Power

Force always attracts men of low morality.
Albert Einstein

In social science and politics, power is the social production of an effect that determines the capacities, actions, beliefs, or conduct of actors. https://en.wikipedia.org/wiki/Power_(social_and_political)

Power is not just about force. It is widely defined as the capability of doing or accomplishing something through action. It can be done individually or in a group. One can accomplish something by oneself, without others. The scientist toiling in a lab by him or herself can find a revolutionary discovery. Unless it is presented to a wider group and those can be convinced to support and promote it, the discovery may have more limited impact. The point of what we have dubbed “Civilization” has been the wider tribe. Its benefits include collaboration. 

As discussed, Humans have cognitive powers to communicate, store and decimate knowledge from place to place and through time. This allows present-day humans to benefit from previous and current knowledge. However, someone or some force decides what is developed, saved, produced, or discarded. In this blog I have that power. If no one cares, it may be power that accomplishes nothing. At the very least, on a personal note, the writing of these thoughts forces me to rationalize the topics. If readers commented, they may shape the discussions. 

The following quote is illuminating, “You are not responsible for your own success. Your burning ambitions, or even your hard work, won’t make you successful. What will make you successful are those people higher up who have power over your career. Your job is to make them want to make you successful. And part of that is hard work and good performance, but part of that are the relationships that you build with them. That’s why hard work isn’t enough.”  (Keith Ferazzi http://www.bnet.com/article/the-one-thing-you-need-to-get-ahead/465765?promo=713&tag=nl.e713)

IMHO Humans are all about stories. It transcends who we are and gives us meaning and a sense of belonging to something greater than ourselves.

Humans being social animals had to coordinate their activities.  This required directed activity.  It did not come instinctively.  It had to be directed by an individual or elite.  Today, we may call this leadership.  Leadership requires power.  A leader needs to influence or force individuals to a certain task.

If power must be shared is most comfortably shared with those who have similar beliefs and backgrounds. Think about this for a moment, isn't it logical that an individual who want to ensure delegated power would be executed in a fashion like what he or she would do.  This may explain why in power circles there may appear to be a lack of diversity. This is not always true, Abraham Lincoln was successful in purposely choosing a cabinet of rivals.

Historically, people have died in the defense or advancement of a truth that they believed that may have not been so.  Some of the recent wars we have had on this planet have been due to ideology.  Pursuit or defense of the truth as perceived by individuals or groups is a powerful force.

Recall the timeline (years ago)

500 The Scientific Revolution. Humankind admits its ignorance and begins to acquire unprecedented power. Europeans begin to conquer America and the oceans. The entire planet becomes a single historical arena. The rise of capitalism.

200 The Industrial Revolution. Family and community are replaced by state and market. Massive extinction of plants and animals.

The Present Humans transcend the boundaries of planet Earth. Nuclear weapons threaten the survival of humankind. Organisms are increasingly shaped by intelligent design rather than natural selection. The Future Intelligent design becomes the basic principle of life? Homo sapiens is replaced by superhumans?

Harari, Y. N. Sapiens: A Brief History of Humankind. HarperCollins. Retrieved from Kindle Edition.

My question to the reader is who decides what happens in the present? 

Great leaps by Michelangelo, da Vinci, Copernicus, Columbus reshaped science, education, manufacturing, communication, politics.

Gutenberg’s press provided the trigger, uncloistering knowledge from the monastery to the populous. The Church’s monopoly power on knowledge was torn asunder.

“Age of Discovery” Ian Goldin , Chris Kutarna

The last point was a big deal! Prior to 500 years ago the population was most illiterate, often depending upon the clergy (who were literate) as a reference point for most matters. The clergy had enormous power.

Savonarola was amongst the first to tap into the information revolution of the time [Gutenberg's press], and while others produced long sermons and treatises, Savonarola disseminated short pamphlets' ... The establishment politicians of the day, who were low energy, 'underestimated the power of that new information revolution to move beyond scientific and cultural ideas' to amplify populist voices challenging authority."

