Short Incentive Quotes

What are the odds that people will make smart decisions about money if they don't need to make smart decisions--if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they're still all wrong.

Our society does reward beauty on the outside over health on the inside. Women must not be blamed for choosing short-term beauty "fixes" that harm our long-term health, since our life spans are inverted under the beauty myth, and there is no great social or economic incentive for women to live a long time. A thin young woman with precancerous lungs [who smokes to stay thin] is more highly rewarded socially that a hearty old crone. Spokespeople sell women the Iron Maiden [an intrinsically unattainable standard of beauty used to punish women for their failure to achieve and conform to it]and name her "Health": if public discourse were really concerned with women's health, it would turn angrily upon this aspect of the beauty myth.

The short story, I should point out, is perforce a labor of love in today's literary world; there's precious little economic incentive to write one...

If we can find short-term incentives that are consistent with our long-term objectives, it is much easier to make the right decisions in the moment.

To give her some incentive, he took her hands away from her face and kissed her.  It was a soft, chaste kiss, but it wasn’t short and it wasn’t brotherly.

In short, honesty is more than a moral principle. It is also a major economic factor. While government can do little to create honesty directly, in various ways it can indirectly either support or undermine the traditions on which honest conduct is based. This it can do by what it teaches in its schools, by the examples set by public officials, or by the laws that it passes. These laws can create incentives toward either moral or immoral conduct. Where laws create a situation in which the only way to avoid ruinous losses is by violating the law, the government is in effect reducing public respect for laws in general, as well as rewarding specific dishonest behavior.

If you wanted to predict how people would behave, Munger said, you only had to look at their incentives. FedEx couldn’t get its night shift to finish on time; they tried everything to speed it up but nothing worked—until they stopped paying night shift workers by the hour and started to pay them by the shift. Xerox created a new, better machine only to have it sell less well than the inferior older ones—until they figured out the salesmen got a bigger commission for selling the older one. “Well, you can say, ‘Everybody knows that,’ ” said Munger. “I think I’ve been in the top five percent of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little

Under democracy, the incentive structure is systematically changed. Egalitarian sentiments and envy are given free reign. Everyone, not just the king, is now allowed to participate in the exploitation—via legislation or taxation—of everyone else. Everyone is free to express any confiscatory demands whatsoever. Nothing, no demand, is off limits. In Bastiat’s words, under democracy the State becomes the great fiction by which everyone seeks to live at the expense of everyone else. Every person and his personal property come within reach of and are up for grabs by everyone else.

Whether it means prizing the value of lessons learned, building games into your creative process, or getting gifts upon certain milestones of achievement, self-derived rewards make a big difference…You cannot ignore or completely escape the deeply ingrained short-term reward system within you. But you can become aware of what really motivates you and then tweak your incentives to sustain your long-term pursuits.

Generally, the financial incentives offered to local law enforcement to pump up their drug arrests have not been well publicized, leading the average person to conclude reasonably (but mistakenly) that when their local police departments report that drug arrests have doubled or tripled in a short period of time, the arrests reflect a surge in illegal drug activity, rather than an infusion of money and an intensified enforcement effort.

What are the odds that people will make smart decisions about money if they don’t need to make smart decisions—if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they’re still all wrong.

In several experiments, people were able to resist the effects of ego depletion when given a strong incentive to do so. In contrast, increasing effort is not an option when you must keep six digits in short-term memory while performing a task. Ego depletion

irrational behavior in the markets may result precisely because individuals are responding rationally according to their incentives. So long as most traders are judged on the basis of short-term performance, bubbles involving large deviations of stock prices from their long-term values are possible—and perhaps even inevitable.

cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed. The line between gambling and investing is artificial and thin.

Since democratic elections are always held in the short term, politicians have every incentive to extract as much wealth as possible from the fixed capital under their jurisdiction, whether through taxes, the imposition of charges on property or of the expropriation. Only public awareness of the long-term consequences can limit this form of exploitation.

But these facts are not very useful to women, because there is a double standard for “health” in men and women. Women are not getting it wrong when they smoke to lose weight. Our society does reward beauty on the outside over health on the inside. Women must not be blamed for choosing short-term beauty “fixes” that harm our long-term health, since our life spans are inverted under the beauty myth, and there is no great social or economic incentive for women to live a long time. A thin young woman with precancerous lungs is more highly rewarded socially than a hearty old crone. Spokespeople sell women the Iron Maiden and name her “Health”; if public discourse were really concerned with women’s health, it would turn angrily upon this aspect of the beauty myth.

A more recent concern relates to “financialization” and associated short-termism. Financialization is the growing importance of norms, metrics, and incentives from the financial sector to the wider economy. Some of the concerns expressed are that, for example, managers are increasingly awarded stock options to align their incentives with those of shareholders; companies are often explicitly managed to increase short-term shareholder value; and financial engineering, such as share buybacks and earnings management, has become a more important part of senior managers’ jobs. The end result is that rather than finance serving business, business serves finance: the tail wags the dog. What John Kay described as “obliquity,” the idea that making money was a consequence of, or a second-order benefit of, serving one’s customers and building good businesses, is driven out (Kay 2010).

PERHAPS there is no subject for meditation more suitable to every class of persons than the most sacred Passion of our Lord Jesus Christ. In it may sinners find the encouragement and graces necessary for their conversion; from it may beginners derive strength and fervor wherewith to subdue their passions; in it may the good discover fresh incentives to advance in the paths of virtue. In short, there are none who will not find it an inexhaustible mine of hidden treasures, and an endless source of graces and spiritual blessings.

A prison is perhaps the easiest place to see the power of bad incentives. And yet in many walks of life, we find otherwise normal men and women caught in the same trap and busily making the world much less good than it could be. Elected officials ignore long-term problems because they must pander to the short-term interests of voters. People working for insurance companies rely on technicalities to deny desperately ill patients the care they need. CEOs and investment bankers run extraordinary risks—both for their businesses and for the economy as a whole—because they reap the rewards of success without suffering the penalties of failure. District attorneys continue to prosecute people they know to be innocent because their careers depend on winning cases. Our government fights a war on drugs that creates the very problem of black-market profits and violence that it pretends to solve. We need systems that are wiser than we are. We need institutions and cultural norms that make us more honest and ethical than we tend to be. The project of building them is distinct from—and, in my view, even more important than—an individual’s refining his personal ethical code.

Only those who have lost as much as we have see the particularly nasty slice of smile on someone who thinks they’re winning when they say “Get over it.” This is the thing: If you have the option to not think about or even consider history, whether you learned it right or not, or whether it even deserves consideration, that’s how you know you’re on board the ship that serves hors d’oeuvres and fluffs your pillows, while others are out at sea, swimming or drowning, or clinging to little inflatable rafts that they have to take turns keeping inflated, people short of breath, who’ve never even heard of the words hors d’oeuvres or fluff. Then someone from up on the yacht says, “It’s too bad those people down there are lazy, and not as smart and able as we are up here, we who have built these strong, large, stylish boats ourselves, we who float the seven seas like kings.” And then someone else on board says something like, “But your father gave you this yacht, and these are his servants who brought the hors d’oeuvres.” At which point that person gets tossed overboard by a group of hired thugs who’d been hired by the father who owned the yacht, hired for the express purpose of removing any and all agitators on the yacht to keep them from making unnecessary waves, or even referencing the father or the yacht itself. Meanwhile, the man thrown overboard begs for his life, and the people on the small inflatable rafts can’t get to him soon enough, or they don’t even try, and the yacht’s speed and weight cause an undertow. Then in whispers, while the agitator gets sucked under the yacht, private agreements are made, precautions are measured out, and everyone quietly agrees to keep on quietly agreeing to the implied rule of law and to not think about what just happened. Soon, the father, who put these things in place, is only spoken of in the form of lore, stories told to children at night, under the stars, at which point there are suddenly several fathers, noble, wise forefathers. And the boat sails on unfettered. If you were fortunate enough to be born into a family whose ancestors directly benefited from genocide and/or slavery, maybe you think the more you don’t know, the more innocent you can stay, which is a good incentive to not find out, to not look too deep, to walk carefully around the sleeping tiger. Look no further than your last name. Follow it back and you might find your line paved with gold, or beset with traps.

from water. These were not trivial challenges to overcome. On the other hand, there was a powerful incentive to leave the water: it was getting dangerous down there. The slow fusion of the continents into a single landmass, Pangaea, meant there was much, much less coastline than formerly and thus much less coastal habitat. So competition was fierce. There was also an omnivorous and unsettling new type of predator on the scene, one so perfectly designed for attack that it has scarcely changed in all the long eons since its emergence: the shark. Never would there be a more propitious time to find an alternative environment to water.

