Markets in Everything and not Just in Theory

The main arguments for government intervention center around public goods and collective action problems.  These arguments are weakening.  Far from being the sole domain of bureaucracies, these are the areas with the most opportunity for innovation.  We see more of it every day, and there is more to come.

Scholars in the classical liberal tradition have argued on ethical and efficiency grounds for markets in everything.  Odd as it may at first strike us the commodification of everything from vital organs to votes allows for freer, fairer allocation and coordination and reduces waste.  Many people will debate the desirability and possibility of markets in everything.  These are interesting discussions but the great thing is no one needs to win them.  We can create markets in everything right now.

Consider AirBnB or Uber as a first step.  People have unused resources like a spare room or a car.  Technology reduces transaction costs associated with simultaneous coordination among thousands of people.  We can turn our unused resources into valuable commodities to buy and sell.  Take it a step further and consider what else we could do.  Why not solve collective action problems that plague community projects with Kickstarter or Groupon like mechanisms?  Want a new park in the neighborhood, setup the campaign and don’t break ground until enough people have voluntarily pledged.  Those who don’t will be easily seen and neighbors can try to convince them to join.  No one’s taxes or HOA dues go up across the board or against their will.  No simple majority can force everyone to their preferred allocation of resources.

There is nothing inherently noble about the political means of allocating resources and addressing collective action problems.  In fact, it comes with a whole heap of unique problems.  Opportunity exists all around us to move more and more processes out of arbitrary first-come-first-serve and political machinations and into the dynamic, voluntary marketplace.

In fact, the less of a market you see in a good, service, or industry, the greater the opportunity.  I launched Praxis because higher education had become more and more cartelized.  There’s not enough of a market.  I want to bring higher ed back into a more competitive market.  Health care, transportation, and finance are top candidates for major disruption.  They’ve become stagnant and further and further removed from the open market process.  That creates wedges of opportunity.  From the major to the mundane, technology allows us instant, decentralized communication and reduces transaction costs associated with large groups with diverse desires.  These means we can bring just about anything into the world of free exchange and enjoy all the advantages and flexibility of the price mechanism.

What can you bring to the market?  I’m excited to see what’s next.

A Word with T.K. Coleman: Escapism

I decided to try something new on the blog and ask my good friend and colleague T.K. Coleman to freestyle riff on a single word.  I gave him a word and without notice he gave me what came to mind.  I love how it turned out.

The word today is escapism.  I’m intrigued by unconventional interpretations of escapism (I wrote in favor of a form of escapism and one of the best decisions I ever made) and I knew T.K. would bring something unconventional.  I suspected he might have a few thoughts in a few paragraphs.  As always, he exceeded expectations.  An active mind is ready at a moments notice to spill out goodness.  I’ll turn it over to him.

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Escapism.

The first thought that comes to my mind is this image:

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It’s a picture I stumbled across a few years ago and it continues to grip my imagination.

What’s going on in this picture?

At first, it seems pretty obvious that this woman is a courageous or adventurous soul who’s preparing to make a daring and admiral leap towards freedom. After all, she’s getting ready to jump out of a cage. How can that be an example of anything other than a movement from captivity to freedom? But take a closer look. Where in the world is she going to land? She’s in the middle of the sky. Surely she’s going to die if she just jumps out of that cage without a parachute. Her cage may feel restricting (as the truth often does), but at least it offers her a better chance of survival than just taking an irrational leap into the clouds, right? Isn’t she being just a little bit crazy here? Isn’t she just allowing her frustration with the ugly truth of her situation to seduce her into illogical fantasies and false hopes? Maybe. But there are so many possible questions we could ask:What’s holding up the cage and how long will it continue to be able to do so? Is there anything holding it at all? Is the woman really jumping into the middle of the sky or is there something or someone waiting to catch her and we’re just unable to see? Does she know something about her situation that we don’t know?

It probably seems foolish for me to engage in this kind of exercise over a surreal photograph, but I think it illustrates the ambiguities involved in our judgments regarding when people are simply making an escape versus when people are practicing escapism.

Let me explain:

We tend to think of the word “escape” as the act or process of breaking free from restriction. The Merriam-Webster dictionary, for instance, lists the following as the first three entries for the term:

to get away from a place (such as a prison) where you are being held or kept

to get away from a dangerous place or situation

to get away from something that is difficult or unpleasant

So if someone says “My friend really needs a plan of escape,” we’ll most likely be inclined to regard that person’s friend as being in an undesirable situation and thus in need of some help. While it’s possible for us to regard a plan of escape as being a bad thing, it’s also possible for us to regard it as a good thing. We wouldn’t support a mass murder’s efforts to escape prison, but we’d definitely support someone’s efforts to escape slavery.

When it comes to escapism, however, we tend to think of it as the act or process of avoiding reality. Here’s what the same dictionary says about that word:

habitual diversion of the mind to purely imaginative activity or entertainment as an escape from reality or routine

If someone says “My friend is an escapist,” we might be inclined to regard that person’s friend as being a delusional sort of individual who could benefit from a healthy dose of reality. Escapism tends to have a much more negative connotation than “escape.” If someone describes you as a person who’s trying to make an escape, there’s a chance that we’ll look at your efforts as noble. If someone describes you as an escapist, that’s almost always going to be looked at as a bad thing.

