Leading the Revival of Individualism & Self Reliance

Trump’s Tariffs: A Practical Attempt To Alleviate A Pestilence Of Politics.

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There is a lot of ideological purity being bandied about recently in favor of “free trade”. It is spouted in righteous indignation on the subject of the Trump Administration’s recently announced intent to impose import tariffs on steel and aluminum imports. All of a sudden, the left-wing professoriate has discovered the virtues of free market economics. Or at least, they find an opportunity in virtue-signaling their opposition to Trump.

A Fine Theory.

Free trade is a theory. Historically, it was advanced by classical economists like David Ricardo and Adam Smith, who pointed out that schemes of tariffs and taxation and statutory import and export limitation were always aimed at furthering government aims and not at the betterment of the people who wanted to trade with their counterparts in foreign countries. In the never-ending battle between the entrepreneurs aiming to improve the quality of life of all economic citizens, and the government aiming to control the population and make sure no-one succeeded more than the government was prepared to allow, free trade became a loser.

Non-existent In Practice.

Today, there is no free trade. Zero. There is not a single trade that is not governed by legislation, bureaucratic rule making, taxes, tariffs or subsidies or political adjustments of some kind. No boat can sale, no plane can fly, no truck can deliver without political permission. Giant global bureaucracies like WTO, and regional ones like TPP and Nafta and the EU make sure that not a single transaction can be made without a specific permission within their rule making.

All of this political bureaucracy imposes costs of money and time delays. Entrepreneurs who want to import and export must research tariff and tax tables, employ their own compliance staff, file forms, undergo inspections, and submit reports about their activities, in addition to incorporating the actual taxes and tariffs into their costs, often acting as collectors for the government.

A Bureaucratic Tangle.

Why so much bureaucracy and cost? Not because of economics. From Ricardo and Smith, we know the economic benefits of free trade. The systemic strangulation of free exchange between countries is entirely driven by politicians. Politicians desire only two things: control over the free, imaginative and entrepreneurial activities of people, and a revenue stream that they can confiscate from the productive activities of others.

The result is a distorted and sclerotic tangle of unfree economic exchange, an unfathomable explosion of rules and regulations, a hampered global economy of constrained buyers and over-regulated sellers. The bureaucrats are happy because there are manifold opportunities for their enemies, the productive economic actors, to make mistakes, yielding unending opportunities for fines, penalties, “clarifications” (a bureaucratic favorite) and more rules.

A Small Bomb.

Along comes Trump and rolls a bomb into this building. A bomb is a vehicle for disruption. This particular bomb is a small one with limited explosive capacity. It could blow open a door, with the opportunity for some evil to exit or some good to enter. If a wall collapses, it opens up the chance of new and perhaps more open construction. If a beam falls, there might be the opportunity to eliminate entire stories of the twisted edifice.

Thinking Ahead.

Moreover, it is likely that Trump is better at systems thinking than the politicians and bureaucrats, for whom short termism is the dominant style. After he rolls in this bomb, will the EU or Canada or China retaliate? If so, that further exposes the façade of international co-operation and clearly underlines the bias of the system towards antagonism and confrontation. Such retaliation will open new pathways for Trump to renegotiate, expanding his options. What if the result is to start a meaningful discussion about how China illegally confiscates American companies’ intellectual property? Or about how Germany illegally favors BMW automobiles and Miele household appliances in its system of state-supported industries?

Tear Down This Trade Agreement.

Free trade is a perfectly viable theory, and it is nice to read about it in historical economics texts. We can all benefit from understanding the concept, because it helps us see how the politicians have permanently destroyed one of the purest mechanisms for collaborative human betterment. But don’t let’s tolerate screeching hypocritical distress over the use of a small explosive device to collapse the edifice of managed trade. It deserves to collapse.

Music, Specialization, and the Beauty of Emergent Order

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I had the fortunate pleasure of growing up surrounded by supremely talented musicians. Raised in a community where music was highly valued, I was exposed to a wide variety of instruments and genres. But what was most exciting about this in hindsight, was the lessons music taught me about spontaneous order.

Jam Sessions

While my family was inherently musical, I learned the most about music from my friends.  During my formative years, I had a front row seat to many “jam” sessions as they were called, where spontaneous order was all around me.  Without planning or structure, I would watch my friends make incredible music. The drummer would be keeping the rhythm while the two guitarists wailed on their instruments. The bass player keeping harmony while the singer made up lyrics on the spot. Each session lacked order and structure, and it was absolutely fabulous.

It always fascinated me that five individuals come together without a plan, and still manage to make incredibly sounding music. The answer for this, I would later discover, came from the economic principle of specialization.

The Division of Labor

Specialization makes the world go round. It is what allows me to be a writer, while someone else is a farmer, and another is a lawyer. Imagine a world without specialization.

