“Don’t Eat Fortune’s Cookie”
I hadn’t seen this graduation speech by Michael Lewis. It blends well with my discussion on luck. Good paragraph:
“The “Moneyball” story has practical implications. If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on. But it has a broader and less practical message: don’t be deceived by life’s outcomes. Life’s outcomes, while not entirely random, have a huge amount of luck baked into them. Above all, recognize that if you have had success, you have also had luck — and with luck comes obligation. You owe a debt, and not just to your Gods. You owe a debt to the unlucky.”
Better paragraph:
“All of you have been faced with the extra cookie. All of you will be faced with many more of them. In time you will find it easy to assume that you deserve the extra cookie. For all I know, you may. But you’ll be happier, and the world will be better off, if you at least pretend that you don’t.”
As I like to say, the best capitalists are the ones who give the most back. The team leader should have broken up that 4th cookie and distributed it to the team so they’d stay happy. Remember, money is a social construct. It is to be earned by giving much back to the society that offers it to you in exchange for goods and services. Taking more than you deserve is just as bad as not paying back what you promised to pay.
*Thanks to reader KB
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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16 Comments
Great post, Im a big fan (loved liars poker).
However there is a bit of irony here. Lewis’s comments ring similar to the Obama post you made about “you didnt build this alone” although your tone is quite different here.
That being said I do agree with social responsibility of the intelligent, successful, affluent, and wealthy. I think anyone who is intelligent and successful hopefully believes in footing more than their “fair share” due to fortune, genetic, socioeconomic, or otherwise.
I should be clear – it’s not that I don’t think someone who earns much should not be expected to give much. Just don’t tell that person they are paying much out of sheer luck or that they’re paying into a system that doesn’t appreciate what they’ve built. Entrepreneurs and risk takers built this nation. Not bureaucracies. Yes, we design govt as a tool to help further us all and I am a proponent of using govt accordingly, but govt is the facilitator, not the driver. Let’s not get things backwards here….
Oh I don’t mean that, I agree whole-heartedly, efficiency breeds affordability more than anything, which improves quality of life even for low earners.
It was more an observation on your writing than the relationship of government and business.
Off-topic,
I recently graduated and am starting a valuation position in Los Angeles, have you ever considered having a professional mixer? Perhaps it could even be a fundraiser.
Anyway, im a fan, been reading since junior year.
What firm? I’m in the industry and am always happy to network. Have a few contacts in LA as well.
BDO Valuation LLC, Im greatly looking forward to it, currently in Army Officer training out of state, im a National Guard member as well
Good post… http://www.pbs.org/now/transcript/transcript_inheritance.html
–above is a related PBS interview of Bill Gates, sr. with Bill Moyers & billionaire Chuck Collins of Oscar Meyer inheritance whom all favor the estate tax because they feel it’s a way of giving back to US society because they feel it was the US public education, US gov paying/financing college educations/universities,
GI Bill,
finacial aid, etc that creates an educated workforce & consumer marketplace that makes it all possible,
US police/military that provides a stable secure marketplace,
&
US investment in technology
&
infrastructure, laws/patent systems,etc that makes it all possible instead of the luck or lack of luck had they been born in Somalia or Bangladesh, no matter how brilliant or hardworking they are, they would not have been able to amass their fortunes had they been born in Somalia, etc
Also, To create & innovate just requires ‘capital’—-it takea money to start businesses, fund reseach, development, marketing, hire staff, build factories… and
whether it’s money creation via private banks loans or gov deficit spending or from saved up money makes no difference.. it just takes money to fund it all so it’s ridiculous that some people want to cut money creation because they fear inflation
Because unless there’s a supply shock/monopoly, increased demand causes production rises to increase supply of products that offsets the increased demand/increased money supply
–cries of hyperinflation are from people who don’t realize that Weimar Germany’s inflation was mostly due to the 90% drop in production from 8+ months of strikes by most of Germany’s industrial/manufacturing/energy workers to protest war reparations
&
invasion by the French & Belgium (as well as Germany’s unwise choice to pay the striking workers to stay on strike & not produce as well as trying to buy foreign currency to pay war reparations) or Zimbabwe’s 30-57% drop in production in various sectors after Mugabe expelled all the whites, whom made up most of the educated workforce, managers, engineers, teachers, professors, factory supervisors, farmers, etc
The govt creates very little money in reality. People fear govt spending because they don’t understand that govt spending is a recycling of existing money. The only “money printing” that occurs is the increase in net financial assets in the form of t-bonds.
oh ya, Cullen, I agree.. the $1 trillion in yearly deficit spending(money creation) pales in comparison to the yearly $6-7+ trillion in private bank money creation (aka as loans/credit created by private banks out of thin air) according to official CIA/FED data (not to mention the $40+ trillion in loans/credit total created you posted earlier from Fed data)
… it’s when banks reduce their money creation that recessions happen as the money supply contracts & gov money creation isn’t great enough to offset it
Anyways, back to Obama’s poorly worded speech, the idea he was trying to articulate was similar to Newton’s paraphrased “if you see farther, it’s because you stood on the shoulders of giants”
most of the tax dollars are for medicare/medicaid. and these costs will continue to spiral out of control. so it is nice to think the add’l tax $’s will splurge on education, infrastructure and progressive plans, but data suggests otherwise. more $’s government collects, the more they can defer the tough decisions required to rein in healthcare spending
Shoebox, the costs increase because medical supply in the US has a shortage ..and the US fed gov doen’st NOT need to raise taxes anyways to fund any gov spending since it can just issue/create money(aka deficit spend) unlike the EURO nations.
Taxes are only needed to limit inflation as well as help increase demand for the US currency since taxes have to paid in the US currency.
