The Stoic Way

Stoicism is a philosophy that leads to mental calmness, composure and an unruffled acceptance of the world as it is. It originated in ancient Greece with Zeno (334-262 BC) and was developed by a Roman slave, Epictetus (55-155 AD) and a Roman emperor, Marcus Aurelius (121-180 AD). Stoicism means keeping the Englishmen’s “stiff upper lip”, living with the virtues of temperance and fortitude. It’s a popular, admirable philosophy. The President of my daughter’s college even quoted a Stoic in his welcome speech to parents: “Luck is what happens when preparation meets opportunity”. Seneca (4 BC – 65 AD).

 

Stoicism embodies moderation and self-control. The Universe is rational and there are reasons why everything is the way it is. To the extent that our emotions rebel against this – they are wrong. Stoics believe that emotions are judgments and therefore, cognitive. They are forms of knowledge (either true or false). For example, greed is the judgment that money is the supreme good, to be acquired by every available means. It’s a false judgment that can be corrected with reason. Plato (427 BC – 347 BC) wrote that knowledge divorced from justice should be called cunning rather than wisdom. The world should be viewed through both intellectual and moral lenses.

 

Stoicism is a necessary addition to the Estate Planning War Chests of the successful because there is a danger in success. Cicero (106 BC – 43 BC) wrote: “When fortune smiles and the stream of life flows according to our wishes, let us diligently avoid all arrogance, haughtiness and pride. For it is as much a sign of weakness to give way to one’s feelings in success as it is in adversity.”

 

Enjoy success – but maintain moral strength, courage and humility. It’s the Stoic way.

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The Millionaire Next Door

As I began my career, studying and researching the trusts and estates business, the book The Millionaire Next Door (1996) by Thomas J. Stanley stood out in my mind. It profiled “millionaires” as surprisingly down to earth, frugal and not flashy with their wealth. They are more likely to drive an old pick-up truck than a fancy Mercedes. I admire the morality of this demographic – well grounded, family oriented with good money habits and a passion for what they do. It angers me that politicians and academics continue to attack my tribe with egalitarian wealth redistribution nonsense.

 

Testamentary freedom is a critical economic right that enables our demographic to perpetuate financial security across generations, and more importantly, values of personal responsibility, industriousness and thrift that lead to a family centered worldview focused on success and self-discipline. Critics attack the wealthy and inheritance rights when advancing an ‘equality for all’ agenda, and it’s wrong and misguided because inheritance: 1) is an incentive for wealth accumulation; 2) is a huge part of our economy and source of investment capital; 3) enables the support of dependents; 4) supports charitable and cultural institutions; 5) is fair because traditional recipients (spouse and children) contribute to the accumulation of wealth (via providing purpose and household stability to the bread winner); and 6) is morally legitimate because the abolition or substantial curtailment of private property and inheritance rights is Socialism. And as we’ve seen here week after week – Socialism is evil and rationally immoral.

 

The author of The Millionaire Next Door, Thomas J. Stanley, died on February 28, 2015 behind the wheel of a new Corvette rammed by a drunk driver. It turns out that Mr. Stanley had a taste for the finer things in life. But he was not a hypocrite. We get more joy out of life from experiences rather than things. A weekend drive in a car that goes really fast is a probably a little of both. But he earned that drive and that car. His book put an untold number of readers in a position where they’d be lucky enough to have that same choice themselves. Keep on stocking your Estate Planning War Chest.

[last paragraph based on a 2015 New York Times article paying tribute to Mr. Stanley]

https://www.nytimes.com/2015/03/07/your-money/paying-tribute-to-thomas-stanley-and-his-millionaire-next-door.html?mcubz=1

The Supreme Value of Philosophy & Music

This image is a statue of the seated philosopher Socrates and a standing Apollo, god of music and poetry. Philosophy is the study of fundamental human concerns like existence, knowledge, values, reason, mind and language. It is a vast, fascinating body of both intellectual and moral ideas, ways of understanding and accepting the universe.  Music is just as important, or as Arthur Schopenheur (1788-1860) believed, actually more important because music and art are on a higher plane than mere thought.

 

Arguably, one of the most important living philosophers is Noam Chomsky. He knows (like Michel Foucault) that language is used and abused in order to hide unjust actions and advance preconceived worldview agendas.  Chomsky’s book Manufacturing Consent (1988) smashed the myth of an impartial media.  The press, as we’ve noted here often, is very much part of the establishment agenda.  His work Understanding Power (2002) delves deeply into the universal corrupting nature of power.  Philosophy is useful in unmasking and exposing government, academic and media bullshit but its highest and best value is in just doing it.

