Tag Archives: Wisdom

Why Don’t We Learn From History? by BH Liddell Hart

Summary
  1. Hart succinctly and engagingly describes why history is so important to study and, yet, why so few do
Key Takeaways
  1. There is no panacea for peace that can be written out in a formula like a doctor’s prescription. But one can set down a series of practical points—elementary principles drawn from the sum of human experience in all times. Study war and learn from its history. Keep strong, if possible. In any case, keep cool. Have unlimited patience. Never corner an opponent and always assist him to save his face. Put yourself in his shoes—so as to see things through his eyes. Avoid self-righteousness like the devil—nothing is so self-blinding. Cure yourself of two commonly fatal delusions—the idea of victory and the idea that war cannot be limited
  2. I would emphasize a basic value of history to the individual. As Burckhardt said, our deeper hope from experience is that it should “make us, not shrewder (for next time), but wiser (for ever).” History teaches us personal philosophy.
  3. Over two thousand years ago, Polybius, the soundest of ancient historians, began his History with the remark that “the most instructive, indeed the only method of learning to bear with dignity the vicissitude of fortune, is to recall the catastrophes of others.” History is the best help, being a record of how things usually go wrong. A long historical view not only helps us to keep calm in a “time of trouble” but reminds us that there is an end to the longest tunnel. Even if we can see no good hope ahead, an historical interest as to what will happen is a help in carrying on. For a thinking man, it can be the strongest check on a suicidal feeling.
  4. What is the object of history? I would answer, quite simply – “truth.” The object might be more cautiously expressed thus: to find out what happened while trying to find out why it happened. In other words, to seek the causal relations between events. History has limitations as guiding signpost, however, for although it can show us the right direction, it does not give detailed information about the road conditions
    1. NOTE: map is not the terrain
  5. History can show us what to avoid, even if it does not teach us what to do—by showing the most common mistakes that mankind is apt to make and to repeat. A second object lies in the practical value of history. “Fools,” said Bismarck, “say they learn by experience. I prefer to profit by other people’s experience.” The study of history offers that opportunity in the widest possible measure. It is universal experience – infinitely longer, wider, and more varied than any individual’s experience.
  6. The point was well expressed by Polybius. “There are two roads to the reformation for mankind—one through misfortunes of their own, the other through the misfortunes of others; the former is the most unmistakable, the latter the less painful…the knowledge gained from the study of true history is the best of all educations for practical life
  7. Why were they not deduced? Partly because the General Staffs’ study was too narrow, partly because they were blinded by their own professional interests and sentiments. But the “surprising” developments were correctly deduced from those earlier wars by certain non-official students of war who were able to think with detachment
  8. History is the record of man’s steps and slips. It shows us that the steps have been slow and slight; the slips, quick and abounding. It provides us with the opportunity to profit by the stumbles and tumbles of our forerunners. Awareness of our limitations should make us chary of condemning those who made mistakes, but we condemn ourselves if we fail to recognize mistakes
  9. Viewed aright, it is the broadest of studies, embracing every aspect of life. It lays the foundation of education by showing how mankind repeats its errors and what those errors are
  10. In reality, reason has had a greater influence than fortune on the issue of wars that have most influenced history. Creative thought has often counted for more than courage; for more, even, than gifted leadership. It is a romantic habit to ascribe to a flash of inspiration in battle what more truly has been due to seeds long sown—to the previous development of some new military practice by the victors, or to avoidable decay in the military practice of the losers.
  11. Direct experience is inherently too limited to form an adequate foundation either for theory or for application. At the best it produces an atmosphere that is of value in drying and hardening the structure of thought. The greater value of indirect experience lies in its greater variety and extent. “History is universal experience”—the experience not of another but of many others under manifold conditions.
  12. The increasing specialization of history has tended to decrease the intelligibility of history and thus forfeit the benefit to the community
  13. Observing the working of committees of many kinds, I have long come to realize the crucial importance of lunchtime. Two hours or more may have been spent in deliberate discussion and careful weighing of a problem, but the last quarter of an hour often counts for more than all the rest. At 12:45pm there may be no prospect of an agreed solution, yet around about 1pm important decisions may be reached with little argument—because the attention of the members has turned to watching the hands of their watches. Those moving hands can have a remarkable effect in accelerating the movements of minds—to the point of a snap decision. The more influential members of any committee are the most likely to have important lunch engagements, and the more important the committee the more likely is this contingency. A shrewd committeeman often develops a technique based on this time calculation. He will defer his own intervention in the discussion until lunchtime is near, when the majority of the others are more inclined to accept any proposal that sounds good enough to enable them to keep their lunch engagement.
  14. Another danger, among “hermit” historians, is that they often attach too much value to documents. Men in high office are apt to have a keen sense of their own reputation in history. Many documents are written to deceive or conceal. Moreover, the struggles that go on behind the scenes, and largely determine the issue, are rarely recorded in documents.
  15. Lloyd George frequently emphasized to me in conversation that one feature that distinguished a first-rate political leader from a second-rate politician is that the former was always careful to avoid making any definite statement that could be subsequently refuted, as he was likely to be caught out in the long run.
  16. “Hard writing makes easy reading.” Such hard writing makes for hard thinking.
  17. Discernment may be primarily a gift—and a sense of proportion, too. But their development can be assisted by freedom from prejudice, which largely rests with the individual to achieve—and within his power to achieve it. Or at least to approach it. The way of approach is simple, if not easy—requiring, above all, constant self-criticism and care for precise statement.
  18. To view any question subjectively is self-blinding.
  19. Doubt is unnerving save to philosophic minds, and armies are not composed of philosophers, either at the top or at the bottom. In no activity is optimism so necessary to success, for it deals so largely with the unknown—even unto death. The margin that separates optimism from blind folly is narrow. Thus there is no cause for surprise that soldiers have so often overstepped it and become the victims of their faith.
  20. The point had been still more clearly expressed in the eleventh-century teaching of Chang-Tsai: “If you can doubt at points where other people feel no impulse to doubt, then you are making progress.”
  21. We learn too that nothing has aided the persistence of falsehood, and the evils resulting from it, more than the unwillingness of good people to admit the truth when it was disturbing to their comfortable assurance. Always the tendency continues to be shocked by natural comment and to hold certain things too “sacred” to think about.
  22. How rarely does one meet anyone whose first reaction to anything is to ask “Is it true?” Yet unless that is a man’s natural reaction it shows that truth is not uppermost in his mind, and, unless it is, true progress is unlikely.
