This is incomplete, but very, very good economic analysis. In the end his points are simple:
0. Employees are willing to trade "freedom" for job stability and increased average returns. Contracters will more easily defect for sporadic higher paying opportunities, which makes them less reliable.
1. Employers can overpay employees while ensuring that they know that they are overpaid, to 'domesticate' their employees and improve reliability of outcomes.
2. Decades ago, employers could also promise long-term job security to achieve similar effects, however rapidly changing markets mean their future existence (and ability to grant stability) is in question.
3. Instead, employees have fixated on cross-company careers, optimizing for general employability , which means that they must still conform to the requirements of a domesticated employeeship.
4. However, when employees have significant, direct, measurable profit impact skill, and can make or break the company, they can not be owned.
He also does an economic analysis of cursing, while explaining that maximizing employability tends to strip away the parts of people that can make them great.
Two interesting things: 1) this predicts difficulty in controlling contractors and getting them to stick to schedules. It explains why taxis suck, homejoy struggled, and showcases that uber circumvented the entire issue of driver reliability by only doing on-demand rides. It also predicts that scheduled contractors will attempt to steal clients from the scheduling company (direct measurable profit impacting skill - you can't own them). Perhaps the on-demand service strategy that works requires either the use of employees or zero-scheduling/real-time request resolution.
2) As an employee, you must figure out how to measure your profit impact and consistently represent that metric as fact - socialize the idea that you have profit impact. You also want to figure out exactly how what you do and how you do it can increase or decrease profits: being the person who's able to both represent a meaningful metric and show how you've affected that metric, and how that metric should have affected the bottom line will make you the most valuable. If what you do does not impact profitability, then do something else.
I think he does not do a good job of analyzing the value proposition of "freedom" in this context. Freedom definitely is a value by itself, but he just posits and accepts that being a contractor gives you more freedom than being an employee.
There are definitely counter examples, for example the cleaning personnel in many hotels is working on a contract basis. The more general observation is that being a contractor only gives you freedom if you have relative market power over your employer/contract giver.
The same applies as a regular employee, but less so: there is value in retaining a skilled labor force, and employers are more reluctant to give that value up by firing people, as compared to contractors. (Also, many legislations restrict hire and fire of employees, but that might be a different topic.)
Given a very acute risk of not finding any other contracts, contractors might find themselves having to live up to demands of your employer, ultimately ending up being less free than an employee in a comparable market.
I've been both an employee and a contractor for various companies.
I found that being a contractor is usually easier, the work hours are shorter, the pay is MUCH better and 'job' security is actually higher (which really surprised me - I've never been fired from a contract job).
From a company's point of view; contractors are not good value. Sure, it's better to hire independent contractors than to outsource everything to an outside company, but a contractor is nowhere near as productive as a full-time employee.
The kinds of companies which hire contractors instead of full-time staff are often interesting companies...
As an employer, you don't need to fire contractors. You just let their contract expire and do not hire them again. Very clean, no pain, no conflict, and the contractor many times walks out the door not even realizing you would have fired their ass under different circumstances.
>> but a contractor is nowhere near as productive as a full-time employee
I disagree, also speaking as someone who's seen a mix of runs as a contractor, consultant and staff employee. It's the individual who is very productive or not, not the role they are filling.
Since the topic has also been making the rounds on HN, this was, as I recall, one of the issues raised with Gravity Payments and their $70K base salary.
Very thought provoking. It seems like a good argument in favour of entrepreneurship and risk taking.