Sometimes we accuse people of practicing escapism (i.e. being delusional or irresponsible) when they’re actually just using their imagination to create an unconventional escape from an unnecessary or unjust form of confinement. This is precisely what J.R.R. Tolkien was getting at when he wrote the following:

“Fantasy is escapist, and that is its glory. If a soldier is imprisoned by the enemy, don’t we consider it his duty to escape?. . .If we value the freedom of mind and soul, if we’re partisans of liberty, then it’s our plain duty to escape, and to take as many people with us as we can!”

Neil Gaiman elaborated even further when he wrote:

“People talk about escapism as if it’s a bad thing… Once you’ve escaped, once you come back, the world is not the same as when you left it. You come back to it with skills, weapons, knowledge you didn’t have before. Then you are better equipped to deal with your current reality…Fiction can show you a different world. It can take you somewhere you’ve never been. Once you’ve visited other worlds, like those who ate fairy fruit, you can never be entirely content with the world that you grew up in. Discontent is a good thing: discontented people can modify and improve their worlds, leave them better, leave them different. And while we’re on the subject, I’d like to say a few words about escapism. I hear the term bandied about as if it’s a bad thing. As if “escapist” fiction is a cheap opiate used by the muddled and the foolish and the deluded, and the only fiction that is worthy, for adults or for children, is mimetic fiction, mirroring the worst of the world the reader finds herself in. If you were trapped in an impossible situation, in an unpleasant place, with people who meant you ill, and someone offered you a temporary escape, why wouldn’t you take it? And escapist fiction is just that: fiction that opens a door, shows the sunlight outside, gives you a place to go where you are in control, are with people you want to be with(and books are real places, make no mistake about that); and more importantly, during your escape, books can also give you knowledge about the world and your predicament, give you weapons, give you armour: real things you can take back into your prison. Skills and knowledge and tools you can use to escape for real.”

As both Tolkein and Gaiman point out, sometimes the best way to escape imprisonment is to risk looking like an escapist by taking your mind far away from the reality of your problems and focusing your attention on something that stimulates inspiration and creative thought.

Sometimes a legitimate escape towards true freedom can appear to be a delusional indulgence in mere escapism. And sometimes those who choose to remain where they are in the name of “facing reality” are the true escapists because they never face the realities made possible by radical leaps in their thinking. I think of the slaves who stayed back on the plantation laughing at the “silliness” of the ones who sought to get away and I think of Harriet Tubman’s words when she said “I freed thousands of slaves, and could have freed thousands more, if they had known they were slaves.”

Now go back to the picture. There seems to be this ambiguity there when I really consider things. Maybe the woman is moving towards greater freedom. Maybe she’s moving towards lesser freedom. I simply don’t know. That sense of “I don’t know” —that’s what I think about when I hear the word “escapism.” I can be sure of what the word means, but can I be sure that I’m always correctly applying it to others when they ignore the realities I prefer them to focus on? I don’t know. I sometimes suspect that freedom may have a closer relationship with fantasy than what I’m currently prepared to believe.

The Danger of Conflating Education with School

In the airport recently I saw this ad:

 

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I was struck and almost offended by it.  Not only does the idea of this autonomous individual being “gently nudged” sound a bit creepy and paternalistic, the ad implies that we should be happy for Hector.  Why?  It tells us nothing about what Hector loves or wants.  It tells us nothing about why Hector was running from school.  It tells us nothing about what Hector went on to do.  It simply states that he was, “pushed to reach his potential” and “succeed in school”.  But succeeding in school may not have anything to do with success in life for Hector.  No matter.  Well meaning teachers and parents will do, “whatever it takes” to get kids in school and keep them there.  They’ll cajole and pressure them to get passing grades on tests and in subjects that have almost no bearing on anything important to the kids.

We’re saturated with Orwellian doublespeak when it comes to school.  It’s gotten to the point where almost no one seems to remember that education exists apart from school.  Same goes for words like success and achievement.  School is used as a synonym.  A simple Google image search for the word education results in all the trappings of school.  But school is one of the narrowest, least effective means of education.

If we mean by education a tamed will and constrained imagination, school does a decent job.  If we mean the temporary memorization of a set of arbitrary facts chosen by arbitrary authority and the permanent crystallization of the life-as-a-conveyor-belt mindset, school does a decent job.  But then it’s more about obedience than education.  Education is about transformation.  It’s a process of transforming the way we see the world and giving us new conceptual tools to put on as lenses and improve our ability to navigate towards our goals.  Kids aren’t given much chance or scope to explore and decide what goals they want to pursue or how they want to do it.  They don’t even get responsibility over their own schedule.

All genuine learning is self-directed.  It happens only when the learner has the desire.  Obedience and hoop jumping can be generated by compulsion and deprivation, but transformative education requires freedom.  If Hector really wanted to be in school he wouldn’t need a nudge.  If he was there of his own volition because he wanted to learn what they were teaching then he might genuinely learn.

