Leading the Revival of Individualism & Self Reliance

Liveblogging Mises’ Economic Classic, “Liberalism”

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Having set a goal to read all the economic classics I never got around to, Mises’ Liberalism was high on my reading list. Utterly exhausted yet intrigued after liveblogging F.A. Hayek’s The Road to Serfdom, I was ready for a change of writing style while still exploring the roots of classical liberalism.

In the introduction of his work, Liberalism Mises beautifully explains a few things liberalism is and a few things it is not. Specifically, he touches on the role material welfare plays in classical liberalism.

Since many tend to associate free market liberalism with greed and an emphasis on material wealth, he explains that liberalism “does not promise men happiness and contentment, but only the most abundant possible satisfaction of all those desires that can be satisfied by the things of the outer world.”

Unlike other schools of economic thought that appeal solely to emotions when crafting policy, true liberalism seeks to abolish the causes of suffering, rather than the “suffering” itself. After all, the suffering is merely a symptom of a greater problem. Speaking to this Mises writes:

“All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself.”

And this is the true beauty of liberalism. While the government may shelter, clothe, and feed many through the welfare system, none of these items adequately help an individual truly pursue what makes them happy nor will it satisfy the longings of their soul.

A lack of clothing, food, and shelter are not solved by the welfare state’s existence. Likewise, an individual’s future will not be secured simply because the government gives them temporary comforts. For a person’s life to really be improved or successful, they must be free to pursue their own passions absent government intervention.

As Mises writes:

“We can only ask them to let us go our way undisturbed, just as we do not hinder them from getting to heaven in their own fashion. Let them shut themselves up in their cells, away from men and the world, in peace. The overwhelming majority of our contemporaries cannot understand the ascetic ideal. But once one rejects the principle of the ascetic conduct of life, one cannot reproach liberalism for aiming at outer well-being.”

Rationalism

Another misconception held by opponents of true liberalism is the focus on rational thinking.

As Mises points out:

“Liberalism is usually reproached, besides, for being rationalistic. It wants to regulate everything reasonably and thus fails to recognize that in human affairs great latitude is, and, indeed, must be, given to feelings and to the irrational generally—i.e., to what is unreasonable.”

Liberalism may always be rational, but human beings are not perfectly wise, and this is perfectly consistent with liberalism. As Mises says, “Liberalism does not say that men always act intelligently, but rather that they ought, in their own rightly understood interest, always to act intelligently.”

Many intelligent people smoke even though it is bad for their health. Mises comments on this phenomenon saying, “‘I want to do what is harmful for my health even though it may be unreasonable,’ hardly anybody would regard his conduct as commendable.”

And yet, policymakers do this all the time. They champion folly by protecting it through legislation. They promise a safety net for ill-conceived choices rather than letting natural consequences serve as a teacher.

But liberalism most certainly does not ignore the flaws inherent to the human race. Instead, it understands that human nature is what it is and individuals frequently act in ways antithetical to their own ends. But instead of merely sugarcoating it and making excuses for irrational thinking, liberalism asks individuals to take responsibility for their behavior.

By noting how we are frequently imprudent actors, we can correct and cater our choices to more desirable ends. Mises says, “Liberalism is not a completed doctrine or a fixed dogma. On the contrary: it is the application of the teachings of science to the social life of man.”

The Aim of Liberalism

Critics like to accuse classical liberals of only looking out for the interests of certain wealthy groups. However, this is simply not the case. When liberalism is examined through the lens of history we see that it was the only ideological school of thought that sought to lift all of mankind to higher standards of living.

Many will juxtapose classical liberalism with socialism claiming that the latter is the only ideology which really aims at helping all of mankind. But Mises knew better.

He writes:

“Historically, liberalism was the first political movement that aimed at promoting the welfare of all, not that of special groups. Liberalism is distinguished from socialism, which likewise professes to strive for the good of all, not by the goal at which it aims, but by the means that it chooses to attain that goal.”

Continuing with this theme he says:

“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.”

The real aim of liberalism then, is to improve the lives of all individuals by letting them create value by living their lives according to the dictates of their own conscience. Liberalism allows individuals to plan for their own lives, instead of letting the state do it in their stead.

Liberalism is the reason why mankind has had access to groundbreaking innovations that have increased life spans, reduced global poverty, and made our lives more convenient along the way.

As Mises writes:

“In order to appreciate what liberalism and capitalism have accomplished, one should compare conditions as they are at present with those of the Middle Ages or of the first centuries of the modern era.”

Anti-liberalism promotes policies that would cause society to regress toward more primitive conditions. It is ironic then that today’s anti-liberal “liberals” call themselves “progressive.”

Profits Are The True Measure Of A Company’s Contribution To Society.

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We’ve quoted Andy Kessler before as a reliable, common sense defender of capitalism and free markets. Here he is again with a eyes-wide-open point of view about so-called socially responsible investing. The most socially responsible contribution of a company is to make a profit.

