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Review and Analysis “How to get rich without being lucky.” (Philosophy) Part 2.

You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom.

Individuals who have a lot of money aren’t typically paid by the hour. They don’t usually work for someone else. They aren’t individuals who sell their labor in exchange for a service they provide. Sure – you can make large sums of money being paid by the hour selling your services; however, you will never achieve the financial freedom and into the category of being “rich” by doing any of the above.

A Doctor, a Lawyer, even the Vice President of a company may all make millions of dollars a year. But they don’t achieve hundreds of millions a year unless they have equity into something, and they surely do not enjoy the financial freedom of doing what they want to do when they want to do it.

The limiting factors here are time and scale. You can only provide your services to so many people and for so many hours until you hit your cap; and unfortunately, the market dictates how much you can charge and to whom.

Therefore, the only real way to gain financial freedom is to own equity into a piece of business.

Review and Analysis “How to get rich without being lucky.” (Philosophy) Part 1.

1. Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.

This is the first post made by Naval Ravikant and in it he’s establishing the the basis/definitions of wealth, money, and status. When explaining any complex or intricate set of ideas you first need to establish the baseline of what is being discussed. If we have differing definitions of wealth then how could we possibly make the same logical conclusions about wealth?

More subtlety, Naval is brushing away misconceptions of each of these words. Being rich does not make one wealthy. Status doesn’t necessarily imply being rich. While these, namely, money, wealth, or status, are all interconnected – having one does not imply the others nor does having one conclude the others.

Status at its core is where you are placed within the social hierarchy. In other words, it is how society perceives you. Celebrities for example tend to place very high within the social hierarchy; a rich man however, often anonymous, doesn’t place that high unless his contributions to society are well known.

Being rich – or as Naval points out, having “money” – does not necessarily imply you are high within the social hierarchy and it definitely does not imply you are wealthy. Naval isn’t exactly the most famous of people within the world despite the fact he is very well off. Likewise, someone can be very rich but not be very wealthy. A Doctor or Lawyer for example can make millions of dollars a year but because they sell their labor for high dollar means they are not wealthy.

Naval defines wealth as having assets that earn you money while you work. Another way for stating this is that wealth is freedom. It is the ability to do what one wants when one wants to do it. The Ancient Greeks likened a wealthy man to one who “pursues knowledge” and the idea here was that he had the time and resources to pursue his own creative endeavors. This is wealth.

Rights vs Privileges

For the vast majority of Americans, there is a fundamental misunderstanding between what is a “right” and what is a “privilege.” 

Rights, in the U.S. Constitutional sense of the word are things which are fundamentally given to you by God or nature. As the U.S. Constitution points out, We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

These are referred to as “unalienable” rights and the key here is “Life, Liberty, and the pursuit of Happiness.” The original statement was written as, “Life, Liberty, and Property” or “Life, Liberty, and Estate” and this is taken directly from John Locke’s Two Treatise’s of Government  whereby Locke, and the Founders as well, was believed man was first given life, then given freedom, and then granted the ability to pursue whatever creative endeavors he desired. Property here is important because it is fundamental that man create something and than fundamentally own that which he creates. As everyone should already be aware, property rights are codified and protected within the U.S. Constitution and Bill of Rights as the Founders believed property rights must be ensured in order to maintain an individuals freedom. 

Privileges; however, are things granted by the state or society but which can be taken away. The state granting a specific political person immunity is a “privilege” afforded to that person by being in that political position. Their freedom; however, is a right which is God-given or provided for by nature. 

The larger misunderstanding most of the American population has is when we start saying certain commodities are rights. The most obvious example of this is having a “right” to “healthcare.” The fundamental issue with having a right to healthcare means that you have to force Doctors or Physicians to provide healthcare services to others. This contradicts the U.S. Constitution because you are now demanding Doctors or Physicians, who have a right to liberty/freedom, to perform services not of their choosing. 

But wait! There’s more!

The popular opinion in America today is to grant or make everything a “right” regardless of whether or not it is possible for the Government to secure that right or whether it makes any sense at all.

“Right to a living wage”
“Right to healthcare”
“Right to birth control (aka abortion)”
“Right to clean air”
Etc.

These are often referred as “human rights” and regardless of whether or not the US Government declares them a right, there’s two important points you need to take a look at.

First, would granting or making one of these specific items a right make the United States better, and second, at what cost.

The Problem(s) with Minimum Wage

In 1987, the New York Times published an opinion article entitled, “The Right Minimum Wage, $0.00.” Here the author concluded that economists were all in agreement, “the idea of using minimum wage to overcome poverty was old, honorable, and fundamentally flawed.” However, today, we can see that many cities within the United States including New York, Washington D.C., Seattle, San Francisco, and even my home-town of Flagstaff, Arizona have all implemented a higher and ever-increasing minimum wage. It bears asking, if economists agreed the minimum wage was terrible for society in 1987, why are U.S. cities raising the minimum wage today?

The answer – voters, including you, are being played.