We’re too focused on the short-term. Experts keep advising us to save and invest, so we can retire in 20 or 30 years. And yet we remain almost exclusively focused on the here and now. Is there a new toy we’re hankering to buy? To persuade us to postpone the purchase for a mere 12 months, somebody would likely have to offer us a huge financial incentive. We are also overly influenced by recent events, including the latest political news, the current crop of economic data, and whether the financial markets have lately been rising or falling. We ascribe great importance to the days and weeks ahead, and not nearly enough to next year, let alone the next 10 years.

It could be argued that one of democracy’s greatest weaknesses is the ability to reform itself. Reform of democracy must, however, be at the heart of a successful plan to improve economic growth and global prosperity. So far this chapter has detailed how the democratic system inherently contains incentives for policymakers to implement bad policy choices that undermine long-term economic success. Nevertheless, as we seek solutions to remedy democracy’s failings, we should acknowledge that politicians in a liberal democracy need not be malicious or even inept to fall prey to short-term thinking. They are wholly rational actors—responding to voters, succumbing to media pressure, and battling to stay in office, even if it means they do so at the expense of the economy’s longer-term success. When democracy works, it delivers economic growth and fundamental freedoms in a way that no other system can. And when it fails, it is rarely, if ever, replaced by a system that can do a better job of delivering for its population. Therefore, creating growth requires that we preserve democratic capitalism’s core strengths—freedom, efficient markets, transparency, and correctly constructed incentives—and reform its weaknesses. Something must be done to remedy the political class’s severe case of myopia, correcting the mismatch between long-term economic challenges and election cycles, safeguarding independent economic choices from political pressures, and eliminating dysfunction and gridlock.

In short, the five or seven hours a day which each will have at his disposal, after having consecrated several hours to the production of necessities, would amply suffice to satisfy all longings for luxury, however varied. Thousands of associations would undertake to supply them. What is now the privilege of an insignificant minority would be accessible to all. Luxury, ceasing to be a foolish and ostentatious display of the bourgeois class, would become an artistic pleasure. Everyone would be the happier for it. In collective work, performed with a light heart to attain a desired end, a book, a work of art, or an object of luxury, each will find an incentive and the necessary relaxation that makes life pleasant. In working to put an end to the division between master and slave, we work for the happiness of both, for the happiness of humanity.

Back in 1995, Munger had given a talk at Harvard Business School called “The Psychology of Human Misjudgment.” If you wanted to predict how people would behave, Munger said, you only had to look at their incentives. FedEx couldn’t get its night shift to finish on time; they tried everything to speed it up but nothing worked—until they stopped paying night shift workers by the hour and started to pay them by the shift. Xerox created a new, better machine only to have it sell less well than the inferior older ones—until they figured out the salesmen got a bigger commission for selling the older one. “Well, you can say, ‘Everybody knows that,’” said Munger. “I think I’ve been in the top five percent of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.” Munger’s

The use of rewards—what might be called positive coercion—does not work in the long run any better than threat and punishment, or negative coercion. In the reward, the child senses the parent’s desire to control no less than in the punishment. The issue is the child’s sense of being forced, not the manner in which the force is applied. This was well illustrated in a classic study using magic markers.2 A number of children were screened to select some who showed a natural interest and inclination for playing with magic markers. Those who did were then divided into three different groups. For one group, there was no reward involved and no indication what to do with the markers. Another group was given a small reward to use the markers, and the third was promised a substantial reward. When retested sometime later, the group that had been most rewarded showed the least interest in playing with the magic markers, while the children who had been left uninstructed showed by far the greatest motivation to use them. Simple behaviorist principles would suggest it ought to have been the other way around, another illustration that behavioral approaches have no more than short-term efficacy. At work here, of course, was residual counterwill in response to positive coercion. In a similar experiment, the psychologist Edward Deci observed the behaviors of two groups of college students vis-à-vis a puzzle game they had originally all been equally intrigued by. One group was to receive a monetary reward each time a puzzle was solved; the other was given no external incentive. Once the payments stopped, the paid group proved far more likely to abandon the game than their unpaid counterparts. “Rewards may increase the likelihood of behaviors,” Dr. Deci remarks, “but only so long as the rewards keep coming... Stop the pay, stop the play.” We

Social life was similarly affected by the teachings of the Koran. At a time when in Christian Europe an epidemic was regarded as a scourge of God to which man had but to submit meekly - at that time, and long before it, the Muslims followed the injunction of their Prophet which directed them to combat epidemics by segregating the infected towns and areas. And at a time when even the kings and nobles of Christendom regarding bathing as an almost indecent luxury, even the poorest of Muslim houses had at least one bathroom, while elaborate public baths were common in every Muslim city (in the ninth century, for instance, Córdoba had three hundred of them): and all this in response to the Prophet’s teaching that ‘Cleanliness is part of faith’. A Muslim did not come into conflict with the claims of spiritual life if he took pleasure in the beautiful things of material life, for, according to the Prophet, ‘God loves to see on His servants an evidence of His bounty’. In short, Islam gave a tremendous incentive to cultural achievements which constitute one of the proudest pages in the history of mankind; and it gave this incentive by saying Yes to the intellect and No to obscurantism, Yes to action and no to quietism, Yes to life and No to ascetism. Little wonder, then, that as soon as it emerged beyond the confines of Arabia, Islam won new adherents by leaps and bounds. Born and nurtured in the world-contempt of Pauline and Augustinian Christianity, the populations of Syria and North Africa, and a little layer of Visigothic Spain, saw themselves suddenly confronted with a teaching which denied the dogma of Original Sin and stressed the inborn dignity of earthly life: and so they rallied in ever-increasing numbers to the new creed that gave them to understand that man was God’s vicar on earth. This, and not a legendary ‘conversion at the point of the sword’, was the explanation of Islam’s amazing triumph in the glorious morning of its history. It was not the Muslims that had made Islam great: it was Islam that had made the Muslims great. But as soon as their faith became habit and ceased to be a programme of life, to be consciously pursued, the creative impulse that underlay their civilisation waned and gradually gave way to indolence, sterility and cultural decay.

