The 10 Habits of Logical People

Becoming a logical person is not just a matter of memorizing and applying formulas, or learning how to tell the difference between a valid and an invalid syllogism. Rather, it involves cultivating intellectual habits and skills that, though they may seem simple and obvious, are only achieved after years of struggle and education.

In his book Being Logical: A Guide to Good Thinking, venerable philosophy professor D.Q. McInerny lays out the following 10 habits that people must cultivate if they are to think clearly and effectively:

1) They’re Attentive.

“Many mistakes in reasoning are explained by the fact that we are not paying sufficient attention to the situation in which we find ourselves,” writes McInerny. The logical person has thus trained himself to always pay attention to the details—even in situations that are familiar—lest he make a careless judgment.

2) They Get the Facts Straight.

“If a given fact is an actually existing thing to which we have access, then the surest way to establish its factualness is to put ourselves in its presence. We then have direct evidence of it. If we cannot establish factualness by direct evidence, we must rigorously test the authenticity and reliability of whatever indirect evidence we appeal to so that, on the basis of that evidence, we can confidently establish the factualness of the thing.”

3) They Ensure That Their Ideas Are Clear.

Our ideas are the means by which our minds understand the objective world. Clear ideas faithfully reflect that world, whereas unclear ideas give us a distorted view of the world. The logical person is constantly testing his ideas to make sure that they accurately depict their objects.

4) They’re Mindful of the Origins of Ideas.

The logical person knows which of his ideas are based on things that actually exist in the world. He knows, for instance, that his idea of “cat” corresponds to things in the objective world known as “cats.” As a counterexample, there are a lot of people who have an idea that there existed a female pope named Joan in the 9th century. But if they spent time looking into the source of that idea, they would find that it’s widely regarded by respectable historians to have originated in legend.

5) They Match Ideas to Facts.

Writes McInerny, “To prevent my idea from being a product of pure subjectivism, in which case it could not be communicated to others, I must continuously touch base with those many facts in the objective world from which the idea was born.” This is easy to do with ideas that have a simple correspondence to things in the world outside our minds (e.g. my idea of “cat” refers to an actual cat). It’s much harder to do, as we’ve all experienced, with more complex ideas such as capitalism and socialism, or conservatism and liberalism. For these ideas to remain sound, they must constantly be linked to, and supported by, facts that are accessible to all.

6) They Match Words to Ideas.

We can only communicate our ideas to others if we use words that accurately convey those ideas. But finding the right words can be difficult. When difficulty arises, we should go back to the sources:

“How do we ensure that our words are adequate to the ideas they seek to convey? The process is essentially the same as the one we follow when confirming the clarity and soundness of our ideas: We must go back to the sources of the ideas. Often we cannot come up with the right word for an idea because we don’t have a firm grasp on the idea itself. Usually, when we clarify the idea by checking it against its source in the objective world, the right word will come to us.”

7) They Communicate Effectively.

Logic is ultimately about determining whether statements are true or false. If others are to accurately determine a statement’s truth, it needs to be communicated to them in a clear manner.

McInerny offers the following guidelines for clear communication:

  • Don’t assume your audience understands your meaning if you don’t make it explicit.
  • Speak in complete sentences.
  • Don’t treat evaluative statements (e.g. “That work of art is ugly”) as if they were statements of objective fact.
  • Avoid double negatives.
  • Gear your language to your audience.

8) They Avoid Vague and Ambiguous Language.

“Vague” and “ambiguous” both come from Latin words that mean “wandering.” Vague and ambiguous language tends to wander about ideas rather than having a fixed, definite meaning. A logical person uses precise language so that his listener knows exactly what he is talking about and can adequately evaluate the truth of his claims. If he refers to more complex terms such as “freedom” or “equality,” he makes sure to establish his particular understanding of those terms.

9) They Avoid Evasive Language.

“The problem with evasive language, language that does not state directly what a speaker or writer has in mind, is twofold. First, and obviously, it can deceive an audience. Second, and more subtly, it can have a deleterious effect on the people who use it, distorting their sense of reality. The user shapes language, but language shapes the user as well. If we consistently use language that serves to distort reality, we can eventually come to believe our own twisted rhetoric.”

10) They Seek to Arrive at the Truth of Things.