  23. Yet the longer I watch current events, the more I have come to see how many of our troubles arise from the habit, on all sides, of suppressing or distorting what we know quite well is the truth, out of devotion to a cause, an ambition, or an institution—at bottom, this devotion being inspired by our own interest.
  24. It was saddening to discover how many apparently honorable men would stoop to almost to anything to help their own advancement.
  25. A different habit, with worse effect, was the way that ambitious officers when they came in sight of promotion to the generals’ list, would decide that they would bottle up their thoughts and ideas, as a safety precaution, until they reached the top and could put these ideas into practice. Unfortunately the usual result, after years of such self-repression for the sake of their ambition, was that when the bottle was eventually uncorked the contents had evaporated.
  26. In my experience the troubles of the world largely come from excessive regard to other interests.
  27. We learn from history that those who are disloyal to their own superiors are most prone to preach loyalty to their subordinates.
  28. Loyalty is a noble quality, so long as it is not blind and does not exclude the higher loyalty to truth and decency.
  29. Truth may not be absolute, but it is certain that we are likely to come nearest to it if we search for it in a purely scientific spirit and analyze the facts with a complete detachment from all loyalties save that to truth itself. It implies that one must be ready to discard one’s own pet ideas and theories as the search progresses.
  30. Faith matters so much in times of crisis. One must have gone deep into history before reaching the conviction that truth matters more.
  31. All of us do foolish things—but the wiser realize what they do. The most dangerous error is failure to recognize our own tendency to error. That failure is a common affliction of authority.
  32. The pretense to infallibility is instinctive in a hierarchy. But to understand the cause is not to underrate the harm that the pretense has produced—in every sphere.
  33. Hence the duty of the good citizen who is free from the responsibility of Government is to be a watchdog upon it, lest Government impair the fundamental objects which it exists to serve. It is a necessary evil, thus requiring constant watchfulness and check.
  34. What is of value in “England” and “America” and worth defending is its tradition of freedom—the guarantee of its vitality. Our civilization, like the Greek, has, for all its blundering way, taught the value of freedom, of criticism of authority—and of harmonizing this with order. Anyone who urges a different system, for efficiency’s sake, is betraying the vital tradition.
  35. We learn from history that self-made despotic rulers follow a standard pattern. In gaining power: They exploit, consciously or unconsciously, a state of popular dissatisfaction with the existing regime or of hostility between different sections of the people. On gaining power: They soon begin to rid themselves of their chief helpers, “discovering” that those who brought about the new order have suddenly become traitors to it. This political confidence trick, itself a familiar string of tricks, has been repeated all down the ages. Yet it rarely fails to take in a fresh generation.
  36. We learn from history that time does little to alter the psychology of dictatorship. The effect of power on the mind of the man who possesses it, especially when he has gained it by successful aggression, tends to be remarkably similar in every age and in every country.
  37. Bad means lead to no good end.
  38. But “anti-Fascism” or “anti-Communism” is not enough. Nor is even the defense of freedom. What has been gained may not be maintained, against invasion without and erosion within, if we are content to stand still. The peoples who are partially free as a result of what their forebears achieved in the seventeenth, eighteenth, and nineteenth centuries must continue to spread the gospel of freedom and work for the extension of the conditions, social and economic as well as political, which are essential to make men free.
  39. We learn from history that the compulsory principle always breaks down in practice. It is practicable to prevent men doing something; moreover that principle of restraint, or regulation, is essentially justifiable in so far as its application is needed to check interference with others’ freedom. But it is not, in reality, possible to make men do something without risking more than is gained from the compelled effort. The method may appear practicable, because it often works when applied to those who are merely hesitant. When applied to those who are definitely unwilling it fails, however, because it generates friction and fosters subtle forms of evasion that spoil the effect which is sought. The test of whether a principle works is to be found in the product. Efficiency springs from enthusiasm—because this alone can develop a dynamic impulse. Enthusiasm is incompatible with compulsion—because it is essentially spontaneous. Compulsion is thus bound to deaden enthusiasm—because it dries up the source. The more an individual, or a nation, has been accustomed to freedom, the more deadening will be the effect of a change to compulsion.
  40. Conscription does not fit the conditions of modern warfare—its specialized technical equipment, mobile operations, and fluid situations. Success increasingly depends on individual initiative, which in turn springs from a sense of personal responsibility—these senses are atrophied by compulsion. Moreover, every unwilling man is a germ carrier, spreading infection to an extent altogether disproportionate to the value of the service he is forced to contribute.
  41. Unless the great majority of a people are willing to give their services there is something radically at fault in the state itself. In that case the state is not likely or worthy to survive under test—and compulsion will make no serious difference.
  42. But the deeper I have gone into the study of war and the history of the past century the further I have come toward the conclusion that the development of conscription has damaged the growth of the idea of freedom in the Continental countries and thereby damaged their efficiency also—by undermining the sense of personal responsibility.
    1. NOTE: great parallels to business. Giving away ownership and responsibility gets people all-in, to self-police, to be your best salesman and advocates. Forcing them to try to act this way never works
  43. I believe that freedom is the foundation of efficiency, both national and military. Thus it is a practical folly as well as a spiritual surrender to “go totalitarian” as a result of fighting for existence against the totalitarian states. Cut off the incentive to freely given service and you dry up the life source of a free community.
  44. Reforms that last are those that come naturally, and with less friction, when men’s minds have become ripe for them. A life spent in sowing a few grains of fruitful thought is a life spent more effectively than in hasty action that produces a crop of weeds. That leads us to see the difference, truly a vital difference, between influence and power.
  45. History shows that a main hindrance to real progress is the ever-popular myth of the “great man.” While “greatness” may perhaps be used in a comparative sense, if even then referring more to particular qualities than to the embodied sum, the “great man” is a clay idol whose pedestal has been built up by the natural human desire to look up to someone, but whose form has been carved by men who have not yet outgrown the desire to be regarded, or to picture themselves, as great men.
  46. We learn from history that expediency has rarely proved expedient.
    1. NOTE: John Wooden – be quick but don’t hurry
  47. Civilization is built on the practice of keeping promises. It may not sound a high attainment, but if trust in its observance be shaken the whole structure cracks and sinks. Any constructive effort and all human relations—personal, political, and commercial—depend on being able to depend on promises.
    1. NOTE: like any high performing culture, trust is at the center of it all. Not being able to depend on promises erodes trust
