Warren Buffett: How to Create a Fair Social System

photo by trackrecord

With the increasing analysis of the differences between President Obama’s policies and those of Mitt Romney, I felt that these wise thoughts by Warren Buffet would be very timely.  Mr. Buffet gives a brief and entertaining explanation of how difficult it actually is to create a fair social system.  I feel like we have all become very good at critiquing our politicians but when it comes down to actually coming up with creative solutions ourselves, it is a real challenge.

Here is Mr. Buffet:

Let’s just say, Sandy, that it was 24 hours before you were born, and a genie appeared, and said “Sandy, you look like a winner.  I have enormous confidence in you, and what I’m going to do is let you set the rules of the society into which you will be born.  You can set the economic rules, the social rules, and whatever rules you set will apply during your lifetime, and your children’s lifetimes.”

And you’ll say, “Well, that’s nice, but what’s the catch?”

And the genie says, “Here’s the catch.  You don’t know if you’re going to be born rich or poor, white or black, male or female, able-bodied or infirm, intelligent or retarded.  All you know is that you’re going to get one ball our of a barrel with, say, 5.8 billion balls in it.”  You’re going to participate in what I call the Ovarian Lottery.  And it’s the most important thing that will happen to you in your life, but you have no control over it.  It’s going to determine far more than your grades in school or anything else that happens to you.

Now, what rules do you want to have?  I’m not going to tell you the rules, and nobody will tell you; you have to make them up for yourself.  But they will affect how you think about what you do in your will and things of that sort.  That’s because you’re going to want to have a system that turns out great quantities of good and services, so that your kids can live better than you did, and so that your grandchildren can live better than your kids.  You’re going to want a system that keeps Bill Gates and Andy Grove and Jack Welch working long, long after they don’t need to work.  You’re going to want the most able people working more than 12 hours a day.  So you’ve got to have a system that incentives them, and that turns out goods.  But you’re also going to want a system that takes care of the bad balls, the ones that aren’t lucky.  If you have a system that is turning out enough goods and services, you can take care of them.  You want a system where people are free of fear to some extent.  You don’t want people worrying about being sick in their old age, or fearful about going home at night.  So you’ll try to design something, assuming you have the goods and services to solve that sort of thing.  You’ll want equality of opportunity – a good school system – to make you feel that every piece of talent out there will get the same shot at contributing.  And your tax system will follow from your reasoning on that.  And what you do with the money you make is another thing to think about.  As you work though that, everybody comes up with something a little different.  I just suggest you play that little game. (Warren Buffet, “Buffet & Gates on Success,” KCTS/Seattle, May 1998, transcript p.12)

Seneca: On the Shortness of Life

photo by h.koppdelaney

It has been awhile since I have posted on here.  Sorry for the delay but hopefully I will pick it up and be more consistent.

I recently finished a book called Seeking Wisdom by Peter Bevelin.  I think it just became my new favorite.  That is not saying much because that changes pretty consistently for me.  It is definitely at the top though.  Bevelin essentially analyzed great philosophers and thinkers to discover how to gain wisdom.  He spends a lot of time studying Charlie Munger (Warren Buffet’s partner at Berkshire Hathaway) because he has developed a simplicity and clarity to analyzing any situation.  I will definitely have to reread it a few times in the future.  It is pretty expensive but will definitely bring more value to your life than the cost of the book.

Bevelin ends the book with part of an essay from Lucius Seneca about how short life is.  It left me sitting and thinking in silence for probably ten minutes.  I’ll let you read it and come to your own conclusions.  Hope you enjoy it…

Seneca:

Why do we complain of Nature?  She has shown herself kindly; life, if you know how to use it, is long.  But one man is possessed by an avarice that is insatiable, another by a toilsome devotion to tasks that are useless; one man is besotted with wine, another is paralyzed by sloth; one man is exhausted by an ambition that always hangs upon the decision of others, another driven by the greed of the trader, is led over all lands and all seas by the hope of gain…many are kept busy either in the pursuit of another mens fortune or in complaining of their own; many, following no fixed aim, shifting and inconstant and dissatisfied, are plunged by their fickleness into plans that are ever new; some have not fixed principle by which to direct their course, but Fate takes them unawares while they loll and yawn – so surely does it happen that I cannot doubt the truth of that utterance which the greatest of poets delivered with all the seeming of an oracle: “The part of life we really live is small.”  For all the best of existence is not life, but merely time.

You live as if you were destined to live forever, no though of your frailty ever enters your head, of how much time has already gone by you take no heed.

You squander time as if you drew from a full and abundant supply, though all the while that day which you bestow on some person or thing is perhaps your last.  You have all the fears of mortals and all the desires of immortals.  You will hear many men saying: “After my fiftieth year I shall retire into leisure, my sixtieth year shall release me from public duties.”  And what guarantee, pray, have you that your life will last longer?  Who will suffer your course to be just as you plan it?  Are you not ashamed to reserve for yourself only the remnant of life, and to set apart for wisdom only that time which cannot be devoted to any business?  How late it is to begin to live just when we must cease to live!  What foolish forgetfulness of mortality to postpone wholesome plans to the fiftieth and sixtieth year, and to intend to begin life at a point to which few have attained!

How to Live a Fulfilled Life

I have always read that if you want to be successful, you need to find what you are passionate about and pursue it.  I think this is great advice.  I believe that this wisdom often gets tossed aside because it doesn’t seem very practical.

However, if you are willing to be patient, you will see the practicality of it.