The purpose of logic, according to McInerny, is to arrive at the truth of things. He explains that there are two basic forms of truth: “ontological” truth—what actually exists and has real being; and “logical” truth—the truth of statements. Ultimately, he reminds us, “What determines the truth or falsity of a statement is what actually exists in the real world. Logical truth, in other words, is founded upon ontological truth.”

The authentically logical person, therefore, keeps his logic rooted in truth and never lets it devolve into mere verbal trickery.

Reprinted from Intellectual Takeout.

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Great Books May Revolutionize College Admissions Tests

You may remember taking the SAT or the ACT. Hours and hours of memorizing techniques and tricks, all to get that perfect score to unlock your college dreams.

These tests have monopolized the college entrance process, and in recent years—in the case of the SAT in particular—have been tied to the controversial Common Core standards.

An Alternative Assessment

The Classic Learning Test offers an alternative to the SAT and ACT. As opposed to these standardized tests, the Classic Learning Test measures a student’s knowledge of great works of literature and applied mathematical skills.

Of course, the struggle in offering an alternative to the SAT and ACT is having colleges and universities adopt the tests as a part of their admissions process.

But colleges are increasingly accepting the Classic Learning Test, and 86 colleges across the country now accept it as a part of their admissions process as an alternative to the SAT and ACT.

Christopher Newport University in Virginia became the most recent college to announce that it will now accept the Classic Learning Test. The president of the university, Paul Trible, said of the decision:

As a former United States senator and president of Christopher Newport in Virginia for the past 22 years, I believe that higher education must enrich minds and stir hearts and instruct and inspire students to live lives of meaning, consequence, and purpose. At Christopher Newport we call that leading lives of significance.

Christopher Newport is thrilled to see a renewed focus on the humanities and a renaissance of classical education throughout America. We recognize that [the Classic Learning Test] is playing an important role in this renewal, and therefore I am excited to announce tonight that Christopher Newport University will be the first major public university in the U.S. to adopt the [Classic Learning Test] as an admissions standard.

Christopher Newport joins a growing list of colleges and universities in accepting the Classic Learning Test, from the University of Dallas and Hillsdale College to Belmont Abbey College and Calvin College.

A Better Test of Knowledge

With school choice programs growing rapidly across the United States, students are starting to personalize their education to fit their unique needs. The college admissions process, therefore, should similarly reflect the diverse skill sets and academic strengths that students bring to the table.

The Common Core-aligned SAT and ACT have been heavily criticized for their very limiting format that too often reflects a student’s ability to learn testing tricks, rather than core knowledge.

And, as my colleague Lindsey Burke wrote in 2014 when the SAT underwent a revamp to align with Common Core, students in traditional public schools weren’t the only ones affected:

The hugely controversial Common Core initiative is at least partly responsible for the latest revamp of the SAT college entrance exam. This puts great pressure on non-Common Core states, private schools, and homeschoolers to comply with national standards to keep students from doing poorly on the new Common Core-aligned SAT. … perhaps this alignment to Common Core will further motivate universities to disregard the test altogether, or to discard it in favor of other assessment instruments.

College and university presidents, it appears, are beginning to do just that, providing an alternative to the SAT and ACT.

Incorporating an assessment like the Classic Learning Test, which measures proficiency in mathematics and the great books, into colleges’ menu of admissions criteria will be critical for the thousands of students across the country who attend classically-oriented K-12 schools.

As the Classic Learning Test chips away at the two large testing monoliths, colleges are growing increasingly confident in employing new, rigorous assessments, and students are beginning to see their options expand for demonstrating their knowledge of the great books.

Reprinted from The Daily Signal.

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California Has the Highest Poverty Rate in America. Why?

Can you guess which state has the highest poverty rate in the U.S.?

Many people would say Mississippi. That’s how I would have responded if you had asked me this morning, and I would have been right in a sense.

There are two different ways to measure poverty, you see. One accounts for cost-of-living in different states; one does not. The method that accounts for living costs (the Supplemental Poverty Measure) is more accurate, and it was introduced in 2011 by the U.S. Census.

According to this measurement, the poverty capital of America is not Mississippi. It’s California, PolitFact says.

It was a point recently raised by California Assembly Republican Leader Chad Mayer at a legislative forum in Sacramento.

