Category: Education Through Entrepreneurship

The Disadvantages of Being a Government Monopolist

Isaac Morehouse

I don’t mean being the dominant player in a market. I mean here a much tighter definition of monopoly: legal monopoly.

Governments suck.

The reason they suck is because they are monopolists. The good news is, this means opportunity to outcompete governments for all the stuff they do badly. (At least the parts that anyone actually wants done).

The challenge of competing with governments is of course that they can kill anyone who doesn’t want to be a paying customer. This gives them a huge customer base.

It turns out, people don’t like to be killed. So they pay government to avoid it. They take the services since they had to pay for them anyway to avoid being caged (or killed if they resisted being caged).

But this provides the opening for competitors.

It also turns out, you don’t get good information about how to make your product valuable when everyone is buying it out of fear you will kill them if they don’t. So governments plod along delivering unimaginably stupid services in unimaginably backward ways with terribly high costs and the worst employees in history.

It’s so bad, in fact, and so hopelessly, systematically deaf to information on how to improve, that people clamor to pay even more money to service providers who can do better, even though they are forced to pay government for their services already.

A customer willing to double pay for your service is a great customer!

Companies that deliver services to compete with government get quick feedback from the market on how to do it well. If they don’t act on it, they don’t survive. It’s very tough out there when your customers don’t have the looming fear that you might kill them. But that’s also what makes real value creation possible.

I am bullish on competing governance services. I love them.

Yes, governments can come threaten to kill such service providers if they don’t stop. But luckily governments move slow, are always trying to figure out the laziest way to maintain power, and often lack the foresight to realize a competitive threat before it’s too late.

The real bear case against competing upstarts is that they will succeed, get tired of competing, and morph into one of the many fat sloppy formerly-private rent-seeking appendages of the government. Yuck.

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College Degrees are Dying Proxies

Isaac Morehouse

A College degree was a proxy for employers to help them see if people have what they value.

The cost of tuition plus the time it takes to complete the degree were the key ingredients. Not anything learned.

The logic was, if you can pay the cost and complete it, it’s probably because you are ambitious and resourceful and reliable enough to get a job, get a loan, get a scholarship, borrow from relatives, etc. and stick through it.

So ambition, work ethic, consistency, resourcefulness, basic professionalism, were traits sought. Not degrees. There were not easy ways to prove those traits, and the thinking was you probably couldn’t complete college unless you had them.

But we can now go one level closer to source with a much better proxy for talent. We now have access to demonstrable activities much more directly related to those traits. And the degree is a worse and worse proxy for them.

Being able to spend a ton of money one college is a weaker and weaker proof of these qualities, because college loans are handed out like candy, parents have way more education money for their kids than they used to, more scholarships, grants, etc. In fact, spending a lot of borrowed money on college is now as likely to be a sign of poor judgement, and a lot of your parents money is as likely to be a sign of not being independent or responsible.

Being able to spend a lot of time to complete a degree is weaker as well. Not only because it’s easier to defer earning due to more access to money, but because the college experience itself is less challenging and less connected to the marketplace, and because being able to do the same thing for a long time is no longer highly valued in the workplace. Jobs are far more dynamic and less monotonous, and average tenure is short.

So degrees are dying proxies for desirable traits like ambition, work ethic, consistency, resourcefulness, basic professionalism.

Good! Because now you can show them in better ways. Now you can have a proof closer to source. Proof of work. No long guesswork involved in assuming the action is a real indicator of the trait.

Now you can learn things, build things, and do things out-loud for all to see. You can create a digital footprint that gives a window into your character, skill, and ability. That’s what Crash profiles, pitches, and job campaigns are all about. But there are many ways.

It’s not just about showing expertise or the product of skills, it’s also about showing the process. You can list “Ran a marathon” on a skills profile, but better yet, you can share a series of blog posts breaking down your decision to do it, you training regimen, etc. This provides deep insight into the way you think, pick challenges, engage in self-improvement, overcome obstacles, show up consistently every day for a long period, etc.

You can communicate a history of personal progress as well as the current state of your skills in powerful ways today, and these projects and pitches and media are more directly related to the traits desired than purchased paper.

That’s the world we’re already in and I love it!

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Work is Better for Kids than School

Isaac Morehouse

Child labor laws sound sensible but they are not.

Places poor enough to need children to work will have child labor whether governments ban it or not.

If banned, it will be unenforceable if it’s widespread, or if enforced, will drive child labor to far worse activities than if it were legal.

Unfortunately, you cannot legislate away scarcity.

Places that do not need children to work in harsh conditions will not have them do so. Laws banning it do not bring this about.

But let’s be clearer about the idea of child labor. It’s very much alive today, even in countries wealthy enough to not need kids laboring.

In the US, children are forced to labor at a desk in cinder block rooms for 13 years. It is mandatory and very difficult to escape. They have no choice over the work or the schedule. They earn no pay. They gain few skills that are valuable later in life. They are shamed and punished if they don’t enjoy it, aren’t good at it, or slack.

These same kids are prohibited from voluntarily offering to work for pay. They can’t go hang around a greenhouse and ask to make a few bucks an hour watering plants. Even if they love plants and learn a ton and the owner would like to have them. It is illegal for them to earn money working at their parents business, or selling YouTube editing services to small companies.

Some still find loopholes and ways to do some kinds of work without getting caught. But the majority of the most interesting and valuable kinds of work are way too legally dubious for companies to mess around paying young people. And minimum wage laws price them out of even the simplest roles.

No wonder young people emerge from colleges in their mid-twenties and enter the workforce with little skill and even less idea what the market values. They’ve been forced out of it for more than 20 years.

