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Value(s) by Mark Carney: Chapter 1 Perspectives of Value – Objective Value: Key Takeaways / Analysis / Citations

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Part 1 The Rise of the Market Society

Chapter 1 Perspectives of Value – Objective Value

Key Takeaways

The first two chapters of Value(s) cover objective value versus subjective value measurement:

Objective value is determined by the fixed and variable costs that go into production of the good or service. It’s the idea that the underlying value is determined not by demand and supply but by how the product or service is created. Objective value is also associated with the classicists: Smith, Ricardo and Marx.

Subjective value, explored in chapter 2, is determined by how exchange value (the market price) reveals the underlying value at a given moment in time. Its underlying value is determined by the demand and supply, preferences and somewhat by scarcity. It is associated with the neo-classicists: Alfred Marshall, Carl Menger and William Jevons. 

Mark Carney’s central point in these first two chapters is that subjective value which is flawed. And that subjective value, in the form of the market economy, has permeated every facet of life turning everything into an economist’s calculation and taking the relationships and intangible value for granted.

Oscar Wilde’s “the price of everything and the value of nothing” is Carney’s central critique of subjective value.. 

This concept that money is a proxy for value is an obvious one but it is worth repeating. If the economic value of a good is determined by the price in the market, then people start developing the classic capitalist critic which continues to be attractive, especially for folks who aren’t interested in economics and instead think that capitalism is merely luck-based gambling coupled with inequality in the form of accruing capital deployed with the reward of interest. 

So, this is a complex topic. How do you measure value? Amazon rainforest is only valuable if you strip it of foliage. Amazon the company is valuable and on a ledger at $1.5 trillion equity valuation as of March 2021. Mark Carney believes we first need to understand how value was measured in these first two chapters.

Value in the economic theory distinguishes between value creation and value capture/extraction/rent seeking. Value theory has been explored by Aristotle (the “just price”), St. Thomas Aquinas talks about a just price + value capture and Dante says usury, interest or rent-seeking, are evils that send the issuer to the 7th ring of hell. The concept of interest is discussed on the basis of disutility (ie. opportunity cost). Disutility is the cost synergies of the absence of the thing i.e loss of profit = interest. If I lend you some land I own, then you should pay me interest. The word interest goes back to ancient humanity when it literally meant lamb. So I lend you my land then you pay me in lambs develop with you using that land…. 

Value at the nation state level was about trade routes, silver and the balance of payments ie. selling more things then you buy. Value perception changed as moving things around was how you made value in the mercantilist age of European empire building. Distribution was the valuable item itself.  

Mercantilism theory of “why a nation became rich” is perhaps today known as crony capitalism, according to Carney. Net export was the measure of value and the surplus was in the form of gold which was the measure of wealth. Gold and silver were the global currency and then banknotes were offered by central banks which we redeemable as gold or silver at that central bank with banknotes. The common good was in the name of nations, but the self interest was selective for those who were members of the mercantilist/crony capitalist class. 

St Antonino (1389 – 1459) defined mercantilism. East Indian Company, a mercantilist company that ran India was responsible for half of all global trade in the mid-1700 to 1800s. Securing gold was the mechanism for measuring value for many centuries…value was measured in gold and silver. This was obviously flawed since a new gold mines would the debase gold as a proxy for value…

There are other thinkers Mark Carney calls on:

Davanzati (1529 – 1606) defined value in use versus value in exchange. Argued that gold had no value in use but value in exchange since it can be used to command other goods. 

Sir William Petty (1623 – 1687) develops a theory of labour in Oliver Cromwell’s Commonwealth government that is the modern basis for gross domestic products, which is another heavily debated metric in economics because of its flaw in measuring value. Petty defines the natural price as the par value of land. This approach predates but also predicts Adam Smith’s approach. Petty was able to explain national production. The only thing that matters are merchant trades, clothing, food and housing. Lawyers have no value in this theory. Petty’s national account: the GDP, we use it as a compass today.

https://en.m.wikipedia.org/wiki/Physiocracy

Physiocratic emerged as another way to look at value creation. The term is based on ‘government by nature’. Laissez-faire and wealth was solely from agriculture. Government by nature that value was derived solely from agriculture. Quesnay’s Tableau is the first to see the economy as a system and applied a systems-thinking approach. He also saw that exports generated gold which was the best measure of value they had at the time. Quesnay saw the farmers are the value creators, supported land is more important than the mercantilists in his view as the flag bearer for the Physiocratic movement. The problem with their approach was the industrial revolution was about to reveal that agriculture alone was indeed not the best way to measure the source of value. 

