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Category Archives: History

12 Things Lee Kuan Yew Taught Me About the World

“It’s no accident that Singapore has a much better record, given where it started, than the United States. There, power was concentrated in one enormously talented person, Lee Kuan Yew, who was the Warren Buffett of Singapore.”
— Charlie Munger

***

Singapore seemed destined for failure or subservience to a more powerful neighbor. The country is by far the smallest in Southeast Asia and was not gifted with many natural resources. Lee Kuan Yew thought otherwise. “His vision,” wrote Henry Kissinger, “was of a state that would not simply survive, but prevail by excelling. Superior intelligence, discipline, and ingenuity would substitute for resources.”

To give you an idea of the magnitude of success that Lee Kuan Yew achieved, when he took over, per capita income was about $400 and now, in only about two generations, it exceeds $50,000.

Here are 12 things I learned from Lee Kuan Yew about the world and the source of many of our present ills reading  Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World

  1. You need a free exchange of ideas. “China will inevitably catch up to the U.S. in absolute GDP. But its creativity may never match America’s, because its culture does not permit a free exchange and contest of ideas.”
  2. Technology will change how governance operates. “Technology is going to make (China’s) system of governance obsolete. By 2030, 70% or maybe 75% of their people will be in cities, small towns, big towns, mega big towns. They are going to have cell phones, Internet, satellite TV. They are going to be well-informed; they can organize themselves. You cannot govern them the way you are governing them now, where you just placate and monitor a few people, because the numbers will be so large.”
  3. Don’t try to install a democracy in a country that has never had one. “I do not believe you can impose on other countries standards which are alien and totally disconnected with their past. So to ask China to become a democracy, when in its 5,000 years of recorded history it never counted heads; all rulers ruled by right of being the emperor, and if you disagree, you chop off heads, not count heads.”
  4. Welcome the best the world has to offer. “Throughout history, all empires that succeeded have embraced and included in their midst people of other races, languages, religions, and cultures.”
  5. It’s about results, not promises. “When you have a popular democracy, to win voices you have to give more and more. And to beat your opponent in the next election, you have to promise to give more away. So it is a never-ending process of auctions—and the cost, the debt being paid for by the next generation. Presidents do not get reelected if they give a hard dose of medicine to their people. So, there is a tendency to procrastinate, to postpone unpopular policies in order to win elections. So problems such as budget deficits, debt, and high unmployment have been carried forward from one administration to the next.”
  6. Governments shouldn’t have an easy way out. “American and European governments believed that they could always afford to support the poor and the needy: widows, orphans, the old and homeless, disadvantaged minorities, unwed mothers. Their sociologists expounded the theory that hardship and failure were due not to the individual person’s character, but to flaws in the economic system. So charity became “entitlement,” and the stigma of living on charity disappeared. Unfortunately, welfare costs grew faster than the government’s ability to raise taxes to pay for it. The political cost of tax increases is high. Governments took the easy way out by borrowing to give higher benefits to the current generation of voters and passing the costs on to the future generations who were not yet voters. This resulted in persistent government budget deficits and high public debt.”
  7. What goes into a standard of living? “A people’s standard of living depends on a number of basic factors: first, the resources it has in relation to its population . . .; second, its level of technological competence and standards of industrial development; third, its educational and training standards; and fourth, the culture, the discipline and drive in the workforce.”
  8. The single most important factor to national competitiveness … “The quality of a nation’s manpower resources is the single most important factor determining national competitiveness. It is a people’s innovativeness, entrepreneurship, team work, and their work ethic that give them the sharp keen edge in competitiveness. Three attributes are vital in this competition—entrepreneurship to seek out new opportunities and to take calculated risks. Standing still is a sure way to extinction. . . . The second attribute, innovation, is what creates new products and processes that add value. . . . The third factor is good management. To grow, company managements have to open up new markets and create new distribution channels. The economy is driven by the new knowledge, new discoveries in science and technology, innovations that are taken to the market by entrepreneurs. So while the scholar is still the greatest factor in economic progress, he will be so only if he uses his brains—not in studying the great books, classical texts, and poetry, but in capturing and discovering new knowledge, applying himself in research and development, management and marketing, banking and finance, and the myriad of new subjects that need to be mastered.”
  9. Earning your place in history … “A nation is great not by its size alone. It is the will, the cohesion, the stamina, the discipline of its people, and the quality of their leaders which ensure it an honorable place in history.”
  10. Weak leaders rely on opinion polls. “I have never been overconcerned or obsessed with opinion polls or popularity polls. I think a leader who is, is a weak leader. If you are concerned with whether your rating will go up or down, then you are not a leader. You are just catching the wind … you will go where the wind is blowing. . . . Between being loved and feared, I have always believed Machiavelli was right. If nobody is afraid of me, I am meaningless. When I say something … I have to be taken very seriously.”
  11. We are fundamentally competitive. “Human beings are not born equal. They are highly competitive. Systems like Soviet and Chinese communism have failed, because they tried to equalize benefits. Then nobody works hard enough, but everyone wants to get as much as, if not more than, the other person.”
  12. The value of history: “If you do not know history, you think short term. If you know history, you think medium and long term.”

