“The problem of political irrationality is the greatest social problem humanity faces.”


Michael Huemer:

The problem of political irrationality is the greatest social problem humanity faces. It is a greater problem than crime, drug addiction, or even world poverty, because it is a problem that prevents us from solving other problems. Before we can solve the problem of poverty, we must first have correct beliefs about poverty, about what causes it, what reduces it, and what the side effects of alternative policies are. If our beliefs about those things are guided by the social group we want to fit into, the self-image we want to maintain, the desire to avoid admitting to having been wrong in the past, and so on, then it would be pure accident if enough of us were to actually form correct beliefs to solve the problem.

Based on the level of disagreement, human beings are highly unreliable at identifying correct political claims. This is extremely unfortunate, since it means that we have little chance of solving social problems and a good chance of creating or exacerbating them. The best explanation lies in the theory of Rational Irrationality: individuals derive psychological rewards from holding certain political beliefs, and since each individual suffers almost none of the harm caused by his own false political beliefs, it often makes sense (it gives him what he wants) to adopt those beliefs regardless of whether they are true or well-supported.

The beliefs that people want to hold are often determined by their self-interest, the social group they want to fit into, the self-image they want to maintain, and the desire to remain coherent with their past beliefs. People can deploy various mechanisms to enable them to adopt and maintain their preferred beliefs, including giving a biased weighting of evidence; focusing their attention and energy on the arguments supporting their favored beliefs; collecting evidence only from sources they already agree with; and relying on subjective, speculative, and anecdotal claims as evidence for political theories.

Why People Are Irrational About Politics (PDF)

Notes: The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War


Notes from The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (2016) by Robert J. Gordon:

* Advertising developed in part as a result of mass production; likewise, it was said that advertising made mass production possible. Firms decided that there was a limit to attracting customers through lower prices, and they tried the alternative strategy of increasing volume by brand-centric advertising. Although advertising began in the late nineteenth century with the development of the first branded products, its true explosion came in the 1920s, when it became increasingly tied to the newly invented radio.

* Electric lights are an example of a technology that had a great burst of innovation early, in this case 1880–1920, and then stood still afterwards. Although the fluorescent bulb had come to dominate lighting in commercial and industrial settings by 1950, virtually nothing changed in home illumination from 1920 until the development of the compact fluorescent bulb after 1990.

* The current system of airport security all over the world represents an overreaction to the September 11, 2001, hijackings. There was only one weakness in the U.S. airline security system on September 11, and this was that the cockpit doors were flimsy. Within days, they were replaced by completely secure doors that nobody could break through. Although the security issue was completely solved within a week, fourteen years later billions of dollars per year of passenger time continues to be wasted in unnecessary additional security precautions. The pre-2001 security system, based on a quick walk through an X-ray machine to check for guns and metal weapons, would be enough.

* If any year can be anointed as the beginning of the Internet revolution, it is 1995. The introduction of Windows 95 was a sensation, creating long lines of eager buyers waiting for hours in front of stores that would sell it before the doors opened on August 24, 1995. This version of Windows represented the transitional moment in the history of the Internet in that Microsoft’s Internet Explorer, a web browser derived from Mosaic, was available as an add-on to Windows 95.

* Virtually every firm making consumer goods (except for basic food and clothing products) had been forced to make something else during World War II, and every one of these producers learned to be more efficient from the process.

* The unrivaled autonomy of the medical profession began to erode after the 1950s. As hospitals became larger and more complex, administrative control fell increasingly into the hands of professional administrators. Patients also began to challenge the authority of the medical profession. While “for the most part, the authority of the doctor was unquestioned” in 1960, with the surgical profession even earning such high praise as being called a “religion of competence,” by the early 1970s patients were demanding greater say in how they were treated. What had always been a tradition of “doctors know best” changed in 1972 when a federal appeals court in Washington, D.C., for the first time established a legal requirement for informed consent. “According to the new standard, the physician had to tell the patient whatever ‘a reasonable person’ would want to know in order to decide whether to accept the treatment.” In 1973, responding to increasing pressure from healthcare consumers, the American Hospital Association came out with a Patients’ Bill of Rights.

* One of the most important improvements in American industrial efficiency was the establishment by Herbert Hoover of the National Bureau of Standards. Its aim was to create a system of uniformly sized parts, down to screws and bolts, aimed at “simplification of practice, elimination of waste, conservation of materials, minimum training of workers, reduction and savings in supply purchasing and unwieldy inventories, defeat of confusion, and speed in production.”

“Stacked up, the Stasi’s complete files reached 125 miles.”


