The Paradox of the Great Economist

Let me ask you a very simple question. Can you name a single American, who would be listed in the history books, as a great economist? Just one. Go ahead, I will wait.

I am willing to bet the answer is “No.” You cannot name a single, great, American economist (without Google) How can that be? Think about it. I mean, I realize not a lot of people spend time thinking about economists. But, all I asked for was one name. Does it not seem curious that you could not think of a single name?

This week we celebrate the birth of America and it got me to thinking about this blog post. America is arguably the greatest capitalist nation in the world and yet we have produced no great economists.

How can that be?

When we think of great economists, what were their nationalities? Adam Smith, Thomas Robert Malthus, John Stuart Mill, David Ricardo, and John Maynard Keynes were all British. Karl Marx was German. Joseph Schumpeter, Ludwig von Mises, and Friedrich Hayek were all Austrian.

I just named nine well-known economists and not one of them was American. I realize this is something of a nerdy investigation, but I think it is fascinating nonetheless. I had to think about it for a while.

Do you have an answer? Do you have a possible explanation?

I must admit I am coming up short on this one. I do not really know why America does not have a great economist. We have modern economists, like Ben Bernanke and Paul Krugman, that have name recognition. But, they are a long ways from being judged as great.

Part of me wants to leave it as an open question, and part of me feels that would be lazy. So, I will attempt to answer the question.

A while back I wrote a blog post titled "America's Genius." And, I think it might shine some light on our current paradox (if a paradox is even what it is.)

As we all know, America did not invent the capitalistic system. So, maybe that is part of the reason why America is not known for her great economists.

One thing America did kind of “invent” was the concept of self-governance. Government of the people, by the people, and for the people was America's main contribution to the world. The most prominent US innovation was political in nature.

For this reason, if America has a king, or some sort of saintly character, his name is Abraham Lincoln. A political figure if ever there was one. I think that might help explain our lack of economists.

By the way, we have had great economists. You just could not think of their names. Thorstein Veblen and Henry George were both great economists. And, here is a name you will recognize. Alexander Hamilton. He was a great economist. But, I bet you would think of him as a President before thinking of him as an economist. Which would be even more interesting, because he was never a President.

It does appear to be true that the great gift, which the United States gave to the world, was political more than it was economic. I think this is kind of a neat reflection as we celebrate the birth of this marvelous country.

Talent is Overrated

A little while back I talked about an interview between Bryan Elliot and Gary Vaynerchuk. If you follow Gary Vee, at all, one of the main takeaways is the importance of good, old-fashioned, hard work. In fact, here is the interview clip so you can listen to it yourself.

The three main lessons, from that video, are: commit, work hard, make lots of mistakes, and talent is overrated. Keep doing it, keep getting better. Act, adjust, act, adjust, act, adjust. In a word, iterate.

I do follow Mr. Vaynerchuk but I think he makes one critical mistake. Gary talks a lot about passion, the importance of passion. And, I think he misses the bull's eye.

The more I pay attention to Gary Vee the more I believe he is passionate about success. And, being that hard work is the prerequisite for success, Gary is very passionate about hard work.

I have heard Vaynerchuk say that he works, every weekday, from 7am to midnight. If you watched the clip above you can hear Gary say, in no uncertain terms, that he outworks people.

In an effective, capitalist system, like the United States, we do not really have the option of either working smart or working hard. To get to the top we have to do both. Read this post.

Regardless of whether you chose to work smart and/or hard, one thing you might notice is that talent is not really part of the equation. This is a message that a lot of people have been eating up lately. The idea I speak of is the idea that Talent is Overrated, which is the title of a book written by Geoff Colvin.

America is the quintessential egalitarian society. We believe in a level playing field. We believe in equality of opportunity. I realize that the idea that talent is overrated feeds into this notion of egalitarianism. For this reason, I am a bit reticent to buy-in.

But, this notion of talent not being all that important is rooted in scientist. The world's expert on expert performance is a gentleman names K Anders Ericsson. Ericsson is a professor of psychology at Florida State University.

It is Ericsson's work that was explained in Colvin's book. The professor was also covered in the more popular book, by Malcolm Gladwell, titled Outliers. And, of course, the idea that talent is overrated, is brought up in Gary Vee's video, when he mentions LeBron James and Kobe Bryant.

Forget about LeBron and Kobe. Everybody seems to agree that the greatest basketball player of all time is Michael Jordan. So, if you still think talent is critically important, think about this: Jordan was cut from his high school basketball team.

Again, the option is not to either work smart or work hard. The imperative is to do both. Embrace the genius of “and” like Imentioned in a previous post.

