Podcast

Objectivism And The Success Of An Entrepreneur With Dr. David Kelley

TWS 23 | Objectivism

 

Objectivism is the belief that certain things, especially moral truths, exist independently of human knowledge or perception of them. On today’s show, Dr. David Kelley describes the concept of objectivism and its four pillars, as well as the most common, refutes for these tenets. He also discusses the relevance of objectivism as it relates to the success of an entrepreneur. Dr. Kelley is a professional philosopher, teacher, and writer. He is also the Founder of The Atlas Society and the author of numerous works in philosophy, politics, and culture.

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Objectivism And The Success Of An Entrepreneur With Dr. David Kelley

We are still talking about entrepreneurship and I had an awesome opportunity to speak with Dr. David Kelley. He is the Founder of The Atlas Society that he founded in 1990. He’s been a huge advocate of objectivism and has written a number of books. He has a lot of accolades. The Atlas Society has a mountain of information on their website. I really liked the way he described the ideas of objectivism. What he sees the involvement of the Atlas Society in regards to younger entrepreneurs and seeing around the world, whether they describe their activities and their philosophy as objectivism or not still understand its basic tenets. That is causing this entrepreneurial type of drive toward improving someone’s life and improving the world in general. I understand that there are some things we talk about that are somewhat controversial depending on what your perspective is. I would encourage you to read the part where I talk about language. How important it is to use the right words and language to describe what the actual meaning is because these days, things are taken out of context and misconstrued and so forth.

Regardless, it was a great conversation. You guys are going to learn a lot. For those of you who have not read Atlas Shrugged yet, I think this is going to be one that inspires you to do so. Maybe for some who haven’t read it in a while, I inspire you to read it again. You guys are going to enjoy it. If you like what you read, go back and read to the previous episodes in this season. Also, get onto YouTube as well. We have all of our episodes and video. You would enjoy that if you’re visual learners. Thanks for all the support. You are amazing. If you have some time and you like what you’ve read, head over to iTunes and give us a good review. It definitely helps, especially as the way in which finding podcasts has been more difficult. High ratings definitely increase the amount of presence that we have and help us increase our audience and also share up with a friend too. We’ll talk to you next time with another amazing guest. His name is Mike Moyer and he wrote the book, Slicing Pie.

Dr. Kelley, it is such an honor to have you on the show. Thank you so much for taking your time.

It’s a pleasure to be here, Patrick. Thank you.

The first thing that I’m so impressed by is how much of your life and your energy has been focused around advancing the philosophy of objectivism with The Atlas Society and other groups. Would you be able to tell the audience what were the events and circumstances that led to your decision to make that dedication?

I read Ayn Rand in high school at a time when I was thinking about what I wanted to do with my life and what my values were as many people at that age do. It bowled me over that she had developed ideas that speak on to the roads that I began to explore. She had gone much further down those roads. However, what led me to read her in the first place was at what became clear as an emerging interest in philosophy as a branch of knowledge. That’s something I wanted to study. I went to college to study philosophy. You didn’t expect that I would remain as committed to objectivism theoretically as I was when I went to college. Every challenge that from other philosophers, from my professors, I see Ayn Rand had a good answer to. I never saw a reason to change. The reason I stayed with it, my interest I went to grad school, I decided I wanted to teach. I ended up teaching at Vassar College for about ten years and I sent the kids in New York. Afterwards, I continue to write in philosophy and started the organization. I founded The Atlas Society in 1990 as a way to provide information to people who are interested in Ayn Rand’s ideas.

At the time, it already was one major and other minor organizations, but I felt what objectivism needed was a more open and exploratory way of approaching the ideas. The idea that philosophy should grow. Ayn Rand was a genius, but she didn’t discover everything there is to know. We launched The Atlas Society to do research, to do education, to do some advocacy, not at the electoral level, but in terms of political philosophy and finding for capitalism, not just a political but a moral ideal.

Thank you for going through that. Maybe a little further into the topic of objectivism, how would you describe that to the neophyte, the novice that may understand general philosophy, but not objectivism? How would you go about explaining that?

You put a trough of government money out there and the pigs are going to show up. Click To Tweet

I would normally explain it in terms of four pillars. The one that most people are familiar with is that objectivism believes in capitalism. The minimal government, individual rights, free markets, rule of law and government is an empire, but it does not get into the economic game. It protects property rights and contracts but otherwise, it leaves people free to engage in any mutual exchange that both parties want to do. That was the political ideal. That’s pillar number one. Very importantly, this is what I think distinguished Ayn Rand from some other advocates of capitalism, is that she felt it had to be based on a view of the individualism as moral philosophy. That individuals have the moral right, it’s morally proper for them to act on their own judgment and to act for their own benefit, pursuing their rational self-interest. She was an opponent of the ethical doctrine of altruism, which emphasizes sacrifice, helping others, self-sacrifice. She said, “No.” She was very comfortable with the idea of benevolence. In proper cases, helping others when it’s deserved. That is not the core of life. Pillar number three, being a producer, creating value by the use of your own mind in the service of your life.

Not just the monetary rewards, but also what we call the spiritual or emotional rewards of pride in what you’re doing, self-fulfillment and exercising your capacities. She was somewhat distinctive when she talked about this pillar, the idea productiveness as the central value of life. She was somewhat unique and that she thought any production was good. You could be an artist, writer, political leader, businessman, merchant, trader or banker. They were all forms of productive work, all honorable when well done without fraud or dishonesty. She opposed the idea that somehow the arts and other professions are good or honorable and making money is this lowly thing. No, she thought it was a great value. That’s why in her major novel, Atlas Shrugged, the heroes were all people in the business. They ran railroads, they had steel companies and so forth.

The three pillars are capitalism, individualism, including egoism, if you want to call it that, pursuit of self-interest. Third is productiveness, creating value as a core part of a rational life. Finally, the absolutism of reason. She believed that reason was our only guide to knowledge and action, as opposed to faith or emotionalism. That’s why I’ve said rational self-interest. In that respect, she was a secular philosopher, as an advocate of reason exclusively. She did not hold with any form of religious faith or any other faith that was not based on reason.

That’s a great description as far as the pillars are concerned. I would say in what I’ve seen in their research and the reading I’ve done, there are a lot of opponents, those that criticize the idea of capitalism and objectivism. What do you see are the most common refutes for these tenets of objectivism?

Let me start by saying there are many people who object to objectivism or to capitalism in particular on the grounds that it’s selfish. It is. Ayn Rand was an advocate of what you call The Virtue of Selfishness. That was the title of one of her books. What she meant by selfishness is not grasping, exploitative and narcissistic way of living or personalities that are often conceived that people associate the term with. Self-interest means pursuing your best self, your best life by rational standards in which that involves production. It involves treating other people fairly by mutual exchange to mutual benefit, whether we’re talking about economic exchange, but even in friendship and love.

Those relationships are hugely important to us as people, but we need to remain ourselves even in a very close relationship. I think part of the problem here is if people don’t understand what you meant by self-interest. In terms of capitalism, the one objection that I’d worry about a bit is that people say, “This isn’t ideal.” If people were all objectivists committed and acted in accordance with these values, sure the world would be a lot better, but people are not like that. We have crony capitalism. Whenever you get people together and give them any option to cut corners, some people will. My best answer to that question is that we have a mixed economy in which the government has a lot of power over companies and increasingly over our personal lives. In terms of what we eat, what we smoke or whether we smoke and so forth.

Once you have that power in the hands of the government then people are going to try to take advantage of that power to get special privileges because they support a candidate, they get some benefits in return. They clamor, subsidies or regulations that will harm the competition. You know this better than I do. There’s a huge element of cronyism, but that’s largely because the opportunity has been created for that. You put a trough of government money out there and the pigs are going to show up.

The intention behind capitalizing on those opportunities in and of itself revolves around self-interest and selfishness.

TWS 23 | Objectivism

Atlas Shrugged

That is a more conventional type of selfishness. People are looking to build their own nest.

I had an interesting experience. I have two teenage daughters and my wife is Latina and once a year, her friends come over and they have a big party. We’re not allowed at the house that night. I usually take the kids up to Park City because the rates are low and it’s beautiful up there in the fall. My daughter asked me a couple of questions and the first one was fascinating. It relates to this topic because of the misunderstanding of words. She said, “Dad, if somebody has never been able to hear, how do they describe things in their mind? What words do they use?” It was interesting because if somebody who’s never heard words, they probably don’t use words. It’s the understanding of meaning, which is the most important thing. Words are a way of describing it. I agree with you in regards to how individuals have misconstrued the nature of capitalism or objectivism because of a confusion of words and the words’ meaning.

That’s certainly true that people hear the word capitalism and they think that refers to what we have is not pure capitalism. It’s not laissez-faire capitalism. It’s a mixed economy with some large socialist elements like Medicare is a socialist enterprise run by the government. Public education is a social enterprise. We’re not living in a consistently capitalist world. Getting to meanings is hugely important. That’s one of the things that I am particularly interested in because my main interest in philosophy is the theory of knowledge, how we acquire knowledge? How we validate our knowledge? At the core of that is how do we form concepts that we then express in words? How do we form abstractions like the economy, capitalism, good and bad? Your daughter raises a fascinating, psychological question and I don’t know enough about deaf people. I think what I do know is that children tend to learn language rapidly and virtually. Every child who’s ever existed has learned the language and picked it up somehow. With deaf children, they may not be able to hear or speak their language, but there’s sign language if they’re given a chance, they will pick that up.

It was a fascinating dialogue. I wanted to ask you because you’ve had such an extensive career and probably met a lot of people. What are maybe some examples of individuals, groups or someone that may have opposed the ideas of objectivism? Because of an interaction with you or relationship with you or the groups that you’re associated with had that a-ha moment, the epiphany, that awakening.

Many people when they first read one of Ayn Rand’s novels, in particular, have this momentous feeling. The effect is, “This is so right.” Many people say, “She put in words but I’ve believed all along but I didn’t know how to say or was maybe afraid to say because it runs against the beliefs that I was hearing from people around me.” I’ve seen that over and over again with students and with older people. One of the gentlemen who served on our board of trustees at The Atlas Society for many years was already a very successful businessman and then he read Atlas Shrugged. The fact that he read a thousand-page novel in the middle of his busy life and career running a company is pretty amazing. He got in touch with Ayn Rand and then help various projects to help spread the ideas. The point is it’s not for teenagers, which is one of the little snarky things people say about objectivism which is not true. There is something powerful about the way Ayn Rand put ideas. The depth and clarity combined with the emotional power of an ideal. It’s very striking.

I would say, as I’ve earned about marketing, storytelling and business, I read Atlas Shrugged, whether it’s the hero’s journey with John Galt is that the core character and how his journey happens in the different things that he says and other characters and their role. It is fiction, but it paralleled to what society was likely at that point in time but also, it continues to be that way. It’s the understanding of the world that we live in and then that world, but then also the way in which the story is told is fascinating. That’s where for the audience who have not read Atlas Shrugged, it’s quite a large volume of work, but it is profound the impact that it has on your ability to understand life at a more magnified level. Going to where my curiosity lies, there have been cases in which you’ve maybe seen where those that did have influence that was able to read or talk to you or become open to these ideas that have made a difference and has been more influential than someone in college or someone that is a budding entrepreneur reads. Have you seen some significant cases that stand out in your mind?

I know many people. When I founded the organization, part of my job was to get in touch with leaders of other think tanks that at least some overlap with our ideas. I’ve met and talked with many of them over the years. For example, we are having our annual gala in New York City and John Stossel will be there and a number of other people who are maybe not card-carrying objectivists in a sense. They love the ideas and they appreciate the power that those ideas hold and the degree in which they could be effective in moving the country more toward a greater level of freedom.

In terms of whether we’ve had that movement, I don’t know. I like to think that Ayn Rand had some influence. She certainly had some influence over the growth of libertarianism as a political philosophy and that is expounded by Cato Institute and Reason Foundation. The number of other think tanks. We’ve had some degree of deregulation. We have had some change in tax laws that lowered the extent of government expropriation. I think the libertarians who were leading the march on that and Ayn Rand was one of the main inspirations for that movement.

Public education is a social enterprise. We're not living in a consistently capitalist world. Click To Tweet

That’s what I love about your initial comments when you talked about the more openness you had instead of the rigidity of how objectivism was in the very beginning. The flexibility to see how it relates and influences the example you used more libertarian and more economics business movement, which I completely agree with because there’s relevance. It may not be wholeheartedly pure objectivism. At the same time, some of those tenets are going to forward the influence that it has on our overall society.

This is a strategic choice that anyone who’s involved with objectivism has to make. Do you work with, collaborate with the people who share some of your ideas but not all? Do you have to have a complete agreement? I thought in my mind it’s clear that the only way to get ideas out is to be incremental about it. To open the doors to people, to come to take what they can from the philosophy and hope that those seeds will grow into something good in their lives and whatever they go on to do and politically in terms of a greater movement and support for a freer system.

The season that we’re in is entrepreneurship and the nature of that. I look at an understanding of objectivism and ways in which that entrepreneur or entrepreneurial organization could be magnified. What do you usually teach or understand the relevance of objectivism as it relates to the success of an entrepreneur?

There are many ways. One way I like to describe the objective is moral code or ethics. In terms of being an entrepreneur in your own life that is taking the viewpoint that you own your life. It’s yours but you’re also totally responsible. The buck stops at your desk. On the one hand, you’re entitled to everything you earned and you should enjoy it, but you’re also responsible for the risks and the losses. In that respect, I think entrepreneurs at wholeness, especially honored places from an objective standpoint because they are striking out taking a road. No one’s going down before and incurring risks, they hire people, they raise money. They have to inspire confidence, but they have to then succeed. It takes a lot of courage. It takes a lot of integrity, rationality and talks about productiveness as a value. Most entrepreneurs I know spend enormous numbers of hours getting off the ground. Atlas Shrugged is a good Bible for entrepreneurs because it taps and it expresses a beautiful language. It expresses the values that most entrepreneurs have and pursue.

I was going to give that second part of this story with my daughter is the next morning after we had that initial interaction, she was paying attention to the hotel that we were at. This is a unique hotel where it’s in Park City, but you have to take this elevator up that go to this top of the Hill. She started noticing and she said, “Dad, how does something like this happen? How is it created?” The brilliance of kids and how their minds are thinking is fascinating to me. It allowed me to have a conversation to talk about the elements and the material for everything has always existed. It had to do with a human being’s mind to figure out ways in which they could provide value to others.