Before 19th-century liberalism made the concepts of the division of labor and specialization commonplace, many people were self-sufficient. But this meant doing almost everything for themselves. From planting and harvesting crops to making clothing and constructing homes, individual households were stuck having to do almost everything for themselves. This, of course, leaves little room for much of anything else like hobbies or self-improvement.

But by specializing in a very specific skill, while others did the same, the division of labor was organically created and spontaneous order able to provide consumers with more than they could have dreamed. And we each rely on this system heavily.

As Mises writes in Liberalism:

In order to provide the family of an English worker with all it consumes and desires, every nation of the five continents cooperates. Tea for the breakfast table is provided by Japan or Ceylon, coffee by Brazil or Java, sugar by the West Indies, meat by Australia or Argentina, cotton from America or Egypt, hides for leather from India or Russia, and so on.

And while this system has given us a robust market, it is also seen in other facets of life, such as music, for example.

Specialization and Spontaneous Order

Each musician in a band has specialized in one unique set of skills. The talented drummer has learned to keep perfect time, which in many ways, keeps the rest of the band on track. The guitarists set the tone and the melody of the band, creating those catchy riffs that make us all want to replay a song in our heads over and over again. Meanwhile, the bass provides the harmony while the singer gives the music a relatable story.

Each is doing their own thing, yet they are each pulled together by an unseen force, weaving the music together. And as a result, amazing music is able to occur.

But even when the music sounds balanced and united, no one has given up their specialized task. The drummer is still in his own world doing his own thing, while one guitarist seems to be trying to outperform the other in a “power stance” duel. But this individuality only seems to add to the chaotic yet harmonious music being made.

Anyone who has ever seen a jazz band play will understand this instantly. Each player seems to be marching to the beat of his or her own drummer, and yet the music sounds amazing and united in a common theme. It is almost as if a magical force is keeping everything in perfect order without any one person needed to assume the power to do such.

And the magical force holding the music together is the same that allows the market to flourish when it is untouched by regulation. It is emergent order at its finest.

If each musician was being regulated by an authority telling them how fast they can play or which style they can play in, music would be boring. It’s that simple. Every single performance would be similar to watching a high school band performance where each artist is only subpar at their instrument and terrified of originality.

Likewise, a market where things were uniform and unoriginal would be boring. But when spontaneity is encouraged and individuals are left to their own devices, an amazing form of order emerges.

Road to Individualism: Millennial Parents Are Saying Yes to School Choice

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Millennials are no longer the youngest kids in town. As the currently unnamed “Generation Z” takes center stage as the new up and coming generation, millennials are now settling down and having families of their own. And this is having a significant impact on education.

As discussed previously, choice and personal control over education choices are both essential to individualism. And if recent polls are any indication of where millennials stand on this issue, then the future of individualism is looking bright and decentralized.

Millennial Parents

Recent polls suggest that millennial parents aren’t making the same educational choices that their parents made for them. And this is a good thing. Our parents were largely educated by traditional means, which led many to sentence their own children to the fate of traditional public schools.

But as public education kept perpetually failing to properly educate kids, more options became available, which is great since millennials love options.

Millennials grew up surrounded by abundant choice. Whether choosing from several hundred cable television stations or choosing from a variety of music available at the click of a button, we have never wanted for options. The same is true of our parenting styles. Millennials like going against the norm when it comes to parenting.

A recent report released by EdChoice found that young Americans tend to have a highly favorable opinion towards school choice. In fact, when asked specifically about charter and private schools, the millennials polled expressed a positive view as opposed to the percentage who reported having negatives opinions towards these alternatives to public education.

Additionally, when compared to other generations, Millennials were three times as likely to give positive feedback towards the overall institution of charter and private schools. For those young Americans who currently have school-aged children attending a charter or private school, the positive responses were even greater.

Homeschool Revolution

But what is perhaps most fascinating about the millennial approach to education, is the favorability for homeschooling. Scoring a few points above other generations, many millennials support this as a viable option for their children.

And it is no wonder. In previous generations, homeschoolers were viewed almost as societal outcasts, having a social disadvantaged over traditionally educated children. But time has dispelled these rumors.

Homeschooled children are not only better at taking tests than the children forced to take them throughout their educational careers, they are also more socialized. Many of the children struggling to speak to their own counterparts were off-putting to many, eager to critique homeschool students. But when those students were put in a room with older children or adults, they were able to socialize at levels far beyond children their own ages. What was once seen as being weird and a disadvantage is now being recognized as a strength.

And the social aspects do not even account for the educational advantage of homeschooling. As the Common Core Curriculum began nationalizing education more so than at any other time in the past, many parents were concerned with the one-size-fits-all approach to education. As millennials are fans of many market options, this didn’t bode well for many of them. Since many charter schools and private schools agreed to use the Common Core Curriculum out of convenience, this left few options to escape this system. This led many parents towards homeschooling and unschooling since they were in full control of their children’s education.

