₦airaland Forum

Even though the deeds [of one paying such reverence] may not have been very elegant while in the human world, at his death there will come at least one kind of sign, such a rainbow-radiance, boneimages, and bone-reliques. This is because the esoteric [or mystic] doctrines possess great gift-waves

The least of the least of mantrayānic [devotees] -- who may seem to be of very unrefined manners, unindustrious, untactful, and who may not live in accordance with his vows, and who in every way may be inelegant in his habits, and even unable, perhaps, to carry the practices of his teachings to a successful issue -- let no one feel disrespect for nor doubt him, but pay reverence to the esoteric [or mystic] doctrines [which he holdeth]. By that, alone, one obtaineth liberation at this stage.

By having meditated on the description of these blood-drinking deities, while in the human world, and by having performed some worship or praise of them; or, at least, by having seen their painted likenesses and their images, upon witnessing the dawning of the deities at this stage, recognition of them will result, and liberation. In this lieth the art.

O nobly-born, the Four Yoginis of the Door, issuing from within the brain, will come to shine upon thee: from the east, the Black Cuckoo-Headed Mystic Goddess, holding an iron hook in the hand; from the south, the Yellow Goat-Headed Mystic Goddess, holding a noose in the hand; from the west, the Red Lion-Headed Mystic Goddess, holding an iron chain in the hand; and from the north, the Greenish-Black Serpent-Headed Mystic Goddess: [these], the Four Door-Keeping Yoginis, issuing from within the brain, will come to shine upon thee. Since these Twenty-eight Mighty Goddesses emanate from the bodily powers of Ratna-Sambhava, [He] of the Six Heruka Deities, recognize them. O nobly-born, the Peaceful Deities emanate from the Voidness of the Dharma-Kāya; recognize them. From the Radiance of the Dharma-Kāya emanate the Wrathful Deities; recognize them. At this time when the Fifty-eight Blood-Drinking Deities emanating from thine own brain come to shine upon thee, if thou knowest them to be the radiances of thine own intellect, thou wilt merge, in the state of at-one-ment, into the body of the Blood-Drinking Ones there and then, and obtain Buddhahood. O nobly-born, by not recognizing now, and by fleeing from the deities out of fear, again sufferings will come to overpower thee. If this be not known, fear being begotten of the Blood-Drinking Deities, [one is] awed and terrified and fainteth away: one's own thought-forms turn into illusory appearances, and one wandereth into the Sangsāra; if one be not awed and terrified, one will not wander into the Sangsāra. Furthermore, the bodies of the largest of the Peaceful and Wrathful Deities are equal [in vastness] to the limits of the heaves; the intermediate, as big as Mt. Meru; the smallest, equal to eighteen bodies such as thine own body, set one upon another. Be not terrified at that; be not awed. If all existing phenomena shining forth as divine shapes and radiances be recognized to be the emanations of one's own intellect, Buddhahood will be obtained at that very instant of recognition. The saying, 'Buddhahood will be obtained in a moment [of time]' is that which applieth now. Bearing this in mind, one will obtain Buddhahood by merging, in at-one-ment, into the Radiances and the Kāyas. O nobly-born, whatever fearful and terrifying visions thou mayst see, recognize them to be thine own thought-forms. O nobly-born, if thou recognize not, and be frightened, then all the Peaceful Deities will shine forth in the shape of Mahā-Kāla; and all the Wrathful Deities will shine [forth] in the form of Dharma-Rāja, the Lord of Death; and thine own thought-forms becoming Illusions [or Māras], thou wilt wander into the Sangsāra. O nobly-born, if one recognize not one's own thought-forms, however learned one may be in the Scriptures -- both Sutras and Tantras -- although practicing religion for a kalpa, one obtaineth not Buddhahood. If one recognize one's own thought-forms, by one important art and by one word, Buddhahood is obtained. If one's thought-forms be not recognized as soon as one dieth, the shapes of Dharma-Rāja, the Lord of Death, will shine forth on the Chönyid-Bardo. The largest of the bodies of Dharma-Rāja, the Lord of Death, equaling the heavens [in vastness]; the intermediate, Mt. Meru; the smallest, eighteen times