It’s also the infrastructure that protects intellectual property rights and how businesses are transformed. A person has a degree of certainty associated with what they create. Because there’s an investment required, there’s time involved, there’s putting a team together that there’s a certainty that there will be output. There will be something remunerated. Going through that process allowed her to understand government, laws and property rights. I look at where the minds of children are. The jury’s out that typical education is way behind. Being able to access data to understand facts, you don’t have to memorize it. You don’t have to keep your brain filled with that information because it’s at your fingertips. It’s exploring other ways in which to solve problems and create opportunities. It gives me a lot of confidence in kids, teenagers and even those in the Millennial generation to see the world. The things that are going on and actually taking action to provide opportunities for themselves, but also see that it could provide opportunity and value to others. It was a very serendipitous experience I had with my daughter, given the fact that I have you. I’m sure you get to see those examples a lot.

I do. One of the things that are a constant with me, I live in the middle of a city in an apartment building. I look out my window and all around me. I see nothing except manmade streets, cars, buildings. People, of course, they are natural in a certain way, but they are educated by and engaged in activities that are manmade, artificial and invented by someone. I’m looking at an enormous amount of intelligence embodied in that brick building over there, in the automobile passing below, the guys who are repairing the street. In addition to appreciating the property rights contracts and investments that lie behind all that, it’s also worth thinking about the human soul that is out there, the intelligence and the commitment that went into making the world that we all live in.

That’s a great way of saying it. I look at the same thing with emerging markets, whether it’s Africa or even the Middle East, despite its chaos, there’s so much entrepreneurial activity there and also in Asia. It’s interesting to see a generation that’s wanting more for themselves that wants to get out there and take their ideas, take who they are and bring that value to the marketplace. At the same time, there are lots of chaos and turmoil. There’s also so much to celebrate because it’s not the US anymore, but a lot of other emerging markets are following suit to a degree.

TWS 23 | Objectivism

Objectivism: The buck stops at your desk. You own your life. It’s yours, but you’re also totally responsible.

 

That’s all good. I’m happy to see it.

Dr. Kelley, thank you so much for your time. Would you mind telling the audience the best ways to either follow you or support The Atlas Society or learning more about objectivism? What are some ways that they can do that?

The best way is to go to our website, AtlasSociety.org. We have done probably thousands of articles, courses, videos. We have been producing some very short videos that are called Draw My Life videos where we personify something like envy, money or some topic we want to talk about. The videos are very captivating. They usually get a million views at a minimum. That’s a good entry point to learn more. We also have courses you can take and articles you can read. Probably the best thing to do would be to sign up for our newsletter. Once a week, we send out a bulletin on what’s going on. You can opt in and see if you like it.

Our nonprofit organization is supported by donors. We do not accept any government money. We have a very strong board of trustees who themselves are major contributors but also oversee the operations and to preserve the integrity. If you like what you see, I would definitely urge you to even contribute right on the site. There’s a donate button in the corner of every page. Also, get in touch with us. We get letters all the time and we’ll try to answer as many as we can. Sometimes include me. I’m officially retired, but I’m still on the board and I’m still working in various ways. I wish all of your readers all the best and I hope that part of that best will involve checking out Ayn Rand and Objectivism and The Atlas Society.

Dr. Kelley, thank you again. I wish you well. Let’s connect sometime in the future. 

I look forward to it. Thank you.

Take care.

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About Dr. David Kelley

TWS 23 | ObjectivismDr. David Kelley founded The Atlas Society in 1990 and served as Executive Director through 2012, before serving as the Chief Intellectual Officer, where he was responsible for overseeing all the content produced by the organization: articles, videos, talks at conferences, etc.

Dr. Kelley is a professional philosopher, teacher, and writer. He is the author of numerous works in philosophy, politics, and culture. After earning a Ph.D. in philosophy from Princeton University in 1975, he joined the philosophy department of Vassar College, where he taught a wide variety of courses at all levels. He has also taught philosophy at Brandeis University and lectured frequently on other campuses.

Kelley’s philosophical writings include original works in ethics, epistemology, and ethics, many of them developing Objectivist ideas in new depth and new directions. He is the author of The Evidence of the Senses, a treatise in epistemology; and The Art of Reasoning, a widely used textbook for introductory logic.

Kelley has lectured and published on a wide range of political and cultural topics. His articles on social issues and public policy have appeared in Harpers, The Sciences, Reason, Harvard Business Review, The Freeman, On Principle, and elsewhere. During the 1980s, he wrote frequently for Barrons Financial and Business Magazine on such issues as egalitarianism, immigration, minimum wage laws, and Social Security.

His book A Life of One’s Own: Individual Rights and the Welfare State is a critique of the moral premises of the welfare state and defense of private alternatives that preserve individual autonomy, responsibility, and dignity. His appearance on John Stossel’s ABC/TV special “’Greed’ stirred a national debate on the ethics of capitalism.

An internationally-recognized expert on Objectivism, he has lectured widely on Ayn Rand, her ideas, and her works. He is the author of Contested Legacy: Truth and Toleration in Objectivism, an account of divisions among thinkers influenced by Ayn Rand.

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Achieving Financial Literacy And Freedom With Sharon Lechter

TWS 22 | Financial Literacy And Freedom

 

Everybody wants to be financially free, but are they willing to take action? For today’s segment, financial literacy expert, keynote speaker, and best-selling author Sharon Lechter teaches about financial freedom in its barest definition and shares how you can achieve it. Sharon co-authored the international bestseller, Rich Dad Poor Dad, and fourteen other books in the Rich Dad series. She recalls the inspiration that started her into financial education and how this literacy can be a catalyst for change. She also touches on the power of association and reveals the secrets to successful entrepreneurship. The choices that you make today shape what you will become tomorrow. Take action and don’t miss this podcast episode.

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Achieving Financial Literacy And Freedom With Sharon Lechter

Our guest is an interesting one. You will enjoy the interview. It’s Sharon Lechter. Sharon is the former CEO of Rich Dad and Pay Your Family First. She’s an entrepreneur and a number one New York Times international best-selling author, philanthropist, international speaker, mentor, licensed CPA and chartered global management accountant. She co-authored Rich Dad Poor Dad, which is why you must be thinking about her name. She also co-authored with Donald Trump and Kiyosaki in Why We Want You To Be Rich. Also Greg Reid who we interviewed, she co-authored a book with him called Three Feet From Gold and also Outwitting The Devil, Think and Grow Rich For Women, Success and Something Greater: Your Magic Key. She’s written a lot of books and she’s written quite a bit.

She was in Columbia and had some cool things to say about that. I do a lot of work with the Rich Dad organization, mainly their Rich Dad Advisors. I have great relationships with all of them, with Tom Wheelwright and Andy Tanner, the Cashflow Wealth Summit which is an annual conference is 100% online. I never had the chance to meet Sharon Lechter although I know she was part of the Rich Dad story. I came to gain a good feeling about her as well as respect and adoration. The influence she had on Rich Dad or the influence it had on here and vice versa, I know it’s mutual.

She’s out there doing good and I believe she has some sound principles she talks about and we recommend you to go her website. She’s definitely mission-driven and still has a lot of work to do. I hope you enjoy the interview we had talking about the theme of entrepreneurship. She definitely is one that has seen many of those. If you like the show, we would love your feedback on iTunes. iTunes started deleting podcasts in general, hopefully not our podcast yet and hopefully never. They’re definitely restructuring some of the podcasts stuff on iTunes. If you would head over and support us, that would be amazing. All you have to do is give us a review and subscribe.

Sharon, thank you so much for taking the time to do this interview. I’m excited to talk to you about entrepreneurship because you have extensive experience in that arena.

Thanks, Patrick. I’ve been around a long time. I have done a lot of things.

Which says a lot. I’m hoping we can get to some of that. The first that I’ve been intrigued by is I’ve discovered that there are these universal variables or principles that determine the success or failure of a business or an entrepreneur. What are a few of those variables that you have discovered along the way? You’ve seen probably thousands of businesses, lots of success but also lots of failure. Have you come to some of those conclusions?

Certainly. One of the biggest ones is every entrepreneur, they’re in love with their product or their service, their idea, the deliverable of their company but too few of them take the time to build the foundation around that business. Everybody wants a successful business, but in order to make that successful business scalable and then ultimately saleable, you need to have the foundation around it. Some of that part is boring because you have to have the right legal structure, you have to have the right agreements, you have to have the right business systems and most people don’t think about that. It’s very important when you are a young entrepreneur to make sure you have a team around you and mentors that can help you build the business structure so that you can create and scale your success.

Getting to that point though, most entrepreneurs or business owners will start because they have a product or a service. Other than finding an amazing all-star team to put together right out of the gate, what are ways in which you’ve seen someone go through stages of a business to get to the point where they realize, “I need a team, I need some structure and I need to set up my operations this way?” What’s usually the process that an entrepreneur goes through before they have that realization?

The first step is you do start small. I invested $1,500 in our first print run of Rich Dad Poor Dad and continued to reinvest in the profits of the sale of the book so we can continue growing and expanding to a multimillion-dollar operation. It’s making sure you understand the needs that you have and then also that power of association is something that I talk about a lot. We were taught in school to do things on our own. Entrepreneurs typically they have their passion, they have their talent, they have their product and they feel they have to do everything themselves. The power of association is what’s going to speed your way to success.

When you're an entrepreneur, everybody's looking to you for the answer; it can get lonely and scary. Click To Tweet

In today’s world, it’s almost a necessity that you have the right people around, the right people that are going to help you market, the right mentors. It’s so important to have a mentor that can guide you around the pitfalls that other people fall into and open the Rolodex. When I have my mentoring clients, I want to make sure that they are looking at what that next level is, not where they are now but where they want to go and who can get them there the quickest. Do I know someone I can introduce them to? Is there a new association, somebody that can help them market their product? Entrepreneurship is a constantly creating environment but with that underlying structure, what you create stays and continues producing for you.

A few things that are interesting around people and having different people with different skillsets, different abilities. How do you go out finding the right person? How do you identify them? Resumes by now are understood as not necessarily the whole truth and nothing but the truth. How do you go about determining if it’s the right person?

There are lots of levels. If it’s an employee, I say hire slow, fire fast. You want to make sure that the employees that you’re bringing on understand your vision, understand where you want to go and that they have strengths where maybe you have weaknesses so they can fill that in but there’s a shared initiative. Let them be an entrepreneur within their job. Part of it is understanding what they’ve done in the past, what their strengths are and then giving them the opportunity to grow within the business. Not just hire them to do the same thing every day and give them the opportunity to own their jobs so that they feel that level of contribution.

In today’s environment, I talked to business owners all the time. If you’re not creating that entrepreneurial environment for the Millennials, install a revolving door because they want to feel like they have ownership over their life and what they’re doing even as an employee. When you’re looking at building your business advisers, does the accountant that you use have experience in what you’re doing so that they can bring their experience to the table to help create greater value for you. Is the attorney you’re using somebody that is an expert in what you do so that they can make sure they’re supporting you, that they’re not learning on your dime? Do you have a mentor who’s challenging you as well as supporting you?

Being an entrepreneur can be very lonely. You may have been a professional in a group of other peer professionals and if you had a question, you walked down the hall and walk into somebody’s office, but when you’re an entrepreneur, you’re the top. Everybody’s looking to you for the answer. It can get lonely and scary. That’s why it’s important to have those people that you and they may be in different industries, but if they’re going through the same growing pains, they may be able to help you deal with issues that come up and help you get past it. It’s a comfort to know that you have people out there that are supporting you in your success as you’re supporting them in theirs.

What are maybe some of those organizations that you have seen best support those leadership and entrepreneur roles? I totally agree with you.

There are quite a few that are regional. They may have a group in your area that may not be national. There is YPO, Young Presidents’ Organization. There’s YEO, Young Entrepreneurs’ Organization. There’s NAWBO, National Association of Women Business Owners. It’s for the women business owners who have more established businesses over $1 million. WPO, Women Presidents’ Organization, I’ve been on their national board and a member of for over twenty years. It’s an incredible organization of peer mentoring. There’s BNI, there’s LeTip. All of these are organizations are there to create and support and inter-networking and supporting each other in businesses. In addition, there are other probably local and regional organizations right here in Arizona. There’s one that’s more of a technology-based group. Check it out. Look out and find out. Talk to other people and what organizations they belong to.

That’s awesome because we haven’t mentioned any of those types of networking groups often. We’re talking about a lot of entrepreneurial principles but as far as networking, it’s always best to learn off of the experience of others instead of having to experience it yourself sometimes.

Experiential learning is so much better than book learning. If you get it from someone else, you save yourself the heartache of learning that lesson the hard way.

One of the things that I find intriguing is the notion of leadership. I find leadership an interesting principle. How have you come to characterize leadership and good leadership and maybe even bad leadership?

TWS 22 | Financial Literacy And Freedom

Financial Literacy And Freedom: Experiential learning is so much better than book learning. If you get it from someone else, you save yourself the heartache of learning that lesson the hard way.

 

There are so many thought leaders on the topic of leadership but from my perspective, I try to make things simple. A leader needs to know when to listen. A leader needs to know when to support. A leader needs to know when to make a decision. There are times when your function is that of a cheerleader, letting your team do what they do best and cheering them on. You duck when there’s praise, but you stand up when there’s criticism. There are times as a leader that you have to be the pit boss. You need to make the tough call. You need to call someone who are not performing. A leader always has the vision of the company, but also has the heart of the team and makes decisions based on both.

I would say one of the biggest things that I’ve faced is when you do have to make those critical tough, tough calls, I value the principle of co of kindness. Sometimes the managerial, dictatorial stick, for whatever reason, it’s never resonated with me. For those that experience those feelings, what are some rules of thumb to abide by to hold the line, tow the line but also do so with a degree of kindness as opposed to the proverbial stick?

The greatest talent of leaders being able to listen. Certainly, I know when I was a member of a team, if I knew I had the environment to be heard, no matter what the outcome was, I would respect it because I know I was heard. My thoughts and my suggestions were taken into consideration. As a leader, there are times when you have to be the decision-maker and you have to do what’s right for the company. Sometimes that means somebody on the team is in the wrong seat on the bus and probably if you sit and meet with them and you help them find something that’s better for them, they’re going to be happier in the long term. A toxic employee creates a toxic environment. That doesn’t mean as a leader that you can’t do it with passion and that’s how you communicate with them. Maybe it takes a little more time than a dictatorial leader will, but it ends up being better in the space in the long-term because an employee that is unhappy in their job may stay unhappy in that job. That’s not good for them, it’s not good for the company and it’s not good for the leader.

Part of that comes back to the first question you asked me is if you had the right business systems, the right code of conduct, the code of honor, things that imply what your business is for, what you believe the code of conduct is and an employee is not performing. If you can manage to the system, it’s a lot easier than manage to the personality because it keeps the emotion out of it. I had a client, a very successful dentist, he’s having a terrible time with her Millennial employees. She was very much more 8 to 5, “Don’t use your cell phone when you’re at the desk.” We sat down and I said, “Why don’t you have a code of conduct? When the next time you have a problem, you say, ‘Which one of these do you think you violated?’” It can almost become comical because I say, “I blew number five.” “What are you going to do about it?” It takes that angst, that emotion out of it because you’re pointing to a piece of paper, not to a person. That’s something that I share with all of my clients. Think of McDonald’s, you take out a little bit of that emotion and when you have high emotion, you have low intelligence. If you can manage the emotion, you’re going to get better results.

