The Communist Manifesto
Quick preface: I began to write this article TWO YEARS ago and I never posted it because I'm constantly worried that my ideas won't find a reader who values them or that I'm somehow only indulging in self aggrandizing narcissism.
As I overcome these negative thoughts I feel empowered to share positive mindset and personal growth ideas that sometimes have nothing to do with real estate but still have immense value because ultimately, a great mindset is difficult but real estate is quite easy.
Scared of books
Recently, I posted a picture of this book on my Facebook feed with a little comment about how easily it is for people to be scared of certain books. It generated some good conversation and while I didn’t mention anything about the content of the book, this particular book can often be polarizing just to hear the name. It got me thinking about a larger systemic issue our culture has when it comes to learning things that make us uncomfortable.
(To be clear, this book wasn’t chosen for any reason over many other controversial books I own. It just was what I picked up first that fit my purpose.)
The 49 page terror
How can this little thing create so much anxiety? The term “Communist” by itself comes with a dump truck full of social baggage but if you were to press most people to define what Communism is you'll usually get next to nothing from them other than "It's bad" or the some version of "it's relates to government control".
How can a book create controversy while so few people know what’s in it? I completely understand why most people wouldn't have read this: it's complicated, it's very old, and it's pragmatically useless information to learn...but then why are people so dramatic about it?
It’s notable that we live in a culture where so many people can have a strong conviction about Communism, or any topic that causes friction, and know so little about what they speak of. It’s also extremely interesting to mention that the book is only 49 pages and takes about an hour total to read, and no one seems to have yet found the time to read it. It becomes even MORE interesting when we consider that it was written in 1847 and has been the intellectual basis for some of history's most impactful governments, and still goes unread. How could anyone NOT read such an important text when we are still talking about it 150 years later? I wonder how many people saw my Facebook post or the headline of this blog and created ab opinion about me but haven't and never will, read this book.
Know where your ideas come from
Before I string you along too far on this, I’ll say that I really don’t want to talk to you about communism. I want to talk to you about the disconnect between the opinions we hold which are based on what we think we know, versus what we actually know.
Is it dangerous that we have people who will tell you how bad (or good) communism is but won't spend a single hour to read the source material? It certainly could be dangerous under the right circumstances. I hardly think 43% of the German population in 1932 were deeply or violently anti-Semitic but 43% is the legal vote count that Hitler earned. Perhaps if these people had their own opinions instead of rallying behind the sensational propaganda that was given to them they may have been able to avoid murdering 12 million of their countrymen.
How about a slightly less aggressive? How many people bought real estate in 2006 right before the housing crash because they were told "Real estate can only go up"? They invested, lost everything, and were surprised because they didn't actually know what was happening, they were just following the hype of the crowd.
My fellow investors would be served well to stop the lazy learning of economics or investing principles (or politics, or any other topic of substance). It’s certainly valuable to discuss these topics with strangers on the internet but learning complicated topics from memes and social media posts will never replace a well established quest for knowledge. In a time where headlines and soundbites rule our attention spans having a thorough understanding of complex topics becomes a premium value. It’s a disservice to yourself to get information second hand especially when you don’t know that the person who you are learning from got their information second hand.
Do the intellectual labor
Everyone is entitled and encouraged to formulate their own opinion, but that’s not what usually happens. What usually happens is we hear an opinion that sounds good and we steal it, but then we don't have our own opinion, we have someone else's opinion. We do this all the time so it’s perfectly normal, but the problem we run into is when the person whose opinion we stole also stole their opinion from someone who also didn’t know better. This is called “the blind leading the blind”. We end up misinformed about so many things and we don’t realize it because it occurs as a societal collective, just like my example of communism. Everyone knows it’s bad, but now one can explain why. How do you know the person you’re learning from isn’t an idiot who just happens to have an explanation of the world that simply sounds like it makes sense?
Ask yourself, if everything you know about the world is from secondary sources and opinions, how do you know the information you are being taught is correct? For those that have ever played the game telephone as a child you know that it proves even short messages will get skewed when passed between only a handful of people. Opinions about complicated topics like macroeconomic, investment strategy, and political philosophy are likely to be skewed from reality if you learned them second hand.
We know the dangers of pre determined negative social knowledge like “all landlords are greedy and evil” or the opposite “don’t be a landlord because tenants are awful” and when someone with intimate knowledge of the field hears these know that whoever said them has no idea what they are talking about. These are the same disingenuous oversimplifications as saying “communism is bad” without having read the underlying (and probably lots of secondary) material. To give a final example: in 2015 the movie "The Big Short" told a very entertaining narrative about the causes of the great recession but it really skimped on the boring but important details. There was a scene in the credits that showed a stripper telling a guy she was given 5 mortgages without proof of income. Because it was in the trailer and because it's such a sensationalist plot line I’ve talked to lots of people who believe the 2008 financial collapse was caused by banks giving 5 mortgages to strippers without proof of income. While it makes for a great story and I’m sure it’s much easier to sell tickets to a movie about economics when you put strippers in the trailer, this is NOT an accurate representation of why we experienced the collapse. The movie did address some of the really important aspects of the global financial collapse like mortgage backed securities, credit default swaps, fraudulent rating agencies, and over-use of no-downside securitization, but there is are simply not enough financially irresponsible strippers on earth that would lead to a global financial collapse.
This isn't just a harmless bad opinion, it has consequences. Right now there are people who have zero worry about our economy because the stripper mortgage situation is fixed up. This type of thinking gives society a misunderstanding of the past, and therefore they are ill equipped to plan for the future. This is not just common, it’s the norm.
I think the investor community is grossly under capitalizing on self education right now. Just like people toss around the term Communism while being under-education on the topic people love to discuss financial topics with the same under-education. If the majority of people aren’t willing to read a little 48 page book to better understand it’s history, then can we safely assume they won’t read a 600 page book to learn the history of the federal reserve. Do these texts hold NO value, or are people just unwilling to do what’s difficult? I guess it’s just easier to share an inspirational Instagram meme and seem accomplished for the social benefit than do the real labor.
I did consider that maybe I’m overvaluing knowledge in the face of the popular advice of “just take action”, but my entire complaint is: we think we have correct information but it’s often wrong or incomplete and to take action based on that false data may very well create exacerbated dilemma in the future. So education has to be first priority otherwise all the action we take will be incorrectly deployed.
The fix is easy: do the intellectual labor, read what your peers are unwilling to. Sometimes the difference between having true knowledge or having 150 years of misinformation is only 49 pages away.