Tag: economy

Episode 59: Taylor Pearson on the End of Jobs

Is accounting the riskiest career?  Is entrepreneurship the safest?  Today’s guest says yes, because the world is changing and “jobs” are being replaced by the ability to adapt and create value outside preset rules.

Technology has dramatically reduced transaction costs when it comes to education and employment. Taylor Pearson, author of a bestselling book The End of Jobs, joins me to talk about risk and antifragility when it comes to jobs and occupation.

Beyond entrepreneurship, we discussed the ongoing democratization of tools of production and creation of new markets.

Visit his website taylorpearson.me

If you want more than a job, check out show sponsor Praxis for a one-year apprenticeship with an entrepreneur and life-changing projects and challenges.  discoverpraxis.com

This and all episodes are also available on SoundCloud, iTunes, YouTube, and Stitcher.

A Tale of Two Cities: Civil vs. Political Society

In one city it seems the innovation never ceases.  Bright and talented dreamers from across the globe flock there to build amazing things.  They create solutions to problems both commonplace and incomprehensible.  You can find entrepreneurs and investors working round the clock on everything from entertaining apps to asteroid mining to life extension.  In the past few decades alone the denizens of this city have revolutionized the planet, put massive computing power in everyone’s pocket and all the libraries of the world at the fingertips of the majority of earth’s population.

This city is always looking forward, upward, onward.  It is relentlessly focused on solving problems and improving quality of life.  It is driven by curiosity, new frontiers, and prosperity.  From this city have come simple yet revolutionary technologies that unlock billions in dormant assets like extra bedrooms, apartments, and cars.  Customers love them.  Investors love them.  And the city can be proud of the world-changing impact made by the companies headquartered there.

There is another city much different.  This city puts up barriers and blockades to keep bright and talented people out.  It proposes solutions to problems that don’t exist.  You can find demagogues and petty tyrants working 9-5 on everything from grocery bag taxes to restrictions on tree branches.  In the past few decades alone the figureheads of this city have managed to take record amounts of money from citizens and demand record levels of compliance with confusing rules and regulations.  They’ve taken untold creative power out of every citizen’s efforts and resources out of their pockets.

This city is always looking backward and downward.  It is relentlessly focused on creating new conflicts and categorizing everyone’s relative quality of life.  It is driven by fear, doubt, and preservation of the past.  From this city have come complex and confounding ordinances that strangle active assets and reduce quality of life.  Customers have no choice.  Investors can’t divest.  And the city can take credit for world-changing companies that have relocated to other cities to escape the Leviathan.

Both cities are the same place.  In this case, San Francisco.  But many cities share the same fate.  The citizens are the same.  Yet they live in two spheres simultaneously and the institutions and incentives in those spheres are so drastically different you can barely recognize the actors in each as the same people.

Make no mistake, they are the same people.  It’s not that some people are peaceful, productive producers and consumers and some people are meddling petty tyrants.  It’s that the same person behaves in both ways, depending upon the incentives and institutions.  The political man (as in mankind) is a barbarous, tribalistic busybody.  The market man is an inventive, curious soul.

I’ll be sharing a specific recent example of this split-personality disorder and what leads to the contrasting behaviors in the two spheres in an upcoming piece for The Freeman.  Stay tuned.

Update: Here’s Part 2.

Gains From a Radically Different Daily Structure

The other day I was in line at a Chipotle in Chicago.  It was around noon on a weekday, so the line was almost out the door.  It took 30 minutes.  It dawned on me just how wasteful and unhappy the whole situation was.  Why should we all wait so long to get food when an hour or two later the cooks and servers would be waiting around with few customers?

The same is true for traffic during rush hour, parking on the weekends, and prices during vacation.  The absurdity of the suffering we all endure and the economic and psychic cost of all this waiting, planning, and crowding is hard to measure.  But it’s real.

It all stems from the same source: the regimentation of life.  Every kid goes to school at the exact same time every day, stays for the same number of hours, leaves at the same time, and has the same days off.  More variation exists in the working world, but not much.  The bulk of producers clock in at roughly the same time every morning, eat lunch in unison, and head home en mass.