But I'm not sure that I agree with Taleb's glorification of Front Office banking roles in sales & trading. Like any sufficiently highly paid corporate employee, traders are compensated mainly through company shares which vest over a long period of time. These days a trader's bonus can even be clawed back, many years after being awarded. Rumour is that Wall St traders are often caught up in a culture of excess where bosses pressure them to spend/live extravagantly and become completely dependent on annual cash bonuses. For all the supposed risk taking tolerance bravado, traders are merely risking the firm's capital and not their own. In some ways it is similar to the expat role - just as some executives are chosen to be expats, some bank employees are chosen as traders and given enormous amounts of the firm's capital to bet with. No one can say what to look for in hiring a good trader, there is no consistent basis for selection, there are no academic or professional credentials for traders, the bank executives can choose to shutdown a particular trading desk on a whim, the worst fear of a trader is to lose this coveted position, and most people do not last very long as traders as their luck runs out eventually at the poker table. If an expat executive is like a diplomat fearfully being assigned from one foreign posting to the next, then I think a trader is like a gambler-slave sent to gamble with his master's money in the casino and he is in constant fear of the dire consequences that await if and when he loses too great a sum or fails to win large sums frequently. Trading jobs are usually a better deal for the employee than most comparable jobs, but it is still an employee job and it attracts exactly the kind of people who go to business school and actively seek low risk careers and dependence on a paycheque written by a prestigious employer.
An employer of an employee on a sponsored H1B visa is unable to keep that employee from finding new employment at another employer who is willing to file an H1B petition. There isn't any way for the current employer to find out the employee has applied elsewhere. If the employee already holds an H1B, then the new employer is not limited by the yearly H1B cap [1].
I am by no means an expert on legal or immigration matters, so you'll have to do your own research. Also, since you refer to an H1B but did not explicitly state the country, I'm assuming you're referring to the US where Skilled Immigration for Work visas are typically called H1Bs. Please correct me if I'm wrong. Cheers
Black Swan is still his best in my mind, but the Bed of Procrustes can be a nice entree; aphorisms were the original tweets, and can be consumed as such. Then I'd jump into Fooled By Randomness, and finally Antifragile (which is the weakest of them...truthfully I think the entire book could have been a chapter in Black Swan, but I'm glad he wrote it all down anyway).
All of his books have been worthwhile in some way. "Fooled by Randomness" is a great place to start. Its effect of exposing the lack of objectivity in many commonly-accepted beliefs that rely heavily on perceived cause and effect can add maturity and humility to your own worldview.
Ironically, my only complaint might be that Taleb seems to get a little more self-congratulating by anecdotally revealing the lifestyle he is able to enjoy as you progress through his series of books. Perhaps this is more of a style device to broaden the books' appeal.
Whatever the case, the perspective you can gain from his writing is worth the time.
It is interesting to note that a few hundred years ago, people didn't make that big of a difference between chattel slavery and wage slavery (labor). Both were university acknowledge to be great evils, and it was as dehumanizing to rent a person than it was to own a person.
Somehow we've all accepted wage slavery as alright. Good even! If someone doesn't have a job we deride him as a lazy ass for not wanting to sell his labor to a capitalist. A solution: universal basic income. Give everyone fuck you money. Then you'll have a free society.
Um, if everyone has that much money, then it's not really a dramatic amount of money is it?
Having enough universal basic income to live on meagerly is one thing, but it's mathematically impossible to give everyone enough for everyone to be rich.
Perhaps there should be some equivalent of Godwin's law for this sort of comparison. Golden handcuffs aren't meaningfully comparable to actual slavery. If you think it is you're out of touch with history.
The pilot contractor doesn't seem like a great example, either. Contractors usually have to think about their reputations. I don't know the industry, but it seems unlikely that there's a huge shortage of pilots, given how poorly beginning pilots are paid.
There is a huge shortage of pilots...who are willing to work for the starvation wages the regional carriers offer.
By the time "Bob" in the story had the status and seniority number to be captaining a trans-oceanic route for a major, he'd be making well into six figures a year working 11-15 days a month. He'd have enough to lose that the Saudi prince would need to pay him his salary until age 65 (mandatory retirement for part 121 airline flying) to make his choice to walk away a rational one.
That's probably because you didn't read past the 3-4 first paragraphs where the brief description of a (historical) "sovereign citizen" religious sect ends.
The rest of the text (and I would say even that part) is totally unambiguous, and offers nothing to be mistaken for "parody" of any kind.
I read through the whole chapter and I didn't see anything sovereign citizen-esque in there. It's an analysis of the modern employer-employee relationship.