If you use the supplemental poverty measure, California is in the lead. We have the highest poverty rate in the nation.

“If you look at the official poverty measure in California, we’re about average with the rest of the country,” Mayes said. “But if you use the supplemental poverty measure, we are in the lead. We have the highest poverty rate in the nation — higher than New Mexico, higher than any of the Southern states, Louisiana, Alabama, higher than Idaho.”

Percentage of Poverty in Each State.

Mark Perry of the American Enterprise Institute offers a chart that breaks down how each state ranks. Take a look:

How is this possible? The Golden State’s economic growth has been robust in recent years, data show.  

“California is the chief reason America is the only developed economy to achieve record GDP growth since the financial crisis of 2008 and ensuing global recession,” Bloomberg reported last year. “The capitalist juggernaut that is California helps explain why the state’s per capita income increased 9.5 percent since 2015, the most of any state and the most since 2012, according to data compiled by Bloomberg.”

Nor does California’s notoriety as the nation’s most impoverished state stem from a lack of programs designed to alleviate poverty. Kerry Jackson explains in the Los Angeles Times:

“Sacramento and local governments have spent massive amounts in the cause. Several state and municipal benefit programs overlap with one another; in some cases, individuals with incomes 200% above the poverty line receive benefits. California state and local governments spent nearly $958 billion from 1992 through 2015 on public welfare programs, including cash-assistance payments, vendor payments and “other public welfare,” according to the Census Bureau. California, with 12% of the American population, is home today to about one in three of the nation’s welfare recipients.”

So how is it that California, which has spent nearly $1 trillion on antipoverty programs, has the highest poverty rate in the nation?

Jackson, a fellow at the Pacific Research Institute, suggests that the state’s war on poverty is one of the causes of California’s impoverished state, and why it is home to about one-third of the nation’s welfare population despite having just 12 percent of the population.

It turns out that state and local bureaucrats who administer California’s antipoverty programs have proven stubbornly resistant to pro-work reforms that have been effective at spurring individuals to pull themselves out of poverty. It’s a phenomenon familiar to those who have read the scholarship of economist Robert Niskanen, whose model of bureaucratic behavior suggested that bureaucrats tend to “maximize their own utility” rather than the interests of their constituents.

This, along with other progressive policies that drive up housing and energy costs, along with a high minimum wage that reduces employment opportunities for low-skilled workers, is the source of California’s poverty problem, Jackson contends.   

Is Jackson correct? I’m not sure, but his theory sounds more than a bit plausible. It’s a problem Nobel Prize-winning economist Milton Friedman warned about more than four decades ago.

“One of the great mistakes is to judge policies and programs by their intentions rather than their results,” Friedman told Richard Heffner in a televised interview in 1975 interview.

Reprinted from Intellectual Takeout.

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Raising Millionaires’ Taxes Will Drive Them Away

Thanks to a frenzied December on Capitol Hill, 2017 will be known as the year of tax reform. But political developments in several blue states may mean that tax relief is significantly clawed back. Massachusetts and New Jersey are currently considering “millionaires’ taxes,” which would significantly increase top rates and spark a “race to the top” for revenue at a time when the federal government is actively lowering rates.

To states such as New Jersey and Massachusetts with red-hot liberal resentment over tax reform, a millionaires’ tax might seem like necessary progressive corrective action. Hidden behind the rhetoric, though, is a flimsy case for states trying to raise taxes on the wealthy. Instead of helping out the middle class, a millionaires’ tax will result in an exodus from the state, squeezing out opportunities for working Americans.

Tax Migration

Prominent millionaires respond to tax increases by threatening to leave, and research shows that they follow through.

State lawmakers with blue electorates often experience generous program funding promises that conflict with balanced-budget requirements. When faced with expanding spending and shrinking revenues, large tax increases are the go-to policy option. Prominent millionaires respond to these proposals by threatening to leave, and research shows that the well-to-do regularly follow through on these promises. Despite inter-state migration by upper-income groups being lower than average, nearly all of the migration that does happen in top brackets has to do with tax changes.

Researchers at Stanford University and the Treasury Department estimate that a 10 percent increase in taxes causes a 1 percent bump in migration, assuming no change in any other policy. This implies that typical levels of tax migration would still result in a net increase of revenue for a state looking to raise taxes on top earners. But it does mean that the bounty is not as great as some state lawmakers would like to imagine. Shifts in executive compensation sources make the payoff to state governments even smaller.

