A review of Sun Tzu's “The Art of War”

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

– Sun Tzu's “The Art of War,” Chapter 3

When I was in business school, one of my professors mentioned a 2500-year-old book from Ancient China. As you may have guessed, the book was Sun Tzu’s “The Art of War.” He said that it was sometimes assigned reading for Master’s of Business Administration programs in the West, and was even more important in the East (in places like China and Japan). Not many books from 2500 years ago are considered that practical. Sun Tzu was probably a contemporary of Confucius – not to mention Lao Tzu, the founder of Taoism (not to be confused with Sun Tzu). Sun Tzu probably wrote about five centuries before Jesus Christ – earlier than Socrates and Plato. His treatise was primarily focused on military strategy, but it also has applications to some business strategy, as I will show in this post.

Sun Tzu, which translates as “Master Sun”

This book is a fairly quick read, which I got through in about two weeks

But first, I should start by saying that I read this book in November 2010. As I wrote at the time, I “read an hour or two a day for about two weeks. It's actually not a very long read. With translator's notes and introduction included, the version I had was 172 pages with small pages and large text, and a lot of that was commentaries from people in Chinese history.” (Source: Status update of 20 November 2010) This book is divided into 13 chapters. Obviously, the version that I read was in English translation, since I don’t know any Ancient Chinese (or even Modern Chinese). Thus, I cannot rate whether Thomas Cleary’s translation was accurate, or whether it accurately communicates Master Sun’s ideas (“Sun Tzu” means “Master Sun”). But I can testify that the content of the translation was practical and useful, and that these ideas are still relevant today.

The edition of Sun Tzu’s “The Art of War” that I read in 2010

What college majors are best for entering the finance field?

“The most powerful force in the universe is compound interest.”

– The greatest Albert Einstein quote that Albert Einstein (most likely) never said

The short answer is that there are five college majors that are particularly helpful for going into finance. These are: mathematics, statistics, economics, accounting, and (of course) finance.

Benjamin Graham, whom some consider to be “the father of investing”

What should I study to go into marketing research?

I should preface this by saying that I have a bachelor’s degree in Business Administration, with a Concentration in Marketing. I don’t have the kind of personality to succeed in the sales end of marketing, but I never really intended to do that anyway. Rather, I wanted to go into marketing research, and apply my analytical personality to studying consumer behavior.

I believed that doing social sciences might be more appropriate for my personality, and studied marketing with this goal in mind. But for various reasons, this did not work out, and I ended up doing something else instead. Nonetheless, I do have some basic education about the subject, and might be able to advise people about what to study to enter the field. I have some inside information, at least with regards to formal education.

Setting maximum healthcare prices doesn't really help consumers (price controls never do)

You're applying for a dream job at a particular organization. You “just know” that this occupation is right for you – or, at least, that it will lead you to a great career. But then you are told that the position doesn't actually pay you. You have to work for free if you work there, and you won't get compensated with anything else, either. Are you likely to stick around by working for this organization? If you're particularly altruistic, you might stick around just for the rewarding feeling of “helping people.” But most people would quickly abandon the job, and move to something that actually pays – particularly when they've got kids or other obligations to take care of.

A review of PBS's “Silicon Valley” (American Experience)

This documentary focuses on a historical company called “Fairchild Semiconductor” …

I was expecting this movie to be about Bill Gates and Steve Jobs, and the desktop computing revolution of the 1980’s. But I was wrong. This movie focuses on a historical company called “Fairchild Semiconductor International.” It was founded in 1957 as a division of “Fairchild Camera and Instrument,” a company based on the East Coast. But Fairchild Semiconductor was based in San Jose, California; in the area that would later become “Silicon Valley.” This area was actually an entrepreneurial haven, long before it acquired the name of “Silicon Valley.” Fairchild Semiconductor was a pioneer in the development of transistors and integrated circuits. Thus, it was also something of a pioneer in the computers industry, back in the day when NASA and the military accounted for more than half of the computers market. It was a true trailblazer, but it is virtually unknown today. This film gives it a thorough treatment, and thus takes a good look at the budding computers industry of this time.

Why do we give patent-holders monopolies on the production of their product?

“[The Congress shall have the power] To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries … ”

– Article 1, Section 8, Paragraph 8 of the United States Constitution

Some say that it is “obscene” or “outrageous” to have life-saving technologies at our fingertips, which are expensive by reason of a patent monopoly. Patents involve monopolies which (admittedly) have some drawbacks to them, at least in the short term. Why, then, does society allow them? I will try to explain in this post.

