Passage taken from James Surowiecki ” The Wisdom of Crowds” pages 118-120:
Why are we willing to cooperate with those we barely know? I like Robert Wright’s answer, which is that over time, we have learned that trade and exchange are games in which everyone can end up gaining, rather than zero-sum games in which there’s always a winner and a loser. But the “we” here is, of course, ill defined, since different cultures have dramatically different ideas about trust and cooperation and the kindness of strangers. In the next section, I want to argue that one of the things that account for those differences is something that is rarely associated with trust or cooperation:capitalism.
In eighteenth and early nineteenth century Britain, a sizable chunk of the nation’s economy was run by members of the religious sect known as the Quakers. Quakers owned more than half of the country’s ironworks. They were key players in banking (both Barclays and Lloyds were Quaker institutions). They dominated consumer businesses such as chocolate and biscuits. And they were instrumental in facilitating the transatlantic trade between Britain and America.
Initially, Quaker success was built around the benefits Quakers got from trading with each other. Because they dissented from the English state religion, members of the sect were barred from the professions, and as a result they gravitated toward business. When Quakers went looking for credit or for trade, they found it easy to partner with fellow believers. Their common faith facilitated trust, allowing a Quaker tradesman in London to ship goods across the ocean and be certain that he would be paid when they arrived in Philadelphia.
Quaker prosperity did not go unnoticed in the outside world. Quakers were well-known already for their personal emphasis on absolute honesty, and as businessmen they were famously rigorous and careful in their record keeping. They also introduced innovations like fixed prices, which emphasized transparency over sharp dealing. Soon, people outside the sect began to seek Quakers as trading partners, suppliers and sellers. And as Quaker prosperity grew, people drew a connection between that prosperity and the sect’s reputation for reliability and trustworthiness. Honesty, it started to seem, paid.
In the wake of the orgy of corruption in which American businesses indulged during the stock-market bubble of the late 1990s, the idea that trustworthiness and good business might go together sounds woefully naive. Certainly one interpretation of these scandals is that they weren’t abberations but the inevitable byproduct of a system that plays to people’s worst impulses: greed, cynicism, and selfishness. The argument sounds plausible, if only because capitalist rhetoric so often stresses the virtue of greed and the glories of what “Chainsaw” Al Dunlap, the legendarily ruthless job-cutting CEO liked to call “mean business”. But this popular image of capitalism bears only slight resemblance to its reality. Over centuries, in fact, the evolution of capitalism has been in the direction of more trust and transparency, and less self-regarding behavior. Not coincidentally, this evolution has brought with it greater productivity and economic growth.
That evolution didn’t take place because capitalists are naturally good people. Instead it took place because the benefits of trust – that is – of being trusting and being trustworthy- are potentially immense and because a succesful market system teaches people to recognize those benefits. At this point, it’s been well demonstrated that flourishing economies require a healthy level of trust in the reliability and fairness of everyday transactions. If you assumed every potential deal was a rip-off or that the products you were buying were going to be lemons, then very little business would get done. More importantly, the costs of the transactions that did take place would be exorbitant, since you’d have to do enormous work to investigate each deal and you’d have to rely on the threat of legal action to enforce every contract.
For an economy to prosper, what’s needed is not a Pollyannaish faith in the good intentions of others, caveat emptor remains and important truth – but a basic confidence in the promises and commitments that people make about their products and services.
As the economist Thomas Schelling has put it: “One has only to consider the enormous frustration of conducting foreign aid in an underdeveloped country, or getting a business established there, to realize what an extraordinary economic asset is a population of honest conscentious people.”
You know, if I had to sum up the entire thesis why you have to buy Philippines? It’s really simple. It was just one sentence. “We now have an honest president in Noynoy Aquino.” And with that statement, a legendary investor and senior mentor of my own boss plopped unheard millions in the Philequity fund and said “Wilson, I’m confident that you will make a lot of money for all the Filipino investors out there. For the first time in our history, we have an honest president.”
And with that note, a man of more than eighty plus years with wisdom and ways similar to a “Master Oogway” whiffed goodbye to all of us that February of 2012. It was my first time to be included in a Philequity board meeting. On and on, my boss will tell me that if there’s one reason why he’s very bullish in the Philippine market, he would always tell me – honesty, honesty – honesty. We have an honest president. Everything emanates from the top.
Lo and behold, when we look at the fiscal numbers, the BSP reported surpluses instead of deficits. Investments from Japan poured in the Philippines. Toyota Motor Philippines expanded in Cavite. While I don’t know when this PPP will exactly take hold, a government willing to sign into law a 20 year old bill like RH Bill and Sin Taxes can accomplish what previous governments have not.
I was in a way awed.
I didn’t understand the meaning of those simple words.
Truly, honesty will pull the Philippines out of its quagmire.
I watched Pacific Rim just awhile ago and while there were a lot of action scenes (and I wished more of it), I knew that the reason the held all these people was their united belief in living. They all believed and “drifted” as one. Two minds had to cooperate. Two minds had to collaborate in such a way that every movement had to be connected. You can only do that with brotherhood, friendship, love and trust.
And with that, any confidence is not called overconfidence but simply – rightful confidence.
Not arrogance but just simply an internal belief in succeeding. Whether you call it delusional or stupidity to make those nuclear plans, a united system shall pull and push things through.
Look around you. If you see people believing in themselves and the power of the collective, it is hard not to see that a market and its people should rise above other “quote unquote” developed markets.
Kudos and ever a perma-bull, thank you for showing me that if I am to live with an honest heart, trust is the best currency in the world.
No wonder all taipans don’t believe in contracts. A handshake is all that’s enough to build the entire world.
So don’t be afraid to show the world your true colors. Be honest.
If you love someone, just be honest.
If you love someone but know that you simply cannot commit fully ending up with a failed promise or half baked commitment, then just be honest. There’s nothing wrong in being honest about your faults and your weaknesses. Respond to heartbreak and failures with hard work. In the long run, painful losses may prove much more valuable than wins. Those armed with a healthy attitude and are able to draw wisdom from every experience “good” or “bad” are the ones who make it down the road, happier along the way. Of course, the real challenge is to stay in range of this long-term perspective when you’re under fire and hurting in the middle of war. This may be our biggest hurdle, and is the core of the art of learning.
As the latest trailer of Wolverine did say, when you are most mortal and most vulnerable, you are most dangerous.
There is no one who knows you more intimately, no one who challenges you so profoundly or pushes you to excellence and growth so relentlessly than your opponents and obstacles in life. – Joshua Waitzkin
So let that true color shine through. Don’t be afraid to show your true colors – Phil Collins
The field of learning and performance are an exploration of greyness – of the in-between. There’s the careful balance of pushing yourself relentlessly, but not so hard that you melt down. Muscles and minds need to stretch to grow, but if stretched too thin, they will snap. A competitor needs to be process oriented, always looking for stronger opponents to spur growth but it is also important to keep on winning to maintain confidence.
Understand that all problems are rare opportunities to grow. Much of what we are today are evolutions from the brutal testing ground of our years in earth.
So long soldier 🙂
(had a blast watching Pacific rim so pardon for my emotional reflections haha.)
– Nix (aka FT)