  48. It is immoral to make promises that one cannot in practice fulfill—in the sense that the recipient expects.
  49. I have come to think that accuracy, in the deepest sense, is the basic virtue—the foundation of understanding, supporting the promise of progress. The cause of most troubles can be traced to excess; the failure to check them to deficiency; their prevention lies in moderation. So in the case of troubles that develop from spoken or written communication, their cause can be traced to overstatement, their maintenance to understatement, while their prevention lies in exact statement. It applies to private as well as to public life.
  50. Studying their effect, one is led to see that the germs of war lie within ourselves—not in economics, politics, or religion as such. How can we hope to rid the world of war until we have cured ourselves of the originating causes?
  51. Any history of war which treats only of its strategic and political course is merely a picture of the surface. The personal currents run deeper and may have a deeper influence on the outcome.
  52. We learn from history that complete victory has never been completed by the result that the victors always anticipate—a good and lasting peace. For victory has always sown the seeds of a fresh war, because victory breeds among the vanquished a desire for vindication and vengeance and because victory raises fresh rivals.
    1. NOTE: dialectical materialism
  53. A too complete victory inevitably complicates the problem of making a just and wise peace settlement. Where there is no longer the counterbalance of an opposing force to control the appetites of the victors, there is no check on the conflict of views and interests between the parties to the alliance. The divergence is then apt to become so acute as to turn the comradeship of common danger into the hospitality of mutual dissatisfaction—so that the ally of one war becomes the enemy in the next.
  54. Where the two sides are too evenly matched to offer a reasonable chance of early success to either, the statesman is wise who can learn something from the psychology of strategy. It is an elementary principle of strategy that, if you find your opponent in a strong position costly to force, you should leave him a line of retreat—as the quickest way of loosening his resistance. It should, equally, be a principle of policy, especially in war, to provide your opponent with a ladder by which he can climb down.
  55. War is profitable only if victory is quickly gained. Only an aggressor can hope to gain a quick victory. If he is frustrated, the war is bound to be long, and mutually ruinous, unless it is brought to an end by mutual agreement.
  56. The history of ancient Greece showed that, in a democracy, emotion dominates reason to a greater extent than in any other political system, thus giving freer rein to the passions which sweep a state into war and prevent it getting out—at any point short of the exhaustion and destruction of one or other of the opposing sides.
  57. It was because Wellington really understood war that he became so good at securing peace. He was the least militaristic of soldiers and free from the lust of glory. It was because he saw the value of peace that he became so unbeatable in war. For he kept the end in view, instead of falling in love with the means. Unlike Napoleon, he was not infected by the romance of war, which generates illusions and self-deceptions. That was how Napoleon had failed and Wellington prevailed.
  58. One of the clear lessons that history teaches is that no agreement between Governments has had any stability beyond their recognition that it is in their own interests to continue to adhere to it. I cannot conceive that any serious student of history would be impressed by such a hollow phrase as “the sanctity of treaties.”
  59. We must face the fact that international relations are governed by interests and not by moral principles. Then it can be seen that the validity of treaties depends on mutual convenience. This can provide an effective guarantee.
  60. Any plan for peace is apt to be not only futile but dangerous. Like most planning, unless of a mainly material kind, it breaks down through disregard of human nature. Worse still, the higher the hopes that are built on such a plan, the more likely that their collapse may precipitate war.
  61. For whoever habitually suppresses the truth in the interests of tact will produce a deformity from the womb of his thought.
  62. Opposition to the truth is inevitable, especially if it takes the form of a new idea, but the degree of resistance can be diminished—by giving thought not only to the aim but to the method of approach. Avoid a frontal attack on a long-established position; instead, seek to turn it by a flank movement, so that a more penetrable side is exposed to the thrust of truth. But in any such indirect approach, take care not to diverge from the truth—for nothing is more fatal to its real advancement than to lapse into untruth.
  63. Even among great scholars there is no more unhistorical fallacy than that, in order to command, you must learn to obey.
  64. A model boy rarely goes far, and even when he does he is apt to falter when severely tested. A boy who conforms immaculately to school rules is not likely to grow into a man who will conquer by breaking the stereotyped professional rules of his time—as conquest has most often been achieved. Still less does it imply the development of the wide views necessary in a man who is not merely a troop commander but the strategic adviser of his Government. The wonderful thing about Lee’s generalship is not his legendary genius but the way he rose above his handicaps—handicaps that were internal even more than external.
  65. the deeper the study of modern war is carried the stronger grows the conviction of its futility.
  66. The more that warfare is “formalized” the less damaging it proves. Past efforts in this direction have had more success than is commonly appreciated.
  67. The habit of violence takes much deeper root in irregular warfare than it does in regular warfare. In the latter it is counteracted by the habit of obedience to constituted authority, whereas the former makes a virtue of defying authority and violating rules. It becomes very difficult to rebuild a country, and a stable state, on such an undermined foundation.
  68. Vitality springs from diversity—which makes for real progress so long as there is mutual toleration, based on the recognition that worse may come from an attempt to suppress differences than from acceptance of them.
  69. To put it another way, it seems to me that the spiritual development of humanity as a whole is like a pyramid, or a mountain peak, where all angles of ascent tend to converge the higher they climb. On the one hand this convergent tendency, and the remarkable degree of agreement that is to be found on the higher levels, appears to me the strongest argument from experience that morality is absolute and not merely relative and that religious faith is not a delusion.
  70. Manners are apt to be regarded as a surface polish. That is a superficial view. They arise from an inward control. A fresh realization of their importance is needed in the world today, and their revival might prove the salvation of civilization. For only manners in the deeper sense—of mutual restraint for mutual security—can control the risk that outbursts of temper over political and social issues may lead to mutual destruction in the atomic age.
  71. Truth is a spiral staircase. What looks true on one level may not be true on the next higher level. A complete vision must extend vertically as well as horizontally—not only seeing the parts in relation to one another but embracing the different planes. Ascending the spiral, it can be seen that individual security increases with the growth of society, that local security increases when linked to a wider organization, that national security increases when nationalism decreases and would become much greater if each nation’s claim to sovereignty were merged in a super-national body.
What I got out of it
  1. Not quite Durant’s Lessons of History but one of the best “meta” books on history I’ve come across. The lessons to be gained from in-depth study of history and why it is worth it, and why we don’t

