- 2019Nov 29
I have a friend who was always trying to talk me into being part of his next business idea. Media, finance, health care—it didn’t matter which sector, he’d always say the same thing, “Jerry, it’s gonna be bigger than Microsoft.” I’d always nod and smile. Then I would change the subject back to the insurance firm that he already owned. How are your profits? Who’s your best producer? Are you controlling your costs? I knew that would end the conversation pretty quickly, because talking about the business that he already owned was boring to him. It shouldn’t have been; he’d built it from nothing and was beginning to break into the middle tier of his industry. He never made it, though; he’d siphon all his best people off to his whim of the month, left the running of his core business to one of his mediocre guys, and, in the end – bankruptcy. The problem, I think, was ingratitude.
I know a lot of guys like this: I have another friend who repeatedly tried to recruit a top manager who would be able to take over the business quickly so my friend could move on to other more exciting ventures. He’d hire some young hotshot and in a year or so, the hot shot would leave? “I don’t know why these guys keep leaving, Jerry.” He’d say to me. I told him it’s because he keeps trying to leave, leaving the available successors with the impression that this job wasn’t worth much. Then they’d jump ship. He finally figured out that he had a first class, highly successful company, and was thankful for it and got focused again. The company is doing great now, and he’s hiring far better performers than he’s ever had before.
Another guy I know founded a highly successful state-level news analysis television program, but that wasn’t enough for him. He wanted to start more of them. He imagined sticking pins in a map, until the map was filled with pins. The bone-head got overextended, ran out of money, and had to ask his wife and kids to help him turn the company around. In the end, he became grateful for what he had, and cared for it, and it grew. That last guy, by the way, is me.
Ingratitude, I’d say, is the most common reason for entrepreneurial failure. The studies say that businesses fail because they are undercapitalized, or because they don’t have enough cash flow to pay their debts. But behind those financial indicators, I see a character flaw: an undercapitalized business (if it’s a good business idea) is just a pre-capitalized business. Somebody was unwilling to wait, work and save or sell shares while in their current job for long enough to create the new job.
It’s not just a problem for start-ups. Established business suffer from ingratitude as well. After all, debt grows when businesses operating costs grow faster than their customer revenue. The owner ceases to be grateful for his current customers and switches his loyalty away from the real men and women who currently do business with him and toward the imaginary men and women who he hope will do business with him when he makes it big.
When my oldest son was about ten I bought a little plastic toy frog for him. While we were driving home from the store together he started complaining about it. "Let me see it," I said. I took it, looked it over, and said, “You’re right, not good enough for you,” and I threw it out the car window. "In our house," I told him, "When you complain about something, you lose it."
1900 years ago a traveling Rabbi wrote a letter to a small community of Jews who lived in Rome. Rome had, by that time, torn down even the vestigial organs associated with the Republic and had become a full-blooded dictatorial empire. Many philosophers and statesmen offered whispered explanations for the fall of the Republic, but I think the Rabbi’s letter got to the essence of it “They did not acknowledge God, neither were they grateful”. The Romans didn’t really know what they had inherited and therefore when Julius Caesar offered them peace and plenty without toil in exchange for republican legal institutions, they heartily accepted.
The foundation of asset management is gratitude. If you’re grateful for something then you’ll appreciate it; if you appreciate something then you’ll care for it; if you care for something then you will (more than likely) get more of it. In other words, if you show appreciation for the assets under your care, they’ll probably return the favor and show appreciation for you.
- 2019Nov 29
I hope this helps you to understand what’s going on in our time:
Civic gratitude is not only a virtue, but a nation’s most necessary virtue. History bears that out. Rome was the greatest empire in ancient history, therefore, its fall was the greatest fall the world had ever seen. Why did Rome fall? Some people say it was because of its high taxes. Others say it was weakened by its embrace of Christian compassion. It could have been bad luck. But the most common answer is Rome fell because of decadence. Decadence gets closer to the truth than anything else, but it’s a particular kind of decadence that we’re talking about.
In the first century, Saint Paul wrote a letter to the church in Rome and he nailed it better than any commentator before or since. He said that Rome ceased to believe in monotheism; ‘neither were they thankful.’ Paul observed that at the root of Rome’s decadence was ingratitude. You see, Roman citizens at one point in their history had had more than any other citizens in the world. They had a strong tradition of property rights, low taxes and a voice in their politics. All of this was guaranteed by a republican form of government which placed an extremely high premium on the rule of law. During the glorious days of the Roman Republic, law was over the king and not the king over the law. That all changed with the coming of the Caesars who promised greater wealth, greater privileges and eventually bread (welfare) and circuses (violent entertainment). There is only one thing the Romans needed to give up in order to gains these benefits: their republican form of government. That sort of appeal only works against a particular kind of people-ungrateful people. This is what the Romans were in that generation, and this is what Saint Paul saw. (Note to those who have not studied history: just re-rent Star Wars: Revenge of the Sith and you’ll get the general flavor of these events.)