Politicians have long framed the issue as a battle of corporation’s vs employees whereby the corporations take advantage of the employees by paying them a non-livable wage. In fact, both Bernie Sanders and Hilary Clinton used rhetoric to emphasis this exact point. In 2016, Bernie stated, “I said that we’ve got to end the starvation minimum wage of $7.25” and Clinton repeatedly used the word “living wage” rather than “minimum wage” to further exaggerate her non-livable wage argument. Both of these statements are tailored rhetoric which are intended to target your emotions. After all, we’re all against starvation and want everyone to have a living wage – right?

The problem with minimum wage is it makes several assumptions about how all businesses operate. 

It assumes:

  1. Every business is making vast profits and has large sums of cash it is hoarding;
  2. The owner, president, or CEO is making significant sums of money compared to its lower tier workers
  3. Differences between employee salaries is unfair as it is inequality, and inequality is unjust;
  4. Assumes one outcome and doesn’t consider cost and rewards;

In doing this, the minimum wage argument fails to make distinctions between small business and large business. It fails to take into consideration industries which operate on razor thin margins. It fails to acknowledge hierarchy within employment structures which are based upon merit and responsibility and it fails to acknowledge outcomes of policy implementation.

The only thing an increase in minimum wage guarantees is that employees within those cities will be paid that specific minimum wage. It does not guarantee those employees will still have the same amount of hours or even a job. Even further, it does not guarantee that the companies for which those employees who receive a minimum wage will exist as a result of the increase in labor costs.

When the Government mandates a business pay its employees a specific cost that cost has to come from somewhere. Any industry which operates with low margins will be negatively affected. The most notable are restaurants, fast food chains and retail stores. The result is these industries either have to increase prices, shut down stores if consumers do not continue purchase goods, reduce employee hours, or fire workers.

Additionally, minimum wage prices young people and those individuals without skills out of the job market. Those individuals who typically work for minimum wage, teenagers, are now competing with those adults who would typically make $15. The idea here is everything slides right as you arbitrarily increase the wage rate.

But don’t take my word for it. 

In March of 2018, Dara Luca and Michael Luca published, “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit” within the Harvard Business School NOM Working Paper and found that a $1 increase on the minimum wage leads to a 14% increase in the likelihood of an exist for a 3.5-star restaurant. Further increases would still allow those 5-star restaurants to survive, but they would now be required to raise prices.

Paul Samuelson, who won the Nobel prize in economics famously stated, “what good does it do a black youth to know an employer must pay him a minimum wage if the fact he must be paid that wage keeps him from getting that job.”

Milton Friedman, another Nobel prize winner in economics  famously stated, “A minimum-wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.”

So who does minimum wage help? Progressive politicians.

Minimum wage effectively keeps those who are poor, poor – by not allowing those individuals to learn the skills necessary to get better jobs at higher wages. Those same poor people and those individuals who are impacted by emotional rhetoric then vote for the minimum wage policy. The result is a never-ending cycle of poverty. Oh, and those politicians who advocate for minimum wage get to stay in office for a lengthy amount of time.

Sounds good, right?

The Great California Exodus and what that means for every other state.

From 2007 to 2016 the number of people coming into California has dropped sharply. According to California’s Department of Finance, the state lost 1 million residents to domestic migration with the majority of these people moving to states like Texas, Arizona, Nevada, and Oregon (Source).

And a recent poll from San Francisco residents shows this is likely to continue.

When polled, 46% of San Francisco residents have plans to move out of the area—61% said they planned to leave the state—with Texas being a primary destination.

It should be fairly obvious to anyone why California’s are leaving the state in mass. The vast majority of these individuals have a low income and cannot survive the high cost of living. But what does this mean politically for the states who are now taking in California residents?

A future of blue.

In the most recent polling race in Arizona and Texas, which have been predominantly red, the reign of Republicans seems to be nearing an end. In Arizona, Krysten Sinema (D) seems to be out-edging Martha McSally (R) and Ted Cruz (R) nearly lost to Beto O’Rourke (D). Now, don’t get me wrong – Martha McSally (R) ran an utterly atrocious campaign and Ted Cruz (R) has been a terrible political candidate (keep in mind, I did not say terrible politician). Still, it seems the future of both of these states may be Democratic if the situation continues to play out as it has.

Still, I can’t help but feel incredibly frustrated at these results. Why? Because it shows a lack of intelligence in these voting communities.

Californian residents move out of the state as a result of Democratic politicians failing them only to vote Democrats back into power. Does anyone else see how ridiculous this is?

Want to see the biggest example of unintelligible voting? Detroit.

 

No, Ben Shapiro is not using “snuck” premises

In a recent video entitled “7 Reasons Ben Shapiro Is So Dominant In Debates Charisma on Command notes Ben Shapiro uses “snuck” premises as a debate tactic to win arguments in a pseudo-gimmicky fashion. Or in other words, he introduces points of contention as a ‘given’ in order to dominate his opponents.

To begin, Charisma on Command provides two examples of a “snuck” premise.

The first is in a widely popular video on the topic of planned parenthood and abortion. Ben points out to the contender, “I don’t have a problem with Planned Parenthood, I have a problem with killing babies” and Charisma on Command notes that the words killing babies makes the assumption everyone in the room already believes an unborn fetus is a person. I strongly disagree that this is a tactic Ben is using, and I believe the harsh language is a byproduct of the individual proposing a number of questions unrelated to the original topic.