[The Thirteenth Day] If this setting-face-to-face be not obtained, good persons on the Path, too, fall back from here and wander into the Sangsāra. Then the Eight Wrathful Ones, the Kerimas, and the Htamenmas, having various [animal] heads, issue from within one's own brain and come to shine upon one's self. Thereupon the setting-face-to-face is, calling the deceased by name, thus: O nobly-born, listen undistractedly. On the Thirteenth Day, from the eastern quarter of thy brain, the Eight Kerimas will emanate and come to shine upon thee. Fear that not. From the east of thy brain, the White Kerima, holding a human corpse, as a club, in the right [hand]; in the left, holding a skull-bowl filled with blood, will come to shine upon thee. Fear not. From the south, the Yellow Tseurima, holding a bow and arrow, ready to shoot; from the west, the Red Pramoha, holding a makara-banner; from the north, the Black Petali, holding a dorje and a blood-filled skull-bowl; from the south-east, the Red Pukkase, holding intestines in the right [hand] and [with] the left putting them to her mouth; from the south-west, the Dark-Green Ghasmarī, the left [hand] holding a blood-filled skull-bowl, [with] the right stirring it with a dorje, and [she then] drinking it with majestic relish; from the north-west, the Yellowish-White Tsandhal?, tearing asunder a head from a corpse, the right [hand] holding a heart, the left putting the corpse to the mouth and [she then] eating [thereof]; from the north-east, the Dark-Blue Smasha, tearing asunder a head from a corpse and eating [thereof]: these, the Eight Kerimas of the Abodes [or Eight Directions], also come to shine upon thee, surrounding the Five Blood-drinking Fathers. Yet be not afraid. O nobly-born, from the Circle outside of them, the Eight Htamenmas of the [eight] regions [of the brain] will come to shine upon thee: from the east, the Dark-Brown Lion-Headed One, the hands crossed on the breast, and in the mouth holding a corpse, and shaking the mane; from the south, the Red Tiger-Headed One, the hands crossed downwards, grinning and showing the fangs and looking on with protruding eyes; from the west, the Black Fox-Headed One, the right [hand] holding a shavingknife, the left holding an intestine, and [she] eating and licking the blood [therefrom]; from the north, the Dark-Blue Wolf-Headed One, the two hands tearing open a corpse and looking on with protruding eyes; from the south-east, the Yellowish-White Vulture-Headed One, bearing a gigantic [humanshaped] corpse on the shoulder and holding a skeleton in the hand; from the south-west, the Dark-Red Cemetery-Bird-Headed One, carrying a gigantic corpse on the shoulder; from the north-west, the Black Crow-Headed One, the left [hand] holding a skull-bowl, the right holding a sword, and [she] eating heart and lungs; from the north-east, the Dark-Blue Owl-Headed One, holding a dorje in the right [hand], and holding a skull-bowl in the left, and eating. These Eight Htamenmas of the [eight] regions, likewise surrounding the Blood-Drinking Fathers, and issuing from within thy brain, come to shine upon thee. Fear that not. Know them to be the thoughtforms of thine own intellectual faculties.

[The Twelfth Day] Despite such setting-face-to-face, being still led backwards by evil propensities, terror and awe arising, it may be that one recognize not and flee. Thereupon, on the Twelfth Day, the blood-drinking deities of the Karmic Order, accompanies by the Kerima, Htamenma, and Wang-chugma, will come to receive one. Not recognizing, terror may be produced. Whereupon, the setting-face-to-face is, calling the deceased by name, thus: O nobly-born, on the Twelfth Day, the blood-drinking deity of the Karmic Order, named KarmaHerua, dark green of colour; [having] three faces, six hands, [and] four feet firmly postured; the right [face] white, the left, red, the middle, dark green; majestic [of appearance]; in the first of the right of six hands, holding a sword, in the middle [one], a trident-staff, in the last, a club; in the first of the left [hands], a bell, in the middle [one], a skull-bowl, in the last, a plough-share; his body embraced by the Mother Karma-Krotishaurima, her right [hand] clinging to his neck, the left offering to his mouth a red shell; the Father and Mother in union, issuing from the northern quarter of thy brain, will come to shine upon thee. Fear that not. Be not terrified. Be not awed. Recognize them to be the embodiment of thine own intellect. [They] being thine own tutelary deity, be not afraid. In reality they are the Father-Mother Bhagavān Amogha-Siddhi. Believe; and be humble; and be fond [of them]. Concomitantly with recognition, liberation will come. Through such acknowledging, recognizing them to be tutelary deities, in at-one-ment thou wilt merge [into them], and obtain Buddhahood. Through the guru's select teaching, one cometh to recognize them to be the thought-forms issuing from one's own intellectual faculties. For instance, a person, upon recognizing a lion-skin [to be a lion-skin], is freed [from fear]; for though it be only a stuffed lion skin, if one do not know it to be so actually, fear ariseth, but, upon being told by some person that it is a lion-skin only, one is freed from fear. Similarly here, too, when the bands of blood-drinking deities, huge of proportions, with very thick-set limbs, dawn as big as the skies, awes and terror are naturally produced in one. [But] as soon as the setting-face-to-face is heard [one] recognizeth them to be one's own tutelary deities and one's own thought- forms. Then, when upon the Mother Clear-Light -- which one had been accustomed to formerly -- a secondary ClearLight, the Offspring Clear-Light, coming together like two intimate acquaintances, blend inseparably, and [therefrom] a self-emancipating radiance dawneth upon one, through self-enlightenment and selfknowledge one is liberated

