I've been reading books by Richard J. Maybury, who is an expert in all-things economic. I have only finished the first and began the second in his series, so what I'm conveying to you is only a small portion of the knowledge that is in all of Maybury's books.
My social civics course in high school didn't stick with me. Neither did American History. World History I can remember a little about... Mostly WWII - I found that very interesting indeed. My point here is that I'm not particularly educated in economics, stock markets, psychology, etc. And I'm setting out to fix that, and as usual, its not within a classroom.
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The first thing that Maybury introduces is the concept of models. Models, or paradigms, are the way that we process information, how we perceive the world. For instance, when we learn a game, we learn a model. And as with any game, the model cannot be easily made without hands-on experience. As Maybury explains, if you were to read the rules of Monopoly to a friend who has never played, he will fall asleep, but if you play with him until he learns, he won't forget it soon.
Once models are established, all incoming data that concerns the model is compared to it. If it doesn't fit, the data will be tossed out long before the model will. Maybury uses the example of Copernicus' theory of the heliocentric universe. Everyone had a model of a geocentric universe in their minds, taught to them by their parents or teachers, who were taught the same by their parents and teachers. The earth was the center and the sun circled it. Copernicus' ideas of the earth revolving around the sun did not match up with the other experts' models - so, before questioning their models, they threw out his ideas.
The same goes for any sort of new information that contrasts with an established model. And a very interesting fact is that human beings have a physical response to this disharmony between incoming data and ingrained models. The reaction is called cognitive dissonance - it is physical stress caused by this challenge to a belief system. The more important the model is to him, the more violent the reaction. Maybury points out that it was cognitive dissonance that very likely started the religious wars in the medieval era.
I love how Maybury writes so wisely. He is not belligerent or argumentative in his writing. He's not even being persuasive. He is simply setting out the simplest, most logical material and letting you choose for yourself. He states his agenda (to spread knowledge of liberty, free market economics and the concept of models) and then gives you simple answers for complicated questions. When talking about cognitive dissonance, he knows that it can be harmful and that it sometimes can't be avoided. So he stresses that you should tread carefully when you are challenging someone's model. Remember that it can be stressful and don't push it.
His next points involve paradigm shifts. A paradigm shift is when you change your mind, when you greatly modify or replace models. If a long-time Democrat was to decide to become a Republican, their model of political values would have to have undergone big changes. And in taking the steps to make such changes, a person has a standard of proof. Some new information is presented, and in deciding whether or not to incorporate the new information into our models, we have a standard of proof. On important things, we should always ask: Where is the evidence? Show me the evidence.
I'm not going to ramble on too long about this. I did love two more points that he made on models and questions. First was this: Beware of certainty. Certainty stops inquiry. When we think that our models are complete, we stop building on them and we stop asking questions. However, our models are always under construction, and if we admit this, we are less likely to suffer from the stress of a challenged model, and more likely to be open-minded and tolerant.
Another point was that bad models lead to bad behavior. As simple as that. It's something that you know - it's very connected to how environment effects our personalities and actions - but don't often hear put into those words. So when you see someone with bad behavior, you might question the model that the person might have.
These were the most interesting points that I learned. I really enjoyed these new(ish) ideas, because they were exactly what I often think about! So, if you managed to read all of this, I hope you learned something, but if not, that's okay too. :) I highly suggest reading the book, Personal, Career and Financial Security by Richard J. Maybury, especially if you are new to the world of money. And if not, it's a good brush up and it's nice to know that there are authors out there that enjoy writing simple, straight-forward, helpful books on economics and politics.
Tomorrow's post is for the next interesting thing that I learn!
- caroline
