Evidence of submission is displayed by the employee’s going through years depriving himself of his personal freedom for nine hours every day, his ritualistic and punctual arrival at an office, his denying himself his own schedule, and his not having beaten up anyone on the way back home after a bad day. He is an obedient, housebroken dog.” (p. 98)
“At the time of writing, firms stay in the top league by size (the so-called S&P 500) for only about between ten and fifteen years. Companies exit the S&P 500 through mergers or by shrinking their business, both conditions leading to layoffs. Throughout the twentieth century, however, expected duration was more than sixty years. Longevity for large firms was greater; people stayed with large firms for their entire lives. There was such a thing as a company man.” (p.99)
“By the 1990s, however, people started to realize that working as a company man was safe…provided the company stayed around. But the technological revolution that took place in Silicon valley put traditional companies under financial threat. For instance, after the rise of Microsoft and the personal computer, IBM, which was the main farm for company men, had to lay off a proportion of its “lifers,” who then realized that the low-risk profile of their position wasn’t so low risk. These people couldn’t find a job elsewhere; they were of no use to anyone outside IBM. Even their sense of humor failed outside of the corporate culture.” (p. 100)
“Welcome to the modern world. In a world in which products are increasingly made by subcontractors with increasing degrees of specialization, employees are even more necessary than before for some specific, delicate tasks. If you miss one step in a process, often the entire business shuts down—which explains why today, in a supposedly more efficient world with lower inventories and more subcontractors, things appear to run smoothly and efficiently, but errors are costlier and delays are considerably longer than in the past. One single delay in the chain can stop the entire process.” (p. 101)
“A bank in New York sends a married employee with his family to a foreign location, say, a tropical country with cheap labor, with perks and privileges such as country club membership, a driver, a nice company villa with a gardener, a yearly trip back home with the family in first class, and keeps him there for a few years, enough to be addicted. He earns much more than the “locals,” in a hierarchy reminiscent of colonial days. He builds a social life with other expats.” (p. 102)
“the dog boasts to the wolf all the contraptions of comfort and luxury he has, almost prompting the wolf to enlist. Until the wolf asks the dog about his collar and is terrified when he understands its use. “ Of all your meals, I want nothing. ” He ran away and is still running . *3 The question is: what would you like to be, a dog or a wolf?” (p. 102)
“Another aspect of the dog vs. wolf dilemma: the feeling of false stability. A dog’s life may appear smooth and secure, but in the absence of an owner, a dog does not survive.” (p. 103)
“There is a category of employees who aren’t slaves, but these represent a very small proportion of the pool. You can identify them as follows: they don’t give a f*** about their reputation, at least not their corporate reputation.” (p. 103)
“Traders who made money, I realized, could get so disruptive that they needed to be kept away from the rest of the employees. That’s the price you pay for turning individuals into profit centers, meaning no other criterion mattered. I recall once threatening a trader who was abusing the terrified accountant with impunity, telling him such things as “I am busy earning money to pay your salary” (p. 103)
“What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing. The more you have to lose, the more fragile you are.” (p. 105)
“People whose survival depends on qualitative “job assessments” by someone of higher rank in an organization cannot be trusted for critical decisions.” (p. 107)
“In some countries, executives and mid-level managers are given perks such as a car (in the disguise of a tax subsidy), which are things on which the employee would not spend his money had he been given cash (odds are he may save the funds); they make the employee even more dependent.” (p. 108)
“Society likes saints and moral heroes to be celibate so they do not have family pressures that may force them into the dilemma of needing to compromise their sense of ethics to feed their children.” (p. 110)
“It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.” (p. 110)
“To make ethical choices you cannot have dilemmas between the particular (friends, family) and the general.” (p. 111)
“Financial independence is another way to solve ethical dilemmas, but such independence is hard to ascertain: many seemingly independent people aren’t particularly so. While, in Aristotle’s days, a person of independent means was free to follow his conscience, this is no longer as common in modern days. Intellectual and ethical freedom requires the absence of the skin of others in one’s game, which is why the free are so rare.” (p. 111)