[The Eleventh Day] Yet, though set face-to-face thus, if, through power of evil propensities, terror and awe being produced, not recognizing them to be tutelary deities, one flee from them, then, on the Eleventh Day, the blooddrinking Lotus Order will come to receive one. Thereupon the setting-face-to-face is, calling the deceased by name, thus: O nobly-born, on the Eleventh Day, the blood-drinking [deity] of the Lotus Order, called the Bhagavān Padma-Heruka, of reddish-black colour; [having] three faces, six hands, and four feet firmly postured, the right[face] white, the left, blue, the central, darkish red; in the first of the right of the six hands holding a lotus, in the middle [one], a trident-staff, in the last, a club; in the first of the left [hands], a bell, in the middle [one], a skull-bowl filled with blood, in the last, a small drum; his body embraced by the Mother Padma-Krotishaurima, her right hand clinging to his neck, her left offering to his mouth a red shell [filled with blood]; the Father and Mother in union; will issue from the western quarter of thy brain and come to shine upon thee. Fear that not. Be not terrified. Be not awed. Rejoice. Recognize [them] to be the product of thine own intellect; as [they are] thine own tutelary deity, be not afraid. In reality they are the Father -Mother Bhagavān Amitābha. Believe in them. Concomitantly with recognition, liberation will come. Through such acknowledging, recognizing them to be tutelary deities, in at-one-ment thou wilt merge [into them], and obtain Buddhahood.

[The Ninth Day] But if one flee from them, through awe and terror being begotten, then, on the Ninth Day, the blooddrinking [deities] of the Vajra Order will come to receive one. Thereupon, the setting-face-to-face is, calling the deceased by name, thus: O nobly-born, listen undistractedly. [He of the blood-drinking Vajra Order named the Bhagavān Vajra-Heruka, dark-blue in colour; with three faces, six hands, and four feet firmly postured; in the first right hand [holding] a dorje, in the middle [one], a skull-bowl, in the last [one], a battle axe; in the first of the left, a bell, in the middle [one] a skull-bowl, in the last [one], a ploughshare: his body embraced by the Mother Vajra-Krotishaurima, her right [hand] clinging to his neck, her left offering to his mouth a red shell [filled with blood], will issue from the eastern quarter of thy brain and come to shine upon thee. Fear it not. Be not terrified. Be not awed. Know it to be the embodiment of thine own intellect. As it is thine own tutelary deity, be not terrified. In reality [they are] the Bhagavān Vajra-Sattva, the Father and Mother. Believe in them. Recognizing them, liberation will be obtained at once. By so proclaiming [them], knowing them to be tutelary deities, merging [in them] in at-one-ment, Buddhahood will be obtained. [The Tenth Day] Yet, if one do not recognize them, the obscurations of evil deeds being too great, and flee from them through terror and awe, then, on the Tenth Day, the blood-drinking [deities] of the [Precious]-Gem Order will come to receive one. Thereupon the setting-face-to-face is, calling the deceased by name, thus: O nobly- born, listen. On the Tenth Day, the blood-drinking [deity] of the [Precious]-Gem Order named Ratna-Heruka, yellow of colour; [having] three faces, six hands, four feet firmly postured; the right [face] white, the left, red, the central darkish yellow; enhaloed in flames; in the first of the six hands holding a gem, in the middle [one], a trident-staff, in the last [one], a baton; in the first of the left [hands], a bell, in the middle [one], a skull-bowl, in the last [one], a trident-staff; his body embraced by the Mother Ratna-Krotishaurima, her right [hand] clinging to his neck, her left offering to his mouth a red shell [filled with blood], will issue from the southern quarter of thy brain and come to shine upon thee. Fear not. Be not terrified. Be not awed. Know them to be the embodiment of thine own intellect. [They] being thine own tutelary deity, be not terrified. In reality [they are] the Father-Mother Bhagavān Ratna-Sambhava. Believe in them. Recognition [of them] and the obtaining of liberation will be simultaneous.