The ultimate destination for the remaining pool of money that does get into state coffers depends on the state. New York State’s experience offers a cautionary tale of what happens when transparency and accountability take a back seat to special interests. In 2009, then-Governor Paterson and state lawmakers urged a temporary 8.97 percent tax on individuals earning over $1 million (or couples earning over $2 million) to shore up funding through the end of the Great Recession of 2008 and 2009.

This new rate proved to be anything but temporary and is still on the books (albeit slightly lowered to 8.82 percent), following a two-year extension signed into law last year. The $3.5 billion annual revenue pads wasteful spending in Albany, as costs balloon for expensive infrastructure projects and waste at Albany agencies. Meanwhile, lawmakers have proven incapable of clamping down on record shortfalls.

Tried and Failed

California’s experience with a millionaires’ tax is only slightly less terrible. A 1 percent surtax on incomes above $1 million, implemented in 2004, is specifically designated for the Mental Health Services Act (MHSA), which funds counseling and rehab services for at-risk, low-income populations. But despite transparency over the funding, per-person program costs have ballooned and the state has presented no data attesting to the efficacy of the program.

If New York and California are any guide, income surtaxes will be destructive.

This does not mean that there are no praiseworthy program results; some statistical findings suggest that increased mental health efforts have led to a decline in emergency room usage and decreases in other government spending. But if the program recoups around 85 percent of costs, as some studies suggest, then a millionaires’ tax is not necessary.

If California clamped down on some of the rampant waste found in infrastructure line-items, payments for mental health would be possible and set the state up for long-run budgetary savings. Better yet, Sacramento could fund specific programs via “charitable donations” as a way for taxpayers to get around the new state and local deduction cap.

If New Jersey and Massachusetts approve new millionaires’ taxes, it is difficult to predict how much will be raised and where these funds will ultimately wind up. But if New York and California are any guide, income surtaxes will be destructive. When it comes to higher taxation, interstate migration is just the tip of the iceberg. Higher-tax states, for instance, see less innovative activity and scientific research according to an analysis by economists at the Federal Reserve and UC Berkeley. Any benefits of millionaires’ taxes do not make up for the economic and social toll caused by fewer innovative activities and correspondingly lower job creation.

In the midst of game-changing federal reforms and widespread blue resentment, scapegoating the rich is a proven political strategy. But millionaires’ taxes make for terrible governance and dubious benefits.

Reprinted from Economics 21.

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Are Earmarks a Lesser Evil than Easing Gridlock?

This is depressing. Republicans botched the repeal of Obamacare. They’ve already sold out (twice!) on the spending caps in the Budget Control Act, and they’re about to do it again. And now they want to bring back earmarks.

The Trouble With Earmarks

In this interview with Neil Cavuto, I explain why this is a very troubling development.

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One thing I didn’t mention in the interview is that earmarks are inherently corrupt. Indeed, there’s a near-universal four-step process that — in a just world — would result in politicians getting arrested (see 18 U.S. Code § 203) for bribery, graft, and conflicts of interest.

  1. An interest group decides it wants other people’s money and decides to use government as a middleman.
  2. The interest group hires lobbyists, most of whom are former members of Congress or former staff members.
  3. The interest group and the lobbyists direct campaign contributions to one or more politicians.
  4. In exchange for those contributions, one or more earmarks are inserted in a spending bill.

That’s a great deal for Washington insiders, but not so good for taxpayers or honest government.

And if you don’t believe me, read about the oleaginous behavior of Senator Tom Harkin and Representative Jim Moran.

Now let’s consider an argument in favor of earmarks. Writing for Bloomberg, Professor Tyler Cowen of George Mason University argues that the system needs a bit of grease to work better.

Think of earmarks as local benefits inserted into bills to buy more votes in Congress.…Recalcitrant representatives can be swayed by the promise of a perk for their district. That eases gridlock…whether we like it or not, there is something inherently transactional about being governed.

As I stated in the interview, I don’t think this assertion is persuasive. Most legislation is bad for liberty, so I agree with America’s Founders that gridlock is good.