The brain is wired to minimize loss . . . [and] to keep you alive. [It] makes the assumption that because you were alive yesterday, what you did previously is safe. Therefore, repeating the past is good for survival. As a result, doing things differently, even if it seems like an improvement, is risky. Perpetuating past behaviors, from the brain’s reptilian perspective, is the safest way. This is why innovation is difficult for most individuals and organizations. Put another way, the brain wants its problems and predicaments solved first because it can’t deal with anything new or different until they are addressed. The brain has no incentive to come up with new ideas if it doesn’t have to. As long as your brain knows you have another out, it will always be content with keeping you alive by coming up with the same ideas that it used before. This suggests that when you decide to get scrappy, a shift occurs and seems to unlock a door. Once that new door opens, you are more capable than ever of getting innovative because your brain has been activated to manage discomfort or challenges first. You’re able to work on a new, perhaps more advanced, level with heightened energy and focus. It’s that initial commitment, that literal act of saying, “I’m going for it!” that stimulates your mind in new and clever ways and ultimately leads to the generation of fresh ideas. Let’s go back to the Greg Hague story. 1. He had a huge goal, which was to pass the Arizona state bar exam. 2. There was a limited time frame as he had only four and a half months to study. 3. He was all in: “I flat out made up my mind I was going to pass.” He decided to go despite the odds. 4. He had to figure out a way to learn a ton of information in a short period of time. His brain adapted, shifted, and developed an entirely new learning system in order to absorb more material, which helped him to pass the Arizona bar and get the top score in the state. It’s weird, right? But it happened.

If you have the option to not think about or even consider history, whether you learned it right or not, or whether it even deserves consideration, that’s how you know you’re on board the ship that serves hors d’oeuvres and fluffs your pillows, while others are out at sea, swimming or drowning, or clinging to little inflatable rafts that they have to take turns keeping inflated, people short of breath, who’ve never even heard of the words hors d’oeuvres or fluff. Then someone from up on the yacht says, “It’s too bad those people down there are lazy, and not as smart and able as we are up here, we who have built these strong, large, stylish boats ourselves, we who float the seven seas like kings.” And then someone else on board says something like, “But your father gave you this yacht, and these are his servants who brought the hors d’oeuvres.” At which point that person gets tossed overboard by a group of hired thugs who’d been hired by the father who owned the yacht, hired for the express purpose of removing any and all agitators on the yacht to keep them from making unnecessary waves, or even referencing the father or the yacht itself. Meanwhile, the man thrown overboard begs for his life, and the people on the small inflatable rafts can’t get to him soon enough, or they don’t even try, and the yacht’s speed and weight cause an undertow. Then in whispers, while the agitator gets sucked under the yacht, private agreements are made, precautions are measured out, and everyone quietly agrees to keep on quietly agreeing to the implied rule of law and to not think about what just happened. Soon, the father, who put these things in place, is only spoken of in the form of lore, stories told to children at night, under the stars, at which point there are suddenly several fathers, noble, wise forefathers. And the boat sails on unfettered. If you were fortunate enough to be born into a family whose ancestors directly benefited from genocide and/or slavery, maybe you think the more you don’t know, the more innocent you can stay, which is a good incentive to not find out, to not look too deep, to walk carefully around the sleeping tiger. Look no further than your last name. Follow it back and you might find your line paved with gold, or beset with traps.

The quality of our thinking is largely influenced by the mental models in our heads. While we want accurate models, we also want a wide variety of models to uncover what’s really happening. The key here is variety. Most of us study something specific and don’t get exposure to the big ideas of other disciplines. We don’t develop the multidisciplinary mindset that we need to accurately see a problem. And because we don’t have the right models to understand the situation, we overuse the models we do have and use them even when they don’t belong. You’ve likely experienced this first hand. An engineer will often think in terms of systems by default. A psychologist will think in terms of incentives. A business person might think in terms of opportunity cost and risk-reward. Through their disciplines, each of these people sees part of the situation, the part of the world that makes sense to them. None of them, however, see the entire situation unless they are thinking in a multidisciplinary way. In short, they have blind spots. Big blind spots. And they’re not aware of their blind spots. [...] Relying on only a few models is like having a 400-horsepower brain that’s only generating 50 horsepower of output. To increase your mental efficiency and reach your 400-horsepower potential, you need to use a latticework of mental models. Exactly the same sort of pattern that graces backyards everywhere, a lattice is a series of points that connect to and reinforce each other. The Great Models can be understood in the same way—models influence and interact with each other to create a structure that can be used to evaluate and understand ideas. [...] Without a latticework of the Great Models our decisions become harder, slower, and less creative. But by using a mental models approach, we can complement our specializations by being curious about how the rest of the world works. A quick glance at the Nobel Prize winners list show that many of them, obviously extreme specialists in something, had multidisciplinary interests that supported their achievements. [...] The more high-quality mental models you have in your mental toolbox, the more likely you will have the ones needed to understand the problem. And understanding is everything. The better you understand, the better the potential actions you can take. The better the potential actions, the fewer problems you’ll encounter down the road. Better models make better decisions.

Neoliberal ideology has radically altered our working lives, leaving us isolated and exposed. The ‘freedom and independence’ of the gig economy it celebrates, in which regular jobs are replaced by an illusion of self-employment, often translates into no job security, no unions, no health benefits, no overtime compensation, no safety net and no sense of community. In 1987, Margaret Thatcher said the following in a magazine interview: I think we have gone through a period when too many children and people have been given to understand ‘I have a problem, it is the Government’s job to cope with it!’ or ‘I have a problem, I will go and get a grant to cope with it!’, ‘I am homeless, the Government must house me!’ And so they are casting their problems on society, and who is society? There is no such thing! There are individual men and women and there are families, and no government can do anything except through people and people look to themselves first.8 As always, Thatcher was faithfully repeating the snake-oil remedies of neoliberalism. Precious few of the ideas attributed to her were her own. They were formulated by men like Hayek and Friedman, then spun by the think tanks and academic departments of the Neoliberal International. In this short quote, we see three of the ideology’s core tenets distilled: First, everyone is responsible for their own destiny, and if you fall through the cracks, the fault is yours and yours alone. Second, the state has no responsibility for those in economic distress, even those without a home. Third, there is no legitimate form of social organization beyond the individual and the family. There is genuine belief here. There is a long philosophical tradition, dating back to Thomas Hobbes,9 which sees humankind as engaged in a war of ‘every man against every man’. Hayek believed that this frantic competition delivered social benefits, generating the wealth which would eventually enrich us all. But there is also political calculation. Together we are powerful, alone we are powerless. As individual consumers, we can do almost nothing to change social or environmental outcomes. But as citizens, combining effectively with others to form political movements, there is almost nothing we cannot do. Those who govern on behalf of the rich have an incentive to persuade us we are alone in our struggle for survival, and that any attempts to solve our problems collectively – through trade unions, protest movements or even the mutual obligations of society – are illegitimate or even immoral. The strategy of political leaders such as Thatcher

Page 141: Group Polarization Patterns Political anger and demands for privileges are, of course, not limited to the less privileged. Indeed, even when demands are made in the name of less privileged racial or ethnic groups, often it is the more privileged members of such groups who make the demands and who benefit from policies designed to meet such demands. These demands may erupt suddenly in the wake of the creation (or sharp enlargement) of a newly educated class which sees its path to coveted middle-class professions blocked by competition of other groups--as in India, French Canada, or Lithuania, for example. * * * A rapid expansion of education is thus a factor in producing inter-group conflict, especially where the education is of a kind which produces diplomas rather than skills that have significant economic value in the marketplace. Education of a sort useful only for being a clerk, bureaucrat, school teacher--jobs whose numbers are relatively fixed in the short run and politically determined in the long run--tend to increase politicized inter-group strife. Yet newly emerging groups, whether in their own countries or abroad, tend to specialize precisely in such undemanding fields. Malay students, for example, have tended to specialize in Malay studies and Islamic studies, which provide them with no skills with which compete with the Chinese in the marketplace, either as businessmen, independent professionals, or technicians. Blacks and Hispanics in the United States follow a very similar pattern of specializing disproportionately in easier fields which offer less in the way of marketable skills. Such groups then have little choice but to turn to the government, not just for jobs but also for group preferences to be imposed in the market place, and for symbolic recognition in various forms. *** While economic interests are sometimes significant in explaining political decisions, they are by no means universally valid explanations. Educated elites from less advanced groups may have ample economic incentives to promote polarization and preferential treatment policies, but the real question is why the uneducated masses from such groups give them the political support without which they would be impotent. Indeed, it is often the less educated masses who unleash the mob violence from which their elite compatriots ultimately benefit--as in Malaysia, Sri Lanka, or parts of India, Africa, or the United States, where such violence has led to group preference policies in employment, educational institutions, and elsewhere. The common denominator in these highly disparate societies seems to be not only resentment of other groups' success but also fear of an inability to compete with them, combined with a painful embarrassment at being so visibly "under-represented"--or missing entirely—in prestigious occupations and institutions. To remedy this within apolitically relevant time horizon requires not simply increased opportunities but earmarked benefits directly given on a racial or ethnic basis.

