Friday, August 17, 2018

Training my Elephant

I spend a lot of time in my head. If you are like me, it is noisy there. More a committee than a voice that makes sense a lot of the time. Often quite harsh. I started Yoga about 9 years ago. The point, I was told, was to still the waves of the mind. Basically, to ask the committee to take a tea break every now and then. I like tea breaks. This sounded like something for me.


I came across the metaphor of the Elephant and the Rider in one of my favourite books of all time. Jonathan Haidt's 'The Happiness Hypothesis' is a wander through the history and current thinking around well being. Other books like 'Thinking Fast and Slow' by Daniel Kahneman, 'Blink' by Malcolm Gladwell, 'Focus' by Daniel Goleman, and 'The Art of Learning' by Josh Waitzkin all touch on a similar idea.


We tend to identify with our Rider. The Rider tells the story of our lives and explains our behaviour. The truth is that it is really the Elephant that does the doing. The Elephant may go right or left at the command of the Rider most of the time, giving the illusion that the Rider is in control. The Elephant just wants to do the same thing on those occasions. The Rider has no ability to make the Elephant do something it doesn't want to do.

The Rider can, with patience, train the Elephant. The Elephant is in fact far more powerful and intelligent than the Rider. The Rider is slow, deliberate, and forgetful. The Elephant embeds knowledge. To change what the Elephant knows and does takes time, patience, and attention. Rather than justifying or excusing your Elephant, the first task is to observe it. To understand it. To not take the credit, or the blame, for everything it does. Realising that your Elephant actually understands a lot you don't. Then you can tweak and teach, with humility.

Step one is realizing you are not the committee in your head. Give them a tea break.


Thursday, August 16, 2018

Democratic Goods

The most basic level of equality is time. We all have 24 hours in a day. Up to a point, wealth is the biggest factor in longevity... how many days you get bar accidents and preventable illness. But that 'point' kicks in quite early, and we all get roughly the same time. In the modern world, without the option of the land to live off, basic financial security determines whether that time is yours. You can, and most people do, carry on selling your time beyond basic financial security... but that is a choice.

We all spend (if we are being healthy) about a third of our lives asleep. When you close your eyes for those 8 hours, there is also a cap on how much it matters what you are sleeping on. It really doesn't matter if the house you are in has 1,000 beds. You sleep on one. As long as you are dry, warm, and safe, the world of sleep is completely democratic.

Food and drink become similar. The best food isn't necessarily the most expensive. Normally expensive just means rare. Really good quality food may be plentiful, and cheap to produce. What you then start paying for is exclusivity, not quality. I call these 'Nine Two' goods. Like ordering a taxi at 9pm or 2am on New Year's Eve. You are going to pay for being precious. You don't get a better party.

Then, of course, there is how we spend our time when we aren't working. Democratic Pastimes are cheap but also not necessarily worse. Road-running and Football are Democratic Pastimes. They are a real leveller of privilege. Privilege gives you some help, but mostly it is about love and commitment.

A good rule of thumb for spending well is to only buy 'Democratic Goods'. Try keep the price you are paying for exclusivity at a minimum. That doesn't make you into a shopping chain replica of everyone. There are enough different combinations of Democratic Goods that you can be as unique as you want. All snowflakes are made of the same snow, but they are still unique. It also doesn't mean you are sacrificing quality. 

The world has made indoor plumbing, safe housing, comfortable beds, tasty food, decent clothes and a good life way more affordable. We are increasingly all Cultural Billionaires. Use your time and money wisely.

Democratic Pastimes

Wednesday, August 15, 2018

What's your Jam?

Markets are transactional. They specialise in clarity. Those who are great at business, are also great at articulating problems so they are like Jam on a shelf. Someone looking for Jam walks into a shop and sees what they were looking for. They buy it. There is a market for Jam that doesn't require any sales process. Of course, if you want to sell YOUR SuperJam©... then you need to articulate another problem. Why is any other Jam not okay? Why is their life not okay without your Jam?

Most of us end up with a clearly defined jam. We specialise in a kind of Jam we know there is a market for. Gradually as we gain experience and expertise, we only sell one kind of Jam. That Jam defines us. What do you want to be when you grow up? A Jam Seller.

The problem is that this makes us really bad at asking for and offering things that aren't Jam. That aren't our Jam. We are spoilt by the clarity of the transaction. I offered Jam. You wanted Jam. You bought Jam. We are done. In the relationships that matter, things are way fuzzier than that. They are relational rather than transactional.