The minimum wage doesn't really help the poor …

One day, a man named Bob goes to the store to buy some milk for his family. Since the price is only $2.00 per gallon that day, he decides to buy 2 cartons of it for a grand total of $4.00. But when he goes to the store again a week later, he finds that the price has risen to $4.00 per gallon. Consequently, he decides to buy just 1 carton this time around for the same price, and wait until the price goes down to buy more. Some people would cut back more than that, and others would cut back less than that. But the demand for the product is not decided by just one customer's purchases. You have to add up the purchases of all of the consumers in that economy to get an accurate demand number. This is known as an “aggregate” figure, and represents the total demand for a given product in a given place at a given time. When you look at these “aggregate” numbers, we can say that the quantity demanded still goes down as the price goes up. Even if some people are still purchasing the same amount of milk as before, the total demand for that milk still goes down. (Applied to your own pocketbook, that logic will probably make sense, at least for some products.)

A review of “The Men Who Built America” (History Channel)

"The Men Who Built America" is something of a rarity in the world of documentaries, because it is one of the few history programs out there that actually focuses on the private sector. Most history programs focus on either heads-of-state or wars, and there's nothing wrong with this - public-sector history is definitely worthy of study; and it is well that our schools spend so much time teaching it. Nonetheless, there is much of importance that happens in the private sector as well; and our focus on "politics and the military" should not preclude us from talking about these things on occasion, if not frequently.

In that spirit, I set out to talk about this remarkable program; which is one of the few programs that talks sympathetically about the contributions of businessmen. When liberals talk about businessmen at all, it's usually in a negative sense, to paint them as greedy "robber barons" who will stop at nothing to make a buck. Fortunately, however, this show seems far enough to the right that they don't slow down the narrative with inappropriate rants about capitalism, and instead focus on the human story of what happened - showing the considerable accomplishments of these men, while not omitting the more sordid details of how they sometimes went about getting their massive fortunes.

Why I majored in marketing

This post expands upon a story from a previous blog post, linked to here.

What history can tell us about economics

I've had a number of people tell me over the years that with my interest in history, I should have been a history teacher. Thus, it's often surprising for them to hear that I majored in business instead. I also got a certificate in economics, which might likewise seem very different from history. And it's quite true that economics and history are two very different majors. But there is actually some overlap between the subjects - more than you might think - and so your average economics class has more history content than one might suppose.

What is the overlap between history and economics?

What is the overlap between these things? In short, there are two main areas where they intersect: the history of economics, and the economics of history. The history of economics is the history of economic thought - or the history of the social science of economics, and how people have attempted to find answers to important questions about economics. It has roots going back far before Adam Smith, but the modern social science of economics began with this great individual's magnum opus in 1776 - a book called "The Wealth of Nations." It is one of the great books of history (up there with Isaac Newton's Principia), and it has had an enormous influence on the way that people think about economics. (Here's my blog post about it, if you're interested.)

Adam Smith

The economics of history is about historical case studies in economic policy

The economics of history, on the other hand, is about the various economic problems that societies have faced; and their various attempts to find solutions to these problems. History is rife with economic case studies that show us which policies work and which ones don't. A good economist tries to learn from these lessons of economic history. I have talked about the history of economics in a number of posts, so I will instead focus this post on the economics of history - about the economic case studies that my classes have talked about, and about what history has to offer us in the way of practical experience with economic policy.

A review of “The Forgotten Man: A New History of the Great Depression”

We've all heard stories about how bad things were during the Great Depression, with extensive poverty and massive unemployment - perhaps the only economic crisis worse than our current one. But the history classes don't often go into the question of why; leaving the complicated subject of causation to economists, rather than the historians of the subject. When history classes do comment on the "why" of the Depression, they often paint a glowing picture of big government, with some economics classes not being much better in this regard.

Poor mother and children - Oklahoma, 1936

Some thoughts about business education

"In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has a direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom."

– Milton Friedman, economist

I have both a practical side and an impractical side. My Facebook friends probably see the impractical side of me more, as I post about things like history and languages, and stay away from the more mundane topics of everyday life. (Maybe having Ramen noodles for dinner is interesting to someone, but I never found it that fascinating; and generally speaking, I don't post about practical things - most people would probably find it boring if I did.)

