Category Archives: life philosophy

Decide based on principles – not results

A principle-based decision making framework. That is – I’ve come to realize – the key to success. Regardless of how you measure success. Let me explain.

Currently reading 7 Habits of Highly Effective People. (Sidenote: probably the most life changing book I’ve read in my life – I can’t believe I haven’t read it until now – just imagining how my life would have been if I read it when I was 20 or so.) The book mentioned principle-centered living a couple of times, and even dedicated a whole chapter to the subject. But it’s not until I read this part that I really got it:

“Where does intrinsic security come from? It doesn’t come from what other people think of us or how they treat us. It doesn’t come from the scripts they’ve handed us. It doesn’t come from our circumstances or our position. It comes from within. It comes from accurate paradigms and correct principles deep in our own mind and heart.”

Suddenly, it made sense. I’ve been wrestling with a big decision for a couple of weeks now. It is actually a life changing decision.

I’ve always had a hard time making big decisions. I could never really feel that “gut feeling” that people talk about. I try to foresee the future. I weigh pros and cons. I analyze potential outcomes. I do everything – but decide, and just go with the decision.

In one blow, after reading that sentence, I realized this: I’ve been making decisions based on wrong premises all my life. I’ve been trying to predict the best outcome. This isn’t principle-centered decision making. It is outcome-centered decision making.

“What will lead to the greatest outcome” – rather than “what is the right thing to do, based on what I believe is right?”

Ironically, I realize now, outcome-centered decision making leads to worse outcomes, for several  reasons.

First, it is prone to error. Nobody can predict the future.

Second, it is draining. By trying to predict the future, you will constantly end up evaluating your choice – never really “landing” in what’s the best course of action. Every bit of feedback you get along the way will make you question whether the choice you made will really lead to the best outcome, or if your other option was the better choice. You will end up constantly questioning yourself.

By making decision based on what’s the right choice – based on principles you believe in – regardless of outcome, you will be more centered. More firm. More trustworthy. Have greater integrity. Knowing what you believe in, and following that belief regardless of the possible outcome, does that to you.

And perhaps more importantly, the gut feeling can develop. Finally, it will be possible to feel what is right – because that feeling will be based on whether you are following your principles, or whether you are doing something wrong. Suddenly, it is possible again to listen to your emotions when making decisions.

This will save a lot of energy. Ironically, because you don’t waste a lot of energy questioning yourself, you will also become more productive. And, correct principles are time-tested. They are proven to work, through the history of people men throughout time. People who made the world a better place. People who were happy. So good principles are a good guide, and a great measuring stick for how well you are doing.

So what are the correct principles?

According to Covey, it’s the following:

  • Fairness
  • Integrity
  • Honesty
  • Human Dignity
  • Service
  • Quality and Excellence
  • Potential and Growth
  • Patience, Nurturing and Encouragement

And what do they mean? What is it, to be fair? What is it, to have integrity, honesty, to view people with dignity, and the other principles?

Well, that, I guess you have to decide for yourself. And that’s the part that I guess you can second-guess based on experience and feedback.

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

Why you should not focus on earning money if you want to secure your future

If you want to earn a lot of money, first ask yourself this question: why?

For most people, the purpose is safety. They want to feel that they will never be poor, that they will always be able to make enough money to support themselves and potentially also a family, and live a good life.

So they start collecting and amassing money. Seeing that number in their bank account grow makes them feel safe.

But there is a big problem with this approach.

The problem is that money is not permanent. During your lifetime, things will happen that will make you lose your money, or more accurately, the value that that money represents. Inflation, wars, government taking your assets, bank runs, and many other things that you cannot do anything about.

What you cannot lose, however, is what’s in your head.

Your knowledge is the most valuable thing you possess. Why? Because your knowledge determines your ability to make more money. And your ability to make money is permanent.

In the story if the golden  goose, a goose started laying golden egg for its farmer. But the farmer got greedy and killed the goose in order to pluck all the golden egg at once, only to he disappointed to not find any Egg inside the goose. In the process, he had also killed any hope of new golden egg in the future.