[...] Kevin had grown up playing left-handed. Seeing him take on Andrew right-handed was ballsy enough, seeing him actually score was surreal. Kevin kicked them off the court [...], but instead of following [...] he stayed behind with Andrew to keep practicing. Neil watched them over his shoulder. "I saw him first," Nicky said. "I thought you had Erik," Neil said. "I do, but Kevin's on the List," Nicky said. When Neil frowned, Nicky explained. "It's a list of celebrities we're allowed to have affairs with. Kevin is number three." Neil pretended to understand and changed the topic. "How does anyone lose against the Foxes with Andrew in your goal?" "He's good, right? [...] Coach bribed Andrew into saving our collective asses with some really nice booze." "Bribed?" Neil echoed. "Andrew's good," Nicky said again, "but it doesn't really matter to him if we win or lose. You want him to care, you gotta give him incentive." "He can't play like that and not care." "Now you sound like Kevin. You'll find out the hard way, same as Kevin did. Kevin gave Andrew a lot of grief this spring [...]. Up until then they were fighting like cats and dogs. Now look at them. They're practically trading friendship bracelets and I couldn't fit a crowbar between them if it'd save my life." "But why?" Neil asked. "Andrew hates Kevin's obsession with Exy." "The day they start making sense to you, let me know," Nicky said [...]. "I gave up trying to sort it all out weeks ago. [...] But as long as I'm doling out advice? Stop staring at Kevin so much. You're making me fear for your life over here." "What do you mean?" "Andrew is scary territorial of him. He punched me the first time I said I'd like to get Kevin too wasted to be straight." Nicky pointed at his face, presumably where Andrew had decked him. "So yeah, I'm going to crush on safer targets until Andrew gets bored of him. That means you, since Matt's taken and I don't hate myself enough to try Seth. Congrats." "Can you take the creepy down a level?" Aaron asked. "What?" Nikcy asked. "He said he doesn't swing, so obviously he needs a push." "I don't need a push," Neil said. "I'm fine on my own." "Seriously, how are you not bored of your hand by now?" "I'm done with this conversation," Neil said. "This and every future variation of it [...]." The stadium door slammed open as Andrew showed up at last. [...] "Kevin wants to know what's taking you so long. Did you get lost?" "Nicky's scheming to rape Neil," Aaron said. "There are a couple flaws in his plan he needs to work out first, but he'll get there sooner or later." [...] "Wow, Nicky," Andrew said. "You start early." "Can you really blame me?" Nicky glanced back at Neil as he said it. He only took his eyes off Andrew for a second, but that was long enough for Andrew to lunge at him. Andrew caught Nicky's jersey in one hand and threw him hard up against the wall. [...] "Hey, Nicky," Andrew said in stage-whisper German. "Don't touch him, you understand?" "You know I'd never hurt him. If he says yes-" "I said no." "Jesus, you're greedy," Nicky said. "You already have Kevin. Why does it-" He went silent, but it took Neil a moment to realize why. Andrew had a short knife pressed to Nicky's Jersey. [...] Neil was no stranger to violence. He'd heard every threat in the book, but never from a man who smiled as bright as Andrew did. Apathy, anger, madness, boredom: these motivators Neil knew and understood. But Andrew was grinning like he didn't have a knife point where it'd sleep perfectly between Nicky's ribs, and it wasn't because he was joking. Neil knew Andrew meant it. [...] "Hey, are we playing or what?" Neil asked. "Kevin's waiting." [...] Andrew let go of Nicky and spun away. [...] Nicky looked shaken as he stared after the twins, but when he realized Neil was watching him he rallied with a smile Neil didn't believe at all. "On second thought, you're not my type after all [...].

the limits amplified the corrosive effects of ambition on the legislators, who focused from day one on how best to use their limited time as a springboard to their next post. That produced incentives to go for a big, short-term splash and leave the long-term mess to the next wave of their successors.

In the social dilemma of the tragic commons, popularised by Garrett Hardin (1968),[51] a group of famers has access to a common grassed area upon which to sustain their individually owned herds of sheep. Each farmer, being rational, wishes to keep as many sheep as possible on the commons in order to make more money – the sheep being a mechanism for converting common property (grass) into individual wealth. However, if the grass is consumed faster than the rate at which it grows (because the number of sheep is unsustainable) the farmers are collectively disadvantaged. The dilemma is that a farmer who adds extra sheep to the commons receives all of the profit, while the cost of doing so is distributed to the group. Each farmer, therefore, has an individual incentive to increase their use of the land even though doing so reduces the productivity of the land, and affects them all adversely. The selfish, though rational, short-term individual preferences of the farmers undermine their longer-term individual interests. Furthermore, the agential behaviour of the farmers creates structural barriers to collective reform because once one farmer overuses the common resource without being punished the action becomes legitimised. The rational behaviour of individuals can thus create collective irrationality. Solving this collective-action problem is typically understood to require either the conversion of the common resource into privately owned property (the exploitation of which is, therefore, regulated by the private owners because they have incentives to maintain its productivity), or through the creation of a public authority that is capable of regulating the amount of the common resource available to an individual.[52] But there is also another option: that the farmers lobby wealthy landowners from the neighbouring village to give them more land and more grass and thus prevent an outbreak of violence between the famers that may affect those beyond the borders of the commons.

In short, despite the unpromising record of politics as a means of raising a group from poverty to affluence, and despite the dangers of politicizing race, there are built-in incentives for individual political leaders to do just that.

Polygamy was common [amongst the Navajo], but women had superior property rights, owning sheep and the houses. A man who deserted his family would be destitute -- a powerful incentive to stay married.

Government-subsidized private sector job creation is one way forward. Recently, the federal government sponsored a promising short-term subsidized jobs program through something called the TANF Emergency Fund. States that chose to participate were allowed to use TANF dollars to provide employers (mostly in the private sector) with incentives to hire unemployed workers, targeting those on TANF or those who were in a spell of extended unemployment. Each state was given considerable leeway to design the program however it saw fit, often in close collaboration with employers. Across the District of Columbia and the thirty-nine states that took part in the program, employers created more than 260,000 jobs with an investment of only $1.3 billion dollars. Roughly two-thirds of participating employers said they created positions that would not have existed otherwise, and the businesses that took part expressed, on the whole, eagerness to participate in such a program in the future. Further, many participants remained employed after the subsidy ended, and those who had experienced significant trouble finding work especially made gains. Researchers who studied the program noted that it garnered “strong support from employers, workers, and state and local officials from across the political spectrum.” Creating a subsidized jobs program modeled on the TANF Emergency Fund would be one way to improve the circumstances of America’s $2-a-day poor.

