Lessig Says Dump the FCC, I Say Don't Stop There

Stanford Law School Professor and founder of Stanford's Center for Internet and Society had a article in Newsweek this week (see also). Some of his observations are profound and, in my opinion, right on target: "Economic growth requires innovation....Washington is practically designed to resist it."

In other ways he stops short of identifying the full problem. He wants to abolish the FCC, but he would replace it with another bureaucracy. It would only be a matter of time before the new bureaucracy was bogged down with the same problems the FCC faces. In addition, there are numerous other governmental bureaucracies that are fully as stifling in their spheres as the FCC is in its sphere.

Innovation is stifled by bureaucracy and regulations. Most regulation does not fulfill its intended result. Further, when elected officials and bureaucrats are given so much power it goes to their heads and they think they can actually protect us and the economy. Lessig says, "commissioners are meant to be "expert" and "independent," but they've never really been expert, and are now openly embracing the political role they play. Commissioners issue press releases touting their own personal policies."

Who in the economy is most capable of stroking and schmoozing politicians? Big business. Competition is tough and the outcome is never certain, even for established corporations with long histories. In fact, established corporations with their own bureaucracies can be a disadvantage. That is why big business seeks favors and favoritism from big government. Because government has the power to control and has already taken billions of dollars from us it is really the only entity in a position to grant favors. Again, Lessig says, bureaucrats develop "an almost irresistible urge to protect the most powerful."

The combination of big business and big government scratching each others' backs is reprehensible and destructive to competition.

I understand that competition means there will be winners and loosers. We are watching some big loosers, the American car makers, grovelling before congress even now. If these entities end up on the bone pile there will be many innocent employees who will be out of work and a few big wigs that will walk away with great post-employment packages. This is more the doing of government favoritism than a failure of the free enterprise system. Adam Smith's invisible hand will never be able to quickly sort through these problems and we will always move forward haltingly, because hundreds of different solutions will be tried and not all of them will work, but this is also the greatest benefit of free enterprise. The solutions that work will be better and stronger.

Many say that people are greedy and will not help their fellow man, but I say that is patently untrue. People are uncommonly good and generous. It's only when they feel they have already been bled dry through taxes that people tend to hold back and even then when the need is real people still give generously.

John Lennon said, "All we are saying is give peace a chance." All I am saying is give people and freedom a chance.

We're Going the Wrong Way

This past year we bought a Wii for the family. We've had so much fun playing the games. It took a while, but finally we were able to snatch a Wii Fit board before a new shipment vanished from the store shelves. Exercising with the board has been fun and healthful. We are all much more active now.

Our most recent game purchase was MarioKart, which lets you race against others on a bunch of different race courses. It's been a lot of fun, but a little frustrating too since I'm not very good at it and I somehow frequently end up turned around a going the wrong way.

Which brings me to the point of this blog entry.

How has the United States moved so far from the principles of morality and personal freedom which were so insturmental in the development of the country in the first place? How have we gotten so turned around and not only going the wrong way, but wanting more of it?

More government control, more government protection from anything that might be painful. As I pointed out in my post Free to Fail these things might not always be pleasant, but they are absolutely essential to our development of character and ability to make choices that will keep us strong as individuals, as families and as a country.

Government can never supplant personal growth and integrity with government programs and regulations.

Here are two other observations on this problem. Douglas French and Star Parker

A Creative Environment: Seven steps to getting it right

Ed Catmull is the president of Walt Disney and Pixar Animation Studios. He is a graduate

of the University of Utah with BS degrees in computer science and physics and a Ph.D. in computer science. He was also a co-founder of Pixar Animation Studios.

Ed was the guest lecturer for the Organick Lecture Series at the University of Utah on December 8, 2008. His lecture was on what he has learned about the creative process as it relates to creating animated movies and shorts, and risk.

The following points from his lecture stood out to me as essential to any creative process. It’s interesting that, with the exception of the first point, they all center on dealing with people.

1. In a creative environment nothing stays the same; there is no safe place. Our measure is taken by how we respond to things when they go wrong.
2. Gather people around you that can do things you cannot do. Don’t be intimidated by people that are better than you are at what they do. Let people work and solve the problems that arise. Trust people; they will make mistakes, but the mistakes can be fixed. Mistakes are part of the creative process. Trust takes time; putting together a group of talented people is not the same as having a group that can work together, be honest about the work with each other, and become cohesive.
3. Ideas are very complex. It may start with a high concept, but eventually there are thousands of decisions that must be made and things that must be done, and most of what is generated won’t get used.
4. As a creative brain trust you must be self-aware and be able to self-assess. Every contributor’s work must be in the open and subject to review by the group at all times. You learn with each other.
5. Talent isn’t fair. You must employ the talent that you have.
6. Push responsibility out to the lowest level possible. Let people work through the difficulties.
7. Make other people look good.

Like so many things in life there is no single way to be creative and what works changes over time. No matter how things change these steps help refine the process. As Ed Catmull pointed out: Our measure is taken by how we respond to things when they go wrong.

