Showing posts with label Warren Buffet. Show all posts
Showing posts with label Warren Buffet. Show all posts

Wednesday, January 30, 2013

The Lottery Assumption

"Your Plan B is someone else's Plan A."

There's something interesting about the way we think about our dreams and aspirations. While we believe our "dream goals" are impossibly difficult to achieve, it seems as though other people doing other things are always an "overnight success". We have a tendency to think that there are other - easier - pathways to success than the daunting uphill trek we imagine our own dreams would require. I think of it as a kind of "lottery" assumption. We figure that people who have achieved success in a creative field were mostly lucky and we conclude that even if we work hard and have talent, our odds of making it in our "dream" field are about as good as our odds of winning the lottery. We also (wrongly) conclude that success will be much easier in some other - usually more conventional - field.

Provided we have reasonable opportunities,
Gary Player's words are simply true.
This lottery assumption is frequently applied to artistic aspirations in particular. The truth is that the people who are "overnight successes" in creative fields - like people who achieve success in any field - rarely arrive at their success overnight. Of course, this is not news to anyone who has ever read the biography of a famous writer, actor or painter. Successful creative people nearly always work hard at their craft for years before their work is widely recognized and/or they achieve great financial success in their artistic endeavors. Yet the conviction persists that there is more than an element of chance to artistic success - not to mention overwhelming odds against you or me winning that particular lottery - undermining the will to work hard and the faith in ourselves that successful realization of our dreams demands.

It's true that opportunity is not equitably distributed throughout the population - and that is a topic for another post - but the lottery assumption goes beyond opportunity. Many people who actually have numerous opportunities to pursue their dreams still fail to recognize opportunity when it knocks. We continue to believe that other people - people who do recognize and answer that knock - are somehow just "luckier" than we are. Most of us turn a blind eye to our chances to do the things we say we would love to do, while telling ourselves that the opportunities we actually ignored just never came along at all. More determined people (who really intend to build a life doing the things that they love) keep an eye out for opportunities and then grab them when they present themselves.

There are lots of reasons why we fail to acknowledge opportunities to pursue our dreams: perhaps we have conflicting dreams and the opportunity means an impossible tradeoff of one cherished dream for another. It's rare that a conflict is so utterly irreconcilable, but it happens. More often, though, our reluctance to commit to a dream may tell us something about ourselves. Although if we pretend the opportunity never existed, we may never figure out what that is while we mourn a dream that we may never have really pursued anyway.

But, I think the biggest reason why we miss opportunities to do work we actually love is because we are socialized to regard enjoyable activities as strictly for leisure, while work is serious business. There is a sense that if we decide to make something we love to do our life's work, that we are somehow...well...goofing off. There is plenty of subtle and not-so subtle societal disapproval to underscore the point, too, so we dream of being able to perform or cook or paint for a living, but we feel a little bit ashamed of ourselves for wanting what essentially sounds like a lifetime of play, when we really ought to be doing more "grown-up" things. We postpone those dreams for some day, never quite formulating a Plan A to make them happen. We give up on our passions at the dreaming stage - decide they are unrealistic and probably we don't have the talent to make it anyway - and move directly on to Plan B. Our culture is more than ready to reinforce that, too.

Meryl Streep's Plan A - Acting
For example, people often say things like "What - do you imagine you'll be the next Meryl Streep?" to young people who express the dream of pursuing a career in acting (or, picking up on the general attitude that performance arts are not serious career options, young people say it to themselves). The unspoken message is loud and clear: performance art is fine for childhood and adolescence, but when it comes to a life plan, get serious! A career in acting is nothing but a pipe dream - a fantasy!

Consequently, the dream never even makes it out of the realm of fantasy to become a Plan A. Feeling naive and foolish for believing that such a childish dream could be made a reality, artistic people all too often default straight to a more acceptable Plan B.

Yet, we rarely hear anyone say things like that to kids who pursue paths that lead to what are perceived as safer, more conventionally solid, high-status careers like law, engineering, medicine or business. Let's take business, for example. No one ever says "What - do you think you're going to be the next Warren Buffet?" to the teenager who announces he is going to pursue a business degree or who hopes to open a small business someday. Unlike the liberal or performing arts, business is regarded as a very sensible course to take. Nobody insists that the only alternative to Buffet-like success is failure or that it is foolish to even consider trying. Why is that?