Again, calling the deceased by name, [address him] thus: O nobly-born, listen undistractedly. Not having been able to recognize when the Peaceful [Deities] shone upon thee in the Bardo above, thou hast come wandering thus far. Now, on the Eighth Day, the blood-drinking Wrathful Deities will come to shine. Act so as to recognize them without being distracted. O nobly-born, the Great Glorious Buddha-Heruka, dark-brown of colour; with three heads, six hands, and four feet firmly postured; the right [face] being white, the left, red, the central, dark-brown; the body emitting flames of radiance; the nine eyes widely opened, in terrifying gaze; the eyebrows quivering like lightening; the protruding teeth glistening and set over one another; giving vent to sonorous utterances of 'a-la-la' and 'ha-ha', and piercing whistling sounds; the hair of a reddish-yellow colour, standing on end, and emitting radiance; the heads adorned with dried [human] skulls, and the [symbols of the] sun and moon; black serpents and raw [human] heads forming a garland for the body; the first of the right hands holding a wheel, the middle one, a sword, the last one, a battle-axe; the first of the left hands, a bell, the middle one, a skull-bowl, the last one, a ploughshare; his body embraced by the Mother, Buddha-Krotishaurima, her right hand clinging to his neck and her left putting to his mouth a red shell [filled with blood], [making] a palatal sound like a crackling [and] a clashing sound, and a rumbling sound as loud as thunder; [emanating from the two deities] radiant flames of wisdom, blazing from every hair-pore [of the body] and each containing a flaming dorje; [the two deities together thus], standing with [one] leg bent and [the other] straight and tense, on a dais supported by horned eagles, will come froth from within thine own brain and shine vividly upon thee. Fear that not. Be not awed. Know it to be the embodiment of thine own intellect. As it is thine own tutelary deity, be not terrified. Be not afraid, for in reality is it the Bhagavān Vairochana, the Father-Mother. Simultaneously with the recognition, liberation will be obtained: if they be recognized, merging [thyself], in at-one-ment, into the tutelary deity, Buddhahood in the Sambhoga-Kāya will be won.

Zara da

The secret of the yansh is in the yansh.

Examples of adaptations are diverse and unique,from heat-resistant archaea that live in boiling hot springs to the tongue length of a nectar-feeding moth that matches the size of the flower from which it feeds.All adaptations enhance the reproductive potential of the individual exhibiting them,including their ability to survive to reproduce.Adaptations are not constant.As an environment changes,natural selection causes the characteristics of the individuals in a population to track those changes.

If farming were to be organised like the stock market, a farmer would sell his farm in the morning when it was raining, only to buy it back in the afternoon when the sun came out.

The master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher - in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light ofthe past for the purposes of the future

Om vajra kili kilaya sarva vignam vam hum pey

The second problem with synthesis

The second interesting problem with synthesis involves two of the most famous examples in the economics. Number one is Ricardo’s principle of comparative advantage in trade, and the other is Adam Smith’s pin factory. And both of these, of course, work to vastly increase economic output per person, and they’re similar in that each somehow directs functions into the hands of people who are very good at doing the functions. Yet they’re radically different examples in that one of them is the ultimate example of central planning, the pin factory, where the whole system was planned by somebody, while the other example, Ricardo’s, happens automatically as a natural consequence of trade.

And, of course, once you get into the joys of synthesis, you immediately think. “Do these things interact?” Of course they interact. Beautifully. And that’s one of the causes of the power of a modern economic system. I saw an example of that kind of interaction years ago. Berkshire had this former savings and loan company, and it had made this loan on a hotel right opposite the Hollywood Park Racetrack. In due time the neighborhood changed and it was full of gangs, pimps, and dope dealers. They tore copper pipe out of the wall for dope fixes, and there were people hanging around the hotel with guns, and nobody would come. We foreclosed on it two or three times, and the loan value went down to nothing. We seemed to have an insolvable economic problem — a microeconomic problem.