 

***

Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World offers Yew’s timeless wisdom.

Civilization and its Fundamental Passions

“To describe a culture is to describe the structure of its institutions.”
— Joseph Tussman

***

In his book The Burden of Office, the educator and philosopher Joseph Tussman, who brought us profound wisdom, does a remarkable job, in just a few short pages, of describing one of the fundamental truths of human life: The same things we cherish are also the things that destroy us. It is exactly the qualities which give us vitality that create our problems. This is a fundamental truth. (Gary Taubes made a similar point recently, calling the thirst for knowledge a tightrope walk.)

Tussman breaks down the fundamental passions into five areas: Eros (Love), Indignation (Moral Righteousness), Curiosity, Acquisitiveness, and Pride. These are the things which bless and bedevil us, as Tussman puts it.

On Eros:

Powerful, necessary, the root of self-transcendence, of the varieties of love and all that we value flowing from that. And yet, a source of anguish, of misery, of torment, of unhappiness, of conflict, madness, murder, war. Half of wisdom is learning to tiptoe in the presence of eros.

On Moral Fervor:

A deeply instinctive reaction to something that threatens us, the social group, the basic human unit. Its absence–indifference, genuine carelessness–is a fatal disease. Its moderate presence supports the justice that makes trust and cooperation possible. Its raging presence brings fanatical or holy war, the horrors of unslaked vengeance, the interminable feud.

On Curiosity:

Without it, no knowledge, no science, no arts, no power. But feared today as the human passion that may bring us to the end of the world. In its grip we stop at nothing recognizing no forbidden fruit, undeterred by decency.

On Acquisitiveness:

If we do not leap to a pejorative sense, we see that it begins as a kind of prudent concern to get what we need to satisfy our wants, now and in the future, to provide for ourselves, our families, our friends, our fellows […] But carried away, we can become misers, acquire the Midas touch, turn ugly with greed, cupidity, avarice–transforming a virtue into a destructive vice.

On Pride:

At one end of the scale we find something desirable and necessary–proper pride, self-respect, a sense of dignity, the capacity to know shame, to feel disgrace. At the other end we encounter the thirst for fame, for status, for glory–the arrogance, the heedless autonomy, the pride that goes before a fall.

Civilizing Passion

In the face of these two-faced passions, the whole point of human civilization and culture is to harness them into being useful and safe. This reminds one of the English saying that Politics is the art of marshaling hatreds. In other words, we build our culture knowing full well what the passions are and what they’re capable of.

Some people, of course, hate the rule-making and the institutionalizing of passions. We all probably do, from time to time. Many political campaigns have been run on the idea that society is reigning in the glorious individual too much.

But rarely do we give society much credit for what it accomplishes by creating useful institutions to marshal our passions. Tussman points out a few that have been especially useful. The first one being the modern legal system, which provides a great example of how we tame the passion of moral fury for the sake of civilization.

Moral indignation gives way to legal argument; fury is tied in legal knots–trapped, confined, restrained, transformed, tamed. The passion finds itself institutionalized, learns to express itself in a set of appropriate habits. Impulse and intuition give way to bureaucracy. Morality bows to legality. War gives way to the rule of law. We become civilized.

The story of fury and its taming into law is the story of all the great passions. We develop the forms within which they are both recognized, acknowledged, satisfied, and nevertheless, banked, kept within limits, restrained.

We do this with Eros too — we find ways to tame and institutionalize love, one of the most fundamental biological passions of humanity:

In its most assertive mood, the institution of marriage aspires to a total monopoly of legitimate sexuality. A rather daring claim, not unlike the claim of the institutions of the sovereign to a monopoly of legitimate coercive power, honored only to a degree. But the point is that marriage and its ancillary institutions are cultural attempts to tame eros into a benign form The pattern may vary from culture to culture and time to time, but every human group will erect its temples to this deity.

