Pig Skin In The Game

I Just finished reading “Skin In The Game” by Nassim Taleb. It is about the importance and consequences of people being exposed to the downside of the risks they take. Like all his books it’s a fun read that is also profound. It’s a little on the light side and not quite as good as Antifragile, in my opinion, but still highly recommended.

In SITG Taleb describes a “Bob Rubin trade” as a class of bets in which you keep the upside but somehow transfer the downside to others. The classic example is the banker who gets bonuses for years doing some activity that will eventually blow up,  and then loses more money than he ever made when the blow up happens but gets to walk away with the bonuses.

Another example Taleb brings up a lot is the pundit, adviser or politician who advocates in lofty terms for foreign interventions but doesn’t have to live with the consequences. No one who talked up spreading democracy to the middle east in the 2000s ended up moving to Mosul.

On a smaller level I think a good example of the Bob Rubin trade is the cowardly cop. Police officers aren’t paid to take crazy risks, but they are paid to take reasonable risks in order to decrease the risks that the public face. Cowardly cops are those that transfer the risks that they are supposed to be taking back to the public.

During the Parkland shooting, the cop that hid outside, rather going to seek out source of gunfire was clearly a cowardly cop. It was his responsibility to try to find and confront the shooter, but given the terrible luck to actually be the cop on the scene when someone started shooting, he chose to let the unarmed students and teachers deal with it and save his own skin.  Now he is retired and collecting his pension in classic Bob Rubin style.

A police officer who fails to confront a threat deserves the approbation that they get, but they aren’t the worst variety of cowardly cop.  All they are doing is failing to do the job they were paid for. They aren’t actively putting the public at risk.

The worst cowardly cops are those that decide that when confronted with any perception of a threat they will prefer a “false positive” to a “false negative” response. In other words, they prefer to kill an innocent than take the risk of dying themselves, and so they can create a deadly situation where none existed. That is the situation we have recently seen with Stephon Clark  and seen many times with people like Philando Castile and many, many others.

We are not paying police like that to risk their lives for us. We are paying them to risk our lives for themselves. Any police officer that would prefer to shoot an innocent than to get shot is not doing the job. They are creating more risk than they are taking and making society worse off. They are also creating a horrendous negative externality by discrediting the majority of police who are brave and do their honest best to shoulder the responsibilities that they have voluntarily accepted.

The standard right now is that the cop may shoot whenever they can reasonably determine that they are at risk. They don’t have to 100% be at risk, just make the reasonable judgement that they are at risk. This legal standard invites false positives and risk transfer.  As long as the cop can honestly say that they thought the cell phone might have been a gun (and perhaps 1 out of 100 times it actually would be) then they face no liability. That policy transfers all the risk to the (probably) innocent person. Instead, the standard should be that no reasonable person should think that they are safe. The burden to determine that they are actually in danger should be on the cops since they are the ones who volunteered to take that burden!

We should laud cops as heroes and encourage them to be heroes. We shouldn’t be providing them with every legal incentive to become Bob Rubins.

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