Ten Lessons For My Kids

I like to think that I’ve learned the lessons that I’ll share but past history indicates that I’m currently fooling myself in new, and undiscovered, ways.

In my 20s, I was hardwired to favor risk and had large financial incentives to overlook lousy decisions by my peers. I had a rough set of values based on my experience, church, parents, peer group and friends.

Historically, I over-react with regard to my Big Four:

  • Drunk Driving
  • Infidelity
  • Recreational Drug Use
  • Fraud

Of these behaviors, fraud is the toughest to spot. If you think that you haven’t been touched by fraud then you’re not paying attention. Fraud varies by scale and demographic:

  • Athletic Fraud – doping, course cutting, drafting
  • Financial Fraud – falsifying accounts, lying to a client, creating assets
  • Business Fraud – bait & switch, substandard products
  • Tax Fraud – tax evasion, undisclosed accounts, subsidiary in tax-free jurisdiction
  • Insurance Fraud – misrepresenting loss, lying to support a claim

Because fraud is tough to spot, I pay attention to the rest of my list.

As you get to know people, drunk driving and recreational drug use are usually the first to surface. Most of us tolerate ‘a little’ drugs and drunk driving in our societies. Thing is, my brian is crappy at calculating when ‘a little’ becomes ‘too much.’

I make better decisions when I give myself binary choices and create large negative consequences from bad behavior. For example, my wife can easily access my email, my financial information and my net worth.

Have a look at the table below. It’s best viewed on a desktop and explains why it’s futile to expect clean sport at the elite level. If you disagree then I bet your happiness, or paycheck, depends on seeing a different reality. That’s ok. My happiness isn’t contingent on changing your opinion.

Source Link.

USPS Cycling Salaries

The table provides insight into the salary range of an organization that places a high premium on winning and supporting winners.

The leader makes over 100x the lowest paid employee. The larger the compensation ratio, the greater the rewards for individual risk taking.

Pay (and taxation) scales are neither right not wrong. They are a cultural expression of values and create incentives that influence behavior.

The compensation ratio of the 2002-2004 US Postal Cycling team (226x, 160x, 180x) is similar to my experience working in Private Equity. When I started my career in finance, my initial salary was similar to the bottom end of the USPS pay scale, and was a good deal for me at the time.

Young men don’t need encouragement to make decisions that work against our collective interest. Fortunately, a group of juiced cyclists isn’t going to bring down Western Civilization. However, unregulated leverage nearly destroyed world-wide financial prosperity in 2008.

Rather than working to change the system, it’s more effective to focus on reducing the damage that the system can do to society. War, leverage, tax policy, products that kill us – these issues can bite your family in the butt.

The Kiwi approach to drunk driving is a useful example of successfully changing behavior:

  • Severe negative consequences
  • Large hassle factor of getting caught
  • Targeted advertising to make the risk behavior uncool within the peer group – if you don’t drive drunk you’re a legend
  • Targeted education to scare the crap out of young drivers – the police drop the deceased’s car off at the entrance to the high school

Basically, remove the incentives and crank up the penalties.

As a social policy issue – safe driving is a good one. It is tough to argue in favor of a ‘right’ to drive drunk.

Things get tougher as the issues come closer to home:

  • the ethics of my favorite sports team
  • earning money by selling cigarettes, alcohol or gambling
  • polluting a river
  • over treatment of patients
  • selling products that benefit my firm more than my clients
  • changing to energy efficient lightbulbs
  • and on and on and on

Too difficult!

The easy way is a belief that we all have a ‘right’ to not change.

I don’t know the right answer to each question. However, I have learned to be wary of people that pursue low incentive, high penalty, risk seeking behaviors – seat belts, speeding, helmets… the odds are overwhelming that risk-seeking behavior pattens carry across lives.

Because the financial upside from driving drunk is the cost of a taxi ride, society had a pretty good shot at convincing young people to modify their behavior.

With financial markets and elite sport, we’re fooling ourselves if we think we will ever win the “battle” while penalties are low; incentives are high; and glory is skewed towards the victors.

We don’t need to change. Keep enjoying sport. Enjoy it for what it is and be grateful that you don’t have to lie to yourself to pay the bills.

Pay attention when you are tempted to cover the lies of your peers and teach your kids that telling small lies can result in living a big lie.

Most the crooks I know started small, were mostly justified in their early behavior and don’t think they’re cheating.


What To Do?!

It is tempting to throw my arms up at the futility of it all. However, quitting ignores the influence that I have over my young children.

As parents, our most valuable currency is love and respect. If our highest values are vanity/victory (athletics) or money/sex (finance) then our children will naturally, and unconsciously, gravitate towards pleasing us via those methods.

If we have different ideals (kindness, good humor, empathy) then our kids will gravitate towards them. Sticking my kids in a Buddhist preschool was one of my better decisions. It’s a mystery how that community had had such a big effect on me, but their values are becoming mine by osmosis.

To break the chain, I need to own the negative aspects of my value system. It’s near impossible to balance my genetic programming to favor height, beauty, wealth and power. I try to counter my idiosyncrasies by sharing them.

To help my kids and myself, I skew behavior via simple mantras.

  • We’ve already won
  • We have more than we need
  • It’s ok to say no
  • Train every day – no zeros
  • One small step, daily
  • Focus on love
  • It’s better to tell the truth
  • Jimi (Hendrix) died from too much liquor
  • Cocaine stops your heart
  • Herpes is red sores on your penis

Sorry about the herpes reference but multi-sensory sexual imagery sticks in the human mind. If we want to change behavior then best to use vivid imagery of the negative consequences.

Break the chain.

Pay your family with love and respect.