It’s even true with the passion for knowledge — something we’d all consider a fundamental right and generally a positive passion for the world. It’s given us so much. But we rein it in all the same, recognizing its power to mislead.

The passion for knowledge might not seem to belong in this fevered company, and may not seem to need restraining. At least it may not seem so in the academic world where we commonly worry more about kindling the passion than dampening. But there is a long tradition of the fear of the mad scientist with his unquenchable thirst–Faust and all those restless probing minds uncovering the secrets of the atom, of the genetic code, of the mind, of the soul, of all that heady fruit the taste of which may threaten what remains of innocence. In spite of bold claims to freedom, however, even the pursuit of truth is subject to social and political constraint. Much of it could not even go on without governmental sanction and support.

Yuval Harari makes similar points in his awesome book Sapiens: There is a long marriage between governmental and capitalistic institutions and the pursuit of knowledge. These pursuits don’t exist independently of each other, but work as complements. Karl Popper also wrote deeply about the need for an Open Society–the need for proper institutions to support the growth of knowledge, which can be suppressed under the wrong conditions.

In the end, says Tussman, we are the sum of our passions and our institutions — every culture answers this problem in its own way.

Civilization requires the institutionalization of the necessary but dangerous passions. Any civilization is a particular way of doing so, achieving–growing into–its complex forms more or less by happy accident. To describe a culture is to map its institutions. To criticize or evaluate a culture is to judge the adequacy of its institutions in light of some conception of how the various passions can best be expressed or shaped or harnessed to serve a variety of human purposes.

***

Still Interested? Check out Tussman’s brilliant quote on understanding the world.

Incentives Gone Wrong: Cobras, Severed Hands, and Shea Butter

There’s a great little story on incentives which some of you may already know. The tale may be apocryphal, but it instructs so wonderfully that it’s worth a repeat.

During British colonial rule of India, the government began to worry about the number of venomous cobras in Delhi, and so instituted a reward for every dead snake brought to officials. In a wonderful demonstration of the importance of second-order thinking, Indian citizens dutifully complied and began breeding venomous snakes to kill and bring to the British. By the time the experiment was over, the snake problem was worse than when it began. The Raj government had gotten exactly what it asked for.

***

There’s another story, much more perverse, from the Congolese massacre in the late 19th and early 20th century under Belgian rule — the period Joseph Conrad wrote about in Heart of Darkness. (Some of you might know the tale better as Apocalypse Now, which was a Vietnam retelling of Heart of Darkness.)

As the wickedly evil King Leopold II of Belgium forced the Congolese to produce rubber, he sent in his Force Publique to whip the natives into shape through genocidal murder. (Think of them as a Belgian Congo version of the Nazi’s SS.) Fearful that his soldiers would waste bullets hunting animals, Leopold ordered that the soldiers bring back the severed hands of dead Congolese as proof that they were enforcing the rubber decree. (Leopold himself never even visited his colony, although he did cause at least 10 million deaths.)

Given that Leopold’s quotas were impossible to meet, shortfalls were common. And with the incentives placed on Belgian soldiers, many decided they could get human hands more easily than meeting rubber quotas, while still conserving their ammo for hunting. An interesting result ensued, as described by Bertrand Russell in his book Freedom and Organisation, 1814-1914.

Each village was ordered by the authorities to collect and bring in a certain amount of rubber – as much as the men could collect and bring in by neglecting all work for their own maintenance. If they failed to bring the required amount, their women were taken away and kept as hostages in compounds or in the harems of government employees. If this method failed, native troops, many of them cannibals, were sent into the village to spread terror, if necessary by killing some of the men; but in order to prevent a waste of cartridges, they were ordered to bring one right hand for every cartridge used. If they missed, or used cartridges on big game, they cut off the hands of living people to make up the necessary number.

In fact, as Peter Forbath describes in his book The River Congo, the soldiers were paid explicitly on the number of hands they collected. So hands gained in demand.

The baskets of severed hands, set down at the feet of the European post commanders, became the symbol of the Congo Free State. … The collection of hands became an end in itself. Force Publique soldiers brought them to the stations in place of rubber; they even went out to harvest them instead of rubber… They became a sort of currency. They came to be used to make up for shortfalls in rubber quotas, to replace… the people who were demanded for the forced labour gangs; and the Force Publique soldiers were paid their bonuses on the basis of how many hands they collected.