Thomas L. Friedman

http://www.nytimes.com/2016/06/22/opinion/another-age-of-discovery.html

(The) “information hoarder (the guy who wields information as power) will undermine trust and performance, create information choke points, and increase uncertainty.”

https://www.linkedin.com/pulse/reileys-rules-10-lessons-improve-your-organizational-matthew-reiley?trk=v-eed&lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3Bh6dhEMufvx6EbXeGOmAihA%3D%3D

Technology can change the dissemination of information. 500 year ago it was the printing press today it is the internet.

A conclusion here is power is based on information and the way it is disseminated. The greater the access to information and the verity of that information is critical. Information can be manipulated and hence increase the power of those who do it successfully can gain increased power. An example today is so called “fake news” where mainstream news reporting is discredited. Distorting facts are a key tactic to influence a wider audience. If one does not base decisions on fact any outcome is possible.

Power as a topic will be revisited in other related topics such as leadership, influence, politics and probably nearly everywhere it exists. This is the beginning of this thread.

©

 

Personal Economics (or How to Budget)

It seems that many people do not understand a very simple principle and it makes them VERY unhappy. It can screw up their life so please continue reading to help you be happy! (or too simplistic so skip!) 

For an individual for a period of time: 

Income (I) minus Expenses (E)  = Savings (S)

 or

 I – E = S

Because one has Income and Expenses for a specific time this relationship is period dependent. A month is a good baseline to consider as rent or housing costs are often monthly. Rent is only part of expenses. One must eat so food costs over the period must be considered.

 E = sum of all costs for the period (rent, food, utility bills, transportation, credit card payments, taxes, gambling losses, etc.)

 I = some of all inflow of cash for the period (wages/salary, investment income like interest, dividends, or the collection of rents for property owned, money your Granny gave you, government payments, gambling wins, etc.)

 S= the left-over income if you spend less than you make i.e. I – E. If Expenses are larger than Income then S is negative and you are in debt.

 All of these are period dependent. We used a month, but there is a longer-term effect. 

If I -E = positive S one can use the S in another period, and it is part of I. If it persists positive your savings will grow. If it persists negatively your debt will grow.

What this means is that whatever income an individual has will constrain what he/she spends. Sure, one can spend way more than Income but debt will rise and those who hold your debt will want to get paid back. You can have your stuff taken away via seizure or if you borrowed from the Mob you can have your kneecaps broken.

What can you do?

Control I This usually takes time. Get a higher paying job (this may include training like education that is a cost for a period of time). Get a second job. Have savings from previous periods that pay interest, dividends, etc.

Control E This can usually be done more quickly. The Expenses one has are a) fixed (like rent, utilities, etc.) and b) discretionary (your choices substitute - like buy groceries and cooking at home instead of eating at a restaurant, making coffee at home versus at a café, buy lower priced stuff, etc.)

This concept is called BUDGETING. It is the matching of Income to Expenses. Even fixed Expenses can be lessened through substituting. Rent can be lessened by moving, taking in another person to help pay expenses (a roomie).

There is a reason this came after Patience, Basic Economics, Survival, and other posts. Most of these posts relate to each other. Please consider that. 

As previously stated, Millionaires are people who live within their means, budget, and spend wisely, and focus on financial independence first. These are habits that take discipline, but ones we can all adopt to begin growing wealth or at least lessen debt.

Wealth is not evil in itself, it is simply the accumulation of residual income over time .

A case study: 

Ronald James Read (October 23, 1921 – June 2, 2014) was an American philanthropist, investor, janitor, and gas station attendant. Read grew up in Dummerston, Vermont, in an impoverished farming household. He walked or hitchhiked 4 mi (6.4 km) daily to his high school and was the first high school graduate in his family. He enlisted in the United States Army during World War II, serving in Italy as a military policeman. Upon an honorable discharge from the military in 1945, Read returned to Brattleboro, Vermont, where he worked as a gas station attendant and mechanic for about 25 years. Read retired for one year and then took a part-time janitor job at J. C. Penney where he worked for 17 years until 1997.