Hector was nudged and pushed into school by others.  Not a great way to become the creative force in his own life.  Most kids dislike school and would skip it if they could get away with it.  Before immediately attempting to get them back within the fences we might ask why they want to escape.  It’s not because kids simply won’t push themselves to do challenging things.  Watch them play.  They do it all the time.  It’s not that they won’t pour themselves into study and experimentation to improve knowledge and skill.  Watch them work to beat a video game.  They’re not running away from hard work or education.  They’re running away from school.  Maybe we should let them.

Some Lies I Believe

I think Michael Jordan’s Hall of Fame Induction speech where he calls out everyone he thinks disrespected him is one of the greatest ever.  I find Alec Balwdin’s “Always be closing” monologue in Glengarry Glen Ross incredibly inspirational.  I loved when Kevin Durant said, “It’s my fault” after playing an amazing playoff game while his teammates let him down.

Strictly speaking, all of these are lies.  Jordan’s high school coach didn’t disrespect him.  He saw an undeveloped talent and made a reasonable decision with no malice.  All the employees Baldwin yelled at were not losers who shouldn’t even think about drinking coffee until they can close a deal.  Durant was not to blame for the loss.

Jordan chose to interpret everything as a sleight.  He used it as a chip on his shoulder.  Probably not a very psychologically healthy move in normal life.  Baldwin’s speech is a terrible way to manage people in the workplace.  Durant’s claim that he was to blame reveals a God complex that is a pretty dangerous outlook.  Yet I love each of these instances.

Only once you know no one is out to get you can you benefit from pretending they are.  Humans adopt beliefs and take actions based on story.  We need narrative.  Sometimes, especially if you’ve achieved some modicum of success, life simply does not present much conflict or direct opposition.  Yet we are moved by stories of heroes and villains.  This is when the truly great ones fabricate a narrative that powers them to achieve.

I sometimes joke with my wife that I want her to pretend to leave me for a few days so I can feel enough angst to write music.  As a teen I wrote songs constantly, fueled by high emotions.  A stable, secure marriage is a real challenge to musical creativity!

When life doesn’t provide them I tell myself stories of struggle.  I create myths wherein villains and haters are obstructing my way or mocking my effort.  I don’t actually make enemies with real people, but I weave a narrative that produces a chip on the shoulder.  I enter into a game where no one really believes in me and metaphorical bullets fly from every side.

A belief that the universe is trying to destroy you is incredibly disempowering.  But once you know it’s not true yet selectively choose to play as if it is you become unstoppable.  You can’t be unstoppable if nothing is trying to stop you.

Put that coffee down.

How to Keep the Young and Poor from Succeeding

Let’s face it. I’m not that young anymore. I’m also not poor anymore, and I live a comfortable middle-class American life. Most older, better-off middle-classers like me got where we are through the dynamic market process. The trouble is, now that we’re doing pretty well, that same dynamic process is a threat. I don’t want some young whippersnapper or poor immigrant to outwork me. What if they succeed faster than I do? What if they create more value than I can, and so outcompete me for a job?

Take heart, well-heeled middle-agers. I have a plan. My scheme for keeping younger and poorer people from succeeding—and possibly making us have to work harder to stay on top—is two-pronged: We’ve got to affect both supply and demand.

We need to restrict the supply of economic opportunities. We need to make those opportunities more costly and thus out of the reach of many young and poor. We also need to suppress the demand for jobs and entrepreneurial ventures. We need to make it more beneficial to stay out of the market than to participate in it.

Let’s get to some specifics.

Restrict the supply of opportunities

The biggest advantages young and poor people have over us are very low opportunity costs and a low-cost lifestyle. This means they don’t have to give up much to work a job, and they don’t need to earn much to cover their expenses. Because of these major advantages, they can work for very low wages, and thus become attractive for employers to hire and train. At low wages, they’ll always find work, and worse yet, they’ll be constantly learning and improving—adding to their stock of human capital.

The obvious solution is to make it illegal to work for low wages. Working for free is absolutely out of the question. If young and poor people could simply offer to work for little or no pay, they’d soon be gaining valuable skills and competing with us for jobs! Let’s cut that first rung off the ladder, lest they climb over us some day.

Young and inexperienced workers don’t have a lot of expertise. They make mistakes. Of course, if they’re allowed to participate in the trial-and-error process of the market, the incentives will soon drive them to develop expertise and be reliable suppliers of goods and services. That would be a travesty for us. We need to keep them unskilled and unreliable. The solution is to create a labyrinthine web of licenses and regulations that make it illegal for anyone but experts to sell goods or offer services. Since we’ve already banned working for low wages or apprenticing for free, it will be almost impossible for these novices to learn from a seasoned expert until they gain the necessary skill. We can make it even harder by adding lots of fees and costly training sessions to obtain licenses.

There needn’t be just one law making low wages illegal or just one licensing and regulatory regime. We need a wide variety of complex and ever-changing barriers. High taxes on productivity and profit, union dues and demands, work restrictions, rigid job categories, seniority bias, massive credential requirements, health and safety rules to cripple upstarts, consumer protection laws to hamper smaller producers, no access to capital or ability to stay in line with the law without costly lawyers and accountants, etc., etc., ad nauseam.