Looking to bolster an economy of rubber, Leopold II got an economy of severed hands. Like the British Raj, he got exactly what he asked for.

***

Joseph Heath describes another case of incentives gone wrong in his book Economics Without Illusions, citing the book Out of Poverty: And Into Something More Comfortable by John Stackhouse.

Stackhouse spent time in Ghana in the 1990s, and noticed that the “socially conscious” retailer The Body Shop was an enormous purchaser of shea nuts, which were produced in great quantities by Ghanians. The Body Shop used shea butter, produced from the nuts, to produce a variety of skin products, and as a part of its socially conscious mission, and its role in the Trade, Not Aid campaign, decided they were willing to pay above-market prices to Ghanian farmers, to the tune of an extra 50% on top of the going rate. And on top of that premium price, The Body Shop also decided to throw in a bonus payment for every kilogram of shea butter purchased, to be used for local development projects at the farmers’ discretion.

Thinking that the Body Shop’s early shea nut orders were a harbinger of a profitable boom, farmers began to rapidly up their production of shea butter. Stackhouse describes the result in his book:

A shea-nut rush was on, and neither the British chain nor the aid agencies were in a position to absorb the glut. In the first season, the northern villages, which normally produced two tonnes of shea butter a year, churned out twenty tonnes, nearly four times what the Body Shop wanted….Making matters worse, the Body Shop, after discovering it had overestimated the international market for shea products, quickly scaled back its orders for the next season. In Northern Ghana, it wasn’t long before shea butter prices plunged.

Unfortunately, in its desire to do good in a poor part of the world, the Body Shop created a situation which was worse than when they began: Massive resources went into shea butter production only to find that it was not needed, and the overproduction of nuts ended up being mostly worthless.

These three cases above, and many more, lead us to the conclusion that people follow incentives the way ants follow sugar. It’s imperative that we think very literally about the incentive systems we create. Remember that incentives are not only financial. Frequently it’s something else: prestige, freedom, time, titles, sex, power, admiration…all of these and many other things are powerful incentives. But if we’re not careful, we do the equivalent of creating an economy for severed hands.

***

Still Interested? Learn about one company that understood and harnessed incentives correctly, or re-read Munger’s discussion on incentive-caused bias in his famous speech on human psychology. Also, check out the Distorting Power of Incentives.

Is Human Progress Real or An Illusion?

Against the historical backdrop of nations, morals and religions that rise and fall, “the idea of progress finds itself in dubious shape”, according to Will and Ariel Durant in their amazing book The Lessons of History. Allow me to explain.

The core idea of their work is that man’s nature hasn’t changed all that much throughout history. Technical advances remain but must be “written off as merely new means of achieving old ends— the acquisition of goods, the pursuit of one sex by the other (or by the same), the overcoming of competition, the fighting of wars.”

Science has no morals, it can heal as well as kill. Science can build and, more easily, destroy. The Francis Bacon motto that “Knowledge is power,” doesn’t fully explain the situation. Power rests in the hands of humans – it is our nature that drives the ends to which we wield it.

Sometimes we feel that the Middle Ages and the Renaissance, which stressed mythology and art rather than science and power, may have been wiser than we, who repeatedly enlarge our instrumentalities without improving our purposes.

The Durants make an interesting argument that our comforts and conveniences, largely the result of technological progress, have “weakened our physical stamina and our moral fibre.”

We have immensely developed our means of locomotion, but some of us use them to facilitate crime and to kill our fellow men or ourselves. We double, triple, centuple our speed, but we shatter our nerves in the process, and are the same trousered apes at two thousand miles an hour as when we had legs. We applaud the cures and incisions of modern medicine if they bring no side effects worse than the malady; we appreciate the assiduity of our physicians in their mad race with the resilience of microbes and the inventiveness of disease; we are grateful for the added years that medical science gives us if they are not a burdensome prolongation of illness, disability, and gloom. We have multiplied a hundred times our ability to learn and report the events of the day and the planet, but at times we envy our ancestors, whose peace was only gently disturbed by the news of their village. We have laudably bettered the conditions of life for skilled workingmen and the middle class, but we have allowed our cities to fester with dark ghettos and slimy slums.

History affords us the opportunity to draw any conclusion we wish.