As the Millennial generation continues to age, these approval ratings are expected to continue their upward trend. While the public education system has done much to disappoint many Americans over the years, it is no wonder that the generation accustomed to choice in every aspect of their lives, favors more educational opportunities for their own children.

Imagine The Future, Take Action To Reach it, And Measure Results.

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The entrepreneurial approach to life expands beyond the business world. Entrepreneurs are empathetic engineers of the future – aiming at a better future for all. In business, they try to improve people’s lives by providing a new service that’s better than anything that’s gone before. People feel happier and more satisfied, and the entrepreneur makes a financial and psychic profit.

The same can apply to everything in life if you take the entrepreneurial approach. Here are four examples of the entrepreneurial approach to life.

  • Adam Neumann was raised in a Kibbutz in Israel where he experienced community and inter-dependence. He recognized that many young US professionals were working in isolation on the web, yearning for a place to be with like-minded people, yet have privacy. He founded WeWork: matching local people (through AI algorithms), who work independently or are telecommuting for companies, to reasonably priced shared work-spaces. WeWork purchases and reconfigures offices with amenities, office equipment, and ambience for online virtual work, but also provides a community for individuals who want to meet and have personal contact with those of common interests. WeWork demonstrates how to create communities of spontaneous order with drop-in flexibility that serves both individual business and personal needs. Today, WeWork is valued at $16 billion and has 60,000 participants in cities throughout the US.
  • John Yang, a former financial advisor, never married or had children. Now 68 years old, he wants to teach children in a safe, structured environment where he can have the flexibility to plug- in and have autonomy. John enrolled as a substitute teacher in the San Francisco School District. He checks the District Platform the evening before class to see which schools, grades, classrooms, and subject areas need substitute teachers. John can choose to bid on a class, and shows up the next day, ready for work.
  • Eve Blossom was appalled at global sex trafficking and wanted to do something about it. Twenty years ago she decided to provide women who were trafficked an opportunity to start a new, self-sustaining life through sales of their crafts and artwork. She founded and directs a B Corporation, Weve, hosted on a global platform. She sources from women in cities and villages anywhere, and places orders for retailers such as Target.
  • Malcolm Franks had a career as an interior designer. At age 67, living in Palm Beach Gardens, Florida he was seeking work that would connect him with children in his religious community, give him autonomy, and freedom for a flexible daily schedule that suits his lifestyle. He drives 15 children to religious school in a van each day and returns them home in the afternoon. He also house-sits for several people who live in Florida during six months of the year, taking care of their pets, pools, and household. He uploads photos and videos to the owners of their homes so he can verify his work.

These individuals are all entrepreneurs, operating with different goals and using different means. There is a common theme in these examples.

Start From Values.

Who am I? What do I believe? What are my values? These are the questions entrepreneurs ask of themselves before they embark on any kind of project. Who do I want to help? How can I understand their need?

Imagine The Future.

The entrepreneurial style is not necessarily to be a genius inventor or a technology wizard. Instead, the entrepreneur imagines. Entrepreneurs can imagine a future state, that is better for them, and better for the people they want to help. If you can imagine like this, you can be an entrepreneur.

Take Action.

Having imagined the future, the entrepreneur takes action to bring it about. He or she is confident that they can succeed. They may not know the pathway, nor have they charted every step along the way. But they have a goal and they explore the means to reach the goal, trying different initiatives, abandoning some as ineffective, and doubling down on others that are promising. Action is one of the defining traits of entrepreneurial life.

Measure Results.

Having a noble or elevated goal is not enough. The challenge is to choose the right means to achieve the goal, and objective measurement is only way to tell if you’ve made the right choices. There’s no shirking from results in entrepreneurship.

The examples cited here are taken from the forthcoming book, The Interconnected Individual, by Hunter Hastings and Jeff Saperstein, Business Expert Press, 2018.

Miniaturized Factories Plus Unique Recipes Can Insulate You From All Competition.

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Have you thought about miniaturization as a technology trend that can enable you to create a unique capability for yourself in the coming services revolution? Many people are worried that jobs are going to be lost to technology and robots, but, in fact, you can make sure that technology insulates you from disruption.

From the days of large corporations, big factories, and mass-produced branded products and services, we are now headed towards a miniaturized, customized, co-developed future. Factories, farms and energy flows are miniaturizing. For example, Farmshelf is a smart indoor farm the size of a refrigerator that makes growing fresh food in a home, garage or restaurant easy. Custom LED lighting and advanced nutrient systems mean that the unit grows plants 2-3x faster and with 90% less water than traditional agriculture. Restaurants can get the freshest product, the best ingredients, and also massively decrease waste by using only use what they need. If you are a restaurant owner, you can tailor the indoor farm to your own recipes, for a truly unique offering.

