False Premises in Popular Psychology Literature

Most of us now work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in.

Susan Cain (Quite: The Power of Introverts in a World That Can’t Stop Talking)

little in our culture trains, rewards or even seems to notice great collaboration.

Margaret Heffernan (A Bigger Prize: How We Can Do Better Than The Competition)

The old stigmatized C’s associated with coming together and “sharing”–cooperatives, collectives, and communes–are being refreshed and reinvented into appealing and valuable forms of collaboration and community. We call this groundswell Collaborative Consumption.

Rachel Botsman and Roo Rogers (What’s Mine Is Yours)

Why Money Is Not the Essence of Economics

In the early 20th century, the isolated Pacific Island Yap was home to an unusual monetary system. The economy only contained three goods: fish, coconuts, and sea cucumbers. Yet, Yap had a highly developed system of money. Its coinage—fei—were large stone wheels, some with a diameter of twelve feet. Owners rarely possessed their fei. After completing a bargain, a simple acknowledgement determined new ownership between sellers and buyers. One family even “possessed” a large fei that had lain on the bottom of the sea for generations. No one questioned their wealth.

In Money: The Unauthorized Biography, Felix Martin asks, “What is money, and where does it come from?” Economists typically argue that money emerged as an alternative to barter. Before money, we would trade fish or corn and other goods but it was an inefficient system. Money became a stable commodity—a medium of exchange—that lubricated the markets. For Martin, however, this view is deeply flawed because it draws on a history of money that relies on what survived.

At first glance, that makes sense. If you want to study money, the first thing you examine is the evidence—coins. However, if you only study what physically survived, you’ll never get the full picture. “Coinage may have been only the very tip of the monetary iceberg,” Felix Martin says.

The unfortunate incineration of one of the largest collections of “Exchequer tallies” tells us why. From the twelfth to the late eighteenth century, financial operations in England relied on thin wooden sticks (tallies) typically harvested from willow trees. An Act of Parliament abolished tally sticks, and in 1834 the government burned millions of the defunct sticks in a large stove in the House of Lords (inadvertently starting a fire that burnt down the Houses of Parliament). Thus, an “immense wealth of knowledge that the Westminster archive embodied about the state of England’s money and finances throughout the Middle Ages… [was] irretrievably lost.” By analogy, if a natural disaster destroyed the digital records of our current financial system, we’d hope that future historians studying the Great Recession don’t only examine nickels and euros.

Coinage, in other words, is not essential to a monetary system. “It is the underlying mechanism of credit accounts and clearing that is the essence of money,” Martin writes. Currency is ephemeral and cosmetic; it is not itself money but a representation of credit. Remember the fei at the bottom of the sea.

Update On Timeless Reading/Writing Analog

A good book is a conversation. My favorite writers never preach; they rely on self-discovery, knowing that interpretation and inference are the lifeblood of reading. One moment, we’re confused and anxious. Then the author reveals a detail that forces us to reinterpret the story. I recounted this experience to a friend and she recalled a quote from Italian essayist Umberto Eco. “Books are not made to be believed, but to be subjected to inquiry. When we consider a book, we mustn’t ask ourselves what it says but what it means.”

In How to Read a Book, Mortimer Adler and Charles van Doren compare passive reading (receiving information from an author who is intent on giving it) with active reading (initiating a dialogue with the author). They use the metaphor of a catcher and a pitcher. A book needs a reader just like a pitcher needs a catcher. In a game of catch, the pitcher won’t always throw a strike and the catcher must be willing to adjust. That’s a good thing. The joy of writing and reading align when a reader and a writer are working together.

The same metaphor appears elsewhere, from the Greek Stoic Epictetus (who wrote that “skillful ballplayers,” like skillful listeners, are not “concerned about the ball as being something good or bad, but about throwing and catching it.”) to the Roman historian Plutarch (who said that the “harmonious rhythm” between a speaker and a listener should resemble the harmonious rhythm of a game of catch). In his mediations, Descartes reflected that, “the reading of all good books is like a conversation with the finest minds of past centuries.”


Invisible Money: An Example of Silent Evidence

If you want to understand how an old monetary system worked, the first place to look is the coins. They are durable and typically stored in secured locations, perfect for preservation. Yet, if you only study what survived, you’ll never get the full picture. You must also study the stuff that burned, decomposed and disintegrated. Imagine future historians studying the Great Recession by only looking at nickels and euros. They must examine online banking statements, read economic papers, research mortgage backed securities and junk bonds. “Coinage may have been only the very tip of the monetary iceberg,” Felix Martin concludes in Money: The Unauthorized Biography.

The Nature of the Banking System

Nature understands size much better than humans. Nature penalizes size. An elephant will die from small injuries (a broken ankle) while a mouse with the same injury will survive. The eco-system will not perish when an elephant dies. Many more mice than elephants.

The removal of large species (whales, elephants, hippos) would impact the eco-system much, much less than the removal of small species (mosquitoes, flies, plankton). Banking is the opposite. One failure brings the entire system to a grinding halt. Nature is bottom-up; man-made systems are, generally, top-down. Nature is robust and we are fragile.

We tend to confuse long-term stability within man-made systems with permanent stability, and thus conclude (falsely) that we are smarter than nature. No empire lasts forever, yet at their peaks, its citizens predicted just that. No fortune lasts forever; money runs out. Long-term stability makes us complacent, in fact. So the longer a man-made system has existed (not a physical thing or a rule or a law) we should be more and more worried.