Tag: poverty

The Power of Broke

Yesterday I listened to an episode of the James Altucher Podcast with FUBU founder and Shark Tank star Daymond John.  It was awesome.

John talked about his new book, “The Power of Broke”.  What a great title.  The subtitle is, “How empty pockets, a tight budget, and a hunger for success can become your greatest competitive advantage.”  The concept is as straightforward as it sounds.  Being broke is an advantage in many ways.  The power of broke is the power you harness because you have to.  It’s the creativity you employ when you can’t buy your way to the next step.

I’ve written before about the advantages of being broke (with a much lamer title, “Your Lack of Income Can Be An Asset“).  While I focused on the freedom and flexibility to experiment and the low cost of failure, John talked in the podcast more about the clearer decision making and enhanced hustle when options are constrained.

One particularly poignant example was when he was selling hats on the streets of Queens.  LL Cool J would come to the neighborhood frequently, and John would stalk and harass and beg him to wear his hats.  He finally did, and it resulted in an explosion in demand.  John said if he had $500,000 to spend at that time he would have spent it all…on getting LL Cool J to wear his hats.  Because he didn’t have the money, he found a way to do it without.

One of my all-time favorite TED talks is called “Embrace the Shake“.  It’s about how creativity can often be unleashed if you give yourself constraints.  An artist who lost his ability to do his favorite technique was forced to find other ways.  He eventually began a series of experiments in creating art with ridiculously tight constraints.  He could only use paper cups and ink, for example.  The results were as much about what it did to his mindset as about the art he produced.

If you launch a startup with no money, you’ll figure out how to move forward with no money.  If you raise $1 million in venture capital, you’ll figure out how to move forward spending $1 million.  The activities you engage in may even be the same.  Or worse, the money blinds you to problems with your model or assumptions and creates a lag in the feedback loop.  Test small and quick, fail small and quick.  Money often makes that harder.

This is obviously not about any kind of moral superiority to poverty.  It’s not about pretending fewer resources always provide an advantage over more.  It’s about a powerful mindset shift that occurs when incentives and desires are tightly connected.  When you don’t have a backup plan or the ability to give up after the first setback or buy your way into the next step, you have something most of your larger, better funded competitors don’t.  You have the power of broke.

Since it’s a mindset, you can employ it even if you are rich, but it’s definitely harder.  Take advantage of the time you have now as a young upstart and get every drop out of the power of broke.

Should the Poor Be Forcibly Sterilized?

Do you think I could convince you that the US needs a forced sterilization program to prevent poor people from having children?

Before you react, please take a moment to consider my case…

What if I told you that people born into poor families have a higher statistical likelihood of committing some kind of crime during their lifetime?

What if I told you the children of the poor are more likely to have bad grammar and adopt fashions and habits out of the cultural norm?

What if I told you those born to poor parents might end up getting low-paying jobs, meaning they might be competing with the kids of the middle class for entry level work?  It might make it harder for your kid to get a job if all these poor kids are also trying to get jobs!

What if I told you that the children of the poor run a high risk of voting for policies that you don’t like?  They might cause a demographic shift that alters the outcome of the democratic process!

If the poor aren’t stopped by force from procreating, consider these ways in which the world may change in the next few decades!

Would you get on board with my plan?  Would you say yes, given the potential outcomes outlined above, it is imperative that we send armed agents to the homes of everyone in the bottom quintile of earnings so that they can be sterilized?  Would you accept that we must prevent their offspring from entering the world?

Never.

You’d tell me this plan is repugnant.  You’d liken it to eugenics and the greatest human rights violations in history.  It would strike you as deeply disturbing, inhumane, and tyrannical.

You’d tell me that the idea of a human life being forcibly prevented from entering the country simply because of someone’s belief about a statistical probability that the child might be or do things others don’t like is morally reprehensible.