Now we could have gone to McKinsey, or maybe a bunch of professors from Harvard, and we would have gotten a report about 10 inches thick about the ways we could approach this failing hotel in this terrible neighborhood. But instead, we put a sign on the property that said: “For sale or rent.” And in came, in response to that sign, a man who said, “I’ll spend $200,000 fixing up your hotel, and buy it at a high price on credit, if you can get zoning so I can turn the parking lot into a putting green.” “You’ve got to have a parking lot in a hotel,” we said. “What do you have in mind?” He said. “No, my business is flying seniors in from Florida, putting them near the airport, and then letting them go out to Disneyland and various places by bus and coming back. And I don’t care how bad the neighborhood is going to be because my people are selfcontained behind walls. All they have to do is get on the bus in the morning and come home in the evening, and they don’t need a parking lot; they need a putting green.” So we made the deal with the guy. The whole thing worked beautifully, and the loan got paid off, and it all worked out.

Obviously that’s an interaction of Ricardo and the pin factory examples. The odd system that this guy had designed to amuse seniors was pure pin factory, and finding the guy with this system was pure Ricardo. So these things are interacting.

Well, I’ve taken you part way through the synthesis. It gets harder when you want to figure out how much activity should be within private firms, and how much should be within the government, and what are the factors that determine which functions are where, and why do the failures occur, and so on and so on.

It’s my opinion that anybody with a high IQ who graduated in economics ought to be able to sit down and write a ten-page synthesis of all these ideas that’s quite persuasive. And I would bet a lot of money that I could give this test in practically every economics department in the country, and get a perfectly lousy bunch of synthesis. They’d give me Ronald Coase. They’d talk about transaction costs. They’d click off a little something that their professors gave them and spit it back. But in terms of really understanding how it all fits together, I would confidently predict that most people couldn’t do it very well.

By the way, if any of you want to try and do this, go ahead. I think you’ll find it hard. In this connection, one of the interesting things that I want to mention is that Max Planck, the great Nobel laureate who found Planck’s Constant, tried once to do economics. He gave it up. Now why did Max Planck, one of the smartest people who ever lived, give up economics? The answer is, he said, “It’s too hard. The best solution you can get is messy and uncertain.” It didn’t satisfy Planck’s craving for order, and so he gave it up. And if Max Planck early on realized he was never going to get perfect order, I will confidently predict that all of the rest of you are going to have exactly the same result.

By the way there’s a famous story about Max Planck which is apocryphal: After he won his prize, he was invited to lecture everywhere, and he had this chauffeur that drove him around to give public lectures all through Germany. And the chauffeur memorized the lecture, and so one day he said, “Gee Professor Planck, why don’t you let me try it as we switch places?” And so he got up and gave the lecture. At the end of it some physicist stood up and posed a question of extreme difficulty. But the chauffeur was up to it. “Well,” he said, “I’m surprised that a citizen of an advanced city like Munich is asking so elementary a question, so I’m going to ask my chauffeur to respond.” (Laughter)

My fifth criticism is there is too little synthesis in economics. Not only with matters outside traditional economics, but also within economics. I have posed at two different business schools the following problem. I say, “You have studied supply and demand curves. You have learned that when you raise the price, ordinarily the volume you can sell goes down, and when you reduce the price, the volume you can sell goes up. Is that right? That’s what you’ve learned?” They all nod yes. And I say, “Now tell me several instances when, if you want the physical volume to go up, the correct answer is to increase the price?” And there’s this long and ghastly pause. And finally, in each of the two business schools in which I’ve tried this, maybe one person in fifty could name one instance. They come up with the idea that occasionally a higher price acts as a rough indicator of quality and thereby increases sales volumes.

This happened in the case of my friend Bill Ballhaus. When he was head of Beckman Instruments it produced some complicated product where if it failed it caused enormous damage to the purchaser. It wasn’t a pump at the bottom of an oil well, but that’s a good mental example. And he realized that the reason this thing was selling so poorly, even though it was better than anybody else’s product, was because it was priced lower. It made people think it was a low quality gizmo. So he raised the price by 20% or so and the volume went way up. But only one in fifty can come up with this sole instance in a modern business school – one of the business schools being Stanford, which is hard to get into. And nobody has yet come up with the main answer that I like. Suppose you raise that price, and use the extra money to bribe the other guy’s purchasing agent? (Laughter). Is that going to work? And are there functional equivalents in economics – microeconomics – of raising the price and using the extra sales proceeds to drive sales higher? And of course there are a zillion, once you’ve made that mental jump. It’s so simple.

One of the most extreme examples is in the investment management field. Suppose you’re the manager of a mutual fund, and you want to sell more. People commonly come to the following answer: You raise the commissions, which of course reduces the number of units of real investments delivered to the ultimate buyer, so you’re increasing the price per unit of real investment that you’re selling the ultimate customer. And you’re using that extra commission to bribe the customer’s purchasing agent. You’re bribing the broker to betray his client and put the client’s money into the high-commission product. This has worked to produce at least a trillion dollars of mutual fund sales.