Similarly, 3D printing (intelligently utilizing recipes and designs in the cloud available to interconnected individuals with miniaturized hardware) brings manufacturing to the home. We recently wrote about Amos Dudley who 3D printed custom orthodontic retainers for himself, instead of paying the astronomically high prices required by the healthcare system.

Solar panel installations and storage batteries turn houses into energy generation plants, promising a future in which we can control our own energy sources and usage. Open artificial intelligence will give the apps on our smartphones new capabilities (e.g., voice interfaces, conversation interfaces, episodic memories, etc.) and transform them into low-cost digital workers as Moore’s Law continues.

This trend is the miniaturization of the expertise economy of nations, and all of these examples are better building blocks for a new individual economy. Individuals empowered by eventually hundreds of low cost intelligent digital knowledge processors, and supported by miniature factories and farms and energy flows, will utilize these “better building blocks” to generate their individualized economic, social, and recreational futures.

Pursuing uniqueness.

Miniaturization is one more example of individual access to great empowerment and self-efficacy in the new technology era. But the opportunity comes with responsibilities. The ultimate responsibility is to pursue knowledge and uniqueness.

The path to your individual uniqueness, insulating you from competition because the service you offer can not be reproduced or replaced, is through knowledge. Here’s what Kartik Gada says in his book ATOM: The Accelerating TechnOmic Medium. It’s Time To Upgrade The Economy.

Have you done enough aggregate Internet searching and forum commenting to capture all the low-hanging fruits available to you for your personal advancement and risk management? If you answer that question in the affirmative, I am here to tell you that you have not come even close to realizing what is possible. Even heavily committed people barely access 10% of the information that could greatly improve their careers, finances, health, and relationships, and I don’t think there is anyone in the world, no matter how successful, who has implemented more than 50% of what is available to them.

Economic specialization has been with us since the days of Adam Smith’s pin factory. Today, it is more finely articulated than ever before. In the service economy, our individual task is to serve others by applying knowledge. When an intelligent knowledge-connected app can do that, the human must stay one step ahead in the only way that humans can: individual uniqueness.

We must become acutely conscious of our capabilities, our values and our desires. To do what we love, what we know, and what we are good at doing requires very rigorous and sophisticated self-examination. Then we must integrate ourselves with the global interconnected world, working with other like-minded people and machines and teams and organizations to realize our maximum individual potential. We must utilize the potential of accessible knowledge, intelligent digital assistants and miniaturization to augment ourselves, and to be as smart as interconnectivity enables us to be. We must be super-efficient, not wasting an iota of energy on anything that detracts from our personal mission of self-realization.

If we accept this responsibility and act upon it, the future is bright for the interconnected individual.

 

Mises Knew That Capitalism is for Everyone

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“Liberal” and “capitalism” are not terms typically associated with each other today. This is largely because “liberal” is now so widely associated with progressivism, an ideology that espouses anti-capitalist beliefs.

Progressives falsely get the credit as being the philanthropists of the political world.  And to many, capitalism appears to be the antithesis of humanitarianism, crushing the people and subjecting them to the whims of the wealthy and entrepreneur class. But in reality, capitalism is the ideology for all. And it has been one of the only real tools against global poverty and stagnation.

What Is Capitalism?

In the introduction of his book Liberalism, Mises refers to capitalism as follows:

“A society in which liberal principles are put into effect is usually called a capitalist society, and the condition of that society, capitalism.”

As discussed previously, Mises explains that true and classical liberalism encompasses free markets, cosmopolitanism, and limited government intervention. But above all things, capitalism has made the world a better place by allowing innovation of all kinds to improve the lives of individual beings.

Because of capitalism, countless jobs have been created that have helped improve the lives of many. Thanks to the scientific improvements that have come as a result of free market capitalism, people are living longer. Diseases that once wreaked havoc are now eradicated. Likewise, technological advances have made the world a more convenient place to live while also allowing larger quantities of products to be made at lower costs and at quicker speeds.

Capitalism has allowed wealth to be created while also creating abundant value in the lives of all those who reap the benefits of innovation: which is every single actor involved in the market process, both consumer and creator.

Mises reflects on this phenomenon by saying:

“However, it requires only a moment’s reflection to realize that the fruits of all technological and industrial innovations make for an improvement in the satisfaction of the wants of the great masses.”

But it isn’t only those who subscribe to Austrian economics who understand how free market capitalism enriches the lives all those it impacts.

The band U2’s frontman Bono has never been shy about flaunting his philanthropic work in developing nations. In his political life, he has been a huge advocate for progressive policies. However, in 2013 he admitted that during the course of his work he learned that it was not foreign aid that helped lift individuals out of poverty.

When reflecting on his work in Africa, Bono said:

“Aid is just a stopgap. Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”

Unfortunately, there are still many who, for one reason or another, refuse to see the situation clearly. Instead of associating capitalism with flourishing nations, they equate it only with suffering and wealth inequality.

