Self-Talk is Important

All of us engage in mental self-talk all the time. A lot of it is negative.

If you start to catch the negative put downs you make, and start substituting more positive ones, you can make a difference over time.

Note: I used to get frustrated whenever self-help books asked me to do things like monitoring thoughts, because there are so many of them, you miss most of them. The thing I have found, however, is that you do not have to catch them all. In fact, if you just catch and correct 1% of the put downs you make unconsciously, you will see improvement over time, and you will naturally start to correct more.

For example, if you say something like, "I just cannot seem to get this right," you can choose to correct yourself immediately with, "I have not understood this in the past, but today I am beginning to see it clearly; and I will get it right from here forward."

You might find yourself saying something like, "That was really stupid. I cannot believe I just did that." If so, you can choose to say immediately, "Self, please forgive me for putting you down. I really am an intelligent person, and I am taking control of my thoughts and actions more every day."

If you find yourself calling yourself something like "loser," you can choose to immediately self-correct with, "I am a winner. I am a person of excellence."

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Unintended Effects of Stock Market Regulation

The House of Representatives recently passed the "say on pay" bill proposed by Congressman Barney Frank. The bill forces all corporations to allow shareholders a non-binding vote on CEO compensation. The idea is to shame directors into lowering CEO pay, which the bill's supporters claim is out of control.

My comments:

1. This is a big waste of tax payer dollars.

2. It will have the unintended consequence of providing incentive to corporations to figure ways to hide and sneak in pay to CEOs, thus increasing the risk of Enron like scandals.

3. It is useless. Shareholders who "shame" their companies' boards into cutting pay will see them lose talent. This will cause shareholders to not vote in the future.

4.This bill is nothing compared to the destructive Sabrenes-Oxley law, but it will help to continue the unintended consequence of that law: push companies to stay private, or go private via hedge fund buyouts. This will, over time, reduce the number of good public companies - hurting investors and retirement plans (who these laws are supposed to help).

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Simplicity Lesson From A Microwave Oven

Yesterday, I went to use the microwave oven in my office break room, and I again got annoyed because the display was stuck on 14 seconds.

Someone had heated something, and then pressed the 'stop' button before the timer hit 0:00.  Now, I was forced to press 'reset'.  Then, I could insert my lunch, press 'cook', and set the timer.

It is annoying, because my microwave at home just has 'cook', 'start' and 'stop' buttons.  There is no 'reset' button.  If you press 'stop' before the timer runs out, the microwave stops and the timer goes to 0:00.

This is a minor point, but is an example of complexity and trade-offs.  The office microwave lets you stop the microwave, check your food, and resume without having to re-enter a time.  But the trade-off is that the number of buttons are increased from three to four, and you have an extra operational state where the oven is off, but the timer is already set, and you have to press 'reset' before you can cook something new.

I would rather have the simplicity of press 'cook', set a time, press 'start' and, if you have to stop the oven before time expires, press 'stop' and the oven is reset back to 0:00.  There is no extra state - the oven state is the same whether 'stop' was pushed, or the timer expired.

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Politics, Cynicism, and Taoists

I was talking to a libertarian friend of mine, Jake, about the criticism over my sales tax proposal by a market anarchist, who disagrees with taxing in any form.

Jake expressed that he himself was starting to see the futility with politics, and that perhaps the system is too far gone to be reformed from within.

I sent him the following note:

I think that being political in general, but especially libertarian, increases your risk of becoming pessimistic and cynical.

I'm an optimist - I think human society and conciousness has risen in the last 2000 years. I really think that America is a great country that can be improved.

The problem is, with politics, you focus on certain parts that need improvement (depending on your affiliation), and you lose sight of the things that are working.

Being libertarian makes you especially vulnerable, unless you keep in mind that it's ideal will never exist.

Humans are governed by a biological survival function called homeostasis. It fears any change that exceeds a certain threshold. It's what keeps our blood chemistry at a certain ph level and our body temperature in a certain range. But, it works on the psychological and social levels too.

Humans are comfortable with a certain level of autonomy vs. government taking care of them, and it has shifted towards more government. The comfort level cannot be shifted quickly in either direction without causing a backlash.

The libertarian ideal is way out of the current range.

My philosophy and focus is simplicity and minimalism, and working with what you have. Taoism is libertarian, but also rooted in working with, not against, nature. That is why the ancient Taoists, criticized Confucian bureaucracy but, when given a chance to work in government, refused.