Even if I told you there was a way some poor people were allowed to be born, if they got lawyers and costly licenses and permissions slips and only a limited number and only from certain neighborhoods, you wouldn’t feel better about it.  It would still feel just as icky.

Your moral intuition would be dead on.  You’d be right.

That’s why we should end immigration restrictions.

Doing Work You Love and Being Happy Are Not Necessarily the Same Thing

Would you believe me if I told you that people can be happy doing work they hate?

Everyone wants to be happy.  Well, there is actually some debate about what people want and whether the word “happy” is the the most accurate.  Call it utility, or fulfillment, or flow, or bliss, or the good life, or anything else you like.  I’m going to use the word ‘happy’ to describe an existence that maximizes those moments when you feel proud and thrilled to be alive, and minimizes those where you feel the opposite.  Just give me some definitional generosity, or substitute your preferred word that defines what it is you seek.

Now, most people also think that they want to do work that they love.  That is, they want the way in which they procure the resources needed for survival and material pleasure to be an activity that is inherently interesting and fulfilling.  They do not merely want the hunt to be done for the meat, but they want to enjoy it for its own pleasures.  At least that’s what they’ll tell you.

You might be lying

I think a great many people are lying to themselves and others about what they actually want.  A lot of people want to be the type of person who seeks meaning in their work, but they actually care a lot more about just finding a way to get the resources needed to relax more.  Doing work you love is harder than doing work you can tolerate.  I don’t think that’s a bad thing.  There is nothing morally superior or inherently noble about wanting to do work that you love, and there is nothing bad about wanting to just get the money you need to work as little as possible.  These are personal preferences, and either approach can lead to a happy life.  Of course, lack of self-knowledge or dishonesty with oneself about which approach you prefer can lead to unhappiness just as easily.

In other words, doing work you love is not the secret ingredient needed to be happy.  At least not for everyone.

There are people who can never be happy unless they are doing work they love.  For them, it doesn’t even matter if they make a lot of money at it.  If those people chase money and status over fulfilling work, they’ll be miserable.

There are also people who can never be happy unless they have a large amount of money, free time, leisure, and a minimum of stress.  For them, it doesn’t even matter much what kind of work they do, as long as it yields them enough money in a small enough amount of time to do what they really love.  If those people chase a meaningful career with all the material and time sacrifices that requires, they’ll be miserable.

Who are you?

The key to happiness is to discover which type of person you are, be honest with yourself and others about what you find, and have the courage to live it.

Let me illustrate this with a matrix.  I love a good 2×2 matrix.  It’s been awhile since the last one I made (in what is still one of my favorite posts), so I decided to conjure up a new one.  My graphic design skills are once again on full display.  You’re welcome for the visual feast.

Doing Work You Love and Being Happy

Let’s walk through each of the four quadrants one by one.  See if you can recognize people in your life who fit them.

Oh, and notice in particular the fact that the amount of money earned is not the relevant factor in any of the quadrants.  You can have rich, poor, or anything in between in any of them.

“I love my work and I’m happy”

The upper left quadrant represents those people who have gone all-in to find work that makes them feel alive every day.  They may be billionaire tech company founders who live and breath their company, or penniless beach bums who spend all day on the waves and scrape together just enough money giving lessons for a burger and a brew.  I know people so passionately obsessed with their work that they’d rather be doing it than anything else.  Depending upon what that work is, they may be very wealthy or very poor.  They don’t much care.  They care about their craft, and so long as they’re doing it, life is good.

“I hate my work and I’m happy”

The upper right quadrant is where people who have accepted the fact that work is not for them hang out.  They’ve also come to grips with the fact that the things they actually do love require a good bit of money and time, and work is required to get it.  They configure their lives to do the minimum amount of drudgery to get the maximum payoff.  I know business owners who have no interest in their industry, or salespeople who would just as unhappily sell something totally different.  They just found a niche where they can get what they need.