I’d love to hear your story. What are maybe some resources to point to, to understand what a code of conduct or code of honor is, how it’s created and then maybe get into some business systems? Are there some resources or guides that would help someone that’s listening that may have a smaller business that does not have established systems and would want to explore establishing?

Certainly. My husband’s an intellectual property attorney. He’s been by my side and he’s the legal mind behind many of the businesses I’ve built and created, this global brand as well as Rich Dad and many others. We put together a course called Essential Components of a Successful Business. I’m not intending this to be a commercial message, but I’m answering your question. We have that course. You can find it at SharonLechter.com because we couldn’t find it anywhere else. It’s like a college MBA class on how to build every aspect from the legal structure, understanding intellectual property, how to protect it and leverage it, business systems, how to raise money, different ways to use other people’s money, other people’s time, other people’s resources, understanding marketing and communication strategy and how important that is to have the follow up and the follow-through.

People talk about follow-up. Following through is usually the problem. It’s understanding every aspect of business systems from the moment somebody answers the phone, to following through on emails, whether you have a funnel, making sure that the customer experience is there and systems on how are you going to pay your bills, how are you going to collect money, what is your system so that you can stick to it, so that you have an organization that can be duplicated or scaled. Those systems are so important. It’s all held together by you as a leader, your team and your vision, your mission of the company. Once you can solidify that, you have an asset. That business becomes an asset. It’s no longer a job. It’s an asset that can operate with or without you.

From a system standpoint, there are so many different industries out there, different types of businesses, whether it’s product-related, service-related. Have you found that business systems are mostly universal or do they vary from industry to industry?

They vary between a large manufacturing company versus a service company. It is unique to the style of business that you have. Think operations manual, that’s step one. How does your business operate? How do you source your goods? How do you source your components? What are the financial terms related to that? Is it in time delivery or do you want to hold a certain number of days of supply down to how much of this do you have components? Who’s going to combine them? What’s the quality control procedures? What’s the return procedures? What are you going to do in handling defective merchandise? What is your return policy?

All of those and that’s a small piece of the types of systems that you have. Your operations manual is your first step in defining what’s missing within your business systems. I’ve got clients or people that have gotten all excited because they’ve got a big order from Costco or from QVC. They spent and they went and mortgaged their house to get the money to create products to be on QVC to find out that it all got dumped back to them. They lost a fortune because they got this high emotion. They didn’t have the systems and the financial intelligence to understand the importance of managing your cashflow.

Oftentimes, saying yes can get you in trouble. The entrepreneurial curse is you want to say yes to everything, but you should only say yes to a few things.

Financial freedom comes when income from your assets exceed your monthly expenses. Click To Tweet

A lot of people say yes and then figure out how. It can be a nice thing to say, but it’s a hard thing to do. You have to make sure you’ve got the financial wherewithal to follow through and then it’s the right thing for you and your business.

There’s a book that I read, Ready, Fire, Aim, and I see the point behind it. At the same time, there are also some drawbacks to approaching big decisions that way. Talk about what your story is and what gave you this bug. Clearly, you’ve had so many different experiences, whether it’s writing books or running businesses, consulting within numerous industries. What gave you that bug and what has kept it alive?

I started my profession as a CPA. Even from the very beginning of my career, I was inside companies of all different industries and saw how they did things right. Probably more importantly saw a lot of them did things wrong. It gave me this base of understanding of business operations and systems and what it takes to be successful in business. Fast forward a few years, I get married and meet the inventor of the talking book. I was able to take that and apply that in-licensing strategy around the globe. We had a new technology. This was back in 1987 before a child had any electronics. We were the very first electronic in a child’s hand. To get the parents to trust us, we partnered with companies like Disney, Warner Brothers, Sesame Street.

Understanding that power of association that helps validate you and elevate you when you needed it most allowed us to grow a very successful company that exploded over the four years from $1 million to $9 million to $23 million to $52 million in sales. Selling that company, we moved to Arizona. This was back in ’91 and in ’92, my oldest son went off to college and came home from September to December. He came home in December with a credit card debt. We didn’t even know he had a credit card. He got to college and there was a table saying, “Free pizza, free money,” and other one, “Free T-shirt, free money.” He had a good time his first semester in college. That was when he came home. It was December of ’92, we said no to bailing him out and we made him figure it out on his own.

It’s probably one of the better decisions we’ve made as parents. That was December of ’92 and that’s when I dedicated the rest of my career to financial education, financial literacy and entrepreneurship education. My passion now is as strong as it was in December of ’92. The way that I’ve done things that built the Rich Dad organization over ten years to be the largest personal finance brand in the world because of the need. I grew up in a very entrepreneurial home. I didn’t understand that everybody didn’t think the way I did. Financial freedom comes when income from your assets exceed your monthly expenses. It’s that simple. You want to invest your time in buying, building or creating assets. Once those assets get to that point, you’re financially free. It doesn’t need to be millions of dollars.

When I met Robert Kiyosaki, he was only making $100,000 a year. He lived in a two-bedroom condo. He had two small apartment complexes and it generated $100,000. His living expenses were $30,000. He was technically financially free. That message is what more people need to understand because people think financial freedom is when you’re at $10 million. No. You can become financially free if you focus on buying, building and creating assets. That has been my lifelong passion. I had fifteen books with Rich Dad. I’ve done four books with the Napoleon Hill Foundation, Three Feet from Gold, Outwitting the Devil, Think and Grow Rich for Women. Success and Something Greater, the reason I wrote this book is I want people to wake up that success means different things to different people.

We have some content that has never been published from Napoleon Hill, but we also highlight close to twenty people that have created success in their industries, all from different magic keys or secret sauce, whatever you want to call it. Their focus and their definition of success is different, but then they also always gave back that success and something greater. The reader is going to see these different stories of success and one may not relate to them at all but the next one can go, “I can do that.” I want to empower people to realize that you are where you are now because of the choices you made before now. If you want success in your life, start making different choices because it’s never been easier to start a business. It’s never been easier to promote a business. It’s never been easier to create success in your life if you do it with the right information.

From 1992, you have grown and it’s awesome that this book is coming out. At the same time, what trapped your son in 1992 it seems that the educational system, the business environment has continued to grow as well and not necessarily providing the financial education for individuals to achieve that end of financial freedom. What do you see in the Millennial generation or what do you see in the environment now that gives you hope? I’m talking mostly in the United States, but the indoctrination of kids and how they’re trained to be employees, trained to be managers, what are some signs that you see that things are changing, that kids are waking up? The Millennial generation, I find extremely fascinating because it’s totally different than all previous generations and they haven’t bought in as hard as a lot of other generations have. What else are you seeing maybe besides the Millennial generation that gives you hope?

There’s a positive and a negative. Millennials now and the younger generation, they recognize that there’s no job security. They recognize that there’s not going to be a 30-year career with a gold watch. They’re not going into it with that expectation, which means they also have more demands. You have to make sure you understand as an employer that it’s not just the paycheck, it’s the environment. If you want to build loyalty in your employees, you need to understand what they want, what they’re looking for and make them feel ownership in what they’re doing with your company. In addition to that, the school system itself is still behind the times. We’ve succeeded in some states, Arizona, we now have personal financial educations as a requirement for high school graduation. It’s not enough and we’re still working on that degree.

We talk about how the rich get richer, the poor get poorer. That’s because they learned about money at home, not at school. If we truly want to level the playing field for students and people around the world, providing that financial education is what’s going to give kids an equal footing. As we see these kids coming up, a lot of people say, “They’re lazy. They don’t want to do anything.” There are those individuals in every generation. I see young people eager to take control of their own lives, eager, recognizing that there is no job security. We will always need employees. Companies will always need employees. If you are in the market and with our low unemployment right now, it’s even more important to create an environment where your employees are proud to be part of your company. Proud to be there, proud to want to work for you and create success. As an employer, as a leader, sometimes you have to be more creative as to how you maintain that environment of excitement even if it’s a corporation and environment of entrepreneurship.

TWS 22 | Financial Literacy And Freedom

Financial Literacy And Freedom: If you want success in your life, start making different choices and start building your business.

 

Sharon, you’ve provided so much information. Tell the audience how they can get your new book and also access some of the resources that you have available. Maybe talk one more time about the business course that you have available on your website.

Thank you so much. I appreciate that. SharonLechter.com is my website. I’m also Sharon Lechter on Facebook, LinkedIn, Twitter, Instagram, everywhere. On my website, you can find more information about several online courses I have. One is the Essential Components of a Successful Business, which I spoke about earlier with my husband. I have a Financial Mastery Course that is also very in-depth getting you from being financially stressed to financially secure. I have a Play Big course, which helps take you to the point where you are financially free. All of those are available. I also have another course on Think and Grow Rich for Women.

For free, I have a podcast, Play Big Movement with Sharon Lechter and then I also have a private Facebook group, Play Big Movement with Sharon Lechter. I invite you all to join all of those. The book Success and Something Greater is available through Amazon. If you want to have a special gift related to you defining your own personal success equation, you can go to Bit.ly/successequation. It’s not a sales pitch. It’s a download of walking you through your own personal success equation, your passion, your talents, your powers of association, what actions you can take and most of all having faith in yourself, faith that what you’re doing is needed and necessary and faith that you can succeed.

Sharon, this has been amazing. Thanks again. Any final words of wisdom?

I want to thank you, Patrick, for what you’re doing. The more information we get out there energizes people to take action. I literally came home from Columbia and the folks down there, South America, they’re so eager to learn. They’re so excited. They were there before the doors open. They stayed until after the doors closed. They were so eager. I think we need to get people energized, particularly in the United States, to take the action. Many people are waiting for it to come to them. Don’t wait, make that decision and go out and create your success.

When the spectrum is wide as far as having freedom and not having freedom and being pushed in certain directions, especially from a country and political standpoint, it’s amazing how much freedom is valued, how much education is valued, how much other perspective is valued. I have tremendous hope for South America. Columbia has made its strides.

It’s amazing. It’s like the beginning. It’s on the upswing. It’s very fast-growing economy with people that are so loving and excited and eager to learn. I’m looking forward to seeing how the economy there grows.

Sometimes those countries have to experience some pretty rough times in order to turn things around and have a shift for the better. That’s awesome you were down there and were able to give them value.

Thank you. It was wonderful. They were incredible people. It was incredible seeing the progress.

I know it’s making a difference and I look at countries like Venezuela and I know Argentina is having issues too. It’s one of those things where you have the Columbias of the world and you have other countries that are making these drastic changes, it provides that flagship and a beacon of hope for the other countries that are their close neighbors. Thank you again for your time, Sharon. Best of luck on everything. We’ll get the word out on all the resources that you mentioned as well as your books.

Thank you, Patrick. Thank you for all that you do.

Important Links:

About Sharon Lechter

TWS 22 | Financial Literacy And FreedomSharon Lechter is internationally recognized as a financial literacy expert and keynote speaker. She is a New York Times Bestselling author, successful entrepreneur, philanthropist, and licensed CPA and CGMA.

Sharon has been a pioneer in developing new technologies, programs and products to bring education into people’s lives in ways that are innovative, challenging and fun, and remains committed to education – particularly financial literacy and entrepreneurship. In 1989, she helped the inventor expand the electronic book industry to a multi-million dollar international market.

As founder and CEO of Pay Your Family First, a financial education organization, Sharon has served as a Presidential Adviser to Presidents Bush and Obama on the topic. In 2009, Sharon was appointed to the National CPA Financial Literacy Commission as a national spokesperson on financial literacy and was reappointed in 2014. Sharon is also a Founding Chancellor for Junior Achievement University of Success and was appointed by Arizona Treasurer Kimberly Yee in 2019 to the Arizona Financial Literacy Task Force.

Sharon co-authored the international bestseller Rich Dad Poor Dadand 14 other books in the Rich Dad series. Over 10 years as co-Founder and CEO, she led the Rich Dad Company and brand to global success. In 2008, when the economy crashed, she was asked by the Napoleon Hill Foundation to help re-energize the teachings of Napoleon Hill. Her best-selling books with the Foundation includeThree Feet from Gold, Outwitting the Devil and Think and Grow Rich for Women. And her fourth book, Success and Something Greater was just released in September. She is also featured in the movie Think and Grow Rich: The Legacy.

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Lessons From Fighting For Your Business And Entrepreneurial Life with George Foreman III

TWS 21 | Boxing As Transformational Experience

 

We all need transformational experiences in our lives to bring more sense to it. For George “Monk” Foreman III, he turns to boxing as his way of becoming better in handling situations both in business and our personal life. Founder of EverybodyFights and serving as a business manager and Executive VP of George Foreman Enterprises Inc., he peels off the layers of fighting and how it can be applied to the business world. Moreover, George gives some interesting notes on how fighting helps us handle conflicts in a positive way and why it is popular regardless of the negativity around it. With this, he encourages you to believe in yourself and that the fighter in you can win.

Listen to the podcast here:

Lessons From Fighting For Your Business And Entrepreneurial Life with George Foreman III

It’s my pleasure to welcome, George Foreman lll. His nickname is Monk mainly due to his brother is having the same name as him. It’s awesome to have him on. I’m looking forward to this interview. Monk, thanks for joining us.

I’m glad to be with you. Thanks for having me.

The initial question I had as I was preparing for this, your background and experiences are definitely unique and how it applies to the business and entrepreneurial world. Why has fighting been so popular from an entertainment standpoint for probably thousands of years, whether it’s boxing, MMA, wrestling, martial arts, ice hockey. What are your thoughts around that?

Most things that people are afraid of but at the same time would love to not be afraid of is entertaining. When you get a chance to observe others who are aligned with your morals and standards succeeding doing those things, it allows you to experience them vicariously. Sometimes we enjoy hating that person too but being able to experience the rush, the ups and downs through someone you identify with, doing something that you’re terrified to do that you wish you could do, I don’t think that ever gets old. Fighting is one of those things that when done properly and by the rules, especially with the sport, there’s something honorable about it. That’s why it’s a sport and not something that’s illegal in most states. There’s point in a good fight and there are points where everybody can relate. Your back is against the wall. You got knocked down, you get back up, you look the guy or the gal across from you and say, “You’re going to get it.” You want to run, you’re intimidated, you have a bad shake and have to fight and you turn around and you have a comeback.