The odd thing is none of this is necessary for a growing number, possibly even most of us.  How many jobs require someone to actually be physically present between the hours of 9 and 5?  Why the heck do kids need to sit in clumps of same aged children for identical hours to be forced to study the same things in the same way?  We can work from almost anywhere.  We can learn from almost anywhere.  Most of us have the tools, the freedom of movement, and the resources.  Why don’t we see a diversity of daily schedules?  Why don’t more people treat Tuesday as the weekend?  Why don’t more people do all their errands during the day and their work at night?  Why don’t more people abandon regular offices or classrooms altogether?

There are some benefits the the regimen, but not enough to justify the costs we endure.  These practices continue primarily because of a mindset.  We have status quo bias.  We feel guilt or confusion at the idea of not being present 9-5 at work or 8-3 at school.  It’s an obsession with externally defined roles and goals at the expense of outcomes and value created.  What do we want and need to learn or create or earn?  How and when can we best do it?  Those are the important questions and the answers, if we are honest, would vary widely and look little like the routines most of us subject ourselves to.

Imagine a world where kids freely explored, worked, played, and learned on their own terms and timelines.  Imagine a world where people of all ages worked when and how they worked best.  Imagine a week not punctuated by any regular rush hour or weekend or meal time.  Certainly patterns would emerge and some schedules would be more common than others, but absent our rigid adherence to an outdated schedule, supply and demand would be regulated by the money, time, and headache of peaks and troughs, and the market would smooth out and have smaller ups and downs.

The value of such a shift would be immense.  Think of how many hours people would not be sitting in traffic if few had to show up at the same time to the office or school in the morning.  Think about the hours and money that would not be spent during peak times for flights, hotels, parking lots, and Disney World tickets.  Think of the immense subjective value enhancement by not enduring the throngs.  Little if any of these major gains would show up in GDP measurements.  In fact, it may hurt GDP.  Less spending on the same goods.  Less need for parking structures, etc.

We are seeing a slow but steady move in this direction, which is part of the reason I’ve argued that GDP is a dated and increasingly useless measure of anything valuable.  Let’s speed up the process by asking “Why not?” instead of “Why?” about radical new structures that make us happier.  You let your kids unschool?  Why not.  You work remotely?  Why not.  You take the day off to go to the beach in the middle of the day?  Why not.

It might not be doable for you in any big ways, but I bet there are some stressful patterns in your life that are relics of a bygone era and can be shed with little difficulty.

Don’t Go to College

Good friend and collaborator T.K. Coleman invited me on his show, “Conversations with FiFi & T.K.” to talk about Praxis and why traditional education doesn’t cut it any more.  We had a great conversation and I got to field some good questions about the Praxis idea.  Made me all the more excited for the start of our first class in February!  Hope you enjoy the interview.

Why I Love the Anonymity of the Market

A lot of people say they want to know the person who sells to them.  They want a tight-knit Mayberry-like marketplace where you buy from and sell to your friends and family.  Seems more civil and cozy than the widely dispersed and highly specialized global market, doesn’t it?  I don’t think so.  And I don’t think most people realize that the very anonymity they claim to dislike is one of the more humanizing and freeing aspects of the market.

Trying a new format, I recorded this while driving home from Starbucks.

A Law Colleges Love

I’ve often wondered why so many people go to college instead of learning on the job by offering to work for free for a company they like.  Turns out, it’s not that easy to work for free.  In most cases, it’s illegal.

Consider the absurdity of this setup.  Young people are supposed to do something to enhance their earning potential.  Without any knowledge or experience, they do not produce enough value to be worth hiring in most promising career areas.  So they’ve got to do something to gain skills.  Since they’re not worth paying, and it’s illegal to have unpaid workers, they can’t get on the job experience.

It’s supposed to be illegal to have unpaid workers because we wouldn’t want poor, unskilled people being taken advantage of.  Instead, they’re directed to college, where not only do they not earn money, they must borrow tens of thousands just for the privilege of not being paid.  They have limited choice as to what skills they learn, as a huge number of courses and credits are required in areas of little interest to them.  It takes at least three or four years to finish.

When they do finish, it’s often the case that they are only a little more valuable to employers than they were before – and much of that is a product of them being four years older and more mature, not any particular knowledge gained.  Most of the needed skills still must be learned on the job.  Most graduates have no idea what kind of job appeals to them or what they excel at, because they spent time in classrooms, not at workplaces trying different things out.