I was a business major with a concentration in marketing, and a certificate in economics

Nonetheless, I have a strong practical side, which manifested itself in my choice of college majors. I actually majored in Business Administration with a concentration in Marketing. It might seem strange that a guy who spends his time learning Ancient Greek would major in business, but it's true - I even got a certificate in Business Economics to boot. (I never took any business classes in high school, although I did take some computers classes that ended up being helpful for my business degree, since that degree required some classes in computer information systems.) Thus, I have some firsthand experience with vocational education in my academic career, and thought that I would write a post about it - thus commenting on the one subject I actually have a degree in, and the educational issues in that field.

Are monopolies really as dangerous as Marx said they were?

"Competition engenders misery, it foments civil war, it 'changes natural zones,' mixes up nationalities, causes trouble in families, corrupts the public conscience, 'subverts the notion of equity, of justice,' of morality, and what is worse, it destroys free, honest trade, and does not even give in exchange synthetic value, fixed, honest price. It disillusions everyone, even economists. It pushes things so far as to destroy its very self."

- Karl Marx, in "The Poverty of Philosophy," Chapter 2, Part 3 (as translated into English at Marxists.org)

Most people today know Karl Marx was an opponent of free markets, and that he gave all kinds of objections to them in his writings. But lesser-known is an objection he gave to free competition: that competition inevitably destroys itself - through monopoly.

Karl Marx

Quote from Marx about competition "destroy[ing] its very self"

In the words of Marx himself:

"Competition engenders misery, it foments civil war, it 'changes natural zones,' mixes up nationalities, causes trouble in families, corrupts the public conscience, 'subverts the notion of equity, of justice,' of morality, and what is worse, it destroys free, honest trade, and does not even give in exchange synthetic value, fixed, honest price. It disillusions everyone, even economists. It pushes things so far as to destroy its very self." (Source: "The Poverty of Philosophy," Chapter 2, Part 3, as translated into English at Marxists.org)

Is it true that competition inevitably destroys itself through monopoly?

The idea that competition needs to be watched - that monopolies need to be guarded against - is held by many today, who are otherwise in favor of free markets. Competition is a good thing, many say; but it needs to be monitored. But ... is it true that competition inevitably destroys itself through monopoly?

Capitol Dome

My own history with this idea

I once believed that this was true, and that there was a needful function for anti-monopoly laws, such as the Sherman Antitrust Law of 1890. This was one of the arguments that fascinated me; because if it was true, then that meant that competition could be dangerous if unfettered, which would undermine my faith in the free market if true. Thus, I had to know whether or not this argument held water; and whether competition was something to be celebrated or feared.

Senator John Sherman, the principal author of the Sherman Antitrust Act

My change of heart in this matter

But I have since come to the conclusion that monopolies are not something to be feared - that there are many forces in place to prevent their rise; and which ensure that if they do appear, that they will not have much power. This might seem to be a strange argument, and I acknowledge that I once saw it as strange myself. But I have come to the conclusion that competition doesn't really destroy itself through monopoly - that free-market forces prevent this from happening, and that Mr. Marx exaggerates their dangers and effects.

Pleas for an open mind in the reader

I will present arguments in this blog post to support this point of view, and challenge Mr. Marx's objection to free-market competition. If this seems counter-intuitive to you, I ask only that you entertain my arguments with an open mind; and refrain from judging them until after you've heard them. So with that in mind, I will now turn to my arguments about free-market competition, and use some quotes from Dr. Thomas Sowell to support them. These will show why competition being destroyed through monopoly is not something that we should worry about.

Thomas Sowell

Why is my stats class so focused on bell curves?

I would wager that many a student has taken a statistics class, and been introduced to bell curves without having the slightest idea why they're used. That was me, to some extent, when I took my first statistics class. I was told they were useful, and was willing at the time to take their word for it. But it was not until a second statistics class, many years later, that I learned why bell curves are used.

Some thoughts about economics education

"This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature, which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another."

– Adam Smith's "The Wealth of Nations" (1776), Book I, Chapter II

When I was in high school, I learned that my class would be among the first at Prescott High School to be required to take an economics class in senior year. I remember resenting the requirement, and even expressing this resentment to one of the older students who had been involved in making the decision to require it. (He took my outburst well, and we have remained friends to this day.)

My introduction to economics in high school

But when I took the economics class in senior year, I was surprised by how much I enjoyed it. The subject had a lot of things about it that I liked: politics, practical business applications, and a penchant for analytical thinking. I could see the practical arguments for having this be a subject required for seniors, because many of them would need basic economics knowledge when entering the workforce after their upcoming graduation. The class taught in high school almost seemed more like a consumer ed class - a useful one, to be sure, but more focused on business applications than political ones. Although it had some political content in it, I had not really gotten a taste for the political side of economics classes; or for the civic reasons to require some basic knowledge about it from high school graduates.

