Rousseau On Luxury: 10 Thoughts and more...

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Rousseau On Luxury: 10 Thoughts

"For luxury either comes of riches or makes them necessary; it corrupts at once rich and poor, the rich by possession and the poor by covetousness; it sells the country to softness and vanity, and takes away from the State all its citizens, to make them slaves one to another, and one and all to public opinion."
--Jean-Jacques Rousseau, from The Social Contract


If I had to distill some useful rules and courses of action from this famous quote from Rousseau, here’s what I’d come up with:

1) If you have money, do not flaunt it. Ever.

2) Do not status compete. You only make life that much harder for everyone else.

3) We live in a world of constructed preferences and Diderot Effects, which means having more money often makes you need still more money.

4) Luxury products also typically oblige you to learn copious amounts of phony, ersatz knowledge, wasting your time and cognitive bandwidth.

5) Thus if you don't have money now, but one day would actually like to have some, avoid luxury and all the costs that go with it.

6) To avoid "softness and vanity" don't spend money as a default solution to solve problems. Instead, learn how to solve the problem without spending money or buying a product.

7) Friends who care or make note of what you drive, how you live or "who" you wear are not your friends. We all know this intellectually, but...

8) Ignore the rich. And aggressively ignore "the rich" as an entity presented to us by BS vendors in the media.

9) Instead, learn how they got rich in order to learn possible courses of action that you might pursue to improve your family's financial situation.

10) Note also: "the rich" presented to us in the entertainment media are usually hilariously far from rich.

BONUS) Teach people to save and to invest. Do not encourage them to spend or signal.

Readers, what thoughts would you add here?

You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

And, if you are interested at all in cryptocurrencies, yet another way you can help support my work here is to use this link to open up your own cryptocurrency account at Coinbase. I will receive a small affiliate commission with each opened account. Once again, thank you for your support!

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How Cut Through The Bullsh*t

It's interesting (uh, well, to me at least) how writing a post on one topic often inspires a tangential post, then another tangential post, and then another... until you're totally orthogonal to the original topic. Two weeks ago I wrote a post on how we fool ourselves by reading and talking about things, then last week I pursued a tangent on how cooking is a beautifully action-based, low-BS domain.


Today is the orthogonal essay: it's a humble (and probably incompetent) effort on my part to structure my thoughts on BS in general, and how to cut through it. It's a bit of a mindwank, it has nothing to do with cooking, and worst of all it's probably too long. Feel free to skip it.

With that friendly warning out of the way, let's get into the BS.

Defining BS
First, let me spend a minute defining what BS is, at least by my thinking. It's when someone starts giving opinions that are:

1) Frequently without any serious knowledge of the subject, and
2) Typically unaccompanied by any concrete action, planning or goals.

Essentially, BS is talk ("tawk") with neither follow-through nor competence.

One other fascinating characteristic of BS: a person BS-ing never thinks he's BS-ing. That's how it works. If you realized you were outside your circle of competence and had no idea what you were talking about, you wouldn't offer an opinion! Or at the least you'd severely qualify that opinion beforehand.

Finally, the worst characteristic of BS: we all do it and we all like to think we don't.

Some examples of BS might be:

* I can't believe how greedy Big Food is. They make all these delicious, high fat foods just to make us all fat.
* Our government was so stupid to bail out the banks back in 2009.
* This summer Tom Brady and Bill Belichick are finally going to split up. I can feel it coming.
* The rich really ought to pay more in taxes.
* The stock market is overvalued and about to crash.

Two quick caveats: First, I'm not saying that these statements are true or false. I could have easily offered contra-statements to each of the above examples and they'd still be BS. Second, there is nothing necessarily wrong with making statements like these. At least from time to time.

But there is, however, something very wrong if this describes the vast majority of the statements someone makes. Why? Because they are all passive (even effete) statements, unaccompanied by personal action, personal growth, or personal accountability.

The single worst source of BS
Of course, the worst source of BS is media-packaged news, and TV news is the worst of the worst. A vast portion of the punditry opining on television, in editorials and in print and online media are spreading BS too, and this gets us into an important (and toxic) aspect of BS: typically, media pundits make highly confident statements with no accountability whatsoever if it turns out that they're wrong. This lack of accountability is important: it's why Nicholas Taleb angrily uses the phrase "BS vendors" to describe most punditry. It's deeply unfair and unethical if you attempt to persuade people around you to hold an opinion, but you yourself have no downside exposure if that opinion is wrong.