Asking and offering fuzzy things is hard. It requires patience as you tease out with each other what exactly it is you want. Through trial and error. When you eventually discover what it is you want, you may not even be able to describe it. You will either just know, or know you don't have it.

The thing is, relational Jam tastes the best. It comes with conditions, expectations, disappointment, anger, humour, frustration, joy, tears, quiet, panic, anxiety, calm, pride, respect, and love.


Tuesday, August 14, 2018

Weeding Contempt

Paul Eckman is a Psychologist who studies the link between emotions and facial expressions. He believes the single best predictor of whether a relationship will fail is contempt. Without even hearing what someone is saying, silent video clips of couples talking can help him predict whether that couple will stay together. I believe in weeding for contempt. Not just in intimate relationships. The second there is contempt between any two people, get rid of it. Fast. 

The two weed killers I employ are 'Benefit of the Doubt' and 'Interpretive Charity'. Doubt is natural and everything we say and do, has holes. Benefit of the Doubt allows for that, and looks for the good. Interpretive Charity means that when someone does something, and there are multiple interpretations, choose the best version. These tools don't make you a sucker. Doubt gets removed, and sometimes there are no positive interpretations. Then it is a good time for that relationship to die. Until then, keep weeding and let the good stuff grow.

Monday, August 13, 2018

Giving Tax Payers Mugs

Framing is everything. It is the context. 'The Endowment Bias' shows that people are willing to pay less for something that isn't already theirs, than they are willing to sell the exact same thing. The experiments to show this used Mugs. Some people were offered bugs, then offered money for the mugs. Others were offered money, then asked if they wanted to buy the mugs. Our money decisions are emotional.

Modern Income Tax was introduced in the United Kingdom 1799 to pay for equipment for the French Revolutionary War. It was supposed to be temporary, and was turned on an off till it was turned off in 1816 after Waterloo. Peel brought it back again in 1842 and it became a permanent feature of the British Taxation system.


The problem with Income Tax is it gives the impression that you have been given the Mug. It creates a class of 'Tax Payers' who feel entitled to make decisions about how the money is spent. It gives the impression of Givers and Takers.

With huge countries, being a Tax Payer becomes an identity and creates barriers between between people. It becomes abstract. Instead of a pool of money amongst your community, it becomes someone taking what is yours.

I prefer Consumption Taxes. To me that feels more like you are paying a fee to society for creating the opportunities that you have benefited from. You pay for something you want. Don't want it, don't pay. Income Tax feels like someone is taking something from you.

If you imagine the world/your country was just 150 people, the dynamics change. Instead of an abstract Giver and Recipient, people have names, faces, and stories. It isn't 'you vs. the Man', 'you vs. the State' or 'you vs. them'.

A group of 150 could have 75 people paying in more money than they are receiving, because they are part of a community. Instead of transactional, it becomes relational. We know that some people bring in money, and other people do other things. Suddenly people know each other, and that changes the framing.

A Community Wealth Fund (CWF) could be built up by those 150 people as an Engine for the Community. Eventually, that CWF could pay everyone a Universal Basic Income. If that went viral, a sufficient number of CWFs would ensure no one was left out of society. Not in an abstract way. In a way where we saw each other. Where we knew each other. That is a world I want to live in.

Mug Shot

Friday, August 10, 2018

Rule of 70

Compound interest is a magical thing. If you divide 70 by the real return you can achieve on your investments, you get the approximate 'doubling time'. So, left alone, 7% real return would double the size of an investment in about 10 years.

Time makes all the difference

I believe in building Engines. The old rules divided us into homemakers and bread-winners. I don't like thinking of people as purely productive assets. As dishwashers and cash machines. We aren't things. We aren't jobs. We certainly don't exist as tools to pay the bills.


An Engine that earns more than you spend can set you free. You may choose to carry on doing exactly what you were doing before. Just knowing you have options changes the story though.

If you got to the point where you and your Engine were earning the same, but instead of not working you carried on.... magic happens. As long as you cover your own expenses and don't harass your Engine, it will carry on growing. 

Depending on how fast, eventually your Engine will be able to set you... and someone else... free. If it grew at 10%, you'd have an Engine that was twice as powerful in 7 years. If it grew at 3%, it would take about 23 years (70/3).

But here is an important point. An Engine isn't a big pool of coins in Scrooge McDuck's mansion that you can swim in. The masterstroke is that wealth only grows if it is doing something useful. The Richest people in the world don't 'have' the figures we see of their wealth. These figures are guesses of the present value of their Engines. Like a guess of your future earnings from your job. But like you, the Engine has to go to work. In factories or businesses that make real things, or do real things, for real people.