The appeal of the despot is always the same: give up what you have now and I will create Heaven on Earth. Implicit in this bargain is this premise: ‘You have nothing to lose.’ It is only a people who have become severed from the virtue of political gratitude who believe they have nothing to lose. In short, gratefulness is the chief bulwark against the demagogue. The story of the 20th Century, which is the bloodiest century in world history, is largely the story of what happens to the world when gratitude fades and people are wooed into giving up the hard-won liberty of centuries in exchange for racial glory (the Nazis), or economic security (the Communists). Our ancestors knew this and offered something to inoculate us against it: Thanksgiving Day. Let’s honor them and their gift to us.
- 2019Nov 29
It's astonishing and a little horrifying that America's elites know so little about their country's history. Case in point: Jared Bernstein of the Economic Policy Institute. Jared is an influential left-ish economic polemicist and a sometime advisor to Barack Obama on economic affairs. I've debated with Jared dozens of times over the past several years, but what happened this week was especially disturbing.
On Monday night, I told Larry Kudlow about the story of the first Thanksgiving.
I explained that the first Thanksgiving was a celebration of abundance after a period of socialism and starvation. It seems Bernstein never heard about this chapter in U.S. history; he called it an "exercise in revisionist history." Admitting that he had never read the memoirs of Plymouth governor William Bradford, he nevertheless dismissed the story as untrue. But the facts are undeniable, and there is nothing to revise. Bradford's historical accounts, which I quote below, have been read by schoolchildren for over 300 years.
The members of the Plymouth colony had arrived in the New World with a plan for collective property ownership. Reflecting the current opinion of the aristocratic class in the 1620s, their charter called for farmland to be worked communally and for the harvests to be shared.
"The strong, or man of parts, had no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could; this was thought injustice."
You probably will not be surprised to hear that the colonists starved. Men were unwilling to work to feed someone else's children. Women were unwilling to cook for other women's husbands. Fields lay largely untilled and unplanted.
"And for men's wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc., they deemed it a kind of slavery, neither could many husbands well brook it."
Famine came as soon as they ate through their provisions. After famine came plague. Half the colony died. Unlike most socialists, they learned from their mistakes, giving each person a parcel of land to tend to for themselves.
"At length, after much debate of things, the Governor ... gave way that they should set corn every man for his own particular, and in that regard trust to themselves ... And so assigned to every family a parcel of land, according to the proportion of their number, for that end."
The results were overwhelmingly beneficial. Men worked hard, even though before they had constantly pleaded illness. Fields were not only tilled and planted but also diligently harvested. Colonists traded with the surrounding Indian nation and learned to plant maize, squash and pumpkin and to rotate these crops from year to year. The harvest was bountiful, and new colonists immigrated to the thriving settlement.
"This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression."
The colonists threw off the statist intellectual fashions of their day. They concluded that the ancient principles of private property as recorded in the Ten Commandments were superior to the utopian speculations of Plato and his 17th-century imitators. Human nature was a fact of life, self-centered, fallen. No cadre of elite philosopher kings could change the cold facts of reality.
"The experience that was had in this common course and condition ... may well evince the vanity of that conceit of Plato's ... and that the taking away of property ... would make them happy and flourishing; as if they were wiser than God."
It's genuinely scary to me that a leading member of the left intellectual establishment--a group that will shortly rule both of our elected branches--doesn't know about America's first experiment with socialism. On top of that, he doesn't care to know. Neither did the philosopher kings who, ignorantly and blithely, imposed on our forebears a system that led to malnutrition, pestilence and mass fatalities.
But it has always been that way. Men in ivory towers, ivied halls, foundation-funded think tanks or bustling newsrooms dream up new forms of social organization. They write books, policy papers and five-year plans telling us all that is wrong with the way we live now and what could be done if we simply adhere to their analyses.
When the famines, tortilla riots or credit collapses come, the rest of us have to deal with the consequences. It has been proved that the "vanity and conceit" (Bradford's phrase, not mine) of the philosopher kings ends in disaster--but by then they've already moved on to something else. When we remind them that their ideas have been tried--and found wanting--in the past, they cavalierly deny history, clap their hands over their ears and cry even more loudly for "change." If we listen to them, we deserve what we will get.