Worse still, the media (and its confidently-stated opinions) tends to be the source of most of the topics we talk about. Let's face it, most people need to be given things to think. Sadly, salient, attention-garnering topics like like crime, violence, inflation, unemployment, inequality, obesity, the latest in studies show science, politics, etc., is what the media gives us to think about. And talk about. This is true only to the extent we consume media and news of course.

A simple solution to BS
Now, let's move on to solutions. Let's say someone around you starts regurgitating opinions on some topic du jour. And you, well, you don't enjoy BS-ing. You don't enjoy trading effete opinions about the world or getting into debates over things that are entirely outside your circle of control. You're much more interested in learning something useful about how the other person thinks, or learning something useful about how to navigate reality. How best to cut through the BS?

Here's what to do: use open-ended questions to ask what specific actions others are taking. What specifically are they doing to prepare for the outcomes they consider likely, for the outcomes that will happen if their opinions are correct?

For a concrete example, let's say you're talking to someone opining confidently that the stock market is massively overvalued and about to crash. Useful open-ended questions to ask might be phrased in these ways:

* Tell me, what are you personally doing about this?
* Would you share with me what you are specifically doing in your personal situation to prepare for what you think is going to happen?
* If you think X is a major problem, what actions are your taking, then, to protect yourself and your family?

Suddenly, the conversation stops being about hand-wringing and pontificating and starts being about how to function more effectively in a world where we hold a given set of opinions. It becomes about how to better navigate reality. It becomes useful, actionable and solution-minded, and no longer just "tawk."

Then again, if the person doesn't have a ready answer to any of these questions, if they mumble, if they come up empty-handed and can't immediately offer any concrete actions they've taken... then they are BS-ing. Both themselves and you. It's time to smile, agree and deflect.

In my former investing career, we used a slightly more jargon-based phrasing of the same question: "Okay, so you think X [the stock market's going to crash/hyperinflation is coming/rates are going higher, etc]. How are you positioned?"

The opining person then has an opportunity to describe what specific actions they've taken: in this case it would likely be a list of the various investment actions they've taken to manage any exposure to their opinion set.

This is a gloriously BS-vaporizing question. It tells you instantly if the person is BS-ing your or not. If someone thought hyperinflation was coming and wanted to say so credibly, they'd be able to articulate specific investment actions they've taken to prepare. Instantly.

Thus if the answer is something like "I hold 25% of my assets in gold, the only stocks I have left are either of companies with very strong pricing power or of companies that have direct commodity exposure, I'm experimenting with some small investments in cryptocurrencies, and I recently bought some arable land in Upstate New York just in case" I can be fairly confident that this person is not BS-ing me. Why? Because it's not just "tawk"! He has taken meaningful financial actions to protect himself from the specific risks he's concerned about.

He might be right or he might be wrong, but at least he isn't BS-ing you.

This is totally, totally different from a pundit BS-ing on TV. Media pundits rarely disclose how they are positioned--and they are likely not positioned in any way at all. Thus they get the benefits of media attention today with zero downside and zero accountability if wrong about their opinions.[1] They get all the upside, while you--the consumer innocently seeking advice and counsel from "experts" in the financial media--suffer all the downside.[2]

We're all BS vendors now
If you think about it, the same thing happen in person-to-person BS as happens with media pundit BS-ing: Opining with no downside. Which is why the question "what specific actions have you taken?" is so clarifying and so anti-BS. It takes the conversation into specific solutions so you can see whether the person opining has any skin in the game, and whether their opinion merits being listened to.

One quick caveat: we probably ought to exclude high BS/low personal action domains like sports from this discussion. If someone spouts the opinion "I think Tom Brady and Bill Belichick are finally going to split up this summer." and you ask "what specific actions are you taking to prepare for this?" you'll get a blank stare. At best.