Read died in 2014. He received media coverage in numerous newspapers and magazines after bequeathing US$1.2 million to Brooks Memorial Library and $4.8 million to Brattleboro Memorial Hospital. Read amassed a fortune of almost $8 million by investing in dividend-producing stocks, avoiding the stocks of companies he did not understand such as technology companies, living frugally, and being a buy and hold investor in a diversified portfolio of stocks with a heavy concentration in blue chip companies.

https://en.wikipedia.org/wiki/Ronald_Read_(philanthropist)

The point of this blog is to help the reader think critically and rationally. That suggests using the reader's intelligence to make them more aware of what is and change the reader's behavior and hopefully have a more fulfilling life. Not wanting too much too soon; having Patience is implicitly part of the formula.

Be happy with what you have. Remember Maslow's hierarchy of needs, if you have shelter, food, health, and security you have the basics – you have enough stuff. Work on the higher needs. Then you will have enough. Wealth is what you make of it. If it is never enough, then you are likely on the wrong path.

This is strictly my opinion, but it seems to me there are thresholds of economic well being

Survival: going day to day ($0 or negative wealth)

Advanced Survival: Going paycheck to paycheck (this can be moved to the next level with some planning like reducing expenses, improving income). ($500 or negative wealth)

Moderate wealth: Having enough to cover unexpected expenses from Saving (this can more easily be moved to the next level with some planning like reducing expenses, improving income). (Enough to cover 3 months expenses with a stoppage of wage income, Likely $30,000+) 

Secure wealth: Enough Savings and Income to offset expense for a lifetime. (Income is likely to be from renewable (passive) sources like rents, dividends interest, pensions... likely wealth exceeds $1,000,000). 

Moderate wealth: Beyond secure. Can purchase luxury goods in moderation. Some political/social influence beyond voting through activism/donations. (Likely wealth exceeds $5,000,000). 

Great wealth: Likely to have well more than what one could purchase in a lifetime. Individual can buy luxury goods beyond normal like private aircraft, yachts, private islands, can influence politics/social outcomes through activism/donations. (Likely wealth exceeds $100,000,000). 

Massive wealth: Almost unlimited possibilities. Could buy entire corporations, has political/social influence at high levels. (Likely wealth exceeds $1,000,000,000). 

The amounts are in US Dollars at 2022 values.

At each threshold one must ask is this enough? The temptation is to play at a whole different level, if successful. If not successful, one could drop one or more levels.

The means to how this wealth was acquired is also important. Ronald James Read achieved moderate wealth by his own actions. He knew how he got there and continued the pattern. Those who inherit or win great wealth are less secure, with greater likelihood of loss.

Life after winning the lottery may not stay glamorous forever. Whether they win $500 million or $1 million, about 70 percent of lotto winners lose or spend all that money in five years or less.

https://www.rd.com/list/13-things-lottery-winners/

What is achieved with ease is held with difficulty. What is achieved with difficulty is held with ease. (Machiavelli) 

©

 

 https://cypressinsuranceteam.com/budgeting-security/

Please note that the blog is giving credit for the picture, which is a quick summary of the post,  not recommending (or the reverse) the firm. There is no advertising on this blog. 

 

Patience

Homo Sapiens may have the most developed ability for patience due to the pre-frontal cortex of the brain. It is key to self-control and patience in humans. The pre-frontal cortex develops with age, being least developed in small children, hence the more emotional responses exhibited. Patience is likely a necessary condition for reasoning. It allows the effectiveness and reliability of communication by giving communicators the ability to argue their claim, be heard and have thoughtful responses be presented and considered. That is why it is harder to reason with a child. While humans assume reason is based on rationality and truth, intelligent points can be made using nonfactual information. This may be done deliberately to achieve a particular outcome, often which may benefit those putting the nonfactual argument forward.

Patience: noun. the quality of being patient, as the bearing of provocation, annoyance, misfortune, or pain, without complaint, loss of temper, irritation, or the like. an ability or willingness to suppress restlessness or annoyance when confronted with delay.  https://www.dictionary.com/browse/patience

The following is freely sourced from “Patience and Finance”, Andrew G Haldane Executive Director Financial Stability, Bank of England

http://www.bankofengland.co.uk/publications/speeches/2010/speech445.pdf

 Given at the Oxford China Business Forum, Beijing 2 September 2010

 In the East, it is said:

“One moment of patience may ward off great disaster

One moment of impatience may ruin a whole life”

[Chinese Proverb] 

In the West, it is said:

“I often make more money when I am snoozing than when I am active”

[Warren Buffett] 

In his Theory of Moral Sentiments (1759), Adam Smith declares: 

“The qualities most useful to ourselves are, first of all, superior reasons and understanding, by which we are capable of discerning the remote consequences of all our actions; and, secondly, self-command, by which we are enabled to abstain from present pleasure or to endure present pain in order to obtain a greater pleasure in some future time”. So for Smith, patience was both a distinctive and valuable human commodity. Subsequent research has shown he was right. Patience is peculiarly human. Our nearest evolutionary relatives, discount almost entirely outcomes more than one minute into the future. It is not that animals are incapable of far-sighted behaviour – for example, squirrels collecting nuts or birds flying south for the winter. But these are not acts of spontaneous self-control, like saving or dieting. Rather, they are genetically pre-programmed. The squirrel does not store food as a dietary device. 

Neo-Classical growth model in economics provides a simple link between patience and development. Patience generates savings by households which in turn finances investment by companies. And capital accumulation by firms, growth theory suggests, is then the prime driver of future output. 

In the subsequent period, patience brought prosperity. Between 50,000 BC and 1000 AD, world GDP per capita rose around 50%, at an annual growth rate of 0.00072%. Economists today would classify that as anemic. But, at the time, it must have felt like a Golden Age. In the subsequent millennium, world GDP per capita has risen 50- fold, at an annual growth rate of around 0.4%. Much of that growth has been since 1750 AD, since when world GDP per capita has risen almost 37-fold, at an annual growth rate of 1.4% per annum.3 It is difficult to imagine patience not having hastened this dramatic journey. 

Behavioural economists, such as Thaler and Shefrin, has formulated the two selves as the patient “planner” and impatient “doer”. Using brain imaging, this model has recently been given neurological support. While patient behaviour is associated with activity in the pre-frontal cortex, impatient behaviour is associated with a distinct part of the brain - the limbic (or midbrain dopamine) system. 

Take happiness. Studies have shown that happy people save more and spend less.Happy people also take longer to make decisions and expect a longer life. In short, they are patient. These patterns of behaviour are connected and reinforcing. Expecting a longer life, happy people defer immediate gratification and save. In consequence, they enjoy a more prosperous tomorrow as they harvest the fruits of their investment. In these models, happiness is not just fulfilling; it is self-fulfilling. 

Just as patience can self-generate, so too can impatience. And while patience generates self-improving cycles, its alter ego can create self-destructive cycles.

Addiction is the classic self-destructive cycle. Drugs and alcohol chemically alter the balance of the double-self, increasing the value of instant gratification. This shortens time horizons, increasing further the value of instant gratification in a downward spiral. Unless arrested, this unfulfilling equilibrium becomes self-fulfilling. 

While self-improving cycles shape individual behaviour, they can also have broader social consequences Sociological contagion has been found in studies of happiness, exercise and dieting. It may have a neurological explanation, as imaging suggests we often incorporate friends’ views and attitudes into our brains as if they were our own. 

Just as patience can self-generate, so too can impatience. While patience generates self-improving cycles, its alter ego can create self-destructive cycles. 

As patience is contagious, impatience is infectious. 

Most traders’ brains harbour the impatience gene. 

With a large fraction of momentum traders, prices deviate persistently from fundamentals. Among untested investors, momentum strategies now flourish while long-term fundamentalists fail. The speculative balance of investors rises, increasing the degree of misalignment in prices. The patience gene falls into terminal decline. Natural selection results in a self-destructive cycle, as with drug, alcohol and food addiction. 

Market prices in this model are buffeted by two winds. Momentum-based speculators cause deviations from fundamentals, while long-term investors drive prices back towards fundamentals. These are the double-selves of the financial brain, the patience and impatience genes. 

John Maynard Keynes quipped: “markets can remain irrational for longer than you or I can remain solvent”. In the sketch model, a Keynesian dynamic selection process is at work. Myopic finance bankrupts the long-sighted. 

English financier Sir Thomas Gresham in the 16th century, this refers to the tendency for bad money to drive out good. 