The Lessons of History by Will and Ariel Durant

Summary

  1. Will and Ariel Durant provide an unparalleled multi-disciplinary recount of history, covering major themes, events and people. This 100 page book is an incredible summary of their 10,000+ page series, The Story of Civilization.
Key Takeaways
  1. History captures how man has behaved for 6,000 years and learning this will help protect you and avoid poor decisions
  2. Through much war and tragedy man has survived and prospered – one of the main lessons to take from studying history
  3. Man competes with each other and pushed himself, others and groups as a whole to become better. This competition helps man reach new heights and learn new things. Life needs to breed in order to pass down these competitive advantages to future generations. Competition is inevitable and necessary as only the fittest survive
  4. History is only a fraction of biology
  5. History is a humorist
  6. Throughout the ages man has changed his behavior but cannot change human nature, his instincts
  7. The role of having character developed in people so they could rise to the occasion
  8. Moral codes adjust and adapt to the prevailing social conditions
  9. At one point, every vice was a virtue. Sexual promiscuity secured survival but today seen as a vice, etc.
  10. There are many more things that should enter a man’s thoughts and decisions than just reason – sentiment, tenderness, mystery, affection. Reason is just a tool but character is based on instincts and intuition and reason can therefore not be the sole defining characteristic of man
  11. Freedom is a trial, it is a terrific test. When we made ourselves free (through reason) we forgot to make ourselves intelligent
  12. Nature does not agree with man’s definition of good and bad. For nature, that which is good is what survived and that which is bad goes under
  13. Morality is dependent upon religion and religion gives man hope that he can survive life, that he can bear reality
  14. Insanity is the loss of memory
  15. God is a creative force in any way He appears. God is love too, but love is only one of many creative forces
  16. “Economics is history in motion” – Karl Marx
  17. Socialist states have been around for thousands of years – the Incas and the Chinese being the most successful
  18. The essence of beauty is order. Must balance order and liberty to have a successful state
  19. Peace is not unrealistic but you are fighting an uphill battle against history. War doesn’t really solve anything but replaces one set of problems for another
  20. Civilization is social order leading to cultural creation – human relationships, trade and commerce, art, government, etc.
  21. History repeats itself at large, but not in detail. All civilizations decay either from internal strife or lack of trade and commerce
  22. Durant is not an optimist and not a pessimist but a realist about the future. Hard to say if progressing or regressing – simply changing
  23. Progress is glacially slow and human nature has hardly changed in thousands of years. Progress means attaining the same ends (sex, wealth and health) through more efficient means
  24. If humans are different today than 50,000 years ago it is because our accumulated social culture is stronger and more refined than before, not because our biological nature has changed
  25. History is philosophy teaching by examples
  26. The excess of anything leads to its opposite reaction. (e.g., the excess of liberty leads to slavery)
  27. Every generation rebels against the preceding one
  28. If youth but knew and old age but could
Summary
  1. Pound for pound may have the most wisdom of any book. An amazing summary of history’s major events and themes. Social order leading to cultural creation is one of man’s defining accomplishments and without it we might still be living in caves. Also, the idea of history being philosophy in motion I thought was a great way to think about it

Seeking Wisdom: From Darwin to Munger by Peter Bevelin

Summary

  1. Through real life examples, many of them centered around Warren Buffett and Charlie Munger, Peter Bevelin helps the reader learn how to think better, make fewer poor decisions  understand ourselves and others better. Discusses mental models, human fallibilities, heuristics, instincts, human psychology, biology and more.