They only wanted to stay close to nature, at the grass roots level. They knew that politics would affect them, not vice versa.

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Criticism of My Sales Tax Proposal

David at No Third Solution posted a critical analysis about my sales tax proposal.

I think his main point is that any tax, whether it's an income tax, flat tax, or sales tax, is going to be regressive to somebody, and are morally equivalent, in that any tax is government taking private earnings.

His point of view seems to be that government and free market capitalism cannot ultimately co-exist. Thus, the libertarian ideal would require that there be no government.

Here is the comment I left:

Hi David,

I'm sorry that I misunderstood the intentions of the carnival, and thought that an article about simplifying taxes would fit in.

I'm glad it happened, though, since my post provoked your analysis, and I got a
chance to find your blog, which is very interesting.

I had a few comments:

1. My post advocates replacing the current system with a sales tax because I believe it is simpler and less intrusive than the current system. I didn't mean to imply that, if a sales tax is implemented, everything is great.

I think Rothbard's statement that the consumption tax is no more noble than an income tax is true when you talk about the broader idea of government forcibly taking private money to pay for collective things.

However, if you have to have a tax, and the government collected the same net amount, I think we are better off not taxing capital gains and eliminating IRS monitoring and paper trails. Anonymity from government scrutiny in our daily life and business would be a big achievement.

2. Having a high rate and regressiveness are common criticisms that I have read about the sales tax. I was simply trying to counter these arguments. For example, I meant to imply that a high rate for a sales tax is more transparent than the income tax, where the amount collected can be manipulated through credits, etc. I think it is easier for people to see through a sales tax than the income tax. Sure, a sneaky government (100% of them ;-) ) can still hide stuff in other places, like debt. But,for example, you would still want to light up a dark alley, even though the muggers could find other dark alleys. You deal with them one at a time.

By eliminating regressiveness through a rebate, I did not mean to imply a sales tax is perfectly fair - I meant to address the regressiveness relative to an income tax. A common complaint is that a sales tax is more regressive than an income tax, and I think that the rebate goes towards eliminating that.

I guess the basic philosophical difference between our views is that you believe that government and the market cannot coexist- like you say "no third solution".

So, you take a more revolutionary view, and think government / taxes are 100% too much.

I am a big advocate of simplicity and minimalism in general - not just in government. I want to eliminate complexity, bureaucracy, micromanagement, and unattended consequences.

I haven't given up completely on government, though I think there is a good chance that you may be right.

At this point, I believe government (and taxes) could easily be reduced 90%. I still believe, though, that there is a place for a small, venture-capitalist-like government that uses market principles to promote things in the public interest.

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Awesome Article from Mr. Fire!

Joe Vitale ("Mr. Fire"), who produces some awesome books in the area of internet marketing and self-help (Laws of Attraction) has a great article on his website.

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2 Lame Jokes and a Good Quote

Q: Why do Eskimos wash their clothes in Tide?

A: It's too cold "out Tide". 

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Q: How much do pirates pay for their earrings? 

A: A "buccaneer".

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When I'm working on a problem, I never think about beauty.

 I think only how to solve the problem.  But when I have finished,

 if the solution is not beautiful, I know it is wrong.

 - R. Buckminster Fuller

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Power of Water

A recurring theme in Taoism is water.

Water is a simple substance.

It is humble, because it always flows down. Rather than be above others, water wants to return and connect to its source - the ocean.

Water is also flexible. It conforms itself to cracks and containers.

Because of these traits, water is the most powerful force on earth. It can erode mountains.

Yesterday, I got a reminder of this. One of our friend's upstairs toilet started to overflow and the water, in its single-minded determination to go down, worked its way through their dining room ceiling, down the chandelier and dining table, and ended up working its way into the basement.

Something similar happened to us back in July. The icemaker of our fridge started leaking and we did not discover it until a portion of the rug in our basement got wet.

We thought the basement had a leak, but it had not rained recently. The plumber ended up tracing it back to the fridge.

The plumber respected water - he was not surprised that the water worked its way down in a twisted path. He said that you can't predict how water will flow - it takes advantage of opportunities, and will adjust and take advantage of pipes, openings, etc.

All this is part of the reason that Bruce Lee, the famous martial artist, always said "Be like water"

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Project Management - Straight From the Horse's Mouth

I believe a key reason for a lot of project inertia is this: we get stuck behind an expectation that projects should be planned in great detail before we get started. This supposedly reduces the risk. On time, on budget - way to go!