My recommendations are myriad, but they all boil down to a simple principle: Do anything we can to make economic opportunities more costly and rare. This reserves most of said opportunities for us.

Now for the second prong.

Reward non-participation

We don’t want to seem callous and cold toward those less comfortably situated. Indeed, we harbor no ill will toward the young and poor. We just don’t want them to compete with or catch us.

Since we care—and especially because we want people to believe that we care—we can’t be all “stick.” We need some “carrot,” too. It’s not enough to restrict the supply of opportunities, because some people will break the rules or work around them. We also need to suppress demand by offering some sweet incentives for young workers to stay unproductive and uncompetitive. We need to make non-participation in the market more attractive than participation.

First, I recommend a strict policy of forced education for the first few decades of life. We’ve already discussed making it illegal for the young to work or the poor to work for low wages. But we also need to make it mandatory that they do something else, and something that won’t make them more likely to compete with us now or later. We should create giant institutions where we send them all day to follow rules and do what they’re told without question. We don’t want them becoming innovative, or pursuing passions and interests that they might become experts in and thus supplant us in the market. They must only learn what the bureaucrats who run the system tell them to. (Oh, and the people who run the system should only be those who don’t really know much about competing in the market, because we wouldn’t want them passing on such knowledge.)

We can’t just make school mandatory. Many would still play hooky if it cost too much. We also need to hide the cost by paying for the whole thing through taxes and borrowing. We need to subsidize it so much that alternatives can’t compete. We need to weave a narrative about its glory so that no one wants to opt out.

But 18 years isn’t enough. We need to keep these young, hungry individuals out of our way as long as possible. I say we artificially lower the cost of otherwise very expensive degree programs and advanced studies. We can guarantee low-interest loans, throw a lot of grants and subsidies around, and always, always parrot powerful propaganda about the inestimable value of classroom learning. Let’s make the most attractive option—socially and economically—the one that keeps them from the commercial world as long as possible.

The longer we can make the education process, the better for us. Defer, defer, defer the time at which young people start entering the productive sector. The more loans they take on in the process, the better. Maybe they’ll even get married, get a nice house (we can incentivize the buying of expensive consumer goods via debt as well!), and have kids. All of these things are good because they take away one of the major advantages the young have in the workforce—their low cost of living and hence ability to bid for lower starting wages. We want them saddled with so much debt that they have to earn high wages to get by, and thus have to compete with workers who are a lot more experienced for those higher wage jobs. We need them coming out of college looking for salaries that don’t comport with their skill levels. This increases the odds that older workers like us will win.

We’ll need to address those too old or too poor for school as well. We need basic income guarantees, food stamps, and all manner of welfare to cover the costs of low-income life such that no part-time entry-level job could pay quite as much. Again, we need to make not working worth more than working.

The best part

Here’s the best part: By the time these young and poor find themselves unable to compete, with costly lifestyles and loans to maintain and little skill or experience, they’ll be older. They’ll join our ranks. They’ll lobby for even harsher restrictions on those even less experienced and less well-off than they are. They’ll demand to get the low-skill jobs they’re qualified for, but demand the pay be raised to high-skill wages. They’ll make the list of degrees and credentials they’ve accumulated the new barrier to entry to artificially raise their market value. They’ll help us perpetuate the very policies that caused their plight!

As with the first prong, these are but a few examples. Ideally a massive and shifting bundle of incentives to not enter the market as a producer can be put together: education mandates and subsidies, tax incentives to spend rather than save and to purchase education rather than other goods or business tools, housing and healthcare as long as you don’t work, and rewards for any activity that makes one less likely to try to compete with us in the market.

These policies will subtly turn the attention of nearly everyone away from value creation, innovation, and serving customers—all of which might threaten our dormancy. It will turn everyone’s attention and energy to fighting over the details of these policies and programs, to who gets which slice of the artificially limited pie and at whose expense. Some of us can really take advantage by running for political office and dividing up the warring interests we’ve created by promising them more restrictions and subsidies.

Above all, with both prongs of this strategy, we need a narrative that calls these policies noble, compassionate, and wise. We need them to be perceived as humanitarian aid to the young and poor, not as ways to keep them from succeeding. We need to make these programs universal values in themselves—regardless of the outcomes they produce. Who could oppose better wages? Who could oppose more education? Who could oppose more loans for homes or college? Who could oppose work rules and consumer safety regulations? Middle-aged, middle-class people certainly won’t, if we know what’s good for us.

We cannot abide an America in which plucky newcomers outperform us at every turn. Join me in securing our future.

Originally published in The Freeman.

The Real Motive for the Matrix

I received a fair number of comments, suggestions, and complaints after yesterday’s post about the obedience-entitlement matrix and how different generations might map onto it.  Unsurprisingly, all of them were from Millennials.  I was glad.  If someone puts your generation in a quadrant with the word “Slaves”, I hope it rubs you the wrong way.

