Monday Monday Wisdom, courtesy of my boy Charlie Munger (99 years old and going strong).
I love me some Munger wisdom!
He talks a lot about incentives. I now believe nearly everything in life can be explained by 2 things:
– Incentives.
Two great Charlie Munger quotes on incentives:
“Show me the incentive and I will show you the outcome.”
Simple but expresses so much. You think it’s about finance? I’d venture it’s 85% finance, but applies to around 98% of things in life.
Munger again:
“I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it.”
More Munger wisdom:
“We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”
Steel man arguments. Know the other side better than your opponent. The kind of thing taught in law schools and sales training the world over.
I think about this and related ideas a lot:
“I know so many people whose main problem of life is that the old ideas displace the entry of new ideas that are better.
That is the absolute standard outcome in life. There’s an old German folk saying that describes it.
It says, “We’re too soon old and we’re too late smart.” That’s everybody’s problem.
And the reason we’re too late smart is that the stupid ideas we already have, we can’t get rid of.
Now it’s a good thing that we have that problem, in marriage that may be good for the stability of marriage that we stick with our old ideas.
But in most fields you want to get rid of your old ideas.
And it’s a good habit. And it gives you a big advantage in the competitive game of life since other people are so very bad at it.
What happens is, as you spout ideas out, what you’re doing is you’re pounding them in. So you get these ideas and then you start agitating and saying them and so forth.
And of course, the person you’re really convincing is you, who already have the ideas. You’re just pounding them in harder and harder.
One of the reasons I don’t spend much time telling the world what I think about how the federal reserve system should behave and so forth is I know that I’m just pounding the ideas into my own head when I think I’m telling the other people how to run things.”
