Jordan Peterson: 12 Rules For Life, Rule 3, and Rule 4. Pages: 67 - 111 Instigator: Verna

Instigation Deadline: EOD - 12/09/18
Response Deadline: EOD - 12/30/18

Get us started Verna with some great comments!

Jordan Peterson: 12 Rules For Life, Overture, Rule 1, and Rule 2. Pages: xxv - xxxv and 1 - 64 Instigator: John

A few ground rules.

Per the previously posted schedule, I will put an entry out here for that session of discussion. Then by the specified date the instigator should put his thoughts out there as a comment to the entry. (This is the first entry.)

Etiquette:
We have some diverse opinions in our group. It is important to be respectful of all perspectives. Obviously no personal attacks. It is great to give differing views just be respectful in presentation. Remember on-line statements may sound more harsh than in person. So, bear that in mind. Rather than saying "I think you are wrong" in response you may want to say something like "you make an interesting point. However, I look at it this way..." Definitely you should not say something like "anyone who thinks that way should die a thousand deaths." or something like that. Finally, one the reverse side of things also remember that on line communication can sound harsher than intended. So please take any responses in the most positive light.

Schedule of Instigation - 12 Rules for Life

Hopefully the schedule below is self explanatory. (I will change it if someone drops out.)



Please Note:  The time between instigations is usually 2 weeks.  However.  For longer sections it is 3 weeks.  Sooooo, pay attention.

Instigator: John
Pages: xxv - xxxv
Pages: 1 - 64
Sections: Overture, Rule 1, Rule 2.
Instigation Deadline: EOD - 11/25/18
Response Deadline: EOD - 11/27/18

Instigator: Verna
Pages: 67- 111
Sections: Rule 3, Rule 4
Instigation Deadline: EOD - 12/09/18
Response Deadline: EOD - 12/11/18

Instigator: Thomas
Pages: 113 - 159
Sections: Rule 5, Rule 6
Instigation Deadline: EOD - 1/6/19
Response Deadline: EOD - 1/8/19

Instigator: Jon
Pages: 161 - 230
Sections: Rule 7, Rule 8
Instigation Deadline: EOD - 1/20/19
Response Deadline: EOD - 1/22/19

Instigator: Brian
Pages: 233 - 283
Sections: Rule 9, Rule 10.
Instigation Deadline: EOD - 2/3/19
Response Deadline: EOD - 2/5/19

Instigator: Eric
Pages: 285 - 332
Sections: Rule 11
Instigation Deadline: EOD - 2/17/19
Response Deadline: EOD - 2/19/19

Instigator: Isabelle
Pages: 335 - 368
Sections: Rule 12, Coda
Instigation Deadline: EOD - 3/3/09
Response Deadline: EOD - 3/5/09

Cyber Book Club Take 2

Verna, Jessica, Anna, Isabelle, Chris, Colby, Steven, Jon, Jon's friend, Eric, Mary, Kiley, Michal, Noah, Andrew, Thomas, Amy, Matt, Christopher, Brian, and... Dad (Gil),
It has been almost ten years since some of us participated in the highly acclaimed cyber book club that was such an internet sensation back when the internet was brand new.

After 10 years I feel enough dust has settled that the world is ready for a second cyber book club event!

The first one was so sensational that we are going to get crazy up in here and quadruple the invitee list.  Whew, makes me a little light headed.  I need a drink of water.


Some of you will remember this format.  We will each take two or three weeks to read part of the book selection indicated in a forthcoming post.  Then we will each take turns kicking off an on-line discussion. For each round of discussion the kicker-offer, let’s call them the instigator, will post their thoughts and then the others will take time to respond to the reading and the instigators thoughts. We’ll have a different instigator for each section of the book designated in the forthcoming post. We will adjust things as needed.

The book we will be reading is –

12 Rules For Life by Jordan Peterson.

Link on Amazon:

https://www.amazon.com/12-Rules-Life-Antidote-Chaos-ebook/dp/B01FPGY5T0/ref=sr_1_1?ie=UTF8&qid=1540510133&sr=8-1&keywords=12+rules+for+life
 

We will officially start toward the end of November and I will post a schedule for who is to be the instigator when. I’ll call it the Schedule of Instigation.

To get the concept started please post a comment to this post indicating you plan to do this AND whether or not you want to be an instigator or just want to comment on other people's posts. 

I will post a comment as a sample.

Nudge

Response to the Freakonomic episode “People Aren’t Dumb.  The World is Hard.”

http://freakonomics.com/podcast/richard-thaler/

I recently listened to the above interview on Freakonomics of Richard Thaler.  Thaler is one of the people who helped develop the concept on Behavioral Economics.

Thaler is a genius and is a very entertaining interview.  In general I am sympathetic to the concepts of behavioral economics pointing out that human behavior cannot simply be described by utility maximization.

I do want to comment a little on something in particular that Richard Thaler said when asked what has… “been the greatest kind of specific contribution of behavioral economics?” His answer was a little more involved than this but Thaler basically said that the biggest policy contribution is the practice that companies now have of pre-enrolling employee’s into 401K plans and that they have to opt out of the program if they don’t want to save their money in the tax deferred retirement savings plan which includes additional pay from the employer typically.  In the past, before the Thaler “nudge” policy was widely adopted, the common practice was for employees to have to choose / opt into the program.  The result of this change in practice has been to significantly increase participation in these programs.

