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SUMMARY We close this chapter with a few summarizing lines. One may be risk loving yet completely averse to ruin. The central asymmetry of life is: In a strategy that entails ruin, benefits never offset risks of ruin. Further: Ruin and other changes in condition are different animals. Every single risk you take adds up to reduce your life expectancy. Finally: Rationality is avoidance of systemic ruin.

a contractor has downside, a financial penalty that can be built into the contract, in addition to reputational costs. But consider that an employee will always have more risk. And conditional on someone being an employee, such a person will be risk averse. By being employees they signal a certain type of domestication.

So we summarize this chapter and link it to hidden asymmetries, the subtitle of the book. Society doesn't evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, tea and cucumber sandwiches, or polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere--and someone with soul in the game. And asymmetry is present in about everything.

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.

Loss aversion (a psychological theory by which a loss is more painful than a gain is pleasant): in Livy's Annals (XXX, 21) Men feel the good less intensely than the bad.fn6 Nearly all the letters of Seneca have some element of loss aversion.

I personally know rich horrible forecasters and poor "good" forecasters. Because what matters in life isn't how frequently one is "right" about outcomes, but how much one makes when one is right. Being wrong, when it is not costly, doesn't count--in

What people "think" is not relevant--you want to avoid entering the mushy-soft and self-looping discipline of psychology. People's "explanations" for what they do are just words, stories they tell themselves, not the business of proper science. What they do, on the other hand, is tangible and measurable and that's what we should focus on.

The employee has a very simple objective function: fulfill the tasks that his or her supervisor deems necessary, or satisfy some gameable metric.

What matters isn't what a person has or doesn't have; it is what he or she is afraid of losing.

The original Aramaic version had a wild ass, instead of a wolf, showing off his freedom. But the wild ass ends up eaten by the lion. Freedom entails risks--real skin in the game. Freedom is never free.

a free person does not need to win arguments--just win.

nobody can transfer hidden tail risk, or Bob Rubin-style risks. Yes, the Bob Rubin trade is 3,800 years old, as old as civilization, and so are the rules to counter it. What is a tail? Take for now that it is an extreme event of low frequency. It is called a "tail" because, in drawings of bell-curve style frequencies, it is located to the extreme left or right (being of low frequency), and for some reason beyond my immediate understanding, people started calling that a "tail" and the term stuck. Hammurabi's best known injunction is as follows: "If a builder builds a house and the house collapses and causes the death of the owner of the house--the builder shall be put to death."

You do not want to win an argument. You want to win.

Looking at Saudi Arabia, which should progressively revert to the pre-oil level of poverty, I wonder if taking away some things from them--including the swarm of fawning foreigners coming to skin them--will make them better off.

No peace proceeds from bureaucratic ink. If you want peace, make people trade, as they have done for millennia. They will be eventually forced to work something out.

That which is "Lindy" is what ages in reverse, i.e., its life expectancy lengthens with time, conditional on survival.

You will never fully convince someone that he is wrong; only reality can.

asymmetry in risk bearing leads to imbalances and, potentially, to systemic ruin.

Two people can be using the same word, meaning different things, yet continue the conversation, which is fine for coffee, but not when making decisions, particularly policy decisions affecting others.

To be free of conflict you need to have no friends.

A saying by the brothers Geoff and Vince Graham summarizes the ludicrousness of scale-free political universalism. I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist.

You are free--but only as free as your last trade. As we saw with Ahiqar's wild ass, freedom is never free.

Burn old logs. Drink old wine. Read old books. Keep old friends.

Use laws that are old but food that is fresh.

Only the nonperishable can be Lindy. When it comes to ideas, books, technologies, procedures, institutions, and political systems under Lindy, there is no intrinsic aging and perishability.

Lindy is a deli in New York, now a tourist trap, that proudly claims to be famous for its cheesecake, but in fact has been known for fifty or so years by physicists and mathematicians thanks to the heuristic that developed there. Actors who hung out there gossiping about other actors discovered that Broadway shows that lasted for, say, one hundred days, had a future life expectancy of a hundred more. For those that lasted two hundred days, two hundred more. The heuristic became known as the Lindy effect.

Taxation for equality incompatible with fat tails: Such a tax, meaning to punish the wealth generator, is popular but absurd and certainly suicidal: since the payoff is severely clipped on the upside, it would be a lunacy to be a risk taker with small probability bets, with wins of 20 (after tax) rather than 100, then disburse all savings progressively in wealth tax. The optimal strategy then would be to go become an academic or a French-style civil servant, the anti-wealth generators. To see the cross-sectional problem temporally: Compare someone with lumpy payoffs, say an entrepreneur who makes $4.5 million every twenty years, to an economics professor who earns the same total over the period ($225K in taxpayer-funded income). The entrepreneur over the very same income ends up paying 75 percent in taxes, plus wealth tax on the rest, while the rent-seeking tenured academic who doesn't contribute to wealth formation pays say 30 percent.)

Consider the chief executive officers of corporations: they don't just look the part, they even look the same. And, worse, when you listen to them talk, they sound the same, down to the same vocabulary and metaphors. But that's their job: as I will keep reminding the reader, counter to the common belief, executives are different from entrepreneurs and are supposed to look like actors.