Richard Cantillon (1680 – 1734) who built on Quesnay’s ideas but he’s not that important. There are three heavy hitters that Carney addresses.

The biggest contributions to value measurement are the classists. 

The Classists: Adam Smith, David Ricardo and Karl Marx. They shared three basic ideas: 

  • The Economy requires labour: The value of a good or service is determined by the inputs to create it, particularly labour.
  • The Economy is dynamic / changes in labour and technology: workers, landlords, industrialists respond to changes in the real world. This process triggers value creation and changes its distribution model. 
  • The Economy is the process of exchange that affects trade: the process of exchange effects value creation and distribution, Ricardo focused on gains from exchange of foreign goods and Marx focused on value of work and income distribution. Smith was interested in the systems thinking like Quesnay. 
  1. Adam Smith (1723 – 1790)

Viewed as the father of modern economics, Smith (from Fife, Scotland) warned scholars about conflating money with economy and for good reason. He too knew that money was a proxy for value. The Wealth of Nation is the most owned economic text, least read (because it is not easy to read for today’s modern English standards) and is thus easily misinterpreted. Carney argues that Smith is loved by the left and right. For example, he is caricatured as the father of laissez faire capitalism despite the fact that the “invisible hand” appears only three times in any of his books and only twice in “An Inquiry into the Wealth of Nations” (1776), according to Jess Norman, Adam Smith: What He Thought, and Why it Matters (London: Allen Lane, 2018), pp21-2. What made him pan-ideological is that Adam Smith applied the scientific method to social scientific observation rather than ideological dogma. The ideological spectrum is a flawed generalization that gets dashed when it interacts with the unique circumstances that define any human interaction (but unfortunately, helps people simply/generalize and feel they know what’s going on, when in fact, ideology is a short-hand used to limit solution development). And as such, Smith was interested in understanding reality rather then bending it to any normative purposes.

Carney’s emphasis in talking about Adam Smith is on the fact that:

  • Adam Smith was chiefly concerned with the idea that life involves continuous exchange. 
  • He believed that the desire to be loved and lovely led to a feedback of mutual cultural memes (Richard Dawkins-style)
  • He famously exalted the fact that the butcher’s self interest (or self-love) got the meat on your table. 
  • He showed that social trust is the engine of prosperity. 
  • He would not have recognized modern financial, economic infrastructure but believed in the living system of his time.
  • He expanded the physiocrat definition of value being solely from agriculture to the definition to industry which was also ground breaking.
  • He was worried about industry capturing government officials. 
  • He was very critical of monopolies and value capture.
  • He was critical of mercantilism/crony capitalism and thus he promoted free trade.
  • He valued competition in the pin-factory example.

What was Adam Smith’s contribution to a Theory of Value?

For Carney, Adam Smith’s formal theory of value was unsuccessful. He, like the other classicists, argued that labour was the main source of value. Total value creation equals the time spent by workers on production taking into account quality and effort. Labour is the measure of exchange value of all commodities. For example, in a hunter only economy where one beaver is as hard to hunt as two deer, then the price of one beaver is two deer. The price of a good is usually therefore based on the relative ‘estimate’ of the labour to procure that good. But Smith didn’t touch on the fact that the act of valuing effects the three things Smith valued most in a functioning market: trust, fairness and integrity. Why does labour and price have such gaps then? Smith doesn’t understand and he didn’t resolve the gap between market prices (nominal/money price) and labour value (real price)….Ricardo and Marx would build on Smith’s work to answer this ‘gap’ problem..

  1. David Ricardo (1772 – 1823)

Ricardo (from Liverpool Street / Spitalfields Markets area of London) made his money by speculating successfully in government bonds with a networth of £100 million in today’s terms. He bet on the outcome of the Battle of Waterloo and made a fortune. Then he promptly retired to his Gloucestershire estate to write.