Review in Deseret News

Federal Bailouts Hurt the Long-term Strength of Our Economy

Government bailouts only prolong the time inefficient management teams can keep control of a business. Inefficient management always hinders the health of a company and its progress. The sooner the ineffective are out the sooner the assets can be put to more productive use.

Lawrence Lessig's rant: the mistake in bailouts

Walter Williams - Bailouts and bankruptcy

I've Grown Acustomed to the Sound of Silence

What is it with music? So much of it is annoying. I was driving in my car today and I scanned through the entire radio frequency twice searching for a song I wanted to listen to. Nothing, I turned the radio off. This is not the first time I've gone through this routine. It happens all the time.

OK, I'm not really moved by mainstream pop music and today's country music, for the most part, is pop music with a twang. The old time country music is nothing but twang and all the lyrics make me have to pull over and... Well, let's just leave it at that.

So given my musical preferences, I'm not expecting dozens of radio stations to be playing something that's intriguing to me, but am I so odd that nobody is creating music that appeals to me or, if they are, no station is willing to play it because there's not enough of an audience? Some of the things I hear while scanning are so annoying I have to wonder who could possibly be listening to it; how could there be a large enough market for that stuff and no market for something I would like?

Some people believe they were born at the wrong time, that they might have functioned better in a different era. Me, sometimes I wonder if I was born in the wrong world.

With the vast number of people inhabiting the planet and the many and varied cultures somewhere someone has to be creating sounds that will communicate to me.

Inflation/Deflation vs The Free Market Pricing Mechanism

There are many factors that economists and pundits bring up in describing inflation and deflation. Unfortunately most of these factors are symptoms rather than causes. Recently in the news headlines decry the threat of deflation.

The so called "pundits" are confused. Deflation and its opposite inflation are ultimately and always a function of the money supply. If too much money is injected into an economy--defined as the money supply increasing more than the supply of goods and services available--inflation is the end result. Conversely if the money supply does not keep pace with the supply of goods and services deflation occurs.

Government's responsibility is to keep a stable currency. That can be accomplished by tying the money supply to something like gold (the U.S. used to be on the gold standard) or increasing the money supply by the amount of growth in the gross domestic product of the country (not as good as the gold standard, but better than what we have now).

When the money supply is controlled by government, inflation or deflation is the sole product of its meddling. Even if those in government act with the very best of intentions, injecting too much money into the system leads to inflation; not keeping enough money in the system leads to deflation. Government meddling over a period of many years can destroy a currency. That is why the U.S. dollar's purchasing power today is only a fraction of what it was in the 1940s. Extreme actions by government can trash a currency in a very short period of time. Many examples of this abound (humanity doesn't seem capable of learning from others mistakes), but one of the best known examples is the Weimar Republic in 1923.

In our day, the rush by the U.S. government to "bail out" the financial industry and possibly other industries by injecting billions of dollars into the system can only lead to inflation. Let us hope it will not be hyperinflation.

The free market pricing mechanism is simply everybody reacting to market forces of supply and demand. If too much money is being supplied then prices go up, the opposite happens if there is not enough money in circulation.

The most important point about pricing in a free market is that prices still fluctuate even with a stable supply of money. If a particular product is not able to be supplied in amounts to meet demand the product's price will rise. If demand for a product declines and the supply becomes too great then the product's price will decline. The market is constantly adjusting prices.

This phenomenon is merely the natural functioning of a free market and has nothing to do with inflation or deflation provided the money supply is not being overly manipulated by government.

Sadly the U.S. government has injected billions of dollars into the economy and has intentions of injecting much more.

How can housing prices be in a tailspin if the government is injecting too much money into the economy and fueling inflation? The government has been pumping too much money into the economy for most of the 2000s and keeping interest rates artificially low. These two factors created an overblown demand for housing over the last many years pushing prices higher and higher. Now with the change in economic conditions the demand for housing has declined; many speculative markets have almost completely dried up. Demand is off and prices are adjusting accordingly.

Four other perspectives: Robert Higgs , Rich Karlgaard , D.W. MacKenzie , Steve Hanke, and WalterWilliams

Free To Grow

In my post Free To Fail my point is we learn and become stronger by the experiences we have. What we learn helps us better understand how to deal with new situations we are confronted with. When someone shields us from those experiences they do a disservice. When we are shielded from important experiences over a very long period of time the results can be disastrous.

Clayton Christensen in his book Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, in referring to the process of hiring people, articulates it this way:

Most of what managers have learned results from wrestling with problems. Overcoming these challenges or problems leads to the development of competencies that people can use in similar situations in the future. While the right-stuff thinking castigates failure, failing can actually be beneficial as long as one can learn to identify the root cause of the failure so as to prevent it in the future.

How people, managers, have overcome difficulties is often as important or more important than the management skills they have learned.

Free to Fail

Of all the freedoms we enjoy the one most overlooked is freedom to fail. Fail?! That's not, really a freedom is it? We don’t like to talk about it and, truth be known, we really wish it wasn’t there.