They sometimes live the Four Hour Workweek life, and truly put in almost no time to keep the income stream going.  Those with a longer time horizon and ability to defer gratification may put in a lot more hours upfront and endure a high degree of boredom for the payoff of evenings, weekends, or retirement.  I know people who I don’t think would ever find happiness in any kind of work.  They want leisure.  But they’ve made their peace with this fact and put all their energy into being true to that reality, instead of unhappily chasing an illusive form of work they’d love, or feeling guilty for their material desires.

“I love my work and I’m unhappy”

Ah yes, the martyr.  The people in the lower left quadrant are probably the hardest for me to be around.  They self-righteously remind everyone about how they opted not to “sell-out”, but then never stop bitching about the costs they incurred for doing so.  The truth is, these are people who would be happier seeking money instead of work they think the world will see as meaningful.  This is the jazz artist who gets angry every time the Grammy’s come along and some blonde pop star takes home the hardware.  This is the adjunct professor who chose an obscure academic discipline with almost no chance of good money but never stops yelling about the injustice in the fact that no one values what they do enough to pay them big bucks.

The funny thing is, this is a phenomenon found almost exclusively in rich countries.  The unhappy work purists are typically quite wealthy by world standards, but they can never stop comparing themselves to the richest of the rich.  This obsessive tendency to compare reveals their true preference for material wealth over career fulfillment.  They’d be a lot happier if they were simply honest with themselves and, as my friend Jason Brennan suggests, got a job at Gieco.

“I hate my work and I’m unhappy”

Opposite of the previous category, those in the lower right quadrant believe themselves to be made happiest by money, status, and “normalcy”.  But they are wrong about their true desires.  These people chose the best school, the best major, the best internship, and the job with the best title at the consulting firm because everyone around them egged them on the whole way.  Surely a great job, nice house, respectable resume, and good income will lead to happiness, right?  In their case, wrong.

They find themselves hating their work and not really enjoying the material benefits it brings either.  Their weekends are just as dull as the workweek.  As they keep ratcheting up the career ladder they also ratchet up their lifestyle, hoping that the next level and a new car will bring happiness.  It doesn’t.  But because their material quality of life escalates with their income, they feel trapped.  If they happen to realize that they never cared much for money and status as much as meaning in their work, it seems too late.  How could they give up $180,000 a year to start a band or become a chef?  They might lose their marriage, and surely their social standing.

Knowledge and Honesty

Again, every quadrant has examples of both rich and poor within it.  The two happy categories include rich and poor as well as those who love their work and those who hate it.  The key is not finding the one true path that works for everyone.  The key is finding out who you really are.  Then not being ashamed of what you find and not lying to yourself about it.

Self-knowledge and self-honesty.

Finally, after discovering and being truthful about what makes you happy, go do it.  It’s worth all the costs.

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For more on this topic check out the podcast episode with TK Coleman, “Should You Follow Your Passion or Not?“

No Home Should Sell for Less Than $100,000

I am appalled by the fact that some people live in homes that cost less than $100,000.  It is truly tragic, and something my conscience can hardly bear.  That is why I support laws that require all homes sold to sell for no less than $100,000.

That is the same argument made by those who support minimum wages, “Sweatshop” bans, and other workplace and compensation regulations.

Every exchange has two sides.  Both parties give something to get something.  When acquiring a home, you give money to get whatever value the home will provide you.  When acquiring a job, you give your productive capacity for money.  If a home costs more money than you have, you simply can’t buy it.  If a wage costs more productive capacity than you have, you simply cannot “buy” it, or exchange your labor for that wage.

Demanding that all homes be sold for at least $100,000 does not magically put money in the pockets of those who have less than that with which to purchase a home.  Demanding work be compensated at a certain price (whether by wage floors, forced offering of benefits, work hour restrictions, etc.) does not magically enhance the productive capacity of the worker.  In both cases, the least well off have simply been priced out of the market.

