Adding Tools to Your Mental Toolbox

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In The Art of War Sun Tzu said “The general who wins a battle makes many calculations in his temple before the battle is fought.”

Those ‘calculations’ are the tools we have available to think better. One of the best questions you can ask is how we can make our mental processes work better.

Charlie Munger says that “developing the habit of mastering the multiple models which underlie reality is the best thing you can do.”

Those models are mental models.

They fall into two categories: (1) ones that help us simulate time (and predict the future) and better understand how the world works (e.g. understanding a useful idea from like autocatalysis), and (2) ones that help us better understand how our mental processes lead us astray (e.g., availability bias).

When our mental models line up with reality they help us avoid problems. However, they also cause problems when they don’t line up with reality as we think something that isn’t true.

In Peter Bevelin’s Seeking Wisdom, he highlights Munger talking about autocatalysis:

If you get a certain kind of process going in chemistry, it speeds up on its own. So you get this marvellous boost in what you’re trying to do that runs on and on. Now, the laws of physics are such that it doesn’t run on forever. But it runs on for a goodly while. So you get a huge boost. You accomplish A – and, all of a sudden, you’re getting A + B + C for awhile.

He continues telling us how this idea can be applied:

Disney is an amazing example of autocatalysis … They had those movies in the can. They owned the copyright. And just as Coke could prosper when refrigeration came, when the videocassette was invented, Disney didn’t have to invent anything or do anything except take the thing out of the can and stick it on the cassette.

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This leads us to an interesting problem. The world is always changing so which models should we prioritize learning?

How we prioritize our learning has implications beyond the day-to-day. Often we focus on things that change quickly. We chase the latest study, the latest findings, the most recent best-sellers. We do this to keep up-to-date with the latest-and-greatest.

Despite our intentions, learning in this way fails to account for cumulative knowledge. Instead we consume all of our time keeping up to date.

If we are prioritize learning, we should focus on things that change slowly.

The models that come from hard science and engineering are the most reliable models on this Earth. And engineering quality control – at least the guts of it that matters to you and me and people who are not professional engineers – is very much based on the elementary mathematics of Fermat and Pascal: It costs so much and you get so much less likelihood of it breaking if you spend this much…

And, of course, the engineering idea of a backup system is a very powerful idea. The engineering idea of breakpoints – that’s a very powerful model, too. The notion of a critical mass – that comes out of physics – is a very powerful model.

After we learn a model we have to make it useful. We have to integrate it into our existing knowledge.

Our world is mutli-dimensional and our problems are complicated. Most problems cannot be solved using one model alone. The more models we have the better able we are to rationally solve problems.

But if we don’t have the models we become the proverbial man with a hammer. To the man with a hammer everything looks like a nail. If you only have one model you will fit whatever problem you face to the model you have. If you have more than one model, however, you can look at the problem from a variety of perspectives and increase the odds you come to a better solution.

“Since no single discipline has all the answers,” Peter Bevelin writes in Seeking Wisdom, “we need to understand and use the big ideas from all the important disciplines: Mathematics, physics, chemistry, engineering, biology, psychology, and rank and use them in order of reliability.”

Charles Munger illustrates the importance of this:

Suppose you want to be good at declarer play in contract bridge. Well, you know the contract – you know what you have to achieve. And you can count up the sure winners you have by laying down your high cards and your invincible trumps.

But if you’re a trick or two short, how are you going to get the other needed tricks? Well, there are only six or so different, standard methods: You’ve got long-suit establishment. You’ve got finesses. You’ve got throw-in plays. You’ve got cross-ruffs. You’ve got squeezes. And you’ve got various ways of misleading the defense into making errors. So it’s a very limited number of models. But if you only know one or two of those models, then you’re going to be a horse’s patoot in declarer play…

If you don’t have the full repertoire, I guarantee you that you’ll overutilize the limited repertoire you have – including use of models that are inappropriate just because they’re available to you in the limited stock you have in mind.

As for how we can use different ideas, Munger again shows the way …

Have a full kit of tools … go through them in your mind checklist-style.. .you can never make any explanation that can be made in a more fundamental way in any other way than the most fundamental way. And you always take with full attribution to the most fundamental ideas that you are required to use. When you’re using physics, you say you’re using physics. When you’re using biology, you say you’re using biology.