Tina Rosenberg, writing in The Haunted Land: Facing Europe’s Ghosts After Communism (2010):

The Stasi complex on Normannenstrasse in the Lichtenberg district consisted of 41 brown concrete buildings. In addition, the Stasi possessed 1,181 safe houses, 305 vacation homes, 98 sports facilities, and 18,000 apartments for meetings with spies. The Stasi had a budget of 4 billion East German marks. It had 97,000 full-time employees—after the army, it was East Germany’s largest employer. There were 2,171 mail readers, 1,486 phone tappers, and another 8,426 people who monitored phone conversations and radio broadcasts. In addition, there were about 110,000 active unofficial collaborators and perhaps ten times that many occasional informants. The Stasi kept files on 6 million people. There were 39 separate departments—even a department to spy on other Stasi members. A master file with a single card for each Stasi employee, collaborator, and object of surveillance stretches for more than a mile—the cards for people named Müller alone reach a hundred yards. Stacked up, the Stasi’s complete files reached 125 miles. They weighed fifty tons per mile; in total, 62,500 tons.

“There’s nothing quite like a convivial evening wrapped around a pint to give you health, happiness and a sense of well-being.”


Robin Dunbar:

Like all monkeys and apes, humans are intensely social. We have an urgent desire to schmooze and an awareness that alcohol helps our cause. Friendships protect us against outside threats and internal stresses, and this has been key to our evolutionary success. Primate social groups, unlike most other animals, rely on bondedness to maintain social coherence. And for humans, this is where a shared bottle of red wine plays a powerful role.

So, if you want to know the secret of a long and happy life, money is not the right answer. Get rid of the takeaway in front of the telly, and bin the hasty sandwich at your desk — the important thing is to take time out with people you know and talk to them over a beer or two, even that bottle of Prosecco if you really must. There’s nothing quite like a convivial evening wrapped around a pint to give you health, happiness and a sense of well-being.

“Mr. Market is there to serve you, not to guide you.”


Warren Buffett, writing in his 1987 letter to Berkshire Hathaway shareholders:

Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Ben’s Mr. Market allegory may seem out-of-date in today’s investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising “Take two aspirins?”

The value of market esoterica to the consumer of investment advice is a different story. In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace. In my own efforts to stay insulated, I have found it highly useful to keep Ben’s Mr. Market concept firmly in mind.

“Expectations are healthier than forecasts because they provide a vision of the future stripped of all false precision.”


Morgan Housel, 2020:

Studying history can feel like intellectual candy that offers no practical use to investors who are paid to foresee the future. But once you accept how fragile our assumptions of the future are, you realize that forecasts are the real fluff and history is where the meat is.

Accepting that forecasts have little use doesn’t mean you become a blind fatalist. When you pay more attention to history than forecasts you pick up on the patterns that guide how people respond to unforeseen events, which – given how stable behavior is over time – is the next best thing to knowing what will happen next.

Forecasts rely on knowing when something will occur. Expectations are an acknowledgment of what’s likely to occur without professing insight into when it will happen.

Expectations are healthier than forecasts because they provide a vision of the future stripped of all false precision. If you know a recession will occur at some point, you won’t be that surprised whenever it arrives – which is a huge benefit. But if you assume you know exactly when it will occur you’ll be tempted into all kinds of dangerous behavior, leveraged with overconfidence. And you’ll be shocked when time passes and what you thought would occur hasn’t happened (yet).

“It costs time and money to access a lot of true and important information, while a lot of bullshit is completely free.”


Nathan J. Robinson, from 2020:

Paywalls are justified, even though they are annoying. It costs money to produce good writing, to run a website, to license photographs. A lot of money, if you want quality. Asking people for a fee to access content is therefore very reasonable. You don’t expect to get a print subscription to the newspaper gratis, why would a website be different? I try not to grumble about having to pay for online content, because I run a magazine and I know how difficult it is to pay writers what they deserve.

But let us also notice something: the New York Times, the New Yorker, the Washington Post, the New Republic, New York, Harper’s, the New York Review of Books, the Financial Times, and the London Times all have paywalls. Breitbart, Fox News, the Daily Wire, the Federalist, the Washington Examiner, InfoWars: free! You want “Portland Protesters Burn Bibles, American Flags In The Streets,” “The Moral Case Against Mask Mandates And Other COVID Restrictions,” or an article suggesting the National Institutes of Health has admitted 5G phones cause coronavirus — they’re yours. You want the detailed Times reports on neo-Nazis infiltrating German institutions, the reasons contact tracing is failing in U.S. states, or the Trump administration’s undercutting of the USPS’s effectiveness — well, if you’ve clicked around the website a bit you’ll run straight into the paywall. This doesn’t mean the paywall shouldn’t be there. But it does mean that it costs time and money to access a lot of true and important information, while a lot of bullshit is completely free.