As Mises says:

“Nevertheless, as a result of the zealous propaganda of the anti-liberal parties, which twists the facts the other way round, people today have come to associate the ideas of liberalism and capitalism with the image of a world plunged into ever increasing misery and poverty.”

Liberalism Is for Everyone

One of the most commonly heard arguments against liberalism and capitalism is that it favors only a select few. But nothing could be further from the truth. As Mises is sure to point out:

“Liberalism is not a policy in the interest of any particular group, but a policy in the interest of all mankind. It is, therefore, incorrect to assert that the entrepreneurs and capitalists have any special interest in supporting liberalism.”

Also lost on many is the fact that each person is directly benefiting from the entrepreneur and the capitalist they condemn. No matter how much you pretend to hate consumerism almost everyone, save the extreme minimalist, has experienced brand loyalty to some extent. And with each innovation put forth by an entrepreneur willing to take risks, the consumer benefits. At the end of the day, everybody wins.

Mises writes:  

“It hardly occurs to anyone, when he forms his notion of a capitalist, that a social order organized on genuinely liberal principles is so constituted as to leave the entrepreneurs and the capitalists only one way to wealth, viz., by better providing their fellow men with what they themselves think they need.”

Giving one specific example of how individuals have benefitted from markets, Mises reminds the reader that without them, consumers would not have near limitless access to sugar.

“No reference is made to the fact that capitalism has placed a delectable luxury as well as a food, in the form of sugar, at the disposal of the great masses.”

But still, even though these types of examples are provided with frequency, many tend to blame capitalism for all the ills and inequalities of the world.

“The links in the chain of reasoning by which antiliberal demagogy succeeds in laying upon liberalism and capitalism the blame for all the excesses and evil consequences of antiliberal policies are as follows: One starts from the assumption that liberal principles aim at promoting the interests of the capitalists and entrepreneurs at the expense of the interests of the rest of the population and that liberalism is a policy that favors the rich over the poor.”

We have already seen that this is entirely untrue. Not only do consumers benefit from new products, but with each new market innovation comes the need for new jobs. The concept of the invisible hand directly touches on this matter. Even if the entrepreneur did not intend to do a great service to his community, he does so by creating consumer value, as well as jobs, in pursuit of profit.

Therefore, these liberal policies that allow more entrepreneurial creation with fewer government restrictions do not just benefit the entrepreneurs and the wealthy. Each individual who profits, either through employment or consumer satisfaction, is a beneficiary of capitalism.

Another problem with how capitalism is perceived by others is that many who sometimes claim to be advocates for the system, or lack thereof, are anything but.

“Then one observes that many entrepreneurs and capitalists, under certain conditions, advocate protective tariffs, and still others—the armaments manufacturers—support a policy of “national preparedness”; and, out of hand, one jumps to the conclusion that these must be “capitalistic” policies.”

But Mises explains:

“If many entrepreneurs today advocate protective tariffs, this is nothing more than the form that antiliberalism takes in their case.”

But even though there is so much evidence to the contrary, there are still anti-liberals who have made it their life’s mission to fight free market capitalism at every corner. But for this, the great Mises also has an explanation, one that will be explained in the next installment.

Probability-Weighted Entrepreneurial Decision Making Is “Thinking In Bets”.

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Artificial intelligence deals in weighted influences on outcomes. If we know the inputs and the weights, we can predict the outcome (that’s predictive modeling). If we know the outcome and the inputs, and seek to understand the weights, that’s machine learning. Human beings would be well-advised to think in weighted probabilities of possible outcomes, rather than in black-white / right-wrong decision making. Entrepreneurs are most likely to benefit from this approach. Carefully weighing probabilities, and looking for those situations where the weighted probability of a good outcome is better than 50%, is critical for business decisions from start-ups to mature innovators.

Probability-weighted decision making is “Thinking In Bets“, according to Annie Duke. Her book of the same name is educational in a way that might help entrepreneurs to adapt this line of thinking. Stephen Phillips wrote this book review in the Wall Street Journal.

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At the age of 26, Annie Duke quit the cognitive-psychology doctoral program at the University of Pennsylvania to play poker full time. Over the course of her subsequent 20-year career as a pro, she won a World Series of Poker bracelet and more than $4 million in prize money. The lessons she learned from those years at the poker table are now distilled into “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts.” It’s the dissertation she never got around to finishing.

Our Decisions Are Always Bets.

“Poker players have to make multiple decisions with significant financial consequences in a compressed time frame,” writes Ms. Duke. “Each decision can be worth more than the cost of an average three-bedroom house.” This may seem far removed from everyday life, but “our decisions are always bets.” Relocating for a job, for instance, amounts to a wager on the job’s future earnings. And yet we constantly make consequential decisions emotionally, based on unexamined beliefs and the presumption that we control the outcomes. We also frequently fail to learn from our experiences.