There were two motives for yesterday’s post.  The first was just fun.  I find categories and paradigms enjoyable as intellectual playthings.  No research went into it.  I’m experimenting with different ideas to see if they entertain or enlighten in new ways.  I wouldn’t even say I stand by whatever labels and descriptors were there in any way, except that I fully admit to finding the exercise useful.

The second motive was to rub a lot of people the wrong way.  Not to actually upset anyone, but to leave all readers feeling that the categories put forth fail to accurately capture many people, and especially the reader him or herself.  Stereotypes, categories, sweeping generalizations, and even concepts like generations are made up.  They have no objective ontological status (may my philosopher friends correct me if I’m using these words confusingly).  Like all myths and symbols, they have truth value in that they convey truths, but they aren’t true.

I hope every time you see the world broken into a few big categories it makes you feel a bit like you don’t really fit into any of them neatly.  Disassociate from collective categorizations and see yourself as exceptional.  Collectivism is one of the most pernicious outlooks in the history of man and is responsible for untold evil.

This balance is to use groupings, categories, and two by two matrices as tools to enhance your experience of the world and improve your interpretive and predictive powers.  Don’t actually believe them.  There are two kinds of people in this world: those who accept being lumped into two groups, and those who don’t.

The Obedience-Entitlement Matrix and Generational Differences

I love a good two by two matrix.  Trying on new lenses through which to interpret the world is a big part of intellectual exploration.  Plus, it’s fun.  I have been fascinated for some time with differences between generations, especially since I’ve interacted a lot with Millenials (or Generation Y) in the last several years, and now I’m interacting with the next generation (I’m calling them Generation Z, because I’m not sure any other title exists currently).  There are some pretty significant differences between these two generations, not to mention the huge difference between both and Generation X, Baby Boomers, and even earlier generations.

In order to explore these generational differences, and to sate my desire for matrices, I put together the Obedience-Entitlement matrix.  Obedience – the degree to which a person follows orders and maintains existing norms – is measured from high to low on the vertical axis.  Entitlement – the degree to which a person believes they are owed something from others – is measured from high to low on the horizontal axis.

You can see the four quadrants that result.  The first label in each quadrant describes the dominant trait displayed by individuals or groups in that quadrant.  The second label in each quadrant serves as a kind of archetype, describing informally the role people in that quadrant play in a society.  Don’t mistake the second label as a career description.  It may be that, but obviously many societies don’t have slaves in the formal sense, and many people who make good soldiers are not necessarily soldiers, etc.  You get the idea.

Don’t be too distracted by the word “Slave” in the upper left quadrant.  Again, it’s an archetype.  I tried to think of a less loaded but still accurate word to describe people who are highly obedient and don’t challenge authority, and are highly dependent and expect to be taken care of.  Slave is the best word I could find.  Obviously not the kind of slaves that revolt or escape, but kind that accept their lot and seek nothing more than the most comfortable slave life possible.

Obedience-Entitlement Matrix

 

So here’s where I started having fun with it.  Thinking in terms of generational differences, I tried to map out the dominant characteristic that describes each of the last four generations.  The Greatest Generation and Boomers were pretty easy.  It gets harder after that.

The ‘Greatest Generation’

The WWII generation fits pretty nicely in the upper right quadrant.  They tend to be deferential to authority and feel a need for maintaining a constant order in the world.  They don’t mind knowing and staying in their “place”, and they don’t expect anything for free.  This generation is accustomed to earning everything through hard work and individual effort, and they keep their gripes to themselves rather than upsetting the apple cart with direct action.

Baby Boomers

Boomers are in the bottom left quadrant.  They grew up questioning everything and tearing down what didn’t suit them.  A big part of their revolt came when they felt they didn’t get what they deserved.  They want things, and you’re damn-well gonna give it to them.  This is a group that’s willing to question all authority structures, and yet doesn’t mind fawning over those promising free goodies.  This is a source of radical idealism, but practical problems.

Generation X, Millennials, and Generation Z

Here’s where it gets hard.  I’ll theorize on why it gets harder in a minute, but first let’s see what we can do.

Generation X might be the least clear.  I consider myself a Gen Xer, even though my date of birth may or may not put me in the tail end of that group, depending who you ask.  I have older siblings and grew up primarily with people and accouterments considered Gen X.  So what does grunge music and a bunch of movies about discontent corporate workers and long-haired slackers mean for the matrix?  I’m still not settled on this one, but I think Gen X is mostly in the upper right quadrant in deed, if not in words.  You don’t see the abiding respect for authority that the Greatest Generation displays, yet for all the complaining and philosophizing about the system, Gen Xers pretty much do the ‘normal’ thing.  They complain about it and feel like it’s pointless, but they do it.  Xers don’t seem to have a strong sense of entitlement either.  In fact, they seem to expect mostly bad things to happen, and have made a kind of stoic peace with it.

