The Personal Website of Mark W. Dawson

The Intellectual Yet Idiot (IYI) and Skin in the Game (SIG)

The Intellectual Yet Idiot (IYI)

From the opening of this fine article by Nassim Nicholas Taleb:

'IYI is a production of modernity hence has been accelerating since the mid-twentieth century, to reach its local supremum today, along with the broad category of people without skin-in-the-game who have been invading many walks of life. Why? Simply, in many countries, the government's role is ten times what it was a century ago (expressed in percentage of GDP). The IYI seems ubiquitous in our lives but is still a small minority and rarely seen outside specialized outlets, social media, and universities' most people have proper jobs and there are not many opening for the IYI. Beware the semi-erudite who thinks he is erudite.

The IYI pathologizes others for doing things he doesn't understand without ever realizing it is his understanding that may be limited. He thinks people should act according to their best interests and he knows their interests, particularly if they are 'red necks' or English non-crisp-vowel class who voted for Brexit. When Plebeians do something that makes sense to them, but not to him, the IYI uses the term 'uneducated'. What we generally call participation in the political process, he calls by two distinct designations: 'democracy' when it fits the IYI, and 'populism' when the plebeians dare voting in a way that contradicts his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote, with some equivalence for foreign elite schools, and PhDs as these are needed in the club.'

The Intellectual Yet Idiot (IYI) is the best explanation I have heard that explains the current crop of Academics and Journalists in the last 50 years. These people often intensely study things, but rarely do they do anything. The IYI academic pedigree is often a K-12 education, followed by undergraduate college, followed by postgraduate studies, followed by a teaching or research position, and never having to earn a salary by working in the real world. The journalist path is K-12 education, followed by a Journalism college degree, with perhaps some postgraduate studies, then a reporter's position, and perhaps eventually a commentator position. The journalist talks to people (mostly the IYI, but sometimes a business leader), but they never actually do anything in the real world but interview, research, and write. The IYI academics are full of theories and opinions based on these studies, but rarely do they attempt to implement their theories or opinions in the real world, and when they do, it is often without any Skin in the Game (SIG). They utilize other people's monies and efforts to achieve their goals, and if their efforts fail, they can walk away without any consequences to themselves. Even after a failure, they continue to espouse their views, often making excuses for why it didn't work in the real world. They continued to be called upon by other academics and journalists to espouse their opinions, even though they have no track record of effort or success. The journalist may think they know something about which they have interviewed, researched, and written about, but the real world rarely conforms to their opinions, as the real world is often more complex and nuanced than they have studied or researched. Beware the IYI, as they are often wrong and will lead you astray.

Skin in the Game (SIG)

Skin in the Game (SIG) is a term coined by renowned investor Warren Buffett referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running.

The idea behind creating this situation is to ensure that corporations are managed by like-minded individuals who share a stake in the company. Executives can talk all they want, but the best vote of confidence is putting one's own money on the line, just like outside investors!

This article can be read at Skin in the Game ~ Life Lessons from Warren Buffett

It's amazing how our perspective changes when we have, as Warren Buffett coined, 'Skin in the Game.' Without it, there is no value or commitment, and without value and commitment, there is no sense of urgency. To make decisions and get results, you need to have Skin in the Game and that sense of urgency to take action and reach that goal. Financial Skin in the Game is effective because something tangible, like your pocketbook, is attached to it, as well as personal Skin in the Game that shows a true emotional investment. A combination of both, though, is necessary.

Something given to us for free has very little value than something we have to work hard for or pay to get. There must be something that is on the line. It doesn't have to be life-threatening or extreme, but if you have nothing to lose, then what do you have to gain? Some would say, 'everything,' but I would argue 'nothing.' If you aren't willing to risk the good for the great, then what are you willing to risk? What does that opportunity cost? Time? Money? When you take a risk and put your Skin in the Game, now you're attached and have more of an incentive to see things through until the end.

Risk-taking is essential to success. Taking risks forces you to be more confident, believe in yourself, and grow. When you play it safe, you don't step out of your comfort zone and, in turn, become complacent and never reach that next level. But, when you truly make yourself uncomfortable, dance with your fears, and fail forward, you realize your true potential and that there is no going back. Whatever it is, make that commitment to propel yourself forward and take action. Put your Skin in the Game.

The above commentary is also the reason that academics and journalists are often poor prognosticators, as they have no Skin in the Game. When your monies and efforts are at stake, reality takes a firmer hold on you. When you have Skin in the Game, you must account for all the variables (human interactions and human responses, bureaucracy, laws & regulations, employees, customers and clients, contractors and sub-contractors, unions, lawsuits, banking & insurance, etc., etc., etc. - to name but a few). Until you have Skin in the Game, you cannot fully comprehend the actual monies and efforts it takes to succeed. There is also the human cost of having your Skin in the Game, as the following poster recognizes:

So, until you have had Skin the Game, you cannot fully comprehend the depth of the effort required to succeed. Whenever you read, see, or hear an academic or journalist prognosticator, you should ask if they have ever had their Skin in the Game and weigh that into your own opinion of what they have said.