There are rules, there’s TKO or Technical Knockout or sometimes you break the rules and you lose because of that. You can have the judges or the referee on your side. You’ve got to have good advisers and people to put you back together when you mess up. I think all of these things also resonate with culture, business culture, entrepreneurship culture, sports culture in general. There are a lot of layers that we can peel back but if nothing else, it’s the thrill of observing something that we’re terrified but would love to do.

I look at what I would say gives a person a rush both from a growth standpoint, but also a rush from a fear standpoint. It seems like it’s two ends of a spectrum and a fight is one of those times when there’s going to be both. There’s going to be what people fear most and what people thrive for, which is winning, growth and excelling. It’s an interesting dynamic because you definitely have the proverbial fight that we face multiple types of fights, but then the actual physical fights. Maybe as it pertains to your experience, what are some of those fights that all people face?

Number one is deciding what victory is and it changes. In competing with someone who’s not on your level mentally, physically and spiritually in terms of character, you’ve got to get an objective to win in competing with someone who’s your peer or a legend, maybe you’re the underdog. Being able to compete, win, lose or draw and not lose yourself and be someone that you’re not, that’s a W. Number two is telling yourself, “There are certain things I’m not going to do at all.” In boxing, you would say, “I’m not going to hit below the belt or bite an ear off. If I can’t win by following the rules and being authentic to who I am, then I’m okay not getting the objective win because I need the moral win.” Name your price and stick to it. The last one I’ll say is responding to conflict is everyone’s challenged. How do we respond? We go down the stairs in our $1 million, $2 million condo and the doorman is using the restroom. He doesn’t come out quick enough to tell you where your mail is. That’s not a real conflict but how do we handle that?

You could set your day off the wrong way by handling it wrong and being rude. When they come back, you can turn it into an opportunity to get to know the person a little bit more and let them know like, “I’m late.” You can move on. That’s one element. You see some of this stuff that we see on these security cameras with celebrities, elevators and the stuff they pull and they get in trouble. It can turn around pretty quick. At work, you’re a public company and it’s quarterly report time and you could hit your numbers by pushing the top line in making more revenue and more profit, or you can hit your numbers by laying off people that don’t deserve it. Laying off people at a time where the business is going to suffer, what do you do? Do you keep them on and not hit your numbers and tell the truth to the board? It’s a conflict. How do you handle conflict?

The last thing are the little things like with the relationship. I believe all great relationships are built on being better on the other side of conflict. You have to practice from day one with someone that you engage with to figure out, “How do I get good at resolving conflict with this person?” No matter how much I love them, when it rains, you’re going to get wet. There’s going to be conflict. Can we look at each other at the other side and say, “We’re stronger?” That’s not magical. You have to practice it. As our relationships go our lives and if we can’t get good at solving those type of conflicts, we’re not going to get anywhere. Those are the things like how you respond to conflict and how well you are resolving it and being better on the other side of it. That couldn’t apply more to boxing and MMA. The only way you could apply more is outside the ring.

It’s a fascinating point because there’s so much parallel between the physical sport of fighting and the business world. There are a lot of things within an untrained fighter’s fight that’s mostly instinctive. They don’t have necessarily a strategy. They use that animal instinct to survive. In business as well, I often see at least in my experience that the untrained business person and the inexperienced entrepreneur is also going to instinctively respond to conflict. It’s the training around that. Maybe as you have lived these two parallel lives, the fighting life and business life. How do you take some of your training in the physical fighting life to the business and entrepreneur life?

Most things that people are afraid of, but at the same time would love to not be afraid of, is entertaining. Click To Tweet

What I learned in the ring is that the minute the bell rings, there’s conflict. It’s a fight. You’re in there, you can’t hop out. You have to forfeit and no one wants to fight you ever again. You get in there and it happens and you get hit. You’re supposed to say, “My plan is not to respond when he wants me to respond. My plan is to make him do what I want him to do and then take advantage of those actions.” There is persuasion, misdirection and all these things involved, but I’m not trying to guess what he’s going to do and then respond based on his response. A great coach once told me, “Don’t let his body language change your body language.” That comes from having the confidence in your preparation, having the confidence in your strategy, the general overall confidence in yourself and because somebody does something to you it doesn’t mean you need to get them back right away.

Going in that same thread I learned from one of my dad’s sparring partners. He sparred with my dad when he was a professional fighter. He worked for my dad as a sparring partner in the ‘80s and ‘90s and also with me. He would laugh as he said, “Everybody I sparred if I got them with a good shot, they’d get me right back or maybe the next round or the next day.” George would get me back two weeks later. I think in business, there are some people who thrive on getting you off balance in a place where you’re uncomfortable and taken advantage of you.

That could be forcing a negotiation to be done in a week when you need two weeks or drag you out in negotiation for nine months that could have taken two months. People are trying to get you out of your comfort zone and taking advantage of the mistakes you’ll make outside of your comfort zone. Being patient enough to fight your fight, do things on your terms, not do what people think you’re going to do and create opportunities to catch them off guard, all that I get from boxing. The end result is back to my original point, patience, confidence all these things come from preparation. I think that will be the core principle I get from boxing.

I’m assuming you work with a lot of non-fighters, those that haven’t had necessarily the experience that you’ve had. Are they able to as quickly develop those attributes and values or do you see it more challenging?

They are, I think you’ll see some parallels. There are some people who have a gift. They are working hard. They have a good chin. They can take a lot of abuse. They have all these things, but you still have to train. What I have done is taught by isolating. If I need to teach you patience, then you need to be able to get in the ring and have you spar for six rounds and not throw one punch. That means you’ve got to survive when someone’s trying to attack you at all times. There are no repercussions for them making a mistake when they attack you. You develop your defense. We have to say, “You have one punch you can throw and you have to protect yourself with that one punch in your defense.” That builds the confidence that you only know that you can defend yourself when you’re forced to. You only know that you can survive a fight with one hand because sometimes you break your hand in the fight if I teach you. It’s little things that force people to develop those skills. Putting them in positions where they have no choice but to use this skill that you want them to develop and have confidence in.

TWS 21 | Boxing As Transformational Experience

Boxing As Transformational Experience: All great relationships are built on being better on the other side of conflict.

 

In fitness, we use the term the Necessity for Technique as opposed to teaching someone like, “You’ve got to do it this way. Your form, your back, your arch, your hamstring, your gluteus minimus.” Instead of your gastrocs and throwing terms they’ve never heard of, treating them like they’re so inadequate every time they tried to do a kettlebell swing or squat. I apply that in business and managing employees, etc. Putting them in a position where they have no choice but to use the quality that you’re trying to ingrain and do it over and over again. Then it will become a tool.

That environment, which is ripe of friction, definitely transforms people. At the same time, I’ve also seen individuals back down from a fight. The leader and the way in which they are getting a person to experience that, not just go to school and get a degree and train, but to actually experience it is paramount. You as a leader, managing and training other people, leading and inspiring other people, how do you get them to believe that the fighter in them can win?

Put them in situations that they think are impossible for them to overcome, but that they would have to struggle to overcome. The simplest example to demonstrate their point, even if I tell a guy, “You’ve got 30 seconds left and this workout is over.” Or a woman I’m training or anyone and they get to that 30 seconds and they’re coach said, “Give me all you got for ten seconds.” Right at that 30 seconds I’d say, “Give me ten more.” Right at that moment they’re like, “I don’t know where that came from and I’m about to throw up, but I did it. I was sure I couldn’t do it.” That’s a very layman example. Putting them in a situation where it’s like, “I need you to program 30 classes for me.” I know that it takes two days, but they do it in one and a half. You can go deeper with that, but the point is everybody loves a superhero. If you watch Superman, Batman, any of these comics, the equation is very simple. Put the superhero in a situation that’s impossible to get out of and somehow they get out of it. That makes us inspired. We grew up loving these.

You manufacture those situations for the people under you or the people that you’re nurturing or mentoring, even sometimes the people above you and say, “I don’t know how you’re going to get out of this, but I believe in you.” You know they’re going to figure it out. You don’t want to set them up to fail over and over. You have to be careful what you put in front of them. Giving them a little bit more than they think they can bite off and digest and be the person to egg them on to do it. On the other side of that, you find a person that becomes infinitely confident that they can do a little bit more than everyone expects, including themselves.

With your different business ventures, how have you come to develop your businesses’ culture? What are some of the values you’ve discovered along the way with both your professional sports career and then getting into the business world? How have you established the vision, culture, the careers of those that come and work for you? Explain that dynamic.

In business, there are some people who thrive on getting you off balance in a place where you're uncomfortable and taken advantage of. Click To Tweet

A couple of things. Number one, lead by example. Part of leading by example is when you make a mistake, say you made a mistake. Make sure everybody knows that you admitted it, you called it out and we went like that, “I made a mistake. That admission of making a mistake did not fix it. We’re sitting in this mistake and it’s my fault.” As a leader, you have to be able to say that. Even after you make a mistake, it keeps people watching everything else you do that’s not a mistake and wanted to emulate it. They know you have the humility to admit when you’re wrong. Outside of all the positive things that you do that you want them to emulate, you also need them to admit when they’re wrong because we don’t have the truth. We can’t fix it. To me, that’s the biggest breakdown of a lot of cultures. There’s so much posturing. People are not taking responsibility for mistakes that nobody even knows why the company is failing. They’re not growing as fast as it should be. There’s no truth.

Number two is, hire for character not for credential. Obviously, depending on your business that you need a base level of skills that you don’t want to stop what everybody’s doing to teach this person. Maybe use a computer, can read a Word doc, Excel, like a base level of skills depending on your business. In construction, that’s different. Be willing to teach them to do everything else that you need them to be a master at. If you do that, then you’re opening up the ability to hire people that are going to emulate the type of culture you want, communicate the way you want. Dealing with your customers the way you want, handle conflict the way you need to when you’re not around, which you can’t micromanage and grow. The technical stuff, you teach them that as opposed to hiring someone with the credential and technical, who destroys the efficiency of the rest of the team.

To recap, that’s leading by example, have the ability to teach people the technical skills you need beyond the base and allow yourself to hire for character. The last thing is, at which point you’re not unable to recruit every person by face, make sure that it’s only the people that you believe in that are recruiting those people. Never let it go a step past that. If you do recruit the person recruiting, you’re going to run into an issue.

From a leadership standpoint, who do you look to as those iconic leaders in your life that have inspired you to be a leader?

I grew up in a church reading the Bible. I’m far from a minister. This is not a religious conversation. Even throughout the entire Bible, there are different figures that are prophets and they have this ability to speak to the people who only understand point-blank objective, like A plus B. Speak to those people and give them something, but at the same time be able to speak a step higher to people who understand analogies and concepts. My point in that is tailoring your communication to meet people where they’re at. That I got a lot from some of the different figures in the Bible, how they were able to speak in parable and at the same time speak in objectivity or tactical, very simple language and have two lessons. That’s important because everybody communicates differently and you need to be able to communicate across all different communication types, visual and audio. Doing it and letting people watch you do it by written.

TWS 21 | Boxing As Transformational Experience

Boxing As Transformational Experience: Tailor your communication to meet people where they are at.

 

Number two, in that story, you find a lot of the leaders using conflict as an opportunity to teach people what the culture is all about. In our business, when it’s time to fire somebody because they keep going wrong, I love the opportunity to say, “Is there a restructuring that I need to do?” Maybe the person’s boss is not having a good month or good six months. Maybe that boss needs a break and that person under them would actually be happier. Maybe the person needs two weeks off. Using these moments of conflict where everybody thinks they know what you’re going to do and say, “No, there might be plan A or plan B. There might be a plan C.” Showing people how we do things. I had a gentleman who’s been stealing for three years. On the third time I said, “The business needs 30%, 70% goes in your pocket. Let’s do the math. What’s our 30%? Bring that 30% back and let’s keep it moving.” He has a family to feed. At the end of the day, he made a mistake. He stole $1,000. We can get past that and it’s horrible to steal. Even the thief said, “You want to make it right, we’re going to move forward. Life goes on.” That’s an opportunity to let them know what your culture is about. Not all culture should be that way.

When we’re talking about money, people deserve an opportunity to make it good. Not millions of dollars where people lose their houses, but a few $100, people deserve to be forgiven. Using conflict as an opportunity to preach your culture, I get that from some of the religious texts. Outside of that, everybody else, you just never know. You see what they do on TV. My dad, I take a lot of inspiration from him. George Conrades, he’s the chairman of Akamai. I learned a lot from him. He was a former IBM executive. Those are the people that come to mind.

I love to know about some of the business ventures you’re up to. Thanks for sharing that. I know you took a moment to think through that. I look at how we learned, there are certain people that inspire us, motivate us, touch us and we ultimately want to emulate them. For most people, it becomes their parents or religious leader, at least in my experience. I was intrigued by your response to hiring people that have character. I love that because I would say that the school system typically teaches kids that their grades and their degree, the different skills that they’re learning is where the value is. Not necessarily in the type of person they are developing, that character developing skills, developing their natural gifts. How do you go about hiring someone for character? What do you do different than the stereotypical interview?

First, I’ll let them walk in the door. I try to let them ask, “Is there something we can do? Can I work here?” They always had that benefit. I try to somehow find a way to identify people within my organization assuming you’ve started that it might be a good fit. You can always do that in terms of interviewing them. Number two, I like to give high-stress projects. It’s for them to start off with like, “I’m not sure if there’s a fit here, but we have a two-month contract opportunity you can do.” I throw it at them and see how they handle all the things that go wrong. Let’s say they’re supposed to do graphics and they’re going to pump out flyers and they don’t have high-resolution photos for the faces in the flyers, how do they deal with that? Do they say, “We need a photographer?” Or do they say, “I can’t do it because I don’t have the photos?” I know that’s not my person right away. I give these opportunities to see how they handle conflict if possible.

Recommendation for people to put the reputation on the line helps. Sometimes you have to ask questions and people typically will tell you who they are if you listen. Questions like, “What’s been the hardest challenge in your life?” If they say, “The hardest challenge was my mom took away my credit card my first year of college and I had to get a job.” I’m not saying they’re a bad person, they actually might be a fit, but they don’t know conflict yet. Then you know what real conflict sounds like. Asking questions like that to understand how they perceive conflict and also how they resolved it. That lets me know what they think the right way to resolve conflict. For instance, if a person has an under-performing employee and they tell me a story about it and I’m like, “What did you do?” They said, “I put him on probation and made him crawl back.” Maybe that’s great if we’re a financial firm. In my world, I’d want to hear that he went and took him to lunch and listen. Even if you still fired him, the fact that he knew the first step is to listen will make a big impact immediately in terms of hiring.

Fighting is one of those things that when done properly and by the rules, especially with the sport, there's something honorable about it. Click To Tweet

Let’s end with explaining what businesses you’re in, what you’re focused on and how our community and audience can learn about you?