There are, of course, complicated work-arounds.  Non-profits and degree granting institutions can setup legal unpaid internships in some cases, and some businesses can do certain types of apprenticeships, on the condition that they create no value.

Let me repeat that: as long as unpaid apprentices do not help the business in any way – better yet if they destroy value – it’s possible to have one.  You think I’m joking, but read this language, pasted directly from the SBA website where they list the guidelines for a legal, unpaid apprenticeship.  This is number four in a list of six criteria:

“The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded”

We want young people to learn how to create value, but certainly not by actually creating it!  We want businesses to create wealth, but not if trainees do it!

You reap what you sow.

Generational Wealth: Hesiod versus Aristotle

Originally posted here.

It is a great irony that prosperity affords posterity the luxury of forgetting its origins. Though not a hard-and-fast rule of societal evolution, generations who grow up wealthy often lack respect for or understanding of the values and ideas that generated the very wealth from which they benefit.

There is an honesty, realism, and practical virtue often accompanying generations that have to endure difficult labor that is sometimes lost on later generations that inherit a comfortable material life. This is not a new phenomenon but is present throughout history. Compare, for example, the life and work of the ancient Greek poet Hesiod with that of the great philosopher Aristotle some 300 years later.

Hesiod lived sometime around 700 B.C. in the region of Boeotia, which he described in his Works and Days as a “cursed place, cruel in winter, hard in summer, never pleasant.” Though little is known about his life, he was apparently a shepherd who claimed to have been given the gift of song by the Muses one day while tending his flock. Regardless of the source, Hesiod’s poetry is full of colorful mythology, practical wisdom, and sound ethics. The ancient poet wrote at a time near the end of the Greek Dark Ages and at the beginning of the Archaic period. Greece was a highly decentralized region made up of mostly small, self-governing societies, and the merchant class was just beginning to emerge.

It is in this context that Hesiod gives advice to his wayward brother Perses in his Works and Days. The poem is a very practical treatise on the value of hard work, the need to cultivate strong personal character and to focus on one’s own welfare rather than the affairs of others. There is a strong individualism throughout Works, and even a foreshadowing of Bernard de Mandeville’sGrumbling Hive and Adam Smith’s invisible hand, as Hesiod describes the value of self-interest and the ability of envy and strife to motivate hard work and wealth creation.

Hesiod makes no apologies for the pursuit of wealth. Indeed, he sees the hard work required to obtain it as a way of becoming virtuous:

But the immortals decreed that man must sweat to attain virtue.

And

If you work, you will be dearer to immortals and mortals; they both loathe the indolent.

No shame in work but plenty of it in sloth.

If your work brings you wealth, you will be envied by the slothful,

because glory and excellence follow riches.

Whatever your lot, nothing will be as good as work.

Ancient Greeks must have heeded Hesiod’s advice. Three centuries later, Greece had grown in power and wealth, and from it began to flower some of the greatest contributions to classical and modern art, science, law, and philosophy. It was into this culture that Aristotle was born.

Aristotle was the son of a royal physician and a member of the aristocracy. He enjoyed an excellent education at Plato’s academy, which allowed him to direct all of his energy to philosophic and scientific inquiry. There is no doubt that the product of his genius was tremendously important to the advancement of the sciences and to the advancement of liberty. However, several passages in his Politics stand in sharp contrast to the views of his Greek predecessor, Hesiod, regarding the value of work, wealth, and individualism.

Compare the passage above on work as a means of obtaining virtue and wealth as a precursor to “glory and excellence” to Aristotle’s description of those fit for citizenship in his perfect state:

Now, since we are here speaking of the best form of government, and that under which the state will be most happy (and happiness, as has been already said, cannot exist without virtue), it clearly follows that in the state which is best governed the citizens who are absolutely and not merely relatively just men must not lead the life of mechanics or tradesmen, for such a life is ignoble and inimical to virtue. Neither must they be husbandmen, since leisure is necessary both for the development of virtue and the performance of political duties.