Pursuing Money:

You will always work harder on something that you truly care about than you will for money.  The common thought is that the relationship between money and motivation will remain linear.  For example, your  motivation to move from $20,000 a year to $70,000 will be the same as your motivation to move from $70,000 to $120,000. In reality, your level of motivation is NOT linear and will actually decrease as your earnings increase.

Once you obtain a certain amount of money, your motivation for the job will decrease drastically.  You will have reached a point where you can pay your bills and live comfortably.  Earning money will become less important.  At this point, you will start to look for fulfillment in other places.  You are essentially working along Abraham Maslow’s Hierarchy of Needs:  Continue reading “How to Live a Fulfilled Life”

Lessons from Toms Shoes

Toms Shoes is a great example of Social Entrepreneurship.  The business model is based on the idea of one for one.  For every pair of shoes that you buy, they will give a pair of shoes to a child in need.  They have recently expanded into a second area of giving with glasses.  For every pair of glasses that you buy, they will give a pair of glasses to a person in need.  Pretty awesome right?

This got me thinking about what it would be like if every business was formatted in this way.  What if every time you bought something, a second one of that same item would be given to a person in need?  It would definitely promote giving, which I am all for; however, I don’t think that profit driven businesses would be up for making this shift.  However, what if we did it on our own?  What if you made the choice that whenever you bought something, you would buy two of them and give one away?

What would the social implications of this commitment be?

1) Buy less and save more – If you knew that when you bought something that you had to buy two of them, you would think long and hard about whether you really needed it or not.  I think this would prevent people from buying unnecessary items and force them to only purchase the things that they truly need.  We are a culture of consumption but we also want things cheap.  If every time you looked at the price of something you had to double it, you probably wouldn’t buy anything that wasn’t essential. Continue reading “Lessons from Toms Shoes”

Why should we be so blessed?

I had my iTunes on shuffle the other day while I was working, and a Brett Dennen song came on with the line “In a world of suffering, why should I be so blessed?”

That one line really got me thinking.  It is kind of hard not to start reflecting on your life when you are asked something like that.  “Why should I be so blessed?”

– Why am I lucky enough to have the amazing parents I do?

– Why was I born in the United States?

– Why can I choose from 10 different restaurants to eat at tonight?

– Why do I have friends that support me and care about me?

– Why do I have supportive siblings that have taught me so much?

– Why do I have a car to drive?

– Why do I have teachers, pastors and mentors to learn from?

– Why do I have the freedom to pursue any dream I want with my life?

Some people might argue that they are blessed because they work hard, study hard and treat people well.  I absolutely believe that these things will get you further in life but I also think that you would agree those things could still be taken away from you in a second.  You probably know a few hard working and kind people that have seen their life take a negative turn because of circumstances that are out of their control. Continue reading “Why should we be so blessed?”

Giving Challenge #2: One Item A Day

While backpacking around New Zealand for seven months, I learned to love living with only the necessities.  All of the possessions I brought with me fit into one backpack and it was still more than I needed.  It is incredible how little you actually need when you are forced into a limited situation.

I knew that this living style was going to be an adjustment, so I began to read about minimalism to prepare.  Walden by Henry David Thoreau is the classic example of minimalist writing.  This book provides a lot of valuable information but for a more modern and applicable example of these principles, I suggest reading Leo Babauta’s writings.  The combination of his books (The Power of Less and Focus) and blog posts (Zen Habits and mnmlist) will provide you with the concepts needed to simplify your life.

This material and my experiences in New Zealand has helped me take a minimalist approach to the number of possessions I have.  It is definitely a struggle to maintain in a society that is constantly pushing people to buy more.  However, it is amazing the amount of stress that is relieved by simply living in an uncluttered and organized space.

This leads to the challenge for the week: Give away one item each day for seven days.  This will not be seven random items either.  I want you to make it a challenge for yourself by strategically choosing the items that you give away.

Take the next five minutes to figure out seven items that fit one of the following two categories:

1) Items contributing to a bad habit
–  Moderate Example: Give away your DVD’s.  Having a large collection of DVD’s can be a huge barrier preventing you from being social.  Without any movies to watch, you eliminate a reason for staying home.  This gives you more incentive to go out and build deeper relationships with friends.  Remove barriers between your current life and your ideal life.
Extreme Example: Give your TV away.  If you want to instantly transform your life, eliminate all TV from it.
Other examples: Unhealthy Food, Video Games, etc.

Continue reading “Giving Challenge #2: One Item A Day”

Giving Challenge #1: Groceries

One of my goals for this blog is to provide people with ways to give practically in their daily lives.  I want to turn giving into a habit.  I am going to be posting a new “Giving Challenge” once a week. The challenges will require you to give of yourself in a variety of different ways.  This is going to be something that will probably be outside your comfort zone but it is when you are outside your comfort zone that you grow.  Complete the task during the week that it is posted and then comment below about your results.

The first challenge is going to stretch a lot of people both financially and socially.

The Challenge: Pay for another person’s groceries

When you are getting ready to check out, pick someone in line that you would like to give to.  The more frustrated, angry or tired the person looks, the better.  Get behind them in line and when the grocer is done scanning the items, step up and say that you would like to pay for the person.  The person is probably going to refuse right away.  It is pretty awkward to let someone do such a generous thing for you and they probably won’t know how to respond.  As soon as they start to refute, here is what you say to put them at ease:

Continue reading “Giving Challenge #1: Groceries”