One activity which ties together smart and hard work is deliberate practice. This is one of the main findings from Anders Ericsson's work. What separates the people that make it to the top from everybody else is this activity that has come to be called “deliberate practice.”

You would have to agree that practicing is a smart idea. But, we cannot just practice things we are already good at. We also have to make sure that the practice is difficult. That is to say, practice needs to truly stretch us and make us grow.

Deliberate practice is the embodiment of working hard and working smart. And, there are six elements, pf deliberate practice to take into consideration. If you wish to reach your full potential, you will need to implement deliberate practice.

Here are the six elements of deliberate practice:

1. It is designed to improve performance

2. It is repeated a lot

3. Feedback on results is continuously available

4. It is highly demanding mentally

5. It is hard

6. It requires (good) goals

This is a subject I will revisit often. For now, I just wanted to pass along the six elements so that you can get started today. Do not wait until you are good to start. You must start if you are ever to get good. This blog is a great example. I know I am not a great blogger...yet. And that is why I do it. Get it?

A Paradox of Self-Control

A couple week ago I wrote a blog about discipline. In that blog I ask the question of whether or not discipline is optional. My conclusion was no, in the domain of entrepreneurship, self-control is not an option. It is a necessity.

I think that is an important distinction because, as it turns out, not all domains are created equal. As far as domain differences, this post will start to explain what I mean.

Last year famed psychologist, Walter Mischel, released an excellent book about self-control. Not surprisingly, he named the book The Marshmallow Test. If you know much about social science, you have probably heard about the marshmallow test.

This is not the time for an elaborate discussion of the marshmallow test. But, I would like to hit on one interesting vignette from Mischel's book. As you undoubtedly know, we humans expect other people to be consistent. That is to say, we expect others to behave is a consistent manner.

Whether we realize it or not, we all have a basic assumption which believes that people's personalities are consistent. This belief is so deep that it can be used to influence people. Robert Cialdini, in his excellent book Influence, states that one of the levers of influence is “Commitment and Consistency.”

Cialdini notes that the societal expectation of consistency is so strong it can influence behavior. A person who behaves in a way that may be perceived as inconsistent is sometimes labeled “two-faced.” A juvenile tag, if ever there was one.

At the extreme we might accuse people of mental illness. We might suggest a person is "psycho" or schhizophrenic

We cast aspersion, with negative labels, to influence behavior. Regardless of the reasons, my point is, the expectation of consistency is deeply ingrained.

What I am saying is that it probably wise to develop a more mature understanding of human nature. What I mean is that life is much too complex to submit to a simpleton's understanding of human semantics. Let me give you a specific example.

There is a big paradox when it comes to self-control. Namely, a person can exhibit much self-control in certain areas of life, while being nearly free of self-control in others.

As you know, your level of self-control is considered an aspect of your personality. A individual is either said to possess self-control or not. This is due to the fact that life is complex and the human mind likes to utilize shortcuts. The shortcut, in this instance, is one of the main shortcuts the mind uses. It is called black-and-white thinking.

The human mind tends to want to see the world in black and white terms. Without effort it is hard to see shades of gray. What do I mean? Well, we tend to believe that a person either has self-control or she does not. You might even think of yourself as either a person with, or without, self-control. But, that turns out to not necessarily be the case.

In The Marshmallow Test, Walter Mischel uses former president Bill Clinton as an example of the complexity of life. President Clinton simultaneously has enormous self-control and zero self-control. When it comes to scholastics, the former president obviously has profound levels of self-control. He earned a Rhodes scholarship and graduated from what is probably the best law school in the world.

That said, when it comes to self-control, what Bill Clinton is better known for is his failures. Clinton's propensity for junk food earned him the label “Bubba.” And, his untamed libido ultimately led to his impeachment.

Isn't that interesting? The same exact individual can be both disciplined, and undisciplined, at the same time. You may ask, how can something both exist, and not exist, at the same time? Well, it is a paradox.

The resolution to this paradox comes largely from the fact that our personality exists in “silos” (to use a popular business term.) Stated differently, we commit different levels of resources to the different areas of our lives. The cause of such allocation decisions must be our personal value system.

This post was not meant to be an exposé on value systems. Rather it is a call to effort and understanding. I certainly believe in the merits of a simple life. That said, the truly simple life is only achieved through complexity. A paradox in and of itself.

I guess my suggestion is three fold. First, embrace the wisdom of the paradox. Second, do not beat yourself up for momentary lapses in self-control. And three, read Walter Mischel's book, when you get a chance, he is a living legend.

