Category: Human Nature

John Graham: Letters from a Self-Made Merchant to His Son

Letters from a Self-Made Merchant to His Son
“College doesn’t make fools; it develops them. It doesn’t make bright men; it develops them. A fool will turn out a fool, whether he goes to college or not, though he’ll probably turn out a different sort of a fool.“

With wisdom and lessons seeping off every page, Letters from a Self-Made Merchant to His Son is a must read. The fictional letters, from John Graham, Head of the House of Graham & Company, to his son Pierrepont, a lazy college student offer timeless advice for anyone. The Letters were quite well known in the early 20th century. I’m not sure why they are not well known today, but they should be.

***

Writing to his son, Pierrepont, at Harvard University, a Freshman, Graham offers advice on the education he is about to receive inside and outside of the classroom.

What we’re really sending you to Harvard for is to get a little of the education that’s so good and plenty there. When it’s passed around you don’t want to be bashful, but reach right out and take a big helping every time, for I want you to get your share. You’ll find that education’s about the only thing lying around loose in this world, and that it’s about the only thing a fellow can have as much of as he’s willing to haul away. Everything else is screwed down tight and the screw-driver lost.

[…]

Some men learn the value of money by not having any and starting out to pry a few dollars loose from the odd millions that are lying around; and some learn it by having fifty thousand or so left to them and starting out to spend it as if it were fifty thousand a year. Some men learn the value of truth by having to do business with liars; and some by going to Sunday School. Some men learn the cussedness of whiskey by having a drunken father; and some by having a good mother. Some men get an education from other men and newspapers and public libraries; and some get it from professors and parchments—it doesn’t make any special difference how you get a half-nelson on the right thing, just so you get it and freeze on to it.

[…]

The first thing that any education ought to give a man is character, and the second thing is education. That is where I’m a little skittish about this college business. I’m not starting in to preach to you, because I know a young fellow with the right sort of stuff in him preaches to himself harder than any one else can, and that he’s mighty often switched off the right path by having it pointed out to him in the wrong way.

[…]

There are two parts of a college education—the part that you get in the schoolroom from the professors, and the part that you get outside of it from the boys. That’s the really important part. For the first can only make you a scholar, while the second can make you a man.

Education’s a good deal like eating—a fellow can’t always tell which particular thing did him good, but he can usually tell which one did him harm.

[…]

Does a College education pay? … You bet it pays. Anything that trains a boy to think and to think quick pays; anything that teaches a boy to get the answer before the other fellow gets through biting the pencil, pays.

College doesn’t make fools; it develops them. It doesn’t make bright men; it develops them. A fool will turn out a fool, whether he goes to college or not, though he’ll probably turn out a different sort of a fool. And a good, strong boy will turn out a bright, strong man whether he’s worn smooth in the grab-what-you-want-and-eat-standing-with-one-eye-skinned-for-the-dog school of the streets and stores, or polished up and slicked down in the give-your-order-to-the-waiter-and-get-a-sixteen-course-dinner school of the professors. But while the lack of a college education can’t keep No. 1 down, having it boosts No. 2 up.

[…]

Of course, some men are like pigs, the more you educate them, the more amusing little cusses they become, and the funnier capers they cut when they show off their tricks. Naturally, the place to send a boy of that breed is to the circus, not to college.

[…]

… it isn’t so much knowing a whole lot, as knowing a little and how to use it that counts.

***

When Pierrepont—still at Harvard—submits his expense account to his father, he receives some plain-spoken advice to smarten up.

I have noticed for the last two years that your accounts have been growing heavier every month, but I haven’t seen any signs of your taking honors to justify the increased operating expenses; and that is bad business—a good deal like feeding his weight in corn to a scalawag steer that won’t fat up.

[…]

The sooner you adjust your spending to what your earning capacity will be, the easier they will find it to live together.

The only sure way that a man can get rich quick is to have it given to him or to inherit it. You are not going to get rich that way—at least, not until after you have proved your ability to hold a pretty important position with the firm; and, of course, there is just one place from which a man can start for that position with Graham & Co. It doesn’t make any difference whether he is the son of the old man or of the cellar boss—that place is the bottom. And the bottom in the office end of this business is a seat at the mailing-desk, with eight dollars every Saturday night.

