The Up Side of Down, by Megan McArdle

by Dan Wang

The book’s lesson is that we can’t engineer away failure and indeed that we shouldn’t. Instead, we ought to embrace it intelligently, because failure is the only way that we really learn.

I wrote about some of the main stories for the Shopify blog.

There are lots of good quotes. Here are a few:

There is a famous story of a rich old man being interviewed by a young striver, who asks him for the secret of his success. “Good judgment,” says the magnate.
His eager young follower dutifully scribbles this down, then looks at him expectantly. “And how do you get good judgment?”
“Experience!” says our terse tycoon.
“And how do you get experience?”
“Bad judgment!”

When people try to explain why the Mona Lisa is the most famous painting in the world, they talk about her mysterious smile, the gauzy technique, the background. And yet Watts points out that they are not really explaining the painting’s appeal; they are just describing the painting.

In Deep Survival, a stunning book about how people survive in extreme terrain, Laurence Gonzales about a phenomenon known in orienteering as “bending the map.” It’s summed up with a pithy quote from Edward Cornell: “Whenever you start looking at your map and saying something like, ‘Well, that lake could have dried up’ or, ‘That boulder could have moved,’ a red light should go on.”

Groups are capable of much more stupid behavior than individuals are. They frequently fall prey to what I’ve taken to calling “groupidity”: doing something stupid because other people around you seem to think it’s safe.

What attracted people to Madoff was the fact that the returns were unusually safe. He delivered 12 percent year after year – bull market or bear, boom or recession. His victims were seduced by what you might call the technocratic fallacy: the idea that someone who is sufficiently smart and dedicated can engineer the risk out of the system.

A golden credential is no guarantee of success, and in the process of trying to secure one for their kids, parents are depriving them of what they really need: the ability to learn from their mistakes, to be knocked down and to pick themselves up – the ability, in other words, to fail gracefully. That is probably the most important lesson our kids will learn at school, and instead they are being taught the opposite.

There is one place where people can go to learn to fail the right way: a place where they are rewarded for effort and persistence, for tackling new challenges, failing at them over and over, and then finally prevailing. That place is their video game console.

Markets turn out to rely as much on morality as monetary policy; sociability can be as important as structure.

When the planes hit the World Trade Center, the building was on fire. But the fire wasn’t close to most peoples’ offices at first; their work space looked exactly like it did twenty minutes before. This made it easy to think that they could take a few minutes and check out what their coworkers thought about the situation, rather than grabbing their stuff and heading for the stairs.

There’s a scientific name for people with an especially accurate perception of how talented, attractive, and popular they are – we call them “clinically depressed.”

Years of wealth building means that everyone has more to lose – and thus, that people will try very hard to avoid the losses.

People seem to lose job skills as employment wears on. One study of Swedish adults found that a year of unemployment caused a 5 percent decline in basic skills. And these skills were really basic – they were looking at scores on reading and math tests.

The single biggest predictor of success in a new territory, salesmen will tell you, is the number of calls you make.

People in a study who reported low control over their work lives had three times the mortality rate of those who reported that they enjoyed high levels of control.

If you want to teach a puppy not to do something, you need to catch him at it, and punish him immediately; if you punish him later, he will not connect the action with the punishment.

What happens to people when they get out of jail? In many cases they find themselves locked out of student loan programs, the military, government employment, housing programs, the voting booth, and most meaningful employment. Someone who cannot get any job better than dishwasher, who cannot find a decent apartment, who finds it difficult to finance further education – is it a surprise that they turn to crime?

European bankruptcy laws treat failure as if it were a simple function of effort and personal virtue. As a result, they end up punishing people whose only sin was to take a chance on starting a business.

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