It's a noble concept, but trying to do this often holds us up unnecessarily. First, planning in great detail takes significant time. As this is time we seldom have, even a pony-sized project comes to look insurmountable. Secondly, the underlying assumption that we can predict what will work and what won't is simply fantasy.

Learn from an old horse. So get up on this giddy old horse with me. As we set off, you'll notice that our well-worn equine takes one careful step at a time. Unable to see his own feet, he makes sure that each hoof is safely planted before lifting the next.
 
He knows exactly where he's going; he's followed this route hundreds of times before. In management-speak, he is clear about his desired outcome. Nevertheless, he plans the detail of his progress one step at a time.

Importantly, rather than plan the detail too far ahead, each step is guided by what he learnt from the last one, and what he can see just ahead. If the surface is loose and unstable, for instance, he'll be extra careful. If it's firm, providing more certainty, he'll move faster.

If this four-legged friend could speak, I'm sure his message would be something like this: Next time you are struggling to get a project started, try the simple approach. Identify the first step and do that. Then decide on the next step. And so on. There's a good chance you'll reach your feedbag sooner.

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Eisner and the Internet Video Revolution

Forbes Magazine had an Article about Michael Eisner's push into the Internet Video Revolution.

Eisner ran Disney for 21 years. In that time, its market value went from $2 billion to $46 billion, and he himself made $1 billion from cash and options.

Now, he is fascinated by the Internet video revolution and is trying to get a piece of it by investing in new media boutiques, through his investment company Tornante (Italian for "hairpin turn").

He bought a stake in Veoh Networks. This company streams user-supplied video (like YouTube), as well as DVD quality programs shot by aspiring filmmakers, and promos from New Line Cinema and Turner.

Eisner used his connections to get United Talent Agency to create a channel on Veoh, where amateur filmmakers can upload videos, hoping to get an agent.

Now, he is backing the creators of "Sam Has 7 Friends" to create a teenage murder mystery called Prom Queen, which will run on PromQueen.tv, Veoh, YouTube, and Ellegirl.com. Juicemaker Pom Wonderful will sponsor the series, Victoria's Secret and HotKiss provide the actor's wardrobe, and the clothes can be purchased from StarStyle.com.

Now that is what I call slick cross-marketing.

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Forbes Profile Of Dennis Albaugh

Forbes Magazine had a profile on Dennis Albaugh, who has made a billion dollar fortune in the pesticide business.

I found this article to be very inspiring, because Albaugh started small and, at several critical points, took unconventional actions and big bets to advance his business.

His first challenge came in 1979, when he first started working for himself. He had mortgaged his house and spent $2,000 in savings to buy a used truck and 1,500 gallons of weed killer. He was driving it from Des Moines to a customer in Aberdeen, S.D. The truck had a leak, and he ended up arriving with an empty truck.

However, he did not let this setback put him out of business. He got the angry customer to give him 3 more days, rented a truck in Des Moines, and got the supplier to give him more weed killer on credit.

His supplier then sold the weed killer factory to another company, who was going to cease manufacturing it. Albaugh got a small business loan for $100,000 and bought the mixing tanks and pumps. He became a manufacturer.

In the 1990's, one of his competitors wanted to sell its factory for $750,000. He could not find a bank to lend him the money. Albaugh bought the plant anyway, by being creative, and getting the current owner to give him the inventory before closing. He liquidated the inventory to raise cash. Once he bought the factory, his sales increased from $10 million to $26 million.

He bought his ingredients from an Australian firm, and Argentinean firm, and Dow Chemical. Once, in a dispute with Dow, he threatened to replace them by manufacturing his own chemicals. He actually went ahead and bought the equipment, forcing Dow to offer a better deal.

In 1995, he decided to acquire his Argentinean supplier, which was four times the size of his company. Also, at this time Argentina was in a recession and having a bank liquidity crisis. He was turned down by 25 banks. He raised $20 million by pledging his company. Then, after months of searching, he found a bank in Argentina to lend him the money.

In 2002, Argentina's economy collapsed and the peso lost 70% of its value. Instead of panicking, Albaugh took advantage. He refinanced the Argentinean supplier purchase with a loan from the U.S. He also went ahead and bought more assets in Argentina, including a glyphosate factory - using both cash and products from his Argentinean plant.

