Self - interest

I come across as selfish. And I laugh it off most of the times since it takes about 2000 words to explain that it is rather self-interest. I usually sum up situations quickly and determine what the best outcome would be. So to laugh it off rather than explain how self-interest is so valuable seems like the best thing to do most of the time.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” That was from economist Adam Smith in the Wealth of Nations. I’ve always felt that if everybody was as selfish as me, we’d be better off. And the reason I’ve stuck to that belief is because I believe that persons who cannot put their own interests first naturally cannot have my best interest foremost in their minds. Walter Williams, economist from George Mason University, shares a similar view:

    "Texas cattle ranchers make enormous sacrifices to husband and insure the safety and well-being of their herds: running down stray cattle in the snow to care for and feed them, hiring veterinarians to safeguard their health, taking them to feed yards in time to fatten them up prior to selling them to slaughterhouses. The result of these sacrifices is that New Yorkers can enjoy having beef on their supermarket shelves. Idaho potato farmers arise early in the morning. They do backbreaking work in potato fields, with the sun beating down on them. Similarly, the result of their sacrifices is that New Yorkers can also enjoy having potatoes on their supermarket shelves. Why do Texas cattle ranchers and Idaho potato farmers make these sacrifices? Is it because they love New Yorkers? Only the most naïve would chalk their motivation up to one of concern for their fellow man in New York. The reason Texas cattle ranchers and Idaho potato farmers make those sacrifices is that they love themselves. They want more for themselves. In a word, they are greedy!"

Ok, if you like the word greedy, I can use that instead. But you get the drift. Whether you dance from self-interest to selfish to greed in search of a better political word, the bottom line is we are better off collectively if we each individually strive hard¹. I was not taught any of this during my undergrad years studying economics. Instead I was encouraged to think how the rich (those that supply us with what we need or want, be it Amazon, Walmart, Facebook) must be taxed more so we can address the inequality of wealth. And when I looked around me, I did see inequality and I concluded, since I live in a capitalist economy, that our style of business was to be blamed. I did not simultaneously realize that I was in my 20s and that my prefrontal cortex was not fully developed. This is the part of the brain that curbs impulsive behavior and exhibit rational thought.  If you didn’t know, now you may understand why teenagers act the way they do.

¹To argue that everyone should be selfish is specific to striving for excellence. Period.

It can also explain why the 18-29 age-group favored the Democratic Party than the Republican. Now, please do not mistake my words. I am not inferring that young people are stupid. I’ll leave that to Kamala Harris (Click here and forward to minute 16 -18). I’m simply positing that this age group lacks knowledge and experience, like I was in college. And when the inexperienced is egged on by politicians who speak from both corners of the mouth, or by educators with their own agenda, yes, bad decisions are made.

With time comes experience and I’m able to look at the facts and draw conclusions devoid of irrational thought. I figured in the comfort of a classroom where the arithmetic has no tangible benefit beyond a passing grade, the younger folks favor liberal policies to redistribute wealth. But when they step in the workforce and see the benefit of self-interest, a split emerges. One group work and sometimes fail but never give up while the other fail and quit, complaining about the unevenness of the system. It is the members of this latter group – the complainers – that fixate on redistribution of resources. They failed at generating wealth so they vote politicians in who will support them in balancing the apparent broken system. Higher taxes, for instance, is championed. That’s the only way student loan forgiveness can be funded. The United States government has no other way.

The problem with higher taxes and student loan forgiveness, as two examples of addressing disparity in wealth, is that the benefits only show up in the short run. Arthur Laffer, an economist in the Reagan administration is remembered for illustrating on a napkin the inverse relationship between high tax rates and total tax revenue. Put simply, total tax revenue fall as businesses restrict investment and move overseas to circumvent high income tax rates. This analysis is known as the Laffer Curve. So, the complainers ought to know that what we’re dealing with is not novel. We’ve been dealing with this phenomenon for over a century. Wealth disparity naturally occurs when people serve their own interests in a society that has minimal government intervention. Vilfredo Pareto, an Italian economist, first observed it in the early 20^th century. He noticed an inequality: 20% of the population owned 80% of the wealth. Since then many similar observations in different areas followed a pattern which later became known as the 80/20 rule. If you were to google the 80/20 rule, you can find hundreds of examples like 20% of criminals commit 80% of crimes; 20% of customers account for 80% of total profits; 20% of the most reported software bugs cause 80% of software crashes; 20% of patients account for 80% of healthcare spending, and so on. And it is not always 80/20. That’s just an average.