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Wall Street considers it a truism that money sloshes around the globe seeking the highest return. But there are countless investors, believe it or not, who are willing to accept lower returns. P.T. Barnum supposedly said there’s a sucker born every minute. Many of them go into so-called socially responsible investing. Laurence Fink of BlackRock , which manages $6 trillion in assets, is only the latest to evangelize this fad. But the basic idea is to throw money away. In reality there is no trade-off of Vice vs. Nice. There are only returns.

“Corporate social responsibility” fails under the same halo. Reread Milton Friedman’s 1970 article “The Social Responsibility of Business Is to Increase Its Profits.” For stockholders to push their view of social responsibility, Friedman wrote, is simply to force others “to contribute against their will to ‘social’ causes favored by the activists.”

Profits are the best measure of a business’s value to consumers—and to society. No one holds a gun to the customer’s head. If the buyer weren’t glad to pay the free-market price, he would make the product or perform the service himself. Yet this idea is questioned all the time.

A case in point is Amazon, currently worth $625 billion based on expectations for Amazon-size profits to come. A Seattle Times headline in 2012 lamented that the company was “a virtual no-show in hometown philanthropy.” Sally Jewell of the retailer REI told the newspaper: “I’m not aware of what Amazon does in the community.” Really? Besides offer low prices, huge variety and quick delivery, along with jobs not only in Seattle but around the world, as manufacturers leverage Amazon’s platform to reach global customers? But the company didn’t sponsor concerts in the park! Gimme a break.

A counterexample is Etsy , which for years proudly touted that it was a “B Corp,” one “certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance.” Sounds a bit wishy-washy, but maybe it was supposed to attract social-impact investors. How’s it going? After Etsy went public in 2015, it opened at $31 a share, bottomed out in 2016 around $7, and now trades at $19. That’s worse than dead money, given that the overall market is up a third since Etsy’s IPO. Little surprise, Etsy is no longer interested in being a B Corp.

In 2016 the Rockefeller Family Fund decided to “divest from fossil fuels.” Whether or not that improved the family’s social standing in New York, it couldn’t have been good for the bottom line: Brent crude was $40 a barrel then, and it’s now pushing $70.

California’s $350 billion state pension system, Calpers, has its own set of confusing divestment initiatives. Last month the American Council for Capital Formation warnedthat Calpers “has demonstrated a troubling pattern of investments in social and political causes that are truly jeopardizing the retirement fund.” Of the system’s nine worst-performing funds, the report says that four focused on renewable energy.

Individual investors can put their own money into hundreds of “sustainable,” “responsible” and “impact” funds, with names like Domini Social Equity and the Neuberger Berman Socially Responsive. Returns are all over the place. But of about 175 that had full-year returns in 2017, 75% underperformed the market. That’s a steep price to pay.

Don’t be fooled by the word “sustainable.” Al Gore and Goldman Sachs alum David Blood set up Generation Investment Management to pair sustainability research with traditional investing rigor. A few leaks of Generation’s returns have shown pretty good numbers. But it depends on what the meaning of “sustainable” is.

Think of Google, which made Al Gore a fortune thanks to his pre-public stock options. Google seems to be sustainable in the business sense, but in the climate-change sense? The company has data centers all over the place that use gobs of electricity. Perhaps Blood and Gore—I know, that would have been a much better company name—are simply deniers, since reports from the Securities and Exchange Commission show that their fund owns not just Google but also electricity hogs Facebook and Amazon.

Master investor Charlie Munger summed it up last year: “Gore hired a staff to find people who didn’t put CO2 in the air, and of course that put him into services. Microsoft , and all these service companies were just ideally located, and this value investor picked the best service companies, so all of a sudden the clients are making hundreds of millions of dollars . . . and he’s an idiot.”

The bottom line is this: Do whatever you want with your money. Feel virtuous. But if you think you’re being charitable for “responsible” investing, you are, but not in the way you think. If you don’t put your money where the returns are, someone else will. By passing up gains, you’re just making guys like George Soros and Steven Cohen richer so they can buy more bad art. Let the money slosh.

Appeared in the January 22, 2018, print edition of The Wall Street Journal.

The Road to Individualism: College Isn’t Always the Answer

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In previous essays, I discussed how the concept of primary education and the wide acceptance of the concept of “adolescence” have worked against the individual. While elementary education has belittled the concept of the individual, adolescence has kept students in a permanent state of childhood. And unfortunately, both have inhibited the sense of personal responsibility and individualism needed to gain a truly beneficial education.

But there is another aspect of our current education system that is stifling individualism: higher education.

Is College the Answer?

College has been the traditional route to success for decades. In order to be successful, one must get a four year degree in something “practical” so that they may be able to provide for themselves and their families. And while this might have made sense in the past, the situation has changed in our modern world.