Out of the millions of people who work in the thousands of business-related occupations, there are very few who achieve the kind of stratospheric success of a Warren Buffet or Bill Gates, and perhaps a few hundred who "live the dream" of merely "great" corporate career success. There are many successful actors, writers and musicians among the thousands of people who work in creative occupations: actually, a person's relative odds of extraordinary success are probably greater in the arts than in business!

Warren Buffet's Plan A - Business
But even more to the point: where does the assumption come from that making it in business (or law, medicine or what have you) is easy - even a given? Have business diploma, will succeed!  Consider the huge numbers of students who flock to business schools. They can't all be passionate about business! And guess what? They're not. Many of these students love other things much more than business, but they've bought into the idea that to be successful (or, rather, to make money which we sometimes mistakenly equate with "success"), they should go into business school. They've shelved Plan A with hardly a whimper and gone to Plan B in the mistaken belief that Plan B will be easier.

They forget that their Plan B is someone else's Plan A.

The biggest pitfall of going with a Plan B is assuming that everyone else who has traveled the same path defaulted to that plan, too. This mistaken assumption is the root of the equally mistaken belief that Plan B will be easier. We see people in solid business careers and we assume: that's the ticket to success! No need to agonize over talent or possible humiliation - it's business!

But virtually every really successful person is working not on a Plan B but on their Plan A. People with no interest or passion for business do not simply walk out of college, diploma in hand and immediately start climbing the corporate ladder.  The people who seem to have effortlessly navigated a dream career have done so only after decades of working their way up through hard work, determination and a little luck. About the only thing that can sustain a person through years of striving at a demanding career is to love what you do. When you love what to do, the work energizes and invigorates you. When you don't, it can drain and depress you.

When you choose something because it seems expedient, rather than because you really want to do it, you actually choose to devote the majority of your one and only life to something you don't care about and don't particularly enjoy. Why would you choose to do that?

Advancing in a field that doesn't excite you is not easy. Aiming higher in a career you really don't love is not easy. Showing up each day at a job you neither care about nor enjoy is not easy at all. It is very hard. Without the passion and excitement we feel when we are working at something we love, it is very hard to find the energy and drive necessary to succeed. Even with a business, medical or law degree success is never easy and certainly not guaranteed.

What should this guy's Plan A have been?
For plenty of young people, these careers are a genuine dream come true, and they are fortunate to be able to convert the sincere desire to do that work into a solid Plan A. They work hard at careers they love, and whether or not they achieve the highest honors in their field, they command respect in society and live satisfying lives, too. Yet, there are doctors and lawyers and business majors who fail because their ambivalence about their work has translated into lackluster job performance. There are Plan B people languishing in dead-end jobs or who are always looking for another job - constantly searching for the right one and rarely succeeding.

It is worthwhile to give some thought to the things we really enjoy doing and try to figure out a way to incorporate those things into a career plan. A career Plan A.  Many of us avoid doing this because we fear the possibility of failure at something we really care about. Yet, by defaulting to a Plan B which ignores our dreams and passions is to guarantee that we will fail to do anything with them.  There are meaningful careers to match any interest known to humankind - if we make the effort to find them.

It is a fact of life that we won't all become CEOs, movie stars or celebrities in our respective fields. Whether or not we end up rivaling Meryl Streep or Warren Buffet, most of us will feel pretty successful if we can enjoy friendships, family, a little fun and the security of a decent job. If that job should also happen to be in a field we really enjoy - if we made a Plan A, stuck to it, worked hard and grabbed our opportunities when they presented themselves - then we will have the satisfaction of spending the best part of our lives doing stuff we love.

And that must feel a little like winning a lottery.

Steve Jobs  1955-2011

Tuesday, November 27, 2012

Buffet Rule Redux - Wait, Isn't That The Reagan Rule?

Warren Buffet rocks. I'm just going to come right out and say that. In the spring, the New York Times' Dealbook editor, Andrew Ross Sorkin, reported that when a shareholder complained to Buffet that his 84 year-old father refused to invest in Berkshire because of Buffet's publicly stated position on taxes:

"Mr. Buffett replied with a zinger: “Sounds like your father should buy stock in Fox.”"

This week, Mr. Buffet's Op Ed piece in the New York Times expands on the topic of rational tax policy. In a few short paragraphs, he recaps the history of how the much higher tax rates of the past paved the way for economic expansion and a prosperous, growing middle class. As those tax rates were gradually reduced, financial inequality in American society began to grow again. With ever more drastic cuts to the tax rates on the wealthiest Americans since the Reagan administration, the gulf between rich and poor has rapidly widened, while manufacturing and other middle class jobs have dried up resulting in a steadily shrinking middle class.