I am not a complainer. I am in the former group. I’m the type that fail and try again. So, instead of blaming the system, I try to see how I can make it work for me. And with this 80/20 rule, I made my personal observations and adjusted accordingly, with much success in managing people and the few resources I have. I have a few shirts and a couple pants and three pairs of shoes. I also have very few friends; so few I can count them on one hand. The reason being is that I am aware that if I’m to overstock on clothes and shoes I’ll only wear 20% of them 80% of the time. It’s better to just give away the excess. And if I have 20 friends, I know that probably only 4 will be good enough to invite to my home. I realized that I can achieve the same amount of output at work by being there 3 times a week. My employer, like many, pays their employees to be at work for 5 days a week. Let’s not misstate the facts. None of us work 100% of the time we are at work. And we can achieve the same result if we were organized better.  Matter of fact, we can acquire more skills in fields we enjoy in the 3-4 days we are not at work. (And it matters not that the days we work are longer when the week is shorter. Days are days irrespective of the day define as 8 hours or 12. It’s like life on earth. There is no difference if we die at 50 or 80 with respect to contribution. Dr. King died at 39 but his contribution to black people is invaluable. It is what we do with the time we have that matters.) And you can expand this to see how this plays out in our current affairs as well. If a politician win about 12 States, that’s enough in terms of electoral and popular votes to win the presidency. You don’t have to actively campaign in all 50 States.

Now for the complainers that don’t accept the 80/20 rule as a natural occurrence in a free society, what do we do about this phenomenon when it shows up, say, in sports? A few athletes perform exceedingly well. That’s why I can call names of basketball, football, baseball, and soccer players even though I do not watch any of those sports. When the game or tournament begins, every player from every team starts out the same way – at zero. A hierarchy develops, the most skilled gets their name on front page news.  And particularly in basketball and football here in America, most of those skilled folks are black men. Are we supposed to rid this inequality by telling some black players to stand down so the white players can shine?

Kamala Harris, via Twitter days before the recent election, claimed that while we live in a free society, one group gets a head start. If that idea was tweeted 100 years ago, it probably would have been true for most colored people. Now, it is true for those who constantly point it out – the complainers. I noticed in that claim the group that got a head start was depicted by a white man. I wondered if it is symbolism for Jeff Bezos. If it is, I’m getting closer to understanding these complainers. See, I know if I continue doing what I do I’ll be a millionaire in about 20 years. It takes time and lots of work to get there. But I’m not shooting for a net worth of 150 billion. I’ll have to be exceptional. I’m not. A million is comfy and I’ll see where I can go from there. But I must reach there first. And it is no different for the complainers. You cannot bypass failure and years of hard work and get straight to Bezos territory. Not many knew of Bezos in the early 2000s and less knew that name in the 1990s. And if he had put his feet up with just Amazon selling books (remember those days?) not only would we be worse off during COVID with all these brick and mortar stores closed, but Bezos would have been ordinary, like millions of the well-to-do in this land. It is this plateau of “ordinariness” that most Americans find themselves.

On this plateau, relative to the rest of the world, we have the best healthcare, food, homes, transportation, and most of all, a strong currency. What we seem to be losing is knowledge. Arthur Laffer, referenced above, wasn’t the one who first came up with the idea of high-income taxes as a deterrent for investment. It was Ibn Khaldun, a Muslim scholar some 600 years prior, in 1377 that mentioned it in his famous 1200 paged book, Muqaddima. To Laffer’s credit, he did admit that it was Ibn Khaldun who first conceived the idea. But we do not call it the Khaldun Curve. We call it the Laffer Curve because people like Laffer picked up books and read them while the complainers among Muslims kill each other and blow things up. The Muslims are painted today as intolerant and prone to terrorism. And that’s what happens when you have other people telling your story; they push through their self-interest. The complainers here at home should take note. Get off the streets and pick up a book. Have self-interest.