This is written by Taleb, he is an interesting fellow and I find his thoughts valuable. Recently he made +$1B in a single day with his hedge fund by evaluating risk vs reward with unconventional methods.
[+] [-] _lex|10 years ago|reply
0. Employees are willing to trade "freedom" for job stability and increased average returns. Contracters will more easily defect for sporadic higher paying opportunities, which makes them less reliable.
1. Employers can overpay employees while ensuring that they know that they are overpaid, to 'domesticate' their employees and improve reliability of outcomes.
2. Decades ago, employers could also promise long-term job security to achieve similar effects, however rapidly changing markets mean their future existence (and ability to grant stability) is in question.
3. Instead, employees have fixated on cross-company careers, optimizing for general employability , which means that they must still conform to the requirements of a domesticated employeeship.
4. However, when employees have significant, direct, measurable profit impact skill, and can make or break the company, they can not be owned.
He also does an economic analysis of cursing, while explaining that maximizing employability tends to strip away the parts of people that can make them great.
[+] [-] _lex|10 years ago|reply
2) As an employee, you must figure out how to measure your profit impact and consistently represent that metric as fact - socialize the idea that you have profit impact. You also want to figure out exactly how what you do and how you do it can increase or decrease profits: being the person who's able to both represent a meaningful metric and show how you've affected that metric, and how that metric should have affected the bottom line will make you the most valuable. If what you do does not impact profitability, then do something else.
[+] [-] Nitramp|10 years ago|reply
There are definitely counter examples, for example the cleaning personnel in many hotels is working on a contract basis. The more general observation is that being a contractor only gives you freedom if you have relative market power over your employer/contract giver.
The same applies as a regular employee, but less so: there is value in retaining a skilled labor force, and employers are more reluctant to give that value up by firing people, as compared to contractors. (Also, many legislations restrict hire and fire of employees, but that might be a different topic.)
Given a very acute risk of not finding any other contracts, contractors might find themselves having to live up to demands of your employer, ultimately ending up being less free than an employee in a comparable market.
[+] [-] jondubois|10 years ago|reply
I found that being a contractor is usually easier, the work hours are shorter, the pay is MUCH better and 'job' security is actually higher (which really surprised me - I've never been fired from a contract job).
From a company's point of view; contractors are not good value. Sure, it's better to hire independent contractors than to outsource everything to an outside company, but a contractor is nowhere near as productive as a full-time employee.
The kinds of companies which hire contractors instead of full-time staff are often interesting companies...
[+] [-] codingdave|10 years ago|reply
[+] [-] toptalentscout|10 years ago|reply
I disagree, also speaking as someone who's seen a mix of runs as a contractor, consultant and staff employee. It's the individual who is very productive or not, not the role they are filling.
[+] [-] tonyedgecombe|10 years ago|reply
[+] [-] cgh|10 years ago|reply
As I sit here entering my 12th hour of work for the day, this sounds remarkably legit.
[+] [-] tsotha|10 years ago|reply
[+] [-] escherize|10 years ago|reply
Slavery is being taxed at 100% of you output.
[+] [-] astrocat|10 years ago|reply
[+] [-] hugh4|10 years ago|reply
[+] [-] late2part|10 years ago|reply
I especially like his insight about those really comfortable not putting on pretensions or airs. Go to Bucks in Woodside some time.
The really good VCs are really good genuine people.