Everybody Fights is my baby. I like a lot what’s going on in the media world and I have a high interest in getting into that space. The primary goal for me is to make boxing available to as many people as possible. It’s important for everyone to have one or two transformational experiences in their life. Things like rock climbing is somewhat transformational. Training like a boxer for six weeks is transformational. Learning to meditate and learning to use silence as a response is transformational. I want Everybody Fights to be a part of as many people’s boxing experience as possible, whether that’s your audio fitness, through trainer certification and our locations. That’s my primary goal. They can find us at EverybodyFights.com.

Monk, this has been awesome. Thank you so much for your time. We’ll make sure that we get the word out. Are you a coming out West with your gyms yet or is that still in the works?

We’re close to closing on a location in Orange County. We’ll see how that goes. We’re working on a deal to open up a number of locations in the Mountain Time Zone and looking at Northern California as well, so we’re getting there.

Congrats on all your success.

Thanks a lot and thanks for your time.

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About George “Monk” Foreman III

TWS 21 | Boxing As Transformational ExperienceGeorge “Monk” Foreman III is an entrepreneur, professional boxer, trainer/coach, founder of EverybodyFights, and son of a businessman and former two-time heavyweight champion George Foreman.

He serves as the business manager and Executive VP of his father’s business empire George Foreman Enterprises, Inc. He also starred on the E! network’s reality series Filthy Rich: Cattle Drive. He opened a boxing fitness gym in Boston called “The Club by George Foreman III”.

In an effort to further promote the core beliefs of the gym’s culture George eventually changed the name of the gym to EverybodyFights. In 2016, the company received a series-A investment from Breakaway in the form of $4 million and soon after announced the opening of another location in Boston.

Since then, Everybody Fights has opened 5 locations and plans to open over 20 new locations by 2020 for growth in other major cities across the U.S.

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Why Certain Societies Succeed And Others Fail with Dr. Richard Rahn

TWS 20 | Why Certain Societies Succeed

 

Why do certain societies succeed and why do others fail? Former Economic Advisor to President George W. Bush and currently the Chairman of the Institute for Global Economic Growth Dr. Richard Rahn sheds some light on this question as he shares his perspectives on successful and unsuccessful environments.  As an entrepreneur, he lends his understanding of how businesses and people affect economies. He talks about how only a few understand the importance of respecting structures which led to the stagnant growth of their entrepreneurial pursuits.

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Why Certain Societies Succeed And Others Fail with Dr. Richard Rahn

Thank you for tuning in to this episode where we are discussing the theme of entrepreneurship. I hope you have enjoyed and learned a lot from the number of guests that we’ve had this season talking on a variety of topics. I definitely have learned a lot and this is no exception. This is an individual that when I saw him scheduled as a guest, I was excited. It’s someone that I have followed for quite some time and I believe you are going to learn a lot from him. I’m going to introduce him first then talk about what I wanted to get out of the interview, what I was trying to learn from him and I’m hoping that you also are going to learn the same thing or potentially something different.

My guest’s name is Dr. Richard Rahn. He is currently the Chairman of the Institute for Global Economic Growth and is the former Economic Advisor to President George W. Bush and a Vice President and Chief Economist of the United States Chamber of Commerce during the Reagan administration. He’s also a former senior fellow at the Cato Institute and he is consulting and writing for the Washington Times. I met Dr. Rahn several years ago in the country of Belize. I was down there visiting a real estate development of some strategic partners and he happened to be down there as well advising the Belizean government. The group I was with was able to coordinate a dinner with Dr. Rahn.

I still think about that dinner and some of the things that were discussed in relation to Dr. Rahn’s involvement, not just in what Belize was doing, but also a lot of other countries especially in the former Soviet Union, helping to consult with establishing the infrastructure for those countries to thrive. I didn’t know what I didn’t know and back then, that conversation sparked some ideas in my mind and I’ve thought about him and developed more and more respect and admiration for what he has done with his career.

He’s consulted with numerous governments and has truly made a difference. That’s what we get into. The reason why I wanted to bring him on and I’m hoping that you all gain from this is understanding this role of an entrepreneur and the nature of the structure in which they operate. I’ve come to realize that there is these entrepreneurial instinct in most human beings or maybe all human beings. I look at how vital the environment is. He goes into what I would say the hierarchy of the structure of economies, the structure of societies in order for the entrepreneur to thrive. If not, they’re going to leave and the growth of these specific economies or societies will be stifled without the structure.

The reason why I wanted to have him talk about certain things was I believe that there isn’t necessarily a respect for the structure, especially the United States. Very few people have experienced the other side of the spectrum or the lack of a structure in which their entrepreneurial pursuits could take root, take hold and grow. I’d say now, in our day and age, you’ll find that there is a lot of divisiveness with regards to political stances and perspective. This divisiveness, I believe, is creating camps and people are joining camps or aligning with camps without understanding the fundamental reasons behind certain stances on economy.

It’s more that this person believes this way, therefore, I’m not going to give any regard to the structure in which they believe or what they are advocating as the right political or economic environment because they had this name, wear this hat or wear this label. I’m going to discount them completely. I think that’s where we are as American society is we’ve joined these camps more off of emotion than off of reason and logic. I look at going forward and how amazingly entrepreneurial the United States is.

Even though you have an idea of the tax system, if you don't have the rule of law, it still won't work. Click To Tweet

I would say for those of you reading who are US entrepreneurs is to be able to have an understanding of all sides of the spectrum when it comes to the appropriate structure of the economic environment, the political environment and the monetary environment. That we can defend based on principle instead of defending based on rhetoric and talking points. That’s where I believe most people are at now. I look at this conversation as I’m someone who has experienced the pros, the successes of certain structured economies and societies as well as the failures.

I think that within the failure side of things, you learn a lot about what works and what doesn’t. I know we didn’t have a ton of time, but as I researched this interview, watched videos and read articles, especially in the Washington Times where he talks almost every week about these topics. I gained the admiration for how he looks at things and what he’s saying. I think you are going to learn a lot from the show but also learn a lot if you follow Richard and what he is up to. If you’re reading for the first time, we did several months on the theme of entrepreneurship. Previous to that, we did a few months on capitalism.

In 2018, we did seasons on the idea of life, liberty and property as it pertains to one of the more famous quotes and points of John Locke who was a British philosopher. If you like what you’re reading now, definitely go back and read those. We’d love your feedback on the show. If you want to give us some good reviews on iTunes, it would definitely help and if you share the episode with your friends and family would be amazing. You are awesome. You’ve been so supportive and grateful for that support. Let’s go ahead and get to the interview with Dr. Richard Rahn.

Richard, it’s awesome to have a have you on. It’s something I’ve been looking forward to for quite some time now. We met a little more than a couple of years ago. I’ve been intrigued with the work that you’ve done and I’ve been looking forward to asking you some of these questions. Welcome to the show.

Thank you very much. It’s great to see you and be with you.

The thing that has piqued my interest in regard to some conversations we’ve had had in the past is in relation to the perspective you have on successful and unsuccessful economic environments. Why certain societies succeed and why certain societies fail. Maybe start out by telling the audience or teaching the audience some of the universal reasons for these outcomes.

TWS 20 | Why Certain Societies Succeed

The End of Money and the Struggle for Financial Privacy

It’s interesting when you mentioned universal reasons because it is indeed true that if you’re looking at six successful countries, you’ll find them over the globe and you find countries that are failures over the globe. It has nothing to do with nationality or planet or where they’re located on the globe. It has all to do with fundamental policy. We have great success stories, not only the US but Switzerland, Singapore and even Ireland now and places that had very high incomes. Venezuela now is the poster child for a country that is rich. It has the world’s largest oil resources and now is the bottom of economic freedom and incomes have been rapidly dropping for a number of years. The place is impoverished because of policy. When you start off, the key policy is the rule of law and without the rule of law, nothing else works. A lot of us like to talk about taxes and regulations and monetary policy.

Even though you have an idea of the tax system, if you don’t have the rule of law, it still won’t work. Fortunately, the British, when they built the British Empire, there was a lot of downsizing there, but one thing they left around the world was the British legal system, the common law system. Many places it took and worked very well. Each country has adapted it somewhat to its own needs. In other places, it got corrupted and it didn’t work. You and I were in Belize a number of years ago. It’s a prime example of a British territory that was given the rule of law, but they managed to corrupt it and destroy it. Once you have the rule of law, you’ve got to have a competent and honest judiciary to carry it out.

The importance of having honest and competent judges can’t be understated. There is then free markets and socialism doesn’t play and work and we can do mini shows on my why socialism doesn’t work. The importance of having free markets, free trade and taxes that are low on work, saving and investment in capital and labor and underlying economics goings-on. Reasonable regulations in many places include those who are overly regulated. There are a lot of unreasonable regulations. I noticed that a number of the Democratic candidates want to take away my plastic straws and I thought I might even do an article on this that I don’t like drinking through paper straws because it dissolves in the mouth. Some places have these aluminum straws, which are terrible because they’re unsanitary, they break your teeth and other problems.

These stupid little regulations are totally unneeded. Having sound money and by that we need money which is a store of value. The dollar has been imperfect, but it’s been far better than the other world currencies. Get off the gold standard and for all intents and purposes, valor is the world’s standard. Those are the fundamentals. If you don’t follow them, you’re probably going to be poor. If you do follow them, you’re likely to be rich. I’m talking about countries, but it’s also true in people’s private lives. People that play by the rules or honest and work hard tend to do better than those who are trying to find the shortcuts, it usually it doesn’t work out too well.

In my experience, many people don’t have the perspective that you do when it comes to other countries and what they faced as the consequences of not following this hierarchy of universal infrastructure. That’s where you look at a lot of the younger entrepreneurs that have built successful businesses and have become wealthy themselves discount sometimes that infrastructure. Oftentimes, they point to the more socialistic type of structures to essentially help those they consider less fortunate. Do you consider that a slippery slope and why?

It’s naive. A number of countries tried it. People often talk about Sweden being socialist. Sweden’s not a socialist. It had been for about a 30-year-period. Sweden had been very capitalistic from about 1870 until around the 1950s and ‘60s. The social go-getters took over and they nationalized a number of things, but they built a welfare state. They didn’t go overboard with the nationalization. They didn’t go as far as Britain and before Margaret Thatcher, but it didn’t work. Sweden went from the fourth wealthiest in the world to something like seventeenth. The Swedes spent many years ago began to reverse course as Sweden is now much more capitalistic. They still have a big social safety net but when you’re there, everything it was privately owned. They have begun the rule of law. They are quite entrepreneurial.

The dollar has been imperfect, but it's been far better than the other world currencies. Click To Tweet

You can start your own business without problems. They’ve got this social welfare state, which works somewhat in small homogeneous economies. In places like Finland, which is very homogeneous, it works somewhat there. There are still the imperfections, but it doesn’t work in large heterogeneous companies. People always think of this wonderful work, everybody gets along and shares. In reality, it’s not what people do. I think it’s interesting a lot of the very wealthy people in the US who are left-leaning and talk about this thing are also the least generous when it comes to private giving. There was a wonderful book years ago by Arthur Brooks, Who Really Cares, and it turned out that there were much greater donations to greater causes from a lot of what are considered some of the tough guy capitalists than the social liberals.

Do you know that people who you view as the hard-headed businessman give enormous amounts of money to hospitals and all kinds of things and that’s a good way. Particularly in this society, when you get billions of dollars, there’s this sort of pact among a number of the billionaires to give away all the money. How much can any one person spend on themselves? Not that much. Bill Gates stresses the same way we do. Have you ever seen him in a suit? Once in a while. They might have a bit nicer car. The one thing they have is a private jet. This is one thing I like, but for the most part anybody who’s successful they can’t eat more and there’s a maximum size of house you want. They have this test of how far should the bathroom be from the master bed. Because some of these houses were being built that the bathrooms were such as distance from the bedroom that you had quite a trek.

I noticed this has now shrunk back down to a reasonable thing. Most people, particularly as they get older and have to get up in the night or whatever. Kids don’t want to walk 200 feet to the bathroom. The point is there’s an optimum in all kinds of things. When a society becomes sufficiently wealthy, there’s no sense of overdoing anymore. Look at Steve jobs with a t-shirt. The billionaires in Silicon Valley wear t-shirts. A few of them have massive houses, but a lot of them don’t. I live in a fairly affluent community in Northern Virginia and we have a neighborhood pub. I never know if the guy sitting at the next table is a billionaire or runs the neighborhood lawn service. That’s wonderful about the US because it doesn’t matter. We’re all there together and that’s true equality when we all have the quality of opportunity, but not necessarily as a result.

There’s a saying I heard a number of years ago that the secret to living is giving. I was intrigued when a local billionaire to where I’m at passed away a few years ago, Jon Huntsman. He had a chemical company and he was very entrepreneurial. He founded one of the first renowned cancer hospitals and that’s what he said in his biographies. He talked about how he became wealthy because he just learned the satisfaction of giving at a very early time. He realized that the more he grew, the more he could contribute and give. I think that’s something that is very interesting when you look at the Bill & Melinda Gates Foundation and what they’ve been able to accomplish.

I had a bit of a partner and he’s also the senior partner, a guy named Bob Krieble years ago. Bob had invented superglue by the Loctite Corporation. He was a great entrepreneur, but he spent most of the time giving away his money. He used to drive a little Ford Escort around Washington and he’d be up in the CDs and he’d scare me to death the way you drove. I said to him one day, “Bob, why don’t you get yourself a bit bigger car? You can afford it. He said, “The more money I spend on myself, the less money I have to give away.” That was his attitude. I thought, “That’s such an American attitude.”

Look at now where you have Bill Gates is a perfect example where he’s still involved to an extent, but for the most part he’s giving. The impact he’s made on the entire world based on his desire to grow. His vision of having a computer at every home has blessed the world and benefited the world. That’s where I look at. It’s interesting where you have this left-leaning entrepreneurial crowd who in essence wants to delegate that responsibility to government and to distribute wealth through taxation and to take care of those that are less fortunate. I think that’s a very flawed philosophy because the government hasn’t created much. If anything, it’s the entrepreneur. It’s the human being and their ability whether it’s creating things in industry or industries themselves changed the way in which people live. Because in order for them to be wealthy, they have to make lives better for a lot of other people first.

TWS 20 | Why Certain Societies Succeed

Why Certain Societies Succeed: When a society becomes sufficiently wealthy, there’s no sense of overdoing anymore.

 

In fact, I could argue that Steve Jobs did more to increase the rural standard of living than any human beforehand. With the iPhone and iPad, just of the Apple version, there is like 1.5 billion out there plus all these other versions. For sure anybody on the planet now has it. If you look at the places in Africa, but they all have them and they now do their banking. You’d have a smartphone and you’d have all the world’s knowledge in your hand and things like medical care. Much has stuck you can outsell treatment back. We know that when a typical American comes down with something, the first thing they do is go to WebMD to see how serious it is or whether they could self-treat or they have to go to the doctor.