I can’t hand out any ready-made success to you. It would do you no good, and it would do the house harm. There is plenty of room at the top here, but there is no elevator in the building. Starting, as you do, with a good education, you should be able to climb quicker than the fellow who hasn’t got it; but there’s going to be a time when you begin at the factory when you won’t be able to lick stamps so fast as the other boys at the desk. Yet the man who hasn’t licked stamps isn’t fit to write letters. Naturally, that is the time when knowing whether the pie comes before the ice-cream, and how to run an automobile isn’t going to be of any real use to you.

I simply mention these things because I am afraid your ideas as to the basis on which you are coming with the house have swelled up a little in the East. I can give you a start, but after that you will have to dynamite your way to the front by yourself.

[…]

You know how I began—I was started off with a kick, but that proved a kick up, and in the end every one since has lifted me a little bit higher. I got two dollars a week, and slept under the counter, and you can bet I knew just how many pennies there were in each of those dollars, and how hard the floor was. That is what you have got to learn.

[…]

The Bills ain’t all in the butcher business. I’ve got some of them right now in my office, but they will never climb over the railing that separates the clerks from the executives. Yet if they would put in half the time thinking for the house that they give up to hatching out reasons why they ought to be allowed to overdraw their salary accounts, I couldn’t keep them out of our private offices with a pole-ax, and I wouldn’t want to; for they could double their salaries and my profits in a year. But I always lay it down as a safe proposition that the fellow who has to break open the baby’s bank toward the last of the week for car-fare isn’t going to be any Russell Sage when it comes to trading with the old man’s money. He’d punch my bank account as full of holes as a carload of wild Texans would a fool stockman that they’d got in a corner.

Now I know you’ll say that I don’t understand how it is; that you’ve got to do as the other fellows do; and that things have changed since I was a boy. There’s nothing in it. Adam invented all the different ways in which a young man can make a fool of himself, and the college yell at the end of them is just a frill that doesn’t change essentials. The boy who does anything just because the other fellows do it is apt to scratch a poor man’s back all his life. He’s the chap that’s buying wheat at ninety-seven cents the day before the market breaks. They call him “the country” in the market reports, but the city’s full of him. It’s the fellow who has the spunk to think and act for himself, and sells short when prices hit the high C and the house is standing on its hind legs yelling for more, that sits in the directors’ meetings when he gets on toward forty.

[…]

There are times when it’s safest to be lonesome. Use a little common-sense, caution and conscience. You can stock a store with those three commodities, when you get enough of them. But you’ve got to begin getting them young. They ain’t catching after you toughen up a bit.

You needn’t write me if you feel yourself getting them. The symptoms will show in your expense account. Good-by; life’s too short to write letters and New York’s calling me on the wire.

***

Letters from a Self-Made Merchant to His Son contains 20 letters of practical advice for parents— looking for some no-nonsense advice on raising children—and wisdom seekers alike. This is one of the best books you’ve never heard about.

The Heart of Humanity

Hubert Dreyfus
“What distinguishes the risks I’m interested in from mere bravado is that they are taken in the interest of what one is committed to…”

Hubert Dreyfus is the preeminent expert on Heidegger so much so that in fact the various copies of Being and Time in his office are held together with rubber bands. In 1965 he took on the entire computer science department of MIT and in so doing explained the key differences between humans and computers.

The Moment of Clarity: Using the Human Sciences to Solve Your Toughest Business Problems, explains the problem:

Dreyfus claimed that symbolic representational artificial intelligence would never succeed because the algorithmic design— so skilled at following rule sets—had no ability to infer or intuit. To use anthropologist Clifford Geertz’s phrase, artificial intelligence was forever in the realm of thin description , completely incapable of understanding the “thick description” of our humanity. Today, such a claim seems commonplace, but at the time, Dreyfus was considered a maverick. He had never programmed a computer in his life, but his training in phenomenology and his deep knowledge of philosophy convinced him that our greatest asset as humans had nothing to do with our ability to follow rules. Humans are human because they have a perspective: they care about things. One might call it our ability to give a damn. And it is this quality that allows us to determine what matters and where we stand. A computer can’t do that.

The ability to distinguish between what is relevant and what is not is the key; this is perspective.

“What is relevant right now is that I am sitting here talking to you in this room,” Dreyfus told us. “What is not relevant is that the room may have ten billion specks of dust on the floor and two screws in the left corner and tiles that weigh a half pound each.”