Carney’s view is that David Ricardo made critical contributions to economic thought:

  • Free trade makes sense through the argument of competitive advantage which is a core position in economic liberalism today. The competitive advantage of wine from Portugal versus England is the classic example, it’s true but not always as obvious. His idea has largely been accepted that it is better to trade with other regions of the world where they have a relative efficiency of production rather than to prop-up domestic producers in the name of economic nationalism. Countries ought to specialize and trade more was Ricardo’s view. 
  • The Corn Law which was a protectionist move to support English landlords and it received Ricardo’s aggressive critique in Essay on the Influence of a Low Price of Corn on the Profits of Stock (1815). He explained that increasing tariffs on grain imports increases the rents of landlords, decreases the profits of manufacturers and slowed the economy’s rate of growth. 
  • Smith and Ricardo aligned on the idea that imports increase exports and growth country-to-country. They both agree that consumers should seek the cheapest price for a good. Monopolies would only serve to create fat, happy management. 
  • Ricardo expanded on this free-trade view with the law of diminishing marginal returns. Here, Ricardo was arguing that more and more inputs into a fixed amount of land would lead to diminishing returns from that land. Therefore restricting foreign inputs would bring more marginal land into production and thus lessen capacity into new production, since grain prices would increase, manufacturing would decrease and landlord rents would increase (Ricardo wasn’t a big fan of landlords). The point was that landlords had the ear of the political elite, Ricardo had the ear of the economic engine. 

What was David Ricardo’s contribution to a Theory of Value?

In Principles of Political Economy and Taxation (1817), Ricardo argues that labour theory of value; value depends on the labour for its production and not on the cost of that labour. The iron law of wages: wages rise and fall, profits fall and rise correspondingly. Profits grow….If the prices of food, agriculture is less productive then the profits decline. His Essay on Profits argues that profits depend on wages, wages on essentials and essentials then impact the price of feed. His theory of growth showed that profits grow, capitalists invest, expand manufacturing which created more and more jobs and wages. The price of food regulates wages.

Carney, and others, identify two problems with Ricardo. First, Ricardo doesn’t pay much attention to organizations of production (division of labour for example) instead focusing on monetary and fiscal areas which leaves an incomplete picture of value. Second, Ricardo labour theory of value doesn’t account for “differences in the time horizon of the returns to the various factors of production.” (page 35, Value(s)). He should have established a relationship between capital and labour as he had between land and labour wages. His solution of providing a value for capital as accumulated labour doesn’t really work since if you build a factory you would expect to be paid back over several years but if you worked in the factory you would get paid on a monthly basis….so the horizon of the worker is shorter than that of the capitalist. Marx would close off this problem of accounting for value through labour. 

  1. Karl Marx (1818 – 1883)

Marx (Trier) was a Hegelian. He followed the dialectic model of thinking which for Marx revealed new truths and he had revised his writings to fit into oppositional forces as he doubled down on Hegel later in his writing. Marx is often mined by people to back their prior position. The Communist Manifesto (1848) and Das Kapital (1867) are well examined. Marx is the first economist you learn about in school and his name remains an adjective, a noun and a social theory because his ideas were used by various political actors to revolutionarily bend the bandwidth under which human nature operates. And the results were mixed, to be diplomatic about it.

What was Karl Marx’s contribution to a Theory of Value?

  • Marx’s view on value, like Smith, centres on a social and political context. 
  • He sees that the history of society is a back and forth ie. Hegel’s idea. 
  • Marx was more explicit that production is a social activity that requires production.  
  • Production and distribution of value was critical for Marx. 
  • Regardless of changes in technology, the value of every good is determined by the labour to put it into production. 
  • He believed that every good has two values: useful value and exchange value.
  • Like Smith and Ricardo, Marx saw labour at the centre of value but he also solved for the time horizon gap between labour and capital. The surplus value goes to the individuals who took the original risk to create the enterprise and then pay the labourers a subsistence wage and pocket the rest of the surplus value / the gap.  
  • Marx also argued that capitalists would replace labourers with machines if the cost of restoring labour power was above subsistence wages.
  • Capitalism would overrun overtime the bargaining power of labour as they replaced labourers with machines and other automation.. 
  • In his views, commercial speculative firms do not add value to capitalist production and by capturing the available surplus, capitalists do not re-invest in production but horde value for themselves as surplus. 
  • Labourers, who do not own the means of production, become alienated and then that surplus value is taken away. 