Children love to play. And they love to work on goals and things they value. They love being around adults and learning from them. They love helping. They love earning money and the confidence and independence that comes with it.

Instead they are raised away from the free market in a low value master-slave setting and banned from breaking free.

No wonder most people have such an unhealthy relationship to work and wages and commerce and companies.

More freedom to work and less coerced labor in school would be awesome for everyone.

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Realizing Everyone is Making it Up

Isaac Morehouse

There’s a huge difference between being an employee and an owner.

It’s not about the work itself. Employees can do everything owners can do, and often more. It’s about the mindset. Employees get to maintain one of the most comfortable illusions in human nature. The illusion that there is a set of answers.

No one believes those answers are always correct. But the idea that they exist is a mental backstop that relieves a ton of stress. I might not know the answer, but it exists, and someone knows it. I can disagree with it, but it’s there.

The realization upon becoming an owner is that there is no such thing as answers that exist out there in the universe. You make them up. You make all of it up. And there’s no way to know if it’s right and no one to judge it or reward or punish you. There is only you and reality and whatever you make up to mediate and navigate between the two.

It’s unsettling. But it’s true. Everyone is making everything up.

It’s true in other areas too. Your health, for example. If you have some symptoms it’s not like somewhere some guy has the answers. Whoever you consult with, they will take in the facts they can gather as they see them, and make up what they think is going on. It’s comforting when they have more experience in making up such things than you. But at the end of the day, they are just making it up.

There are no guarantees.

To be an owner of anything – a business, your health, relationships, and life – is to realize you are making it up. Winning is getting comfortable with that fact.

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The Only Thing Stupider Than Your Policy Ideas is Trying to Enact Them

Isaac Morehouse

I’ve been hearing a lot of smart people lately talk about “We”.

“We have too many people studying X”

“We need more people to learn Y”

There’s all kind of discussion on problems “We” face in the macro economy, and debates about which uses of violence will best help “Us” achieve some imagined state of aggregate balance.

I hate these discussions. Like the thief in Dirty Harry, I’m always asking, “Who’s ‘we’ sucka?”

It’s one thing to make an argument that more individuals would get greater returns doing X than Y, or that common ideas about economic or cultural value are off base. These are great discussions. But when they move from individuals to aggregates, and especially when they move from exploration or persuasion to policy, they descend into stupidity. Or more precisely, what Hayek called the Fatal Conceit.

The good news is nobody has to know the answer to these complicated debates. And that really is very good news. No matter how much brain power you have, there’s no way you could ever know the ‘correct’ number of individuals who should be doing X or Y. But back to the good news. You don’t need to know these answers – nobody does – as long as there’s a discovery process where they can emerge and adjust in a constant evolutionary dance.

And there is such a process!

It’s called the market. It’s anywhere people are not prevented by violence from peacefully creating, building, trading, and saving. These miraculous things called prices emerge. Prices are information wrapped in incentives. If an activity wanes in value to people, its price will decline. When its price declines, fewer people will be attracted to that activity and go do things where the price is rising due to higher value-creation potential.

Of course the market process in any snapshot of time will never reflect the impossible to define ‘perfect’ mix of things from any one individual’s subjective point of view. That’s not possible of any system and if it was we’d all be dead. It’s stupid to judge things against that standard. What it does reflect is reality. And it allows for you and everyone else to act to change reality based on your preferences always all the time, granted to you don’t do it by using violence against others.

Turns out, it produces miracles beyond our wildest dreams.

For that reason, I don’t care what some smart people with the Pretense of Knowledge think about what money should be taken by violence from whom and what other people should be forced by violence to do some activity so their imagined aggregate equilibrium can be achieved. It’s a fool’s errand to plot it out and a sociopath’s to attempt to enact it.

Focus on freeing the discovery process from violent impediments. Ceaselessly and relentlessly. Focus on building and persuading through voluntary exchange. Everything else is the lowest form of barbarism and utterly anti-humanitarian.

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What Does Aggregated Information Mean?

Isaac Morehouse

Prices are information. They provide both info and incentive for individual actors to help them determine how to allocate resources. I love prices and the way they emerge.

But on a massive scale and when aggregated, they can get pretty wild. You can see anything you want in the info they convey. Especially in nascent markets.

There’s another crypto bull run going on, after a long ‘crypto winter’. No one really knows why the prices are climbing, though everyone will do their best to figure it out and tell you. There’s nothing that has really changed since the last big run up and dip. In fact, the brand leader BTC has arguably gotten technologically less feasible since then. No major advancements or breakthroughs in usage, tech, or adoption. (Yes, I know, fans of each coin will list 100 things that have happened. My point is that none of these are clear and compelling to general audience sufficient to explain the price spike). The only big happening is Facebook announcing the creation of their own coin. This could either be a threat to BTC and others, or a boon. Or nothing at all. It’s hard to tell. You would expect those betting on each of these three outcomes to more or less cancel each other out, rather than the bulls to dominate the market and drive up price.

I love massive run-ups. I also love massive dips. Not so much for the financial outcome (though I hold some crypto and have benefited from low buying prices and high selling prices at times). I love them because they are entertaining and revealing. People can’t help but show their feelings in a massive bull or bear market. You learn a lot about the state of crypto fans, traders, and doubters in the big swings. Mostly what I learn is that vocal crypto fans are almost entirely fans for gambling purposes. Very few care or know about anything but price. There’s a small cluster behind each coin that cares about use cases and development, and a small spread of agnostics who are interested in the crypto market’s overall real world application. Otherwise it’s 90% speculators. Speculators are wildly entertaining and overreact to everything in every direction. They make sports fans seem sane by comparison.

So what do the recent price spikes mean? Beats me, but I’ll have my popcorn and Twitter feed ready.

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