That being said, Tyler makes a couple of compelling arguments. First, he points out that we may need some pork to get good legislation through the process.

Advocates of smaller government should keep in mind that reforming spending and regulation requires some activism from Congress. Gridlock today is not the friend of fiscal responsibility, coherent policy, or a free, well-functioning capitalist economy.

I agree with the first sentence and said the same thing in my talk with Neil. We will need congressional action to reform entitlements and save the country. And if that means bribing a few members to get votes, so be it.

However, I think his second sentence is too optimistic. Good reform is not very likely with Trump in the White House. It’s a judgment call, to be sure, but I believe gridlock will be a good thing for the next few years.

Are Earmarks Cheaper than New Entitlements?

Second, Tyler acknowledges that politicians try to buy votes, but he suggests that earmarks are cheap compared to potential alternatives (such as new entitlements, presumably).

Virtually every member of Congress looks to support government spending that will boost his or her re-election prospects. It is often the case that directly targeted local spending — which may take the form of earmarks — buys support for a relatively low dollar price per vote. If earmarks are removed, representatives are still going to pursue votes, but the total amount of electorally motivated, wasteful government spending may be higher.

This is a potentially persuasive point, but I’ll be skeptical until I see some supporting evidence.

In a gridlock environment, I suspect enacting non-earmark spending is not that easy (though I admit an Obamacare-level budget buster every 10 years would completely wipe out in just one year the money that might be saved over several decades with an earmark ban).

In addition to what Tyler wrote, another pro-earmark argument is that there will always be a person who decides how money is spent. And I’ve had members of Congress tell me that they’d rather make those decisions than have a bunch of left-wing bureaucrats allocate money.

That’s a perfectly reasonable argument, but it doesn’t address my fundamental concern that the existence of earmarks will seduce members into supporting higher overall levels of spending.

Which brings me to my final point. I’m willing to cut a deal.

I’m willing to let politicians allocate 100 percent of spending with earmarks if they’ll agree to a comprehensive spending cap that complies with the Golden Rule and slowly but surely shrinks the overall burden of federal spending.

If the crowd in Washington is serious about the argument that earmarks are needed to grease the skids for desirable legislation, it’s time for them to put their votes where their mouths are.

Given the track records of most of the politicians who support earmarks, I’m not holding my breath.

Reprinted from International Liberty.

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Inner Strength Training Can Rebuild Lives and Prevent Violence

Attempting to conquer feelings of pain through violence is a well-documented tactic as well.

Dr. James Gilligan is an expert on the psychology of violence. Before joining Harvard Medical School and NYU Law, he was the Medical Director of a prison mental hospital in Massachusetts for the “criminally insane.” His task was to tackle skyrocketing rates of murder and suicide. When he left ten years later the rates of both had dropped to nearly zero.

Dr. Gilligan argues that shame and humiliation underlie most acts of extreme violence. “Because I feel small, I will make you feel smaller.”

When someone wants to feel big, there are two primary tactics to choose from: become bigger yourself or cut down everyone else around you. It requires far less effort to do the latter.

Bully psychology 101: going on the offensive to address emotional pain.

During a recorded interview, Dr. Gilligan recalls the story of one patient in particular. It’s paraphrased below:

“…He lived comfortably with his wife and children. He was a foreman at a local factory, his wife was a local school teacher. Both enjoyed a good income. But during a recession he was laid off. Burdened in shame, he refused to let his family know. Instead, each day he got dressed and “left for work.” He looked tirelessly for jobs but eventually became discouraged and gave up. His wife confronted him when she realized the paychecks were missing. In complete humiliation, he finally admitted what had happened. She furiously replied, “What kind of man are you, what kind of man would do something like this?” To answer her, he got up, grabbed his pistol from the bedroom and shot her. This caused the children to scream. To silence them he killed them as well. When asked why he didn’t kill himself, he said it was because he was already dead. Looking into his eyes I found it hard to disagree. Day and night, all he could hear was their screams.”

Mass Shooters

Addressing internal pain through external violence may play a role in mass shootings as well.

Like terrorism, the psychology behind mass shootings is poorly understood. However, there is a common thread that links mass shooters from many different backgrounds together — domestic violence.