Let us for a moment pretend that there were a bunch of golden egg in the goose. Who has more freedom, who is more secure, who has more prosperity? The farmer that collected a bunch of egg, or the farmer who got one egg a week forever?

The farmer who waited would never have to worry about survival again, and he could do whatever he wanted with his time. The farmer who killed the goose could go and buy something really luxurious and cool, but then he would have to go back to his farm and spend his time producing food, and worrying about the future. Would you rather be the farmer with the cool thing, or the farmer who never again has to worry about survival and can spend his time on whatever he wants?

What would you do with your time, if you didn’t have to spend it earning money for survival?

If you think this type of freedom might be degenerating because it will make you lazy, I think you have a bigger problem. That of purpose and drive. If you need to be forced to do something in order to not fall into laziness, you unfortunately have lost the connection to what drives your from within. That passion for living, curiosity and internal drive to do something because you enjoy it, because you enjoy growing, and because you enjoy the feeling of pride in having contributed to something bigger.

But now we’re digressing. I guess what I’m trying to say is this: stop focusing on amassing money. Focus on growth and development. Focus on increasing your value to the market. Focus on learning things that others will pay you money for. That is the ultimate freedom, the ultimate security, and the ultimate path to creating it source of income that doesn’t rely on your time.

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

Life decision making process with acceptable worst case and unlimited upside

Barbell strategy decision making heuristic

When making an important, potentially life changing choice where some of the options may be irreversible, it is important to thoroughly analyze the different options before choosing one. But it is impossible to weigh options against each other if you don’t have objective criteria against which they can be measured.

I will propose here that because of the uncertainty in future prediction, and the existence of so called positive and negative “black swans” (unexpected, impossible to predict, high consequence events), the best strategy is the “barbell” strategy.

In the context of this post, a barbell strategy means that you choose the option which, given high volatility, the worst possible outcome (worst case) of your choice is acceptable, and most optionality.

(To understand the reasoning behind this and why optionality is good, it is probably best to read the thought-provocing book Antifragile by Nassim Nicholas Taleb.)

Thus, the decision making criteria against which you will measure your options will be as follows:

Which choice brings an acceptable worst case, while maximizing optionality?

Note that we are not looking for the BEST worst case, instead we are disqualifying all options which have non-acceptable worst case scenarios.

Out of the remaining, we are choosing the one which gives us most optionality.

What is optionality in the context of decision making?

Optionality can be defined as:

The ability to discover and take advantage of unexpected opportunities.

Notice that this is two pronged: discover and take advantage of. In general, in order to be able to take advantage of any opportunities, you have to control your own time.

In general, all of us have more or less control over our own time as defined by the below parameters:

  • The amount of free time we have
  • The amount of flexible time we have

In order to survive, we all have to fulfill a baseline living standard (at least food and shelter), which translates to a baseline income stream. This is non-free time, and the rest is free time. How much free time we have, then, is defined by how much of our time needs to be tied up to income-generating activies. (Notice that I say “needs to be tied up to” and not “is tied up to” – because if you tie up more of your time than necessary on such activities, that is a choice, thus defined as you choosing to spend your free time on income-generating activities rather than other activities.)

How much of our time needs to be tied up to income-generating activities is defined by the following factors:

  • The amount of money you already have “in the bank” which you can spend on both living and on opportunities before it “dries up”
  • How much time it costs you to get income (income is very cheap in terms of time if you have a passive income flow or if someone is simply handing you money for free, otherwise it is determined by your hourly rate – actual or calculated based on salary vs. time spent on job)
  • Your “happiness cost” of actual cost of living (meaning can you live really cheaply and still be happy, or do you need luxury roof over your head, food, activities in order to be happy?)

Based on all this, an example of a lifestyle which brings incredible amount of optionality would be as follows:

You live alone (don’t have to support anyone) in a house you fully own with no rent, you eat very cheap food with no demands, you meet a lot of interesting people through various online groups, and you have both a passive income stream exceeding your living standard plus a lot of money in the bank which you can spend on any opportunity you wish.