We look at all the apps that take care of it, things like cameras. I’ve always traveled around the world to go deal with the work I’ve done and I used to take a camera with me, a Rolodex and all these kinds of things. Now, I have everything in my hand all the time. Even poor people around the world have this. That has been enormously empowering and greatly reduced mortality rates and increase this stock of happiness for people. People now know if they have a shortage of something and they know what the world markets are and where surpluses and things are or where shortages are. The markets can arbitrage that over the globe instantaneously. That’s a wonderful innovation and people haven’t thought through of it. It’s one reason we have this apparent worldwide deflation is that the improvements in technology had been so fast that they’ve in certain ways overwhelmed the ability of the government to inflate the currency, which is bizarre.

Interestingly enough, that’s where I wanted to go next. Maybe not specifically to currency, but to maybe the belief systems that you are seeing in the US and American society that may not be in line with what we’ve been talking about. I believe these universal truths are evident in a lot of different respects, a lot of different successful societies. In our day and age, I see a lot of fragileness associated with the markets with interest rates. It starts with the American Society’s belief system or perspective when it comes to how things should operate. What would you say are maybe some of those fragile points that you see that American society is adopting as their belief system?

The biggest problem and you alluded to it is that people don’t understand how the system works and you got a lot of these young entrepreneurs who became rich. They don’t understand why they became rich and how they could do that in the US, but they couldn’t do it in Venezuela. They have the same person. It’s the same genetic structure. This can come from a good family in both countries and in one place, you’re stuck. You have to get out. There was no way to do anything. Then they can come to the US and do most everything. Many years ago, I was very much involved in the economic transition in Eastern Europe and the former Soviet Union. What struck me is when I started working in these countries are all these very smart young entrepreneurial people, but they couldn’t do anything in their own country. They had to get out and then came to the US or Europe or other places, but particularly come into the US.

Particularly, I have worked in Bulgaria and Bulgaria now is a great free-market country. I noticed that the index of economic freedom it’s in the top quintile now. Years ago, it wasn’t. For a Bulgarian to succeed, it was much easier to leave the country. You had all these young Bulgarians who would come to the US and get an education. I used to say, “Why don’t you go back to Bulgaria and help the country?” They say, “It’s hopeless. I’ll stay here.” A lot of them became quite wealthy, some of them who worked for me. I realized that they made the right decision and then Bulgaria changed. They’re the first ones to put a 10% flat tax in and they have a lot of crushes, but they’ve gotten rid of much of it. It is a remarkably different place now because they started adopting the rules that worked in every place. We take Chile. Chile I think is now the 30th freest country in the world. Many years ago, it was a Marxist dictatorship.

It was horrible. It was a communist country. It hadn’t been that long that a guy named Allende who was in his time a dictator, he was overthrown. It took them a number of years to get a democratic government, but they started the economic reform quite early. Now you go to Chile, San Diego and it reminds me so much the way California used to be before California went downhill. It’s beautiful. It’s got the same climate. San Diego is like Southern California. The mountains come up in the sea and beautiful beaches and it’s gorgeous. The vineyards grow almost everything. You’ll see that change for a country was a poor Marxist dictatorship and now is the wealthiest country in South America. It’s the same people and the only thing that’s different is the systems.

True equality is when we all have the equality of opportunity. Click To Tweet

What I find fascinating is polarity oftentimes gives you a different perspective when you’ve experienced what it’s like to have a dictatorship. I think the value that’s placed on freedom is so much greater. I look at how I characterize the perspective of the United States is we don’t have polarity. We’ve had freedom, we’ve had success and we’ve had an infrastructure for so long that people have discounted its nature. Subsequently now, our questioning is nature. Do you see the same thing or maybe something different?

I think you put your finger on it. We look at what’s happening in Hong Kong. The people who are the citizens of Hong Kong, most of them are the descendants of people who came over in the late ‘40s or 1950s from China. If they didn’t directly experience Communism, their parents or grandparents did. They know what it’s all about. You don’t have to explain it to them and you look at how they’re risking everything. They are unarmed and every weekend and every night they go out there and are protesting what may seem like fairly minor issues, but they’re not because they understand that once they start to lose some of these things, there is a slippery slope. They’ll end up looking like China rather than Hong Kong. You can see that they don’t want to go back and I worry about the situation, but the facts that these people have this courage without any weapons or anything. They go out there and confront the authorities night after night and demand to keep the freedoms that were given to them on the basic agreement between the British and Chinese 50-year agreement.

The fighting comes from that understanding of what it’s like to have the opposite and their neighbor is China. If you look at with regards to one of those universal fundamentals, I know that you have some experience here which is a currency, a sound monetary system. I look at what’s going on in our country and we’ve benefited from so much yet at the same time, there’s a great cause for concern with the deficit spending with the future obligations of Medicare and Social Security and the way in which that is operating. You had some communications with a lot of the Silicon Valley folks that were looking at internal payment systems associated with cryptocurrency or blockchain and figuring out new ways in order to make exchanges. It would not only create more efficiency with exchange but would ultimately reduce the central influence and power around that type of exchange. Do you mind speaking to that?

Central Banks are relatively recent phenomena. They are going to be a short-lived phenomenon. From about 1870 to 1914, the world was on the gold standard, which is the great error of monetary stability around the world because all the major countries were on the gold standard. Nobody could control the price of money, there are supply and demand. It worked extremely well. There were no exchange fees between countries because an analysis of gold in London was the same as New York or Tokyo or wherever. That worked well and the reason it fell apart is that when they went in World War I, the countries needed to borrow a whole lot to engage in war. None of the gold sends you’ve limited to how much should you borrow and we should have constrained war. In fact, it destroyed the money engaged in the war.

We look now and we have these they call fiat currencies. The US dollar has backing and the US dollar is the world’s currency. The backing the US dollar has is the ability of the government to tax, take real resources. Take things that have real value that we all own. Take them to the point of a gun and seize them. They try to manage the value of the dollar. We see they can do this less and less well. The open market operations. Some of your readers learned about some of the tools and most of these tools are less potent than they used to be and are hardly used anymore. I should back up, I was a great fan of FA Hayek, the great Nobel Prize economist-philosopher. In 1976, he wrote a book called Denationalization of Money.

I was a young economist at the time and I was fascinated by the book and I was an advisor to one of my exchanges at the time in Austin. I thought, “He’s nailed it, but mechanically it’s hard to do.” This would be before the modern computer digital age. I wrote a lot about it and played with it to how we could do it. In 1998, I wrote a book called The End of Money looking at digital money and so forth. Eventually, several years ago, the blockchain came along with Bitcoin in the early cyber purchases. The question is where does all of this lead? To start with the basic goal would be to have a worldwide monetary standard which would make trade and investment very easy around the world with these big fluctuating exchange rates.

TWS 20 | Why Certain Societies Succeed

Why Certain Societies Succeed: Central Banks are relatively recent phenomena, and they are going to be a short-lived phenomenon.

 

Think if you are a German chemical manufacturer. The price of the euro that the Germans use goes up and down considerably against the dollar. Do you put your plants in Louisiana? Do you put it in Hamburg, Germany? Do you put it someplace else? If you make a mistake because you’ve misgauged what the exchange rate would be and nobody knows this for certain. This can be extremely costly too. You can have windfalls or often great penalties. If you had a constant currency throughout the world that everybody used, that problem goes away. A lot of these investment decisions, which are almost difficult to make, disappear and you’ll put your money where it makes the most sense given raw materials in markets and so forth. That is a great promise of the cryptocurrency digital age.

You have then a debate of, “What should be high-end with cryptocurrency?” With Bitcoin, there’s nothing better than a computer algorithm. They kept a scarcity by the system they have and you have to mine the new ones that have increased costs. They have limits. It’s $21 million. There’s nothing real there. Someday somebody will figure out how to hack it. Nobody has to date, but things can go wrong or you have a meltdown of the rural electronic system for some period of time. It won’t be permanent and you see these science-fiction things and not all of them are still science fiction of the electrical grids going down and so forth. If a currency has nothing more than a computer algorithm behind it, you’ll have many more problems that I think are necessary. A lot of people recognize this problem. They’re trying to do cryptocurrencies, but have real backing like with gold or silver, the traditional precious metals.

These are heavily-regulated and I’ve argued that you can use almost any standard commodity, things in trade and organized futures market around the world. We had the standards for a long while. I have a few others who had created a company which we are willing to an aluminum-backed cryptocurrency. That may sound ridiculous because aluminum is inexpensive. It is found everywhere, but it has a number of great advantages. It’s never going to be worth zero. We’re not talking about carrying around aluminum foil in your pocket. The goal is an important flag to carry around. Digitally, she would have stored at any place and still trade and still use it. I think this is the way we’re moving and I had been putting my money and time where my mouth is on the whole thing. It’ll be interesting to see how this works out. When you’ve got a thousand different experiments around the world this time or at any given time.

Richard, one of the conversations we had when we were in Belize was around an idea that you had regarding how to essentially create some sort of ETF or fund around the natural resources of Belize and what that could potentially do to back their currency. It sounds in a similar way what you’re talking about, having something that backs a cryptocurrency.

What I was talking about there was a standard currency board. I used to be on the board when I came out on monetary authority and I’ve got a currency board there where the Cayman dollars fixed the US dollar. Those of us who are on the board, we managed that. It’s easy to have a fixed exchange rate. Years beforehand, I had done some work in Estonia and they had a number of natural resources. The Estonians were trying to figure out how to establish new money and they had some gold in the Bank of England and in New York. They had a lot of timber, oil, shale and so forth.

They were able to put together a currency board which gave total backing for currency. It wasn’t a cryptocurrency, it’s was normal currency at the time. The currency boards I have been, a lot of them is set up in Eastern Europe, the former economist countries. They worked very well for mid-sized countries because they get monetary production outside the political process. Bulgaria has got one and it’s affixed in euro. Bulgaria can inflate as well and have problems. Bulgaria has a very good fiscal policy. Before they had the currency board, they went through a couple of episodes of hyperinflation. Back when I shared the transition project back in 1990, I argued for the courtesy board then they had to go through these bouts of inflation. I got a call one day and said, “Richard, you knew that idea you had for a currency board.” The paper was ready. That is in 1997 and it has worked well since.

If a currency has nothing more than a computer algorithm behind it, you'll have many more problems that are unnecessary. Click To Tweet

That’s the polarity idea. Where ideas and solutions could be valid but if that’s the only thing that a person sees, then it may not be relevant at the time. When they go through some sort of a crisis and experience not having it or something that could have prevented it, that’s when they value it more. That’s I would say one of the last things we can talk about before the end of this fascinating conversation. Where do we stand with the fragile nature of potentially in America and what we experience? I know we have a lot of strength in so many different areas, but do you look at where we’re at as a society and identify one part of it or a couple of parts of it that are more fragile than others.

Yes. The most fragile part is this notion of getting stuff for free and the idea that you can have free medical care and free pensions and so forth. These don’t have to be actuarially sound. That always ends up a disaster. Every place in the world is a separate tribe. It’s like these people, Madison did these debates. It’s like, “People have read no history.” It’s quite astounding to me that they think they can do this. There are some crazy things as Bernie Sanders comes out. It’s like the Soviet Union and all of the other places never existed or maybe in his mind may have worked perfectly.

For those of us who’ve been there, “No, that’s true.” It impoverished everybody. We look at Social Security. We have to make adjustments to the system as we age as a society. When Social Security was first developed in the 1930s, there were about twelve working in Americas for each person’s Social Security. Now we have about three. That at racial continued to decline as people start living to commonplace to 100, 110, 120 or whatever. We can’t have people retire for half their lives and have a good retirement income.

Somebody has to be doing the work. He said, “We’ll increase the taxes,” but the more you increase taxes, that discourages work. You get out of yourself on these treadmills and it’s a formula for disaster. We’re seeing it play out in places in Europe and Japan and other places and in worse shape than the US. In the last few years, we saw it play out in Greece and the average Greek has a per capita income of about 30% less than they did a few years ago. That’s a huge drop in the standard of living and the idea is that we’re going to spend money if they weren’t earning and you can only do that up to a point. At some point, people say, “I’m not going to loan to you anymore.” When that happens, the game is over and that’s what I fear in this country. On the socialized health systems, we’ve seen plenty of those around the world and you tend to get inferior care, queuing and then you always end up with two sets.

I look at it in all the places. There is a medical system for people in welfare willing to pay for their own. They have decent hospitals and state of the art and then there’s the medical care for everybody else’s free. It’s like the VA system. Do you want to go there? One of the great changes the Trump administration made it is now the VA have a choice to either to the VA or go to your own doctor. They call the VA and they say, “We can’t see you for a few months. You can go to your own doctor.” They send the bill over to the VA.

TWS 20 | Why Certain Societies Succeed

Why Certain Societies Succeed: We have to make adjustments to the system as we age as a society.

 

I refer to what’s going on sometimes as psychological warfare because it seems that rational thinking has been thrown out the door and its demagoguery and rhetoric that has taken over. It’s the hot buttons. It’s the trigger buttons that ultimately get people to react emotionally. When that exists, you throw rationale at the window because history has shown what some of the things that are being proposed have done to societies. Yet history and reason have nothing to do with the conversation anymore it seems.

I thank you for giving me an opportunity to speak to your audience.

You’re still active and you are still writing. Why don’t you tell people about what you’re doing with the Washington Times and other ways in which people can follow you and keep up to speed with what you’re talking about?

I do a column which is published each week in the Washington Times. You can find on the Washington Times website or the InstituteForGlobalEconomicGrowth.orgI. I think you’ve got all the information on that and it appears in a lot of other places. If you Google my name, you’ll find me on Twitter and Facebook. You’ll find 2,000 columns by me and my ideas on the week.

Richard, it has been a pleasure. Thank you so much for your time. It’s been an awesome conversation. I appreciate it. I’ve learned a lot.

Thank you.

Important Links:

About Richard W. Rahn

TWS 20 | Why Certain Societies SucceedRichard W. Rahn is an economist, syndicated columnist, and entrepreneur. Currently, he is Chairman of Improbable Success Productions, the Institute for Global Economic Growth, and Metal Convertibility LLC. He writes a syndicated weekly economic column which is published in The Washington Times, Real Clear Markets and many other places, and serves on the editorial board of the Cayman Financial Review.

Previously, he served: as the Vice President and Chief Economist of the Chamber of Commerce of the United States; as a representative of the United States Information Agency in a number of countries; as the Executive Director of the American Council for Capital Formation; as a member of the Board of Directors of the Cayman Islands Monetary Authority; as the U.S. co-chairman of the Bulgarian Economic Growth and Transition Project (1990-91); as a member of the Quadrennial Social Security Advisory Council (appointed by President Reagan in 1982); and as an economic advisor to President G.H.W. Bush (in 1988-1989). In 1990, he founded the Novecon companies, which included Novecon Financial Ltd., Novecopter, and Sterling Semiconductor (now owned by Dow Corning). He has taught in graduate schools at several universities, and for the U.S. Air Force.