The response to these three classists encapsulated the modern expression of how objective value is measured. However, Carney will show that value is measured subjectively. It is critical for Carney that we acknowledge how value measurement has been distorted over time so that we can then reset the system of measuring values for a better world for all…ambitious! To that end, Carney seems to recommend a return of these objective measures of value with hybrid additions from the likes of Carl Sunstein and others.

Previous Chapter
Next Chapter
Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG
  

Analysis from Part 1 and Chapter 1

  • Theory (9/10) versus Practice (5/10) Rating (out of 10): Theory is nice, these men were seeing the world from their own vantage point as we all do. Even Ricardo. Attempting to develop generalizable systems like a generalizable measure of value is kind of bunk, though. Anyone with a social science background will tell you predictability and perfectability aren’t what we humans are. There are pockets of predictability like “I am going to wake up today” but then there are less predictable things we do like “I am going to brush my teeth today…maybe.” The fact is there is no generalizable theory of human behaviour, folks. A bell-curve or overton window of human behaviour but it is evolving, alongside culture and many many variables. Human’s aren’t that predictable: that’s what makes us awesome!
  • This chapter is a good primer on an economic theory of value. Not so much on an intangible theory of value which would be handy for climate change which comes up later.
  • Subjective value is the target of his central criticism. Except, that objective value described in this book is accountant focused. It fails to measure the things we care about about like love. It’s only useful for economist minded people.  Many people do not “value” economic thinking at all. And they have rights, preferences, influence on politicians hence the tendency to ignore capitalism in their personal and/or political decision-making. 
  • Ivy League Fallacy: some of the most theoretical and therefore impractical people graduate from Ivy League universities. Insulation from failure is also a major risk for Carney who doesn’t seem to notice he is detached as well. Mark Carney thinks he’s smart because he is smart but also he jumped through the hoops, he is not one for breaking the mold very much…It’s also possibly that I’m just jealous.
  • Mark Carney believes that at the Bank of England which he joined in 2013 and his colleagues figured out “how to rebuild the social foundations of financial markets following the financial crisis in 2008” (page 28, Value(s)), I’m afraid that Senator Palpatine disagrees with you?…It just seems like a pretty grandiose claim.
You think you are influential? Senator Palpatine, he knows how to pull strings, Mark Carney. He’s behind it all!
  • What about the concept of Networks in value creation? We buy and sell products and services from people who are top of mind. Adam Smith touches on this with the idea of being loved. If we have a good relationship with someone we work to support their goals. The labour put into helping someone we care about is a premium on that good or service.
  • Who cares that Adam Smith was uncomfortable at Oxford? Well, a dude who went there himself. Balliol College, Oxford but the wizard hat sorter put Carney in Nuffield College….To be clear, I think Mark Carney has written an important book here, and he’s generally a unique voice in finance, but occasionally, he reveals some pretentious tendencies that Harvard and Oxford imbue in their students (“I am so smart because Oxford told me so”).

Citations Worth Noting for Part 1: Chapter 1:

  • Marianna Mazzucato, The Value of Everything (London: Allen Lane, 2018), p. 6
  • Sir William Petty, ‘The Political Anatomy of Ireland – 1672’, in A Collection of Tracts and Treatises Illustrative of the Natural History, Antiquities, and the Political and Social State of Iralen, vol II (Dublin: Alex. Thom & Sons, 1861), p 50.
  • Jess Norman, Adam Smith: What He Thought, and Why it Matters (London: Allen Lane, 2018), pp. 21-2. 
  • David Ricardo, ‘Chapter 1: On Value’, in On the Principles of Political Economy and Taxation (1817): https://ww.marxists.org/reference/subject/economics/ricardo/tax/ch01.htm (accessed April 2021)
  • Sir William Petty, ‘The Political Anatomy of Ireland – 1672’, in A Collection of Tracts and Treatises, vol. II (Dublin: Alex. Thom & Sons, 1861).
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Value(s) by Mark Carney: Intro, Humanity Distilled: Key Takeaways / Analysis