An example of a lifestyle with a very low degree of optionality (which unfortunately, as far as I can see most people in the western world seem to live under), is as follows:

High mortgage with borrowed money and bad housing market (basically already at this pointyour optionality is gone since you cannot get out of having to pay a certain amount of money per month in mortgage, forcing you to spend all your time on activities which bring immediate income, with no ability to focus your efforts on longer-term opportunities regardless of how good those opportunities may be), a large family with a luxurious (expensive) lifestyle to support, no money in the bank (or less money than debts even after including the value of your assets that you could potentially sell), a job that demands all your free time (even after minimizing the amount of sleep and family time you get – because now you can’t even spend your time on potential opportunities, even if you had the money to do it), and meeting only the same closed group circle of people (you meet only them, and they meet only you and each other – no outside influence) that you meet through your work and family every day – and, in addition to that, when meeting them you only have time and energy to talk about short-term work related issues rather than potential long-term opportunities (long term opportunities can be translated as simply “enjoying yourselves” and talking about ideas, things you have seen, gossiping, and philosophizing, since those activities are what breed ideas, and ideas are in fact long-term opportunities).

Note that in such a situation, regardless of whether you have superhuman intelligence, abilities, control over yourself, multitasking ability, and experience – there is simply no way that you can get out of that situation unless you do one of the following:

  • Being lucky and stumbling upon a more passive or higher income stream (since you can’t search for such income streams, you rely do have to rely on luck – luck such as someone randomly approaching you on the street and offering you a job, or you overhearing a conversation which prompts you to ask for a potential new job)
  • Reducing your living costs (most likely by reducing your lifestyle requirements, which though is very difficult considering you have a family to support – something you should have thought about before getting children), which will enable you to reduce your working hours by taking a new job

What is an acceptable worst case scenario when making decisions?

An acceptable worst case is:

Any option which is reversible (meaning even in the worst case, with the amount of time and/or money at your disposal before you die or loose your freedom permanently, you can return back to any of the previous good points you have been at from a free and flexible time at your disposal point of view, at an acceptable level of happiness)

With that worst case locked in, choose the option that brings most optionality. Optionality means that you can make many small bets, hoping that one of the bets will pay off big time (for example invest in businesses or stocks, starting companies, meeting a lot of people which can show new opportunities, etc.)

Some practical implications of this decision making heuristic

  • Education raises your worst case. With a degree, you always have a good chance to go off and take a lot of risky bets, but you can always change your mind and go back to a reasonably well paying job (assuming your degree doesn’t deteriorate when you don’t entertain it)
  • Taking rare, well paying jobs that forces you to work a lot are two-pronged: On one hand, they lock you into a rich lifestyle and reduces your possible worst case options – because if you try any other option, you will not likely be able to get back to your current situation. On the other hand, you can use these jobs as temporary platforms for saving money, which doesn’t put you in a situation which you can’t go back to easily as you haven’t really raised your living standards, plus having a lot of money in the bank is in itself an improvement of your worst case (the more money you have, the more flexibility you have in avoiding potentially irreversible situations).
  • The poorer you are able to live happily, the better your optionality is. Because whatever you do, you can’t do worse than you are doing today, but you have enormous upside. Basically, the poorer you are, the more free you are to use your time on anything you want (however, not having money in itself can be a limitation, as you may then not have access to tools, resources, geography that would give you optionality – so this is a tricky balancing act).
Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

Life Lesson’s from Benjamin Franklin’s autobiography

Main learnings from this book:

    • Humbleness
      • Better to convince people by being the “humble inquirer” rather than being confrontational and “winning over” people which may win you the argument, but will not win you any friends, which is more important for success. Better to help people realize the truth for themselves, which makes them like you more and gives them the feeling that you are their mentor and want their best, rather than proving them wrong, which makes them feel like you are out to compete with them and make them feel foolish and makes them not trust you but instead hate and fear you.
      • Tell people stuff like “I believe…, it seems to me…, from my point of view it looks like…” instead of being dogmatic.
        • Own thoughts around this: It seems like this goes very much into the skill of getting people to come to a conclusion themselves, rather than telling them how it is.
    • Socratic dialogue
      • Good for proving people wrong
      • Humble inquirer
      • Aim not to “disprove” people, but to help them realize stuff
    • If you get help from someone else, that person is more likely to keep helping you, than if you had offered to help him. Thus: If you want to repair or establish a relationship, ask people for help! [I personally believe it should be help which does not cause them any grief or much effort, for example asking to borrow a book, and at the same time strokes their ego.]
    • Method of character development
      • Wrote down 13 traits of good character:
        • Humbleness
        • Temperance (don’t eat to dullness or drink until elevation – which contributed according to him to his energy and longevity)
        • Industry (showed how being industrious made people speak about him as being trustworthy, in the end leading them to give business to him)
        • Integrity
        • Sincerity
        • Order (everything has its time and place – plan accordingly and focus on one event at a time)
        • …?
      • Had 13 weeks (one for each character), and every week focused on getting no dots (breaking the character habit) on one character trait. If he succeeded, he went on to the next character trait and did the same. Thus, in 13 weeks, he focused on improving one character trait per week for 13 weeks. (But he had to repeat some when he did not succeed with it during that week.) And he went through this list again once every year. (This is something I should also try to achieve.)
        • Psychology about self-development: He realized that he couldn’t just read about what is good, because people are creatures of habit – so he had to habituate a set of character traits which would make him moral and good. And he says that all these traits made him good in different ways, and combined made him a great person to converse with and pleasant to be with.
    • That if one focuses on one singular goal, and strives with all his might to achieve it, without distractions, it will likely happen (if it is realistic)
    • Reading a LOT makes you smart
    • He woke up early, took 3 hours for breakfast, preparing, planning the goals of the day (5-8). Then work 4h (8-12). Then lunch 2h (12-14). Then work 4h (14-18). Then reading and leisure with friends and then to bed (18-22). The importance and contribution of not sleeping too long, the extra 2h he has (3h in the morning minus one hour in the evening which for me is not productive anyway) goes a long way, because during those 2h he can read a book in a couple of days, which is 4-5 books per month.
    • Hide that you’re the initiator or driver of projects, pretend you’re doing it for others to not open up their jealousy. Don’t let your prestige come in the way of your success – better to aim for success than for prestige. Lie low, initiate projects and things, let others take credit if they want because when people find out they did not actually initiate the projects they are claiming to, then they will get the punishment by being discredited.

Personal thoughts around the book:

  • He was a naturally talented person? He succeeded easily in stuff he went into, often winning and becoming the best at it. Is this because he was naturally talented? Or did it come from the fact that he read a lot so he developed his intelligence faster and broader? It seems like him reading a lot and really wanting to learn a lot was a great contributor to his success and abilities. It also seems like he may have had some innate talent – but I’m not sure. Perhaps it is worth looking into intelligence pills or something like that, because obviously high intelligence is of great benefit.
  • His network strength and benefits of that: It seems like the network he built (partly because of his character development, which made him very pleasant to be with and speak with), through his Junta, was a very strong influence on the success of his life. The network had a coherent philosophy, and a defined code of conduct which was focused on everybody’s development and about finding the truth and helping each other, rather than prestige and “winning”. This was of great benefit to Franklin because he used this to refine his oral skills, his philosophies, his character, and he also used this as his network to find people that would help him and support him with a strong network in various places in public life. Is it possible to create or be part of such a network in today’s world? Perhaps I should search Meetup.com to find such networks for myself to be part of.

 

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

The purpose of life is self-esteem

According to Aristotle, the highest value is something which “makes life desirable and lacking in nothing”. I personally happen to agree with this – this is the ultimate thing that every person should strive for, this and nothing else. Anything particular thing we strive for should ultimately lead to this thing, because this is what life is actually about. The question is, what is this ultimate value?

Many have proposed that it is happiness. Aristotle himself defined this thing as what we today often translate as “happiness” (even if this translation is much debated and according to many didn’t have the meaning then as we attribute to it today).

I happen to not agree that happiness is this ultimate good. Happiness is not the ultimate end – because there are higher ends, which implicate happiness, but which are not always present although you are happy. Thus, these other ends are of higher value than happiness. I have found one such higher value, and I believe that it is the ultimate value in life – the purpose of life itself. This value is self esteem.