He is a member of the Mont Pelerin Society and has served as a senior fellow at the Cato Institute, the Hudson Institute, and the Discovery Institute; and a visiting fellow at the Heritage Foundation. He has written more than a thousand articles for newspaper, magazines and professional journals, such as the Wall Street Journal, USA Today, Forbes, The American Spectator, The Weekly Standard, National Review, and The National Interest. As an economic commentator, he has appeared on such programs as the Today Show, Good Morning America, Kudlow and Co., Wall Street Week, the PBS Newshour and Crossfire, and was a weekly commentator for Radio America.

He has testified before the U.S. Congress on economic issues more than seventy-five times. He earned a Ph.D. from Columbia University and was awarded an honorary Doctor of Laws by Pepperdine University. In 2018, Dr. Rahn was a recipient of the annual Hayek Lifetime Achievement Award.

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Reality Over Influence with Erik Fogg

TWS 19 | Reality Over Influence

 

Your reality is shaped by your education, where you live, and what you consume. How do you view people with different beliefs? Is there a way to bridge the polarity in society? And, how should an entrepreneur respond to influence? Patrick Donohoe gets the answers from Erik Fogg, an author, CEO, and co-host of the ReConsider podcast. Erik introduces his book, Wedged: How You Became a Tool of the Partisan Political Establishment, which talks about the way you can open your mind to the manipulation and fight your way out of political polarization.

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Reality Over Influence with Erik Fogg

This topic may not seem that it has anything to do with the entrepreneur, but I believe it has everything to do with it. My guest, Erik, is in the political arena. This arena is for the most part psychological as it pertains to what we hear and what is represented. I believe that is a skill of the entrepreneur to understand what is hyperbole and what is real and applicable. It takes some discipline when it comes to understanding yourself and how you’re wired. How you’ve been influenced in the past and also the person that is communicating with you. What are they are influenced by and why they are speaking to you? I believe psychology and influence being used all around us without being that known, being that conspicuous. There’s a documentary I saw called The Great Hack. The documentary was fascinating. It’s on Netflix. It’s a group that used big data as well as artificial intelligence to be very strategic in the way that they marketed during the Trump campaign and previous to the Trump campaign, Brexit and some other elections.

These days, I know we’ve heard big data, I know we’ve heard about privacy and we’ve heard the Facebook inquisition and so forth. Our information is everywhere and it’s being used for a strategic advantage of whether it’s marketing and companies or in this case, the political environment. Being aware of that is very important, but also it’s the psychology associated with your understanding of yourself, your perspective, where it stands and then being open to other’s perspectives then weighing everything and then coming up with a decision. This is crucial. I believe in times of crisis and times of chaos, there is a lot of opportunity, yet there’s only a small percentage that capitalizes on that opportunity. I would argue that that percentage understands themselves so well that they aren’t necessarily influenced by the emotional side of things, the rhetoric.

They are able to understand that and hear what’s being said but not necessarily come to a conclusion. Erik and I had a great discussion and I’m going to end my introduction of him with a quote that I found. He says, “The problem with the world is that the intelligent people are full of doubts while the stupid ones are full of confidence.” It’s very interesting. Thanks again for all the support. If you like what you read, go check out the previous episodes. Give us an awesome review on iTunes. I’d be so grateful if you did, so thank you.

Most of you know that I wrote a book called Heads I Win Tails You Lose: A Financial Strategy To Reignite The American Dream and the book has sold tens of thousands of copies. We’re excited about it. For those of you who are new reading and haven’t had your chance to pick one up, you can get it for free. If you head over to TheWealthStandard.com/book and all you have to do is pay for shipping, you will get your copy for free. Thanks for the support.

My guest is Erik Fogg and I’m excited. We had a brief conversation and it’s made me even more excited. Erik, thank you so much for spending the time with me. I can’t wait for my audience to read this and learn from you.

Patrick, it’s my pleasure. I’m looking forward to this one for a while.

There is a gap between reality and what is projected into the national conversation. Click To Tweet

The first thing that would help the audience is if you were to maybe describe or characterize the message of your blog, the book that you came out with years ago, what were you trying to achieve? What did you want your audience to walk away with as an understanding or a new view of the world?

I’m glad that you pointed out that it came out years ago because I have a little bit of political history cred now and I was concerned about the political polarization before it was cool, before coming as a team. One of the reasons it’s so important is that I was able to get it out before it reinforces the fact that we were able to do this analysis and the book about political polarization in the United States before Donald Trump was elected, before we saw schism play out in the American electorate. Being able to do that analysis beforehand shows that this has been coming, that Donald Trump’s election and the polarization around it is a result of an ongoing process as opposed to the cause itself.

What we explore in the wedge is what are the forces and incentives in the United States political election system and media around politics that drive us towards choosing these tribal sides and treating politics like a war rather than treating it as a discussion? The big thesis in the wedge is that most Americans have nuanced contradictory, not always necessarily moderate, but often mixed views about how they feel about issues. Many Americans have very moderate views. Not all do, and that’s okay, but that is not reflected in Congress and it’s not reflected in the national conversation. We can talk about as much of the theory behind this as we want, but the big insight is that there’s this gap between reality and what is projected into the national conversation.

Where do you feel these realities come from? It’s so widespread and I’ve thought about this before as how a big group of people comes to do a way of doing things that’s similar. My kids right now are in school. I look at the school system. It was Horace Mann who brought this whole Prussian idea of the school system where it was going to a more regimented, dictatorial, hierarchical structure in which teachers are placed in this very elite role and essentially teach people. The whole theory is that it’s to train workers, to train military people, to be told what to do. You look at going through elementary school and then junior, middle school and then high school and then even college. It’s the repetition over and over again of being told what to do and told what to think. You have to do this in order to succeed. It’s interesting how that plays into our ability to look at what you described as reality. That’s what most people’s reality is. At the same time, it also helps us understand why we’re in the situation we’re in, the political scheme of things.

We don’t bring up the US education system in the book in particular because it’s one of the constants throughout this change period that we’re talking about. The period we’re talking about starts in the early 1990s where we start to see this weird divide happening. A good example is as regards to abortion, the mix of policy ideas that Americans have has been constant since the 1990s, but there used to be much more of a combined identity around what my position was in abortion. Most people were pro-choice, but even though people want the same policies, there’s been this bifurcation of pro-choice for life. It’s about 50/50 now, even though everyone thinks the same thing, they identify differently now. There’s all that time period that we’re explaining. What is the thing that changed? Your point about education is interesting because of how it preps the human mind to respond to what it’s seeing in the media.

What is the thing that changed? What’s driving this split between narrative and reality? What we believe and what we hypothesize in the book is that changes in how media is consumed are the primary driver. If we think about how the brain is prepped and then we think about how media has changed, no longer do we consume media in these long forms of newspapers. We consume media, both television media and internet media in very small chunks that activate a very different part of the brain. They activate this very instinctual, immediate responsive part of the brain, which is a different literal region of the brain that is activated during reading a newspaper. That part of the brain is very responsive to emotion, it’s very responsive to anger, fear and frustration.

TWS 19 | Reality Over Influence

Reality Over Influence: The education system wired us to do as we are told. It has prepared our mind to respond to what we are seeing in the media.

 

If we think of, for example, the incentive of an online newspaper, what they need to do is get you to click. They need to get you in for a few seconds so you see the ad and you ship out. In the shorter attention span mechanism, the tools that are being used to drive revenue for a newspaper are the tools that get you to click, which are the ones that activate that smaller instinctual part of the brain. How did they make money? They make you angry and they make you scared. That is the process. That’s the mechanism. It’s not necessarily anyone’s fault. There’s no bad guy. It’s incentives that have led to how our emotional relationship with politics has changed.

Politics has become much more about the psychological narrative than anything else. It’s clear to those who understand what we’re talking about, where there are triggers that get some chemicals in our brain, things to fire and they don’t allow for rational, critical thinking. Donald Trump is the epitome of this. I don’t think he cares as much about what he says as the reaction he wants. He knows the reaction he’s going to get and it’s fascinating that people still buy into it. If you look at all the information that exists, whether it’s the internet or social media, there’s so much. I’d say our mind is defending ourselves from taking anything else in. That’s why we are so influenced way more than we think, whether it’s by the artificial intelligence that tells companies where they should place ads, how the color scheme should look, what time of day they should be posting, the different ages and sexes and socioeconomic situations.

There’s so much data out there right now that there is strategic influence every minute of the day, it seems like. Most people are ignorant and naive about that. That’s what I would say is scary but also good that you’re blogging, you’re talking about this because we have a huge election is coming up in 2020. Based on you writing this book years ago and how things have evolved and compounded, I can’t imagine what the rhetoric and the narrative and the psychological ways in which people are being swayed one way or the other.

Your example of advertising is so potent for this because it’s the exact same mechanism, techniques, technology, data that are being used in the political sphere to influence how you relate to political parties. What causes you to donate, what causes you to vote, what causes you to read this article are the same techniques used to get you to buy a thing, to click an ad and buy a new product that’s being advertised to you based on all this data. It’s these micro-manipulations to a point the saturation of micro-manipulations that we’re facing from these systems is overwhelming that we can’t process it, we can’t become aware of it. In particularly because they’re designed to influence that smaller part of the brain that is instantaneous, instinctual, quick-action thinking, it never actually makes it to the part of the brain where we fully process it.

It’s happening to us all the time and we don’t notice it. You’re banging on about that and you brought up the president. He’s trapped in the same cycle that everyone else is in terms of what does it take to get elected with this new technology and with these new techniques. He happens to be a master at using it. Whether that’s broken clock is right twice a day, whether he’s a mastermind and understands psychology at a level that other politicians didn’t, it doesn’t ultimately matter. It’s a technique that worked. The real tragedy of it is that because politics is a zero-sum game because there are exactly 535 members of Congress and one president, it means that the person who’s going to do this best for each of those seats, he’s the one who happens to win. We can’t ask politicians not to do it. We can’t wait for a hero to come save us because the ones that don’t do it, that don’t manipulate us will continue to lose.

How have you got to this point? I would say the problem isn’t necessarily just politics. The problem is how we’re influenced and we don’t even know that we’re being influenced. That’s why I look at so many unintended consequences of following this trail of thinking or following this group or following this narrative and what that takes away from a human being’s ability to think through and rationalize and understand for themselves. How did you get to this point? Was it a book? Was it an event that you went to? Was it an experience that you had in school? What led you to view the world this way to the point where you’re writing about it, you wrote a book about it, you’re blogging or podcasting about it?

The problem in our society is how we are being influenced without even knowing it. Click To Tweet

As much as I would like for it to be that I have some Socratic wisdom and some ability to rise above it all that everyone does not have, I super don’t. I have in time started to see where I’m being manipulated by this because I have my emotional reactions and my own biases, my own desire for something to be true and revulsion of some other facts. The thing that caused me to start to see that something was afoot was when I went to college. This was in 2005 in the city of Boston. I had grown up in a farm town in Pennsylvania. I grew up in a very red part of the country where everyone around me was great people that worked hard. They cared about their families, they cared about the country and they cared about helping people. They volunteer as firefighters. They gave money to feed the homeless and the poor. They’re wonderful people, and they hated the left. They vilified them and said, “These people are monsters that hate America and they want to do all these bad things.” Of course as a child, I was very impressionable. I was like, “That must be true.”

I then went to Boston and I ran into a lot of people that were very smart and cared about the country and wanted to work hard and wanted to help people that thought totally differently about all these different policies and hated the right-wing. They are monsters and they want to destroy America and hate all these groups and all this stuff. I was at first very defensive of conservatives where I grew up, but then when I started to come to love the people that I had met in Boston, I realized they were wonderful people too. The Boston people are wrong about the farmers in Pennsylvania and the farmers of Pennsylvania are wrong about the people in Boston. They hold these concepts of monstrosity so deeply. I used to until I had met all these people in Boston and I wonder, “How did that happen? What drove that?” Because disagreeing is one thing and even disagreeing fiercely is one thing, but to believe, and we have good data this in the book, that people in each party believe that other people in the other party have terrible intent, that they’re out to do bad things. How did that happen? That’s the first part I researched. Was this true? Yes. What must be going on? It was a three-year project to try to dig into what causes this divide of heart much more so than the divide of policy in mind.

It’s fascinating that you’re saying this because I was watching something with my wife. It was four days after 9/11 and it was an interaction between a Muslim person and an Orthodox Jew. Talk about extremities. You look at left and right at Pennsylvania versus Massachusetts, but this extreme view led to the exact same conclusion. Both wanted the same outcome, yet they became so involved in their group and the notion of group psychology programs the same thoughts and the same feelings over and over and over where they’re a part of us. We don’t know why we’re reacting the way that we are. We just react that way. If you’re aware of that, then it allows you to question the assumptions associated with what you believe and why you believe it.

It’s not to say that what you believe or don’t believe is true or false. It’s taking ownership over what you think and what you believe. That’s the ability we have. We all have to realize we’re human and we have been influenced as an American and me as a male. I grew up on the east coast, but I live in the West now, on the west coast. We have all these influences and we form a perspective of the world and that’s how we wake up every single morning. If we’re not aware that the majority of our life is subconscious and we’re just going to respond and react to things when it comes down to these very critical votes or critical things that we’re stating or that we’re trying to pursue, that we’re perceiving, we’re going to buy into what all our past has programmed us to do.

The transformative moment for most people in my experience, including me, is the moment that you’re in a state of mind that through whatever preparation, perhaps reading a book, perhaps reading this blog where you’re curious. You’re like, “Maybe this is happening,” because we know that it’s happening with advertising. We know that it’s happening about what we buy. We now have this thought, “Maybe this is happening in politics.” With that mindset, you go on your Facebook feed, what’s the stuff you’re normally clicking like on, that you’re normally sharing, that you’re normally reacting and you go, “This must be true because it makes me mad and I’m going to tell the rest of the world.” You question that once and go look it up and go do some digging and go see, “Maybe this is designed to manipulate me.” Understanding the mechanism of how it got to you in the first place is important, but when you see, “In this one instance, I reacted in a way that someone designed me to react in order to get me to do something for them.” That’s the transformative moment we realize, “This is happening,” and then you’re prepared. You have the spine and the knowledge to begin to resist it and filter through it in the future.

TWS 19 | Reality Over Influence

Reality Over Influence: Allow yourself to question the assumptions associated with what you believe and why you believe them.