To fill this gap in the capital market, Davis and Rock set themselves up as a limited partnership, the same legal structure that had been used by a short-lived rival called Draper, Gaither & Anderson.[18] Rather than identifying startups and then seeking out corporate investors, they began by raising a fund that would render corporate investors unnecessary. As the two active, or “general,” partners, Davis and Rock each seeded the fund with $100,000 of their own capital. Then, ignoring the easy loans to be had from the fashionable SBIC structure, they raised just under $3.2 million from some thirty “limited” partners—rich individuals who served as passive investors.[19] The beauty of this size and structure was that the Davis & Rock partnership now had a war chest seven and a half times larger than an SBIC, and with it the ammunition to supply companies with enough capital to grow aggressively. At the same time, by keeping the number of passive investors under the legal threshold of one hundred, the partnership flew under the regulatory radar, avoiding the restrictions that ensnared the SBICs and Doriot’s ARD.[20] Sidestepping yet another weakness to be found in their competitors, Davis and Rock promised at the outset to liquidate their fund after seven years. The general partners had their own money in the fund, and thus a healthy incentive to invest with caution. At the same time, they could deploy the outside partners’ capital for a limited time only. Their caution would be balanced with deliberate aggression. Indeed, everything about the fund’s design was calculated to support an intelligent but forceful growth mentality. Unlike the SBICs, Davis & Rock raised money purely in the form of equity, not debt. The equity providers—that is, the outside limited partners—knew not to expect dividends, so Davis and Rock were free to invest in ambitious startups that used every dollar of capital to expand their business.[21] As general partners, Davis and Rock were personally incentivized to prioritize expansion: they took their compensation in the form of a 20 percent share of the fund’s capital appreciation. Meanwhile, Rock was at pains to extend this equity mentality to the employees of his portfolio companies. Having witnessed the effect of employee share ownership on the early culture of Fairchild, he believed in awarding managers, scientists, and salesmen with stock and stock options. In sum, everybody in the Davis & Rock orbit—the limited partners, the general partners, the entrepreneurs, their key employees—was compensated in the form of equity.

Here are four examples of Lead Magnets I use: A checklist that can be used to properly perform something I explained in a video. A template for determining, say, a business’s profit margin. An advanced guide that goes further into the details of a subject of one of my videos. A unique book that provides substantial value but is offered for free. For me, it is 11 Side Hustle Ideas to Make $500/Day from Your Phone. The appropriate opt-in incentive depends on your content. Here are other types of examples: A DIY carpenter could offer plans to make a corner table. A marketing YouTuber could offer scripts of what to say on sales phone calls. A landscaping expert might offer recommendations for which kinds of grass to use around the United States. YouTuber Nick True at Mapped Out Money, who makes video tutorials that teach the best practices for using the personal budgeting software YNAB, found that he gets the highest sign-up rates when he offers a checklist that relates to the video. His followers really like having a resource that they can use to put his advice into practice. Jess Dante of Love and London runs a YouTube channel helping viewers plan their trips to London by suggesting lesser-known restaurants and stores to visit. Her superstar opt-in incentive is a free London 101 Guide with everything a first-time visitor needs to know. It’s been downloaded more than 45,000 times. Where you make your call to action will also have an impact on your success building your email list. You can make your call to action in a variety of places or ways inside your videos. One of the best ways is to give a short, relevant tease of the bonus or resource you’re offering within the YouTube video and tell people where they can learn more. CHALLENGE Create a Lead Magnet. It’s time to create your first Lead Magnet using the process we’ve just outlined above. You can use your piece of content from the previous chapter as a base or start something new. Don’t spend more than two hours on the first iteration. If you want to turn it into a big thing later on, great. But start SMALL. Go to MillionDollarWeekend.com to get Lead Magnet templates! (See what I did there?)

The payments system is the heart of the financial services industry, and most people who work in banking are engaged in servicing payments. But this activity commands both low priority and low prestige within the industry. Competition between firms generally promotes innovation and change, but a bank can gain very little competitive advantage by improving its payment systems, since the customer experience is the result more of the efficiency of the system as a whole than of the efficiency of any individual bank. Incentives to speed payments are weak. Incrementally developed over several decades, the internal systems of most banks creak: it is easier, and implies less chance of short-term disruption, to add bits to what already exists than to engage in basic redesign. The interests of the leaders of the industry have been elsewhere, and banks have tended to see new technology as a means of reducing costs rather than as an opportunity to serve consumer needs more effectively. Although the USA is a global centre for financial innovation in wholesale financial markets, it is a laggard in innovation in retail banking, and while Britain scores higher, it does not score much higher. Martin Taylor, former chief executive of Barclays (who resigned in 1998, when he could not stop the rise of the trading culture at the bank), described the state of payment systems in this way: ‘the systems architecture at the typical big bank, especially if it has grown through merger and acquisition, has departed from the Palladian villa envisaged by its original designers and morphed into a gothic house of horrors, full of turrets, broken glass and uneven paving.

The situation was similar in the Soviet Union, with industry playing the role of sugar in the Caribbean. Industrial growth in the Soviet Union was further facilitated because its technology was so backward relative to what was available in Europe and the United States, so large gains could be reaped by reallocating resources to the industrial sector, even if all this was done inefficiently and by force. Before 1928 most Russians lived in the countryside. The technology used by peasants was primitive, and there were few incentives to be productive. Indeed, the last vestiges of Russian feudalism were eradicated only shortly before the First World War. There was thus huge unrealized economic potential from reallocating this labor from agriculture to industry. Stalinist industrialization was one brutal way of unlocking this potential. By fiat, Stalin moved these very poorly used resources into industry, where they could be employed more productively, even if industry itself was very inefficiently organized relative to what could have been achieved. In fact, between 1928 and 1960 national income grew at 6 percent a year, probably the most rapid spurt of economic growth in history up until then. This quick economic growth was not created by technological change, but by reallocating labor and by capital accumulation through the creation of new tools and factories. Growth was so rapid that it took in generations of Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy.

Makani (a fledgling Albatross) ...kept going....until solid ground reached an abrupt end. She splashed into the ocean and bobbed with a flotilla of hundreds of her fellow fledglings...Suddenly one of her fellow fleglings disappeared in a terrifying commotion of white water and shark teeth. Talk about incentive. Makani ran on the surface, webs slapping water, never skinking, a Jesus bird, flapping with all her might until she got liftoff...She was really and truly the pilot of her own craft. Makani followed her nose, using wind and gravity to propel her forward. She had to teach herself to forage for food, and over the weeks and months she got good at it. Wherever she went, she flew solo. For years she explored an enormous region of the North Pacific, from Japan to the Aleutian Islands to British Columbia, landing only on the surface of the sea. She forgot what land felt like. Her to-do list was deceptively short: Fly far. Find squid. Then, when she was four years old, two more items were added: Go home. Find love.

If you wanted to predict how people would behave, Munger said, you only had to look at their incentives.

Thus, contrary to the popular narrative that people are slaves to the terms on which a given employer may be willing to hire them, the employers themselves are subject to concrete economic incentives not to short change employees either on the basis of wages or working conditions. Such incentives are due to competition between employers for labor, just as there is competition between prospective employees for jobs. If

Thus microeconomics of the financial sector—bad incentives and externalities—was the root cause of the macroeconomic effects—loss of output and high unemployment.

Indeed, the very premise of extrinsic incentives is that we’ll always respond rationally to them. But even most economists don’t believe that anymore. Sometimes these motivators work. Often they don’t. And many times, they inflict collateral damage. In short, the new way economists think about what we do is hard to reconcile with Motivation 2.0.

We need to find a way to safeguard humanity whilst still offering short-term financial incentives. For sure, we need innovators in finance more than we need innovation in technology.

the Soil Carbon Challenge measures carbon levels over ten years. Someone at a university, completing a PhD or seeking publication, has incentives to do research projects of no more than a few years. In government agencies and nonprofits, soil carbon work is geared to the “so-called carbon market.” And all organizations—this is a pet peeve of his—tend toward fragmentation, so that soil conservation and climate mitigation are seen as separate, even competing, campaigns. All this means that stories that don’t fit into a short time frame, aren’t linked to profitable ventures, and/or can’t be neatly tucked into departmental divisions may not get told.