Still, this little backwater freedom is under major attack by government officials with encouragement from every side: liberals and conservatives, Republicans and Democrats, economists, journalists, businesspeople and citizens at large. Heck, we’d give away the freedom to fail in a heartbeat—if anyone would take it. Who wants to fail? Not me!

What we learn from our failures though—our mistakes—is often more meaningful than what we learn from our successes. Part of human nature is making mistakes. Humanity is full of emotions. We push things to extremes: up and down. Small failures help us learn to avoid big failures. We become more cautious, more observant. We back away from ideas that don’t work and pursue ideas that do work.

When government steps in and saves us from economic turmoil it adds to a feeling of euphoria, a feeling that government really can control things and make life better through economic planning and social programs. However, even when done with the best of intentions, government programs such as loosening financial standards, creating too much money, and acting quickly to keep the economy from experiencing its normal ups and downs delay, but do not eliminate economic corrections.

My biggest fear is that those who want to run the government are too willing to take control and solve our problems. Just sit back and relax. They won't let anything bad happen to us. Poof, our freedoms are squandered along the road to a better society.

You say I'm paranoid and overreacting to the situation? In the last year, we have witnessed many government seizures of control I never dreamed could happen in my lifetime. In some cases the profligate business people begged for government help.

Free markets are made up of millions of people acting on their own behalf; economic engineering and social programs deny us of lessons we as individuals must learn to ensure sound economic growth and development. If we don't learn from our small mistakes as we go, then the let down when it comes is worse, sometimes catastrophic.

Our current situation has grown out of many years of government engineering of the economy and the money supply. The lessons we haven’t learned put us further out on the limb than is reasonable or prudent. We will never know what our economy might have been like if we had grown stronger by learning from our mistakes.

Billion dollar bailouts are a last ditch effort to save us from the harmful and often wrong decisions of economic planners over the past 30 years. Lessons we should have learned in those years have been postponed, but not avoided.

Unfortunately, the price we pay to avoid the pain is more than monetary. We give up the chance to take care of ourselves and do things in better ways, in ways that are more personal. We give up the freedom to choose.

Solving our problems won't be easy. A space ship off course by only half a degree will miss its target by thousands of miles. Because of government meddling our economy has been moving off course for many years. Then when government officials decide to embark on a plan to save us, and throw billions of dollars at it in the process who can stop them?

To be sure, there are other factors contributing to our being off course: greed and big business seeking and receiving favors from government are two, but the lessons we haven’t learned apply here also. And the culprit is also the same: Government granting favors to select groups and encouraging reckless actions on the part of individuals in the name of accomplishing some social program.

Those who would run the government believe we are not capable of taking care of ourselves. They don't have faith in us. They earnestly believe only they can provide the solutions to our misery and woe.

However, people like to do things for themselves. We are capable of figuring out solutions to challenging situations; even situations that are unpleasant and thrust upon us. We have the energy and enthusiasm to meet challenging tasks and overcome them. Our history is full of examples. Our energy and enthusiasm grow when we take care of ourselves.

Relying on government to solve our problems—or worse, wanting government to do so is a recipe for loss of freedom, and I believe for failure on a large scale. We may be learning that unnecessary lesson right now.

There is no substitute to taking responsibility for our own well-being.

Where Are We Going?

We have entered into a sailing ship and are on a great journey. At our destination is a lighthouse and although that lighthouse is far away we see the light and we continue on. Seas may rage, winds may blow, obstacles may loom in our way but we continue.

We still have to swab the decks, set the sails or take them down, and keep the ship in repair, but the lighthouse is ahead. Distractions are thrown overboard.

This sense of direction brings a steadiness and calm. It’s bigger than this world and goes beyond it. It helps us stay focused on what is most important.

What to Do With Wikipedia; A New World Is Before Us

There is a revolution ahead. Some would argue we are already well into it. One thing seems certain, we are much closer to the beginning than the end. This is not a religious war, though some may see it that way; this is not a war of political ideology, though some will try to impose their political orientation; this is not a war for geography, we are moving past that.

This is a war for the World Wide Web and how it is used.