 

This is what I’ve seen in myself and it’s a flaw that I’ve noticed where I have these biases, these cognitive biases to those that agree with me as opposed to going and checking my assumptions up against those that may have opposing views. As I’ve done that, people have a fear associated with what another group or another philosophy or another perspective is. I’ve found that in myself as well. What are you doing to check the other side too, to check your assumptions? Your book, your podcast and your blog are going to start firing up in the next few months. How are you looking at ways in which you can objectively analyze something, think about something and talk about something so that the audience can get the upper hand in relation to taking your information and realizing that you’re biased, but your bias comes from starting out being unbiased, if that makes sense?

You’re always going to have a perspective, a belief, a conviction and that’s good. Being able to challenge your own convictions is probably the single hardest thing on earth. It’s a tall order. The beginning is when we start vilifying the opposition outright, because when we vilify the opposition, when we fall into these tribal politics that you talked about, it blocks us substantially from being able to consider that they may have an opinion that is valid ever, because they’re bad people. What they think is bad, it’s to hurt people.

When we peel that away and we start to think, “Maybe people ran into what they believe in a similar process by which I ran into what I believe,” that’s the first step to being able to start thinking about different people’s opinions in terms of them being opinions in and of themselves. They may still be wrong, but they are ideas and that they are not the reflections of evil. Not that there aren’t evil people up there if you think within the middle 80% of how the country thinks about stuff. Step one is that we isolate the opinions of the people. The other path to being able to challenge my own biases is to ask, “How did this other person who disagrees with me so much about immigration, about the economy, about gender relations, something, how did they get there?”

You can think of this as a study of another person and it can even be a thought experiment. You don’t necessarily have to interview them or if you know someone, that’s even more helpful. Once you’ve been able to go through that thought experiment and derive a reasonable narrative for how they got to where they got to, other than sitting down and thinking, “I want to hurt people,” once you’ve got that firm, you can then turn it on yourself. Then you have the tools to ask, “How did I get to what I believe? What influenced me to get here?” Similarly, with the first layer of this, which is the anger layer, when we see the process and the mechanism by which we reach wherever we reach, we become less firmly attached to it. It becomes less something that’s part of our identity and something that’s more its own thing that exists. The key is extracting the idea, extracting thought from our sense of identity. That opens our mind to be able to then think critically. Changing our mind, doing the study, that’s the long work. It’s not the emotionally hard work, but that’s the long work.

What have you seen as some of the success of your podcast, your book, where someone had a certain point of view, a way of looking at things and they’ve realized how they’d been influenced and swayed by this political narrative or that political narrative and a can-do and understanding that’s different? I look at most people consuming this information won’t do anything with it. They’ll listen to it and say, “That sounds interesting,” but because of how hard-wired and program we are, they’ll show up tomorrow and respond and react to this the same way they’ve always done. That’s where the notion of a pattern interrupt or a shift in thinking allows us to go about life with maybe a different tweak to the way in which we make our assumptions. Going to the successes you’ve seen in people and how they’ve been able to understand things at a higher level, maybe talk through that?

The way I like to say it most about how we react to hearing something like this, what you and I are talking about is something that generally at the level of nod and then walks away, everyone would agree with or almost everyone in group. They’d say, “That’s great. Those other people who are super wrong, they need to hear this.” That’s the first thought that we’re going to have, is that other people need to hear this and they need to fix themselves. “They can be more like me,” which is correct. It is hard work and part of the problem is that it’s not fun. It’s fun to be right. It’s fun to fight a war. We love fighting wars. We’re very tribal people. We love having an enemy and we don’t have the communists anymore. We don’t have the Soviet Union, so were’ turning on ourselves. I digress a bit. The best story that I see people change on repeatedly, it’s because it’s the first chapter in the book.

People ran into what they believe in a similar process by which you ran into what you believe. Click To Tweet

We lead with it because it’s the most intractably emotional topic I can think of, which is abortion. People are like, “I don’t even want to talk about it,” but we’ve got people into it. The success stories I’ve seen are that someone starts off saying, “I am pro this. Anyone who is not pro this is bad. They either want to murder babies or they want to oppress women. They’ve got a war council about how to oppress women that had murder babies. That’s their plan. This is based on reader feedback and listener feedback. After reading that section on abortion, one of the things they realize is that the vast majority of Americans want abortion to be open and legal most of the time and they want to have some restrictions usually on timeline. They sometimes disagree on that timeline. Should it be 20 weeks, 24 weeks? The vast majority of Americans, whether they call themselves purchase or pro-life, we believe in that.

When you’re at your protest rally with your tribe and you’re saying, “End abortion, abortion is evil,” or you’re saying, “Free and open abortion always,” when you say “never” and “always,” you’re going to create a reaction. When you sit back and you read that most people want it to be legal most of the time, the people who read it then go, “That’s me too.” I also want it to be legal most of the time. The readers get that and go, “We can all sit down and say we can make it legal most of the time. There some tweaks to figure out. We’ll probably fight about it, but most of us want to be legal most of the time. What are we even fighting about?” That’s where people start to change everything because we’ve taken the most terribly, intractable emotional identity, politics, life and death, feminism and patriarchy issue and realize, “As far as policy, we’re not that far apart on it. It’s just stupid branding.”

It’s interesting that you have these two forces, the force of wanting to be right in the chemical reaction you get to being right and winning. We all know what that feels like. There’s this other side of the spectrum, which is the fear of being wrong. Nobody wants to be wrong. You have these two forces that essentially are converging and creating these absolutes, absolute this and absolute that because you want to avoid the feeling of being wrong and feel what it’s like to be right. Those are very animalistic types of responses. We’re all included in this because I react animalistically as much as everybody else does, but it’s being able to take these very critical things, these topics. They have to do with our lawmaking and the future, whether it’s our future, our kids’ future or the future of our society. These are very important issues. Being able to approach them as unemotional as possible is vital. What’s coming down the pipe is probably more artificial intelligence, more computer learning and more very strategic influence that is going to get us to buy into our tribe and if we’re on the fence, buy into some tribe.

Your point about that buy-in represents the biggest strategic challenge to this and the third fear people have, which is the fear of losing influence in stuff that they care. Because what people rightly understand is that, “If I misalign, if I don’t align with a tribe, I’m not able to create the collective power. I’m not able to replicate the collective power that the tribe has.” There’s an incentive to our own beliefs to a tribe because a tribe when it’s big enough and angry enough can get something done. Whereas if we’re sitting out in the middle going like, “It’s complicated.” It is real that the people sitting out are saying, “It’s complicated,” they’re not getting much done.

The hardest part is if you ask an individual to let go of the tribe and be independent, there is a good reason for them not to and that’s the structural thing that we need to change. I do think that there’s this individual perspective and the peak way you can operate right now is to have a bit of emotional detachment where you understand what’s happening. You don’t get caught up in the BS and the propaganda as reality. You still need to pick a tribe. It’s tragic. It’s unfortunate you take the best thing that you can, but the structural change that will allow people to let go of this is going to be a deeper structural change in how we vote and how we set up parties. They’re going to probably have to be some constitutional changes to allow people to have more than two tribes to pick from. There are a little more dynamism and a little more fluidity to represent the real nuance and difference that people have.

If you think of the Republican Party, when Mitt Romney was running for president in 2012, he was very pro-immigration and he was very pro-free trade with other countries. He was very anti-Russia. Obama gave him a hard time on all three of these. He said that his thinking about Russia was backwards. He said that too much free trade is bad for labor and too much immigration is bad for labor and now the two parties have flipped. Even within the Republican Party, you’ve got this pro-free trade, pro-immigration side and an anti-free trade and anti-immigration side. Somehow they’re in the same team. It boggles the mind that they can somehow get along, but because that tribal cohesion and strategic imperative is so powerful, they want to stick around. Whereas if we can structurally change something to let them get divorced and let them have their own parties and advocate for their own stuff, it means you don’t have to have this weird suborning of what you think to whatever dominates the party to get in time.

TWS 19 | Reality Over Influence

Reality Over Influence: Once you understand the thought process someone has to go through to reach their beliefs, you start seeing their beliefs as not who they are but something that just exists.

 

What do you see coming down the line in that regard? As you look at how much money in influence and resources behind these two dominant parties, what’s going to cause them to create factions within themselves or something else to be as influential or start to pierce that veil? People are fed up and the animosity that exists toward all politicians, whether it’s left or right, is probably at the highest levels ever. Are they going to stay the same? Are they going to change? What are you seeing?

Historically, we have had realignments occur where if you get Republicans, they used to be a left-wing radical liberal party. One of the major shifts that occurred was during the 1960s when essentially the Republicans moved south, the Democrats moved out of the south and they realigned to how they think about a lot of stuff. We could have a realignment. I happen to think that in 2016, it would be a lopsided victory for Hillary Clinton. My preferences aside, it’s what I predicted. I was super wrong. It usually takes a serious trouncing of a party to trigger a realignment of that scale. The state of Maine has experimented with rank choice voting. They passed that in a referendum. They’re implementing it in their congressional presidential elections. Thinking about rank choice voting, let’s say you want to vote Jill Stein, but you don’t want Donald Trump to get elected.

Strategically, the right thing to do is to vote for Hillary Clinton in order to keep Jill Stein, in order to keep Donald Trump from getting elected. You don’t vote for Jill Stein, so the Green Party doesn’t get your support. Whereas in rank choice voting, you could vote Jill Stein one, Hillary Clinton two, maybe even Gary Johnson number three and then Donald Trump number four and rank choice voting sorts out such that you voting Jill Stein one doesn’t hurt Hillary Clinton’s chance to beat Donald Trump in case Stein does not win. What that does is it changes all these incentives where you can prioritize someone other than your second least favorite choice. Let’s say Hillary Clinton is your second least favorite choice, but Donald Trump is so much worse for you. You have to prioritize Hillary Clinton. In this rank choice voting feature, you could prioritize the Green Party if that’s your thing. All of a sudden, that leads to a proliferation of parties and ideas that people can then bounce around between and have a few more nuanced ideas besides this seemingly black and white, two ways of looking at the world, which as we discussed, even within the Republican Party alone, it’s not consistent.

Has that been adapted or is it still in that theoretical stage?

It has been adapted and then it went through a legal challenge. The legislature voted down and then the Supreme Court got involved. It is back. It is something that the system will push back on. The two dominant parties, the one thing that we’ll probably agree on is that they don’t want this to happen. The historical moment that needs to happen in order to drive a shift of that magnitude is something like the progressive era of the 1920s. The 1920s post-Gilded Age was when enough people got sufficiently fed up with the system as a whole that they reformed a lot of stuff. They reformed how the Senate works, they reformed how elections work. Women voted and all this crazy stuff, but it all came through from the bottom up. The path forward comes through a reform movement that works on the system as opposed to on specific policy.

Nothing’s going to change from the top down. It’s all going to happen from the bottom up.

People fear losing influence in the stuff that they care about. Click To Tweet

The incentives aren’t in place for it to come from the top.

This has been awesome. We haven’t talked politically on the show. It’s been more business and entrepreneurship and more theory. I look at coming down the line in 2020 and I’ve watched some documentaries and became aware of certain things. From an individual standpoint, the saying that I’ve always heard is, “I’m one person. What difference can I make?” The individual has way more power than they used to have, with their ability to communicate, with their ability to express themselves and with the ability to start a conversation. We have way more influence than we think we have.

I look at what’s coming down the line and starting to become aware and educated and figuring out ways in which you can be influential is vital. I see the world is changing so rapidly on a daily basis. Politics and law, having that type of structure is I would say necessity for a civilized society. I feel like change is brewing. I don’t know where and that’s why we need to talk about how the audience can follow you and how can they get the book? What are ways they can keep up to speed with what you’re seeing so that they can circumvent some of the legwork they have to do on their end?

The one plug I’ll make for why your audience should care about this as a whole, regardless of whether you buy my book, I don’t care. I have my own startup, I make my money doing tech things. There’s no money in books. Buy my book or not, I don’t care. The reason you should care about this is that you are an entrepreneur. You’re a business owner, you’re a stakeholder in this system. Completely and selfishly, the United States political system doesn’t fix itself. There’s going to be a lot of trouble for the economy, frankly. There are a lot of reforms that need to happen to make it work. I don’t want to play armchair economist too hard, but there are dangerous signs about how we’ve been managing the economy from the federal level. They are due to the fact that we’ve spent our time being distracted about stuff such as immigration at the southern border and abortion perennially and whether Donald Trump is a Nazi or not perennially.

Those distractions mean that we’re not actually as a populace advocating for the changes that we need for small business owners or for the bread and butter engine of the American economy. That’s not happening. We are too distracted to do it. Of course, depending on how you feel about it or depending on how you think about it, does that leave the door open for certain special interests to pervert the economy to their interests, against the interests of the whole?

It’s this sleight of hand.

TWS 19 | Reality Over Influence

 

Even selfishly, even beyond we as entrepreneurs are major actors in the system and have a duty to have a public life, there’s private interest in this as well. Hopefully, that resonates to the audience pretty well. The way you can find us if you want to read a little bit more is ReconsiderMedia.com. It has links both to our podcasts, our blog and my book. I would recommend a probably listening to some podcasts of choice first. It’s going to be the easiest way to get into it. We’re going to talk through a few issues, break apart some of the two-sided narratives about it, dive into some of the nuance and detail and it’s through that repeated practice. A lot of it is in economics. What we don’t want to do is tell you what to think. We try to avoid that as much as we can. We want to help challenge the narrative that you’ve been facing and arm you with the tools to be able to make your own mind up about what’s important to you, what matters and what reality looks like. It’s ReconsiderMedia.com. Come check out the podcast. It would be great to have you.

Erik, this has been awesome. Thank you again. Thanks for what you’re doing. It’s a great conversation. Best of luck to you. Maybe we should link up again once the political environment starts to heat up.

That’s a great idea. It’s off of my own show. I can riff a little bit more and we can talk about the election as it’s coming, which will be terrible, a lot of fun and terrifying all at the same time. I would love to come back. Patrick, you are even more incisive and insightful about all this stuff than I even expected. This has been a real pleasure. Thank you.

Erik, thanks again. Hopefully, we’ll talk soon.

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About Erik Fogg

TWS 19 | Reality Over InfluenceErik Fogg is the Founder of ProdPerfect, Chief at ReConsider, co-author of the ReConsider blog, co-host of the ReConsider podcast, and author of the bestselling book Wedged: How You Became a Tool of the Partisan Political Establishment, and How to Start Thinking for Yourself Again. Erik is an MIT Bachelors/Masters grad, studying mechanical engineering and political science. He has 4 years of experience as an operations and engineering consultant with Stroud International, followed by an operations/sales executive role at startup HelmetHub. Erik interludes as political author, business book ghost-writer, and consultant for private equity and biotech.

Erik’s big ambitions are to use artificial intelligence to help large organizations and societies consistently identify truth from falsehood, and make better fact-based decisions

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