The so-called “Goulash capitalism” episode in Hungary clearly illustrated the problem. In 1994, shortly after the privatization of agriculture and food production, the country was swept by an epidemic of lead poisoning. After searching far and wide for the cause, doctors and scientists finally tracked down the source of the problem. Manufacturers of paprika—a staple of Hungarian cuisine—had been grinding up old paint, much of it lead-based, and adding it to the spice in order to improve its colour. The practice was so widespread that Hungarian officials were forced to order all the paprika in the country removed from store shelves and destroyed. At the time, no laws were in place to prevent such a catastrophe, simply because it had not occurred to anyone that this kind of thing would happen. Under communism, in which firms had no competition, no one had any incentive to poison their customers, and so consumer protection laws were unnecessary. In making the transition to the market, policy-makers assumed that producers would compete with one another to produce the best-quality paprika. They didn’t realize that producers would compete only to produce the best-looking paprika.

Often counselors find it necessary to spell out for clients methods for getting things done. They teach them first to plan their long-range goals. Then they show them how to plan the short-range goals which must be reached along the way to attaining long-range objectives. Thirdly, all of the goals are then scheduled as accurately as possible. Fourthly, the planning must be followed by doing. The scheduled goals become (1) incentives: it is easier to shoot for short-term goals; (2) milestones: goals performance may be checked.

Shortly after a visit to a Harrah’s, customers who exceeded a minimum CLTV received targeted marketing offers to incent cross-market play, and the higher the CLTV, the greater the value of the offer.

Money—personal finance, investing, and economics—is typically taught as a math-based field, where you take the data and plug it into a formula and out pops an answer. Not just an answer, but the answer. Iron laws, like in physics. The problem when thinking like this is that in theory people should do what the economic laws tell them to do, but in reality they are impatient, misinformed, bad at math, hungry, irritable, short-sighted, guided by incentives, and a slew of other unavoidable characteristics that create a mile-wide gap between theory and reality. And that’s why I’m so excited about the book you’re holding.

In short, no psychiatric diagnosis is, or can be, pathology-driven; instead, all such diagnoses are driven by nonmedical (economic, personal, legal, political, and social) factors or incentives. Accordingly, psychiatric diagnoses do not point to pathoanatomic or pathophysiological lesions and do not identify causative agents—but rather refer to human behaviors. Moreover, the psychiatric terms used to refer to such behaviors allude to the plight of the denominated patient, hint at the dilemmas with which patient and psychiatrist alike try to cope as well as exploit, and mirror the beliefs and values of the society that both inhabit.

In Vietnam, lying became so much part of the system that sometimes not lying seemed immoral...The teenage adrenaline-drained patrol leader has to call in the score so analysts, newspaper reporters, and politicians back in Washington have something to do. Never mind that Smithers and his squad may have stopped a developing attack planned to hit the company that night, saving scores of lives and maintaining control over a piece of ground. All they'll be judged on, and all their superiors have to be judged on, is the kill ratio. Smithers's best friend has just been killed. Two other friends are missing pieces of their bodies and are going into shock. No one in the squad knows if the enemy is 15 meters away waiting to open up again or running. Smithers is tired and has a lot of other things on his mind. With scorekeepers often 25 kilometers away, no one is going to check on the score. In short, Smithers has a great incentive to lie. He also has a great need to lie. His best friend is dead. "Why?" he asks himself. This is where the lying in Vietnam all began. It had to fill the long silence following Smithers's anguished "Why?" So it starts. "Nelson, how many did you get?" Smithers asks. PFC Nelson looks up from crying over the body of his friend Katz and says, "How the fuck do I know?" His friend Smithers says, "Well, did you get that bastard that came around the dogleg after Katz threw the Mike-26?" Nelson looks down at Katz's face, hardening and turning yellow like tallow. "You're goddamn right I got him," he almost whispers. It's all he can offer his dead friend. "There's no body." "They drug the fucker away. I tell you I got him!" Nelson is no longer whispering. … The patrol leader doesn't have a body, but what are the odds that he's going to call his friend a liar or, even more difficult, make Katz's death meaningless, given that the only meaning now lies in this one statistic? No one is congratulating him for exposing the enemy, keeping them screened from the main body, which is the purpose of security patrols. He calls in one confirmed kill. ... Just then PFC Schroeder comes crawling over with Kool-Aid stains all around his mouth and says, "I think I got one, right by the dogleg of the trail after Katz threw the grenade." "Yeah, we called that one in." "No, it ain't the one Nelson got. I tell you I got another one." Smithers thinks it was the same one but he's not about to have PFC Schroeder feeling bad, particularly after they've all seen their squad mate die. … the last thing on Smithers's mind is the integrity of meaningless numbers. The message gets relayed to the battalion commander. He's just taken two wounded and one dead. All he has to report is one confirmed, one probable. This won't look good. Bad ratio. He knows all sorts of bullets were flying all over the place. It was a point-to-point contact, so no ambush, so the stinkin' thinking' goes round and round, so the probable had to be a kill. But really if we got two confirmed kills, there was probably a probable. I mean, what's the definition of probable if it isn't probable to get one? What the hell, two kills, two probables. Our side is now ahead. Victory is just around the corner. … [then the artillery has to claim their own additional kills…] By the time all this shit piles up at the briefing in Saigon, we've won the war.

Step 1: Increase physical awareness. Impulses begin as physical sensations. Stop and notice what you feel and where you feel it. In your stomach? Head? Neck? Chest? Step 2: Increase emotional awareness. Try to connect the physical sensation to an emotion. Why do you feel tense? What do you feel angry about? What are you afraid of? Step 3: Increase impulse awareness. Do the feelings you just noticed make you want to take action? What do they make you want to do? Step 4: Increase consequence awareness. Ask yourself what the outcomes are likely to be, in the short run and the long run, if you take that action. Becoming conscious of the undesirable consequences of that action serves as a deterrent. Step 5: Increase solution awareness. Ask yourself what alternatives you have. Which of those is likely to produce the best outcome? Picturing the good things that will happen if you act more constructively can serve as an incentive to change.

Whenever the incentive to imitate the dominant race is removed the Negro or, for that matter, the Indian, reverts shortly to his ancestral grade of culture. In other words, it is the individual and not the race that is affected by religion, education and example. Negroes have demonstrated throughout recorded time that they are a stationary species and that they do not possess the potentiality of progress or initiative from within. Progress from self-impulse must not be confounded with mimicry or with progress imposed from without by social pressure or by the slaver’s lash. When the impulse of an inferior race to imitate or mimic the dress, manners or morals of the dominant race is destroyed by the acquisition of political or social independence, the servient race tends to revert to its original status as in Haiti.

It turns out that there was good reason to be skeptical. Thanks in large part to increased transparency, the financial services world is now unhealthily tied to an annual compensation cycle. The desire to be paid the most each and every year has created perverse incentives directly impacting almost every facet of the banking and investment world. As the focus on and opportunity for outsized compensation in the financial industry has shifted from investment banking to the investing world, the short-term compensation arms race has moved to the realms of private equity, hedge funds, and managers of public market securities. Given investment managers’ desire to boost their annual—and, in some cases, quarterly—compensation, they’re motivated to pursue strategies that maximize returns on an annual basis, rather than allowing for longer hold periods. As such, these annual compensation structures often lead to shorter-than-ideal investment horizons and lower relative returns, all at the expense of investors—and, arguably, at the expense of the long-term compensation of the investment managers themselves. This was not always the way things were done. Of course it happened, but much less when the investment strategy wasn’t so laser-focused on an annual bonus cycle.

this book claims two important points: that leaders will tend to behave in a way that is consistent with what concentrated interests desire, and one must look at behavior, rather than directly at what people say or even what they truly "believe," to achieve a nontrivial conclusion about causation in the case of any particular decision. Regardless of what leaders believe, and no matter how cynical or idealistic they are, America does not have anything that we can reasonably call a grand strategy, but leaders who are motivated by a combination of ideas and short-term political goals in a system in which their incentive structure is shaped by concentrated interests.

short seller has an economic incentive to sell as much as possible – to attempt to drive the price down – in order to increase profits. A simple concept from economics is at work here: prices fall when supply increases. It is as true for cars as it is for shares. For stocks, we call this decrease in price a “dilution of share value” because the price of the shares is falling not because the company performed badly but because there are simply more shares in circulation (an increase in supply).