Mass shooters without domestic violence records have shown similar traits. The shooters in Sutherland SpringsLas Vegas, and Orlando all had such backgrounds. The U.S. Congress defines a mass shooting as three or more killings in a single incident. If we combine mass shooting events with those where the shooter also targets family (such as the Sutherland Springs shooting), 54 percent of all mass shootings involve domestic violence.

Domestic abusers are typically insecure, hypersensitive and have extremely low levels of self-worth. In order to find relief from these sensations, abusers cause harm to those they know they can. Instead of worthless paupers, they can feel like temporary kings.

Mass shooters without domestic violence records have shown similar traits. In addition to battling schizophrenia, the Aurora theater shooter also struggled with severe self-esteem and anxiety issues. His legal representation argued he killed in a misguided attempt to improve his self-worth. He previously stated having homicidal urges because he was tired of feeling so awkward around others. If they were eliminated he wouldn’t have to feel that pain anymore.

Pain & Shame Among the Alt-Right

Violence as a response to perceived weakness and pain may also explain the growing number of violence-friendly “alt-right” organizations as well.

A young man hiding his face, holding a weapon, and standing in front of a flag. Where else have we seen this?

Dr. Michael Kimmel is a leading expert on masculinity. He directs the Center for the Study of Men and Masculinities at Stony Brook University and authored Angry White Men, a book which focuses on how men join and eventually leave hate groups.

In an interview with the Guardian newspaper, he reiterates the power of humiliation and pain:

“Many of them, especially the American guys, were sexually abused, beat up, bullied as children…Growing up they were deeply ashamed of themselves; they didn’t do well in school, they didn’t have friends, they were sad, miserable, and they escaped into themselves. That just made them better targets, and the far right drew them in.”

These men lived in a constant state of emotional pain. Acting in violence, or being perceived as willing to act in violence, allows them to feel strong.

It’s worth pointing out that the response to the alt-right, the so-called “anti-fa” or “anti-fascists,” isn’t much different than their ultra-conservative opponents. Both are a response to feeling threatened and weak. Each group pursues dominance — and therefore safety — from their “threatening” counterpart.

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Tariffs and Artificial Scarcity Don’t Make Prosperity

The bonus quotation of the day is from an excellent interview with Doug Irwin that appears in the third-quarter 2017 Econ Focus; among the questions put to Doug during the interview was one about the effects, if any, that restrictive late 19th-century trade policies in the United States had on industrialization in the U.S.; here’s part of Doug’s answer:

Another point to be made is that when you look at the high productivity growth sectors in the U.S. economy in the late 19th century, John Kendrick and others have shown they’re mostly in the non-traded goods, service sector. Transportation and utilities were growing very rapidly. It’s hard to see how the tariff would help the non-traded goods, service sector of the economy improve its performance. Also, Steve Broadberry has done some work showing that increasing productivity in the service sector was very important to the United States catching up with Britain in the late 19th century. That, too, doesn’t seem to be tariff related. All of this doesn’t lend itself to an easy story where the tariffs are the key factor behind U.S. growth and industrialization.

In general, the notion that the masses can be made more prosperous by artificially restricting their access to goods and services – that is, by artificially intensifying the bite of scarcity – is too far-fetched to take seriously. 

The fact that one can spin out theoretically coherent accounts of growth springing from artificially induced scarcities does not imply that these accounts are valid in reality. Nearly all that is theoretically possible is practically impossible – and much of it is downright ludicrous.

Reprinted from Cafe Hayek.

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20 Money Truths and Falsehoods from My Social Media Feed

Over the weekend, I asked my friends to share with me some of their favorite sayings about economics and finance. The responses ranged from the truthful to the absurd. Some were superficially true — “You’ve got to spend money to make money.” Some were obvious — “100 pennies make a dollar.”

Below is a compilation of the responses, grouped with my own commentary.

The Obvious And Overused

Money doesn’t grow on trees.

“You’ve got to spend money to make money.”

Folks beginning new businesses say and hear this a lot. It’s true that entrepreneurs must work — and forego other opportunities to use their work — in order to get their new ventures off the ground, but is it absolutely necessary to spend actual money? So, although this is extremely likely, it may not be entirely accurate.

“A penny saved is a penny earned.”

 This is attributed to Benjamin Franklin, but he went to a lot of parties, so who really knows?