The other thing that gives currency it’s value is the production of the nation (ie, it produces goods/services that the currency will can buy just like gift cards to a department store, the value of the gift card is what the department store produces/sells)
… ie, US has about half the docs per capita of European/Asian countries, much less medical schools, studies show 33% of qualified med school applicants are turned away due to lack of space, etc
..there is also a shortage of RNs, PAs, & NPs too.
All this talk about health insurance reform & how to fund it is for nothing & a distraction..it DOENS’T MATTER if you have $6734 trillion in gov funds to fund it when you have only 1 hospital & 1 doc or if you have 0 in gov funds to fund it yet have 1 million hospitals & 1 million docs –
the goal of healthcare is to increase to make there’s enough physical real supply of medical services/facilities avialable for everyone… insurance or fiat numbers on an accounting spreadsheet means little.
The govs of Japan, Taiwan, Singapore, etc started building tons of hospitals, paying for medical educations, etc so much that there is zero wait times in Japan & almost no wait times in most Asian countries
(so much so that conservatives lament that there’s “too many hospitals” –not realizing that it’s better to have & not need then need & not have –plus when diasters like tsnamis or Fukishima nuclear failures hit or seniors age, they will be happy to have them in the future.
The US in the 1950s doubled number of medical schools & massively increased funding of universities too.
The solution to the US stagnation as well as healthcare problem is the US gov should embark on long-term ‘stimulus’ on increasing medical supply/production on hiring
&
producing/building more hospitals, clinics, medical educations, medical personnel, etc
the populist message that I think Obama was getting at is that there are a select few who are “taking more than they deserve”. For example, CEO’s who hire “salary consultants” who only get re-hired with the compensation package is huge, and whose Board is made up of other CEO’s, all knowing their turn will get them the same huge pay package if they OK it. Result – something like 200 or 300 to 1 vs. avg worker pay. Meanwhile, the GOP wants to give those guys more breaks – with less than 2% of the country getting $100k in inhertance they want “death taxes” at zero for up to $5 million. And when Obama says the rich should pay more in taxes he is starting “class warfare”. There is so much wrong with where we are today, and Obama isn’t doing much about it partly because he can’t when he can’t even give a speech about “it takes a village” without the furor it has created.
How does no one acknowledge the fact that a BoD is a union for executives???
Also, isn’t it common sense that when you give a dollar back to a segment of the population, the lower class is most likely to use it? They can’t save! Rich people can. So if you want economic stimulation, shouldn’t the modus operandi be trickle up? Einstein seemed to think so.
A lot of simple things are explained in a convoluted now a days. Effort is independent ( n one will do that for you), but for a lot of things in our life we are interdependent ( to do something, apart from the effort you need knowledge and skills which were acquired with the help of others).No two persons with the same effort has same outcomes, that’s where luck comes in. Previously we used to say some one had misfortune if he had not succeeded well in something. Nowadays we call him loser. There’s a world of difference. We as a society had stopped understanding NUANCE. We started equating outcomes with process. Effort,skill e.t.c are necessary but not sufficient in and of themselves. Many outliers have something else that worked for them apart from their effort and skill. Ingenuity is what helped this nation either by risk takers, ordinary people or enterpreneurs to find better ways of doing something.
Couldn’t agree more with this speech. America needs to take a step back and remove the venom from the debate on socioeconomic policy.
The US is looking back on 200 years of history which showed that hard work and determination meant that anyone could rise to the top. Globalisation has largely pulled the rug out from under that view and to truly do well now requires a huge investment in education, and a support network which opens the door to opportunities.
The societal response to this decline in upward mobility has been a reinforcement by the political parties of the perceived viability of attaining the American Dream, with the suggestion that those who don’t get there are simply lazy. Astoundingly, nearly everyone has bought into this narrative and we have a blame the victim animosity towards the poor. Even poor people hate the poor because they truly believe that one day they can and will be rich.
We need a president who is courageous enough to revisit the social contract and have a frank and comprehensive discussion with the country on what we all owe eachother in terms of a basic quality of life for all citizens.
To me, it is shocking that the richest country in the world is even asking itself whether everyone should have basic healthcare as a universal right. Attacking these issues piecemeal doesnt work though as each one viewed in isolation is easily contextualised by one party as an attack on the rich, and the other as being an attack on the poor. In these cases it seems everyone loses.
I spend most of my days up in a glass tower, surrounded by intelligent, hard working, and successful people. It’s easy to lose perspective. I saw an obviously homeless woman on a bench the other day, not begging, just weeping. It broke my heart, I didn’t even have the courage to go speak with her and see if I could help in some way. How do we justify having a country where people are living unbearable lives like this?
Nobody wants to be poor, being poor sucks. I have been poor, it is the worst feeling in the world. I’m well beyond top 5% income now and I would not be here without government handouts.
Obama’s heart is in the right place, but as usual, his execution is incredibly lacking.
Separately, pragcap is a massive cookie. Thanks much for sharing!
Nice.
Life is a stochastic (I.e., probabilistic processes) it may start with the womb lottery as WB says, and that may be a big part of what defines our success; but don’t kid yourself, good and bad stuff happens to everyone. What differs is the DECISIONS we make when stuff happens (good or bad). If you make more good than bad decisions at the random decision points that present themselves in life; then, you harvest good outcomes and that is what naive people call luck.
Making good decisions has something to do with being “smart” but is is not only that. I know a lot of smart people who have totally screwed up their lives.
So Cullen , don’t blind yourself, Obama is wrong, this guy is wrong. They are both full of it. Unless you live and extraordinarily short life, enough good and bad stuff shows at your door step that you can toss aside luck. What happens is not the most important thing. The actions you take are. How may stories haven’t you read about people who make it big in llife because they were fired?