On to Millennials.  Here’s where I’ll tick some people off.  If I can narrow down the diverse set of Gen Y characteristics to only the most common, I’d have to place them in the upper left quadrant.  Millennials are demanding and ‘high maintenance’ if you ask employers or parents.  But not in a revolutionary way that truly scares those in authority.  Millennials aren’t threatening to the status quo as much as they are frustrating.  It’s hard to know what they need.  They want a lot of things, and they want someone else to figure it out and give it to them.  They aren’t afraid to openly criticize or make demands of authority, but mostly as a way to vent emotions.  They want to be taken care of above all, and have an abiding sense that the world is unfair if they don’t get what they want.  If you provide, they’ll obey.

Generation Z is really interesting to me.  Only in the last few years have I spent a good deal of time around this generation.  I place them primarily in the bottom right quadrant.  They’ve seen older siblings pay a lot of money for college only to end up in debt living in the basement.  They’ve never known the phenomenon of ever increasing home values and 401(k)’s.  They don’t expect their lives to be better than their parents by some automatic function of time passing.  They’re not entitled.  But they also feel comfortable openly criticizing existing institutions.  Unlike most Millennials, however, they’re not afraid to do something about it and pay the price.  Unlike boomers, they don’t see revolt or reform as the best way to confront the status quo.  They simply walk away, opt out, and exit what they don’t like.  They’ve grown up in a world full of options, and they don’t feel the urge to go along with, or revolt against the game.  They just quit and find or create a new one.

The End of Generations?

X, Y, and Z are pretty hard to easily categorize.  Not just on this matrix, but in general.  They don’t seem to share really dominant characteristics the way previous generations do.  Perhaps that’s because not enough time has yet passed for us to have the ability to look back at their full record.  But I also suspect that the value of defining generations is declining across the board.

We have more choice and customization than ever.  It was once the case that everyone in a certain age range was sure to have a lot of shared experiences.  You saw the same shows, heard the same songs, wore the same clothes.  There weren’t many options.  Today it’s not uncommon for one 18 year old to be a huge fan of a band or TV show that another 18 year old in the same town has never even heard of.  The number of shared experiences and cultural icons has diminished.  This is a very exciting development!  Oppression and stagnation thrive off of sameness.  Collectivism is a dangerous mindset, but it’s becoming endangered.

Your Turn

Play around with the matrix yourself.  Place generations, individuals, companies, sports teams, or anything else on it.  Tell me why I’m wrong.  See if you can adapt it to be of more use to you.

The Trade-Off Between Productivity and Adaptability

When I got to the office this morning the WiFi was down.  It put a wrench in my whole day.  I had planned to write a blog post then jump right in to my task list.  Today was one of those productive days.  I could feel it.  But with no WiFi I couldn’t start in my preferred order.  I could do emails and several other things on my phone, but it’s much harder to write a blog post that way, so that had to wait.  I am now off my game, and struggling to get back on.

Some days I’m pretty adaptable.  If I know things are going to be unpredictable, I enter a flexible state of mind and can handle it well (when travelling, for instance).  But even though I handle it well, I’m far less productive when I’m highly adaptive.  I get back from a trip and I have a lot of catching up to do.  I have yet to find that zone where I can be highly productive and still easily roll with unexpected schedule shifts or curve-balls.

This apparent trade-off got me thinking about great sports teams.  Some of the greatest regular season teams are highly productive.  They have a plan, they are excellent at execution, and they deliver results week in, week out.  But many of those teams struggle mightily in the post season.  They face top defenses who have had longer to plan and throw out every trick in the bag.  They can upset the schedule.  Teams who operate far on the productivity side of the continuum suffer from lack of adaptability and can sometimes get blown out just by missing one or two early series.  I’m thinking of football especially.  How many Super Bowl winning teams have been the most consistently productive regular season teams, compared to the more tumultuous, creative, adaptive, and even streaky “big moment” teams?  Outside of Manning’s Colts, not many in my lifetime.

Where does this leave me?  I don’t really know.  I suspect the sweet spot is to find a way to dial in to productive mode for the regular season – the daily grind when travel and tumult are not the norm – and flip the switch to adaptive mode during the post season – the busy times and big moments where a lot is in the air.  I’m not sure how well one person or team can embody both styles of play and change between them on call.  I’ll have to think of some examples.  Still, I suspect that is where consistent greatness comes.  The kind that can win day in, day out, playing to strengths and rising to the big game with whatever’s needed.

What Does a Degree Signal?

There are plenty of critics of college.  It’s not uncommon to hear prominent pundits challenge the prevailing narrative that everyone should go to college.  Many contrarians say that too many young people are going to college, not too few.  They say that higher education is well-suited for the smart, hard-working, above average types, but too many mediocre students are attending.  They say it works better when only the best and brightest attend.  I think most of these critics have it backwards.

A degree is a signal.  It is well established that higher education’s primary value, and hence business model, is as a sorting mechanism rather than a forming mechanism.  Sure, you learn and change and gain things through the typical four year experience.  But all of those things could be had without being a registered student.  The only reason people keep paying to make the experience official is because of the signalling value of a transcript.  Given this fact, it follows that the signal would provide the most value for the marginal students, and the least value for the smartest, hardest working, highest achieving (not merely academic achievement, which doesn’t always mirror what matters in the world outside the walls of the classroom).  In other words, college is far more valuable to an average person who is content to put in less effort it than an above average talent who is very ambitious.