Key Takeaways

  1. Peter Bevelin lives in Malmo – visit when go to Sweden
  2. Main goal is to understand why people behave the way they do. “This book focuses on how our thoughts are influenced, why we make misjudgments and tools to improve our thinking. If we understand what influences us, we might avoid certain traps and understand why others act like they do. And if we learn and understand what works and doesn’t work and find some framework for reasoning, we will make better judgments. We can’t eliminate mistakes, but we can prevent those that can really hurt us.”
  3. Learn from other’s mistakes
  4. Learn the big ideas that underlie reality and develop good thinking habits (namely, objectivity)
  5. This book is a compilation of what Bevelin has learned from reading some of the works of the world’s best thinkers
  6. Book is broken down into 4 parts – what influences our thinking, examples of psychological reasons for misjudgments, reasons for misjudgments caused by both psychology and a lack of considering some basic ideas from physics and mathematics and lastly describes tools for better thinking
What I got out of it
  1. Seriously good read if you’re at all interested in understanding how and why we make decisions (both bad and good) and how we can go about improving our thought processes and tools. Fantastic read and couldn’t recommend more highly
Part 1 – What Influences Our Thinking?
 
  • Brain communicates through neurochemicals and genes are the recipe for how we are made
  • Behavior is influenced by genetic and environmental factors
  • The flexibility of the brain is amazing as it can change due to our thoughts and experiences
  • Mental state (situation and experience) and physical state are intimately connected – beliefs have biological consequences, both good and bad
  • World is not fixed but evolving – evolution has no goal
  • Pain (punishment) and reward (pleasure) have evolutionary benefits with pain avoidance being our primary driver
  • Hunter-gatherer environments have formed our basic nature – competitive, access to limited resources, many dangers, self-interest, ostracism = death
  • Cooperation leads to trust, especially amongst relatives
  • Fear is our most basic emotion and it guides almost everything we do. Repeated exposure lessens instinctual reactions
  • Novelty is always sought out
  • Reputation, reciprocation and fairness are big human motivators
  • Very painful to lose anything, especially status, once obtained. Higher status linked to higher health and well being
  • People learn their behavior from their culture
  • Assume people will act in their self-interest
  • Don’t blindly imitate/trust others – think rationally and form your own opinions
Part 2 – The Psychology of Misjudgments
  • Outlines 28 reasons for misjudgment. These are never exclusive or independent of each other. Many of these echo similar sentiments to Cialdini’s Influence
    1. Bias from mere association
    2. Underestimating the power of rewards and punishment
    3. Underestimating bias from own self-interest and incentives
    4. Self-serving bias
    5. Self-deception and denial
    6. Bias from consistency tendency (only see things that confirm our already formed beliefs)
    7. Bias from deprival syndrome (strongly reacting when something is taken away)
    8. Status quo bias and do-nothing syndrome
    9. Impatience
    10. Bias from envy and jealousy
    11. Distortion by contrast comparison
    12. Bias from anchoring
    13. Over-influence by vivid or the most recent information
    14. Omission and abstract blindness
    15. Bias from reciprocation tendency
    16. Bias from over-influence by liking tendency
    17. Bias from over-influence by social proof
    18. Bias from over-influence by authority
    19. Sensemaking
    20. Reason-respecting
    21. Believing first and doubting later
    22. Memory limitations
    23. Do-something syndrome
    24. Mental confusion from say-something syndrome
    25. Emotional arousal
    26. Mental confusion from stress
    27. mental confusion from physical/psychological pain, the influence of chemicals or diseases
    28. Bias from over-influence by the combined effect of many psychological tendencies working tougher
  • Behavior can’t be seen as rational/irrational alone – must have context
  • People can take bad news, but we don’t like it late
  • Evaluate things, people and situations by their own merits
  • Past experiences are often context dependent. Just because some stimulus caused you earlier pain, doesn’t mean that is still the case today
  • Create a negative emotion if you want to end a certain behavior
  • Good consequences don’t necessarily mean you made a good decision and bad consequences don’t necessarily mean you made a bad one
  • Frequent rewards, even if smaller, feels better than one large reward
  • The more “precise” people’s projections about the future are, the more wary you should be
  • Munger looks for a handful of things in people – integrity, intelligence, experience and dedication
  • Recognize your limits. How well do you know what you don’t know/ Don’t let your ego determine what you should do
  • Bad news that is true is better than good news that is false
  • People associate being wrong as a threat to their self-interest 
  • Labeling technique – when somebody labels you, whether you agree or not, you are more likely to comply and behave in ways consistent with that label
  • Avoid ideology at all costs
  • “There is nothing wrong with changing a plan when the situation has changed.” – Seneca
  • Base decisions on current situations and future consequences
  • Don’t fall in love with any particular point of view
  • Know your goals and options
  • Remember that people respond to immediate crisis and threats
  • People favor routine behavior over innovative behavior and similarly, people feel worse when they fail as a result of taking action than when they fail from doing nothing
  • Deciding to do nothing is also a decision. And the cost of doing nothing could be greater than the cost of taking an action
  • People give more weight to the present than to the future. We seek pleasure today at a cost of what may be better in the future
  • “We envy those who are near us in time, place, age or reputation.” – Aristotle
  • “The best way to avoid envy is the deserve the success you get.” – Aristotle
  • How we value things depends on what we compare them with
  • Sometimes it is the small, invisible changes that harm us the most
  • Accurate information is better than dramatic information. Back up vivid stories with facts and numbers
  • We see only what we have names for
  • Always look for alternative explanations
  • We see available information. We don’t see what isn’t reported. Missing information doesn’t draw our attention
  • A favor or gift is most effective when it is personal, significant and unexpected
  • Always try to see situations and people from their POV
  • People tend to like their kin, romantic partners and people similar to them more as well as those who are physically attractive. We also like and trust anything familiar
  • Concentrate on the issue and what you want to achieve
  • The vast majority of people would rather be wrong in a group than right in isolation
  • “It is easy in the world to live after the world’s opinion; it is easy in solitude to live after our own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.” – Ralph Waldo Emerson
  • When all are accountable, nobody is accountable
  • Being famous doesn’t give anybody special expertise – beware ads with celebrity endorsements
  • “We don’t like uncertainty. We have a need to understand and make sense of events. We refuse to accept the unknown. We don’t like the unpredictability and meaninglessness. We therefore seek explanations for why things happen. Especially if they are novel, puzzling or frightening. By finding patterns and causal relationships we get comfort and learn for the future.”
    • Consider how other possible outcomes might have happened. Don’t underestimate chance
  • Any reason, no matter how flimsy, often helps persuade others
  • 5 W’s – A rule for communication – must tell who was going to do what, where, when and why.
  • Memory is very selective and fallible – keep records of important events
  • Don’t confuse activity with results. There is no reason to do a good job with something you shouldn’t do in the first place
  • “Wise men talk because they have something to say; fools, because they have to say something.” – Plato
  • Awareness of ignorance is the beginning of wisdom
  • When we make big decisions, we could compare our expected feelings with those of people who have similar experiences today. In that sense, we are not as unique as we think we are
  • Understand your emotions and their influence on your behavior. Ask – Is there a reason behind my action?
  • Hold off on important decisions when you have just gone through an emotional experience
  • Cooling-off periods help us think things through
  • Stress increases our suggestibility
  • Stress is neither good nor bad in itself. It depends on the situation and our interpretation
  • “I’ve suffered a great many catastrophes in my life. Most of them never happened.” – Mark Twain
  • People tend to overestimate personal characteristics and motives when we explain the behavior of others and underestimate situational factors like social pressure, roles or things over which there are no control
  • The less knowledgeable we are about an issue, the more influenced we are by how it is framed
  • Advice from Munger – can learn to make fewer mistakes than others and how to fix your mistakes faster when you do make them. Were the factors that really govern the interests involved, rationally considered and what are the subconscious influences where the brain at a subconscious level is automatically doing these things – which by and large are useful, but which often mis function. And, take all the main models from psychology and use them as a checklist in reviewing outcomes in complex systems
Part 3 – The Physics and mathematics of Misjudgments
  • 9 Causes of Misjudgment/Mistakes
    1. Systems Thinking
      • Failing to consider that actions have both intended and unintended consequences. Includes failing to consider secondary and higher order consequences and inevitable implications
      • Failing to consider the likely reactions of others
      • Overestimating predictive ability or using unknowable factors in making predictions
    2. Scale and limits
      • Failing to consider that changes in size or time influence form, function and behavior
      • Failing to consider breakpoints, critical thresholds or limits
      • Failing to consider constraints – system’s performance constrained by its weakest link
    3. Causes
      • Not understanding what causes desired results
      • Believing cause resembles its effect – a big effect must have a big, complicated cause
      • Underestimating the influence of randomness in good or bad outcomes
      • Mistaking an effect for its cause
      • Attributing an outcome to a single cause when there are multiple
      • Mistaking correlation for cause
      • Drawing conclusions about causes from selective data
      • Invert, always invert! – look at problems backwards
    4. Numbers and their meaning
      • Looking at isolated numbers – failing to consider relationships and magnitudes. Not differentiating between absolute and relative risk
      • Underestimating the effect of exponential growth
      • Underestimating the time value of money
    5. Probabilities and number of possible outcomes
      • Underestimating the number of possible outcomes for unwanted events. Includes underestimating the probability and severity of rare or extreme events
      • Underestimating the chance of common but not publicized events
      • Believing one can control the outcome of events where chance is involved
      • Judging financial decisions by evaluating gains and losses instead of final state of wealth and personal value
      • Failing to consider the consequences of being wrong
    6. Scenarios