Someone's sitting in the shade today 
because someone planted a tree a long time ago.  
Warren Buffett
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.

So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities. 

Warren E. Buffet, A Minimum Tax for the Wealthy, New York Times, November 25, 2012.

Warren Buffet has earned popular respect for more than just his quick wit and feisty defense of his principles. Although he is one of the richest and most successful businessmen in the world, Buffet broke ranks with most of the super rich when he said that he did not think that rich people like himself should be paying less in taxes than the middle class. That pronouncement probably cost him a few friends (though probably not business followers) in the rarefied world of the super wealthy.      

Debbie Bosanek
The reality is that the current micro-fraction of superrich Americans have accumulated a rapidly growing portion of the wealth pie due to their ability to influence legislation to favor their own interests. Warren Buffet seems to have reached a point in his life where personal ambition and business pragmatism no longer justify turning a blind eye to or remaning silent about immoral wealth inequity and increasing plutocratic control of government and the economy.

The Oracle of Omaha went on the record saying that he is uncomfortable about the fact that his secretary - earning considerably less than $100,000 per year - pays a higher tax rate than the Berkshire Hathaway legend himself pays. That was the anecdote cited by President Obama when he put forward his suggestion for a more fair and balanced tax structure - featuring a minimum 30% tax rate on high incomes - aptly named the Buffet Rule.

On April 16, the Buffet Rule was killed by the Senate, thanks to determined Republican obstructionism.  Later that same week, the Republicans planned to vote on a bill handing out yet another 20% deduction on business income. That bill was passed by the Republican-controlled House on April 19. It has not yet been passed by the Senate. While braying about class warfare - by which they mean envy of the productive rich by the shiftless, lazy not-rich -  the Republicans managed once again to champion tax advantages for the wealthiest Americans, while heaping more of the tax burden onto the middle class and the poor.

via Charles H. Smith
How ironic it is that while the incredibly wealthy Warren Buffet speaks out in defense of the 99.9%, Republicans in Congress appear to live in an alternate universe where the extremely wealthy never use roads or shipping infrastructure to move their goods across the country and around the world. They appear to have missed completely the fact that workers - many who have endured wage freezes or at best wage increases which have barely kept up with the cost of living: inflated health care costs, rents and mortgages, college tuitions and gas prices - enable the production of goods and services which provide the enormous profits that line the pockets of the wealthiest Americans. (Yes, Paul Ryan, there are makers and takers: the workers - too few of them unionized - make the goods and services while the plutocrat elites take the profits).

Republicans appear to have been asleep while banks, mortgage companies and brokerage houses played fast and loose with the economy, enriching the tiniest sliver of the population while the other 95% or more fell farther and farther behind in the income gap. When the housing and stock market bubbles burst, most of this same extremely wealthy and privileged few escaped prosecution - and escaped serious financial damage - and were soon recouping their losses from the crash by buying up stocks in more companies at extremely discounted post-crash prices. Meanwhile, the middle class and the poor ate the cost of the crash - losing jobs, losing homes, losing livelihoods - and still kept paying taxes, on income, on goods and on services.

Yes, Paul Ryan, there are makers and takers: the workers - too few of them unionized - make the goods and services while the plutocrat elites take the profits.

It's also interesting that Warren Buffet isn't the first person to depart from the received "wisdom" of his overwhelmingly conservative peer group. Theodore Roosevelt, the father of the progressive Republican movement, had to break away from the Republican party as his goals for social justice became increasingly at odds with the plutocratic ambitions of party hardliners. Similarly, though he courted the support and votes of conservative hardliners, Ronald Reagan - the demi-god of the right wing - expressed views which today would see him kicked unceremoniously to the curb by the party "base". 

Via Upworthy

Last fall, Think Progress published a great article comparing the class warrior presidents - Reagan and Obama - with supporting video. As the White House and Congress continue negotiations to avoid the so-called "fiscal cliff" at the end of the year, it is interesting to consider that the current party of No has its roots in progressive social justice, ideals that were apparently shared by their idol, Ronald Reagan, even as his ambition led him to an unholy alliance with the right wing fringes of his party thus enshrining himself as the father of the current economic nightmare.

Once more, history offers compelling evidence of just how fanatical and extreme the conservative movement has become in this country. Jay Bookman, Atlantic Journal-Constitution, October 3, 2011.

Some days, the irony meter spins way up on bust.

via Mother Jones, It's the Inequality, Stupid