BS heuristics
I'll close this post off with a few more heuristics on high-BS domains:

1) Any domain where there exists jargon easily adopted and regurgitated by everyone (e.g., bump stocks, quantitative easing, tariffs, etc.) is likely a very high-BS domain. The jargon--and our easy use of it--tends to give us a dangerous illusion of knowledge.

2) Some domains are by definition non-action based and therefore high-BS: politics and economics are worst offenders here. See also professional sports. Again, it's totally fine to talk about these or any other BS-heavy topics! Just know it for what it is.

3) Anything heavily covered in the news or media is likely high-BS. Generally these subjects are laughably oversimplified, offer enormous illusion-of-competence risks, and typically the debate is already pre-framed for us, if not outright propagandized. This is a feature, not a bug, of media coverage.

And, to make this post a little more action-based, let me offer two heuristics we can use to detect and limit our own BS:

1) Try to not forget, ever, that we know very much less than we think we know.

2) It pays to drastically limit our strongly-held opinions. At the very least to limit them only to domains that we have actually performed at an advanced level.

These last two heuristics have a lot to do with the deliciously ironic Dunning-Kruger Effect, which essentially says that people vastly overestimate their competence when they are incompetent in a given domain. And once they actually start to get good at that domain, only then do they begin to realize how incompetent they are (and were). This is psychology's embodiment of Bertrand Russell's fabulous quote "The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt."

Which takes us to our final conclusion. In those (likely very, very few) domains where you have truly deep expertise, you will have tremendous humility about your opinions, and if you have a strong opinion it is a reliable indicator that in that domain you are BS-ing and do not know it.

READ NEXT: Using Your Sophistication and Great Taste Against You

[1] It's a useful exercise for practicing epistemic humility (and also like shooting fish in a barrel) to come up with examples of pundit wrongness. Here are three from the finance and investing media that stick in my mind:
a) "Legendary" investor Bill Miller repeatedly recommended bank stocks on CNBC mere months before the 2008 bank crisis;
b) After allegedly "predicting" the 2008-2009 crash, economic pundit Nouriel "Dr. Doom" Roubini continues, broken record-like, to predict doom and gloom for years afterward, keeping many investors out of one of history's best-performing stock markets.
c) The mother of all stock market "heads I win, tails you lose" BS artists might be Elaine Garzarelli, who after blindly lucking into predicting the 1987 crash became a nearly perfect contrary indicator thanks to the utter wrongness of all her market calls thereafter.

[2] Worse still, articles and interviews about crashes and bubbles get extra coverage, so of course the media brings those to us relentlessly. Think back over the past nine (nine!) years since the 2009 stock market bottom. Have you seen more negative or bearish stories than positive stories in the financial media? How many articles attempted to scare you out of stocks all the way up during this incredible, life-altering bull market? Astute readers might be able to deduce a heuristic here to help them improve their financial decision-making in the future.

[3] If you made it this far down the page, congratulations. :)

Readers! You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

And, if you are interested at all in cryptocurrencies, yet another way you can help support my work here is to use this link to open up your own cryptocurrency account at Coinbase. I will receive a small affiliate commission with each opened account. Once again, thank you for your support!


There’s No BS in Cooking

A few follow-up thoughts on last week's post on the difference between doing things and talking about doing things.


Cooking gives us a striking illustration of this difference. You can talk about cooking, you can read about it, you can watch shows about it. But it's painfully obvious to everyone that none of these things is cooking. You can't demonstrate you "know" cooking without actually performing the action of cooking.

Better still, in cooking there is a far lower risk of fooling ourselves with a "psychological sense of completion" compared to other domains. And it's interesting to think about why: it boils down to ego injury. If we make a practice of ingredient bragging, or worse, blather in conversation about advanced cooking techniques yet we can't actually cook, it would be a tremendous ego injury if we get found out. It would be transparently pathetic. Therefore, because the risk of embarrassment is too great, our egos don't (and won't) risk pretending to have expertise we don't have.

All of this makes cooking a wonderfully BS-free domain.

In stark contrast, other fields are buried in BS. Have you ever heard an out-of-shape person talking pseudo-knowledgeably about fitness regimens or diets? Another example: in my former professional field of investing, it's hilariously common to hear people blather on about the stock market or the economy with zero knowledge whatsoever behind their talk. (We're clearly in a stock market bubble right now, and I'm deeply concerned about hyperinflation and ultra-high interest rates once the Treasury stops QE.)