History is so indifferently rich that a case for almost any conclusion from it can be made by a selection of instances. Choosing our evidence with a brighter bias, we might evolve some more comforting reflections.

So we must first define progress.

If it means increase in happiness its case is lost almost at first sight. Our capacity for fretting is endless, and no matter how many difficulties we surmount, how many ideals we realize, we shall always find an excuse for being magnificently miserable; there is a stealthy pleasure in rejecting mankind or the universe as unworthy of our approval. It seems silly to define progress in terms that would make the average child a higher, more advanced product of life than the adult or the sage— for certainly the child is the happiest of the three. Is a more objective definition possible? We shall here define progress as the increasing control of the environment by life. It is a test that may hold for the lowliest organism as well as for man.

At any point in time some nations are progressing and some are regressing. Adding even more nuance, nations and people may advance in one area and recede in another.

America is now progressing in technology and receding in the graphic arts. If we find that the type of genius prevalent in young countries like America and Australia tends to the practical, inventive, scientific, executive kinds rather than to the painter of pictures or poems, the carver of statues or words, we must understand that each age and place needs and elicits some types of ability rather than others in its pursuit of environmental control. We should not compare the work of one land and time with the winnowed best of all the collected past. Our problem is whether the average man has increased his ability to control the conditions of his life.

The unhappiness of undertakers as a measure of progress.

The lowliest strata in civilized states may still differ only slightly from barbarians, but above those levels thousands, millions have reached mental and moral levels rarely found among primitive men. Under the complex strains of city life we sometimes take imaginative refuge in the supposed simplicity of pre-civilized ways; but in our less romantic moments we know that this is a flight reaction from our actual tasks, and that the idolizing of savages, like many other young moods, is an impatient expression of adolescent maladaptation, of conscious ability not yet matured and comfortably placed. The “friendly and flowing savage” would be delightful but for his scalpel, his insects, and his dirt. A study of surviving primitive tribes reveals their high rate of infantile mortality, their short tenure of life, their lesser stamina and speed, their greater susceptibility to disease. If the prolongation of life indicates better control of the environment, then the tables of mortality proclaim the advance of man, for longevity in European and American whites has tripled in the last three centuries. Some time ago a convention of morticians discussed the danger threatening their industry from the increasing tardiness of men in keeping their rendezvous with death. But if undertakers are miserable progress is real.

It is no trivial achievement that famine has almost been eliminated and many of the viruses that killed millions worry us not. And yet the probability is that our civilization will die. As Frederick asked his retreating troops at Kolin, “Would you live forever?”

Perhaps it is desirable that life should take fresh forms, that new civilizations and centers should have their turn. Meanwhile the effort to meet the challenge of the rising East may reinvigorate the West.

But great civilizations do not entirely die, they leave fragments. These fragments are the connective tissues that bind us together.

Some precious achievements have survived all the vicissitudes of rising and falling states: the making of fire and light, of the wheel and other basic tools; language, writing, art, and song; agriculture, the family, and parental care; social organization, morality, and charity; and the use of teaching to transmit the lore of the family and the race. These are the elements of civilization, and they have been tenaciously maintained through the perilous passage from one civilization to the next. They are the connective tissue of human history.

If education is the transmission of civilization, we are unquestionably progressing. Civilization is not inherited; it has to be learned and earned by each generation anew; if the transmission should be interrupted for one century, civilization would die, and we should be savages again. So our finest contemporary achievement is our unprecedented expenditure of wealth and toil in the provision of higher education for all.

This calls into question the role of education.

None but a child will complain that our teachers have not yet eradicated the errors and superstitions of ten thousand years. The great experiment has just begun, and it may yet be defeated by the high birth rate of unwilling or indoctrinated ignorance. But what would be the full fruitage of instruction if every child should be schooled till at least his twentieth year, and should find free access to the universities, libraries, and museums that harbor and offer the intellectual and artistic treasures of the race? Consider education not as the painful accumulation of facts and dates and reigns, nor merely the necessary preparation of the individual to earn his keep in the world, but as the transmission of our mental, moral, technical, and aesthetic heritage as fully as possible to as many as possible, for the enlargement of man’s understanding, control, embellishment, and enjoyment of life.

The fragments we transmit to the current generation are richer than ever before. We stand on the shoulders of those that have come before us and in assuming the new height, we attempt to allow others to stand on our shoulders. If we see farther, it is because of this.

