And when in doubt, it’s better not to mess with these systems. Starting a war to implement democracies is an example of messing with a complex system. Clueless politicians compare a local dictator not with the local alternatives but with a Norwegian prime minister. These people keep staying at their jobs even their reckless decisions because they don’t have skin in the game. Nobody paid anything for the Iraqi invasion or for supporting “Arab spring” failed uprisings.

Complex Systems Don’t Work With Simple Cause/Effect

Those who don’t take risks should never be involved in making decisions

It’s perfectly rational to overestimate some tail risks because you can’t consider them in isolation.&nbsp; Driving after 2 glasses of wine once will not be extremely dangerous, but doing so every day is.When you measure tail risks in the laboratory you only consider one tail risks at a time, and that’s why their conclusions are wrong. Subjects are being rational in overestimating the risk because, chances are, they are likely already running several tail risks in their lives.

Overestimating tail risks makes sense

Betting harder with money you won and being more conservative with your own money makes sense because that’s how you survive. Thaler and other behavioral economists don’t get it because they see the world as a one-shot game instead of a series of repeated trades.

Mental accounting is correct

In societies, minorities can come to dictate the rules to the majority.This usually happens because of asymmetry or because when the majority is either too flexible, too accommodating, or too indifferent. A case of asymmetry is between smokers and non-smokers. A smoker can sit in a smoke-free area but a non-smoker cannot sit in a smoker area, so the non-smokers will prevail even if they are the minority.However, this can become an issue when the minority prevails because it’s more aggressive or more intolerant.

Minority Rule Is Destroying The West

It is the most intolerant person who imposes virtues on others precisely because of that intolerance. We need to be more than intolerant with some intolerant minorities. The West is currently in the process of committing suicide.

Employees display submission by going through years of personal deprivation. Givin' up 9 hours of one’s time for years, every day is the equivalent of domestication. And showing up on time every day is the sign of an obedient, housebroken dog. The question is whether you want to be a housebroken dog or a free wolf. However, being a wolf comes with risks. Wolves who seek their own paths have skin in the game.

Employees Are Broken, Submissive Fellas

it’s not the poor who are actually envious of the rich and it’s not the poor who first embrace communist movements. It’s usually the bourgeois and the intellectuals and the clerical class who first embrace communism. It’s because of jealousy.

It’s intellectual Who Are Jealous of The Super Rich

You often hear people saying that you are more likely to die by X silly thing -ie.: coconut falling- than by terrorist attacks or Ebola outbreaks but that makes no sense.People dying because of falling coconuts or people who die by drowning in their bathtub will never double from one year to the other -they are examples of mediocre stand-.But the effects from events in an extreme stand, say a huge virus outbreak or a series of terrorist attacks, can increase the death toll by several orders of magnitude.

The Idiocy of Naive Empiricism

#1 NEW YORK TIMES BESTSELLER * A bold work from the author of The Black Swan that challenges many of our long-held beliefs about risk and reward, politics and religion, finance and personal responsibility In his most provocative and practical book yet, one of the foremost thinkers of our time redefines what it means to understand the world, succeed in a profession, contribute to a fair and just society, detect nonsense, and influence others. Citing examples ranging from Hammurabi to Seneca, Antaeus the Giant to Donald Trump, Nassim Nicholas Taleb shows how the willingness to accept one's own risks is an essential attribute of heroes, saints, and flourishing people in all walks of life. As always both accessible and iconoclastic, Taleb challenges long-held beliefs about the values of those who spearhead military interventions, make financial investments, and propagate religious faiths. Among his insights: * For social justice, focus on symmetry and risk sharing. You cannot make profits and transfer the risks to others, as bankers and large corporations do. You cannot get rich without owning your own risk and paying for your own losses. Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations. * Ethical rules aren't universal. You're part of a group larger than you, but it's still smaller than humanity in general. * Minorities, not majorities, run the world. The world is not run by consensus but by stubborn minorities imposing their tastes and ethics on others. * You can be an intellectual yet still be an idiot. "Educated philistines" have been wrong on everything from Stalinism to Iraq to low-carb diets. * Beware of complicated solutions (that someone was paid to find). A simple barbell can build muscle better than expensive new machines. * True religion is commitment, not just faith. How much you believe in something is manifested only by what you're willing to risk for it. The phrase "skin in the game" is one we have often heard but rarely stopped to truly dissect. It is the backbone of risk management, but it's also an astonishingly rich worldview that, as Taleb shows in this book, applies to all aspects of our lives. As Taleb says, "The symmetry of skin in the game is a simple rule that's necessary for fairness and justice, and the ultimate BS-buster," and "Never trust anyone who doesn't have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them."