The first paper money example of Gresham’s Law pre-dated Gresham. It came from China during the Yuan (1271-1368) period. Then, paper money drove out silver coinage. This bad money dynamic has since been replicated across many monetary economies. China also provided the world with its first example of the reverse phenomenon – a self-improving cycle of good money driving out bad. During the Ming (1368-1644) dynasty, paper money was swept away by commodity money. 

Liquidity unlocks the impatience gene. Investors whose judgement is wrong, but whose timing is right, can lock in immediate gains. Liquidity, too, can pollute the gene pool by allowing the impatient to prosper. Like information, liquidity can be too much of a good thing.  This dual self-world is structurally schizophrenic: financial innovation is both good and bad; information is both solution and problem; liquidity is both cure and curse; investors are both abstemious and addicts. 

One source is the enormous literature on financial market efficiency. If markets were efficient, asset prices would mirror fundamentals. This would be indirect evidence against impatience, which tends to cause prices to deviate persistently from equilibrium. They are: Excess volatility, Serial correlation, Equity premium, required yield on equity over safe assets, discount rates used to value firms, and to evaluate projects, appear to be consistently higher than can be explained by fundamentals, a finding consistent with short-termism in investment. 

In general, people dislike goods price inflation, but like asset price inflation. Higher goods prices cut today’s disposable income. Higher asset prices cut tomorrow’s disposable income. 

Studies have found that future cash flows are undervalued by investors. These effects compound over time. So, if cash flows 5 months ahead are undervalued by 5% today, those occurring 5 years ahead are undervalued by 40% today. 

CEOs positions are likely to be particularly at risk from short-term performance evaluation in capital markets. And as with holding periods for financial investments, CEO tenure patterns have changed strikingly over recent decades. (Individual performance evaluations have also shortened.)

In 1995, the mean duration of departing CEOs from the world’s largest 2,500 companies was just less than a decade. Since then, it has declined. By 2000, it had fallen to just over 8 years. By 2009, it had fallen to around 6 years. This pattern is replicated across regions but is marked in North America and non-Japan Asia.  

Just as patience can ward off great disaster, impatience can ruin a whole life.    

From http://financialedge.investopedia.com/financial-edge/0810/7-Millionaire-Myths.aspx

Millionaires are people who live within their means, budget, and spend wisely, and focus on financial independence first. These are habits that take discipline, but ones we can all adopt to begin growing wealth. ©

 

Trial, Error and Progress.

Rule: Knowledge is built upon what is known and can be expanded though observation and inspiration.

 In statistics there are:

Type I error represents a false positive. Usually, a type I error leads one to conclude that a supposed effect or relationship exists when in fact it doesn't. Examples of type I errors include a test that shows a patient to have a disease when in fact the patient does not have the disease, a fire alarm going off indicating a fire when in fact there is no fire or an experiment indicating that a medical treatment should cure a disease when in fact it does not.

A type II error (or error of the second kind) is the failure to reject a false null hypothesis. With respect to the non-null hypothesis, it represents a false negative. Examples of type II errors would be a blood test failing to detect the disease it was designed to detect, in a patient who really has the disease; a fire breaking out and the fire alarm does not ring or a clinical trial of a medical treatment failing to show that the treatment works when really it does.^[2]

When comparing two means, concluding the means were different when they were not different would be a Type I error; concluding the means were not different when in reality they were different would be a Type II error.

http://en.wikipedia.org/wiki/Type_I_and_type_II_errors 

Why is this important?

Type I errors suggest a course of action when none is needed.

Type ll errors suggest no course of action is needed when one is needed.

Both relate to a false premise. Therefore, reasoning is important to avoid needless or wrong actions.

Take reading this blog.

Assume all the ‘rules’ are wrong especially about making decisions based on facts because this is all crap, fake news, and faulty presentation. You could make some decisions that make thing worse, not better! This is mostly Type 1 territory as you should ignore this blog and not make any decisions based on the “rules” because they are faulty.

Assume all the ‘rules’ are correct, and you don’t use them to make decisions. That’s like the fire alarm going off, you don’t leave the building and it burns to the ground.