As tuition rates continue to rise and the student loan bubble continues to inflate, many young Americans are looking for alternative solutions that will help them prepare for the future without going into massive amounts of debt before they have even begun their careers.

Certainly, a college education is still necessary for many looking to become doctors, lawyers, or academics, it is not the only solution when it comes to building a prosperous career.

In many cases, going into hundreds of thousands of dollars’ worth of debt for a degree can actually be detrimental to both your financial future and your professional career. For example, those spending their early 20s in classrooms and lecture halls earning a degree are missing out on years of experience in the workforce.

For those who do not wish to accumulate debt, and whose desired career fields do not require a degree, college is not the end all be all. In fact, before there was such a huge emphasis placed on earning a college degree, many Americans began their professional life the old fashioned way; through apprenticeships.

There Is Another Way

Currently, there are over 400,000 apprentices in the United States alone. For those who choose an apprenticeship over college, there can be many benefits, which include avoiding student loan debt altogether.

For trades and other vocational careers which utilize apprenticeships, there is also the advantage of being able to earn a decent living soon after you complete your training. For example, someone learning the trade of sheet metal may be able to make $50,000-$60,000 immediately after their apprenticeship ends.

Even with a college degree, many graduates must start at the bottom of the barrel earning low salaries while they work their way up the ladder. Combining the low salaries with monthly student loan payments can present many financial issues for those fresh out of college.

There is no one-size-fits-all solution when it comes to gaining the skills and education needed to build a successful professional career, but for those who are looking for alternatives to the traditional collegiate system, apprenticeships can help you fast track your career without all the financial strings attached.

In the past, college used to the key ingredient for success. But the world is a very different place than it used to be. Now, skills can be obtained based on personal preference and what works best for the individual in question.

The world will always need doctors and lawyers, but it also needs a wide array of other specialized skills that make the market unique and prosperous. In order for individuals to achieve full and prosperous lives, they have to be able to pursue whatever makes them happy.

When college serves as a barrier to entry, rather than a vessel of education or workforce training, it does not help the individual grow. Education, like the market must be full of individualized options that allow individuals to create value and achieve a sense of purpose.

The Road to Individualism: Treating Teens Like Adults Brings Success

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If we want children to be prepared for adulthood, why do we keep treating them as adults? Just as elementary education needs to be completely rethought, so do we also need to rethink how our society treats teenagers.

It wasn’t so long ago when teens were making their own way in life and even starting families. While medical advancements have increased life expectancy, allowing us to have higher time preferences for things like marriage and families, being able to provide for yourself while also creating value will always be of the utmost importance.

But instead of preparing today’s youth for the world that awaits them, we treat them like children until they reach the magical age of 18. Then suddenly, after years of coddling and under exposure to real-world issues, we push them out into the world and expect them to fend for themselves.

True, for many people this is the rude awakening they need to get their adult lives going, but what if there was a different way to prepare children for adulthood. The truth of the matter is there is a very simple solution to this problem: stop treating teens like children.

Teenagers are wasting the most curious and ambitious years of their lives trapped behind desks. While there may have been some rational reason for forcing children to congregate in large buildings to study core academic subjects, the internet has made this almost completely irrelevant. There are now learning options available to anyone. And unlike public education, these online resources are individualized and allow students to go at their own pace.

By having more freedom over their studies, teens now have more time to devote to finding out what they want to do with their lives. So many adults spend years in school mastering a particular topic only to discover that their area of specialty no longer interests them. Instead of subjecting today’s youth to that type of displeasure, what if we allow them to try a few things out while there is still time.

As more unconventional private schools pop up around the country, many have focused their junior high and high school curriculum on apprenticeships and internships. At Acton Academy, for example, students get the chance to go out into the workforce for a preview of what a given field would be like. They learn and observe the day to day and ultimately get to decide if it is something they want to do.

Often times, the most rewarding of these types of experiences occurs when a student realizes that their dream job is not what they thought it would be. But, by having this preview, teens are able to reroute their charted course and find what makes them happy. And by having the freedom to do what makes them happy, these individuals will create value in the marketplace.

This is just one example of how we can change the way we approach education for today’s youth, but ultimately what we need are options that break the cycle of perpetual childhood.

Teenagers are individuals just like adults, and unless they are treated as such, we cannot expect them to magically transform into responsible humans on their eighteenth birthdays. This belief in adolescence along with forced schooling until the age of 18 inhibits teenagers from getting ahead in life and keeps them in a permanent state of arrested development.

If we want a world robust with choice and diversity in the market, we need individuals who have the freedom to innovate by going after their passions.

Trump At The Margin: Why The Market Goes Up.

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Economics is about individuals and individual decision-making. That’s not how it is packaged by the government, academia, or the media. That’s because the government wants to control our lives through central planning, legislation, bureaucratic rule-making, and interventionism. They can’t do that one individual at a time, so they make up aggregates like GDP and total employment and the inflation rate, tell us they can manage those aggregates, and then make great sweeping collectivist rules and laws and mathematical models that claim to do so. Academic economists seek jobs and consulting contracts and research grants helping the government, and so they crony up. The media is mostly an arm of the establishment, and so they tag along too.

