Miscellaneous Essays

The Broken Window Fallacy

No Comments

This interview was originally published in the October 4th issue of The Palm Beach Letter.

Tim Mittelstaedt: Let’s talk about books. What is the best book on economics or investing you’ve ever read?

Mark: Gee, I haven’t read all that many. But I’d have to say that the book that had the greatest impact on my thinking was Henry Hazlitt’s Economics in One Lesson.

Tim: A classic. How did that affect you?

Mark: It was one of those “eureka!” moments. It was like coming up from a murky basement into a bright room. The book gave me a clear, common-sense explanation of why things were the way they were. I could finally see the fallacies that supported so much stupidity that passed for economic science.

Tim: Such as?

Mark: Such as why public works are so often wasteful, why government credit diverts production, why technological advances are good, not bad, for employment, why spread-the-work schemes inevitably fail, why government price fixing and tariffs make us poorer, etc.

Tim: So what is the most important thing you got from reading Economics in One Lesson?

Mark: That you can’t understand any economic policy unless you look at the whole picture. It’s not enough to see the immediate, localized consequences of any public action. You must see its long-term effect on the entire economic community. Hazlitt says that nine tenths of the economic fallacies that politicians use do so much harm because they ignore this lesson. After reading the book, I can’t help but agree.

Tim: That’s a little abstract. Can you explain?

Mark: Hazlitt explains it beautifully in the second chapter, entitled “The Broken Window.” It goes like this: A hoodlum throws a rock through a baker’s plate glass window. A crowd gathers and talks about what a shame it is. But someone suggests that it is actually a blessing. He points out that the $250 the baker must pay for a new window will make the glazier $250 richer. And the glazier will use that $250 to spend with other merchants. The smashed window, according to this theory, will go on providing money and employment in ever-widening circles.

The logic is that the hoodlum who threw the brick was not a menace at all, but a public benefactor. The crowd agrees.

Tim: It does seem like a compelling argument.

Mark: It does. Yet, it’s a logical fallacy.

Tim: So what’s the fallacy?

Continue Reading

Miscellaneous Briefs

The Three P’s

No Comments

Leadership in business should be about three things that begin with the letter P: prospects, products, and profitability.

Prospects are your customers-to-be. If you want your business to grow, you must focus your people’s attention on their needs.

Products are about your existing customers. If you want them to stay with you, you must constantly motivate your people to refine and upgrade your products. (Think Apple.)

Profitability is the metric by which you can best judge the health of any business. You must inspire your people to do what needs to be done to reach your financial goals.

Continue Reading

Miscellaneous Briefs

Holiday Career Advice from Mark Ford (Or 15 Rules of the Holiday Office Party)

No Comments

There are three social environments when it comes to your career. At one end, is the formal atmosphere of your professional business life. Here, all eyes are on you … and to succeed, you must conduct yourself with the utmost energy, enthusiasm, and decorum. At the other end (if you are lucky), is a personal life that is free from business relationships. Here, you do exactly as you please. In the middle, are the social events that surround business functions — the dinners and dances and cocktail parities that often follow conferences, trade shows, and seminars.

It is this middle ground that is difficult for some people (like me). It’s easy to convince yourself that anything goes in such situations – but it doesn’t. Like it or not, you will be judged by your behavior at these events, and although your actions will be given much greater tolerance than they would in your daytime business life, you will not be excused from everything.

Here is a partial list of things I have done and/or observed that are probably inadvisable at such functions:

  1. Passing out from drink
  2. Telling your colleagues what you really think of them
  3. Commenting (positively or negatively) on your colleagues’ body parts
  4. Any form of “dirty” dancing
  5. Forcing people to play volleyball/water polo or do that YMCA thing
  6. Telling your boss’s wife what a prick he is
  7. Telling your boss’s husband how hot all the guys think she is
  8. Confessing your love to anyone except your spouse
  9. Dancing on, standing on, or toppling over furniture
  10. Yodeling, Tarzan calls, or hyena laughing
  11. Disrobing, even if it’s “so fucking hot”
  12. Leading a conga line
  13.  Showing your supervisor your tattoos
  14. Taking the “after-party” to a karaoke bar
  15. Doing anything that in any way resembles John Belushi’s behavior in Animal House

Jason Gay, at the Wall Street Journal, has compiled his own list of rules which you can read here.