While Type I errors may seem unlikely to be harmful, they have inhibited activity or led to false conclusions, with consequences. The widespread belief that the earth was flat inhibited explorers form venturing too far on the globe for fear they would fall off the edge. Superstitions of all kinds have translated into serious negative results. In the case of the flat world premise, sailors mutinied resulting in unnecessary death. Various moral or spiritual conventions have led to war between groups that would seem irrational from a third-party perspective.

Type II errors have clear consequences. 

The scientific method refers to bodies of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry must be based on gathering observable, empirical and measurable evidence subject to specific principles of reasoning. A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses. 

http://en.wikipedia.org/wiki/Scientific_method 

The first experimental scientific method was developed by Muslim scientists, who introduced the use of experimentation and quantification to distinguish between competing scientific theories set within a generally empirical orientation, which emerged with Alhazen's optical experiments in his Book of Optics (1021). 

http://en.wikipedia.org/wiki/Scientific_method#History

In The Scientists, John Gribbin outlines that in the Renaissance period, roughly 1453-1687, Western thought was transformed from a near worship of ancient thought to an acceptance of the scientific method. In the periods following the fall of the Roman Empire, the Dark Ages and the Middle Ages were a period of virtual scientific and technological stagnation. Ancients, the Egyptian, Greek and Roman philosophers, and engineers were seen as far superior to those of the Dark Ages and the Middle Ages.  ...the Pantheon and the Colosseum in Rome still inspire awe today, and at a time when all knowledge of how to build such structures had been lost, it must have seemed that they were the work of a different species – or of gods.” ( p.3)

There are several important points to take from this. 1) That the old is better than the contemporary. 2) That knowledge builds and lost knowledge is a void (that contemporaries may not be up to filling) 3) That the knowledge of old must be superior to what contemporaries may find 4) Errors must be found in the old to allow the new to progress.

In short, the scholars of the Dark and Middle Ages had a giant inferiority complex relative to the Ancients. This was likely due to religious beliefs that God created the world and the closer to this point just after creation was closer to perfection.  

It may be said that the universe has near infinite diversity. Structures or processes compete
through trial and error. This can happen through happenstance or design. There is a certain 
randomness in the universe. (The concept of entropy is related but will be discussed later.)  
Certain structures or processes only get to interact if they are in proximity.  
Intelligence can turn this happenstance into design. It is our responsibility to determine the 
facts and proceed with an analysis that may lead to progress. 
“I shall try to correct errors were shown to be errors, and I shall adopt new views as fast
 as they shall appear to be true views.” 
Abraham Lincoln Source: Letter to Horace Greeley
©
“When my information changes, I alter my conclusions. What do you do, sir?”
― John Maynard Keynes

https://unsplash.com/@garri?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText

Vladislav Babienko

 

Basic Economics

 Rule:

 Everyone must produce something of value, trade for it, borrow it, be given it or steal it.

 In other words, an individual must produce it, trade it or steal it to survive.

Economics is central to survival. As a society, we cannot consume more than we produce. That is not to say that we can have temporary periods of time where we do consume more than we produce. One may have stored a surplus and a present production is insufficient, one can reduce the surplus.  We can trade or borrow with other groups or with their own group.  If over some long period of time, one continues to consume more than one produces.   In tribal times everyone was expected to pull one's own weight. On a sports team, every team member is expected to play their role.  If these expectations are not met there is bound to be resentment.  [The resolution of resentment is a function of politics and address later in a later section.]

The building of a surplus can be defined as having more than we need at the present. It is the foundation of wealth.  In a hunter gatherer society, the group could gain only as much sustenance, as it needed for that day.  If this was done repeatedly there would be no wealth.  Predatory animals need to kill prey on a regular basis.  They do not store.  Humans seem to be the only creatures who attempt to the store more than what they need in a given day.  This is because humans realize through experience that there may not be enough sustenance in the near future.  Shelter is another form of wealth.  Both sustenance and shelter are critical to survival.  These are the drives to survive may wealth be the basis for our desire to accumulate wealth.

 A contemporary example: the accumulation of wealth in today's society, assures the individual of continued survival at a particular standard of living.  A necessary condition for this is the establishment and maintenance of property rights.

There are essentially two ways to acquire wealth.  One is to be the first to find it labor for it or created it.  The other is to steal it. 