Iteration

Iteration. How do you feel about that word? Iteration. It is not a very common word and, for that reason, I really like it. Since the word is not used very much, we can apply it for a very specific purpose.

The word comes out of the realm of mathematics and computation. Merriam-Webster's dictionary defines iteration as, “A procedure in which repetition of a sequence of operations yields results successively closer to a desired result.”

I believe the word iteration is absolutely central to entrepreneurship. I think the recipe for successful entrepreneurship is the following: Act – Adjust – Act – Adjust – Act – Adjust. And on and on it goes.

The repeating of action and adjustment is the process of iteration. The only other important element would be perseverance. If you keep iterating long enough, success is inevitable.

Admittedly, iteration is not any different than trial and error. The problem is that “trial and error” is an overused phrase. It means a lot of different things.

Like I said in the first paragraph, the word iteration is not well known. So, when it is said, the meaning should be clear.

Last week I posted a blog, about entrepreneurs, from Robert Kiyosaki. Kiyosaki defines iteration as, “The process of repeating and refining a process in order to meet a goal.” Instead of calling it trial and error, we could simply call it practice.

That is what Peter Drucker would probably call it. Let me let you in on a little secret. Drucker said the only thing that bridged the gap between potential and performance was practice. That is why he titled his book The Practice of Management.

Admittedly, practice is an easier word, but it has basically become a cliché. So much so that people actually debate the idea of whether or not practice makes perfect. I say, “Who cares.” What we should be striving for is effectiveness. And, one thing I know for sure is that practice makes effective.

To me, trial and error sounds too scientific. As much as I love science, I feel like it is a domain that is too dry and inanimate.

As far as the word practice, I think it reminds us of what we have to do to get good at baseball or piano. The thing about baseball and piano is that they have predefined rules. So, practicing becomes rather straightforward.

The problem with business is that the rules are not predetermined. You make them up as you go. Sure, there are boundary conditions, as known as laws. However, within the boundaries, you are free to do what you want. So, you run straight into the paradox of choice.

Enter the word iteration. Not only do you need to iterate the necessary behaviors, but you also need to iterate the rules of your game. A deliciously complex challenge. So, I recommend you get started today. As in, right now!

Why Do Most Entrepreneurs Fail?

Over the weekend I read a blog post, from Robert Kiyosaki, and I thought it was pretty good. So, I figured I would repost it, hoping you all could enjoy the post as well. The blog was titled “Why Do Most Entrepreneurs Fail?” Here is the post, in its entirety:

Many 'experts' say, “Entrepreneurs fail because they are under capitalized.” This fear of being “under capitalized,” this lack of money as well as the absence of a steady paycheck, is what keeps most people clinging to job security as an employee. But it’s not why entrepreneurs fail.

While being undercapitalized is a challenge, it is not why most entrepreneurs fail. It’s a lack of entrepreneurial education, real-world business experience, and guts.

Every entrepreneur I’ve ever talked to says they are “under capitalized.” They never have enough money to meet all the financial obligations required as an entrepreneur, let alone the capital needed to grow their business. Yet, somehow, true entrepreneurs keep going. Then one day, for some entrepreneurs, the money starts pouring in. It may take years.

I always find it amusing when I hear people say, “Oh, she was lucky.” Or “They’re an overnight success.” Few know or appreciate the real story behind entrepreneurial successes. The reason they succeeded is they learned the secret. The secret to leadership.

The primary reason why most new entrepreneurs fail is simply because they lack the core training, the core strengths they need to withstand the rigors of being an entrepreneur. Some people call it guts. Others call it perseverance. In the military, it might be put this way: “Stand up, get off your butt, stop feeling sorry for yourself, stop pouting, stop sucking your thumb, and get going again. Your mama is ashamed of you—because your mama is tougher than you are.” I think you get the point here.

Another important reason why most entrepreneurs fail is because our educational system trains people to be employees, not entrepreneurs. The world of an employee is very different from the world of an entrepreneur. One big difference is the concept of paychecks.

If you think about it, you’ll realize that the person who signs your paycheck controls your life. Shouldn’t that person be you? It probably should be, if you are strong enough.

If an employee does not receive his or her “paycheck” they quit and go looking for a new job”. Most entrepreneurs must be tough enough to operate, sometimes for years, without a “paycheck.”

The military taught me a toughness I greatly valued later as I became an entrepreneur. The leadership I learned through the military gave me the tools I needed to become an entrepreneur.

I just wrote 8 Lessons In Military Leadership for Entrepreneurs so I could teach you the lessons learned through my training in the Marines. If you want to be an entrepreneur, then this book will teach you some important and hard lessons. And… it’s easier than going through boot camp.