This tactic is not an attractive part of human nature, and I want to tell you that I pretty completely avoided it in my life. I don’t think it’s necessary to spend your life selling what you would never buy. Even though it’s legal, I don’t think it’s a good idea. But you shouldn’t accept all my notions because you’ll risk becoming unemployable. You shouldn’t take my notions unless you’re willing to risk being unemployable by all but a few.

I think my experience with my simple question is an example of how little synthesis people get, even in advanced academic settings, considering economic questions. Obvious questions, with such obvious answers. Yet people take four courses in economics, go to business school, have all these IQ points and write all these essays, but they can’t synthesize worth a damn. This failure is not because the professors know all this stuff and they’re deliberately withholding it from the students. This failure happens because the professors aren’t all that good at this kind of synthesis. They were trained in a different way. I can’t remember if it was Keynes or Galbraith who said that economics professors are most economical with ideas. They make a few they learned in graduate school last a lifetime. (Laughter).

My fourth criticism is that there’s too much emphasis on macroeconomics and not enough on microeconomics. I think this is wrong. It’s like trying to master medicine without knowing anatomy and chemistry. Also, the discipline of microeconomics is a lot of fun. It helps you correctly understand macroeconomics. And it’s a perfect circus to do. In contrast, I don’t think macroeconomics people have all that much fun. For one thing, they are often wrong because of extreme complexity in the system they wish to understand.

Case study: Nebraska Furniture Mart’s new store in Kansas City

Let me demonstrate the power of microeconomics by solving two microeconomic problems. One simple and one a little harder. The first problem is this: Berkshire Hathaway just opened a furniture and appliance store in Kansas City. At the time Berkshire opened it, the largest selling furniture and appliance store in the world was another Berkshire Hathaway store, selling $350 million worth of goods per year. The new store in a strange city opened up selling at the rate of more than $500 million a year. From the day it opened, the 3,200 spaces in the parking lot were full. The women had to wait outside the ladies’ restroom because the architects didn’t understand biology. (Laughter). It’s hugely successful.

Well, I’ve given you the problem. Now, tell me what explains the runaway success of this new furniture and appliance store, which is outselling everything else in the world? (Pause). Well, let me do it for you. Is this a low-priced store or a high-priced store? (Laughter). It’s not going to have a runaway success in a strange city as a high-priced store. That would take time. Number two, if it’s moving $500 million worth of furniture through it, it’s one hell of a big store, furniture being as bulky as it is. And what does a big store do? It provides a big selection. So what could this possibly be except a low-priced store with a big selection?

But, you may wonder, why wasn’t it done before, preventing its being done first now? Again, the answer just pops into your head: it costs a fortune to open a store this big. So, nobody’s done it before. So, you quickly know the answer. With a few basic concepts, these microeconomic problems that seem hard can be solved much as you put a hot knife through butter. I like such easy ways of thought that are very remunerative. And I suggest that you people should also learn to do microeconomics better

It’s my view that economics could avoid a lot of this trouble that comes from physics envy. I want economics to pick up the basic ethos of hard science, the full attribution habit, but not the craving for an unattainable precision that comes from physics envy. The sort of precise reliable formula that includes Boltzmann’s constant is not going to happen, by and large, in economics. Economics involves too complex a system. And the craving for that physics-style precision does little but get you in terrible trouble, like the poor fool from McKinsey.

Einstein and Sharon Stone

I think that economists would be way better off if they paid more attention to Einstein and Sharon Stone. Well, Einstein is easy because Einstein is famous for saying, “Everything should be made as simple as possible, but no more simple.” Now, the saying is a tautology, but it’s very useful, and some economist – it may have been Herb Stein – had a similar tautological saying that I dearly love: “If a thing can’t go on forever, it will eventually stop.”

Sharon Stone contributed to the subject because someone once asked her if she was bothered by penis envy. And she said, “absolutely not, I have more trouble than I can handle with what I’ve got.” (Laughter).

When I talk about this false precision, this great hope for reliable, precise formulas, I am reminded of Arthur Laffer, who’s in my political party, and who is one of the all-time horses’ asses when it comes to doing economics. His trouble is his craving for false precision, which is not an adult way of dealing with his subject matter.