The ability to have a perspective—to respond to what matters and what is meaningful— is at the heart of humanity and, by extension, at the heart of all successful businesses. A perspective implies that you have prioritized certain things— relevant things—and by consequence let some things go. This risk—letting profitable opportunities go for the sake of others— is the essence of all value propositions. We can’t solve all the problems for all the consumers all the time. Nor can we design products that meet all the needs of all the people everywhere. What we can do is risk responding to what calls us. We can find ourselves committed to a perspective. We can build a successful business that will sustain us.

Dreyfus summed it up by saying, “What distinguishes the risks I’m interested in from mere bravado is that they are taken in the interest of what one is committed to, what they have defined themselves in terms of, and what makes meaningful differences in their lives. This is the kind of risk that is a necessary step in becoming a master at anything.”

The Optimism Bias: Imagining A Positive Future

In The Optimism Bias: A Tour of the Irrationally Positive Brain, Tali Sharot argues that we have a neurobiological basis for imagining a positive future.

“Humans,” she writes, “do not hold a positivity bias on account of having read too many self-help books. Rather, optimism may be so essential to our survival that it is hardwired into our most complex organ, the brain.”

From modern-day financial analysts to world leaders, newlyweds, the Los Angeles Lakers, and even birds, optimism biases human and nonhuman thought. It takes rational reasoning hostage, directing our expectations toward a better outcome without sufficient evidence to support such a conclusion.

Sharot argues the root of optimism starts with mental time travel.

Optimism starts with what may be the most extraordinary of human talents: mental time travel. That is, the ability to move back and forth through time and space in one’s mind. To think positively about our prospects, it helps to be able to imagine ourselves in the future. Although most of us take this ability for granted, our capacity to envision a different time and place is critical for our survival. It allows us to plan ahead, to save food and resources for times of scarcity, and to endure hard work in anticipation of a future reward.

While mental time travel has clear survival advantages, conscious foresight came to humans at an enormous price — the understanding that somewhere in the future, death awaits. This knowledge that old age, sickness, decline of mental power, and oblivion are somewhere around the corner, can be devastating.

Close your eyes for a second. Imagine five years from now. What pops into your head? How do you see your family life? How do you see yourself professionally?

Though each of us may define happiness in a different way, it remains the case that we are inclined to see ourselves moving happily toward professional success, fulfilling relationships, financial security, and stable health. Unemployment, divorce, debt, Alzheimer’s, and any number of other regrettably common misfortunes are rarely factored into our projections.

These (likely) unrealistic predictions of an amazing future extend to everything. We expect to do more work this week than last. Today was a bad day? No worries, tomorrow will be better.

The Optimism Bias

Challenging the assertion that the key to life is low expectations:

Some people believe the secret to happiness is low expectations. If we don’t expect greatness or find love or maintain health or achieve success, we will never be disappointed. If we are never disappointed when things don’t work out and are pleasantly surprised when things go well, we will be happy. It’s a good theory — but it’s wrong. Research shows that whatever the outcome, whether we succeed or we fail, people with high expectations tend to feel better. At the end of the day, how we feel when we get dumped or win an award depends mostly on how we interpret the event.

Maybe that’s why most of us wear rose-colored glasses:

We wear rose-tinted glasses whether we are eight or eighty. Schoolchildren as young as nine have been reported to express optimistic expectations about their adult lives, and a survey published in 2005 revealed that older adults (ages sixty to eighty) are just as likely to see the glass half full as middle-aged adults (ages thirty-six to fifty-nine) and young adults (ages eighteen to twenty-five). Optimism is prevalent in every age group, race, and socioeconomic status.

Sharot argues that one of the reasons the optimism bias is so powerful is precisely because, similar to our other biases, we’re largely unaware of its existence.

Yet data clearly shows that most people overestimate their prospects for professional achievement; expect their children to be extraordinarily gifted; miscalculate their likely life span (sometimes by twenty years or more); expect to be healthier than the average person and more successful than their peers; hugely underestimate their likelihood of divorce, cancer, and unemployment; and are confident overall that their future lives will be better than those their parents put up with. This is known as the optimism bias—the inclination to overestimate the likelihood of encountering positive events in the future and to underestimate the likelihood of experiencing negative events.

Having an overly positive sense of the future can be destructive. So what benefit does it serve?