Aristotle’s aristocratic upbringing leads to an arrogant view of not only who should be a citizen or leader but also how a state should be governed in general. Hesiod’s focus is on the individual and how he might improve his own lot and leave others alone, while Aristotle is more concerned with selecting the best men to plan and rule the rest. Like Plato before him, Aristotle thought those fit to rule were educated men like himself — men who had sufficient leisure and could stay out of “unnatural” businesses like retail trade and moneymaking.

There is no doubt that — probably thanks to the intellectual lifestyle afforded him — Aristotle provided one of the best defenses for private property, and his work in logic and metaphysics remains unrivaled today. However, Aristotle’s political and economic thought leaves something to be desired by those who value free-market capitalism, the role of the entrepreneur, and the positive power of self-interest and individuality.

The main difference between these two men was their wealth and status. Hesiod, perhaps due to necessity, was a practical thinker. Extolling the virtues of hard work was not mere speculation; I doubt Hesiod could afford to look down his nose at labor. Aristotle, on the other hand, could afford to disparage trade and labor. The wealth of Greece provided opportunity for full-time teachers and thinkers to ponder anything they chose. Indeed, the power of wealth to fund such speculative philosophy is one of its greatest advantages, and as one who spends hours studying, I would not wish to return to a poor agrarian society. Still, such generational wealth carries with it a certain danger.

Anticapitalist theories share in common an inability to take human nature as it is. Rather than analyzing man as a complex creature who will always act to achieve what he perceives as good, anticapitalist theories tend to focus on what the theorist wishes man to be and often overlook the necessity of market exchange for human improvement. From the vantage of a moneyed aristocracy, it is easy to be “above” the hustle and bustle of the marketplace, and to pursue higher ideals than material prosperity — forgetting that such prosperity is what supports the hours of speculation.

I do not believe one must be poor to understand and appreciate capitalism, nor am I opposed to generational wealth or inheritances. It does seem, however, that there is a certain danger in living a life completely detached from market processes and the pursuit of wealth through production and trade. Far worse than a physically lazy trust-fund baby is a generation that has become intellectually lazy. With wealth comes the temptation to rebel against existing institutions and ideas — after all, you can afford to. While iconoclasm and courage to question the status quo are cherished virtues and much needed in defense of liberty, they are not ends in themselves. There is no heroism in revolting against the existing order if the existing order is better than the ideals for which the revolutionaries stand.

In our age of plenty where “higher learning” is ubiquitous, it is imperative that we remain realistic in our assessment of human nature and not forget that the basic principles that produced our prosperity still govern human action. Teaching future generations the theories of individual liberty and capitalist production is important; perhaps letting them experience the theories in practice is as well.

Aristotle on Mixed Economies

This is an article I wrote some time ago for the Ludwig von Mises Institute.

——————————————————————

A friend recently commented that he has found wisdom in moderation. He said it seems that truth and goodness are found not at the extremes, but at the place of balance between extremes. This can be very true.

As Aristotle wrote in his Nicomachean Ethics, “Virtue must have the quality of aiming at the intermediate.” In Aristotle’s examples, it is cowardice and recklessness that are the extremes, courage the middle ground. It is drunkenness and uptightness that are extremes, and moderate drinking the mean.

My friend went on from this concept to state that he believed in neither socialism nor capitalism, but in a mixed economy — or what he called a “messy middle ground.” There are two main problems with this conclusion.

The first is that statements like this in the abstract are meaningless. To construct a pretend spectrum, and place various actions and beliefs on it and then to choose the “middle” between them does not give meaning to that middle in and of itself. That is, without actual arguments and definitions regarding what that middle choice or belief is, it is simply a made up point on an imaginary spectrum on which other ideas are arbitrarily placed. Using this logic, I could claim that, since the mean is always good, green beans and omelets are both extremes and I prefer the middle ground.

Most often, those advocating an idea simply because it is in the “middle” of their mentally constructed spectrum do so because they lack any real arguments about the idea itself. For the idea of a middle ground or moderation to have any meaning, the extremes must first be defined and understood as opposite responses to a common problem, and must be placed on an ordinal value spectrum, such as a standard of basic morality that always holds falsehood as bad and truth as good.

The second problem with the conclusion that, since even Aristotle recognized moderation as the source of virtue, a mixed economy is better than capitalism or socialism is that it departs from the logic used in the earlier examples of courage and moderate drinking.