If progress is real despite our whining, it is not because we are born any healthier, better, or wiser than infants were in the past, but because we are born to a richer heritage, born on a higher level of that pedestal which the accumulation of knowledge and art raises as the ground and support of our being. The heritage rises, and man rises in proportion as he receives it.

History is, above all else, the creation and recording of that heritage; progress is its increasing abundance, preservation, transmission, and use. To those of us who study history not merely as a warning reminder of man’s follies and crimes, but also as an encouraging remembrance of generative souls, the past ceases to be a depressing chamber of horrors; it becomes a celestial city, a spacious country of the mind, wherein a thousand saints, statesmen, inventors, scientists, poets, artists, musicians, lovers, and philosophers still live and speak, teach and carve and sing. The historian will not mourn because he can see no meaning in human existence except that which man puts into it; let it be our pride that we ourselves may put meaning into our lives, and sometimes a significance that transcends death. If a man is fortunate he will, before he dies, gather up as much as he can of his civilized heritage and transmit it to his children. And to his final breath he will be grateful for this inexhaustible legacy, knowing that it is our nourishing mother and our lasting life.

If you liked this post, you’ll love these two:

The Three Lessons of Biological History — Human history is a fragment of biological history. If we are to learn enduring lessons it is best to go back in time.

What History Teaches us about The Concentration of Wealth — Assuming practical ability differs amongst people, the majority of whatever society values will always rest with the minority of men.

Learning From Your Mistakes … When You Win

“Men ought either to be indulged or utterly destroyed,
for if you merely offend them they take vengeance,
but if you injure them greatly they are unable to retaliate,
so that the injury done to a man ought to be such
that vengeance cannot be feared.”

— Machiavelli, The Prince.

***

In the ancient world, wars were wars of conquest or survival. The Persian, Macedonian and Roman empires were the spear-won fruits of conquest, resulting in the total annihilation of their enemies. By the seventeenth century, however, the increased cost of war made such triumphs nearly impossible. The victors of the Thirty Years War (1618-48) were as devastated as the defeated. Nations lacked the infrastructure to mobilize for total war, and so it became a more limited activity. Small, expensive professionally-trained armies fought campaigns to obtain limited benefits in a series of king-of-the-hill conflicts between dynasties. Total victory, and the accompanying hatred and annihilation of the loser, was rare.

This pattern changed again with the rise of the nation-in-arms. Mass conscript armies, supported by large-scale propaganda campaigns at the home front, fought the wars of Napoleon, the American Civil War, and, approaching the Twentieth Century, the wars of German unification. During the Franco-Prussian War (1870-71), after defeating the regular French army, the Germans had to face a people’s militia; Paris was besieged and bombarded. When the war finally ended, Germany annexed the provinces of Alsace and Lorraine, claiming that they were historically German. But German Chancellor Bismarck himself recommended against the annexation, stating that it would cause continued enmity, and jeopardize any hope for long-term peace between the two nations.

Bismarck was correct; the annexation created resentment that only increased and helped generate the momentum leading to the First World War. (At least someone understood the Hydra.) Four years later, the horrific devastation of the war reinforced the victors’ attitude of debellation – harsh and absolute punishment of the losers to ensure that they are never able to rise again. The Paris Peace Talks were awkward as they tried to balance the ideals of the League of Nations, to create a unified bond of peace and mutual recognition, with the reality of seizures and break-ups of territory, and the reparations to be paid by the losers.

In The Economic Consequences of the Peace, John Maynard Keynes argued that the reparations inflicted on Germany were unjust and would lead to future conflict, the opposite of their intent. Historians continue to debate his arguments. What is true is that the sense of injustice created by the reparations was a major element of Hitler’s rhetoric, and this emotion echoes throughout his speeches in his rise to power. The causes of the Great War had been murky, and it was not clear who was the aggressor. Was Germany forced into aggression by Russian mobilization? Was it right that Germany should have to pay so much, and furthermore, later see the French occupy the Ruhr, the center of Germany’s industry? Hitler used this resentment – an emotion he himself felt to his core – along with the general economic collapse of the 1930s, to create the anger for justice and revenge that brought him public support and the role of Chancellor. Human beings have a strong desire to see justice – that is, our very limited emotional interpretation of it – carried out to restore our belief in fairness in the world.

