Friday, June 20, 2008

Scalable Professions

Nassim Nicholas Taleb on scalable professions:

A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards--a few can take a large share of the pie, leaving others out entirely at no fault of their own.

Billers, Players, and Income Inequality, Arnold Kling:

Yes, this is just the economics of superstars. But it suggests a simple dichotomy. As Taleb points out, there are safe professions where you charge by the hour, so I might call them Billers. As a Biller, your earnings tend to have a high floor but a low ceiling. Think of an accountant.

What Taleb calls scalable professions are ones where you are not limited by what you can charge for an hour. Recording artists, professional baseball players, entrepreneurs, corporate CEO's, and financial speculators enjoy scalability. But, as Taleb points out, they have to compete in tournaments where there are a few winners and many losers. So we can call these sorts of people Players.

I think this can be a helpful frame in which to view the financial choices faced by the modern-nomad. Rules of thumb follow:
  • Context is King or 50 is not middle aged.
  • Never confuse your Billing job with a Scalable job.
  • For the modern-nomad, Billing is better

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