18th - 24th Oct

Skin in the Game

It's year 10,191, and human beings have spread out and colonized planets throughout the universe. On the planet Caladan, Duke Leto of the House of Atreides is preparing to leave for his new position as the governor of Arrakis, a desert planet with valuable resources of melange, a spice drug that is extremely popular with wealthy people. Leto and his family, including his concubine, Jessica, and his son, Paul, suspect a trap by their rivals, the Harkonnens, led by Baron Harkonnen. Leto decides to settle on Arrakis because of its rich supplies of melange, despite warnings from his men.

The Setting

Leto's main plan is to enlist the Fremen, the tough natives of the Arrakeen desert, as soldiers and advisers but he's betrayed by one of his own soon after arrival, and Paul and his mother, are left to fend for themselves. Eventually, Paul and Jessica come into contact with the Fremen, a group of people native to Arrakis. Paul learns more about his heritage and psychic abilities and even meets his love interest, a Fremen woman named Chani. The remaining members of the Atreides family soon join forces with the Fremen to take back Arrakis and avenge their family.

The Plot

On the Atreides home planet of Caledon water is everywhere there are vast oceans rivers and rainstorms so the people living there can consume a lot at virtually no cost.&nbsp; On Arrakis, although water is extremely scarce, it's expensive. Even wet towels from the palace are sold to Fremens with whatever moisture that can be wrung out of them. This is a fantastic lesson on subjective value.

Model of internal logic in storytelling

The average price of a good or service is not based on the amount of labor or the cost of the resources required to produce it. It's a function of supply and demand value changes depending on individuals desires and preferences and it's based on the availability of whatever it is that they want relative to how many other people happen to want the same thing at the same time For eg- if you are thirsty and have a bottle of water, you are very less likely to give it to me or maybe charge a lot of money. On the other hand, you might have 100 bottles and may just give them to me for free.

Economic values are subjective

Nothing is more useful than water: but it will scarcely purchase anything.A diamond on the contrary has scarcely anyuse-value but a very great quantity ofother goods may frequently be had inexchange for it.

Contradictorily, spice(the most expensive thing in the universe) is only found on Arrakis.Still, much of the Arraken population is materially poorer than a lot of people alive on earth today.&nbsp; The reason is the political system in Dune: Imperial Feudalism which means the entirety of society is controlled by a private political party and since the territory is vast, some power, in this case, is delegated to Dukes and Barons. The people of Arrakis, are also not legally allowed to own productive land or keep the proceeds of their work.

The government

He who controls the spice controls the universe.

It means the state should play a dominant role in the economy, in particular by controlling commercial activity Everything the citizens of Arakis produce belongs to the Emperor and It decides what to do with it and who profits from it. The government directly supports favored companies orcorporations and inhibits competition. They typically do this through tariffs subsidies and regulations that restrictwho is allowed to participate in commerce. The company responsible for melange is CHOAM aka the honorable union for the advancement of mercantilism in which the emperor has directorship.

Adoption of Mercantilist Economic Policy

As a result of the policy, the people of Arrakis have no purchasing power with which to flood their entire planet with water food, and other resources they could have easily acquired in exchange for their magicalspice. In a world where individual rights are universally respected, we would see a multitude of property owners who become entrepreneurs, who genuinely create value for others which ultimately enrich the lives of even more consumers, and equally importantly everyone wouldbe allowed to keep the income they have legitimately earned using it to improve their own lives as they see fit