The twenty-first-century shift into real-time analytics has only made the danger of metrics more intense. Avinash Kaushik, digital marketing evangelist at Google, warns that trying to get website users to see as many ads as possible naturally devolves into trying to cram sites with ads: “When you are paid on a [cost per thousand impressions] basis the incentive is to figure out how to show the most possible ads on every page [and] ensure the visitor sees the most possible pages on the site.… That incentive removes a focus from the important entity, your customer, and places it on the secondary entity, your advertiser.” The website might gain a little more money in the short term, but ad-crammed articles, slow-loading multi-page slide shows, and sensationalist clickbait headlines will drive away readers in the long run. Kaushik’s conclusion: “Friends don’t let friends measure Page Views. Ever.

Until then, the CAP had used price support mechanisms to pay farmers, thus providing a strong incentive to overproduce: hence the wine lakes and butter mountains of the 1980s.

As far as the Balkans were concerned, the result of the EU’s initial failure was a return to the drawing board and the production of a Stability Pact for South-Eastern Europe. This overarching set of policies, designed to strengthen democracy, human rights, and economic reform, was later followed by Stability and Association Agreements between the EU and each of the West Balkan states. This is backed by the EU’s Instrument for Pre-Accession Assistance, which provides the West Balkans with some €500 million per year. With the slow stabilization of the region, the EU has been able to offer membership to Croatia; full candidate status to Albania, Macedonia, Montenegro, and Serbia; and a provisional status to the others with Stability and Association Agreements, thus providing a strong incentive for local politicians to follow the example of the other Central and Eastern Europeans.

The use of a fair benchmark assumes heightened importance when incentive fee arrangements fail to incorporate investor-friendly characteristics such as clawbacks and high-water marks. A clawback forces managers to disgorge past incentive fees when subsequent performance falls short of the benchmark. (In vivid imagery, taloned investors claw back previously paid fees.) In the absence of a clawback, investors face the ugly prospect of paying fees for performance that came and went. A high-water mark requires managers to fill performance deficits produced after having received incentive fees, prior to earning more incentive fees. In the absence of a high-water mark, investors face the unattractive possibility of paying fees on past gains without getting an offset for subsequent losses. Granum Value Fund investors benefit neither from a clawback nor from a high-water mark.

Over the past thirty years the orthodox view that the maximisation of shareholder value would lead to the strongest economic performance has come to dominate business theory and practice, in the US and UK in particular.42 But for most of capitalism’s history, and in many other countries, firms have not been organised primarily as vehicles for the short-term profit maximisation of footloose shareholders and the remuneration of their senior executives. Companies in Germany, Scandinavia and Japan, for example, are structured both in company law and corporate culture as institutions accountable to a wider set of stakeholders, including their employees, with long-term production and profitability their primary mission. They are equally capitalist, but their behaviour is different. Firms with this kind of model typically invest more in innovation than their counterparts focused on short-term shareholder value maximisation; their executives are paid smaller multiples of their average employees’ salaries; they tend to retain for investment a greater share of earnings relative to the payment of dividends; and their shares are held on average for longer by their owners. And the evidence suggests that while their short-term profitability may (in some cases) be lower, over the long term they tend to generate stronger growth.43 For public policy, this makes attention to corporate ownership, governance and managerial incentive structures a crucial field for the improvement of economic performance. In short, markets are not idealised abstractions, but concrete and differentiated outcomes arising from different circumstances.

It is a way of returning your mind to the loop, allowing you to be reflective instead of reflexive, to act on intelligence instead of on impulse and consciously choose the best course of action. Step 1: Increase physical awareness. Impulses begin as physical sensations. Stop and notice what you feel and where you feel it. In your stomach? Head? Neck? Chest? Step 2: Increase emotional awareness. Try to connect the physical sensation to an emotion. Why do you feel tense? What do you feel angry about? What are you afraid of? Step 3: Increase impulse awareness. Do the feelings you just noticed make you want to take action? What do they make you want to do? Step 4: Increase consequence awareness. Ask yourself what the outcomes are likely to be, in the short run and the long run, if you take that action. Becoming conscious of the undesirable consequences of that action serves as a deterrent. Step 5: Increase solution awareness. Ask yourself what alternatives you have. Which of those is likely to produce the best outcome? Picturing the good things that will happen if you act more constructively can serve as an incentive to change. Focus on What You’re Gaining, Not What You’re Losing

The traditional defense of class stratification and the existence of a "leisure class", ever since the rise of civilization, from both Plato and Aristotle as well as from more recent social thinkers, is that a leisure class is needed in order to have the time and energy for the specialized intellectual development and technological skills that are necessary preconditions for civilization; and "leisure class" has always meant a group with a guaranteed income — i.e. those who did not have to work for a living. Implicit in this argument is the assumption (which I happen to think is correct, as I think the history and development of civilization proves) that when people are freed from the necessity to work — that is, when work is freely chosen rather than slavery or wage-slavery (i.e. "work or starve"), they do not just vegetate in a state of "passivity and dependency." Rather, they engage in much more creative work. Coercion creates an incentive for "passive aggressiveness," because when overpowered and helpless there is no other way to express the minimal degree of autonomy that people need in order to maintain any semblance of self-esteem, dignity, and pride. Furthermore, when work is a means to and end — working in order to eat — then it is, in Marx's terms, "alienated" labor. Labor can only be liberated from alienation when work is an end in itself, entered into freely as the expression of spontaneous and voluntary creativity, curiosity, playfulness, initiative, and sociability — that is, the sense of solidarity with the community, the fulfillment of one's true and "essential" human nature as "social" and "political" animals, to be fulfilled and made human by their full participation in a culture. In short, the contradiction in the old defense of class stratification is that it defends leisure for the leisure class, but not for the underclass. With reference to the underclass, leisure is said to destroy the incentive to work, leads to slothfulness and self-indulgence, and retards cognitive and moral development. When applied to the leisure class, the concept evokes an image of Plato and Aristotle, whose leisure was based on slave labor, creating the intellectual foundations of Western civilization; or patrician slave-owners like Washington and Jefferson laying the foundations of American civilization; or creative aristocrats like Count Leo Tolstoy or Bertrand Ear Russell; or, even closer to home, of our own sons and daughters (or of ourselves, when we were young adults) being freed from the stultifying tasks of earning a living until well into our adult years so that we could study in expensive universities to gain specialized knowledge and skills.

high cash compensation teaches workers to claim value from the company as it already exists instead of investing their time to create new value in the future. A cash bonus is slightly better than a cash salary—at least it’s contingent on a job well done. But even so-called incentive pay encourages short-term thinking and value grabbing. Any kind of cash is more about the present than the future.