But ideas alone are not enough. We need to understand how they interact and combine. This leads to lollapalooza effects.

You get lollapalooza effects when two, three or four forces are all operating in the same direction. And, frequently, you don’t get simple addition. It’s often like a critical mass in
physics where you get a nuclear explosion if you get to a certain point of mass – and you don’t get anything much worth seeing if you don’t reach the mass.

Sometimes the forces just add like ordinary quantities and sometimes they combine on a break-point or critical-mass basis … More commonly, the forces coming out of … models are conflicting to some extent. And you get huge, miserable trade-offs … So you [must] have the models and you [must] see the relatedness and the effects from the relatedness.

Seneca on Wisdom

wisdom

In Seneca’s Morals: Of a Happy Life, Benefits, Anger, and Clemency, the famous stoic philosopher Seneca, who brought us combinatorial creativity, illuminates real wisdom.

Wisdom is a right understanding, a faculty of discerning good from evil, what is to be chosen and what rejected; a judgment grounded upon the value of things, and not the common opinion of them. It sets a watch over our words and deeds, and makes us invincible by either good or evil fortune. It has for its object things past and things to come, things transitory and things eternal. It examines all the circumstances of time, and the nature and operation of the mind. It stands to philosophy as avarice to money — the one desires and the other is desired; the one is the effect and the reward of the other. To be wise is the use of wisdom, as seeing is the use of eyes, and speaking of the tongue. He that is perfectly wise is perfectly happy; nay, the very beginning of wisdom makes life easy to us. It is not enough to know this; we must print it in our minds by daily meditation, and so bring a good will to a good habit.

Philosophy, after all, is a guide to living your life.

We must practise what we preach, for philosophy is not a subject for popular ostentation, nor does it rest in words, but in deeds. It is not an entertainment to be taken up for delight, or to give a taste to our leisure, but it should fashion the mind, govern our actions, and tell us what we are to do and what avoid. It sits at the helm and guides us through all hazards; nay, we cannot be safe without it, for every hour gives us occasion to use it. It informs us in all the duties of life : piety to our parents, faith to our friends, charity to the poor, judgment in counsel; it gives us peace by fearing nothing, and riches by coveting nothing.

A wise man, will always be happy …

… for he subjects all things to himself, submits himself to reason, and governs his actions by counsel, not by passion. He is not moved with the utmost violences of fortune, nor with the extremities of fire and sword; whereas a fool is afraid of his own shadow, and surprised at ill accidents, as if they were all levelled at him. He does nothing unwillingly, for whatever he finds necessary, he makes it his choice. He propounds’ to himself the certain scope and end of human life: he follows that which conduces to it, and avoids that which hinders it. He is content with his lot, whatever it be, without wishing for what he has not, though of the two, he had rather abound than want.

The business of his life, like that of nature, is performed without tumult or noise: he neither fears danger nor provokes it; but from caution, not from cowardice; for captivity, wounds, and chains he looks upon as unreal terrors. He undertakes to do well that which he does. Arts are but the servants whom wisdom commands. He is cautious in doubtful cases, in prosperity temperate, and resolute in adversity; still making the best of every condition, and improving all occasions to make them serviceable to his fate.

Some accidents there are which, I confess, may affect him, but they cannot overthrow him; such as bodily pains, loss of children and friends, or the ruin and desolation of his country. One must be made of stone or iron not to be sensible of these calamities; and besides, it were no virtue to bear them if one did not feel them.

There are three degrees of proficiency in the school of wisdom:

The first are those that come within the sight of it, but not up to it: they have learned what they ought to do, but they have not put their knowledge into practice; they are past the hazard of a relapse, but they are still in the clutches of disease; by which I mean an ill habit, that makes them over-eager upon things which are either not much to be desired, or not at all. A second sort are those that have conquered their appetite for a season, but are yet in fear of falling back. A third sort are those that are clear of many vices, but not of all. They are not covetous, but perhaps they are passionate; firm enough in some cases, but weak in others; perhaps despise death, and yet shrink at pain. There are diversities in wise men, but no inequalities; — one is more affable, another more ready, a third, a better speaker; but the felicity of them all is equal.

