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Opportunity

It’s Not Luck: Recognizing And Acting On Opportunity Is The Way To Get Ahead In America.

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Some people believe that becoming rich is a question of luck. I disagree. Whether chance presents you with a good opportunity or not is not the key question. Rather:

  • Do you actually recognize the opportunity in front of you? Or do you fail to appreciate it for what it is? As the Swiss author Max Frisch once said, “Chance shows me what I have an eye for.”
  • And if you do recognize your lucky break, do you take advantage of it? Do you act? Or are you someone who says: “Maybe now is not the right time. Perhaps it’s something to think about one day…”

The likelihood that someone would only ever experience either good or bad luck during their lifetime is very low. Over many years and decades, in most cases, good and bad luck should balance each other out.

1. Setting Big Goals

Jack Ma failed the test to get into university, wasn’t very good at math, and didn’t know much about technology. But from the beginning, he thought big and set very ambitious goals for himself. Shortly after founding Alibaba, he told a journalist: “We don’t want to be number one in China. We want to be number one in the world.” He was so sure of his future success that, in February 1999, he even had one of Alibaba’s earliest meetings filmed—to make sure this key moment was documented to mark the beginning of his success.

2. The Ability to Sell

Two-thirds of the interviewees in my book The Wealth Elite stated that they owed much of their success to their ability to sell. For them, selling is not just about marketing products or services. They define sales far more broadly. To them, selling is all about being able to convince other people, whether it’s getting approval from a government official, persuading the perfect applicant to accept a job, winning over employees, or talking a banker into making a firm financial commitment. “Everything is sales,” explained one of my superrich interviewees.

3. Nonconformity: Taking Joy in Swimming Against the Current

The investor Jim Rogers studied history and philosophy at Yale and Oxford before he took a job on Wall Street in 1968. During hard times for the US stock market, he succeeded in laying the foundations for his wealth and success.

Rogers met George Soros at a major investment bank. Together, they founded the Quantum Fund. They tore up the investment banking rulebook, buying stocks, commodities, currencies, and bonds from all over the world. They were also among the first to use innovative strategies such as short selling.

Unlike most other investors, Rogers bought shares in companies that were in trouble. In the mid-1970s, for example, he invested heavily in the aircraft company Lockheed. Rogers once told the story of a fancy dinner with bankers and investors. One of the other guests had heard that Rogers had been buying Lockheed shares. At that time, Lockheed was hit by a number of scandals and getting bad press nearly every day. The company’s share price had collapsed.

“Who would invest in a company like that?” wondered one of the guests—loudly enough that everybody at the dinner could hear him. The other guests joined in the laughter. Rogers felt humiliated—after all, he was the butt of their joke.

But Rogers had done his homework, and he was right with his positive analysis of the company. The share price shot up, and his fund made a huge profit. At the same time, the S&P 500 Index rose by just 47 percent, the Quantum Fund managed by Rogers and Soros gained an incredible 4,200 percent.

4. Being Able to Handle Setbacks

Most of the superrich have faced serious setbacks and crises. What is striking is the attitude they generally take when things go wrong. They do not blame outside forces or other people but look for the fault in themselves.

They do not complain about being the victims of circumstance or the evil deeds of their opponents; they take personal responsibility for their mistakes. Nor do they make excuses for negative market developments. If the market takes a tumble, they blame themselves for misjudging the market. So often, this is what distinguishes successful people from unsuccessful people.

5. Focus, Focus, Focus

In early July 1991, Bill Gates Sr. invited some guests over for dinner, including his son Bill Gates, Jr.— the founder of Microsoft—and the investor Warren Buffett. These were two of the most successful men in the world who, for many years, had been at the top of the Forbes World’s Billionaires list. The host asked his dinner guests, “What factor do you feel has been the most important in getting to where you’ve gotten in life?”

Buffett immediately replied, “Focus.” Bill Gates, Jr. agreed.

Warren Buffett, too, had focused on a single goal for decades. According to his biographer, Alice Schroeder, even as a child, his dream was to become rich. One of his favorite books was One Thousand Ways to Make $1,000. When he was 11 years old, Buffett announced that he would be a millionaire by the time he was 35. At 16, he had already saved up $5,000. Today, that would be worth about $60,000—not bad for a 16-year-old. His prediction was only off by five years. He made his first million by the time he was 30.

6. The Ability to Win Trust from Others

John D. Rockefeller, one of the richest men in history, is proof of just how important trust is in business. For the young Rockefeller, a key to his future success was realizing that “old men had confidence in me right away.” Throughout his incredible career, he said, his biggest problem was always “to obtain enough capital to do all the business I wanted to do and could do, given the necessary amount of money.”

His ability to win the trust of banks and investors was one of his most valuable assets, as Rockefeller knew well: “It is chiefly to my confidence in men and my ability to inspire their confidence in me that I owe my success in life.” So, what’s the best way to get other people to trust you? By acting and—even more crucially—by thinking in a way that inspires trust. Warren Buffett applies the following test to every decision and action: is it something you would be happy for your wife, family, friends, and neighbors to read about the next day in their local newspaper?

7. Persistence and a Willingness to Experiment

Many books stress the importance of persistence, and that’s true. But staying power alone is no guarantee of success. It needs to be combined with another very important characteristic: the willingness to experiment. Experimentation is more important than a precise business plan.

Michael Bloomberg, No. 9 on the Forbes list of the richest people in the world with assets of $55 billion, details the earliest days of his company. One of his key insights is that rigid planning can do more harm than good:

You’ll inevitably face problems different from the ones you anticipated. Sometimes you’ll have to “zig” when the blueprint says “zag.” You don’t want a detailed, inflexible plan getting in the way when you have to respond instantly.