Although the belief in a better future is often an illusion, optimism has clear benefits in the present. Hope keeps our minds at ease, lowers stress, and improves physical health. This is probably the most surprising benefit of optimism. All else being equal, optimists are healthier and live longer. It is not just that healthy people are more optimistic, but optimism can enhance health. Expecting our future to be good reduces stress and anxiety, which is good for our health. Researchers studying heart attack patients have found that optimists were more likely than nonoptimistic patients to take vitamins, eat low-fat diets, and exercise, thereby reducing their overall coronary risk. A study of cancer patients revealed that pessimistic patients under the age of 60 were more likely to die within eight months than nonpessimistic patients of the same initial health, status, and age.

She concludes:

Yes, optimism is on one level irrational and can also lead to unwanted outcomes. But the bias also protects and inspires us: It keeps us moving forward, rather than to the nearest high-rise ledge. To make progress, we need to be able to imagine alternative realities, and not just any old reality but a better one; and we need to believe that we can achieve it. Such faith helps motivate us to pursue our goals.

The Optimism Bias explores the optimism bias by investigating when it works for us and when it is destructive and gives examples of how it promotes well-being. If you’re not in the mood for a full book but still want to know more, read the shorter edition (Kindle only), The Science of Optimism: Why We’re Hard-Wired for Hope, which, in addition to the book, I quoted from above.

The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves

“Essentially, we cheat up to the level that allows us to
retain our self-image as reasonably honest individuals.”

— Dan Ariely

***

In his book, The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves, Dan Ariely attempts to answer the question: “is dishonesty largely restricted to a few bad apples or is it a more widespread problem?”

He concludes that we’re mostly honest as long as the conditions are right:

We are going to take things from each other if we have a chance … many people need controls around them for them to do the right thing. … [T]he locksmith told Peter that locks are on doors only to keep honest people honest. “One percent of people will always be honest and never steal,” the locksmith said. “Another one percent will always be dishonest and always try to pick your lock and steal your television. And the rest will be honest as long as the conditions are right—but if they are tempted enough, they’ll be dishonest too. Locks won’t protect you from the thieves, who can get in your house if they really want to. They will only protect you from the mostly honest people who might be tempted to try your door if it had no lock.”

We’re ok cheating, as long as its just a little and unnoticeable.

as long as we cheat by only a little bit, we can benefit from cheating and still view ourselves as marvelous human beings. This balancing act is the process of rationalization, and it is the basis of what we’ll call the fudge factor theory.

Something that stood out for me was the chapter on the relationship between creativity and dishonesty. According to Ariely, the link between creativity and dishonesty is not as straightforward as we might think — The more creative we are the better we are at rationalising dishonest behavior.

We may not always know exactly why we do what we do, choose what we choose, or feel what we feel. But the obscurity of our real motivations doesn’t stop us from creating perfectly logical-sounding reasons for our actions, decisions, and feelings.

… We all want explanations for why we behave as we do and for the ways the world around us functions. Even when our feeble explanations have little to do with reality. We’re storytelling creatures by nature, and we tell ourselves story after story until we come up with an explanation that we like and that sounds reasonable enough to believe. And when the story portrays us in a more glowing and positive light, so much the better.

We don’t make rational decisions. Our choices are (mostly) not based on explicit preferences and thought through. Rather, we follow our intuition with “mental gymnastics” to justify our actions. Conveniently this allows us to get what we want and maintain our ego. We tell ourselves that we are acting rationally. The real difference Ariely found between more and less creative people is the creativity of the justifications. “The most creative we are,” he writes, “the more we are able to come up with good stories that help us justify our selfish interests.”

This really comes down to our storytelling nature:

We’re storytelling creatures by nature, and we tell ourselves story after story until we come up with an explanation that we like and that sounds reasonable enough to believe. And when the story portrays us in a more glowing and positive light, so much the better.

The idea that worries Ariely the most is the trend toward cashless payments. “From all the research I have done over the years,” he writes, “the idea that worries me the most is that the more cashless our society becomes, the more our moral compass slips.”

One factor that Ariely didn’t contemplate that I think it is important is how our environment — whether we’re in an environment of abundance or scarcity — affects our moral compass. Intuitively, I think it’s a lot easier to rationalise moral transgressions in an environment of scarcity than one of abundance.

 

The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves is worth reading in its entirety.