      • Overestimating the probability of scenarios where all of a series of steps must be achieved for a wanted outcome. Also, underestimating the opportunities for failure and what normally happens in similar situations
      • Underestimating the probability of system failure
      • Not adding a factor of safety for known and unknown risks
      • Invest a lot of time into researching and understanding your mistakes
    7. Coincidences and miracles
      • Underestimating that surprises and improbable events happen, somewhere, sometime to someone, if they have enough opportunities (large enough or time) to happen
      • Looking for meaning, searching for causes and making up patterns for chance events, especially events that have emotional implications
      • Failing to consider cases involving the absence of a cause or effect
    8. Reliability of case evidence
      • Overweighing individual case evidence and under-weighing the prior probability considering the base rate or evidence from many similar cases, random match, false positive or false negative and failing to consider relevant comparison population
    9. Misrepresentative evidence
      • Failing to consider changes in factors, context or conditions when using past evidence to predict likely future outcomes. Not searching for explanations to why past outcome happened, what is required to make past record continue and what forces change it
      • Overestimating evidence from a single case or small or unrepresentative samples
      • Underestimating the influence of chance in performance (success and failure)
      • Only seeing positive outcomes and paying little or no attention to negative outcomes and prior probabilities
      • Failing to consider variability of outcomes and their frequency
      • Failing to consider regression – in any series of events where chance is involved unique outcomes tends to regress back to the average outcome
      • Postmortems – Record your mistakes! Instead of forgetting about them, they should be highlighted
        • What was my original reason for doing something?
        • What were my assumptions?
        • How did reality work out relative to my original guess? What worked and what didn’t?
        • What worked well? What should I do differently? What did I fail to do? What did I miss? What must I learn? What must I stop doing?
Part 4 – Guidelines to Better Thinking
  • This section helps provide tools which create a foundation for rational thinking
  • 12 Tools for rational thinking
    1. Models of reality
      • A model is an idea that helps us better understand how the world works. Helps explain “why” and predict “how” people are likely to behave in certain situations
      • Ask yourself, “Is there anything I can do to make my whole mental process work better? And I [Munger] would say that the habit of mastering multiple models which underlie reality is the best thing you can do…It’s just so much fun – and it works so well.”
      • A valuable model produces meaningful explanations and predictions of likely future consequences where the cost of being wrong is high
      • Considering many ideas help us achieve a holistic view. No single discipline has all the answers – need to consider mathematics, physics, chemistry, engineering, biology, psychology and rank and use them in order of their reliability
      • Must understand how different ideas interact and combine
      • Can build your own mental models by looking around you and asking why things are happening (or why things are not happening).
    2. Meaning
      • Truly understand something when “without using the new word which you have just learned, try to rephrase what you have just learned in your own language.”
      • Meaning of words, events, causes, implications, purpose, reason, usefulness
      • “Never express yourself more clearly than you are able to think.” – Niels Bohr
      • Use ideas and terms people understand, that they are familiar with and can relate to
      • We shouldn’t engage in false precision
    3. Simplification
      • “If something is too hard, we move on to something else. What could be more simple than that?” – Charlie Munger
      • Make problems easier to solve. Eliminate everything except the essentials – break down a problem into its components but look at the problem holistically – first dispose of the easy questions
      • Make fewer but better decisions
      • Dealing with what’s important forces us to prioritize. There are only a few decisions of real importance. Don’t bother trying to get too much information of no use to explain or predict
      • Deal with the situations in live by knowing what to avoid. Reducing mistakes by learning what areas, situations and people to avoid is often a better use of time than seeking out new ways of succeeding. Also, it is often simpler to prevent something than to solve it
      • Shifting mental attention between tasks hugely inefficient. Actions and decisions are simpler when we focus on one thing at a time
      • Some important things we can’t know. Other things we can know but they are not important
      • Activity does not correlate with achievement
    4. Rules and filters
      • Gain more success from avoiding stupid decisions rather than making brilliant ones
      • Filters help us prioritize and figure out what makes sense. When we know what we want, we need criteria to evaluate alternatives. Try to use as few criteria as necessary to make your judgment. Then rank them in order of their importance and use them as filters
      • More information does not mean you are better off
      • Warren Buffet uses 4 criteria as filters
        • Can I understand it? If it passes this filter then,
          • Understanding for Buffett means thinking that he will have a reasonable probability of being able to assess where the business will be in 10 years
        • Does it look like it has some kind of sustainable advantage? If it passes this filter,
        • Is the management composed of able and honest people? If it passes this filter,
        • Is the price right? If it passes this filter, we write a check
      • Elimination – look for certain things that narrow down the possibilities
      • Checklist procedures – help reduce the chances of harm (pair with Gawande’s The Checklist Manifesto)
        • Should think about – different issues need different checklists, a checklist must include each critical item necessary for “safety” and avoiding “accidents” so we don’t need to rely on memory for items to be checked, readily usable and easy to use, agree with reality
        • Avoid excessive reliance on checklists as this can lead to a false sense of security
    5. Goals
      • How can we make the right decision if we don’t know what we want to achieve? Even if we don’t know what we want, we often know what we don’t want, meaning that our goal can be to avoid certain things
      • Goals should be – clearly defined, focused on results, concrete, realistic and logical, measurable, tailored to individual needs and subject to change
      • Goals need target dates and controls stations measuring the degree to which the goal is achieved
      • Always ask – What end result do I want? What causes that? What factors have a major impact on the outcome? What single factor has the most impact? Do I have the variable(s) needed for the goal to be achieved? What is the best way to achieve my goal? Have I considered what other effects my actions will have that will influence the final outcome?
    6. Alternatives
      • Opportunity cost – every minute we choose to spend on one thing is a minute unavailable to spend on other things. Every dollar we invest is a dollar unavailable for other available investments
      • When we decide whether to change something, we should measure it against the best of what we already have
    7. Consequences
      • Consider secondary and long-term effects of an action
      • Whenever we install a policy, take an action or evaluate statements, we must trace the consequences – remember four key things:
        • Pay attention to the whole system, direct and indirect effects
        • Consequences have implications or more consequences, some which may be unwanted. We can’t estimate all possible consequences but there is at least one unwanted consequence we should look out for,
        • Consider the effects of feedback, time, scale, repetition, critical thresholds and limits
        • Different alternatives have different consequences in terms of costs and benefits. Estimate the net effects over time and how desirable these are compared to what we want to achieve
    8. Quantification
      • How can you evaluate if a decision is intelligent or not if you can’t measure it against a relevant and important yardstick?
      • We need to understand what is behind the numbers
        • Buffett says that return on beginning equity capital is the most appropriate measure of single-year managerial performance
    9. Evidence
      • Evidence helps us prove what is likely to happen or likely to be true or false. Evidence comes from facts, observations, experiences, comparisons and experiments
      • Occam’s Razor – if we face two possible explanations which make the same predictions, the one based on the least number of unproven assumptions is preferable, until more evidence comes along
      • Past record is the single best guide
      • The following questions help decide if past evidence is representative of the future – observation (will past/present behavior continue?), explanation (why did it happen in the past or why does it happen now?), predictability (how representative is the past/present evidence for what is likely to happen in the future?), continuation and change (what is required to make the past/present record continue or to achieve the goal?), certainty and consequences (how certain am I?)
      • Falsify and disprove – a single piece of evidence against something will show that it is false
      • Look for evidence that disproves your explanation and don’t spend time on already disproved ideas or arguments or those that can’t be disproved
      • Engage in self-criticism and question your assumptions
      • Find your mistakes early and correct them quickly before they cause harm
      • The mental habit of thinking backward forces objectivity – because one way  to think a thing through backward is by taking your initial assumption and say, “let’s try and disprove it.” That is not what most people do with their initial assumption. They try and confirm it.
    10. Backward thinking
      • Avoid what causes the opposite of what you want to achieve and thinking backwards can help determine what these actions are
        • Should also make explicitly clear what we want to achieve
      • “Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes of the fools, but fools do not imitate the successes of the wise.” – Cato
    11. Risk
      • Reflect on what can go wrong and ask what may cause this to turn into a catastrophe?
      • Being wrong causes both an actual loss and an opportunity cost
      • To protect us from all unknowns that lie ahead we can either avoid certain situations, make decisions that work for a wide range of outcomes, have backups or a huge margin of safety
    12. Attitudes
      • “Life is long if we know how to use it.” – Seneca
      • Know what you want and don’t want
      • Determine your abilities and limitations. Need to know what we don’t know or are not capable of knowing and avoid those areas
      • Ask – what is my nature? what motivates me? what is my tolerance for pain and risk? what has given me happiness in the past? what are my talents and skills? what are my limitations?
      • Be honest – act with integrity and individuality
      • Trusting people is efficient
      • Act as an exemplar
      • Treat people fairly – must be lovable
      • Don’t take life too seriously – have perspective, a positive attitude, enthusiasm and do what you enjoy
      • Have reasonable expectations – expect adversity
      • Live in the present – don’t emphasize the destination so much that you miss the journey. Stay in the present and enjoy life today
      • Be curious and open minded and always ask “why?”
Appendix
 