“In this world, nothing can be said to be certain, except death and taxes.”

This is also generally attributed to Benjamin Franklin, who did write it in a letter, but the phrase itself dates back to at least 1716.

“Money doesn’t grow on trees.”

You can’t get something for nothing.

The Absurd but True

“If you think no one cares about you, try missing a couple of payments.”

If you want attention, remember that incentives matter.

I need more money. “Banks will only loan you money if you can prove you don’t need it.”

This refers, of course, to collateral. You’ve got to be good for it.

“A fool and his money are soon parted.”

In other words, it’s far easier to spend than to earn.

“Retail is details.”

There are many shops in the mall, but you’ll mostly choose to shop in the ones that both allow you to get what you need or want and provide you with your desired experience. Think the Apple Store versus Wal-Mart: both have cell phones, but they offer very different prices and experiences.

“I need more money.”

This one, attributed to my lovely mother-in-law, made me laugh out loud. Who can’t relate?

The Wonky

“Supply creates its own demand.”

This is a highly simplified and somewhat misleading version of Say’s Law, named for French economist Jean-Baptiste Say. Basically, it is only through the production of valuable goods and services that there can be the means to demand the same. Production creates the wealth necessary for consumption.

“There are no perfect solutions — there are only trade-offs.” 

Everything that is done or bought was done so in favor of doing or buying something else. Attention and resources given to one thing will deflect attention and resources from another. We will not find a way to Utopia, so let’s instead set the goal to find the least imperfect solutions to our problems.

“There ain’t no such thing as a free lunch.”

Economists trot this one out regularly, expressed as TANSTAAFL in shorthand. It’s commonly attributed to economist Milton Friedman but is actually a line from a book by one of my favorite authors: Robert A. Heinlein. It means that there is nothing truly free.

All costs get covered. It’s just a matter of whose covering them. “No thing is just one thing.”

Sounds metaphysical, but this statement in the economic sense and the following explanation come from my friend Laurie Williams: “Every debt is someone else’s asset. Each paycheck is someone else’s labor expense. Every dollar spent is a dollar of someone else’s income. This taught me to look for the trade-offs, the opportunity costs, the alternative angles.”

“Scarcity is a fact.”

This is, perhaps, the very first lesson we teach students at FEE’s events. The world is full and bountiful, and there are always new ways being discovered to transform what we have into resources to improve our lives, but there is never an infinite supply of anything valuable.


This concept from your economics textbook explains how economic efficiency is achieved when the marginal benefit (MB) of producing one more unit of a good exceeds the marginal cost (MC) involved in producing it. Basically, you should only continue to produce a good when the benefits outweigh the costs. If the marginal benefit of producing one more widget, for example, equals or is less than the marginal cost involved in producing that same widget, you are foregoing other, more valuable opportunities.

“An economist is a guy who thinks he knows more about money than those of us who have it.”

Attributed to financier Bernard Baruch, this is just a jab in the eye to all of those economists who appear on CNBC to provide a reading from their crystal balls.

“All costs get covered. It’s just a matter of whose covering them.”

Another good way of looking at things when someone claims they are “free,” such as government-run health care, education, and housing. This is similar to one of my favorite sayings: “Everything has a cost.”

Cash Is King

“Cash is fungible.”

This was the saying I thought of when proposing the original solicitation for others’ ideas. It basically means dollar bills (or euros, ounces of gold, or BTC and fractions thereof) are perfectly replaceable by others of the same “species.” In other words, for purposes of transactions, it doesn’t matter for what reason you acquired a unit of money — you can use it for any other.

“If you love somebody, give them cash.”

Gift cards, anyone?

“I don’t love money; I love the things money can buy.”

This is another way of saying, “You can’t eat cash.” Money doesn’t matter if there’s nothing valuable — by whatever analysis — you can get for it.

We think about money, the economy, and finances in terms of what they mean for us individually. Interesting Insights

The vast majority of these responses pertain to how individuals use and misuse money, and nothing could really be construed to imply a collectivist economic framework such as socialism (unless my friend Suzanne’s debatable saying counts: “The rich get richer and the poor get poorer!”). Chalk it up to my special selection of social media friends or not, but this exercise prompted me to consider that there may be very few collectivistic sayings about wealth and its uses.