[+] [-] kawera|10 years ago|reply
[+] [-] nulltype|10 years ago|reply
[+] [-] n00b101|10 years ago|reply
But I'm not sure that I agree with Taleb's glorification of Front Office banking roles in sales & trading. Like any sufficiently highly paid corporate employee, traders are compensated mainly through company shares which vest over a long period of time. These days a trader's bonus can even be clawed back, many years after being awarded. Rumour is that Wall St traders are often caught up in a culture of excess where bosses pressure them to spend/live extravagantly and become completely dependent on annual cash bonuses. For all the supposed risk taking tolerance bravado, traders are merely risking the firm's capital and not their own. In some ways it is similar to the expat role - just as some executives are chosen to be expats, some bank employees are chosen as traders and given enormous amounts of the firm's capital to bet with. No one can say what to look for in hiring a good trader, there is no consistent basis for selection, there are no academic or professional credentials for traders, the bank executives can choose to shutdown a particular trading desk on a whim, the worst fear of a trader is to lose this coveted position, and most people do not last very long as traders as their luck runs out eventually at the poker table. If an expat executive is like a diplomat fearfully being assigned from one foreign posting to the next, then I think a trader is like a gambler-slave sent to gamble with his master's money in the casino and he is in constant fear of the dire consequences that await if and when he loses too great a sum or fails to win large sums frequently. Trading jobs are usually a better deal for the employee than most comparable jobs, but it is still an employee job and it attracts exactly the kind of people who go to business school and actively seek low risk careers and dependence on a paycheque written by a prestigious employer.
[+] [-] spacecowboy_lon|10 years ago|reply
Apparently wearing cufflinks was also a no no - which made me smile as the on or 2 days a year I wear a suit I ways wear shirts with cufflinks.
[+] [-] titomc|10 years ago|reply
[+] [-] justinjlynn|10 years ago|reply
I am by no means an expert on legal or immigration matters, so you'll have to do your own research. Also, since you refer to an H1B but did not explicitly state the country, I'm assuming you're referring to the US where Skilled Immigration for Work visas are typically called H1Bs. Please correct me if I'm wrong. Cheers
[1] <http://www.immihelp.com/visas/h1b/h1-visa-transfer-faq.html> -- looking for a better source that's not commercial, happy for pointers.
[+] [-] avmich|10 years ago|reply
[+] [-] tsotha|10 years ago|reply
[+] [-] rwhitman|10 years ago|reply
[+] [-] FlailFast|10 years ago|reply
[+] [-] OldSchool|10 years ago|reply
Ironically, my only complaint might be that Taleb seems to get a little more self-congratulating by anecdotally revealing the lifestyle he is able to enjoy as you progress through his series of books. Perhaps this is more of a style device to broaden the books' appeal.
Whatever the case, the perspective you can gain from his writing is worth the time.
[+] [-] Animats|10 years ago|reply
[+] [-] littletimmy|10 years ago|reply
Somehow we've all accepted wage slavery as alright. Good even! If someone doesn't have a job we deride him as a lazy ass for not wanting to sell his labor to a capitalist. A solution: universal basic income. Give everyone fuck you money. Then you'll have a free society.
[+] [-] dracht|10 years ago|reply
[+] [-] robodale|10 years ago|reply
[+] [-] ars|10 years ago|reply
Um, if everyone has that much money, then it's not really a dramatic amount of money is it?
Having enough universal basic income to live on meagerly is one thing, but it's mathematically impossible to give everyone enough for everyone to be rich.
[+] [-] kakakiki|10 years ago|reply
[+] [-] jazzyk|10 years ago|reply
[+] [-] squozzer|10 years ago|reply
[+] [-] theGimp|10 years ago|reply
Can somebody tell me the name of the book?
[+] [-] pouetpouet|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] kayman|10 years ago|reply
[+] [-] skybrian|10 years ago|reply
The pilot contractor doesn't seem like a great example, either. Contractors usually have to think about their reputations. I don't know the industry, but it seems unlikely that there's a huge shortage of pilots, given how poorly beginning pilots are paid.
[+] [-] sokoloff|10 years ago|reply
By the time "Bob" in the story had the status and seniority number to be captaining a trans-oceanic route for a major, he'd be making well into six figures a year working 11-15 days a month. He'd have enough to lose that the Saudi prince would need to pay him his salary until age 65 (mandatory retirement for part 121 airline flying) to make his choice to walk away a rational one.
[+] [-] slater|10 years ago|reply
[+] [-] coldtea|10 years ago|reply
The rest of the text (and I would say even that part) is totally unambiguous, and offers nothing to be mistaken for "parody" of any kind.
[+] [-] mintplant|10 years ago|reply
[+] [-] solotronics|10 years ago|reply
[+] [-] neuro_imager|10 years ago|reply