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Mark Carney is a banker with a compelling track-record as well as a citizen of Canada, Ireland and the UK. He was born in 1965 in Fort Smith, Northwest Territories, Canada and has a global perspective and an impressive resume. At the same time, he could probably be your favourite prof in university. So there’s that too. In life, you should always plan for multiple paths, and so what makes this book doubly interesting is that it is possible that Carney will enter the political fray in Canada and / or seek more global posts as a thought leader in finance and banking. At the very least, teasing the thought of Carney as Prime Minister of Canada will sell a fair number of copies just for the opposition research. In a parliamentary committee testimony in May, Carney was interrogated by a conservative MP signaling that the Canadian Conservative Party is a bit scared and annoyed that Carney is helping Boris Johnson but also working with the Liberals… Guaranteed that if Carney was saying he wants to join the Conservative Party of Canada, the Tory caucus would sing his praises. Such is the absurdity of partisan politics. This book threads the needle across a fundamentally flawed ideological spectrum. And Carney offers the intellectual firepower and vision that Canada has struggled to cultivate within the legal/business class that dominate its representative democracy.

Value(s) basically advocates for the marriage of solidarity, a sense of fairness with the dynamism of markets. Markets, being social conventions, can be harnessed for good, according to Carney, who clearly lands closely to MacKenzie King, who also wrote a book before running for public office. That book was called Industry and Society which at the time was not widely read and was incoherent. The reason I mention MacKenzie King the Pragmatist In Chief is that he is typically on the top three best Prime Ministers of Canada list and Value(s) is easily the best pre-political primer since the Audacity of Hope. Value(s) is not really an emotive, poetic document but I think the rigour of Value(s) makes it a book that you can imagine is referred in 2121 as a historical document. Not kidding here. This book is really a doorway to better understanding how value has been approximated over the last few centuries.

Unfortunately, while Carney’s Value(s) is a blueprint for political leadership, it is also unapproachable for people with a reading level below Grade 8…(and maybe Grade 7 with a glass of wine because when you watch too much tv, you’re reading level slowly declines over time…the golden age of television has yet another unintended consequences, other then the decline of cinema)….. As such, this series of posts will explore his ideas (I hope clearly) as well as provide a tough critique where there is disembodiment between his theory and practice/reality. 

Private Sector experience:

  • Goldman Sachs (1990 to 2003)
  • South African international bond market launch and the Russian financial crisis were where he cut his teeth.

Current Private Sector roles:

  • Brookfields (2020 to present)

Public Sector experience: 

  • Deputy Governor of the Bank of Canada (2003 to 2008)
  • Governor of the Bank of Canada (2008 to 2013)
  • Governor of the Bank of England (2013 to 2020)

Current roles:

  • COP26 point-person on finance for Prime Minister Boris Johnson
  • UN Special Envoy on Climate Action and Finance

Political Leanings:

Note that Carney makes no mention of the fact that he is likely advising the current Prime Ministers Office and Cabinet Ministers in Canada, in Value(s). He is a prospective Prime Minister of Canada via the Liberal Party of Canada which is the default / natural governing party in federal Canadian politics. 

Mark Carney’s central question in Value(s) is: 

How do we bring some humanity into our capital-centric system of valuation? 

Since we observed that human nature supersede socialist command economies (acknowledging the fact that Wal-Mart and other companies are command and control entities), we ought not to try to escape capitalist markets of value measure, Carney argues, instead we should figure out:

How do we mitigate capitalism’s destructive power and harness its constructive power for a brighter future? 

The Parable of Pope Francis: ie. markets are humanity distilled…markets take out all the best of us

Carney recounts how Pope Francis invited him, then the governor at the Bank of England (salary of £480,000 per year) and other elite decision-makers, to a conference. The pope raised a glass of grappa and said “Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self-interest. The market is humanity distilled.” The Pope’s challenge to these insiders is “to turn grappa back into wine, to turn the market back into humanity. This isn’t theology. This is reality/ This is the truth.”….and then everybody cheered and said saluti. (Page 3, Value(s))

  • How do we turn grappa back into wine?
  • What’s grappa?
  • The market is humanity distilled, markets of exchange are self interested actions distilled into a quantified format where the nuance is lost. 
  • Humanity is many things, our jobs as bankers is to turn this market back into true reflection humanity…..

Threadneedle Street Thinking:

Carney argues that radical changes are required to build an economy that works for everyone within that economy (staying vague about global, national or local economy). His audience is certainly white dominions / advanced countries that he is most familiar with as a private and public sector banker. He is threading the needle between capital or monied interests and some social democratic concepts, nominally speaking. 