William Badke in his article What to Do With Wikipedia does an exceptional job of addressing several issues that are key to the information age and the way people learn in this new era. The article is worth reading. My perspective on this issue follows: The first issue--creative destruction--was popularized by economist Joseph Schumpeter and more recently articulated by Harvard Professor Clayton M. Christensen in his book The Innovator's Dilemma. When creative new methods or technologies come forth those entrenched in the established methods, most strenuously resist the new ways. Early on at a time when new ways could be adopted the established organizations resist change; the old way works just fine and they are in control. Later when the threat of destruction looms on the horizon the establishment seeks to embrace. Second, to the old guard knowledge is power; something that must be controlled and only imparted (through scholarly journals) to those who are qualified or to those who pay (students). Control does ensures a certain level of discipline, but does not always keep out bias. To the avant-garde knowledge should be freely imparted. In every field, knowledge thus shared brings to bare the intellectual force of all who are interested. This is blasphemy to the anointed scholars, but beyond them are thousands of intelligent people who have significant contributions to make, but in the past were disregarded. When more people get involved ideas are tested and refined in ways that would otherwise not be considered. (James Suroweicki in his book The Wisdom of Crowds proposes the idea that a group of people with varying intellectual abilities often finds a better solution, because experts tend to view things in similar ways.) Discipline is maintained because those involved have a vested interest in making sure it does; perhaps discipline even improves because so many unbiased eyes are watching. Third, the new ways will prevail if for no other reason than the old guard will die. More and more, new academics will innovate, contribute and collaborate in the new medium. Fourth, even some who are accustomed to the traditional academic methods question one of academia's products. Career counselor and author Marty Nemko sees eroding value in the traditional four year college degree http://chronicle.com/free/v54/i34/34b01701.htm. Fifth, as the cost of a college education and advanced degrees continues to skyrocket, as the volume of information even in narrow fields continues to explode, and as the knowledge gained may be very important, but have a short shelf life one must question the viability of the traditional academic format. A system that teaches students--who have no intention of becoming "experts"--vast amounts of information that has no application to the students' needs. Sixth, for years George Gilder has held out the idea that what we have in abundance should be wasted; what is scarce should be preserved. Transistors are a good example. In the 1950s they were rare and expensive, today because transistors are made of silicon they are everywhere and cheap. Knowledge is taking a similar path. Wikipedia is not the new way, it's the current way. Innovators will continue to forge ahead developing new tools and finding ways to use them. What the Internet and the academic environment will look like in another decade is anyone's guess. To be sure it will be someone's guess or more likely the thinking of many.

Thoughts and Ideas

I have so many ideas that come to my mind, but they rarely come to me while I'm at the computer and I usually don't carry around a note pad to record them. Frequently these ideas come to me while I'm driving and it would be impossible to write them down without pulling over to the side of the road. I must start carrying a note pad though.

I was reading some comments last night by Ray Bradbury about his work. He indicated he didn't really create his stories and ideas they just came to him and he would then work to get them recorded. He mentioned how even as a young boy he loved words and ideas and this has carried him through the sixty plus years of his work. He talked about how he wrote as a youth and as he looks back on it how awful his work was and that he didn't really have any talent. He developed through continuing to write because he loved recording his ideas.

I guess I come late to things. I have had a love of words and ideas for the last twenty years or so, but it seems so hard for me to organize my thoughts and get them recorded; when I look back on what little I have recorded my writing seems awful. Still I have this love for words and communication and sharing ideas and it just keeps surfacing in my mind. I must record what I am thinking, even disjointed little snippets of ideas. If I can get them recorded then I have at least a better chance of organizing them into something.

To My Son

Marc is getting ready to go on Trek in Wyoming. I was asked to write a letter that will be given him while he's on Trek. Here it is:

Dear Marc,

One of the greatest joys of my life is having you as my son. I love you. I enjoy being with you and I enjoy our conversations. It has also been a spectacular journey watching you grow into a young man. Life is a journey not a destination.

Sometimes life forces itself upon us and we just have to tough it out and make the best of the situation. At other times many options are before us and we have to choose. I don’t know what fields of study and endeavor you will pursue in your life, but I have great faith and confidence that you are fully capable of figuring this out. (I know there have been times when you’ve felt like I made you do something, but I want you to know I believe in you and your ability to make your own choices. I will tell you what I see based on my experiences in life, but my desire is always to let you make your own choices.)

You have worked hard to make the most of your talents and abilities and you have also made wise choices. Working hard is not the same as making wise choices. Always remember to step back—in your mind’s eye—far enough to see the situation before you; you will never have complete informa­tion so remember to trust in Heavenly Father. Make an assessment of your options, make a decision and then work hard to accomplish your mission. To the extent possible, follow your heart.

Life is constantly changing and you must learn to change with it. Skill sets will come and go, opportunities will come and go, talents will come and go, and even people will come and go; through it all you must learn new things and apply them. Hold fast to the people you love and who love you, but understand even they will come and go. Keep them in your heart, but don’t let their loss cripple your ability to act.

Some people will be mean or rude or try to take advantage of you in an effort to “get ahead” or for no good reason at all. Avoid these people if you can, but that is not always possible especially at work. Many people believe life is a competition (sports, school, work, business), but that is not true not even in those areas.

Life is a journey and a road that is not meant to be traveled alone. Joy is to be found in every step not at the end. Many people will be nice and if you go out of your way to be nice to them you can have incredible friendships. Every person that you meet whether bright or not, talented or not, beautiful or not, rich or not has something to contribute and if you listen you may be surprised. Develop these friendships and networks of people you can rely on and work with. This is extremely important. I didn’t realize this and it has curtailed some of my opportunities in life.

Never forget you also have great contributions to make. Some may not want to let you contribute; do it anyway. Others will be grateful for your contributions.

I could not have asked to live at a better time or with a better family. I love you so much. Even as much as I love you I know that our Heavenly Father and Mother love each of us infinitely more. Don’t forget to check in with Heavenly Father regularly. Go and do your very best; there will be times when you feel you have fallen short, but you haven’t if you never give up.