How then to see reality more clearly? Ms. Duke suggests recasting our judgment calls as bets. “We don’t win bets by being in love with our own ideas,” she writes. “We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.” Thinking about choices this way brings with it a profound attitudinal shift, from binary right-wrong thinking to a “probabilistic” approach, in which we choose “among all the shades of grey.” This reframing has a clarifying effect. “The more we recognize that we are betting on our beliefs (with our happiness, attention, health, money, time, or some other limited resource),” Ms. Duke writes, “the more we are likely to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe.”

More Flexibility In Decision Making.

Moreover, when we state our judgments circumspectly in the form of a bet, we are more inclined to revise them with the arrival of new information. “When confronted with new evidence, it is a very different narrative to say, ‘I was 58% [certain] but now I’m 46%,’ ” writes Ms. Duke. “That doesn’t feel nearly as bad as ‘I thought I was right but now I’m wrong.’ . . . This shifts us away from treating information that disagrees with us as a threat.”

We’re also less likely to assume that our decisions alone dictate outcomes. We habitually ascribe favorable outcomes to personal agency, discounting the role of fortune. Conversely, if a decision turns out poorly, we believe that it must have been ill-judged. Ms. Duke cites the closing moments of the 2015 Super Bowl, when Seattle Seahawks coach Pete Carroll directed quarterback Russell Wilson to pass the ball rather than hand it off. Later, most who had watched the game thought that this was the wrong play to call because it resulted in a turnover and cost the Seahawks their chance to win the game. Actually, it was a percentage play undone by an unlikely interception, Ms. Duke points out.

We often apply double standards when we judge our own decisions versus those of others: When we suffer a setback, we may dismiss it as an aberration, overlooking the extent to which it was self-inflicted. But we don’t extend the same pass to others; as the vilification of Mr. Carroll attests, they are the authors of their misfortune, merely lucky when they succeed.

We come by these instincts honestly—they are evolutionarily grounded in the survival benefits of “creating order out of chaos” and the reproductive payoff of aggrandizing ourselves at the expense of others. But they also cause us to miss out on teachable moments.

Sharper Truthseeking.

As a rookie poker player, Ms. Duke was susceptible to these tendencies. Basking uncritically in her wins yet slighting the victories of others as flukes, she ignored many of the insights that might have helped her improve her game. She credits the empirical, dispassionate habits of mind instilled by “thinking in bets” with opening up new learning opportunities.

Phil Ivey, a 10-time World Series of Poker bracelet winner, is an exemplar in this regard. Instead of reveling in his triumphs, Ms. Duke relates, he picks them apart to find what he might have done better. “When we look at the people performing at the highest level of their chosen field,” she notes, “we find that the self-serving bias that interferes with learning often recedes and even disappears. The people with the most legitimate claim to a bulletproof self-narrative have developed habits around accurate self-critique.”

Ms. Duke counsels us to seek strength in numbers, forming “truthseeking” cohorts committed to challenging self-serving narratives and critically interrogating the beliefs behind our decisions. She found such a “pod” among her poker-playing confreres, including her brother, Howard Lederer, and Erik Seidel, two-time and eight-time World Series bracelet winners, respectively. “My group helped me to give a little more credit [to others] than I otherwise would have,” Ms. Duke writes, “to spot a few more mistakes than I would have spotted on my own, to be more open-minded to strategic choices that I disagreed with.” It was hard-won, incremental improvement, but “that little bit had a huge long-run impact on my success.”

“Thinking in Bets” belongs to a tradition that locates decision-making acumen in the negative space of omission rather than in commission—checking one’s instincts, expunging wishful thinking, scourging oneself. It is a sober and disillusioning book, and that is not a bad thing.

Mr. Phillips writes a regular tech-books roundup for the San Francisco Chronicle.

Appeared in the Wall Street Journal February 21, 2018, print edition as ‘A Gambler’s Education.’

Photo by Jack Hamilton on Unsplash

What a Colony of Ants Can Teach Us About Emergent Order

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Anyone observing a colony of ants will notice that these creatures appear to be among the most organized of the animal kingdom. Never failing to stay in formation, these ants seem to be heeding the call of some unseen authority. So widely held is this observation, that ants are usually seen as the epitome of conformity, thinking not for themselves but steadfastly following a central authority.

But what if our observations are incorrect. What if instead of being the perfect example of submission to power, ants represent something vastly different than blind obedience. Perhaps, ants are actually a manifestation of what F.A. Hayek called, spontaneous order.

Individuals are each armed with knowledge specific to their own unique lives. But as much as each person knows or thinks they know, it can never be enough to plan for society as a whole. It is for this very reason that planned societies are so dangerous. It claims to have a perfect knowledge of things when such an act would be completely impossible.