Economics At The Margin.

Thinking about economics as the study of individual choices, and about how to give people the means to make choices that improve their circumstances, leads to an entirely new and different realm of action than government planning and intervention. One example of innovative individualist economic thinking is what Professor Mark Skousen calls the Marginalist Revolution. The concept of marginal value originated with the Austrian economist Carl Menger. He demonstrated that, when we look at economics through the lens of the individual, all value is subjective – it depends on the feelings and emotions of the individual, and his or her individual preference scale. Whether or not a sale can be made, and at what price, is a subjective decision by one individual.

Moreover, each sale is at the margin, i.e. it is a matter of whether the individual wants one more of the item, and their perceived value of that one item, here and now, compared to what else he or she could purchase right now, irrespective of any historical or average or nationwide or worldwide “price”. For example, if you check into a hotel late, and you are thirsty for a Diet Coke, and the most convenient location is the vending machine, which requires you to deposit $3.00, you may well make the purchase. At the margin, it’s the most convenient and desirable alternative, compared to leaving the hotel and spending time searching for an all-night convenience store. Alternatively, if you are doing your weekly shopping and you see a 12-pack of Diet Coke for $9.99, or roughly 83 cents per unit, you might not make that purchase because you have two 12-packs in the refrigerator at home, and you don’t feel like a Diet Coke right now, nor do you feel like carrying the 12-pack home. At the margin, the 83 cents price is not a good value for you.

Marginal Value In Real Life Individual Decisions.

Professor Skousen relates marginal value to investing in the stock market. First, all prices on the stock market are created by a relatively few marginal buyers and sellers. Only a few of them call their broker or click the trade button on their E-Trade dashboard on any given day. Therefore, it takes only a marginal shift in investor sentiment to change the direction or accelerate the movement of stock prices on that day.  He cites an example of a day when the stock of a leading technology company fell by 14% in one trading session, after an announcement that the company missed its earnings estimate by one penny. 70 million shares traded that day – but that was less than 6 percent of the outstanding shares. A marginal number of shareholders can make a huge difference when their sentiment changes. A similar principle can be identified in the real estate market. At any one time, only 5% or so of houses in a neighborhood are up for sale. If there is a shift in sentiment at the margin, and suddenly 10% of houses are for sale, the price level for all houses for sale in the neighborhood could drop by tens or even hundreds of thousands of dollars.

Trump At The Margin.

There have been a lot of articles recently to commemorate the first anniversary of the Trump Presidency, and a lot of discussion as to whether Trump should take any credit for a 31% increase in the Dow Jones Industrial Average.  There are arguments on both sides, but no-one is thinking about the individual and marginal decision-making. For example, Ed Yardeni of Yardeni Research was quoted at CNBC as saying

“….coinciding with Trump’s victory was mounting evidence of a global synchronized boom. In our opinion, the run-up in stock prices over the past year has been a continuation of the bull market…”

Global synchronization? Hardly. All it takes at the margin is for a few investors to change their sentiment in response to Trump’s deregulatory actions, tax cut, and renegotiation of trade agreements, and to begin to feel positive about the future. Or for a few employers to take early steps to add to their workforce because they have an anticipatory feeling about economic growth.

As Mark Skousen, says:

“….marginal changes in government policies regarding inflation, interest rates, taxes and spending can make a huge difference in …investment decisions. One leader can make a difference. The right kind of leader can be bullish and the wrong kind of leader can be bearish.”

The Marginal Revolution.

Taxes may stay broadly the same, but marginal tax rates can be reduced, unleashing a few optimistic investors. Inflation may still exist, but there may be a marginal decline, perceived as positive by a few people. We may not be able to eliminate government, but we can begin a program to reduce it at the margin. And that change can start a revolution in the way political leaders think and act – a marginal revolution.

 

This Year, Make a Resolution to Celebrate Failure

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We are a week into the new year, and undoubtedly, many have already “failed” at keeping some of their resolutions. While it is all too easy to be overly critical of ourselves, losing ourselves in self-deprecating defeat is never the productive route.

So instead of getting bogged down by failure because you were not able to fully cut sugar from your diet or because you failed to visit the gym as often as you had hoped, why not treat your own life like the market, and celebrate failure as a tool for growth?

You Have to Fail before You Succeed

Any successful entrepreneur will tell you that they did not arrive at victory by avoiding failure. Not only would an attempt to do so be fruitless, since it is an unavoidable part of life, but failure is also an indispensable building block for success. It all depends on what you do with it.

Before the iPhone came into existence, Apple spent a great deal of time and resources on its Apple MessagePad. If you are unfamiliar with this particular product that is because it was a complete market dud. Only a handful were ever sold and those that did make it into the hands of consumers had extreme glitches.