Of course the worst of all examples is the domain of politics. We're all experts here. We all feel justified in having strongly held political opinions, even though 99.9% of us have never held any actual political responsibility and half of the electorate doesn't even vote.

Cooking is refreshingly different, and I wonder if one of the reasons I like it so much as a subject (and why I find so many metaphors and so much to talk about in it) is because it's an action-based, non-bullshit domain. If you can cook something you can cook it. You don't talk to demonstrate your competence in cooking, you don't regurgitate factoids and jargon in conversation to demonstrate your competence in cooking, you cook to demonstrate your competence in cooking. There's no way to hide behind "tawk" like there is in all these other domains.

Have you ever heard anyone sling cooking jargon without knowing anything in the same way people constantly sling investing (or economic, or political) jargon without knowing anything? (Yesterday I was chiffonading some local organic collard greens, and I thought, gosh, if I brunoise-diced them instead, they would go great in a sugo that I could simmer in my Chinese ding.)

That is a sentence I'm fairly confident I will never hear spoken. And certainly not by someone who has no idea how to cook.

Sure, okay, there's ingredient bragging and virtue-signaling in cooking. Nothing's ever perfect. And yes, sure, people do watch cooking shows and don't actually cook. But nobody's ego confuses this with actual cooking. You show you can cook by cooking, by preparing food and serving it to friends and family and having them enjoy it. It's refreshing.

READ NEXT: You May Now Ignore All Scientific Studies

Readers! You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

And, if you are interested at all in cryptocurrencies, yet another way you can help support my work here is to use this link to open up your own cryptocurrency account at Coinbase. I will receive a small affiliate commission with each opened account. Once again, thank you for your support!


Fooling Ourselves With Tips and Listicles

A list of tips on "how to do X" is a standard modern mass media staple. If one of these articles happens to come to you (usually via social media), it will likely have three predictable characteristics: it was SEO-optimized, it's a listicle-style article with a clickbait-y title, and it should take roughly three to four minutes to read.

It might even contain useful advice.

People process articles like these in cognitively intriguing ways. For example, one can read a list of 12 Obscenely Easy Tips to Save Money! with a skim-til-offended mindset. And as soon as you stumble onto a tip that strikes you as dumb (cut my own hair? ZOMG only a total loser would do that), you can mentally dismiss the article. Even the entire domain.

What's happening here, cognitively speaking, is the reader reacted by doubling down on her existing belief set. She was waiting, just waiting, for any tip that seemed even the slightest bit stupid. And since some money-saving tips actually are dumb, it should be unsurprising that she found one. The exercise of reading the article--with her specific mindset--reinforces all her worst suspicions about frugality.

What's also astounding is how this reader can actually say she read something "from the other side" and yet, somehow, she still finds evidence confirming her existing beliefs! (See how dumb frugality tips are? Sheesh.) This reader achieved a rare cognitive twofer: she both increased her epistemic arrogance and got slightly dumber at the same time. [Note: this never happens with politics.]

Now, let's consider another example. What if you like frugality (or whatever subject the listicle of "X Easy Tips" happens to cover) and you actually want to put the ideas to work?

Believe it or not, for you, there's an even more dangerous way to read articles like this, especially if it also involves talking about the topic with peers or friends. As much as we wish it weren't true, our brains confuse reading and talking about a domain with practicing that domain.

This deeply unfortunate phenomenon happens in all areas of personal development: losing weight, fitness, cooking at home, writing a novel, decluttering, investing, starting a business, the list goes on. We finish the article--"6 Staggering Advantages of ETFs" let's say--and then we demonstrate our rapidly growing knowledge by regurgitating it in a conversation with a friend. (I've been reading up a lot lately on investing, I'm really leaning towards ETFs rather than index funds. What about you?)

What happens next is fascinating. Our brains get a quick mini-squirt of dopamine and we achieve what psychologists call "a sense of completion." Which means we vaguely feel like we've done something to change our life situation even though we've actually done nothing and taken no action whatsoever.