Read more: Seneca’s Morals: Of a Happy Life, Benefits, Anger, and Clemency which is available online for free.

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5 Books That Will Change Your Life

Reading is important to me. Not only is it one way to fill in the gaps left by my formal education but it is a meaningful way to better myself. Reading alone, however, isn’t enough. What you read and how you apply it matters. In the past year, I started reading over 300 books and finished 161 of them.

Reading what everyone else reads is good for conversation, perhaps, but it’s not going to help you to think differently. And if you can’t think differently, you’re always going to be a one-legged man in an ass kicking contest.

With that in mind, here are 5 books that you’ve (probably) never heard of that will help you see things in a new light.

1. Collected Maxims and Other Reflections by La Rochefoucauld
La Rochefoucauld’s critical and pithy analysis of human behavior won’t soon be forgotten. A list of people influenced by his maxims include Nietzsche, Voltaire, Proust, de Gaulle, and Conan Doyle. “The reader’s best policy,” Rochefoucauld suggests, “is to assume that none of these maxims is directed at him, and that he is the sole exception. …. After that, I guarantee that he will be the first to subscribe to them.”

2. The 48 Laws of Power, by Robert Greene
I’ve never read this book in a cover-to-cover sense but I’ve read each of the laws. More than that, I’ve broken each of the laws. I’ll give you an example. The first law is “Never outshine the master.” Once I worked directly for a CEO. I worked as hard as I ever have to show off my talents and skills and at every turn it backfired over and over again. The lesson — “make your masters appear more brilliant than they are and you will attain the heights of power.” I wish I read this book earlier in my career, it certainly would have been helpful.

3. Xenophon’s Cyrus the Great: The Arts of Leadership and War by Xenophon
This book sat on my shelf for a year before I picked it up recently. This is the biography of Cyrus the Great, also known as Cyrus the Elder, who made the oldest known declaration of human rights. The book is full of leadership lessons. Here’s an example. “Brevity is the soul of command. Too much talking suggests desperation on the part of the leader. Speak shortly, decisively and to the point–and couch your desires in such natural logic that no one can raise objections. Then move on.”

4. Letters from a Self-Made Merchant to His Son
This no nonsense collection of 20 letters from a self-made man to his son are nothing short of brilliant as far as I’m concerned. This is a great example of timeless wisdom. The broad theme is how to raise your children in a world where they have plenty but the lessons apply to parents and non-parents alike.

5. Models of my Life by Herbert Simon
An autobiography of Nobel laureate Herbert A. Simon, a remarkable polymath who more people should know about. In an age of increasing specializing, he’s a rare generalist — applying what he learned as a scientist to other aspects of his life. Crossing disciplines, he was at the intersection of “information sciences.” He won the Nobel for his theory of “bounded rationality,” and is perhaps best known for his insightful quote “A wealth of information creates a poverty of attention.”

And one more… just for good luck.

6. Meditations by Marcus Aurelius
Ok, this is a bonus pick as I figured a many of you might have read this already. It was, after all, on the 2013 Farnam Street reader’s choice list. If you bought it and haven’t read it, consider this a nudge. The best way to sum up this book is: A simple and powerful guide to life. This book was never intended for publication it was for himself. How many people write a book of epigrams to themselves? Get it. Read it. Live it.

Letters from a Self-Made Merchant to His Son

Letters from a Self-Made Merchant to His Son
“College doesn’t make fools; it develops them. It doesn’t make bright men; it develops them. A fool will turn out a fool, whether he goes to college or not, though he’ll probably turn out a different sort of a fool.“

With wisdom and lessons seeping off every page, Letters from a Self-Made Merchant to His Son is a must read. The letters, from John Graham, Head of the House of Graham & Company, to his son Pierrepont were collected and bound by American Journalist George Horace Lorimer in the early 1900s. The Letters were quite well known in the early 20th century. I’m not sure why they are not well known today, but they should be.