The MessagePad was ultimately pulled from the market and was even recently placed in Sweden’s Museum of Failure. And although this product was not by any means a conventional success, it led to Apple eventually inventing the technology necessary for correcting the initial glitch. In doing so, it paved the way for portable electronics like iPhones and iPads.

By reflecting on the MessagePad’s failure, Apple was able to explore what had gone wrong. And by identifying the problem, they knew what path to avoid in the future. And eventually, that initial failure seemed minuscule when compared to the unprecedented success of the iPhone.

And while these stories of market failure are inspirational for hopeful entrepreneurs, sometimes we are not able to see how these lessons can be applied to our own personal life.

Failure Is Not Fun

When I was ten years old, I auditioned for a production of The Music Man. Diligently— and theatrically— singing in front of my mirror daily, I poured my heart into rehearsing for this audition. It never occurred to me that not being cast in the play was a possibility.

As it came to my turn to take center stage in a room full of theater teachers and older high school students, I performed my musical number with ease and perfection. But then came the script readthrough. What had started on a high note had ended in me dropping the script, getting flustered, and completely fumbling my lines. I had spent all my time rehearsing the song, but had dedicated almost no time to learning my lines.

Needless to say, I was not cast. And it would be eleven years before I would audition for another musical. Instead of using this failure to my advantage by perfecting my craft and being more prepared the next time, I sulked for an entire week and missed out on years of performing.

Maybe I was never meant to be a Broadway star, but because I let failure cripple me and inhibit my willingness to take risks, I will never really know. What I do know is that I missed out on many opportunities for growth all because of how I responded to one minor setback. Unfortunately, I didn’t know as a child that failure is an evitable part of life, whether we choose to accept this as truth or not.

But as we overcome obstacles and slay our proverbial dragons, we correct our failures in a very real sense by innovating our own lives. The tasks that once seems hard or unbearable get easier and we learn to push through the moments of rejection and failure. But each time we do, we get stronger and wiser, and this allows us to create value we may not have even recognized before.

But when we throw in the towel because of the unpleasant feelings associated with failure, we cheat ourselves. We may not have the iPhone today if Apple had decided that the failure of the MessagePad was just too great a burden to bear. Imagine what successes might have manifested themselves in our own lives if we had chosen to learn from failure, instead of embracing defeat.

Failure is painful, but it is absolutely necessary for growth. As billionaire investor Ray Dalio says, “Pain plus reflection equals progress.” When we accept it as an inevitable part of life, we can tame and domesticate it and turn it into something useful, to us and to others.

New Years Resolution

So, instead of getting down on yourself when your resolutions fail to come into fruition, maybe try making a new resolution: learn to grow from your failure. My main resolution this year is not to write more or work out more. Instead, my resolution is to celebrate my personal failures, because without them, I would not be the person I am today.

Entrepreneur, author, and podcast host Tim Ferriss recently published a book full of advice from those who have mastered their respective trades. For each expert being interviewed, Ferriss always asks, “How has a failure, or apparent failure, set you up for later success? Do you have a “favorite failure” of yours?” And it is this question that usually elicits the most profound responses.

As any one of Ferriss’ interviewees can attest, we cannot improve our lives until we accept what is not optimally helping us achieve our goals. One of his recent guests was Dalio himself, who explained that his great success was based on learning to think of mistakes as puzzles:

“If I solved the puzzle, the puzzle being, ‘What would I do differently in the future?,’ I would get a ‘gem.’ That gem would be a principle that would let me do a better job the next time that sort of thing came about, and I wrote those principles down and refined them over a period of time…”

Dalio eventually distilled these lessons into his highly-acclaimed book Principles.

Treat your own existence as you would a business enterprise you are heavily invested in. Understand that you will fail. Acknowledge that this can be beautiful, productive, and beneficial if you accept it for what it is. Make the conscious decision to keep improving, even when it breaks your heart to do so. Because in the end, you may end up surpassing even your own expectations for success.

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It’s Time to Reclaim the Meaning of Liberalism

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Liveblogging F.A. Hayek’s The Road to Serfdom was a journey unlike many others. While it may sound like hyperbole, I can say with full certainty that I learned more from Hayek’s critically acclaimed book than I did from my undergrad economics courses.

Intrigued by the wisdom I gained and determined to keep momentum and excitement for reading economic texts, I made the decision to tackle another economic philosopher: Ludwig von Mises.

Human Action may have been the most commonly chosen work of Mises to jump right into, I decided instead on another one of his classics. As someone who tends to to take a more radical view of classical liberalism than the great F.A. Hayek, I decided that in order to fully understand Mises’ take on the matter, I would have to go to the source. And this is what led me to the decision to tackle Liberalism.