Munger Harvard School Commencement Speech 1986
  • Avoid drugs, envy, resentment, being unreliable, not learning from other’s mistakes, not standing on shoulders of giants, giving up, not looking at problems from different POVs, only reading/paying attention to information that confirms your own beliefs
  • Be objective
  • “Disraeli…learned to give up vengeance as a motivation for action, but he did retain some outlet for resentment by putting the names of people who wronged him on a piece of paper in a drawer. Then, from time to time, he reviewed these names and took pleasure in nothing the way the world had taken his enemies down without his assistance.”
Wisdom from Charles Munger and Warren Buffett
  • Appeal to other people’s interests over your own
  • Institutional imperative – tendency to resist change, make less than optimal capital deployment decisions, support foolish initiatives and imitate the actions of peer companies
  • Board of directors have few incentives (unless large owners) to replace CEO
  • Type of people to work with – need intellectual honesty and business owners must care who they sell to
  • Need role models early on
  • Emulate what you admire in others but also be aware of what you don’t like
  • Know your circle of competence
  • Use all available mental models, not just what you’re comfortable with
  • Scale extremely important – efficiencies, information (recognition), psychology (fit in), and in some industries leads to monopolies and specialization
    • Disadvantages of scale – specialization often leads to bureaucracy
  • On what something really means – ask “and then what?” to truly get at somethings core
  • There is a certain natural tendency to overlook anything that is simple and important
  • Avoid commodity businesses
  • Deal only with great people and you will avoid 99% of life’s headaches