Adam Smith and the Pin Factory

"The greatest improvements in the productive powers of labour, and the greater part of the skill, dexterity, and judgment, with which it is anywhere directed, or applied, seem to have been the effects of the division of labour. The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manufactures."

- Opening lines of Adam Smith's "The Wealth of Nations" (Book I, Chapter I)

If your parents have ever divided household chores among you and your siblings, then you know what the division of labor is. So-and-so mops the floor, so-and-so does the vacuuming, and so-and-so cleans the toilets. (Lucky for them, huh?) The labor gets divided among multiple people, with each person getting a certain kind of task.

The concept is not a new one, and labor has been divided among several people for centuries. But it was not until comparatively recently that its advantages were systematically explained. The Scottish economist Adam Smith explained it well more than 200 years ago, and his words about its importance still have relevance today. There are advantages to dividing the labor, and these advantages have great importance for society. So with that in mind, I will now turn to what he said about this concept.

Adam Smith

My love-hate relationship with computers

"Computer science is no more about computers than astronomy is about telescopes, biology is about microscopes or chemistry is about beakers and test tubes. Science is not about tools, it is about how we use them and what we find out when we do."

- Michael R. Fellows, Ian Parberry (1993), "SIGACT trying to get children excited about CS," Computing Research News, January 1993

Those who first met me in my adulthood might be surprised to hear that I was once really into computers. In my generation, I was introduced to computers at a very early age, and I often enjoyed going to my dad's office to play with his computer. When our family got a computer at home, my sister still enjoyed going to my dad's work and being in his office, but my interest in this suddenly waned (as my dad often mentions with a smile). I decided to play with my computer at home instead.

Why Adam Smith is still relevant today

" ... every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it."

- Adam Smith's "The Wealth of Nations," Book IV, Chapter II

People still talk about Adam Smith's "The Wealth of Nations" to this day

People still talk to this day about an economics book that was published in 1776. And though the year I'm talking about is rightfully associated with America, this book was actually published by someone in the mother country that we were then at war with. Adam Smith (the author of this book) was a Scotsman, which meant that he was also British.

John Trumbull's Declaration of Independence

Historical note: Adam Smith sympathized with the American Revolution

But his views about the American Revolution were actually fairly sympathetic to the Patriot side. He favored giving the American colonies either representation in Parliament, or independence from the mother country. (For evidence of this, see this blog post.) Because I discussed this subject at length in my other blog post referenced above, I will not go into it further here. Instead, I will now launch into my discussion of his political and economic ideas, and how they apply to our world today.

Adam Smith

My experience with Spanish

"♪ Mexicanos, al grito de guerra / el acero aprestad y el bridón. Y retiemble en sus centros la Tierra, al sonoro rugir del cañón. ♪" ("♪ Mexicans, at the cry of war, assemble the steel and the bridle, and the Earth trembles to its core to the resounding roar of the cannon. ♪")

- Chorus of "Mexicanos, al grito de guerra" ("Mexicans, at the cry of war,"), adopted as the national anthem of Mexico (or the "Himno Nacional Mexicano") in 1854

Those who know me know that I am a language enthusiast. I have spent a lot of time trying to learn other languages, and learning languages like Ancient Greek (or even French or German) would make me a bit unusual. But my trying to learn Spanish generally doesn't raise any eyebrows. The perception that "everybody speaks it" is (for some) an argument against learning it, as they value being different for the sake of difference. But for a practical person like me, the large number of Spanish speakers is an excellent argument for learning the language, because it grants you access to the hearts, minds, and wallets of a large population. To be sure, this is why the Spanish language is so commonly taught in the Southwest, because the practical benefits of Spanish fluency are attractive to many.

My love-hate relationship with economics

"Let's start with what economics isn't.  Economics isn't a meal ticket to make lots of money in the stock market, although economics helps you understand how stock markets and other markets work. Economics also isn't a business degree, although economics teaches important business skills. Economics, first and foremost, is a social science.  As such, economics helps to explain the mysteries of how people and society operate ... Economics is defined as the study of how people choose to use their scarce resources in an attempt to satisfy their unlimited wants."

- A webpage that influenced my decision to study some economics in college

I did not fall in love with economics, the way that I fell in love with history and politics. This is not to say that I didn't like the subject, but it didn't excite me in the same way. There are parts of it that I find quite fascinating, and others that I find quite boring. But it is definitely one of my interests, and I'll talk a little bit here about my love-hate relationship with economics.