Regardless of how economic ideas have been turned into common (and less-common) sayings, at a fundamental level, we each think about money, the economy, and finances in terms of what they mean for us, alone and individually. Thinking this way is the only real way we can truly judge value, and why it’s so difficult to try to plan for others. This is a fundamental insight of free-market economics.

What are your favorite sayings? Share them in the comments.

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Your Coworkers Are Your Most Important Clients

You probably know you need your co-workers if you want to get anything done at work. But you probably also take your coworkers for granted.

Our coworkers have their own unique information and perspective on what the business needs.

I think a default position for many is to assume that — as long as you have a good idea — your coworkers are obligated to help you achieve it. After all, they’re working for the company, right? Of course they have to.

It’s frustrating when you realize that this entitled approach simply doesn’t work.

It takes time to realize that our coworkers have their own interests. They have their own unique information and perspective on what’s needed in the business. They have their own ideas about what it takes to move the company’s interests forward. And none of them really have to help you.

In reality, your relationship to your coworkers is really not that different from your relationship to your clients.

You have to provide value. You have to communicate and sell your ideas effectively. You have to build relationships, trust, and social capital. All of these things are essential in a business relationship outside of your company. So why would you not do the same things inside?

Your coworkers are the people who make your company possible in the first place. 

Do unto your coworkers what you would have your company do unto clients. You should spend more time doing sales, customer service, and marketing to them than you do for any external clients.

Say “thank you” to your coworkers. Do favors for them. Build relationships of trust with them. Back them up when they need support. Give them credit, and give them opportunities to shine. Capture their imaginations. Clearly communicate (“sell”) the value of any idea you have which will need their help. Clearly communicate the value any such project ends up creating. Be transparent.

In short, do unto your coworkers what you would have your company do unto clients. If you do that, your coworkers will be far more likely to help you get things done when the need comes.

Reprinted from James L.Walpole.

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All Laws Prohibit Either Crimes or Liberties

The best way to understand the voluntaryist perspective on politics is to realize that there are only two types of laws: 1) those that prohibit crime, and 2) those that prohibit liberties.

Crimes and Liberty

Crimes are actions that produce victims, which in popular usage can mean almost anything undesirable under the sun. A more principled approach to understanding crime and victim-hood is to narrow the definition to a state in which somebody has been forcefully or fraudulently deprived of life, liberty, or property.

Crime includes such obvious actions like murder, battery, rape, assault, and theft. How particular people define particular instances of these types of action may differ, but for the most part, physically hurting people or taking their stuff is generally viewed as criminal behavior.

Liberties may be offensive but, staying within the law, they should not be prohibited by political authorities.

Liberties, on the other hand, are actions that do not produce an identifiable victim. They are actions that people should be free to perform as they do not victimize, in the criminal sense, other people.

Liberty includes a much broader spectrum of actions than does crime. I think we can confidently say that any action that is not criminal is a liberty. Liberties typically comprise 100% of people’s actions day-to-day. Think of anything you do: does it physically hurt somebody or take/damage their stuff? Then it’s a liberty, not a crime.

Liberties may be offensive in the sensibilities sense, but so long as they are not criminal, they should not be prohibited by political authorities. While every property owner may prohibit the liberties enjoyed within their private domain, they may not call upon third parties with guns to prohibit them in other domains.

Unfortunately, doing so is all too common, and makes up most of the actions that political authorities engage in today. Politicians, eager to get and remain elected, pander to sensibilities and push through laws that not only prohibit crime but, in too many ways, prohibit liberties.

The Prohibition of Liberties

The prohibition of competition is the root of a dangerous and corrupt system of governance.

The prohibition of liberties is not limited to what people eat, drink, smoke, how they use their bodies, or other such actions. It goes much further, all the way to the very foundations of political authority: the prohibition of competition in the provision of law and order. This prohibition is the root of a dangerous and corrupt system of governance. It amounts to one group of people forcing others to pay them — or else — with little recourse on the part of their ignorant victims.

In any event, understanding the voluntaryist perspective on politics is not difficult. It might be bitter, but it is simple. If an action is voluntary vis-à-vis of other people, it’s not a crime and should not be forcefully prohibited by political authorities. To do so constitutes a crime in and of itself, wouldn’t you think?

Reprinted from Everything Voluntary.

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