You may feel sad in your quarter million dollar home when you realize many people have $60,000 houses, but only a fool would respond by demanding homes be sold at a higher price to ease the plight of the less well off.  When you feel bad about people only earning a few dollars an hour, it would be just as foolish to demand that the jobs they wish to purchase only be sold for a higher price than they can afford.

Private Charity Isn’t Enough

Originally posted here.

“The idea that churches can tackle national poverty, take care of those who are ill, and rebuild communities after natural disasters requires a spoonful of bad moral theology and a cup of dishonesty.” – Robert Parham

In this blog post, EthicsDaily.com editor and Executive Director of Baptist Center for Ethics Robert Parham claimed that churches and charities could never do enough to alleviate poverty. I agree.

Poverty will never be “tackled” because it is a relative term; a moving target. If you could describe the plight of America’s poor today to a poor person in another country, or an American 100 years ago, they would conclude that poverty had been eliminated. The standard of living among the poorest Americans today is incredible by world and historical standards. Yet we still wage the war on poverty, even in America. This is not a bad thing – helping the down and out can be wonderful. But when we aim at targets like the “end” of poverty, there is no end to what we can justify in order to reach this impossible goal. “The poor will always be with you.” The question is how best to reach them, spiritually and materially.

The second reason I agree with Parham’s claim is that, to the extent that poverty can be reduced, private charity alone is simply too small to do it. The incredible gains in social and material welfare of the poor in America have not primarily resulted from charity, churches or governments. They have resulted from (mostly) free-market economies.

If we look at poverty in a vacuum as Parham does and ask how private charity compares to government efforts, we could conclude that private efforts are too small. But if we look at government and private efforts combined compared to the power of the market, they would be dwarfed so as to make them hardly important in the big scheme. Charity is a targeted and short-term salve for the wounded; its value is far more in its spiritual nourishment and encouragement than any material progress it brings. A vibrant free-market is the only institution powerful enough to bring about the kind of dramatic increases in standard of living that most of us wish to see.

Public Choice

Jumping from the premise that private charity is not enough to the conclusion that government must do something places a blind, sometimes idolatrous faith in government that counters logic and experience. The incentive structure in government departments is to perpetuate and grow regardless of their effectiveness or the need for their services. There is no check on whether or not they are effective. In fact, the less effective a bureau of poverty relief is, the more they are rewarded with bigger budgets. If poverty is on the rise, and they will always claim it is so as to increase their importance, the last thing to do is cut the department of poverty relief!

Government programs are also subject to “capture” by interest groups and politicians. Scratch the surface of any government program and you will find that it is not the “general welfare” being promoted, but the welfare of a very small and politically connected group at the expense of the general welfare.

To examine private efforts and claim they cannot tackle a problem is only half the analysis needed. We must also examine government efforts and ask if they can tackle the same problem before we charge them to do it. The field of Public Choice Economics does just this, and you would be hard-pressed to find a case where the market is not providing something and getting government involved makes it better. If Christians have a duty to help the poor, they also have a duty to use their brains to discover ways that actually work. Intentions and actions are not enough, we need to understand how to be effective. This requires some knowledge of economic and political systems.

Wrong about Rights

The most damning and least supported claim in Parham’s article was that it is wrong for a Christian to value other people’s property rights:

“[L]ibertarian morality values property rights over human rights. For a Christian, that’s bad moral theology.”

I beg to differ. What Parham leaves unexplained is how human rights are to exist absent property rights. Private property is not some sacred dogma for its own sake; it is important because there is no other method of peacefully settling competing demands for limited resources. Such resources include food, water, shelter and other necessities of life. Common definitions or human rights include the right to be free from hunger. How can you have this right if you have no right to the very food you need to survive?

If Parham means by human rights the right to food, shelter, health care and other positive rights, this poses an incurable conundrum. Positive rights are a logical and practical impossibility. They cannot coexist with negative rights, or even with other positive rights.