What is self esteem?

Self esteem pre-supposes many things, but it is an end in itself (something you want to achieve for its own sake) rather than an instrument to reach other ends. Some of the things that it pre-supposes are:

  • Ability to sustain yourself (not starving, not freezing) and the security that you will be able to do this in the foreseeable future regardless of circumstance, due to your own intellectual capability and skills. If you don’t have this, you will by definition lack self-esteem, since self esteem is a direct result of knowing that you can sustain yourself (and your loved ones?) now and in the future.
  • Ability to interact productively and well with other human beings – let’s call it “social IQ”. Having ability to interact well with other people is (I am assuming, to be fully correct) inherently tied to self-esteem. Social IQ is also a requirement to the ability to sustain oneself now and in the future, thus indirectly is a requirement for self-esteem.
  • Freedom (which in itself both requires and leads to some of the other values in this list). If you don’t have freedom, you are not living the life you want, you are not living your life but someone else’s, which reduces your self esteem in accordance with the degree of lack of freedom. (Conversely, if you do have freedom, it means you must also have ability to sustain yourself because you don’t have to answer to anyone, and both of these lead to self-esteem).

Thus, if you don’t have these, and probably other, values, you won’t have self-esteem. Conversely, self-esteem is the automatic result of having these (and probably other) values. Self-esteem, then, is the highest value we strive for, meaning it is the thing that ultimately “makes life desirable”, and because all other values lead to it, and it doesn’t lead to any other value, it is “lacking in nothing”.

But what about happiness?

Do you get self-esteem from the state of being happy, and the other way around? Let’s examine this.

It is intuitively evident that having self esteem does make you happy. But this is indirect: you are happy not because you have self esteem, but you have self esteem and you are happy because you have the other values discussed above and more (freedom, ability to support yourself, ability to interact well with people, and probably more). But then, is happiness and self esteem both self-sufficient ends?

One way to find the answer to that is to examine if there are some situations which give you one but not the other.

One such situation may be, in some cases (when you are insecure), being in comfort of (taken care of) a “master”. This gives you happiness (under the condition that you are insecure) but not self esteem (it does not give you security that you own – just security as long as the master doesn’t abandon you, not fully within your control, thus robbing you of freedom at the discretion of this master). So there are situations in which you can have one or the other (happiness/self-esteem) while not having both simultaneously.

This also means that one of these is not “…lacking in nothing” because it means you can have happiness but still lack self-esteem. But from the other end, this is not true: If you have self-esteem, it means that you must have security, in which case having a master will not provide you any more happiness than that which you already possess. Thus, self-esteem pre-supposes (meaning it doesn’t lack) happiness (at least in this example, but I will assume it is equally true for any other example we can find), but happiness can lack self-esteem. This means that self-esteem is a higher value than happiness, and the value we are seeking (rather than happiness).

Our conclusion, then, is that anything (you own, think, do, become, or other) in life which raises your self esteem is good, and anything which lowers it is bad.

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

Why Kant’s Categorical Imperative is evil and how you should think instead

Kant’s Categorical Imperative says that you should base your decisions on whether the underlying reasoning should reasonably applied as a universal law. For example, if you feel like lying to get money from someone else, would you want this to be a law that everybody should follow? Obviously not, so lying to get money from someone else is evil and you shouldn’t do it.

That may seem like a good way to morally reason, but if you examine it deeper, you will find why that it shifts your thinking away from your self and makes you a sacrifice to societal good. Not that lying is good – it is not – but the reasoning above which concluded that lying in this instance is bad is evil.

By thinking in “categorical imperatives”, you sacrifice your life for someone else. Instead of thinking from your own perspective, what you find good and bad, what you yourself find ethical, you shift your thinking to what is good or bad for society. This is evil – it diminishes your personal worth and value. It makes you a sacrifice for society. It makes you obliged to make decisions based on something other than yourself and something other than your own good.

