Dare to Think

When it comes to critical thinking, advice is good but tools are powerful.

“If you want to teach people a new way of thinking, don’t bother teaching them. Instead, give them a tool, the use of which will lead to new ways of thinking.” - Buckminster Fuller

Critical thinking isn’t a new way of thinking but it is rare. At one point or another, each of us were undoubtedly told by a caring mentor, or scolding teacher, to be a critical thinker. In that case, why is it so rare?

Perhaps it’s because these well-meaning advisors rarely follow up with, “And let me tell you (or better, show you) how one becomes a critical thinker.” If you aspire to be a dead fish in the stream of public opinion, then stop reading right here. Don’t worry, look around, you wouldn’t be alone. Besides, floating down stream is fun!

Instead, if you want to be a free-thinking, sovereign individual, able to make wise decisions, we’ve got work to do. Let’s begin by picking up tools used by some great thinkers, innovators and financial investors.

First let’s talk about mental models. Think of each model as a tool for your critical-thinking tool box. Or perhaps, as a weapon to defend your brain against the daily onslaught of social media vomit, political rhetoric, and mass media propaganda. (That felt good to get off my chest.)

I was introduced to mental models by reading about Charlie Munger. He’s a multi-billionaire and business partner to famed investor Warren Buffett. Cool, he’s got credentials and piles of cash, but more interestingly, some consider him the closest thing we have to a modern-day Ben Franklin. He’s legit. Look him up.

Let’s dive straight into the first two models!

Mental model #1 - Incentives

This is one of my favorites. Charlie Munger said, “Show me the incentives and I will show you the outcome.” In addition, the authors of The Sovereign Individual claim, “Any forecast that accurately anticipates the impact of incentives on behavior is likely to be broadly correct.” Deciphering outcomes sounds useful, right? For example, you hire someone to bag up leaves on your front lawn. Should you pay by the hour or by the number bags filled? Considering the incentives inherent in each method will help you make your choice.

The authors of the US Constitution infused incentives into their masterpiece. Consider how a member of the US house of Representatives serves a two-year term while a Senator serves a six-year term. Why? The founders wanted the House of Representatives to be more immediately accountable to its constituents. In contrast, the Senate was designed to act more independently. With an understanding of the incentives involved, you can better understand the fine folks who work for us in Washington.

Incentives also determine outcomes in free market economics. Lets say a hurricane disrupts the supply chains of a costal city. As essential items become scarce, prices rise. Manufacturers from areas unaffected by the hurricane are incentivized by high prices (and thus profit) to be the first to fill the empty shelves. Incentives produced the outcome. (As a side note, if the government implements price controls, this incentive is greatly reduced or completely erased, likely producing shortages.)

Mental model #2 - Invert, always invert

Here’s another one from Munger. In short, to find the answer to a complex problem, sometimes it’s easier to solve the problem’s opposite. This model was made famous in a speech Munger gave to the Harvard School in 1986 titled “How to Guarantee a Life of Misery.” Instead of orating on the requirements of a happy life, Munger listed ingredients for a miserable one.

Where else can this model be applied? What about, “How do I succeed as an employee?” Inverted it becomes, “How can I be a worthless employee?” That’s easy to answer: never show up on time, don’t even think about displaying initiative, undermine your boss’ initiatives, and of course dress like a slob. The list is endless.

What questions are you trying to answer in your life? Are you wondering how to be a better dad or brother, how to lead a life with few regrets, what you want to do when you grow up, what type of person you want to marry, what skills you posses, or how to write a blog people will enjoy? Take these questions and flip them on their head. Inversion attacks the same problem from a different point of view.

There you go. Two tools for you to develop your critical thinking. Mental models are only one type of useful tool. Here are some others: spotting and avoiding logical fallacies, asking good questions, running a cost-benefit analysis, weighing probabilities, and studying history. Don’t forget about optimizing the tool you already have - your brain? We’ll dive into each of these in the future.

Even if you guys don’t aspire to be the next Ben Franklin or Charlie Munger, take action and practice with these tools. You’ll be one step closer to becoming a crack-shot critical thinker. It’s worth the investment.

Now get out there and live a courageously unsafe but good life.