Testing the Invisible Hand on “What Would You Do?” and The Office

In his Wealth of Nations, Adam Smith wrote about the Invisible Hand of markets.  The Invisible Hand can allocate resources without  specific, direct action.

I don’t have to order gasoline from an oil company weeks ahead of time, I show up at the gas station and it’s ready to be purchased.  The Invisible Hand works through self-interest, supply and demand and competition and is guided by price and buying signals.

In his Theory of Moral Sentiments, Smith also writes about four sources of moral approval that keep our behavior in check.  Those sources of moral approval are our senses of prudence, propriety, benevolence and justice.  These four sources govern our interactions with others.

I consider this an extended Invisible Hand.  Our behavior toward one another is guided by signals from others that let us know how well we are applying our four senses of moral approval.

While watching ABC’s What Would You Do? this evening, it occurred to me that the idea of the show is to push beyond the edge of the envelope of our senses of moral approval and see how others in the area react.

What happens is that we see the Extended Invisible Hand in action.  Other people act as a check on behavior that is deemed inappropriate.

Continue reading

Black Swans at McDonalds

Nassim Taleb wrote a book named The Black Swan: The Impact of the Highly Improbable.  As you can tell from the title, a Black Swan is what Nassim calls a highly improbable event.  He asserts that these events are highly improbable, not predictable and they drive much of what goes on around us.

Many successful companies and products are the results of Black Swan events.  As much as we’d like to think that there are formulaic ways of building successful companies, there isn’t.  The best formula is lots of experimentation.  The successful companies are the one experiment that works out of many.  We just never really see the many because they die off before we ever take notice.

Many successful companies get their innovation wrong after they’ve become successful.  They try to innovate from the top down.  That is, high level management sit around at HQ thinking it’s their jobs try to dream up the next big thing.  They forget where they started. Continue reading

Talking Past Someone

Steven Landsburg’s video embedded in his blog post, Why I’d Rather Be Blogging, is an excellent example of what happens in discussions all too often that prevents actual exchanges of information and ideas.

In this case, the host of the Fox News program, John Gibson, desperately wanted Steven Landsburg to be saying something he wasn’t.  What Gibson thought Landsburg’s position was would have been an easy take down and made Gibson look like a hero for blasting someone with such an obtuse viewpoint.

Gibson couldn’t adjust after figuring out that he misunderstood Landsburg’s point.   He wasn’t giving up the hero mentality.

Continue reading

Paul Krugman – Thumbs Down

Every once in awhile I try reading a Paul Krugman column to see if I’m missing anything.

I know I’m just a lowly non-Nobel Prize winning crank with a little voice out here, but years ago when I encountered one of Krugman’s columns for the first time I found it to be remarkably dumb and decided that he wasn’t worth my time.

Apparently others don’t find him his columns dumb since he keeps getting published.  So, every once in awhile I try reading again to see if it’s just me.  His May 13 column, We’re Not Greece appeared in my local newspaper and I gave it a read.

He didn’t disappoint.  The dumbness started just one paragraph in:

Everywhere you look there are editorials and commentaries, some posing as objective reporting, asserting that Greece today will be America tomorrow unless we abandon all that nonsense about taking care of those in need.

I added the emphasis to show Krugman’s straw man.  A straw man is a false representation of the opponent’s position.

No conservative or libertarian I know of thinks we shouldn’t take care of those in need.  This is a false representation of our position.  Representing our position like this is either a lie or stupidity.

Continue reading

Buffett and Goldman

I received a link to this write-up about the Berkshire Hathaway shareholders meeting from the Motley Fool:

Buffet defends Goldman? — Philip Durell, Inside Value advisor
I expected Warren Buffett to be on the defensive over the SEC’s civil charge and subsequent Manhattan U.S. Attorney’s Office criminal investigation, both of which accuse Goldman Sachs (NYSE: GS) of fraud. So I was stunned by his response, which I’ve paraphrased below:

Continue reading

Calling People on Their Rush Bashing

On the radio show, Shanin & Parks, I heard the hosts address the latest round of Rush bashing in the main stream media.

Rush bashing is when the media, looking for attention from Rush-haters, grab onto something Rush said and misrepresent it to show the Rush haters just how right they are for hating Rush.

I’ve heard and read a lot of unsubstantiated statements made by folks who dislike Rush.

To me, that reflects on the credibility of those reporting the faulty information than on Rush.  But, few people see it that way.  As long as the Rush-haters get their fill of reasons why they should continue hating Rush, they have no need to question or research what their beloved media stars are telling them.

Here’s what I do when someone tries to pass off one of the unsubstantiated rumors on me.

1. Would you mind giving me evidence?  He’s been on the air for a long time.  It’s the Internet age.  He posts many of his transcripts on his sites.  I’m sure, if what you say is true, it wouldn’t be hard to find it. [Usual response: “Well, I just heard about it,” with no follow-up to show to substantiate what they’ve heard.]

2. Have you ever listened to his show?  [Usual response: “No”].

3. I’ll tell you what.  Listen to an hour of his show.  Write down the stuff he says that you find objectionable, inaccurate or wrong and come back and I’ll be happy to discuss those with you.

I don’t care if you like Rush or not.

But, if you’re going tell me about how stupid he is, all I ask is that you do your homework and be ready to substantiate it with concrete examples.

If you’re going to form your opinion based on what others say and how you want to feel, great, but I have no interest in hearing about that.

If you’ve listened to the guy for an hour and have substantive disagreements that you’ve thought through, I’m much more interested in that.

Calling them on their BS

NBC’s show The Office had a great example of someone calling out BS.

People in the office were convinced that Michael Scott’s (the branch manager) girlfriend was cheating on him.  The girlfriend walked into the break room where several people were having their lunch.  Kelly, the young, silly girl of the office immediately sees the girlfriend is wearing heart shaped, diamond earrings and starts asking her questions.

Who gave those to you? If she says Michael, that’s easy to validate.  If she says who really bought them she’s busted.

I bought them myself.

Where?

Down at the mall.

Where at the mall? Kelly names every store at the mall that sells jewelry.

Not that mall.  Another mall.  I picked them up when I was traveling for business in some area.

Kelly then proceeds to name all the malls in that area. Which one?

The guys were baffled by the line of questioning.  The ladies explain that you don’t buy heart shaped jewelry for yourself.

I thought it was smart writing.  Kelly would know about jewelry and where to get it.  Her line of questioning and rationale introduced enough suspicion with others to continue the search for evidence that Scott’s girlfriend was cheating.

This is what a good line of questioning should do when someone is full of BS.  Expose their BS by having them reveal exactly what their thinking is based on.  Chip away at the certainty they’ve built into their story to sell it.

Be the feedback loop that doesn’t let BS persist.