Seeking Wisdom: From Darwin to Munger by Peter Bevelin

Seeking Wisdom

Summary

  1. Through real life examples, many of them centered around Warren Buffett and Charlie Munger, Peter Bevelin helps the reader learn how to think better, make fewer misjudgments and understand ourselves/others better. Discusses mental models, human fallibilities/instincts and human psychology
Key Takeaways
  1. Main goal is to understand why people behave the way they do. “This book focuses on how our thoughts are influenced, why we make misjudgments and tools to improve our thinking. If we understand what influences us, we might avoid certain traps and understand why others act like they do. And if we learn and understand what works and doesn’t work and find some framework for reasoning, we will make better judgments. We can’t eliminate mistakes, but we can prevent those that can really hurt us.”
  2. Learn from other’s mistakes
  3. Learn the big ideas that underlie reality and develop good thinking habits (namely, objectivity)
  4. This book is a compilation of what Bevelin has learned from reading some of the works of the world’s best thinkers
  5. Book is broken down into 4 parts – what influences our thinking, examples of psychological reasons for misjudgments, reasons for misjudgments caused by both psychology and a lack of considering some basic ideas from physics and mathematics and lastly describes tools for better thinking
  6. Too much great information to even try to condense. Just read the damn thing!
What I got out of it
  1. Seriously good read if you’re at all interested in understanding how and why we make decisions (both bad and good) and how we can go about improving our thought processes and tools. Fantastic read and couldn’t recommend more highly

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