And yet, popular opinion has arrived at an opposite conclusion. The idea of leaving the market to its own devices is seen not only as risky but dangerous. Without laws, who would be there to protect consumers from tyrannical capitalists? Without regulations, how would we ensure that the world would not dissent into a chaotic free-for-all in which every man was out only to protect themselves? Many cling to this belief structure and use it as a justification for why we need more government in almost every area of our lives.

But, as has been discussed before, nature has been a prime example of showing us that there is actually more order born out of this “chaos” than has ever existed as a result of man-made laws. And for anyone doubting this fact, they need only take a closer look at our small ant friends.

Market Signals

Just as humans have spontaneously created language as a means of guiding our actions in cooperation with others, so have ants learned to communicate with each other to achieve the most productive possible results. Rather than obeying some central authority, as is often believed, ants rely on pheromones and hydrocarbons— described by the dictionary as being “a compound of hydrogen and carbon, such as any of those that are the chief components of petroleum and natural gas.” In short, these signals serve as a language used between these ants to communicate with each other.

It is this signaling system that informs the other ants where to dig and where to forage, so that they may not waste their time on fruitless endeavors. It also warns of the danger that may be lurking ahead. This organic signalling helps maintain natural order for the entire colony while combining the individual knowledge held by each ant. It is a remedy to the knowledge problem because it recognizes that no one single ant has all the information needed for survival. They must rely on their joint knowledge to achieve the greatest results because relying on one sole ant would simply be dangerous and illogical.

Think of it as a bunch of drivers on the road. When there is a long patch of road without lights or stop signs, drivers rely on hand signals and gestures to communicate with each other so as to prevent dangerous situations from arising. And somehow, without central authority, this communication structure is able to happen seamlessly most of the time.

But instead of using hand signals, the ants secrete pheromones and hydrocarbons and help give feedback to the others in their colony. If there is danger in a surrounding area, the ants will send out the signal and others will know to avoid the chaos. It is the ant version of Yelp, giving feedback and telling consumers which products or companies to avoid. And again, this happens without anyone calling the shots. As pheromones change and ants pick up on the scents of their brothers and sisters, they adjust their actions accordingly. The very same thing happens in the market.

It is this system, or lack thereof, that has allowed these resilient creatures to survive, albeit to the dismay of many annoyed humans. Since each ant is armed with its own knowledge of the environment surrounding them, they are best suited to warn others. If there were a leader of an ant colony, this survival system would crumble to the ground because one ant, just like one single person, is incapable of knowing everything.

It seems almost silly, then, that the animal kingdom is wiser than humans when it comes to emergent order.

Rules, Rules, Rules

Humans are scared to put their trust in market order because they have been trained not to. We have been taught from birth to rely on central authority to tell us what to do. In school, we are taught that we cannot do any action unless condoned by a teacher because, they must know better than we do.

We do not trust our own instincts, or our own judgement, as a result of these rules. But it only serves to our own dismay. But the internet is changing the way we communicate. Social media and the wonders of technology are allowing us to benefit from the knowledge of others. None of us will ever have all the information needed to make fully informed decisions when it comes to the rest of the world, but by sharing this knowledge we bridge the gap. Just like the ants communicate with each other for the best possible outcomes, so can individuals share their personal knowledge with others for the best possible outcomes. And the real beauty of this is that it doesn’t require a central authority.

Indeed, humans could learn a lot from paying more attention to the emergent order of the animal kingdom, and less attention to arbitrary and uninformed central authority.

Creativity And Coordination: The Dynamic Efficiency Of Entrepreneurial Order.

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We live in the information age, where computers store, retrieve, transmit and manipulate data or information for us. Artificial intelligence promises to make the computers even better at this task, analyzing the information, finding patterns, learning and modeling and predicting. A.I. will make all computers more powerful and useful, including the miniaturized ones we carry around in our hands and call smartphones.

Historically, technological revolutions like this one free up human workers for higher level tasks. What is the higher-level task when computers are storing, retrieving and manipulating and analyzing data for us and providing it to us in the form of knowledge?

It is to generate new information. With the management of information taken care of by computers, humans can focus on the far more important task of generating new information. New information can lead to economic growth and improved quality of life. Entrepreneurs generate new information.

In The Theory Of Dynamic Efficiency, Spanish economist Jesus Huerta de Soto sets out the most important features of the economic system driven by entrepreneurship.

Entrepreneurship Always Generates New Information.

Entrepreneurs exercise a uniquely human form of imagination, based on unique knowledge that only they possess because it’s in their mind. They imagine a state of affairs that does not exist today, that they believe they can bring to fruition in the future as a result of their own actions. This is not the extrapolation of existing data. This is creativity – new subjective information. Once entrepreneurs act upon it, it becomes shared with others as a new proposition. The proposition either works or it doesn’t. Customers either buy or do not buy, creating further new information in both cases. Based on the market feedback, the entrepreneur re-imagines, acts again, constantly revising and adapting, and the cycle of new information generation continues.