Pretty soon we'll forget all about the whole thing, and we'll move on to some other listicle-friendly domain. ("8 Awesome Ways to Lose Weight That Big Food Doesn't Want You To Know About!")

It all makes me wonder sometimes whether there's an entirely inverse relationship between how much people read and talk about doing things and to what extent they actually do them.

READ NEXT: Tips Vs. Strategies
And: Epistemic Arrogance

Readers! You can help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!

And, if you are interested at all in cryptocurrencies, yet another way you can help support my work here is to use this link to open up your own cryptocurrency account at Coinbase. I will receive a small affiliate commission with each opened account. Once again, thank you for your support!


Four Reasons the Retail Apocalypse Hurts Frugal Consumers

In our last post we talked about how the decline of physical retailing is great for the environment. That was the good news.

But there's bad news too, unfortunately: The retail apocalypse is not great for consumers. Not at all.

And for frugal, bargain-hunting consumers, it's going to be really not great. As the retail environment evolves, we're going to get less and less value for the money we spend. Here's why:

1) Retail will become more oligopoly-like and less competitive. If you've read Casual Kitchen's recent posts on inflation and how to beat it, this will be obvious to you, but I'll say it anyway: as more and more physical retailers close down stores and exit the marketplace, the players that remain simply do not have to compete as hard to earn your purchasing dollars. This means higher prices, fewer alternatives, and less value for consumers.

2) Amazon is the mother of all "meet or beat" pricing players. As we know, meet or beat pricing results in higher prices for consumers, not lower prices. When a store claims it will beat any competitor's price, it just gives the other stores in a market an excuse to raise prices. Since consumers shopping in say, Best Buy, can quickly check their phones to compare prices, Amazon has zero incentive to cut prices--after all, they are the benchmark everyone will compare to. Worse, Best Buy has zero incentive to offer any price significantly lower than Amazon either! Neither retailer wants to start a race to the bottom that no one--except consumers--can win.

3) Fewer truly attractive sales. A less competitive retail environment will drive second-order effects: there will be far fewer retailers offering truly attractive sales and doorbuster-type opportunities. Doorbuster pricing and inventory liquidation sales can offer extraordinary value to disciplined and patient consumers--admittedly at the expense of a physical retailer that planned poorly for customer demand. In the increasingly virtual world of retailing, it's much easier to manage inventory, distribution is less complicated, and companies know a lot more about you and what you want (more on this in a moment). Truly glorious sales--the kind that result when a retailer badly misjudges demand and later needs to liquidate unwanted inventory--will be far less common in the new retailing environment.

4) Worse informational asymmetry. Amazon and all the various online information gatherers know a lot more about us than we know about them. As their share of retailing grows, the informational advantage they have over us grows too. We will know less and less about what happens behind the scenes. Worse, we can't see--and most of us are hardly even aware of--all the informational trails we leave online. Online retailers gather this information relentlessly, and use it to their advantage.

Final thoughts
There will be other pros and cons to the new retail beyond the negative impact on consumers. For one thing, there will be lots and lots of job losses. But don't forget: at one time the USA's labor force was 95+% agricultural (it's less than 1% now), and buggy whip manufacturing, whale oil refining and 35mm photography all used to be gigantic industries. Our economy has handled bigger and far more wracking transformations--we'll muddle through this one as well.

It's probably too early to really forecast the cultural impact here, although I can speculate that the Amazoning of retail will further worsen the atomization of our society. I'm sure there will be other cultural impacts that we haven't even thought about.

Finally, remember that one of my central goals here at Casual Kitchen is to help consumers become better informed and more empowered. And there's a laughably easy solution for the coming consumer-unfriendly retail environment--and it's a solution anyone can adopt: just buy less freaking stuff. We have an absurdly consumerist culture here in the USA. Would it be so bad to tone it down a little? No matter how much market share or informational advantages online retail might have, they cannot take away our power and our psychological agency. We are the ones who willingly fish our credit cards out of our pockets and click "buy"--and therefore we consumers are the ones with ultimate power here.

What do you think?

Readers! Despite these secular trends (!), you can still help support the work I do here at Casual Kitchen by visiting Amazon via any link on this site. Amazon pays a small commission to me based on whatever purchase you make on that visit, and it's at no extra cost to you. Thank you!


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