I love you.

I Just Keep Swimming Uphill

Charles Darwin made a name for himself and shaped the thinking of the world with his theory of evolution by natural selection. I believe in evolution, but not to the extreme that Darwin and many in modern science believe.

Through our own experience we see evolution on a small scale: we create new strains of plants and see that genetic code can be altered by cross breeding. I can even accept that over long periods of time cross breeding could result in improvements to the genetic code itself, but I still sense the work of a higher being, God, in the world and the universe.

My point here isn't which is right: creationism or evolution. No, its a different subject entirely--society and government.

For those that so adamantly endorse evolution the idea of a managed society should be heresy. The evolution of the world and its vast array of biodiversity is the result of natural selection not central planning. Even natural selection with just a little help from those that believe they are truly bright enough to enhance the whole process would still be tinkering. For those that believe in a higher being, central planning is still wrong because it means control of the many by the few. Life, liberty and the pursuit of happiness by very definition mean freedom of the individual to choose.

Information is increasing at an incredible rate. Not all information is available to all people; it's impossible to collect all information into one repository, and even if it were possible it's impossible for one individual or even a small group of individuals--no matter how smart--to process that information in a timely manner. Even the gifted and talented cannot know more than a fraction of the information needed to effectively "run" the economy. That is especially true as we become a global economy and move further into the age of information.

Collectively though, all available information is known and is processed by someone. Millions of people acting independently and in their own best interest are able to more rapidly sift through information and put it to use. Some will choose wisely and others won't and it doesn't matter. Millions of decisions will be made and of those decisions the best, the most practical will produce positive results and rise to the top.

Whoa......Wait a Minute, Haven't I Heard That Comment Before?

"Frankly, these people frighten me. Politics and governing demand compromise. The government won't work without it. But these Christians believe they are acting in the name of God, so they can't and won't compromise. I know, I've tried to deal with them."

Thus responded Barry Goldwater to John Dean in a telephone conversation in November 1994. (From: Conservatives Without Conscience, by John Dean) The comment was referring to some individuals who exerted influence over conservative thinking in the United States.

"Believe they are acting in the name of God, so they can't and won't compromise"--where have I heard something like that before? Read that comment from today's perspective and you might assume it is referring to Islamic extremists.

And yet when I consider some of the terrible things that have been done in the name of Christianity--in or out of the political arena--I have to admit the comment applies all too well to groups professing Christian beliefs. I can understand why some good people would abandon religion all together, or adopt a philosophy that is less authoritarian in it's enforcement. Let's face it, if you believe you are carrying out God's will what choice do you have? You either obey or disobey.

I would respond that if those professing to be Christian were truly living their religion they would be more tolerant, loving, and forgiving. "He that is without sin among you, let him first cast a stone." But there are numerous stories in the Bible where God, through his people or in his fierce anger, wipes out a specific group of people. We're His creations so He can do that. As for me I would want to make pretty sure I was doing what God wants before I went around eliminating or hurting people.

Think Like a Dandelion

Cory Doctorow uses reproductive strategies of mammals and dandelions to make a point about how information and influence are distrbuted in the virtual world. Mammals generally exercise much more control over their offspring than do dandelions. Obviously most mammals wouldn't survive if they adopted the dandelion approach, but the point is our own Internet creations are not the same as our physical offspring.

Still the unresolved question remains, "How do you earn a living if you give away your creations?" I don't have the ultimate solution, but it seems to me the wider your sphere of influence the greater your opportunity to translate what you do into cash flow of some sort.

Nine Inch Nails made its last two creative efforts available for free over the Internet. It's album The Slip is not only available for free, but the group also encourages people to share it, use it and change it. I would never have purchased a NIN CD at the store, and I probably would not have purchased its music over the Internet, but I know the group now and I'm more likely to complete a money transaction in the future. So, has the increased exposure offset the lost revenue from selling music through traditional formats? I don't know. Has it increased the groups sphere of influence? I think so.

The Internet is still relatively new; most people and businesses try to force the ways of commerce from the past on to this new and really uncharted medium. I believe we are on the threshold of significant changes in the way we interact and conduct business on the Internet.

Made to Stick

Why is it some ideas lodge themselves in our societal memory and others--even good ones--don't? Sometimes, the idea that sticks isn't even true. The Great Wall of China is the only man made structure visible from space; Coca Cola will rot your bones; razor blades in Halloween candy have all been part of our culture for years. True or not almost everyone knows these stories.

What is it that makes these stories memorable? Are there any common themes to ideas that stick? Will these themes help our ideas stick?


Chip and Dan Heath in their book Made to Stick have done exhaustive research on what makes ideas stick and as it turns out there are several common characteristics that may be applied to any idea or course of study.

So what helps an idea stick? The authors identify six concepts that make ideas more stickable: Simple, Unexpected, Concrete, Credible, Emotional, and in the form of a Story. The book develops each of these concepts. A stickable idea may not use every element, but the more it uses the better.