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Writing to his son, Pierrepont, at Harvard University, a Freshman, Graham offers advice on the eduction he is about to receive inside and outside of the classroom.

What we’re really sending you to Harvard for is to get a little of the education that’s so good and plenty there. When it’s passed around you don’t want to be bashful, but reach right out and take a big helping every time, for I want you to get your share. You’ll find that education’s about the only thing lying around loose in this world, and that it’s about the only thing a fellow can have as much of as he’s willing to haul away. Everything else is screwed down tight and the screw-driver lost.

Some men learn the value of money by not having any and starting out to pry a few dollars loose from the odd millions that are lying around; and some learn it by having fifty thousand or so left to them and starting out to spend it as if it were fifty thousand a year. Some men learn the value of truth by having to do business with liars; and some by going to Sunday School. Some men learn the cussedness of whiskey by having a drunken father; and some by having a good mother. Some men get an education from other men and newspapers and public libraries; and some get it from professors and parchments—it doesn’t make any special difference how you get a half-nelson on the right thing, just so you get it and freeze on to it.

The first thing that any education ought to give a man is character, and the second thing is education. That is where I’m a little skittish about this college business. I’m not starting in to preach to you, because I know a young fellow with the right sort of stuff in him preaches to himself harder than any one else can, and that he’s mighty often switched off the right path by having it pointed out to him in the wrong way.

There are two parts of a college education—the part that you get in the schoolroom from the professors, and the part that you get outside of it from the boys. That’s the really important part. For the first can only make you a scholar, while the second can make you a man.

Education’s a good deal like eating—a fellow can’t always tell which particular thing did him good, but he can usually tell which one did him harm.

Does a College education pay? … You bet it pays. Anything that trains a boy to think and to think quick pays; anything that teaches a boy to get the answer before the other fellow gets through biting the pencil, pays.

College doesn’t make fools; it develops them. It doesn’t make bright men; it develops them. A fool will turn out a fool, whether he goes to college or not, though he’ll probably turn out a different sort of a fool. And a good, strong boy will turn out a bright, strong man whether he’s worn smooth in the grab-what-you-want-and-eat-standing-with-one-eye-skinned-for-the-dog school of the streets and stores, or polished up and slicked down in the give-your-order-to-the-waiter-and-get-a-sixteen-course-dinner school of the professors. But while the lack of a college education can’t keep No. 1 down, having it boosts No. 2 up.


Of course, some men are like pigs, the more you educate them, the more amusing little cusses they become, and the funnier capers they cut when they show off their tricks. Naturally, the place to send a boy of that breed is to the circus, not to college.

… it isn’t so much knowing a whole lot, as knowing a little and how to use it that counts.

***

When Pierrepont—still at Harvard—submits his expense account to his father, he receives some plain-spoken advice to smarten up.

I have noticed for the last two years that your accounts have been growing heavier every month, but I haven’t seen any signs of your taking honors to justify the increased operating expenses; and that is bad business—a good deal like feeding his weight in corn to a scalawag steer that won’t fat up.

The sooner you adjust your spending to what your earning capacity will be, the easier they will find it to live together.

The only sure way that a man can get rich quick is to have it given to him or to inherit it. You are not going to get rich that way—at least, not until after you have proved your ability to hold a pretty important position with the firm; and, of course, there is just one place from which a man can start for that position with Graham & Co. It doesn’t make any difference whether he is the son of the old man or of the cellar boss—that place is the bottom. And the bottom in the office end of this business is a seat at the mailing-desk, with eight dollars every Saturday night.

I can’t hand out any ready-made success to you. It would do you no good, and it would do the house harm. There is plenty of room at the top here, but there is no elevator in the building. Starting, as you do, with a good education, you should be able to climb quicker than the fellow who hasn’t got it; but there’s going to be a time when you begin at the factory when you won’t be able to lick stamps so fast as the other boys at the desk. Yet the man who hasn’t licked stamps isn’t fit to write letters. Naturally, that is the time when knowing whether the pie comes before the ice-cream, and how to run an automobile isn’t going to be of any real use to you.

I simply mention these things because I am afraid your ideas as to the basis on which you are coming with the house have swelled up a little in the East. I can give you a start, but after that you will have to dynamite your way to the front by yourself.