To anyone familiar only with the modern meaning of the term liberalism, they may think it synonymous with “progressive.” Yet, nothing could be farther from the truth. Liberalism has been hijacked in many capacities and distorted to mean something contrary to its origins. 19th century liberalism, the kind proclaimed by philosophers like Adam Smith, Frederic Bastiat, and Ludwig von Mises is about the freedom to live without government constraint.

Today, it is typically associated with those who advocate for government intervention in almost every aspect of their lives. But the time has come to reclaim this term and restore it to its original meaning.

Reclaiming Liberalism

While we have experienced varying degrees throughout history, true liberalism has actually never existed. Mises recognized this in the introduction of his book when he says:

“Only with some exaggeration can one say that the world once lived through a liberal era. Liberalism was never permitted to come to full fruition.”

And yet, even with these lighter versions of liberalism, the world was able to achieve more for humanity than any other construct known to man. Thanks to liberalism, a human was no longer bound to the conditions of his birth. Anyone with a dream, talent, and perseverance was able to pursue his own happiness and create value as he saw fit.

This phenomenon that allowed mankind to be in control of their own fate also allowed men to create in ways that were not thought of before. And because of these market innovations, infant mortality rates decreased, material wealth increased, and education became accessible to more people.

Liberalism broke the chains that had bound mankind to dependency for centuries. As Mises says thanks to the spread of liberal ideas, “The barriers that had in earlier ages separated lords and serfs had fallen.”

But instead of liberalism being associated with self-sufficiency and the ability of human beings to live free from arbitrary state regulation, liberalism has now been associated with those who call for extreme government intervention.

In fact, those who have now adopted the title of “liberal” are anything but. Instead of advocating for a market that organically and spontaneously functions based on demand, these modern “liberals” call for governments to “level the playing field.”

It is for this reason that reading Mises’ Liberalism today is so important. Before the term “liberal” can be properly understood, it needs to be reexamined by studying its roots. Liberalism changed the world, but to understand how it was able to do so, we need to ensure that its rightful definition is restored.

The Road to Individualism: Personalized Education Not One-Size-Fits-All

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In 1944, economist philosopher F.A. Hayek published his book The Road to Serfdom. The pages of this classic work warn of the dangers our civilization is sure to meet if we continued to subscribe to collectivist ideologies, both in economics and politics.

And while the book issues an ominous warning to its readers, it also ensures that they are not too late to choose a different path. If we can learn from history then we are not doomed to repeat it.

Sometimes the greatest advice lies in failure. And by recognizing how something has gone wrong, we can avoid making the same mistake in the future. This is, perhaps, one of the most useful ways to look at Hayek’s book. By using the book as a warning, we can alter the course of history.

So let us pretend for a moment that we find ourselves at a fork in the road and instead of choosing the path of servitude, we followed the road to individualism. And on this path, individualized education is of the utmost importance.

Against the Individual

In Road to Serfdom, Hayek touches a great deal on how compulsory education has contributed to the destruction of liberty. Today’s public schools are not designed for the individual to thrive. Instead, individuality is stripped in favor of the collective and children are routinely taught that their value is derived from how they benefit the group.

Instead of individualized learning methods, public schools offer a one-size-fits-all model. If your child does not thrive under the state-sanctioned methods, that is too bad. Public schools do not have to cater to market demand because taxpayers are forced to fund them regardless quality.

But what if instead of herding children into large buildings like livestock, chaperoning them from one task to another, we tried a different approach to education. What if instead of one-size-fits-all education there were open-sourced resources available. What if instead of teaching children what to think, we focused instead on teaching them how to think.

As hard as it is to imagine this is possible given the current state of our education system, the free market is already providing what education consumers are looking for, because unlike the government, the market responds to demand, rather than state mandates.

The Internet

Knowledge has never been as readily accessible as it is today. While education used to be reserved only to those who held a certain status or wealth, that is no longer the case. Sites like Khan Academy exist to teach you anything you want to learn from math and science to coding and blockchain basics.

“Google Courses” is another platform that allows education to be open-sourced and available to those who are interested. There are even Ivy League schools that are now uploading course syllabi and making it available to all.

But even aside from traditional education subjects like math or science, Youtube is providing other types of education as well. Whether you want to learn how to play the guitar, dance, or sew there are hundreds of options waiting for you on YouTube.

The overall goal of education is supposed to help children prepare for their future. But the free market is filled with opportunities for all sorts of different skills. It seems silly to limit children’s exposure only to math, reading, and science when music or other trade skills may be how they choose to create value in the market in the future.

However, Youtube also has many traditional educational resources. Some professors have even opted to record and upload course lectures online, giving the public the same access to these as those paying to take the college course.

Access to all these different educational opportunities is enabling individuals to find the model that best suits them. And when students are put in an environment where they are free to thrive, they usually do.

Are You Entrepreneurial? Self-Assess These 8 Attributes.