 

Philosophy is like music – it has many practical uses but its supreme value lies not in any of them but in what it is in itself. There will never be a finished understanding of the human condition but by engaging in philosophy and music – immersively and religiously – it becomes clear that the journey in itself is an enriching experience, a worthy undertaking for its own sake.  I deeply and actively engage in both philosophy (here) and music (with my rock band buddies) every week.  It’s an exciting quest towards an increasing awareness of what’s really going on in this life that we all share.  Our Estate Planning War Chest seeks practical understanding but it will never be complete – its value is the ongoing, willful climb.  Back at it next week.

Language and Power

Michel Foucault (1926-1984) developed the idea that every kind of discourse is an attempt on the part of its user to exercise power over others. He was a deconstructionist like Nietzsche (see my 8/30/16 post), who probed down into the true motivation of the writer of an argument.  There are no facts, only interpretations. Every lawyer knows this as they begin a trial – “ladies and gentlemen of the jury, these are the facts……”  Neither truth nor virtue is centralized in anyone; those who claim to have a monopoly on truth or morality are just trying to exert power.

 

Considerable power was institutionalized in government, the media and academia but its strength in those institutions has been greatly weakened by the obvious exercise of that power to advance a Leftist agenda. Here are a couple of examples of ‘progressive’ bias:  Academics proposed the idea of a personality trait they labeled “Social Dominance Orientation” based on Social Dominance Theory (which sounds a lot like Marxism).  It suggests that the idea of a meritocracy (individual achievement) is a “legitimizing myth” designed to produce a false illusion of fairness.  I wrote about that horseshit nonsense back on 11/3/15 –Well isn’t that special (in the voice of the Church Lady from SNL).  If you don’t hold egalitarianism as an ideal, you’re a morally inferior, evil racist! 

 

Another example is all the hubbub over income inequality as measured by the Gini Coefficient. It’s based on the Lorenz Curve, developed by Max O. Lorenz in 1905, which graphs share of income against percentage of people.  As expected, wealth is always distributed in a power function (80/20 rule) allocation.  The Gini Coefficient measures inequality by calculating the ratio of the area between the “perfect” line of equality and the total area including under the Lorenz Curve.  The underlying assumption seems to be that the ideal distribution of income is equality and we are measuring how far off we are from that “ideal”.

The point is that discourse is always in pursuit of an agenda (or in defense against the imposition of one).  Everyone is biased, including me, but I happily recognize and acknowledge it.  I battle for my mass affluent tribe – an intellectual gladiator wielding my sword of reason against the egalitarian dragon.  I don’t root for inequality (that’s like cheering for the earth to be a sphere) but I strongly believe that egalitarians are morally and logically misguided in trying to attack those who own wealth.  It bears repeating – every competitive endeavor (golf, chess, spelling bees, sports, business, etc.) has a highly skewed distribution favoring the successful.  Trying to knock down the strong to pull up the weak is just wrong and will never work.  The strong fight back.  We have powerful cognitive, moral and pecuniary weapons in our Estate Planning War Chests.

Peas in a Pod

UCLA Professor Jared Diamond wondered why European and Asian civilization had such a vast historical advantage in power and technology over the rest of the world. So he researched and wrote the Pulitzer Prize winning book Guns, Germs and Steel (1997).  Eurasia culture dominated and conquered the globe not because of any intellectual, moral or genetic superiority but rather because of cumulative advantage amplified by a positive feedback loop.

 

Successful families are fortunate because there are significantly fewer of them than everyone else. And they stick together, leveraging advantages over generations.  Financial success is dependent on many variables, many of which are beyond our control.  Recognizing an advantageous position and then protecting and augmenting it over time separates top tier wealth owners from the disgruntled, miserable masses.  It’s a natural phenomenon and some policy makers resent the hell out of it.

 

The Pareto Principal is based on the observation by Italian economist’s Vilifredo Pareto (1848-1923) that a vital few (20%) of the peapods in his garden produced the majority (80%) of the peas.  A minority of pods are hoarding peas… oh the injustice!  The “80-20 Rule” has broad applications across a wide range of fields from business management/sales to engineering and software.  It’s a fact of life and there’s nothing you can do to change it.  But our enemies keep trying.   Wealth redistributionists have an uphill battle because wealth is tucked away in tightly sealed pods.  Political forces seek to rip them open and redistribute the peas in them to the “less fortunate” peapods.

 

The moral and philosophical error/evil of Leftist radicals is their failure to accept that the most undesirable type of society is one in which centralized planning is imposed and dissent disallowed. A redistributionist society is necessarily coercively totalitarian because people won’t just voluntarily hand over their money so it can be reallocated for the “betterment of society”.  Hayek understood that, as did philosopher Karl Popper (1902–1994), who wrote The Open Society and Its Enemies (1945). Radicals seeking to impose an ideal, “perfect” social arrangement are wrong and immoral.  Karl Popper was the gravedigger for Marxism.  Our intellectual position, moral values and wealth are peas in a pod.

