Economies’ by Mariana Mazzucato and Rosie Collington. The authors argue that the reliance of large businesses and, even governments, on external experts weakens and undermines their competence and ability to accomplish their goals. The hired experts have no stake in the real outcomes and go through a highly practised performance and make their money.
Essentially, the problem is that they have no real stake in the outcomes, no skin in the game. ‘Skin in the game’ is a concept often used to emphasise that those who have some stake in the outcome are more committed to it. This is intuitively true, but how exactly does it work? The recent sinking of the Titan submersible in the North Atlantic, which was taking tourists down to the Titanic, has drawn unexpected attention to this question.
As the submersible community has clearly shown, the design and construction of the vessel took some horrendous shortcuts, which more or less doomed it, along with its passengers. However, Stockton Rush, the Chief Architect of the submersible and the company’s CEO, perished along with his clients. He had as much skin in the game as anyone else.
More, actually, because he had dived in it repeatedly, ignoring warnings that the fibreglass hull must be weakening with every dive. So how does the skin-in-the-game principle work here? Why did this man take risk himself? In his case, the answer is a mix of incompetence, arrogance and hubris. He thought he knew best, and that was that.
The crypto players seem to fall in the same category. They have ruined others, but many, though not most, had skin in the game and destroyed themselves as well. As Nassim Nicholas Taleb has pointed out, skin in the game does not work by magically increasing the
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