It is important to note the individual in the video raises four different arguments to Ben on the topic of Planned Parenthood and abortion yet never actually brings up the topic of personhood. What I actually believe Ben is doing here is baiting the person into arguing about personhood by using the overly visual phrase, ‘killing baby.’

Why do I believe this?

Because Ben knows the real question for most people on the topic of abortion is at what point do you draw the line of personhood. In fact, Ben debates this topic with other students in many other videos.

For example,

September 15, 2017 Ben Shapiro debates personhood with an individual at UC Berkeley.

March 28, 2016 Ben Shapiro debates personhood with two female students.

October 19, 2017 Ben Shapiro responds to abortion claims on EWTN.

If Ben was trying to mislead the other person through making assumptions on personhood, why would he have this open debate in various other forums? Why would he even bring up the topic in the original video when the individual had already made four other arguments and was not likely to bring it up herself?

Charisma on Command then provides another example when Ben Shapiro states “a checker at a grocery store doesn’t have a right to Jeff Bezos or Bill Gates money.” He believes the “snuck” premise here is that a socialist or communist wouldn’t necessarily think they have a right to another’s money but may believe in redistribution of wealth.

Let’s take a step back here and better understand the arguments at hand.

The topic of discussion is redistribution of wealth and it stems from the prior discussion Shapiro had with this individual on income inequality. Income inequality is the disparity in income between two individuals. For example, there is large income inequality between myself and Bill Gates. The reason why Shapiro is rightly pointing out you do not have a right to Bill Gates or Jeff Bezos’s money is because the socialist perspective is that Bill Gates and Jeff Bezos should be giving their wealth out to the masses; in other words, a form of ‘redistribution.’

See this Tweet from Bernie Sanders on the subject:

“38 years ago, the top 0.1% owned about 7% of our nation’s wealth. Today, that same 0.1% owns 2 2% of the wealth.”

Notice how Bernie is implying few are getting more and more wealthy while the masses are getting more and more poor? Shapiro is attacking a redistribution policy by giving it moral context. If you do not agree that you have a right to Jeff Bezos or Bill Gates money than you probably do not agree with redistribution of wealth. You therefore probably do not side with Bernie Sanders, but you side with Ben.

In both of these cases Charisma on Command implies Ben Shapiro is using charisma and charm to sneak in premises on arguments the debater may not agree with and Ben uses this as a tactic to win debates. This is not only an incorrect reading of what Ben is doing, but it implies he is trying to win through a gimmick rather than facts and logic.

David Pakman is painfully ignorant about “logical arguments”

This post is in response to David Pakman’s video, entitled, “Ben Shapiro is painfully ignorant about “socialism.”  Funny enough, I responded directly to Pakman as a way of generating feedback and comments and it appears Pakman deleted that comment.

David Pakman’s major point is that Ben Shapiro confuses democratic socialism, socialism, social democracy, etc. The issue real issue here is that the Democratic party isn’t clear on what democratic socialism is. The democratic socialist party states it is “to meet public needs not to make profits for few” but this doesn’t actually explain much of anything. If anything, it is a clear cut slogan rather than an endearing and useful term. It is especially confusing when they state that “democratic socialism” isn’t “Government ownership of resources” whereas socialism is in fact “state ownership and control of all resources.” So if that is the case, why use the word socialism at all?

Secondly, he takes a snippet of Ben Shapiro discussing Norway, Venezuela and Cuba and presents a strawman. He believes Ben Shapiro’s argument is that the “Left” cherry picks when socialism works for them and ignores when it does not – implying that it worked in Norway but didn’t work in Venezuela and Cuba. That is not Ben Shapiro’s point. Norway isn’t socialist. It is a capitalistic country with heavy and broad social programs whereas the other two are largely socialist. In fact, Ben Shapiro makes that point on the same program. The snippet used by Pakman is rather poor because it doesn’t actually demonstrate Shapiro’s argument at all, nor does it provide context in any meaningful way whatsoever.

The next two clips he uses to further demonstrate that Ben Shapiro is confusing socialism with democratic socialism. This isn’t the point Ben Shapiro is making. Ben Shapiro is making the point that that these societies which are capitalistic in nature with heavy social programs are succeeding as a result of capitalism and not of their social tendencies.

To be overly redundant, Pakman believes Shapiro is framing the argument in a way that is misleading to the viewer by conflating democratic socialist countries and socialist countries. Once again, this is not Ben Shapiro’s point. The point Shapiro makes is these societies are failing because of their socialist tendencies and succeeding because of their capitalist tendencies.

Now, I don’t blame Pakman for misrepresenting Shapiro because I don’t think he understood the arguments being made. In my mind, this is someone who has very limited experience with arguments but is attempting to sound as if he does. I’ll end with the final note, making comparisons between Norway and the United States is utterly ridiculous when they are very different from each other:

(1) Norway is extremely ethnically and culturally homogeneous;
(2) Norway has no defense budget or a very minuscule defense budget; largely subsidized by other countries including the United States.