The situation of people like Laffer reminds me of a rustic legislator – and this really happened in America. I don’t invent these stories. Reality is always more ridiculous than what I’m going to tell you. At any rate, this rustic legislator proposed a new law in his state. He wanted to pass a law rounding Pi to an even 3.2 so it would be easier for the school children to make the computations. Well, you can say that this is too ridiculous, and it can’t be fair to liken economics professors like Laffer to a rustic legislator like this. I say I’m under-criticizing the professors. At least when this rustic legislature rounded Pi to an even number, the error was relatively small. But once you try to put a lot of false precision into a complex system like economics, the errors can compound to the point where they’re worse than those of the McKinsey partner when he was incompetently advising the Washington Post. So, economics should emulate physics’ basic ethos, but its search for precision in physics–like formulas is almost always wrong in economics.

The third weakness that I find in economics is what I call physics envy. And of course, that term has been borrowed from penis envy as described by one of the world’s great idiots, Sigmund Freud. But he was very popular in his time, and the concept got a wide vogue.

Washington Post case study

One of the worst examples of what physics envy did to economics was cause adaptation and hard-form efficient market theory. And then when you logically derived consequences from this wrong theory, you would get conclusions such as: it can never be correct for any corporation to buy its own stock. Because the price by definition is totally efficient, there could never be any advantage. And they taught this theory to some partner at McKinsey when he was at some school of business that had adopted this crazy line of reasoning from economics, and the partner became a paid consultant for the Washington Post. And Washington Post stock was selling at a fifth of what an orangutan could figure was the plain value per share by just counting up the values and dividing. But he so believed what he’d been taught in graduate school that he told the Washington Post they shouldn’t buy their own stock. Well, fortunately, they put Warren Buffett on the Board, and he convinced them to buy back more than half of the outstanding stock, which enriched the remaining shareholders by much more than a billion dollars. So, there was at least one instance of a place that quickly killed a wrong academic theory.

What’s wrong with the way Mankiw does economics is that he grabs from other disciplines without attribution. He doesn’t label the grabbed items as physics or biology or psychology, or game theory, or whatever they really are, fully attributing the concept to the basic knowledge from which it came. If you don’t do that, it’s like running a business with a sloppy filing system. It reduces your power to be as good as you can be. Now Mankiw is so smart he does pretty well even when his technique is imperfect. He got the largest advance any textbook writer ever got.

But, nonetheless, he’d be better if he had absorbed this hard science ethos that I say has been so helpful to me.

I have names for Mankiw’s approach, grabbing whatever you need without attribution. Sometimes I call it “take what you wish,” and sometimes I call it “Kipplingism.” And when I call it Kipplingism, I’m reminding you of Kippling’s stanza of poetry, which went something like this: “When Homer smote his blooming lyre, he’d heard men sing by land and sea, and what he thought he might require, he went and took, the same as me.” Well that’s the way Mankiw does it. He just grabs. This is much better than not grabbing. But it is much worse than grabbing with full attribution and full discipline, using all knowledge plus extreme reductionism where feasible.

A special version of this “man with a hammer syndrome” is terrible, not only in economics but practically everywhere else, including business. It’s really terrible in business. You’ve got a complex system and it spews out a lot of wonderful numbers that enable you to measure some factors. But there are other factors that are terribly important, [yet] there’s no precise numbering you can put to these factors. You know they’re important, but you don’t have the numbers. Well practically everybody (1) overweighs the stuff that can be numbered, because it yields to the statistical techniques they’re taught in academia, and (2) doesn’t mix in the hard-to-measure stuff that may be more important. That is a mistake I’ve tried all my life to avoid, and I have no regrets for having done that.

The late, great, Thomas Hunt Morgan, who was one of greatest biologists who ever lived, when he got to Caltech, had a very interesting, extreme way of avoiding some mistakes from overcounting what could be measured, and undercounting what couldn’t. At that time there were no computers and the computer substitute then available to science and engineering was the Frieden calculator, and Caltech was full of Frieden calculators. And Thomas Hunt Morgan banned the Frieden calculator from the biology department. And when they said, “What the hell are you doing, Mr. Morgan?,” He said, “Well, I am like a guy who is prospecting for gold along the banks of the Sacramento River in 1849. With a little intelligence, I can reach down and pick up big nuggets of gold. And as long as I can do that, I’m not going to let any people in my department waste scarce resources in placer mining.” And that’s the way Thomas Hunt Morgan got through life.

I’ve adopted the same technique, and here I am in my 80th year. I haven’t had to do any placer mining yet. And it begins to look like I’m going to get all the way through, as I’d always hoped, without doing any of that damned placer mining. Of course, if I were a physician, particularly an academic physician, I’d have to do the statistics, do the placer mining. But it’s amazing what you can do in life without the placer mining if you’ve got a few good mental tricks and just keep ragging the problems the way Thomas Hunt Morgan did.