Now – lying is not good for you. So doing something “for your own good” would not mean that you would automatically lie. On the contrary – lying is actually bad for you. And your decisions should be based on what is good or bad for you, because you are not here to live for someone else, you are here to live for yourself. Lying is bad for you because it reduces your CHARACTER and makes you weaker. Becoming a weaker character, with weak integrity, thinking in a short-sighted way, having to cheat people to get what you want, should not be something you should be striving for.

And this is precisely the alternative moral compass that you should follow. What type of character do you want to become, in order to feel happy about yourself? Do you want to be a character which lies, goes behind people’s backs, cheats and steals to get what he/she wants? Or do you want to be a character that is dependable, has integrity, is strong enough to stand for what he/she believes in, and does what he/she thinks is right and ethical in itself without having to follow some outside moral code or axiom, making your own decisions and shaping your personality based on what you believe in?

What type of character do you want to become in order to be happy – for your own sake, because you value your own self? Act in that way, and let that be your moral compass instead of an axiom – a shortcut – which someone else has placed on you.

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone

The path of least resistance

One of my friends have planted this idea in my head called “The path of least resistance”. It is the theory that you should basically go with the flow, take the least resistance to happiness. For example if it is easy for me to get a job in a certain career, then I should take that job instead of fighting to get another.

This has popped up in my head from time to time since he told me about it, so finally I decided to see if there could be any truth to the theory.

There is also another theory that has been bouncing around in my head that I haven’t really truly investigated, which is the idea of “personal strengths” and “comparative advantage”. They could be mistaken to be the same thing, but they are not. Personal strengths can be defined as the answer to “what can I do well without much effort?”.

Comparative advantage is a bit more difficult to explain, and I have to give an example to be able to explain it properly. Let’s say that we have two persons, person A and person B. We’ll look at their respective comparative advantages when it comes to producing apples and pears. Let’s say that both person A and person B are better at producing apples than pears, but person A is three times as good producing apples than pears, while person B is just twice as good at producing apples than pears. In this case, even though both persons’ strengts are to produce apples, person A has a comparative advantage in producing apples compared to person B, while person B has a comparative advantage in producing pears compared to person A.

Now the theory I said I have but haven’t really investigated thoroughly, is the theory that in order for a person to maximize his or her success, he should work with something where he has a comparative advantage compared to all other people in the world. This is certainly the theory we learn in school – where they say for example that if country A has a comparative advantage in producing X, and country B has a comparative advantage in producing Y, then country A should only produce X and country B should only produce Y, and then they should trade.

But this requires a certain assumption which, at least for me, was never mentioned. This assumes that there is infinite demand compared to the available supply of both X and Y. If there isn’t demand for something, it doesn’t matter if you are relatively better at it than everybody else in the world. You will still not earn your living.

Comparative advantage example

Let’s me make up an example using standard theory comparative advantage:

Person A can produce either 10 apples or 5 pears in one hour. Person B can produce either 4 apples or 1 pear in one hour.

Comparative costs for person A:

1 pear costs 2 apples to produce, and 1 apple costs 1/2 pears.

Comparative costs for person B:

1 pear costs 4 apples to produce, and  1 apple costs 1/4 pears.

Result 1:

Person A is comparatively better at producing pears than person B, and person B is comparatively better at producing apples than person A.

Result 2:

Person A will benefit from producing and selling pears instead of apples if he can get more than 2 apples for each pear that he trades away. Person B benefit from producing and selling apples instead of pears if he can get more than 1/4 pears for each apples he trades away.

Result 3:

1 pear > 2 apples

1 apple > 1/4 pears <=> 4 apples > 1 pear

Meaning: 2 apples < 1 pear < 4 apples.

This means that trade will arise and a pear will be traded for between 2-4 apples. For simplicity sake, let’s say that a pear will be traded for 3 apples.

Inserting demand into the model

Now we come to the interesting part. The above example, as I said previously, is not entirely realistic, because in the real world there may not be demand for apples or pears, or the relative demand for apples might be so much greater than the demand for pears, that both countries gain more by producing mostly apples. The overall goal of both persons, after all, isn’t to produce as much of everything as possible. It is to satisfy their needs to the greatest extent possible. Which is exactly the nature of a real free economy

Because of this, I want to see what will happen if we say that both A and B have limited needs for both apples and pears. After this example, I will explain how this is related to the theory of “The path of least resistance”.