Most text books and lectures have not been particularly strong in using the Made to Stick principles. As we move into the Information era this will surely change. If you think about it, how information is presented makes all the difference, regardless of the idea or subject matter.

With the Internet virtually everything we know is available or will be available on-line. Unlike the classroom setting the Internet gives people a choice. Information presented in the simplest, most understandable and most attractive form will get top priority. People will learn rather than be taught much of what they know. Today knowledge can be broadly categorized in two forms: that which we know and that which we know where to find. As mankind's knowledge base continues to expand, knowing how to find information we need will become increasingly more important.

Our school system was developed during the Agricultural era and most of the teaching methods are still from that era. Back then most people did not continue on with advanced learning. Only the brightest and highly motivated continued to learn. Information presenters--teachers--had very little incentive to wrap their knowledge in an attractive format. Presenters of today and tomorrow will compete for the minds of the learners. Presenters who employ the principles in Made to Stick will have the advantage.

The Big Picture

If you heard only of Ben Carson's childhood you would be amazed to learn he is now the director of pediatric neurosurgery at Johns Hopkins Medical Institutions.

The inner city of Detroit, Michigan was his home and as a youth he gained the nickname of "Dummy." He looked destined to live the fate of too many that grow up in such circumstances. His mother had other ideas; she curtailed TV watching and required her boys to read two books a week and write reports on them. (They didn't know it at the time, but she couldn't read the reports.)

There are at least three ways to learn: visual (seeing things in writing), auditory (lectures, audio-tapes), and kinesthetic (learning by doing, hands-on). At school Ben had been in an auditory environment and things weren't sinking in. Reading turned out to be his strong point and a new world opened up to him. Within a year he went from the class dummy to the top of the class. He graduated from high school with honors went on to Yale University and then received his medical training at the University of Michigan.

At the outset of his medical schooling he again struggled to learn the material. His councilor even suggested that medical school might not be for him; he knew better. He stopped attending most of the class lectures and immersed himself in his medical texts and any other related texts or materials he could get his hands on. In addition, he made a point of attending all lab sessions to get the hands-on experience. His dramatic improvement shocked not only his councilor, but himself as well.

The Big Picture is not about Ben Carson the neurosurgeon, it's about what was required to take Ben Carson from what was--by all outward appearances--a no account black kid in the slums of Detroit to the top of his field in the medical profession and then beyond.

The principles he used will help us all succeed in whatever we do in life. These principles transcend race, religion, personal background and political correctness. We don't alway like to hear them, but they are indispensible just the same: working hard; accepting hardships and working through them; refusing to accept the "I'm a victim someone should do something" mentality so prevalent in our society; doing things differently if the established way does not work for you; being nice to people and doing good things for them just because you can; and, if you are a parent, accepting the responsibility and realizing that being a parent is more important than anything else you may do (even brain surgery).

Finally, Ben Carson is a Christian he has no reservations about that and he has a deep abiding faith in God and believes it has made all he does possible.

Maybe This is the Real Meaning of Life All Along..

A brilliant video showcasing Alan Watt's ideas. Watts was a philosopher, writer, speaker, and student of comparative religion. He was best known as an interpreter and popularizer of Asian philosophies for a Western audience. Remember to sing and dance, people!

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Mortgage Interest and Tax Advantaged Investments

A few basic principles of personal finance apply to almost every homeowner. If money is not a concern these principles may seem less important because the water is deep, so to speak, and many of the hazards of life are covered over. The hazards are still there you just miss them. If, like most people, you are boating in shallower water the chance of hitting a hazard or two during your lifetime is greater. The closer these principles are followed the easier it is to get around hazards without sinking your ship.

• Spend less than you earn. This may seem obvious, but in our world of have it all now and easy credit this rock sinks a lot of boats.
• If you use credit cards pay off the entire balance every billing cycle.
• Keep your home mortgage as high as you can for as long as you can. This may fly in the face of all you have been told, but don't dismiss the idea yet.
• Build an emergency fund large enough to pay off your home mortgage.

Earning and Spending

I will only say here if you do not know how much is coming in and where it is being spent you can never spend less than you earn. Budgeting doesn't have to be elaborate or detailed, but you must understand where your money goes.

Credit Cards

Credit cards are a most useful tool if you have self control. Make all routine purchases using your cc. If you have the money then paying with your cc gives you a receipt and lets you postpone payment until the end of the billing cycle; essentially you're getting use of free money for up to 30 days depending on when your billing cycle ends. If you have saved up for a larger ticket item make the purchase with your cc for the reasons above. If you don't have the money for the purchase never use your cc to pay for it.

No self control? No credit cards. You must be honest with yourself on this one. Debit cards or cash also work well.

Home Mortgage

When we were just starting out together in life my wife and I bought our first house. The interest rate on the loan was 12%, ouch!

I majored in finance and thought I knew something about personal finance, and we knew all the cliches: Interest, those that understand it collect it, those that don't pay it; Debt is a strict task master it never sleeps, never takes a vacation if you can't repay it, it crushes you; You're never really free while your in debt. With a 12% interest rate those sayings seemed all too true; we wanted our freedom back. We decided to start making additional principal payments on our mortgage every month.

