No Time for Rationality
So convenient a thing to be a reasonable creature, since it enables one to find or make a reason for every thing one has a mind to do.
Ben Franklin
A man always has two reasons for doing anything: a good reason and the real reason.
J.P. Morgan
Humans are rationalization machines. Most people think that in our process of making decisions we:
Methodically gather facts and data
Carefully mull over what we’ve learned
Arrive at a conclusion after careful deliberation
In reality, the order is usually reversed. What actually happens:
Arrive at emotionally charged conclusion based on existing beliefs and prior experience
Hastily search for or invent reasons for this conclusion
Methodically use language to make our reasons compelling
Most of the time it’s conclusion first, reasons second.
The degree to which you feel this is true is largely based on how good you are at rationalizing. If you disagree with this point and think you fit more in camp #1, you’re likely very smart.
High intelligence is great for many things, but it can be particularly dangerous because it means you are very, very good at inventing reasons not to do things.
This might sound like a good thing to do, but it is actually a huge disadvantage.
Smart people sometimes seem almost allergic to optimism. I think this is because it just doesn’t sound smart. Here’s Morgan Housel:
Pessimism is intellectually seductive in a way optimism only wishes it could be.
Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention.
Hearing that the world is going to hell is more interesting than forecasting that things will gradually get better over time, even if the latter is accurate for most people most of the time. Pessimism can be hard to distinguish from critical thinking and is often taken more seriously than optimism, which can be hard to distinguish from salesmanship and aloofness.
Because…Reasons
Our brains are reason-inventing machines. They’re so good at it it’s probably fair for it to be considered a superpower. Like all superpowers, it can be used for good or for evil.
Most people use their powers of rationalization to come up with reasons things won’t work. Given enough time, we can invent a thousand very compelling and scary sounding scenarios for any proposed course of action.
It’s very easy to find reasons something can go wrong because we are biologically programmed to do so. We are less hardwired to look for what can go right.
This is particularly problematic because today, when things go right, they can go really right.
And when things go wrong, we don’t die - it might just mean we lose some money or are slightly embarrassed (to be fair, for some people this is worse than dying)
In short, the upside is huge, the downside is tiny.
A product someone was unsure was any good can go on to improve the lives of millions of people.
A new way to do something can emerge from a random person who combined some basic ideas in a new way.
The balance of outcomes has completed shifted. Whereas natural selection pruned the human race to be naturally risk-averse, the modern world dramatically rewards those who are the most risk-tolerant.
Often, whatever is attempted will not work. Most people will agree that even in this case, the attempt made them a better person and better prepared for whatever comes next.
Isn’t it better to attempt something and fail than to not attempt something at all? This is a deeply personal question everyone must answer for themselves, but the answer to it largely determines the course your life will take.
Invest and then Investigate
This is a saying used by two all-time great investors and partners: George Soros and Stanley Druckenmiller
In investing, the decision to buy or not to buy something starts out as a hunch. If you take that hunch and then beat it to death with hours or days of due diligence about every aspect of the company, industry, and macro economy, then you will end up with very poor results.
The world is so complex and chaotic that you will always be able to find or invent some reason not to buy it.
Interest rates are high.
Instead, Stan and George recognize that if you follow your hunch and commit to the position first, your mindset changes. Then rationality works more in your favor: the reasons to buy more or sell become more balanced, and you generally get something closer to the truth.
In other words, you go ahead and set sail and simply correct course along the way as you learn new information.
This is probably not great advice for the average investor (unless you’re just buying index funds), but it is great advice for starting something new in life. If you simply suspend judgment and rationality and follow that hunch, you will be much more able to correctly balance the decisions and tradeoffs along the way.
If you let rationality and fear take the reins when deciding whether or not to do it, they will always succeed in talking you out of it.
Start First, Reason Later
My favorite scene (and music) from Interstellar is where Cooper throws caution to the wind (vacuum?) to dock his ship back at the Endurance. TARS, the friendly onboard robot, tells him that it isn’t possible. Cooper has no choice - it’s dock or die.
As he approaches the ship TARS reminds him that “this is no time for caution”
If you want to start a business, hobby, I believe the wisest thing you can do at the very beginning is simply suspend judgment.
There is a time for rationality and judgement, but it is not in the beginning of things. If you don’t suspend judgment then I can virtually guarantee you will never get started. You will come up with all kinds of very good reasons why it won’t work or why now isn’t the right time.
Instead, I propose an experiment. If there’s something you’ve been wanting to try, provided you have adequate savings to not starve, then just go for it. It doesn’t have to be big - it could be a hobby or a trip you’ve wanted to take. Commit to it and get started - you don’t need a reason to do so.
I admit this is more difficult if you have dependents (especially children) but it is not impossible. The need of dependents is a good reason not to do something, which means you must be especially careful with it. It can be used as an excuse more easily than almost anything else.
I don’t mean to trash talk rationality. It is wildly important for nearly every area of life - just not for starting something. When you start something you have to be, frankly, quite unreasonable.
Rationality is good and can protect us from mistakes in certain domains and contexts. But it also cuts us off from the much larger but less salient realm of possibility - the realm of what could go right.
When armed with rationality we cannot enter the realm of possibility. There is a time and place to be rational. But it is not at the beginning of something.
Don’t take my word for it. Here’s Henry Ford describing the same phenomenon in the early days of Ford Motor Company:
We get some of our best results from letting fools rush in where angels fear to tread. None of our men are “experts.” We have most unfortunately found it necessary to get rid of a man as soon as he thinks himself an expert - because no one ever considers himself an expert if he really knows his job…The moment one gets into the “expert” state of mind a great number of things become impossible.
And:
All the wise people demonstrated conclusively that the engine could not compete with steam. That is the way with wise people – they are so wise and practical that they always know to a dot just why something cannot be done; they always know the limitations. That is why I never employ an expert in full bloom. If I ever wanted to kill opposition by unfair means I would endow the opposition with experts. They would have so much good advice that I could be sure they would do little work.
Explaining in excruciating detail why something will not work sounds smart; believing something could work and just getting started seems foolish.
Paradoxically, in the long run the former course of action is dumb, the latter smart.
Joel
Big believer in this. I think impulsively making radical/high risk changes in life is usually not a great idea -- you sometimes meet people who follow their intuition over a cliff.
But there's always a safe and reasonable way to start any idea. I like the story of Elon Musk making spreadsheets while inviting rocket scientists to hang out as the first step towards SpaceX.
Modern cities are the tyranny of experts. All these panels and rules and processes are Henry Ford's nightmare projected onto the built environment.
Another banger