The glyphosate purchase was perfect timing. Glyphosate is the active ingredient in Monsanto's herbicide Roundup. Monsanto had just released some Roundup-resistant seeds, which meant that farmers could be more aggressive with applying it. This boosted the demand.

Glyphosate also went off patent and Albaugh was able to use his Argentinean plant as leverage to get good terms with Monsanto. The business has been wildly successful.

He continues to make big bets. Four years ago, he spent $55 million on three sugar mills and 11,000 acres of sugar cane in Argentina, when their owners had been losing money for years and the price of sugar had been depressed for years.

After Hurricane Katrina knocked out sugar crops and refineries, world sugar prices more than doubled.

Now, when people are predicting the housing market will crumble, he is bankrolling a 1,031-acre development in Des Moines, that will have 3,555 homes.

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Hip Hop Lifestyle Video Game

Forbes Magazine had an article about how, in the world of mainstream hip-hop, today's role models aren't just stars - they are entrepreneurs, like 50 Cent and Jay-Z.

So, Def Jam Interactive and Electronic Arts have released a third "hip hop lifestyle" video game called Def Jam:Icon.

In the game, producing a gold record is just the beginning. At that level, you character is a "hustler". The ultimate goal is to become an "Icon", and sign other rappers to you own record label.

There is violence in the game, but the more import tools are your PC and cell phone.

A character has to be constantly checking his email and PDA. A key element of play is determining royalty rates to keep your artists happy and producing.

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Simple Solutions Book

I just read a review of an interesting book called Simple Solutions: Harness the Power of Passion and Simplicity to Get Results by Tom Schmitt and Arnold Perl.

They feel that the key to being a good leader is by being a good "KISS"er (Keep It Simple Stupid).

Their philosophy is:

1. When employees have a simple, clear, and focused understanding of their jobs, they will willingly contribute to their team's goals.

2. Simplicity helps break down problems to the core issue, allowing productive solutions.

Schmitt is an executive with FedEx and Perl is an Memphis attorney who helped build the FedExforum, where the NBA's Grizzlies play. The book's foreword was written by Frederick W. Smith, the founder of FedEx.

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Piggybacking Names in the Chicago Suburbs

The Chicago area has a lot of suburbs. Some of them too their names from the City of chicago, or older suburbs near by:

The suburbs of East Chicago, North Chicago, West Chicago, Chicago Heights, and Chicago Ridge all derived their name from Chicago.

Palos Park led to Palos Hills and Palos Heights.

From La Grange came La Grange Park.

Orland Park led to Orland Hills.

Barrington spawned North Barrington, South Barrington, Barrington Hills, Lake Barrington, and (recently) Port Barrington.

Clintonville renamed itself South Elgin, after its bigger neighbor Elgin.

Oak Brook preceded Oak Brook Terrace.

Glen Ellen preceded Glendale, which later changed its name to Glendale Heights.

Round Lake as followed by Round Lake Beach, Round Lake Park, and Round Lake Heights.

Park Forest lead to Park Forest South (which later renamed itself University Park).

At least two suburbs got their names by combining the names of two other, nearby communities:

Norridge was named from Park Ridge and Norwood Park (which is a neighborhood in Chicago, not a suburb).

Prospect Heights was named from Mount Prospect and Arlington Heights.

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Americans Overestimate Retirement Resources

In this past Sunday's Chicago Tribune business section, columnist Humberto Cruz writes about how the 17th annual Retirement Confidence Survey shows that Americans overestimate their preparedness for retirement.

Some of the points:

1. Only 41% said that they or their spouse is covered by a "defined benefit" pension plan (that pays a monthly pension for life). Yet, 62% of workers expect that they will receive income from one in retirement.

2. 25% of workers surveyed, and 33% of retirees say they have long-term care insurance. Yet, industry estimates are that only 10% of Americans 65 and over have this kind of coverage. So, it looks like people only think they are covered.

3. One third of workers 55 and over have only saved $25,000 or less. Less than half have saved more than $100,000. One third of workers 45 and over are not saving anything for retirement.

4. Despite a government education campaign, only 19% of workers (42% 55 or over) know that the age to receive full social security benefits will rise until it reaches 67 in 2027.

5. More than one-fourth of workers estimate that they can retire on less than $250,000. Assuming a 5% interest rate, $250,000 would bring in only $12,500 a year before taxes.

6. Most workers expect to work at least part time in retirement, but the survey found that 37% of retirees had to leave work earlier than planned, due to health problems, taking care of a family member, etc.

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