If you want to understand the success of many startup companies in Silicon Valley, you need to understand the idea of “pivoting.” This involves being prepared to radically change your business model at a moment’s notice. The goal is not to stick to an original concept and prove how good it is. The goal is to establish a strong market position. If that means abandoning the plan and giving the company a completely new and different direction, then it’s time to pivot.

Dr. Rainer Zitelmann is a historian and sociologist. This article appeared at fee.org.

Progressives And Conservatives Both Misunderstand The Economy. It’s The Result Of Individuals Pursuing Their Own Goals.

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There are many different ways to distinguish libertarians from progressives, progressives from conservatives, and conservatives from libertarians. Here’s one of my favorite ways. Both progressives and conservatives regard the country to be an entity with purposes. In contrast, libertarians understand that the country (as opposed to its government) has nothing that can meaningfully be called “purposes.”

You as a sentient individual have purposes. (“To graduate from college and to have a fulfilling career.”) Your family can meaningfully be said to have purposes. (“To raise the children well and live debt-free.”) Your business has a purpose. (“To earn as much profit as possible by making and selling better mousetraps.”)

An economy, according to its original Greek meaning, is the material affairs of a household. Economics — “oikonomia” — means “household management.”

Wikipedia reports that Aristotle, in his Nicomachean Ethics, defined “the word ‘economy’ as ‘the art of household management’.” Each household can be run well or poorly; when run well, it is run “economically.” The household’s means — its space, its furniture, its appliances, its inventories of food and drink, its time — are used to promote as many as possible of the household’s ends.

Likewise for you as an individual. You marshal your means to fulfill as many as possible of your ends. So too for a business. Each business uses its capital and inputs to earn profits.

And to marshal means in a manner that fulfills as many as possible ends requires not only planning, but also conscious effort to execute the plan.

In sharp contrast to an individual, a household, and an organization such as a business firm, what is today called an “economy” has no purposes. The economy has no hierarchy of goals that it or its participants pursue. Each American, each American household, and each American firm (for-profit and not-for-profit, and governmental) has a hierarchy of goals that it pursues, and each does so by acting within the American — actually, within the global — economy. But these many attempts to fulfill individual goals are no part of a collective effort to fulfill higher goals.

The American economy has no goals. It is not an economy; it is not a goal-directed entity, such as a household. An economy, properly speaking, is a catallaxy. According to F.A. Hayek, a catallaxy is “not a single economy but a network of many interlaced economies.”

Libertarians recognize this reality. Progressives and conservatives deny it.

The Economy Isn’t a Family

Progressives think of the country as a large family. According to this mindset, each American is rather like one of more than 300 million siblings, all under the direction of Papa (the U.S. president) working with Mama (Congress), who are supervised by wise (if in practice sometimes senile) grandparents (the Supreme Court). Just as within a family each member bears an ethical responsibility to care for fellow members, so, too, within a country each citizen has a similar ethical responsibility to care for fellow citizens.

The family itself earns an income. And while it’s appropriate for some siblings to receive out of this income more resources than are received by other siblings, the distribution of income within the family is not driven by commercial, arm’s length negotiations or by luck. Instead, the distribution of the household’s income is consciously chosen by its elders, and the chosen distribution is meant to enable the family to achieve as many as possible of its goals.

Thinking of the country as a large family, progressives judge the actions of each citizen toward others as they would judge the actions of someone toward his or her siblings.

When Bernie Sanders thunders against income inequality, he seems to be motivated by the same animus that would motivate any of us to look with stern disapproval on a handful of siblings accumulating large stores of toys and candy and refusing to generously share these with other siblings. Refusal to share, after all, works against the family’s purpose of ensuring the maximum well-being of each member.

I suspect that when Sanders and other sincere progressives propose to redistribute income they think of themselves as proposing to do nothing more than to ensure that the American family works according to plan.

The Economy Isn’t a Firm

Conservatives are no less confused. They tend to think of America as a large corporation — America, Inc. — whose goal is to produce and sell as much as possible in order to earn profits as high as possible.

This mindset perhaps explains why conservatives are less agitated than are progressives by income inequality. If America, Inc., is to fulfill its goal of earning high profits, it must operate at peak efficiency. And so to motivate citizen-workers to produce as much as possible, high performers must be allowed to keep most of what they earn. There is no injustice in super-producer Gates having more material resources than ordinary producers Boudreaux and Tucker. Super-producer Gates contributes disproportionately much to America, Inc.’s, bottom line.

This conservative mindset also explains why conservatives are less supportive than are progressives of the welfare state. Just as General Motors would be acting contrary to its plan of maximizing profits if it paid some of its workers to live idly, so, too, does America, Inc., act contrary to its plan of maximizing profits by subsidizing the idleness of some of its citizens.

Conservatives recognize the justice of some welfare payments. Each corporation, after all, typically agrees — for perfectly good business reasons — to help its workers in their retirements and to compensate workers for injuries suffered while on the job. But a large and indiscriminate welfare state, in the conservative view, reduces the country’s operating efficiency.

My hypothesized mindsets of progressives and conservatives are admittedly simplistic. Not only do progressives differ amongst themselves in their conceptions of society, as do conservatives, progressives and conservatives often share with each other similar attitudes and priors.

Yet as a first approximation of an important difference separating both progressives and conservatives from libertarians, I submit that my hypothesized mindsets capture something real. Unlike progressives and conservatives, libertarians judge society and government policy by how well individuals are able to fulfill their goals; libertarians do not suppose that individuals who comprise the large collectives that we call “countries” do or should aim at fulfilling the non-existent higher goals of these large collectives.

Donald J. Boudreaux is a senior fellow with the American Institute for Economic Research and a professor of economics at George Mason University.

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