Thaler’s assessment of all this is “We are also not trying to tell them to do what we think is smart. We’re trying to help people do what they want to do.”

I disagree with this assessment and would analyze the situation in the following way.

Point 1:

When a choice is extremely complicated and almost impossible to know what the best choice is, it makes sense to do nothing.

Point 2:

The 401K investment decision is one such choice. 

The reason this is complicated is it is impossible to know if putting your money into a 401K is a good idea.  Any number of the following things could happen.

• The economy may roll along for the next 20 to 70 years much as it has in the past and the employee could have a very nice nest egg to help them with their retirement.
• 20 to 70 years from now when the employee starts to draw on his or her 401k the government could raise the tax rate and the employee could end up paying more in taxes in the future than the taxes they are avoiding now.  The great deficits the government is running will need to be dealt with some day and higher taxes may be part of the solution.
• The employee might die before they have a chance to draw on the funds.
• The investment companies may fail either because of unethical practices or bad decisions and lose much of the money invested.
• The economy might collapse in the next 20 to 70 years and most of the investments might be lost.
• War, nuclear or otherwise, could break out in the next 20 to 70 years and wipe out the factories and infrastructure underlying the investments, ruining their value.
• Runaway inflation might occur in the next 20 to 70 years undermining the value of the investments.

I and many smart people may think that the first bullet point above is the outcome we should expect but it is impossible for any human to know what will happen

In this decision, with the time horizon under consideration, I would argue that the world is not just complex and hard, it is impossible to predict.

In instances like this when the choice is not clear the only way to come to a decision is to base it on your values.   If you have learned / acquired the “value” of saving for the future, you are likely to opt into your 401K to support that value.  If you have the value of focusing on the now in preference to the future you are likely to opt out.   However, if you have not developed strong values in this space you are likely to do nothing because it is impossible to assess the best decision in this complicated scenario.

Point 3:

I feel the nudge is essentially unethical as by default it is having the employee buy a service that unless they value the service it is almost impossible for them to know if the service will be good for them or bad for them.  The service they are buying is the management of their investments for which they pay a fee.  This is the equivalent of saying, we believe people should have more fruit in their diet and so we are going to automatically sign them up for buying fruit out of their paycheck twice a week.  They can opt out if they want.  The only difference is it is very hard to figure out what the costs of the 401K plan (service fees) but it is easy to figure out the costs of the fruit deal.

By defaulting people into this program in a situation where a normal person would have the propensity to do nothing because it is impossible to know what to do based on the information available and it is very difficult to understand what fee the individual is paying for the service you all but guarantee that people just take the service unless they have a strong personal value to not use that service.

This seems ethically questionable at best.

One thing that is certain is that the investment companies benefit from this program because they collect more fees than they otherwise would.  And they collect these fees now, today, in the present and for them that is unquestionably a good thing.  Nothing complex or hard about that.

Federal Deficit

Hello Dr. Kelton.

I heard you on an interview with Matt Klein on Alpha Chat and read the article you wrote with Scott Fullwiler.  You had some very thought provoking things to say in particular regarding the forgiving student loan debt and Federal deficits.  I have a questions / thoughts to which I hope you would be willing to respond.

First, if you take the overdraft approach rather than T-Bill approach to funding deficits you remove from the Fed the discretion of exercising monetary policy.  That is, you take away from them the option of doing QE and putting money in the economy and later perhaps reversing QE, selling the T-Bills and taking money back out of the economy to potentially slow it back down if needed.  You move monetary policy to the treasury.  You’re just changing who controls at least some aspects of monetary policy.  Do you think the treasury / executive branch is in a better position to do that?  I believe many would argue that keeping monetary policy in the hands of a quasi-independent Fed is a good check on politicians who may use the ability to push money into the economy eventually bringing about high and detrimental inflation.  How would respond to that concern?

Second, during the podcast you said, “If you run budget deficits that exceed the capacity of the economy to keep up with any demand that’s being created by stimulus from the deficits the results are inflation.”  Are you recommending that the federal government run deficits funded by over drafts / “new money” until the U. S. economy hits a certain inflation target?  Say, 2% or 3%.  What target would you pick?  Also, once you hit that target would you advocate that the government begin to issue debt again until the inflation rate drops below the target?  In this regiment who decides when to fund deficits with “new money” and when to fund deficits with debt? 

Or alternatively, are you suggesting that the Federal government never issue debt in the future but always fund deficits with new money.  In this case, it seems like you would fully couple fiscal policy with monetary policy and when you see inflation arise in order to address it the federal government would have to run a surplus until inflation is back under control.  Based on past experience it seems unlikely that congress, which is largely responsible for whether we run deficits or surpluses, has or ever will have the economic savvy or discipline to manage federal spending in this way.  Are you advocating this approach?  And if so, how do you address the concern of the Congress lacking the ability to manage fiscal / monetary policy in this manner effectively?

Finally, I got hung up on your discussion in the Alpha Ville article from 2013 on interest on reserves verse interest on Treasury bills.  I was having a hard time following your argument.  I finally reached the conclusion that your point with all that was there is very little point in preferring one form of interest payment over another, lending support to our suggestion that spending be supported by overdrafts.  Please correct me if I got that wrong.

If you have gotten this far, thanks for taking time to consider my note.  I really appreciate it as I know that you must be quite busy.

Thanks,

John Christopher