Entrepreneurship Is Fundamentally Creative In Solving Social Dissatisfactions.

The environment in which entrepreneurial creativity operates is one of social dissatisfaction. People live in a permanent state of discontent: even though quality of life may be improving, things could always be better. (If that weren’t the attitude, then no-one would do anything – we’d live in a permanent state of happy inactivity.) They might not be able to articulate this dissatisfaction, but they feel it. Something’s wrong. The entrepreneur has an intuition for this feeling, and is able to imagine how to design improvements. He or she assembles resources to implement the design, creating something that did not exist before.

Entrepreneurship transmits new information that everyone can use in the innovation process.

Once the entrepreneur makes an exchange with a buyer of the innovation, there is new information in the marketplace. A new offering, a new price established, and news of the willingness of consumers to spend their money to improve their lives this way. A new development pathway is opened up. Market prices represent very dense information, conveyed very efficiently, and available to everyone.

Entrepreneurship co-ordinates economic activity.

Everyone has a personal hierarchy of needs that they are constantly attending to, buying more of this and less of that, substituting new goods and services they discover for those they now find inadequate, adjusting savings and investment. They’re always tinkering and doodling and imagining and thinking, “What if?” There is dynamic, continuous change. The entrepreneur’s role is to monitor this dynamic, and respond to meet consumers’ changing needs as fast and efficiently as possible. Other entrepreneurs observe this activity, and stay alert to jump on when there’s a gap to fill. In this way, resources are used to maximum efficiency, as defined by meeting consumer needs. It’s a complex, fast speed dynamic co-ordination.

Entrepreneurship is competitive.

Once an individual entrepreneur has created an opportunity for profit, the exact same opportunity – with the same offering to the same customer at the same price at the same time and place – can not be created by another entrepreneur. The chance is gone. The entrepreneurial process is one of rivalry, where entrepreneurs vie with each other to be the first to create opportunities for profit and, if they are late, to create the next one. Competition is not about the multiple suppliers performing exactly the same action to sell the same good at the same price to the same customer. It’s not dog eat dog. It’s about rivals seeking to improve the customer’s satisfaction by creating the next opportunity for an exchange.

The entrepreneurial process never stops or ends.

There is no state of equilibrium, that magic state that economists conceive of in order to make their spreadsheet models run smoothly. The entrepreneurial process of coordination is unbroken and never ending, always improving consumers’ lives, offering them new means to achieve their ends. It’s an ongoing process of creativity and ever-expanding knowledge and resources.

Individuals, companies, institutions and an entire economic system will all be more efficient the more they fuel entrepreneurial creativity and coordination.

 

 

The Road to Individualism: Coding Boot Camps May Be More Beneficial Than College

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Thanks to the modern technological world that we live in, knowledge has never been more obtainable than it is today. But while information is more accessible than it ever has been, the cost of a college degree has actually skyrocketed, resulting in a rise of individuals needing to take out student loans in order to pay for their education.

As more young Americans are getting degrees, the degrees themselves are actually losing value. When there is an influx of college-educated Millennials all competing in the same sector, that college degree no longer serves to distinguish you from the rest of the pack.

Fortunately, thanks to the technological advances we have seen during our lifetimes there are now alternatives to earning a four-year degree that might actually help you get ahead in the job market while saving time and money.

Before the days of the internet, the study of computer science was something you learned only in an institution of higher knowledge. Today, anyone wanting to learn how to code can do so without ever taking out a cent of student loans.

Coding boot camps, for example, have provided a viable alternative for those interested in pursuing a career in the tech field. Instead of graduating with $50,000 of student loan debt and no real world experience, those opting to attend coding boot camps will pay a small portion of the cost of a college degree while earning actual experience in a fraction of the time.

While the cost of boot camp programs varies from a few thousand dollars to as much as $20,000, the average cost is around $11,450. However, even the most expensive coding boot camps are cheaper than the average out-of-state or private school tuition costs for a traditional four-year degree program.

Another convenient aspect to these coding boot camps is the amount of time it takes to complete the course. Most of these courses last about eight weeks and after completion, many students transition directly into their careers. In fact, some of these programs operate on an apprenticeship model where students are actually earning money while they learn to code.

The demand for coding skills is not likely to decrease at any time in the near future. In fact, it is only expected to grow in the coming years. According to code.org, there are currently 523,222 job openings in the computing field and only 42,969 computer science students graduated into the job market last year. Colleges are not turning out enough computer science graduates to fill these jobs and coding boot camps are helping to fill these gaps.

There was a time when a college degree was essential to building a lucrative career, but thanks to the technological advancements of our time, a four-year degree is no longer the only option. For those looking for alternative ways to break into the tech world, coding boot camps offer financially feasible alternatives to the traditional college experience.

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