Let us say that both A and B need 10 apples and 5 pears each.

Without trade:

If both A and B produced what they themselves needed without trading, it would take A 2 hours to produce 10 apples and 5 pears (1 hour to produce each). For B, it would take 7,5 hours (2,5h to produce 10 apples, and 5h to produce 5 pears).

With trade:

Now this will happen (assuming the previous price of 3 apples for 1 pear, according to both persons’ comparative advantages in order for trade to arise):

A will produce in total 9 pears in (1+4/5) hours (assuming we can’t produce fractions of pears). He will then trade 4 of his pears with B, against 12 apples. The result is that he will have got 12 apples and 5 pears (more than his need) in less than 2 hours.

B will produce in total 22 apples in 5,5 hours. Of these, he will trade 12 with A, and get 4 pears in return as we saw above. But it is now that the interesting bit occurs. Since there is no longer a need for A to produce any more pears, B will have to produce his last pear himself. This will take 1 hour. So finally, B will have got his 10 apples and 5 pears in 6,5 hours (again less than if he had produced everything himself).

So as we can see, both A and B still gain from trading, as they will satisfy their needs in less time than if they had not traded. But in order to fulfill his need, B had to do something where he did not have a comparative advantage – he had to produce pears as well as apples. This tells us that in real life, perhaps it is not enough to make your career choice based only on the comparative advantages you have. Perhaps you have to consider demand as well.

Real life is all about specialization and trade. We all benefit from specializing in something and then doing only that, and then trading what we have produced with things that other people have specialized in and produced. It is a little bit more complicated than apples and pears, as we specialize in thousands, dare I say even millions, tens of millions, or even hundreds of millions of different little tasks in total. Just to take one example of this complexity, there are in just “computer and IT related work” probably thousands or tens of thousands of different specializations to choose between to earn money. And the same is true for every other “general profession”. I work in IT and have done so for over 3 years, not to mention my interest in IT which covers even more years, and I don’t even know a fraction of the different programming languages, technical skills, and roles you can have. Hell, I barely have time to catch up on the latest cool gadgets that are released.

The key to success is to specialize in something where you have a comparative advantage and where there is high demand compared to supply, and to become really good at it.

The question that I want to answer though, and to tie this into the theory of “The path of least resistance”, is: “How will we choose what to specialize in?” In real terms, this means “What career should I choose?

Expanding the model to encompass multiple people

In real life, it is, as we saw in the example above, not enough to specialize in something just based on your comparative advantages. If B would only learn how to produce apples, even when there was no need for it, he would not be able to satisfy his needs.

In order to explore this further, we need to take into considerations that comparative advantage doesn’t just occur between 2 people – it occurs in yourself compared to all the other people that you can interact with indirectly or directly (which in today’s society means everyone except groups of people who are completely separated from everybody else in every conceivable way).

How can we possibly define this? This no longer becomes a simple question of listing possible specializations and measuring how good I am at producing them compared to someone else. Instead, we have to insert some kind of “base measuring unit” which will tell us how comparatively good we are at something on a neutral scale.

Furthermore, this measuring unit has to encompass not only how good we are at something, but also encompass how much need there is for this thing that we are good at. Simply put, this measuring unit has to be able to measure the total value that we with our specific strengths can produce, and compare that to the value that other people can produce with their specific strengths. We can then look at this value, and compare it across different specializations or professions that are available to us, and make the best choice (i.e. the choice that balances our strengths with other people’s strengths, and the need in society for each specific specialized skill).

We actually have this measuring unit in real life. It is called money.

The amount of money you can get by producing something is a direct measure of how much value you can give to others by producing it, while taking into account all mentioned above. All you have to do is to look inside yourself and ask yourself “how much money can I earn by producing X compared to the money I can earn by producing anything else?“.

