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Decision-making Heuristics

Of course, one would prefer to always choose the right choice. But in a contingent world, unfortunately, that's not so easy. Even what feels right at first can later turn out to be wrong. Whether the French Revolution was right remains to be seen, it is too early to judge, replied Chinese Prime Minister Chou En-lai in 1972 - almost two hundred years after the event. The right thing is difficult to identify, but many variations of the wrong thing are all the easier to recognize. Therefore it remains nevertheless: The first heuristic is that of the distinction between right and wrong. There is a solution for every problem without cheating - in everyday life usually even several. However, once the solution range has been narrowed down, it becomes more complicated.

The second heuristic is that of usefulness: Among everything that seems right, there are those solutions that are additionally useful, they generate advantages in other contexts apart from the specific question, where other ways cause disadvantages. Of course, the former are preferable. But also in the useful there is contingency. The solution range is thus only further reduced, the decision remains open.

The third heuristic is left: that of beauty. Possibly the sun also rotates around the earth, but the mathematical equations for a rotation of the earth around the sun are the more elegant ones. And if one is honest to oneself, the decision about beauty is most often the simplest and clearest heuristic.

Written in September 2023 | Category: Considerations

The Disappointing Study of History

We have actually come to terms quite well with the three great disappointments of mankind – that the earth is not the center of the universe (Copernicus), that man is descended from apes (Darwin) and that we are not masters of our own heads (Freud). Theoretically interesting, pointedly phrased (Freud again), but not really noticeable in everyday life.

Another disappointment, on the other hand, can be felt very well – if one does not consciously avoid it: the study of history. For a brief, naïve moment, one may believe that the problems facing one personally, society or the entire world are unique and particularly serious. Even a shallow historical look teaches: they are not. Economic history is fairly repetitive anyway, change is currently comparatively slow and low in consequences for those affected (new websites vs. industrialization). Society was once much more divided up to the point of civil war (Weimar Republic), we are quite far away from that today. And besides the threat of extinction by a nuclear war, one may also consider climate change more manageable, especially as low side-effect solutions are known (nuclear power plants).

The fact that one's own problems seem reasonably small and solvable in historical comparison is the much greater disappointment. As if we – despite all reenactment of former struggles – do not heroically lead the most difficult battle of all times, but rather a quite minor secondary one.

Written in October 2022 | Category: Considerations

The Tragic of Milton Friedman

Milton Friedman is one of the few intellectuals I have encountered several times in my management education and corporate trainings. I even believe, without being able to say for sure, that he is the only one so far. Unfortunately – and this is the first tragedy – each time in a distorted way.

Of course, it's always about his stance on corporate social responsibility. The tragedy begins because his core argument is missed: Friedman writes, of course, that (1) the tenuous definition of "social responsibility" makes debates impossible. And he is probably also right that (2) many companies simply place economically motivated projects under this heading, i.e. they cheat. That (3) employed managers want to look like benefactors at the expense of their owners – the classic principal agent problem – is probably also true. But Friedman's main point is a different one. Capitalism and Freedom, the book in which he lays out his thoughts on this, is primarily about freedom. Friedman is above all an apologist of freedom, that interactions, cooperation and business are based on the free will of the individuals involved. He sees this freedom best realized in the economic system, which is why he defends its freedom with passion.

The main problem Friedman sees with a social responsibility of corporations that goes beyond economic goals is the danger that certain approaches to social responsibility politicize the sphere of freedom, the economy. Political systems make binding decisions that everyone must abide by, whether they agree or not. The political system is necessarily not based on the free will of individuals.

One can disagree with Friedman's argument. But one thing is indisputable: that everyday life and the economy have become politicized since Friedman's time. That is the second tragedy: If postmodernism means that the different subsystems of society spill over into one another, that is, there is a juridification outside the original legal system, an economization outside the economic sphere and also a politicization of the whole of life - and I believe there is little opposition to this today - then there is really only room for Friedman as a distorted image in the discourse. He then defends a freedom in the economy in distance from politics that has long since been lost.

Written in February 2021 | Category: Considerations