Investing isn't hoarding. It is problem-solving. People aren't problems to be solved. Done right, investments can do the problem-solving so people can do the people-loving.

Thursday, August 09, 2018

Survival Models

Always have some time between thinking and sleeping, for your mind to calm down. I learnt this lesson most vividly when I was doing a course called ‘Survival Models’ at University. If you think that name is bad, it used to be called ‘Mortality’. In it, you learnt to model different states and the probabilities of moving between them. After spending a day studying this, I can remember not being able to sleep. In my head, I believed I was allowed to go to sleep once I had calculated the probability of such a transition. A nonsense problem that couldn’t be solved. I would flip between realising that, and scolding myself, and then going back to trying to solve the nonsense problem. Neither resulted in sleep.


A Self-Portrait from my Survival Models days

I had to do that course twice. I failed the final exam horribly along with most of my class. I had to transition to doing the course again. The second time around, suddenly things started to sink in better. I was able to help those doing it the first time, and in doing that I was teaching myself. Sometimes we move on from what we have learnt too quickly. Failing that exam was a blessing. I got to spend more time genuinely wrapping my head around which were real problems, and which were nonsense ones.

I am now very interested in the way Hans Rosling (Gapminder) argued that we should reframe the ‘Developing World’ and the ‘Developed World’. In 'Factfulness', he argues that the gap between the two has disappeared. That instead, we should be talking about Income Levels. He defines Level 1 as people living on less than $2 a day (about 1 Billion people). Level 2 live on $2-8 a day (about 3 Billion People). Level 3 live on $8-32 (2 Billion), and Level 4 live on more than $32 a day (about 1 Billion).



Level 4 people know very little about actually living on Level 1, but are often in a position to start trying to help. Help often comes with strings. I prefer empowerment. One of those methods of empowerment is recognising the strength that is already there. I would love to learn about more real Case Studies of the transitions between levels. How do real people get from Level 1 to Level 2. From Level 2 to Level 3. From Level 3 to Level 4. How often are these transitions happening every year? What is working? What isn't?

If we built Community Wealth Funds with 150 people on a variety of those Levels, that could be a powerful tool to create a bottom-up Universal Basic Income. People living on $32 a day, could probably kick-start transitions by ensuring no one lives on less than $2 a day. There are about as many people living on more than $32 a day as living on less than $2 a day. They could buddy up. I always prefer names and faces (real) to abstract (nonsense) problems.

I know I would sleep better as part of a Community that was looking after each other.

Tuesday, August 07, 2018

Bottled Water

Value and Price are not the same thing. Value is what something is worth to you. It is complicated, personal, irrational, dynamic and precious. Price is simply a clearing mechanism. That price seems to connect to value, is because (1) on average, (2) across all our choices, and (3) when things work, markets don't do an awful job. If two people exchange something, and both are happy, it does matter that the price was 'wrong'. Ideally, it is wrong in the right direction for both parties. They both feel they have paid less than what the thing is worth to them.

Water is a great example. It is obviously valuable. Yet, in modern society with good infrastructure, it is almost free. From the tap. If you want Bottled Water, you pay for the story someone weaves to tell you why it is special. 'Ah, but this water comes from the Enchanted Spring of the Botchupikuchi People. It is carried on the backs of Sacred Priests in ancient hand-woven baskets for 12 days. Never 11. Never 13. There are only 93 bottles produced every year. If you freeze this water in this special device that produces cold stars (I know it looks like the stuff outside, but it isn't), it will give you long life.'

Writing has become like water. There are so many people out there producing high-quality pieces, who don't need money, that it has become very difficult to make money from. That doesn't mean it isn't valuable. To make money, you have to spin/monetise an additional story.

Child Care is like water. It costs a lot to get someone else to do it for you. To bottle it. But ideally, it is free, and done by parents, family and friends. Free doesn't mean worthless. It means there isn't a market for it.

Law, Medicine, Mental Health, Education, Relationships, and Community Building are all valuable activities where the side-effects of involving money are very difficult to control or manage. That doesn't mean we don't take our medicine when we have to. It would just be great if there was a better way.

I am passionate about people building Buffers and Engines because I would like to be in a world where more people are able to focus on the things they value. I would like to be in a world where a Universal Basic Income meant that everyone could afford the basics of survival. Where everyone had water to drink. 

Don't confuse Price and Value. As Warren Buffett says, 'Price is what you pay, Value is what you get'.