 

Continue Reading

Miscellaneous Briefs

10 Greatest Solo Folk Rock Artists (According to Me)

No Comments

Cocktail conversation is wonderful because there is a sort of ironic twist to it. The best conversations tend to be about the most trivial things.

Oscar Wilde seemed to share the same view. He said, “I choose my friends for their good looks, my acquaintances for their good characters, and my enemies for their intellects.”

One such conversation, enjoyed recently after drinks with my sister Denise and son Patrick, was about the greatest solo folk rock artists of all time. We decided we needed to name the top ten. Here are mine, in order of greatness:

  1. Bob Dylan
  2. Paul Simon
  3. Van Morrison
  4. Janis Joplin
  5. James Taylor
  6. Leonard Cohen
  7. Cat Stevens
  8. Neil Young
  9. Joni Mitchell
  10. Bruce Springsteen

What do you think?

Continue Reading

Miscellaneous Essays

Achieve More With a Mentor

No Comments

This essay was originally published on January 14th, 2006 for Early To Rise 

“It can be no dishonor to learn from others when they speak good sense.”

– Sophocles

A man looks back on his life and says, “I wish I knew then what I know now.”

It can take a decade or more to become the successful person you want to be, but you can shorten your learning curve – even drastically curtail it – by using a mentor.

With the advice, experience, and support of an experienced person in your field, you can avoid the most common mistakes you are likely to make. You overcome the stickiest problems and find shortcuts to success.

It doesn’t really matter where you are along your career path, getting yourself a good mentor will be enormously valuable for you.

A survey commissioned by the Elliot Leadership Institute at Johnson & Wales University confirms this. For this particular study, researchers surveyed senior executives and middle managers in the food service and hospitality industry about leadership competencies. What they discovered was that leaders who had been mentored felt the experience invaluable. They said their mentors helped them build all kinds of leadership skills, including decision-making, strategic thinking, planning, coaching, and effectively managing others.

In Early to Rise, I’ve often talked about the mentors in my own business life. From Leo, my first post-college boss, I learned the importance of persistence and dogged determination. Leo once had me call Honda Motors more than 100 times to convince them to give us a new engine after the one we had died (from lack of oil). We hadn’t a single, sensible argument in our favor, but that didn’t stop Leo from pushing me. Finally, after I got all the way to the top, the Honda executive leadership decided they had wasted too much time on us and gave in. I didn’t feel good about getting something we didn’t deserve, but I never forgot that lesson in persistence.

From Joel, my second major mentor, I learned a great deal. The first lesson he taught me – by firing the lady who wanted to get me fired – was that a good leader needs to surround himself with the strongest people he can find. Another lesson I learned soon thereafter had to do with the fundamental nature of business.

“Until you make a sale,” Joel explained patiently, “nothing else happens.”

Continue Reading

Miscellaneous Briefs

Memory

No Comments

Storing documents in your computer makes it easier to retrieve them, but …

A study at Columbia University headed by Betsy Sparrow found that people were more likely to forget things if they felt they could retrieve them easily via computer.

In one experiment, participants typed 40 bits of trivia (e.g., an ostrich’s eyes are bigger than its brain) into a computer. Half were told that the information would be saved. Half believed it would not. Those that believed it would be saved had a significantly harder time remembering the trivia than those who thought it would be lost.

In another experiment, participants were asked to recall not just the bit of trivia but which of the five folders it was saved in. Most were better able to recall the folder than the fact.

This confirms what I’ve always suspected: The reason I don’t keep track of what our friends are up to is because I have a folder, my wife, who does it for me.

The same is true when we travel together. I never pay attention to street signs because I know she does. Is this a sign of laziness or intelligence? I’d say both. In fact, there is a term for this – the idea that we rely on our family, friends, and colleagues as well as references to “store” facts. It’s called transactive memory.

Continue Reading