Therefore, if one is the first to find or create wealth then innovation or labor is the key. If one is to steal wealth, power (discussed later) is the key. This is one of the important concepts that make humans strive to labor effectively, be innovative and/ or be powerful.  A critical function of the political process is to redistribute this wealth.  From one perspective of the person this is being taken from this could be theft.  From the perspective of the person receiving the benefit it is a simple redistribution recognizing some form of entitlement that benefits the group as a whole.

As human lives and technologies have become more complicated and intertwined over the centuries, the benefits of a bedrock of stable social norms and institutions have become increasingly obvious. There have been many strands of opinion and research about which social norms are most favorable for human development. Adam Smith highlighted two of these strands. In the Theory of Moral Sentiments, Smith argued that human beings are inherently sympathetic to the fates of others beyond themselves, but too imperfect to apply such sympathies beyond themselves, their friends and family, and perhaps their countries. The power and responsibility for achieving general happiness of the world population lay with God, with individuals and families presumed able to be fully sympathetic only with those close to themselves.

Trust has long been seen as an especially important support for economic efficiency. Trust among participants is an asset vital to dealing with the many contingencies that lie beyond the power of contracts to envisage. It also helps to ensure that contracts themselves will be reliable.

OECD has defined as “networks together with shared norms, values and understandings that facilitate co-operation within or among groups.” There is thus much evidence that good governance is a key foundation for economic growth; … that it has benefits for happiness that extend beyond its support for economic progress.

Generosity, (which will be discussed later) is an important source of happiness, also turn out to benefit physical health, with a variety of studies showing that health benefits greater for the givers than for the receivers of peer-to-peer and other forms of support.

Over the past century, there has been increasing realization of the importance of social norms for any joint activity, especially including the production and distribution of goods and services, as measured by GDP. (This can be represented by the social contract, the norms of a particular group. This can develop by consensus, often unwritten or by contract, like the U.S. Constitution.)

Trust has long been seen as an especially important support for economic efficiency. Trust among participants is an asset vital to dealing with the many contingencies that lie beyond the power of contracts to envisage. It also helps to ensure that contracts themselves will be reliable. As will be discussed later there are Extractive and Inclusive Economic systems. Simplistically Extractive are command and control economies with rigid hierarchies that limit the individual to benefit from their own innovations or labors. Inclusive are more lassiez faire allowing individuals more benefit from their own innovations or labors. (This is explored in depth in Why Nations Fail, Acemoglu, Daron; Robinson, James A.)

To feel secure, people need to feel that others care for them and will come to their aid when needed. To some extent, being in such a network of usually mutual obligations sets limits on each person’s freedom to make life choices freely, as the interests of others must always be borne in mind. It is apparent from our results that both features are important for a good life. Some degree of generosity is required.

Some of the last half of this discussion was sourced from WORLD HAPPINESS REPORT 2017 Editors: John Helliwell, Richard Layard, and Jeffrey Sachs Associate Editors: Jan-Emmanuel De Neve, Haifang Huang and Shun Wang.

©

https://www.pinterest.com/pin/27443878966331579/

 

Human Thought, Reasoning and Critical Thinking 

This blog has evolved in a manner that I could not expect. Which in a strange way, which is what I expected. What the heck does that mean? This is a journey through human cognition, the necessary conditions for life, survival, hopefully thriving and moving forward. One of the most important elements is the ability to think critically. 

Essentially separate the misconceptions from what we perceive as real. 

Humans make decisions based on 1) emotion and 2) reason. 

Primitive humans had a reflex what has been referred to the “fight or flight response because it evolved as a survival mechanism, enabling people and other mammals to react quickly to life-threatening situations. The carefully orchestrated yet near-instantaneous sequence of hormonal changes and physiological responses helps someone to fight the threat off or flee to safety. Unfortunately, the body can also overreact to stressors that are not life-threatening, such as traffic jams, work pressure, and family difficulties.” https://www.health.harvard.edu/staying-healthy/understanding-the-stress-response

I found it is always good to quote a highly respected source like Harvard. Who will dispute that? Well, you should. “Plato divided the mind into two separate spheres. The soul was seen as conflicted, torn between reason and emotion.“ (It was as if the soul was the driver of 2 horses.) “When the driver and horses wanted different things, Plato said, it was essential to listen to the driver. "If the better elements of the mind which lead to order and philosophy prevail," he wrote, "then we can lead a life here in happiness and harmony, masters of ourselves." The alternative, he warned, was a life governed by impulsive emotions. If we follow the horses, we will be led like a "fool into the world below."  Lehrer, Jonah. How We Decide (p. 10). 