 

Next week the War Chest surveys some of the intellectual battle armaments in the war to convince you that inequality is caused by unnatural, unjust cultural oppression and that equality is the perfect end goal to which we should all strive.

War Chest Weapon

Wealth is under siege by political and economic forces. The most vital economic weapon in our War Chest is Cumulative Advantage.  Simply put, it’s a mechanism operating across time (one lifetime and multiple generations) in which a favorable position becomes a resource that produces further gains and strengthens advantages.  There are many names for and voicings of this phenomenon.  Let’s take a look at a few:

 

The Matthew Effect was a term coined by sociologist Robert K. Merton in 1968. It is summarized by the adage “the rich get richer and the poor get poorer” and takes its name from a Bible passage.  The Gospel of Mathew: For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken even that which he hath. Matthew 25:29, King James Version.

 

Preferential Attachment is another name for the cumulative advantage process used in scientific – mathematical and biological analysis.   It sets forth equations demonstrating how wealth (or credit for academic papers) is distributed among individuals according to how much they already have.  So, those that are already wealthy receive more than those who are not.

 

Power Law is a statistical concept that describes the relationship between two quantities where one varies as a power of another. For example, the area of square varies as a power of 4 with regard to the length of its sides.  Double the length the side of a square and the area is multiplied by a factor of four regardless of the size of the square.  This relates to wealth because the distribution¹ of wealth is governed by a power law function whereby the few overwhelmingly dominate the many.  It’s quite natural and normal but social justice warriors hate it and want to redistribute the existing allocation of society’s resources by attacking the rich.  However, the wealthy few are protected by the power law distribution of wealth².

An example power-law graph, being used to demonstrate ranking of popularity. To the right is the long tail, and to the left are the few that dominate (also known as the 80–20 rule).

 

Our War Chest is defended by the undeniably powerful law of the vital few, also known as the Pareto Principle, named after an Italian economist in 1896, who noticed that 20% of the peapods in his garden contained 80% of the peas.  Hey, let’s explore the 80-20 rule next week.  These notions are potent weapons in the moral and intellectual defense of our wealth, which is under attack by those who despise the fact that wealth will always be concentrated in the hands of a few.

 

¹ Using the word distribution implies that wealth is purposefully allocated in favor of some and not others.  It’s not.  Wealth allocates itself – not through some Marxist mechanism of exploitation.

 

² This is Mother Nature not systemized oppression of the poor. There is a natural inverse relationship between the number of wealthy households and the size of their wealth.  Similarly, the frequency of earthquakes varies inversely with their intensity.  The number of cities with a certain population varies inversely with their population size.

What We Deserve

Meritocracy is a political philosophy holding that power and wealth should be vested in people based on their ability and talent. There’s been a flurry of books and articles attacking the morality of meritocracy.  Here are 2 articles that cite and refute those ‘anti-meritocrats’:

http://slatestarcodex.com/2017/07/24/targeting-meritocracy/

http://www.nationalreview.com/article/450101/american-meritocracy-needs-reform-not-replacement

It’s clear that 1) the U.S. economic system is a meritocracy (albeit an imperfect one); and 2) this is a morally just and highly efficient way to allocate power and resources.

The philosophical attacks on meritocracy stem from concerns about what people deserve.  Power and wealth generally flow to people who deserve them in a meritocracy.  You can object to the mechanism of how this is accomplished or what defines merit, but it’s hard to argue that those with greater merit (superior skill, ability, talent, work ethic, etc.) do not deserve more of society’s good things.  But some writers do.  Here’s an articulation of the idea by Freddie de Boer from a book review cited in Scott Alexander’s article:

I reject meritocracy because I reject the idea of human deserts. I don’t believe that an individual’s material conditions should be determined by what he or she “deserves,” no matter the criteria and regardless of the accuracy of the system contrived to measure it. I believe an equal best should be done for all people at all times.

More practically, I believe that anything resembling an accurate assessment of what someone deserves is impossible, inevitably drowned in a sea of confounding variables, entrenched advantage, genetic and physiological tendencies, parental influence, peer effects, random chance, and the conditions under which a person labors….. Reality is indifferent to meritocracy’s perceived need to “give people what they deserve.”

That’s a rational argument but it misses the point and doesn’t stand up to the practical necessity of having the best people in the hardest, most important jobs, making the difficult most critical decisions. Numbskull egalitarians would destroy incentive, motivation and natural economic processes in order to somehow make the world fairer by forcing a social justice based regime.  Just because it can be difficult to assess merit or that such assessments can be abused (or that the system doesn’t appear equitable because the “rich get richer”) does not mean we should abandon meritocracy.  Your Estate Planning War Chest is built upon a foundation of merit.  And that’s a good thing.  Next week, we’ll examine the natural phenomenon of exactly why the rich stay rich and the poor stay poor across generations.