Fast forward to 1945, and the end of the second global conflict in thirty years, unimaginably worse than the first one. This time the destruction of the defeated was as utter as any nation has suffered since Carthage. The French proposed that Germany’s industrial heartland be annexed, to ensure that France would have the industrial power to always serve as a check on future German ambition. US Treasury Secretary Henry Morgenthau Jr. went even further, proposing to completely de-industrialize Germany, turning it into an agrarian society, incapable of waging modern war.

For the first few years, a variation of Morgenthau’s plan was used to guide post-war policy. However, by 1947, it was apparent that a crippled West Germany was delaying European recovery in general, and the continent would be unable to defend against Soviet encroachment. US Secretary of State George Marshall introduced the plan that bears his name, providing $1.5 billion to West Germany (and over $2.3 billion to France). Between 1948 and 1951, seventeen European nations obtained a total of almost $13 billion ($130 billion in today’s money) in aid through the Marshall Plan. Substantial sums were also provided to Asia, including Japan, during the same period.

Did the Marshall Plan fuel Europe’s post-war recovery? In the two decades after the war, France spent at least the same amount of money fighting two unnecessary wars in Vietnam and Algeria. It’s hard to say that they earned much benefit from the aid. West Germany was better able to invest the money, but economic historians argue that their growth had more to do with their own internal policies on currency stabilization, low taxes for the middle class, and investment in both capital stock and education. But all those polices had to operate in the context of investment, and much of that investment came from the Marshall Plan.

Which was the more peaceful Europe? The Europe of the 1920s or the Europe of the 1950s? Many factors led to the rise of Hitler, the global depression being one of them, but Hitler was molded by his experience living homeless on the streets of Vienna before the First World War, and the turmoil of anger and unemployment that followed the end of the war.

Which Europe are we more grateful for? The idea of a unified Europe was almost unimaginable in the context of the perceived injustice of punishment for losing. Only after the second war did it become real. A Frenchman in 1913, or a German in 1919, would have laughed in disbelief if you described to them how close their two nations are now.

When we win, we often want to be like Machiavelli’s Prince, and win utterly. It is when your opponent is defeated that he is weakest, helpless, and you can take the most from him. And, if somehow he rises to confront you again, then that means you were not severe enough in your punishment, and you should only punish him harder.

But it seems that no victory is complete, now. For every terrorist leader struck down, another pops up to replace him. The Marshall Plan looked at the idea of punition and decided that it wouldn’t work. The only way to make your enemy incapable of revenge would be to wipe them out completely. Or, conversely, rebuild them and take away the cause for anger. Make them more like you, not as a nation, but as a victor.

Still Curious? Check out why win-win relationships are the only ones that stand the test of time. 

What Can the Three Buckets of Knowledge Teach Us About History?

Every statistician knows that a large, relevant sample size is their best friend. What are the three largest, most relevant sample sizes for identifying universal principles? Bucket number one is inorganic systems, which are 13.7 billion years in size. It’s all the laws of math and physics, the entire physical universe. Bucket number two is organic systems, 3.5 billion years of biology on Earth. And bucket number three is human history, you can pick your own number, I picked 20,000 years of recorded human behavior. Those are the three largest sample sizes we can access and the most relevant. — Peter Kaufman

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When we seek to understand the world, we’re faced with a basic question: Where do I start? Which sources of knowledge are the most useful and the most fundamental?

Farnam Street takes its lead here from Charlie Munger, who argued that the “base” of your intellectual pyramid should be the great ideas from the big academic disciplines. Mental models. Similarly, Mr. Kaufman’s idea, presented above, is that we can learn the most fundamental knowledge from the three oldest and most invariant forms of knowledge: Physics and math, from which we derive the rules the universe plays by; biology, from which we derive the rules life on Earth plays by; and human history, from which we derive the rules humans have played by.

With that starting point, we’ve explored a lot of ideas and read a lot of books, looking for connections amongst the big, broad areas of useful knowledge. Our search led us to a wonderful book called The Lessons of History, which we’ve posted about before. The book is a hundred-page distillation of the lessons learned in 50 years of work by two brilliant historians, Will and Ariel Durant. The Durants spent those years writing a sweeping 11-book, 10,000-page synthesis of the major figures and periods in human history, with an admitted focus on Western civilization.(Although they admirably tackle Eastern civilization up to 1930 or so in the epic Our Oriental Heritage.) With The Lessons of History, the pair sought to derive a few major lessons learned from the long pull.

Let’s explore a few ways in which Durants’ brilliant work interplays with the three buckets of human knowledge that help us understand the world at a deep level.

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