I think I’ve got eight, no nine objections, some being logical subdivisions of a big general objection. The big general objection to economics was the one early described by Alfred North Whitehead when he spoke of the fatal unconnectedness of academic disciplines, wherein each professor didn’t even know the models of the other disciplines, much less try to synthesize those disciplines with his own.

I think there’s a modern name for this approach that Whitehead didn’t like, and that name is bonkers. This is a perfectly crazy way to behave. Yet economics, like much else in academia, is too insular.

The nature of this failure is that it creates what I always call, “man with a hammer syndrome.” And that’s taken from the folk saying: To the man with only a hammer, every problem looks pretty much like a nail. And that works marvelously to gum up all professions, and all departments of academia, and indeed most practical life. The only antidote for being an absolute klutz due to the presence of a man with a hammer syndrome is to have a full kit of tools. You don’t have just a hammer. You’ve got all the tools. And you’ve got to have one more trick.

You’ve got to use those tools checklist-style because you’ll miss a lot if you just hope that the right tool is going to pop up unaided whenever you need it. But if you’ve got a full list of tools, and go through them in your mind, checklist-style, you will find a lot of answers that you won’t find any other way. So limiting this big general objection that so disturbed Alfred North Whitehead is very important, and there are mental tricks that help do the job.

Okay, now it’s time to extend criticism, instead of praise. We’ve recognized that economics is better than other soft-science academic departments in many ways. And one of the glories of civilization. Now it’s only fair that we outline a few things that are wrong with academic economics

Also, economics early on attracted some of the best writers of language in the history of the earth. You start out with Adam Smith. Adam Smith was so good a thinker, and so good a writer, that in his own time, Emmanuel Kant, then the greatest intellectual in Germany, simply announced that there was nobody in Germany to equal Adam Smith. Well Voltaire, being an even more pithy speaker than Kant, which wouldn’t be that hard, immediately said, “Oh well, France doesn’t have anybody who can even be compared to Adam Smith.” So economics started with some very great men and great writers.

And then there have been later great writers like John Maynard Keynes, whom I quote all the time, and who has added a great amount of illumination to my life. And finally, even in the present era, if you take Paul Krugman and read his essays, you will be impressed by his fluency. I can’t stand his politics; I’m on the other side. But I love this man’s essays. I think Paul Krugman is one of the best essayists alive. And so economics has constantly attracted these fabulous writers. And they are so good that they have this enormous influence far outside their economic discipline, and that’s very uncommon in other academic departments.

Another thing that helped economics is that from the beginning it attracted the best brains in soft science. Its denizens also interacted more with the practical world than was at all common in soft science and the rest of academia, and that resulted in very creditable outcomes like the three cabinet appointments of economics PhD George Schultz and the cabinet appointment of Larry Summers. So this has been a very favored part of academia

And lastly, the tragedy of the commons model, popularized by UCSB’s Garrett Hardin. Hardin caused the delightful introduction into economics – alongside Smith’s beneficent invisible hand – of Hardin’s wicked evildoing invisible foot. Well, I thought that the Hardin model made economics more complete, and I knew when Hardin introduced me to his model, the Tragedy of the Commons, that it would be in the economics textbooks eventually. And, low and behold, it finally made it about 20 years later. And it’s right for Mankiw to reach out into other disciplines and grab Hardin’s model and anything else that works well.

Economics was always more multidisciplinary than the rest of soft science. It just reached out and grabbed things as it needed to. And that tendency to just grab whatever you need from the rest of knowledge if you’re an economist has reached a fairly high point in Mankiw’s new textbook (Principles of Economics). I checked out that textbook. I must have been one of the few businessmen in America that bought it immediately when it came out because it had gotten such a big advance. I wanted to figure out what the guy was doing where he could get an advance that great. So this is how I happened to riffle through Mankiw’s freshman textbook. And there I found laid out as principles of economics: opportunity cost is a superpower, to be used by all people who have any hope of getting the right answer. Also, incentives are superpowers.

Let me begin by discussing the obvious strengths of academic economics. The first obvious strength, and this is true of a lot of places that get repute, is that it was in the right place at the right time.

And, of course, economics is in many respects the queen of the soft sciences. It’s expected to be better than the rest. It’s my view that economics is better at the multi-disciplinary stuff than the rest of the soft science

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