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The future quality of our work and our world is going to be governed more and more by our entrepreneurial capabilities. The emergent technologies of A.I., cloud computing, and global talent and commerce platforms will augment everyone’s capacity, and will place increased demands on each of us to define our specialist value, specialist skills and specialist contribution in the interconnected global economy.

In addition, organizational norms are going to evolve and change, mostly in the direction of less structure and greater flexibility. In the future, we are more likely to work for ourselves, or as part of a flexible team arrangement in which our individual contribution is measured carefully and rewarded commensurately.

The requirement for each of us, as a consequence, is to develop and reinforce our entrepreneurial skills, so that we can plan, learn and adapt on our pathway through a fast-changing world of work, technology and organization. It is valuable to conduct a self-assessment of our entrepreneurial aptitude. Here are the attributes to examine.

Empathy

Empathy is the primary entrepreneurial skill: the ability to understand and respond to how others feel and how they think and why they behave as they do. Those others are co-workers, team members, customers, partners, networking connections, information providers, service providers, and innumerable people with whom we interconnect on global platforms. We all are naturally empathetic, but our circle of empathy can be quite narrow. Adam Smith famously pointed out that a person living in Europe might feel some distress in the event of a massive earthquake in China that caused millions of deaths, but it would be nothing compared to the distress caused by some private, local misfortune. But this narrow circle of empathy will not suffice in the modern world. Our empathetic engagement needs to extend worldwide, across demographics, and over multiple contexts. If we want to sell our talent or our services worldwide, our empathetic reach must complement our ambition.

Interconnection

We used to call it networking. Today, the updated term is interconnecting. It is possible to interconnect with virtually any individual, any firm, any vendor or service company, any knowledge and any learning provider. On global platforms, we can offer our talents and evaluate and purchase the talent of others. On social media, we can give and get appraisals and ratings of the products and services and experiences that we buy or we sell. We can potentially analyze the customer reaction of millions, or we can be the one to offer such a reaction.

Interconnection is a practice, a constant activity that expands and reinforces our entrepreneurial capacity. By working hard at interconnecting, we can improve our performance every day. It takes effort and a certain amount of desire.

Adaptability

The first principle of entrepreneurial economics is that the future is uncertain and unpredictable, and no amount of planning or forecasting or predictive analytics will make future uncertainty any more tractable. Successful entrepreneurs embrace uncertainty, betting that they can navigate its changing currents. The attribute required for confident navigation is adaptability, being able to adjust to new and emerging conditions. Adaptability can be innovative and even transformative. If you can change course, change beliefs, change behaviors, change priorities, or change alliances to adapt to new signals from the marketplace, your entrepreneurial prospects will always be bright.

Time Preference

Consumption is an act of high time preference, the expression of desire for immediate gratification – I want it now, rather than later. Entrepreneurship requires a highly developed practice of low time preference – the willingness to save, invest and take the time required to develop a product or service offering that will yield future returns while accepting sacrifice during the development phase. Entrepreneurs live in the future rather than the present. They make bets on what consumers will buy in the future, and they spend their effort in the present to create the appropriate offering. Entrepreneurs sacrifice in the present. They may take low or no salaries, they prioritize research and development funds, they test and experiment to polish quality rather than rush to market. Check your time preference to ascertain your appetite for the entrepreneurial life.

Lifelong learning

The traditional view of education and learning is that we concentrate it in our younger years so that we can devote our mature years to pursuing a career or developing a business based on the learning foundation we have established. Today, that approach simply doesn’t work. Change, both in people and technology, is so rapid, and the enormous flow of data available for analysis from every interaction and transaction is so transformative, that the old concept of education is totally outdated. The new concept is lifelong learning. In practice, that means that we commit ourselves to learning as a practice – that we will be open to data, analytics, information, and experience, and actively use these inputs to learn, to improve, to change and to get better at whatever we do. Nothing is fixed, no knowledge is permanent. Our attitude must be that of the lifelong learner, nurturing the capability to take in new knowledge, process it, and make whatever changes are required to act upon it, without clinging to any fixed precepts.

Co-creation

One of the outcomes of interconnection and lifelong learning is co-creation: innovation as a shared, social practice. Dr. Cristina Mele of University Of Naples calls entrepreneurs “inno-mediaries“. Inno-mediaries encourage new innovators (consumers, communities, and experts) to enter into the co-creation of innovation. Each individual one of us represents a critical component. The more we work at learning and the more we work at being interconnected, the more we contribute. We all should seek to be more knowledgeable, and better equipped for the collaborative economy. Co-creation is a practice we can each actively cultivate.

Grit

Working in the future, sacrificing the present, and learning through experimentation (which inevitably results in a lot of failed experiments) all require what Angela Duckworth calls Grit – the power of perseverance. There is no overnight success, and most entrepreneurial journeys require many years, often decades, of sustained effort. The earliest years may be the most trying, when the entrepreneur is at the lowest point on the learning curve, perhaps stretched for resources, with few successful data points to cultivate. There is no substitute for stick-to-it-iveness.