“Taking temporarily high rates of annual exponential growth as indicators of future long-term developments is a fundamental mistake.”


Vaclav Smil, writing in Growth: From Microorganisms to Megacities (2019):

Taking temporarily high rates of annual exponential growth as indicators of future long-term developments is a fundamental mistake — but also an enduring habit that is especially favored by uncritical promoters of new devices, designs, or practices: they take early-stage growth rates, often impressively exponential, and use them to forecast an imminent dominance of emerging phenomena.

Many recent examples can illustrate this error, and I have chosen the capacity growth of Vestas wind turbines, machines leading the shift toward the de-carbonization of global electricity generation. This Danish maker began its sales with a 55 kW machine in 1981; by 1989 it had a turbine capable of 225 kW; a 600 kW machine was introduced in 1995; and a 2 MW unit followed in 1999. The best-fit curve for this rapid growth trajectory of the last two decades of the 20th century (five-parameter logistic fit with R2 of 0.978) would have predicted designs with capacity of nearly 10 MW in 2005 and in excess of 100 MW by 2015. But in 2018 the largest Vestas unit available for onshore installations was 4.2 MW and the largest unit suitable for offshore wind farms was 8 MW that could be upgraded to 9 MW (Vestas 2017a), and it is most unlikely that a 100 MW machine will be ever built.

This example of a sobering contrast between early rapid advances of a technical innovation followed by inevitable formation of sigmoid curves should be recalled whenever you see news reports about all cars becoming electric by 2025 or new batteries having impressively higher energy densities by 2030.

“Confidence in a forecast rises with the amount of information that goes into it. But the accuracy of the forecast stays the same.”


Dean Williams, 1981:

One of the most consuming uses of our time, in fact, has been accumulating information to help us make forecasts of all those things we think we have to predict. Where’s the evidenced that it works? I’ve been looking for it. Really. Here are my conclusions: Confidence in a forecast rises with the amount of information that goes into it. But the accuracy of the forecast stays the same. And when it comes to forecasting—as opposed to doing something—a lot of expertise is no better than a little expertise. And may even be worse. The consolation prize is pretty consoling, actually. It’s that you can be a successful investor without being a perpetual forecaster.

We have security analysts. We get research reports from brokers. We get forecasts about the economy, interest rates, the stock market. We process that information and act on the basis of it. For all of that to make any sense, we all have to believe we can generate information which is unknown to the market as a whole.

There is an approach which is simpler and probably stands a better chance of working. Spend your time measuring value instead of generating information. Don’t forecast. Buy what is cheap today. Let other people deal with the odds against predicting the future.

“Trying Too Hard”, Financial Analysts Federation Seminar 1981 (PDF)

“There is no excuse to persist in irresponsible spending.”


The Rational Walk:

Compound interest is merely one example of an exponential function. Human beings have great trouble thinking in exponential terms. It is far easier to think in linear terms and, because this is our natural instinct, most people vastly underestimate the power of investing over a long lifetime. Compounding takes a long period of time to work its magic and we live in a society that prizes instant gratification above all else.

Part of getting older is gaining insight into the reality that living a good life has far more to do with factors such as health and family that simply cannot be purchased with money. However, money is definitely a prerequisite for living a secure life. Since poverty almost always guarantees misery and since anyone in the middle class or higher can easily attain financial independence over a lifetime, there is no excuse to persist in irresponsible spending. Your future self will thank your present self for being prudent and sensible.

“You don’t need more time; you need more focus.”


Shane Parrish:

As the adage goes, if you do what everyone else does, you’ll get the same results everyone else gets. Extraordinary success requires misunderstood choices.

Bill Gates once had the radio removed from his car. When asked why, he said he didn’t want any distractions from thinking about Microsoft. This level of single-minded focus is what builds empires.

Distractions are the assassins of great work. You don’t need more time; you need more focus. Time expands when we eliminate interruptions – our attention, not the clock, ultimately limits what we can achieve.

“Jews believe that they are bearers of a unique covenant with God.”