Since I was an employee I reasoned I would only earn a specific amount of money during my life time, I hoped to add to that some day with investment income, but at any rate a finite sum. The more we paid in interest during our lifetime meant less we had for other things.

Even though we were not bringing home all that much money, we faithfully paid extra principal every month. And not just a little, we made big sacrifices paying as much as $1,000 in extra principal each month. I spent hours with my financial calculator and graph paper (there were no laptops or PCs) mapping out how quickly we could get out from under that mortgage. We made extra principal payments for several years and I have to say it was exciting to watch the principal amount of the loan drop dramatically over that time.

Then we bought a new home. We had a large amount of equity--at least for us--to put into the new home, but the price was also much higher so we ended up with more debt than what we had started with on our first home. Fortunately by then interest rates were much lower, our new mortgage payment wasn't much different than the old payment.

By this time my wife was not working. They say most people are one paycheck away from being on the street; we had a small emergency fund so we were maybe four paychecks from the street. For me, being so vulnerable was not acceptable; we needed greater security. That meant not putting all of our money into paying off the mortgage.

I worried during those years of extra principal payments about what would happen if I lost my job and couldn't make next month's payment. For lenders the primary thing is that you make your next scheduled payment. How consistent you have been in the past means nothing if you cannot make your next scheduled payment. On our first mortgage we had paid enough additional principal to be about fifteen years ahead of scheduled payments, but if we missed the next monthly payment we were in trouble. No matter how far ahead you are next month's payment must still be paid.

We stopped making extra principal payments and built up our emergency fund. An emergency fund should be liquid--in very short-term investments that can be converted to cash quickly--and in safe types of investments; your emergency fund is no good if it's not available when you need it.

Warning

Before I go on I must give a caution: Too often we rely on our government and its programs to take care of us and bail us out if problems arise. First, relying on government is never a good thing because it generally requires giving up some of our freedoms (think taxes, and IRA and 401k requirements). Second, when we know the government is there and will take care of us we become lazy and do not exercise the caution we should in considering the safety of investments. What I am about to share I believe meets the requirements of safe and liquid, but should be considered seriously to determine if it is a strategy that will work for you.

Emergency Fund

Conventional wisdom says paying off your mortgage is the best thing to do. However, conventional wisdom never looses its job or has other real life catastrophes that might keep it from making a mortgage payment, and there are other factors to consider. Having enough money to completely eliminate your mortgage may be a better strategy. There is a tax advantage to having a mortgage and some disadvantages to having no mortgage or one that is small in relation to the value of your home.

Mortgage interest is tax deductible, this is powerful because it means the government is paying part of your interest expense (as an aside, one of the reasons you do not want credit card and consumer debt is because interest expense on these borrowings is not tax deductible). If you have no mortgage then you have a considerable amount of your money--equity--tied up in an asset that is illiquid and earning no income. Some people look at house appreciation and say their equity is earning a return, but think about it, whether you have one hundred percent equity in your home or none the appreciation is the same. So, equity taken out of your home can be invested to earn additional income and in safer and more liquid investments.

In the wrong type of real estate market you may wait months if not years to sell your home. We had a great real estate market for many years, prices usually went up and houses usually sold fast. Now things have changed and at the very time you may need to sell your home quickly you may not be able to.

You are more likely to be foreclosed on with a small mortgage and a lot of equity in your home if you get into trouble and cannot make your payments. Imagine you are a mortgage lender and you have two loans outstanding, one with a lot of equity and one with no equity. Both borrowers are having trouble making their payments. The house with a lot of equity can be sold--at a discount if necessary--the loan repaid and likely with enough equity left to cover the costs of foreclosure. If the house with no equity is foreclosed on and sold at a discount the proceeds will not even cover the loan on the property let alone the foreclosure costs. If you were the lender which house would you foreclose on first?

Building an emergency fund with the goal of having at least enough to pay off your entire mortgage puts you in a nice position. Let's say you are just starting and your fund is only $15,000 or $20,000, even with this much if you have a problem and cannot make your mortgage payments from your regular income you can make a lot of monthly payments from your fund while you resolve the problem or sell the home. With time your fund will grow and the larger it gets the more money it will earn each year. When you have enough in your fund to pay off your mortgage isn't that essentially the same as not being in debt? You could pay the mortgage off if you wanted to, but you would still have a large sum parked in an illiquid asset and not earning any return.

One final consideration is using investment vehicles that will allow your money to grow tax free and also be able to be drawn on and used without paying taxes. These vehicles exist and combined with tax deductible mortgage interest make it possible to accumulate a good sized emergency fund in less time than you would think.

If this makes sense to you there are people that can help you explore these options. I'm not one of them and I receive nothing from them for making this recommendation. Douglas R. Andrew has written four books: Missed Fortune, Missed Fortune 101, The Last Chance Millionaire, and Millionaire By Thirty. I highly recommend the first two, the third was not as good and the last one I haven't read yet. Doug's website http://www.missedfortune.com/ is the place to start. His staff can help you find someone in your area that understands these principles.