Individualism

Inherent in every attribute on our list is the embrace of individualism. You probably have ideas that are different from those of others, and may be mocked for that very reason. You may pursue a path that others don’t. You may read signals from the marketplace differently. You may be an innovator, the very definition of which is challenging the status quo. The ethos of individualism is that we all are free to try as hard as we can to contribute to society in a way that is different and better. Everyone else is free to provide feedback, both positive and negative, and the entrepreneur laps up that feedback in the form of learning, taking no offense at the negative feedback, and no excessive pride in the positive feedback. Individualism is the system that generates economic growth, improved life experiences and greater social order. The entrepreneur embraces individualism in the service of all.

 

 

Without Spontaneous Order, Ridesharing Would Never Exist

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In a previous essay, I discussed how the English language and its lack of central control exemplified what economist F.A. Hayek referred to as spontaneous order.

Spontaneous order is the belief that when individuals are left to their own devices, they will organically create order out of chaos. However, since we have grown accustomed to living under an extreme regulatory state, many have lost faith in humankind’s ability to self-organize.

But the beauty of spontaneous order is that it exists whether we believe in it or not, which makes any attempt at regulation not only wasteful but harmful. Those who doubt the existence of this organic order will usually attempt to demean its pivotal role by labeling it as dangerous and destructive.

Without manmade laws, it is believed that human beings will fall victim to their alleged carnal nature and seek to do harm unto others without any regard for how their actions impact others.

We have seen this type of justification from almost every government agency in existence today. Without the FDA, it is believed by many that those in the food and drug sectors will fall prey to their own self-interest and sell harmful substances in order to earn more money and grow rich at the expense of the consumer. But many fail to realize that this is not the case. And once such example is the sharing economy.

The Sharing Economy 

When the sharing economy began rising to prominence in the marketplace, it was virtually unregulated. Its existence was born of the consumer’s desire for higher quality transportation.

When it came to hailing a ride,  consumers were not left with many choices. Cabs had been the only game in town for over 80 years. The traditional cab companies had not had to deal with competition before, therefore, they had no real reason to innovate.

But this void in the market left a natural opening for spontaneous order to occur. Without asking for permission, companies like Uber and Lyft were able to grow their own free market legacies. And the consumers were grateful.

The model was simple, if you owned a car and wanted to make money you could turn your car into a taxi and work only when you wanted. Talk about a truly spontaneous model! But it didn’t take long for doubt in spontaneous order, and a love of cronyism, to influence policymakers.

“This must be regulated,” many shouted. Without ridesharing under the thumb of government, there was a misguided belief that chaos would roam free and consumers would be placed in harm’s way. Without having to obtain the same licenses as can drivers, what would ensure these drivers would not be a threat to consumers!

Of course, these fears completely disregard the fact that traditional cab drivers are humans too, which means they are also prone to error. And while required to obtain a license, many drivers still encounter traffic incidents and wrecks. A license does not ensure safety, or only ensures government involvement.

This lack of faith in the sharing economy led to regulations that not only harmed consumers but also those who sought employment through these services.

In addition to driver safety on the road, there was also the fear of “getting into cars with complete strangers.” And even though can drivers are also strangers, these fear tactics were used by the cab unions specifically to incite government action.

The Invisible Hand

True, human beings are not all good people, however, humans are fueled by self-interest. And as a motivator, self-interest can be a source for good. The principle of the invisible hand is the belief that even when someone’s motives are purely financial, this inspiration can actually serve to help others and benefit society as a whole.

The billionaire who loves his wealth but is also creating thousands of jobs for individuals is not by default greedy. Think of the households that now have financial security as a result of this alleged greed.

The billionaire’s self-interest has actually benefited society by creating jobs. And the goods and services created will also benefit numerous consumers. This concept of the individual hand in vital to spontaneous order. It is a natural guideline that ensures things run smoothly and that consumers and the producers both mutually benefit.

It is highly unlikely that your Uber driver will hurt you just because they can. Absent the legal consequences, the driver has accepted this job as a means to make money. The passenger, on the other hand, has used Uber because they need a ride. This mutual exchange ensures that things will run smoothly.

And let’s say, for argument’s sake, that a drive is harmful to a passenger, or that a drug or food product harms a consumer. Do we need government for accountability? The answer is no.

Feedback and word of mouth provide what is needed to ensure quality and consumer safety. Yelp exists absent any government intervention and it helps consumers make informed decisions. If you harm a consumer, those harmed will signal a warning to other consumers. Just like flocks of birds are capable of swerving to avoid predators. All animals are obsessed with self-preservation, and we will do what we need to ensure we stay safe. We do not need rules and regulations for this. In fact, these rules are the same that would have most likely prevented companies like Uber from ever existing in the first place.

Consumers want to consume quality products that will leave them safe and satisfied. This mutual understanding is exactly what makes spontaneous order so remarkable.

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