What Is A Bureaucracy? And Why They Are So Hard To Change

Bureaucracies, according to Manuel Castells in The Rise of the Network Society, are “organizations for which the reproduction of their system of means becomes their main organizational goal.” Put differently, bureaucracies strive to maintain themselves at all costs. The actual purpose of the bureaucracy becomes secondary to preserving the bureaucracy.

“This means,” writes Dr. Mark Federman, “that a bureaucratic system cannot afford to be demonstrated to be wrong: If it was wrong, it would impede its ability to reproduce its system of means.”

This underlying mentality often translates into bewildering and often arcane public explanations that seem to ignore what to those outside of the system would be simple, common sense. It is the reason why so many bureaucratically minded leaders choose to “stay the course,” rather than admit that a decision was ill advised (because that would be tantamount to admitting that the system which vested in them decision-making power made a mistake).

Of course this leads to absurd outcomes. Take, as one example, the teacher in Edmonton, who was suspended for giving students a zero when they failed to turn in work. The School board spokesperson, Cheryl Oxford, says “as opposed to being assessed on what they don’t know, they’re being assessed on what they do know.” Huh? To anyone (outside of the school board, that is) this goes against common sense. The second order effects of this on the students and society itself are even worse.

* * * * * * * * * * * *

Perhaps Charlie Munger explained it best:

The great defect of scale, of course, which makes the game interesting—so that the big people don’t always win—is that as you get big, you get the bureaucracy. And with the bureaucracy comes the territoriality—which is again grounded in human nature.

And the incentives are perverse. For example, if you worked for AT&T in my day, it was a great bureaucracy. Who in the hell was really thinking about the shareholder or anything else? And in a bureaucracy, you think the work is done when it goes out of your in-basket into somebody else’s in-basket. But, of course, it isn’t. It’s not done until AT&T delivers what it’s supposed to deliver. So you get big, fat, dumb, unmotivated bureaucracies.

They also tend to become somewhat corrupt. In other words, if I’ve got a department and you’ve got a department and we kind of share power running this thing, there’s sort of an unwritten rule: “If you won’t bother me, I won’t bother you and we’re both happy.” So you get layers of management and associated costs that nobody needs. Then, while people are justifying all these layers, it takes forever to get anything done. They’re too slow to make decisions and nimbler people run circles around them.

The constant curse of scale is that it leads to big, dumb bureaucracy—which, of course, reaches its highest and worst form in government where the incentives are really awful. That doesn’t mean we don’t need governments—because we do. But it’s a terrible problem to get big bureaucracies to behave.

So people go to stratagems. They create little decentralized units and fancy motivation and training programs. For example, for a big company, General Electric has fought bureaucracy with amazing skill. But that’s because they have a combination of a genius and a fanatic running it. And they put him in young enough so he gets a long run. Of course, that’s Jack Welch.

But bureaucracy is terrible…. And as things get very powerful and very big, you can get some really dysfunctional behavior. Look at Westinghouse. They blew billions of dollars on a bunch of dumb loans to real estate developers. They put some guy who’d come up by some career path—I don’t know exactly what it was, but it could have been refrigerators or something—and all of a sudden, he’s loaning money to real estate developers building hotels. It’s a very unequal contest. And in due time, they lost all those billions of dollars.

Situations Matter

“We’re easily seduced by the notion of stable character.
So much of who we are, how we think, and what we do is
driven by the situations we’re in, yet we remain blissfully unaware of it.”

— Sam Sommers

***

Situations Matter: Understanding How Context Transforms Your World

Situations Matter is an excellent book that should give you a leg up in life.

One of the lessons of modern psychological research is that ‘the situation’ we find ourselves in influences us. If you’ve ever wondered about why you are not as independent-minded as you think or about the difference between men and women this is a great book.

A summary paragraph:

So much of how we see and interact with the social universe around is shaped by our immediate context. … seemingly trivial aspects of daily situations determine whether we keep to ourselves or get involved in the affairs of others, whether we follow a group or stake out on an independent path, why we’re drawn to certain people and away from others.

As Sam Sommers points out, “once you start paying attention to situations there’s no going back.” Sommers argues, “People are easy to see. They’re tangible. Context is harder: it’s an abstract, nebulous concept, a backdrop that can be downright invisible. Precisely because situations are difficult to see, effort is required to recognize their influence.”