A positive right is a right to something. A negative right is a right from something. A positive right obligates another person to take action. A negative right prohibits another person from taking action. A right to life, liberty or property is a negative right. You are free to live and act and justly acquire property, and no one can prohibit that so long as you are not violating their rights. A right to health care is a positive right. If you have the right to receive health care, someone else has an obligation to give it to you. If I am a doctor and you say you need my services, I am obligated to assist you in a world of positive rights. But what if at the same time I am hungry and need to eat rather than assist you in order to maintain good health? Our positive rights to health care cannot both be fulfilled, and in order for one of us to fulfill them we’d have to violate the other’s negative right to liberty and property.

Indeed, it is not possible to have any moral theology whatsoever without an acceptance of private property. One cannot give generously what one does not own, and one cannot help another by stealing from him.

Means and Ends

To sum up the argument, the author couldn’t imagine church and charity doing a task to his satisfaction, so his response was to ask men with guns to take money from people who presumably wouldn’t part with it voluntarily, and give it to causes he valued. Everything government does is backed by threat of force. Indeed, that is the only thing that distinguishes government from all other institutions. Let’s remove the intermediary agents (IRS, law enforcement) and revisit the argument with the author as the principal actor:

Churches and charities can’t or won’t do as much to help the poor as Parham wants, so he threatens, “donate or else.”

That’s clearly a barbaric and inhumane way to a more civilized and humane world. Yet voting for people, who will appoint people, who will hire people, who will send threatening to extort money to give to some bureaucrats to spend on social causes is no different in moral terms.

Appealing to Christian ethics is an odd tactic to justify a redistributive state.  Jesus made it pretty clear that the methods of the kingdom of God are service, sacrifice, grace and love. The means of all earthy kingdoms are brute force and the threat of it.

When the rich man refused to sell all his possessions and give the proceeds to the poor, Jesus did not send the disciples after him to extract a percentage on threat of imprisonment. He let him walk away. Christians are supposed to do the same.

You Can’t Have Free Markets without Free People

I’ve run a trading game at seminars and in classrooms where, by the end, all the students agree that free trade creates wealth and restrictions reduce it.  I give out trinkets, ask students to rank how much they value them, then allow them to trade for a few rounds, each with a larger segment of the room.  At the end of each round we tally up the value they place on the goods they have after trading.  As the movement of goods opens up, each person’s wealth in trinkets goes up.  Without producing a single new good, the total value of the goods in the room (measured subjectively by the owners) increases dramatically between the initial dispensation and the few rounds of trading.  Trade creates wealth.

This provides a nice segue into a short talk about the benefits of trade, comparative advantage, specialization, and why trade restrictions make us worse off.  I see several eureka moments as students understand from this simple exercise that freedom to move goods allows resources to go to their highest valued use.  Then I throw in a twist just before Q&A;

“Just as restricting the free movement of goods unnecessarily reduces wealth, so does restricting the free movement of labor; otherwise known as immigration restrictions.”

Hands shoot up.  Despite nearly an hour spent demonstrating and discussing free trade in goods, this single line at the end attracts 100% of the Q&A attention.  Inevitably, well over half the class has a reason why the laws of economics they just learned cannot possibly apply to human resources the way they do to goods and services.  Within the first few questions, every one of these objections withers.  What’s left are objections that have nothing to do with immigration per se, but are problems with the welfare state or the warfare state, and immigration is sought as a scapegoat.

The economic case for the free movement of people is incredibly clear and not hard to make.  Yet those opposed to freedom of movement tend still to cloak their arguments in economic rhetoric.  Even though it’s unsure footing, it is perhaps more comfortable than talking about the moral implications of barring people from interaction and exchange across arbitrary borders.  When you get down to it, it’s one of the most inhumane policies around.  Anyone who talks about helping the world’s poor should start by advocating open borders.

Here’s a great article to get started.