Economic freedom to enrich lives

Frank Herbert’s sci-fi novel “Dune” is a literary masterpiece filled with illuminating insights. In anticipation of the upcoming movie release, this episode of Out of Frame explains why the fascinating world constructed by Herbert is not only a great story, but also surprisingly sound in terms of philosophy and economics. Ultimately, “Dune” demonstrates how systems of mercantilism and feudalism create crippling poverty, when systems based on private property and free trade do not. ______________________________ FOLLOW/SUPPORT US: Support Out of Frame on Patreon or SubscribeStar:  https://www.patreon.com/OutofFrameShow https://www.subscribestar.com/outofframeshow Join our Discord: https://discord.gg/RKc4AcGQ9k Watch our newest video, "Everything You *Really* Need to Know About Dune": https://youtu.be/ZmNzbhM4BSQ Sign up for our mailing list and never miss an episode again: https://fee.org/oof-newsletter Check out our podcast, Out of Frame: Behind the Scenes: https://www.youtube.com/channel/UCiS5rEmhnLwo1IG9bgr19Og Follow us EVERYWHERE! https://linktr.ee/outofframefee ______________________________ CREDITS: Written by Sean W. Malone Produced by Sean W. Malone Edited by Michael Ozias Asst. Edited by Jason Reinhardt ______________________________ LINKS: -- Marginal Utility -- https://fee.org/articles/to-be-a-happy-person-understand-marginal-utility/ https://fee.org/articles/value-cost-marginal-utility-and-bhm-bawerk/ https://fee.org/articles/eugen-von-bhm-bawerk-a-sesquicentennial-appreciation/ https://fee.org/resources/bhm-bawerk-for-the-citizen/ -- Capitalism -- https://www.empireonline.com/movies/news/dune-story-enough-is-enough-exploited-cultures-exclusive-images/ https://movieweb.com/dune-2020-oscar-isaac-anti-capitalist-environmental/ https://www.jacobinmag.com/2021/08/dune-herbert-science-fiction-conservatism -- Paradox of value -- https://en.wikipedia.org/wiki/Paradox_of_value https://www.investopedia.com/ask/answers/032615/how-can-marginal-utility-explain-diamondwater-paradox.asp https://www.youtube.com/watch?v=e7S8jWh6AEs -- Mercantilism -- https://www.investopedia.com/terms/m/mercantilism.asp https://www.econlib.org/library/Enc/Mercantilism.html https://www.economist.com/free-exchange/2013/08/23/what-was-mercantilism

Stashed ideas

The Politics and Economics of Dune

This referes to the income received for performing a service. Some examples of active income are: wages, tips, salaries, commissions, and income from businesses that hae material participation.

Active Income

<ol><li>Active Income - the most common example of an active income comes in the form of paychecks from your employer&nbsp;</li><li>Passive Income - this type of income is received even without active participation in the business</li><li>Portofilio Income - comes in forms of investment divdends and capital gains.</li></ol>

Types of Income

Active income refers to income received from performing a service. Wages, tips, salaries, and commissions are all examples of active income.

What Is Active Income?

Cost-push inflation is the decrease in the aggregate supple of goods and services stemming from an increase in the cost of production. An increase in the costs of raw materials or labor can contribute to cost-pull inflation.

Cost-Push Inflation 

Demand-pull inflation is the increase in aggregate demand, categorized by the four sections of the macroeconomy: households, business. governments. and foreign buyers. Demand-pull inflation can be cause by an expanding economy, increased government spending, or overseas growth.

Demand-Pull Inflation

Cost-push inflation is the decrease in the aggregate supply of goods and services while demand-pull inflation is the increase in aggregate demand.

Cost-Push Inflation vs. Demand-Pull Inflation: What's the Difference?

Positive Economics is a stream of economics that focuses on the description, quantification, and explanation of the developments in economics, the expectations, and the associated phenomena. It heavily relies on objective data analysis, relevant facts, and associated figures.

Positive Economics 

Normative economics is what economists call as "what should have been" or "what ought to be" study. This stream of economics aims to determine people's desirability or lack thereof to various economic programs, situations and conditions by asking the questions: what should happen or what ough to be. It leaves the door open for future changes, eliminates absolute statements, and provides an avenue for discussion.&nbsp;

Normative Economics

The history of positive economics can be traced back to the 19th century from the ideas of John Neville Keynes and John Stuart Mill, who were early economists.&nbsp; Keynes believed that logic and methodology were imperative in the study of economics while Mill was an economist who blended economics with philosophy. Mill also approached economics from data, such as the relationship between supply and demand, rather than the value perspective approach. Later on, these ideas were adapted by contemporary economists and developed observations to back early economic theories.

History of Positive Economics

Pros:<ul><li dir = "auto">based on objective data and fact are at our disposal to back up any claims</li><li dir = "auto">there are no value judgments in positive economics which allows policymakers to formulate the appropriate measures necessary to tackle any economic conditions</li></ul>Cons:<ul><li>not everyone is concerned with the facts and there are certain economic conditions that we can base on emotions; economics isn't an exact science, therfore there are no fool-proof solutions</li><li>positive economics is not a one-size-fits-all approach. policies and solutions that arise from positive economics don't affect everyone the same way</li></ul>

Pros and Cons of Positive Economics

Positive economics is the study of economics based on objective analysis of what is occurring and what has been occurring in an economy.