You know how I began—I was started off with a kick, but that proved a kick up, and in the end every one since has lifted me a little bit higher. I got two dollars a week, and slept under the counter, and you can bet I knew just how many pennies there were in each of those dollars, and how hard the floor was. That is what you have got to learn.

The Bills ain’t all in the butcher business. I’ve got some of them right now in my office, but they will never climb over the railing that separates the clerks from the executives. Yet if they would put in half the time thinking for the house that they give up to hatching out reasons why they ought to be allowed to overdraw their salary accounts, I couldn’t keep them out of our private offices with a pole-ax, and I wouldn’t want to; for they could double their salaries and my profits in a year. But I always lay it down as a safe proposition that the fellow who has to break open the baby’s bank toward the last of the week for car-fare isn’t going to be any Russell Sage when it comes to trading with the old man’s money. He’d punch my bank account as full of holes as a carload of wild Texans would a fool stockman that they’d got in a corner.

Now I know you’ll say that I don’t understand how it is; that you’ve got to do as the other fellows do; and that things have changed since I was a boy. There’s nothing in it. Adam invented all the different ways in which a young man can make a fool of himself, and the college yell at the end of them is just a frill that doesn’t change essentials. The boy who does anything just because the other fellows do it is apt to scratch a poor man’s back all his life. He’s the chap that’s buying wheat at ninety-seven cents the day before the market breaks. They call him “the country” in the market reports, but the city’s full of him. It’s the fellow who has the spunk to think and act for himself, and sells short when prices hit the high C and the house is standing on its hind legs yelling for more, that sits in the directors’ meetings when he gets on toward forty.

There are times when it’s safest to be lonesome. Use a little common-sense, caution and conscience. You can stock a store with those three commodities, when you get enough of them. But you’ve got to begin getting them young. They ain’t catching after you toughen up a bit.

You needn’t write me if you feel yourself getting them. The symptoms will show in your expense account. Good-by; life’s too short to write letters and New York’s calling me on the wire.

***

Letters from a Self-Made Merchant to His Son contains 20 letters of practical advice for parents— looking for some no nonsense advice on raising children—and wisdom seekers alike. This is one of the best books you’ve never heard about.

A Few General Principles Associated With Wise Behavior

Paul Baltes, once described wisdom as “a topic at the interface between several disciplines: philosophy, sociology, theology, psychology, political science, and literature, to name a few.” Farnam Street aims to be at the crossroad of these disciplines.

What does it mean to be wise? What is Wisdom?

One of the more interesting aspects to wisdom is self-awareness. “Thinking about wisdom,” writes Stephen Hall in his book Wisdom: From Philosophy to Neuroscience, “almost inevitably inspires you to think about yourself and your relationship with the larger world.” The book is an investigation into fuzzy questions such as how can it help us shed light on the process by which we deal with big decisions and dilemmas.

He writes:

Wisdom requires an experience-based knowledge of the world (including, especially, the world of human nature). It requires mental focus, reflecting the ability to analyze and discern the most important aspects of acquired knowledge, knowing what to use and what to discard, almost on a case by case basis (put another way, it requires knowing when to follow rules, but also when the usual rules no longer apply). It requires mediating, refereeing, between the frequently conflicting inputs of emotion and reason, of narrow self-interest and broader social interest, of instant rewards or future gains. Moreover, it expresses itself through an insistently social vocabulary of interactive behavior: a fundamental sense of justice (which is sometimes described as an innate form of morality, of knowing right from wrong), a commitment to welfare of social (and, for that matter, genetic) units that extend beyond the self, and the ability to defer immediate self-gratification in order to achieve the greatest amount of good for the greatest number of people.

On his “wisdom tour,” after an encounter with a politician, Socrates concluded that he “thinks that he knows something which he does not know, whereas I am quite conscious of my ignorance. At any rate it seems that I am wiser than he is to this small extent, that I do not think that I know what I do not know.”

So one of the most essential aspects to wisdom is knowing the limits of one’s own knowledge. Charlie Munger offered this simple prescription: “If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.”