In order to come to that conclusion that we need our system of valuation to be adjusted to reflect more what it does presently, first Carney asks you to consider

  • What is value? 
  • How is it grounded? 
  • Which values underpin value? 
  • Can the act of valuation in the market also reflect values in society? 
  • Are we under-valuing what matters most? 
  • Why is Amazon worth $1.5 trillion while the value of the actual Amazon rainforest(s) is $0 trillion?
  • As Oscar Wilder said “we know the price of everything and the value of nothing?” 
  • As Albert Einstein said “not everything that counts can be counted, and not everything that can be counted counts.”
  • As John Kay said “profit is to business as breathing is to living. Profit is not the purpose of business, it is necessary but not the purpose.”
  • Have we moved from a market economy to a market society? Carney says “yep” and then asks how do we bring back humanity in our calculation of value?

Valuation and markets are disconnected. Values represent the principals of behaviour. Rawlsian idea of the veil of ignorance, not utilitarian or libertarian. 

Three Crises: 

  1. Credit, 
  2. Covid, 
  3. Climate change

Imposes costs created by this generation on future generations. 

To stop the catastrophe, we need:

  • Dynamism
  • Resilience
  • Fairness
  • Responsibility 
  • Solidarity shared
  • Humility: to act as custodians 
  • Sustainable globalization 
  • Markets are incentives to build social capital. 
  • Help us realize our potential. 
  • Leaders have to earn their legitimacy.
  • Great leadership is ethical…….next Carney will look at how value is determined historically….
Previous Chapter
Next Chapter
Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG
  

Analysis of Introduction Humanity Distilled:

  • Not a Light Read: Carney is a bit academic and pretentious and so I don’t know that this book will be widely read, therefore, I have provided these detailed summaries for the benefit of others who don’t have the time but the inclination. This book is not a light read….
  • Well Sourced: Academics like to detail to the reader ‘what you are going to learn before you learn it.’ Value(s) does this. Typically, this is a no-no. Mark Carney presents his book as a well sourced academic textbook rather than a public intellectual page-turner, it ought to be distilled which is what I’m attempting to do here. Note also that there is bias of course in the academic work that Carney sources…consensus is rare, making jobs for academics plentiful. 
  • Grounded Enough?: Mark Carney has the financial and global connections / rolodex and the experience from one of the most successful investment banks, for 13 years, which means he’s likely cut-throat. Or did he get where he is through sheer intellect? It isn’t clear that politics is in his blood. Politics is about winning, fighting off the other candidates and horse trading / cutting deals. Often, the choices are between bad and worse. Carney hasn’t been in that circumstance as much based on his writings here. Yes, he’s been in the top public / private sector tower of central banks but very far from the general economy or the consequences of his actions (the data that describes the consumer price index is a bit different from the abject poverty in rural Canada for example). Ironically, I speculate Carney may be more like the bankers who leveraged and imploded Canadian ABCP asset backed commercial paper in Chapter 7 then he realizes. Monday morning quarterbacking the financial crisis and being lucky doesn’t = great leadership. Having said all that, he’s still pretty cool.
  • All That Glitters: At the Bank of England, Mark Carney explains as the governor touring the gold vault that those gold reserves are mostly pointless beyond a back-store of value. The gold is less valuable now that it is NOT the basis of central bank money management since finding new gold mines used to mean inflation automatically. The British pound is a FIAT currency after-all.
  • Financial Community Is More Selfish Then Carney Lets On: One thing that will come up multiple times in Value(s) is that Carney underplays just how much investor folks are more self-interested then altruistic compared to a bell-curved population average. There is a stronger interest amongst financial specialists to capture a value / capital / make money which is why some folks getting into finance in the first place. This mentality is what Bill Maher / Marxism / Socialism ridicules. That ridicule asks what did you do to become so wealthy, BitCoin enthusiasts or stock speculator? Reading the market? Fundamental analysis? Financial players are mostly in the value capture game rather than value creation game and so their service is more to help price assets and to allocate capital which is valuable to be sure….but they definitely incentivized by making money themselves over that of allocating scarce capital….
  • Multiple Pathways: Perhaps influenced by his British spouse (“happy wife, happy life”), Carney is very much a British man with a Canadian accent, the book is written in British English with “s” and not “z” for equalise, organise and characterise, autumn instead of fall. In the Audible (audiobook) version of Value(s), Carney pronounced aluminum the British way (“Ali-min-ium” and not the Candian way “Aluminum”.) Expect that as a line of attack if he does join the political fray via the Liberal Party of Canada. There are multiple pathways for Carney, Canadian PM, best-selling author and another global post. It’s a win-win to suggest he’ll enter Canadian politics….it sells more books.
  • Market Logic and the Ideological Spectrum Are Illusions: David Simon another brilliant man (wrote ‘The Wire” HBO show) and Mark Carney have much in common: they both protest capital as the problem and solution. I have long maintained that money is a proxy for value. It’s the values that people price that is the problem/opportunity. The wealthy tend to value putting a high price on drug offences and sending drug dealers to jail. David Simon makes a relatively cursory case for mitigating the negative effects of capitalism but the problem he and Carney have is that it is what is in human nature that needs to be harnessed. We are cruel to be kind and we are adaptable to how value is measured.
  • Gell-Mann Amnesia Effect: If Carney says one thing that I think is a bit wrong, then does that error mean the areas in which he is an expert and I don’t have enough knowledge could also be wrong as well? This is known as the Gell-Mann Amnesia Effect. David Simon’s criticism of political donations do lack a bit of nuance…off topic, I know, but Simon is right about the Ideological Spectrum and is a brilliant TV writer but his views on political donations are a bit warped; The Wire and Political Donations. David Simon is misguided on political donations, first it’s often reverse causation, interests donate to the horse they think will win and or aligns with their views already. And no one will ever prove my case or otherwise conclusively as politicians vary. Second, if a politician collects $1M from special interest X and $500K from special interest Y in which Y is the opposite of X. Then the politician is not perfectly beholden to either X or Y donor, is she? Boom! The politician has $1.5M from donors that he/she will show to be satiating. Same with any one voter or one million voters. Gather up trust, potentially betray said trust with the plausible deniability of the legislative process…that is how politicians operate in a representative democracy, it’s ugly but true.
  • Writing This For A Long Time: Mark Carney’s PhD thesis was “Dynamic advantage of competition.” In one sense, that’s obvious but not for people doing the dynamism. Competition is really bad for the people doing the creating. Makes you strong yes, but no one willingly supports competition at the entrepreneurial level. So this hits on the issue of the expert may not be the most appropriate person to build the future. 
  • Euro-Ameri-centric? Is Carney really talking about Anglo-Saxon and European conceptions of value for the most part or where is the line there? Does his message resonate with different cultures that he doesn’t work in very much? Is Value(s) getting translated into Mandarin? Will the general public read this book as closely as I have? 
  • Another MacKenzie King Mention Here: From a political perspective, Carney is aligned with the 3rd way style Labour party of Britain that can create successful coalitions with various interest groups with competing appreciations for economics. His embrace of the market as well as some undefined mixture of solidarity is not novel, it is precisely what MacKenzie King did by showing he could work with both labour and management in contract disputes. 
  • Expert/Metaphor Disconnect, Should the Pope Be Dictating Public Policy? Is it possible to turn grappa into wine? People of all socio-economic statuses drink wine, but grappa is a very European thing…is the Pope out of touch or is Mark Carney out of touch? Or am I missing out on the finer things in life? Is the Pope really just saying that human nature suggests that we need to impose agreeable behaviour? The folks who typically self-select into banking are focused on enhancing their own interests (and their shareholder by the way) by maximizing shareholder value, buying low and selling high and thus capturing value. To a certain extent value creation through the allocation of resources is certain value facilitating and thus partial value creation and value capture….
  • Great Speaker: Carney gave a commencement address for the University of Toronto, 2016-2018 MBA program which was further insight into his thinking…

Parenting

how to talk so little kids will listen: A summary

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how to talk so little kids will listen | summary

All Rights are held by Faber and King, post is for educational purposes.

The following are notes on how to parent effectively for toddlers by Joanna Faber and Julie King, who just so happen to be the children of Adele Faber and Elaine Mazlish the authors of “How To Talk So Kids Will Listen & Listen So Kids Will Talk” fame. I have found these technique very useful, not just with kids but my spouse and colleagues! Strange but true.

how-to-talk-so-your-small-child-will-listenDownload

Part 1: Chapter 1

Handling Emotions

Tool 1: Acknowledge feelings with Words

  • “You wanted to continue to do X. How disappointing!”
  • “It can be so frustrating when X, Y, Z falls apart, breaks etc.” 
  • Acknowledging feelings is critical. Imagine telling an adult that their desire to sleep in on Monday “would get up fired, fool!” or that “you’re not really tired!” We as adults often just want to be heard, we don’t actually want to solve our problem we want to express our emotions and get sympathy not solutions. Whether you’re a co-worker, adult friend or child, the best way to get on someone’s side is to empathize with them. 