If you do what everybody else does--live from paycheck to paycheck with a lot of illiquid funds locked up in your house--you will get what everybody else gets. There are much better alternatives, take time to educate yourself and do what is best for you.

Government meddling, part 2

I didn't intend this blog to be a rant about government, but there are some things happening right now that really bother me. If the Democrats were in control and these things were happening I could live with it, but from the party of "less government and free markets" it's unconscionable.

President Bush has approved the stimulus package passed by Congress. That means Americans will be getting some amount of money from the government. Our government leaders hope we will spend the money to stimulate the economy. Deception is going on here; you see the market cannot tell who spends money. Whether it's me, you or the government, money that is spent stimulates the economy. During FDR's administration billions were spent by government to "stimulate" the economy. This time around our government wants to make us feel like they are doing all they can to rev up the economy by benevolently giving us money to spend.

My problem with this is where did our government get the money in the first place? The government is not a for profit entity it's a consumer. It can only get money from taxes and levies, borrowing, or printing more money.

If it took money from us (taxes and levies) why did it take more than was needed to run the government? Excesive taxes are unacceptable. We should spend our money as we see fit. Just because our leaders--and I use the term loosely--decide to give some of our money back does not make them the generous and benevolent people they want us to think they are.

If the government borrows the money to give to us then eventually it must be paid back and where will the funds come from to do that? From us! I don't want our leaders deciding when I should borrow money, that is unacceptable also. The only exception would be to defend our nation, but I won't get into the war at this time.

If the government prints excess money that's called inflation. Inflation is an economy killer and would do more damage than can be overcome by the stimulus package. Spending can stimulate the economy, but you have to follow the process all the way through to see if it makes sense. I want more accountability from government and less tinkering with the economy.

Government meddling only makes things worse

When it comes to the functioning of a free society there are some rules that hold true even if we choose to ignore them. Freedom works best when there are a basic set of rules that govern conduct. Whether we are talking about not punching your neighbor in the nose or how things are owned the rule of law must define what is appropriate.

The rule of law--like the rules of a game, say baseball--defines the boundaries for play and how the game is played, but it is not the same as playing the game. Once the boundaries and rules are set referees enforce the rules when the game is played, but neither the rule makers nor the referees tell the players what strategies to employ.

Even though central planning has failed dramatically during the 20th century--Soviet Union and Communist China are two large examples--there is a group of intellectuals within our society that believe some social functions must be provided by the rule makers rather than the players. In fact they believe the rule makers can provide better service than the players. There are so many examples of this in our society it's impossible to list them all, but a few recent examples include the No Child Left Behind requirements for public schools, health care requirements enforced by government and the economic stimulus package just approved by President Bush.

The temptation, by those who are elected or appointed to serve in government, to believe that if really smart people --defined as them--do the central planning it will work, but there is an inherent flaw in this reasoning. Thomas Sowell explains why even the very smartest can never know enough to efficiently manage the entire economy.
http://jewishworldreview.com/cols/sowell051607.php3

In his book What On Earth Have I Done? Robert Fulghum http://www.robertfulghum.com/ brings me back from the Solar System to the neighborhood. Pick a question and answer it.

Did you ever have a great teacher—in school or out? Tell me.
What would you be learning—if you had the time?
What would you have learned to do if you knew then what you know now?
What would you teach, if you were asked?
Teach me something. Anything.
Do you know any silly tricks? Coins, cards, face contortions?
If you could be an eyewitness to some event in history, which one?
If you could see anyplace in the world before human history—where and why?
Who would you like to see naked?
Who do you admire? Who admires you?
Answer the unasked question—something you know but nobody would ever ask about and you would never volunteer.
Decisions of consequence—what forks in the road were on your Way—and what if you had taken the other path?
Pick another place/time in modern history—since 1770—to live.
Book, movie, you’ve read/seen more than once. Why?
What ability/talent do you not have but would like to have?
Ever thought about changing your appearance or identity? And?
If you were a spy, what would be your cover?
What was the worst/best summer job you ever had?
If you could know how your life will end but you still could not change it, would you want to know? Why or why not?
If you could live one short episode of your life over again—a day, week, month—which would it be? And Why?
Do you remember your first love? Tell me.
Have you ever experienced the kindness of a stranger? How?
Do you ever have any bizarre thoughts?

More on this later.

The Endless Dance

Ships that pass in the night? Jupiter and Venus in the morning sky on January 31, 2008. They look so close together and yet Venus' orbit is closer to the Sun than Earth's orbit; Jupiter's orbit is way out past Mars. They looked close together that Thursday morning because of their respective orbits around the Sun and where the Earth is in its orbit. Venus, the smaller planet, is the brighter object because it is so much closer than Jupiter is to Earth.

Still these planets have a relationship with each other and all the planets in our Solar System; if we could view them from above and if they left a trace of their path we would see a spiral-like design moving through space, somewhat like a couple waltzing around the edge of a dance floor. This has gone on for millions of years.

We are part of that waltz. Do we make a difference?