Monday, February 26, 2007

Gain and Loss

As I've said in a recent post, people have two economic instincts. Gain, and prevent loss.

One of the insights I gained from LeFevre is that when there is gain to be had, people want to be individualistic. When there is loss, they want to be collectivistic. They want the full benefit of their rewards but they want everyone else to bear the burden of their loss. This led me to realize something. People who are focused on gain tend to be individualistic. People who are focused on not losing tend to be collectivistic.

Individualists, libertarians and atheists, are gain-oriented, they seek to make the most of life, to achieve what can be achieved, to create, seek happiness and reward and glory and riches, to win big and lose big, but learn how to win more often than lose.

Collectivists, socialists and theists, are stop-loss oriented, they seek to not lose in life, and so invent such ideas as a social "safety net" so that nobody can really lose, or an afterlife so that when they lose their life, they believe they are actually going to gain.

From the Rich Dad Poor Dad series, you read Kiyosaki incessantly describing how the middle-class trap and unsuccessful investment and noninvestment is driven by emotion, fear of loss and subsequently pursual of security (and as he points out, there are no safe investments).

As Kiyosaki says, the problem with the stop-lossers is that they never win. "Losing is part of the process of winning," he says. If you want to win, you have to get used to the fact that you're going to lose a few times. He likens it to saying "Here, learn how to ride this bike but don't fall off."

People who are gain oriented respond to loss with thought. When they fail, they learn from it, think about why it happened, what caused it, and what they can do about it in order to gain.

People who are stop-loss oriented respond to loss with emotion. When they fail, they're angry, scared, sad, and negative emotive feedback leads them to have negative responses. And with reason not being applied in this case, it tends to bring out the animal in people.

We should also look at the relationship between freedom and security. They exist on different axes, but any libertarian can tell that there's a correllation between them. Freedom is objective, it's based on the world around you and outside you. Security is subjective, it's nothing but a feeling. It's possible to be free and feel secure, and to be free and feel unsecure. It's possible to be a slave and feel secure, and to be a slave and feel unsecure.

Stop-loss oriented people recognize insecurity as a potential loss. Thus, they seek to enter collectives which spead this loss out, and give them a feeling of safety. They may still feel unsecure, but they believe they will lose less than they would if they were responsible individual. Of course this collective requires collective decisionmaking which requires tyranny, which means slavery. That's why people who seek security end up with slavery.

In short, if you like to win, individualism makes sense. If you don't like to lose, collectivism feels good.


Blogger Francois Tremblay said...

Thank you very much. A stunning insight.

1:10 PM  
Blogger Francois Tremblay said...

Can I quote you on that? What's your name?

5:12 PM  
Blogger Zhwazi said...

Of course you can quote me. What am I gonna do, assert property rights to an idea that's now in your head? I'm not that silly.

Just quote it as Zhwazi. I don't really like my real name (it's pretty ironic), and I'm the only one who uses the name Zhwazi.

9:45 PM  
Blogger Alex Ramos said...

Is your name Christian ;)

A very insightful entry, hadn't thought of that before, really.

9:22 AM  
Blogger Francois Tremblay said...

Well I can't really quote a person with only one name can't I? That's not scientific. And I don't want to have to call you "anonymous."

11:28 AM  
Blogger Zhwazi said...

How is only having one name not scientific? The important part of a name is that it's unique, not how many words it is composed of.

They're your ideas now. I gave 'em to you, but they're yours. Do whatever you want with 'em. You're not obligated to connect my ideas back to me in any way. Quote me or don't, use my name or don't, I don't mind. Although I prefer being quoted as Zhwazi due to reputation boost, any combination of those is fine by me.

8:00 PM  
Anonymous Anonymous said...

Oh all right then.

2:00 PM  
Anonymous Anonymous said...

I got another blog so that now I can pretend to be as smart and opinionated as you are. :]

5:06 AM  
Blogger Aaron Kinney said...

I have used my mental powers to discover Zhwazi's real name.

And his real name is Moses Washington Christian Lincoln III.

No wonder his name is ironic ;)

I feel your pain Zhwazi. I am named after Aaron, Moses' brother from the Buybull.

3:54 PM  

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