This question encompasses both your comparative advantages (because you will not get much money for doing something compared to doing something else, if you are not comparatively speaking good at it), and the demand for it (because you will not get any money for doing something that is not valuable to someone else).

Inserting personal happiness into the model

They keyword in the above question is the “I” – because if you don’ t look at what you specifically can earn, and instead look at how much a profession in general pays, then you are not taking into consideration your comparative advantages.

However, we are not finished with this model just yet. In order to answer the question “what is the path of least resistance and is it the path I should take?”, we have to insert one more factor into the model. This factor is “happiness”.

This is an extension of “money”, because money is one part of your total happiness. The other parts of your happiness are for example how much you like doing what you chose to do. So we will rephrase the question above with the following:

“How much happiness can I get by producing X compared to the happiness I can get by producing anything else?”

In the word happiness, we will add everything that will make you happy (such as the ease of finding a job, how much pleasure you get from doing a job, and how much money you can earn by doing a job), and subtract everything that makes you unhappy (such as the painful period of low income and boring work you have to do to get to the position you want, and the pain of not finding a job when there isn’t enough demand for what you do).

Choosing the right career

Now let’s take it one abstraction-level down and look at real life again.

Let’s say that you feel that you are really good at producing music compared to other people. But as you look at the music-industry, you realize that the chances of you getting a lot of money by doing it are very small. However, you also see that there are lots of administration jobs, and although this is not your top strength, you think that you can make quite a nice progression here and easily get an OK job and feel save. Perhaps you decide that overall, specializing in accounting will make you happier than the stress you have to go through to become a successful musician.

This is exactly the path of least resistance, and this is the path you should take. This considers both your personal strengths and compares them to the personal strengths of others and the needs for this value in society. It is the optimal way that you can contribute to society, as well as your own happiness.

Another example – let’s say you have trouble choosing job – do you want to do sales or do you want to be a designer? You put your CV with your skills out there, and you see what kind of responses you get. And you notice that 90% of the offers you get are for sales jobs that pay quite well, while the rest of the offers are for design jobs that would pay not as well. The path of least resistance has then shown you that you can easily be happy going for the sales job and doing it OK, than going through the trouble of becoming a designer.

Of course, the opposite may also be true. You may be so good at and like being a musician or designer so much that you will nothing but enjoy all the overtime and extra work you put into it, even in the periods when it may be tough and not lead to where you want. Then this will give you the most happiness, and this will be the path of least resistance. And then this is the choice you should make in order to provide the maximum value to both others and yourself.

The path of least resistance

So which is the path of least resistance and what does  it lead to? Is the theory worth following?

Simply put, yes!

The path of least resistance is the path that will lead to most happiness for you in the easiest way, or with least trouble.. As we see above, it encompasses everything worth considering – both your personal strengths and comparing your personal strengths to other people’s personal strengths in order to find your comparative advantages, and then comparing this with the overall needs in society. Thus, this is the optimal way in which you can provide the maximum happiness for yourself by using your strengths compared to other people’s strengths (and incidentally, providing the maximum possible value to the society as a whole).

Sidenote: Why a free economy is the only way to maximize happiness

Everything I have written about above lies on the foundation of a free economy. If money is to be the “measuring unit” combining both your personal strengths with the strengths of others and the needs in society, and thus provide an accurate input to what will give you the most happiness, it has to flow freely and without artificial roadblocks and pressures. If I want something, I should be able to pay for it, whatever it may be (not considering the external costs of course). If somebody can provide something, he has to be able to offer it to me, in exchange for whatever  I am willing to pay for it.

Not only is this the only way to correctly choose the optimal specialization, but having a completely free economy is also the only moral choice we can make when designing society’s rules. The morality of it, I will write about in another post.

Note about external costs of production: We are talking about the needs of others, but have not mentioned costs for others. Of course, any cost that I infer to others or to the society as a whole, such as pollution, must also be inserted in to the model by being withdrawn from what I get payed and given to the ones who suffer. These costs must be the exact value at which the sufferer is willing to go through with what he or she is suffering, provided he or she gets paid said amount for going through with it.

Share this!Share on FacebookShare on Google+Tweet about this on TwitterEmail this to someone