Courage and moderate drinking were the mean because either an excess or a deficiency was problematic. However, both courage and moderate drinking are extremes in another sense. Courage is a word that describes the good state of mind in the face of danger. There is no case in which courage itself is bad or not to be desired, since it is by definition the proper balance between cowardice and recklessness — you cannot have too much courage, nor too little, only too much fear or too little. There is either courage or noncourage (cowardice, recklessness), just as there is either truth or falsehood. In this sense it is an extreme.

Perhaps this sounds like a simple matter of definitional difference. There is, however, a fundamental difference here, meant to show that moderation is only good if it is moderating between two bad extremes and to a good mean, and not if it is moderating between a good and a bad. As Aristotle put it:

But not every action nor every passion admits of a mean; for some have names that already imply badness, e.g., spite, shamelessness, envy, and in the case of actions adultery, theft, murder; for all of these and suchlike things imply by their names that they are themselves bad, and not the excess or deficiencies of them. It is not possible, then, ever to be right with regard to them; one must always be wrong.

The midpoint between murder and nonmurder is not the good choice — nonmurder is. However, the moderation between not caring a lick about the actions of another and caring so much you would use violence to control them is a good middle ground — but this middle ground is not to be confused with socialism.

Socialism is a system where government uses force to tell people what decisions they can and cannot make. There may be degrees of freedom within different socialist systems, just as a prisoner may be treated better or worse by different wardens, but if you are not free, you are not free.

Capitalism is an economic system that allows people to make choices free from government intervention. All government intervention is backed by the threat of violence — if it were not, it would not be a government policy, but rather a voluntary recommendation, or a rule of a voluntary association. The fact that one cannot avoid taxation and obedience to a government without physical consequences proves that it is not a voluntary institution, but rather one backed by force.

Advocating a “mixed economy” or a middle ground between socialism and capitalism is nothing more than advocating a middle ground between threatening your neighbor with violence if he doesn’t do your will and not threatening him with violence. If he resists, it becomes the same as the “middle ground” between murdering and not murdering. In that sense, capitalism is an extreme, just as courage is an extreme against noncourage.

In another sense, there is a middle ground economically. The middle ground is between caring so much about the economic decisions people make that you would threaten them with murder to control them, and caring so little that you would allow them to harm themselves or others. By definition, you cannot escape the second extreme by application of the first. You cannot care about individuals by threatening them with violence. Such care must come peacefully and voluntarily: by persuasion, not force.

The middle ground in this case is not socialism — or control by threat of violence — but a capitalist system in which individuals voluntarily look out for one another, and peacefully persuade others to look out for themselves and others. Capitalism is not a virtue in the way that courage is a virtue; it is rather a framework that avoids the extreme of violent coercion. Avoiding the one extreme, as a capitalist system does, does not guarantee avoidance of the other extreme, just as not being reckless does not guarantee you will be courageous. But again, avoiding the extreme of neglecting others cannot be achieved by embracing the extreme of coercing them.

The true middle ground is to accept a capitalist system — i.e., avoid the extreme of coercion — and choose personally to care for and about others, and persuade them to do the same — i.e., avoid the extreme of neglect. Since caring for others is a highly subjective, individual concept, no form of coercive economic arrangement can bring it about; one can only allow it to occur.

In one sense capitalism is an extreme in that it is the opposite of coercion. In another sense, capitalism is simply a system that allows individuals to choose the middle ground between coercion and neglect. Socialism, on the other hand, is an extreme in both cases; it is the opposite of freedom and it is not a middle ground between coercion and neglect; it is itself coercion.

Attempting to find a middle ground between coercion and freedom is a bad idea.

Finding a middle ground between coercion and neglect is a good one.

Capitalism is the only system that allows for both of these. We should not stop advocating capitalism, nor should we stop caring about ourselves and others in peaceful, voluntary ways.

I find it no less disturbing when someone says both capitalism and socialism are extreme and they seek a middle ground than if someone were to say both love and cruelty were extreme, and they therefore seek a middle ground. Some vices or virtues are found in moderation; some are found in absoluteness. As Barry Goldwater famously said,

Extremism in the defense of liberty is no vice! — Moderation in the pursuit of justice is no virtue.

Capitalism is just. Socialism is unjust. There is no “messy middle.”