Google “critical thinking” or be lazy and check the following… 

“Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action. 

Critical thinking can be seen as having two components: 1) a set of information and belief generating and processing skills, and 2) the habit, based on intellectual commitment, of using those skills to guide behavior. It is thus to be contrasted with: 1) the mere acquisition and retention of information alone, because it involves a particular way in which information is sought and treated; 2) the mere possession of a set of skills, because it involves the continual use of them; and 3) the mere use of those skills ("as an exercise") without acceptance of their results.

Critical thinking varies according to the motivation underlying it. When grounded in selfish motives, it is often manifested in the skillful manipulation of ideas in service of one’s own, or one's groups’, vested interest. As such it is typically intellectually flawed, however pragmatically successful it might be. When grounded in fairmindedness and intellectual integrity, it is typically of a higher order intellectually, though subject to the charge of "idealism" by those habituated to its selfish use.

Critical thinking of any kind is never universal in any individual; everyone is subject to episodes of undisciplined or irrational thought. Its quality is therefore typically a matter of degree and dependent on, among other things, the quality and depth of experience in a given domain of thinking or with respect to a particular class of questions. No one is a critical thinker through-and-through, but only to such-and-such a degree, with such-and-such insights and blind spots, subject to such-and-such tendencies towards self-delusion. For this reason, the development of critical thinking skills and dispositions is a life-long endeavor. 

https://www.criticalthinking.org/pages/defining-critical-thinking/766 

“The crucial importance of our emotions—the fact that we can't make decisions without them—contradicts the conventional view of human nature, with its ancient philosophical roots. For most of the twentieth century, the ideal of rationality was supported by scientific descriptions of human anatomy. The brain was envisioned as consisting of four separate layers, stacked in ascending order of complexity. (The cortex was like an archaeological site: the deeper you dug, the farther back in time you traveled.) Scientists explained the anatomy of the human brain in this manner: At its bottom was the brain stem, which governed the most basic bodily functions. It controlled heartbeat, breathing, and body temperature. Above that was the diencephalon, which regulated hunger pangs and sleep cycles. Then came the limbic region, which generated animal emotions. It was the source of lust, violence, and impulsive behavior. (Human beings shared these three brain layers with every other mammal.) Finally, there was the magnificent frontal cortex—the masterpiece of evolution—which was responsible for reason, intelligence, and morality. These convolutions of gray matter allowed each of us to resist urges and suppress emotions. In other words, the rational fourth layer of the brain allowed us to ignore the first three layers. We were the only species able to rebel against primitive feelings and make decisions that were dispassionate and deliberate. But this anatomical narrative is false. The expansion of the frontal cortex during human evolution did not turn us into purely rational creatures, able to ignore our impulses. In fact, neuroscience now knows that the opposite is true: a significant part of our frontal cortex is involved with emotion. David Hume, the eighteenth-century Scottish philosopher who delighted in heretical ideas, was right when he declared that reason was "the slave of the passions." (Lehrer, Jonah. How We Decide pp. 17-18). 

Critical thinking is not always innate and must be learned because it is a lot easier to make decisions based on emotion. But that is NOT always bad. Emotion is the “gut check” when one can feel a decision is right or not. The emotional decision is IMHO (in my humble opinion) is a start. Analyze where that leads using critical thinking tools. 

As stated, separate the misconceptions (bull) from what we perceive as real. Then analyze it, conclude, and review and review… What we know changes with new information. Factual information should be the basis for critical thinking. Conclusions from critical thinking should guide our actions. 

Apply this to reading this blog. I do not have the hubris to but believe that everything in this blog is fact. I hope it is. If I am divinely inspired, I sure don’t feel it. None of you have even made a comment yet. I try to keep these individual publications short, so you don’t get too bored!

 

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https://www.indeed.com/career-advice/career-development/critical-thinking-skills