Sam Harris, writing in The End of Faith: Religion, Terror, and the Future of Reason (2004):

The gravity of Jewish suffering over the ages, culminating in the Holocaust, makes it almost impossible to entertain any suggestion that Jews might have brought their troubles upon themselves. This is, however, in a rather narrow sense, the truth. Prior to the rise of the church, Jews became the objects of suspicion and occasional persecution for their refusal to assimilate, for the insularity and professed superiority of their religious culture — that is, for the content of their own unreasonable, sectarian beliefs. The dogma of a “chosen people,” while at least implicit in most faiths, achieved a stridence in Judaism that was unknown in the ancient world. Among cultures that worshiped a plurality of Gods, the later monotheism of the Jews proved indigestible. And while their explicit demonization as a people required the mad work of the Christian church, the ideology of Judaism remains a lightning rod for intolerance to this day. As a system of beliefs, it appears among the least suited to survive in a theological state of nature. Christianity and Islam both acknowledge the sanctity of the Old Testament and offer easy conversion to their faiths. Islam honors Abraham, Moses, and Jesus as forerunners of Muhammad. Hinduism embraces almost anything in sight with its manifold arms (many Hindus, for instance, consider Jesus an avatar of Vishnu). Judaism alone finds itself surrounded by unmitigated errors. It seems little wonder, therefore, that it has drawn so much sectarian fire. Jews, insofar as they are religious, believe that they are bearers of a unique covenant with God. As a consequence, they have spent the last two thousand years collaborating with those who see them as different by seeing themselves as irretrievably so. Judaism is as intrinsically divisive, as ridiculous in its literalism, and as at odds with the civilizing insights of modernity as any other religion. Jewish settlers, by exercising their “freedom of belief” on contested land, are now one of the principal obstacles to peace in the Middle East. They will be a direct cause of war between Islam and the West should one ever erupt over the Israeli-Palestinian conflict.

“You are not going to get very far in life based on what you already know.”


Charlie Munger, speaking at USC Law School Commencement in 2007:

Wisdom acquisition is a moral duty. It’s not something you do just to advance in life. As a corollary to that proposition which is very important, it means that you are hooked for lifetime learning. And without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know. You’re going to advance in life by what you learn after you leave here.

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.

Just as civilization can progress only when it invents the method of invention, you can progress only when you learn the method of learning.

Nothing has served me better in my long life than continuous learning.

“It would be naïve to depend on the Supreme Court to defend the rights of poor people, women, people of color, dissenters of all kinds.”


Howard Zinn, 2005:

It would be naïve to depend on the Supreme Court to defend the rights of poor people, women, people of color, dissenters of all kinds. Those rights only come alive when citizens organize, protest, demonstrate, strike, boycott, rebel, and violate the law in order to uphold justice.

The Constitution gave no rights to working people: no right to work less than 12 hours a day, no right to a living wage, no right to safe working conditions. Workers had to organize, go on strike, defy the law, the courts, the police, create a great movement which won the eight-hour day, and caused such commotion that Congress was forced to pass a minimum wage law, and Social Security, and unemployment insurance.

The right of a woman to an abortion did not depend on the Supreme Court decision in Roe v. Wade. It was won before that decision, all over the country, by grassroots agitation that forced states to recognize the right. If the American people, who by a great majority favor that right, insist on it, act on it, no Supreme Court decision can take it away.

The rights of working people, of women, of Black people have not depended on decisions of the courts. Like the other branches of the political system, the courts have recognized these rights only after citizens have engaged in direct action powerful enough to win these rights for themselves.

No Supreme Court, liberal or conservative, will stop the war in Iraq, or redistribute the wealth of this country, or establish free medical care for every human being. Such fundamental change will depend, the experience of the past suggests, on the actions of an aroused citizenry, demanding that the promise of the Declaration of Independence — an equal right to life, liberty, and the pursuit of happiness — be fulfilled.

“Any fool can make a fortune. It takes a man of brains to hold on to it after it is made.”


Arthur T. Vanderbilt II, quoted in Fortune’s Children: The Fall of the House of Vanderbilt (1989):

Within thirty years after the death of Commodore Vanderbilt in 1877, no member of his family was among the richest people in the United States, having been supplanted by such new titans as Rockefeller, Carnegie, Frick, and Ford. Forty-eight years after his death, one of his direct descendants died penniless. Within seventy years of his death, the last of the great Vanderbilt mansions on Fifth Avenue had made way for modern office buildings. When 120 of the Commodore’s descendants gathered at Vanderbilt University in 1973 for the first family reunion, there was not a millionaire among them.

“Any fool can make a fortune,” the Commodore had told his son William, whom he still called Billy, shortly before he died. “It takes a man of brains to hold on to it after it is made.”