Considering how widespread the granting of degrees is, and considering the talent level of the typical college classroom, the degree doesn’t signal much.  It signals that you are average.  You’re like most other people.  If you’re at or below average, it can be valuable to have a way to let people know this.  If you’re above average, you want signals that demonstrate that you are, not merely those that lump you in with average.  Look around a college classroom and remember; what you’re purchasing is a signal that says, “I’m about the same as these people.”  For many of the sharpest, hardest working students, a degree signal greatly undersells them.

So much so that degrees have actually become a reverse signal in some circles.  In the venture capital world, it’s not uncommon for investors to count skipping or dropping out of college as a big plus for founders they want to invest in.  Entrepreneurs who have the courage to pursue their vision in the face of social pressure signal something really powerful.  Some of the most interesting people and opportunities in the world want an answer to the question, “Why did you go to college?”, rather than why didn’t you.  If you’ve got drive, creativity, and smarts above average, why did you choose the relatively easy, prevailing path?  Why did you wait four years to get started on the really good stuff?

Like most critics, I agree that college is not for everyone.  Where I disagree is that I think those who benefit least from it are those who are smartest and hardest working and most able to do more without it.  College is a least common-denominator signal.

A Book That Will Help You Understand Why Bitcoin is Amazing

My friend Steve Patterson – a brilliant and clear thinker, excellent writer, radical, tech enthusiast, and scholar – has written what I think is the best intro to bitcoin you can find.  It’s sufficiently basic, so even a tech noob like me can grasp it, but it doesn’t shy away from delving into the details of how the technology works.

downloadWhat’s the Big Deal About Bitcoin is the kind of book that, as you read it and immediately after, make you feel like you completely grasp the intricacies of bitcoin.  After a few days you can’t really explain or recall exactly what had you so excited.  That is a sign of a book that does a great job boiling down really complex ideas.  Big ideas take a while to understand, longer to be able to explain to others, and longest to become second-nature.  A book this small that can give you the complete intellectual understanding of the concept immediately is rare.  One encounter will convince you of the power of bitcoin.  Another will help you be able to explain it.  I’m reading it for a third time as I try to gain a level of understanding sufficient to convey it to others!

Prior to reading Steve’s book I was excited about bitcoin as currency from primarily a theoretical standpoint.  I know the dangers and limitations of government issued currency and the power and beauty of competitive, market-based currencies.  I was also very interested in bitcoin as method of payment as a practical solution to the archaic, costly, time-consuming methods currently available to individuals and businesses.  Transferring money is ridiculously cumbersome, and the fact that I’ve had to physically enter a bank branch twice in the last month – with several paper documents in hand – is absurd and annoying.  I knew bitcoin had potential as both a currency and method of payment, and I loved buying and transferring small amounts to play around with it.  What I did not understand was the real source of bitcoin’s value and power, the blockchain itself.

The blockchain is nothing more than a public ledger, but one that is completely decentralized and essentially eliminates fraud and most of the biggest problems that have long plagued both physical and digital financial transactions.  But the blockchain is more than just a financial innovation.  It’s a unique distributed software process that can be applied to anything where proof of ownership is incredibly valuable and forging such proof is low cost. (Copying paper money, or paper titles, for example).  It makes units of digital information, which by nature are infinitely copy-able, into unique, scarce pieces of data.  That single innovation has the power to transform the world, and the number of applications and technologies than can be built on top of it are endless.

Don’t get too bogged down trying to understand my explanation – I’m reading the book again to get better at explaining it, but I’m not there yet!  Pick up a copy and read it for yourself.  I’ll be surprised if you don’t walk away thinking bitcoin is the biggest innovation since the internet.

 

 

Some Podcasts I’m Listening to

EconTalk – An excellent podcast that I’ve been listening to somewhat regularly for a long time.  It’s great if you love economics, but it’s also great if you just love interesting people, big ideas, and non-conventional thinking.

School Sucks – I’ve heard about this one for a while and finally started listening to it.  I love it.  It covers a lot of topics, but the main theme is that the schooling mindset is anti-intellectual and stunts our imagination and development.  In the vein of thinkers like John Holt, John Taylor Gatto, and Peter Gray.

Alan Watts Podcast – A collection of recorded talks given by Alan Watts on religion, philosophy, science, meditation, and everything in between.  If you’ve never read Watts, this is a great way to get acquainted with his mind-stretching ideas and style.  If you have read him, it’s a cool experience to hear his voice.

Startup – A very cool almost real-time story of a podcaster starting his program and launching a company around it.  Longtime NPR Planet Money and This American Life host Alex Blumberg sets off on his own and shares the trials and tribulations of starting a company.  It’s entertaining, transparent, and inspirational.

The Tim Ferriss Show – I just started listening to this show by the author of the (badly named) Four Hour Work Week.  In the early episodes Tim takes a while to get to some of the best content and conversation, but he has excellent guests and wide ranging conversations about optimizing human performance and much more.  You never know what you’ll get, but it will be something new and challenging.