High pressure salesmen focus on the short term incentives to outweigh the long term cons

Product immediately after exercise insurance solutions No investment insurance purchase in a very simple Prostatis action, even though he is trained only exception in the industry. There are many new threats that can lure the unwary with remote media policy is clearly insufficient for your needs. It is important to do your due diligence and scientific evidence, ask yourself just before the market does not provide a sound purchasing decisions. This short article will help you, just accept, shoulders that decisive action must begin with knowledge. Those most critical factors giving a positive self basically want to cover the first edition. That's pretty strong earnings, unemployment, and some cannot Prostatis even be informed. Talk to your employer and give generally positive, they are not. Relevance Tab justified confidence that the business aspects, really, that this, after all, attractive to employers incentives, long-term employees, and where the only specialized services for industry and again the other for employees of highest quality that are more difficult problem to treat, made only more secure, since it is to find a person. Although the direction of transmission of buying Prostatis insurance on their own, more attention is considerable, certainly in the sense that the plan to "complete" and "renewable insurance." This suggests that other, as you continue to receive payment of costs should not be fully covered by commercial insurance. Not even know that the level of demand in the economy Although in good condition I, and the company has taken the right path, and then joined a vague clause to complete the plan in principle and in its way through, you can also apply safeguards Generally they produce, the plan rescission period is 10 days during the working sets, make sure it's perfect, then throw the cards, if not immediately. The scenario is especially the Prostatis fact that it contains the option to change the terms and other demanding applications. Currently, for many years a large number of hits includes hands. As "absolutely certain legal requirements" specialized insurance services for investment in more selective inside to be taken, especially in the stop position of education on the basis of a different plan that incorporates the experience, regardless evaluation or situations require the exercise includes products and services for the same price evaluation face to face selling. Similarly, principles and manipulated so as the experience of many destructive aspect of the current market containing the entire industry. An insurance company to a higher potential, to ensure that purchasers or plans worth more to feel a little pressure, the result is inevitable that insurance is available against people who have contact to practice for a few days . Basically it is to maintain the power to print money to unrealistic levels.

The difficulties of bringing to an end even a short essay lie not in the fact that we feel the end of the piece demands a fire which the actual content up to that point has not been able to produce out of itself, they arise rather from the fact that even the shortest essay demands of the author a degree of self-satisfaction and of being lost in himself out of which it is difficult to step into the everyday air without great determination and an external incentive, so that, before the essay is rounded to a close and one might quietly slip away, one bolts, driven by unrest, and then the end must be completed from the outside with hands which must not only do the work but hold on as well.

The wound that was made when white people came and took all that they took has never healed. An unattended wound gets infected. Becomes a new kind of wound like the history of what actually happened became a new kind of history. All these stories that we haven't been telling all this time, that we haven't been listening to, are just part of what we need to heal. Not that we're broken. And don't make the mistake of calling us resilient. To not have been destroyed, to not have given up, to have survived is not a badge of honor. Would you call an attempted murder victim resilient? When we go to tell our stories, people think we want it to have gone differently. People want to say things like "sore losers" and "move on already, quit playing the blame game." But is it a game? Only those who have lost as much as we have see the particularly nasty slice of smile on someone who thinks they're winning when they say "Get over it." This is the thing: If you have the option to not think about or even consider history, whether you learned it right or not, or whether it even deserves consideration, that’s how you know you’re on board the ship that serves hors d’oeuvres and fluffs your pillows, while others are out at sea, swimming or drowning, or clinging to little inflatable rafts that they have to take turns keeping inflated, people short of breath, who’ve never even heard of the words hors d’oeuvres or fluff. Then someone from up on the yacht says, “It’s too bad those people down there are lazy, and not as smart and able as we are up here, we who have built these strong, large, stylish boats ourselves, we who float the seven seas like kings.” And then someone else on board says something like, “But your father gave you this yacht, and these are his servants who brought the hors d’oeuvres.” At which point that person gets tossed overboard by a group of hired thugs who’d been hired by the father who owned the yacht, hired for the express purpose of removing any and all agitators on the yacht to keep them from making unnecessary waves, or even referencing the father or the yacht itself. Meanwhile, the man thrown overboard begs for his life, and the people on the small inflatable rafts can’t get to him soon enough, or they don’t even try, and the yacht’s speed and weight cause an undertow. Then in whispers, while the agitator gets sucked under the yacht, private agreements are made, precautions are measured out, and everyone quietly agrees to keep on quietly agreeing to the implied rule of law and to not think about what just happened. Soon, the father, who put these things in place, is only spoken of in the form of lore, stories told to children at night, under the stars, at which point there are suddenly several fathers, noble, wise forefathers. And the boat sails on unfettered. If you were fortunate enough to be born into a family whose ancestors directly benefited from genocide and/or slavery, maybe you think the more you don’t know, the more innocent you can stay, which is a good incentive to not find out, to not look too deep, to walk carefully around the sleeping tiger. Look no further than your last name. Follow it back and you might find your line paved with gold, or beset with traps.

In a regular strike, workers lose their wages and an employer loses its profits. So during a virtual strike, the workers would work for nothing and the employer would give up all of its profits. Profits might be too hard to measure and short-term profits might also understate the true cost to the firm. Instead, we have the firm give up all of its revenue. As to where the money would go, the revenue could go to Uncle Sam or a charity. Or, the product could be free so that the revenues would be given to customers. During a virtual strike, there is no disruption to the rest of economy. The consumer is not left stranded without service. Management and labor feel the pain and thus have an incentive to settle, but the government, charities, or customers get a windfall.

Promote Ownership Q: Do you offer any compensation to your team in the form of company “ownership”—including a share of profits or growth? Q: Do you regularly communicate to your team your short-term goals and your long-term goals for the business? Q: Is there an incentive (or a barrier) for employees to improve or fix areas of the business outside of their own department or responsibilities?

The ability to make rational decisions is limited, or bounded, by the extent of people’s information. To broaden employees’ understanding, a firm should promote a tradition of teamwork and interdependence and develop future leaders by rotating them among work assignments in different departments and geographic locations. In order to reduce structural secrecy, there may be short-term opportunity costs, but the long-term benefits are significant.12 Firms must think about long-term greed and what it means. Through actions and training, leaders must explain the pressures on short-term thinking and how the firm resolves the conflicts of short- and long-term goals. Potentially conflicting or confusing organizational goals, such as putting clients first while also having a duty to shareholders, require strong signals from leadership as to what is acceptable and unacceptable behavior. These nuances cannot be left to statements of principles; they must be modeled by leaders’ actions each day. Leaders must understand that external influences can shape the culture. For example, there are competitive, technological, and regulatory pressures. Responses to them can have unintended consequences, including drifting from principles. This can increase the probability of an organizational failure. An organization needs to understand to what extent models impact behavior, decisions made by business leaders, and organizational culture. For example, boards of directors of public companies should ask questions if earnings per share (EPS) estimates are too consistent with analysts’ estimates. They should ask whether the firm is managing to models or to what is in the best long-term interests of the firm. Leaders get too much credit and too much blame. Leaders need to uphold the firm’s shared values—and that is a key component to leadership.13 But too little emphasis is given to the organizational elements that shape behavior or provide an environment for leadership or change. An organization’s structure, incentives, and values last longer and have more impact than those of individual leaders. Usually when there is a change or loss or failure there is a tendency to blame one thing or one person, when typically there are complex organizational cultural reasons. It is the duty of leaders and board members to examine what is responsible, not who is responsible.

The potential problem with options is that executives can do things to goose the firm’s stock in the short run that are bad or disastrous for the company in the long run—after the CEO has sold tens of thousands of options for an astronomical profit. Michael Jensen, a Harvard Business School professor who has spent his career on issues related to management incentives, is even harsher than Paul Volcker. He describes options as “managerial heroin,” because they create an incentive for managers to seek short-term highs while doing enormous long-term damage.12 Studies have found that companies with large options grants are more likely to engage in accounting fraud and more likely to default on their debt.