TED Radio Hour – An excellent way to get snippets and highlights from some great TED talks, with additional background info and interviews with the speakers.  Episodes are thematic, and have sound bites and interviews built around three or four TED talks on the theme.  I just pick themes of interest to me and skip around.  They do a good job of overcoming lack of visuals by adding extra audio content.

The James Altucher Show – I’m not a regular listening, but I like to check in and see what guests he has and pick and choose episodes.  They’re always good when I do!

Why I Love Voxer

I don’t spend a lot of time looking for or experimenting with new apps.  I assume I’ll eventually hear about anything that really helps me.  It takes a lot to change my systems of getting things done.  When a friend told me to download Voxer so we could connect easier than via phone or text, I was almost annoyed.  But I did it anyway.  It changed everything!

Voxer is a simple messaging tool that allows for audio, text, and images.  It’s much easier to use than the audio option native to the iPhone, and I find it incredibly natural to use it as the primary form of communication with friends and colleagues.  It combines the passive communication form of email and text – where you don’t need a coincidence of mutual availability like a phone call – with the personalization and ease of voice.  You can’t text while driving, and you don’t get to convey as much emotion and nuance.

The most valuable part is the ability to have threads with multiple people.  At Praxis, the team has two seperate Voxer threads that are ongoing.  One is for action items, and one is for big picture stuff.  We all travel a lot and are rarely together in one place, so when one of us has an idea we want to bounce around, we can have a conversation about it right away but still work around our schedules.  I’m a part of NBA and NFL threads with friends who are into sports where we debate what greatness is and trash-talk.  My kids use it to leave me messages when I’m travelling.  There is also a notes feature where you can leave notes to yourself, but without having to take up storage space on your local device like the native voice recorder app.

It’s hard to explain why Voxer adds so much value beyond the existing forms of communication, but I’m telling you if you and a few people with whom you regularly text, call, or email try it out, you’ll get it.  It’s amazing.

Two Habits That Help Me

I was checking out some new podcasts while travelling yesterday and listened to an episode of Tim Ferriss’s show where he interviewed Josh Waitzkin, on whom the book and movie Searching for Bobby Fischer are based.  Waitzkin mentioned several habits that keep him productive and help him maximize his day.  Two in particular stood out because I’ve found both extremely helpful when I practice them, but had not consciously thought about why that might be.  Waitzkin helped clarify the why.

The first is simply to begin the day with writing or some other kind of creative activity.  Do your creative work first, before checking emails or social media.  Those tasks and inputs will put your mind in a reactive orientation.  Once in react mode it’s very hard to keep the creative part flowing and it can make for a more stressful, chaotic day.  If you create first, you orient your mind creatively and then when it’s time for the inputs and tasks, you’re less reactive and more creative.

The second habit is to finish the work day with high quality work.  Whatever task or project you end the day on, make it your best work.  This not only gives a sense of pride, completion, and accomplishment that helps you transition away from work and unwind, it also leaves you in a productive, high quality mindset.  Your subconscious will carry that over into the night.  When you awake the next morning to create, you’ll already be in a good frame of mind to do so.

I’ve not always been consistent with these habits, but both essentially formed on their own as I found how valuable they were to getting and staying in the zone.  As I said, I hadn’t actually pondered them as explicit habits and discovered why they worked until the podcast, but they definitely do for me.

Should You Study the Greats, or Just Improvise?

It’s not uncommon for the most devoted students of personal health, or business startups, or filmmaking, or success more generally to be only moderately successful themselves. We’ve all met people who have read every “7 Ways”, and, “10 Tips” book on the market, yet still haven’t really gotten off the ground personally. So is greatness just too unique and context-dependent for useful road maps?

Most classes and books and seminars on how to succeed are run by those who have succeeded in some field or another. While their track record may be impressive, I always feel a little bit like successful people make up a lot of rules and patterns that helped them succeed in retrospect, and only some of them are real and valuable. If you’re too serious about it, it can make you feel like you can’t succeed unless you follow such rules or have great formmulae in place. In reality, those come later. First comes just doing stuff.

I think most endeavors in real life are more like bike riding than the checkbox tests in schools. If you wanted to be great at cycling, what would you do? Would you start with a seminar on bike riding? Best case, maybe you’d gain 5% of what’s needed from theory and experienced riders – like why a helmet might be a good idea – but you have to get 95% from just doing it.

This doesn’t mean experts and books are useless. Once you are an avid rider, only then do tips and techniques from Lance Armstrong really help you. It’s hard to even know what they’re talking about before that.

A lot of people in business school or getting MBA’s or at entrepreneurship conferences are like an aspiring cyclist spending years studying inside tips for winning the Tour de France and drafting and advanced specialized techniques for hill climbing, etc. before ever getting on a bike. Hop on and ride. A lot. Enter a few small races. Then whip out the books.

You don’t have the master something before studying it, but to really benefit from the insights of experts, you have to know what they’re talking about on a gut level. You have to be doing the stuff they’re teaching.

Glean what you can, but don’t ever let the quest for more knowledge on how to do something get in the way of just doing it.