Tool 2: Acknowledge feelings with Writing

  • “We don’t have that on our shopping list, write it down!”
  • “You really want that toy. Write it down for Santa or gifts!”
  • Documenting considerations, writing things down is sometimes viewed as a liability. In reality, writing things down will help shift your mind off of the consideration and make space for other matters. In negotiations, repeating what your counterparty has just said is a powerful mirroring technique. With a child, writing considerations down = problem solving and it works to calm them. 

Tool 3: Acknowledge feelings with Art

  • “You are sad, sad, sad” [draw a stick figure with tears or give the child the pencil to your child to have them show it off]”
  • “You are this angry” [draw an anger line]
  • Pencil out exactly how your child feels, this will help them to calm down, stop screaming and crying will lead to maturity. This same logic is precisely why powerpoint presentations have such a dopamine effect, a good powerpoint provides the illusion of completeness, clear, compelling and memorable. At a minimum, you will feel better after having a visual medium represent your concerns. Same applies to your child.

Tool 4: Give in Fantasy what you cannot give in Reality

  • “I wish we had a billion more hours to play”
  • When you wish upon a star….our aspirations are very different for our reality. It is cathartic to express those aspirations. As long as those aspirations aren’t too crazy. A lack of imagination is a scary thing, be mindful of people who are insecure about their own lack of imagination. Kids though, they are unencumbered by a world view….let dreams relax them.

Tool 5: Acknowledge feelings with silent attention

  • “Ugh!” “mm” “ooh” “huh”
  • In a negotiation, a long pause is sometimes the most effective tactic to come to an agreement. With kids, the same is true. Let your child know that you aren’t trying to monopolize their mind. Stop talking so much. Be comfortable with silence. You will be happier at work, with your spouse and your kids.

IMPORTANT NOTES

  • All feelings can be acceptable. Some actions must be limited! Instead of acknowledge and then “But”, substitute  with “the problem is…” or “Even though you know…” 
  • Letting a child get to the acceptance stage and then smacking them back down with a “but….” is the worst. Don’t go into the solution phase too quickly. 
  • Resist the urge to ask questions of s crying kid
  • Mirror their emotions. Oscar performances help. 

Part 1: Chapter 2 

Engaging Cooperation

Tool 1: Say It with a Word (or Gesture)

  • “Garbage!” “Blocks!” “Toys!” to indicate clean up. 
  • Instead of stating three or four words, just say one word for example, instead of “don’t forget to put your chairs back” just say “chairs.” Rather than overtly tell an adult the exact thing you want them to do, give them more flexibility to internalize the problem and then correct it themselves. People want to be empowered. By enabling the receiver, of a single word command, the chance to digest the problem and then interpret the likely solution, you are going to get a higher rate of compliance. Works with kids, by the way. 

Tool 2: Be Playful

  • Make it a game “Can we get to the bath tub before the timer beeps? Ready, Steady, Go!”
  • Setting a unique goal will help motivate. For example, calorie counting using Weight Watchers, helps moderate consumption. Gamification is not just a fad from the 2010s, we are wired to play and compete. Talk like a duck, avoid lava, or take a fake energy pill, these are games to get your child onside. However, if you do the opposite you will be in trouble: “If you throw sand one more time…” Throwing sand one more time is a challenge. Setting a red line in the sand will dare your opponent to cross that red line. Therefore do not say that phrase. 
  • Getting a child to wear a winter coat can be difficult. You could create a temperature measurement graph and then indicate the current days temperature and then suggest that this was the temperature for wearing a coat. This way, instead of telling your child what to wear you can check the thermometer, have him or her check the thermometer and tell you what they need to wear. This exact same model is used in the financial sector through the policy rate of any country’s central bank. Macro-economic forecasting realize on generalizable indicators such as the employment numbers.
  • Make inanimate objects talk “I’m an empty glove. I need a hand” 
  • Try the very hungry nail cutter nail clippers that talk to your child….
  • Use silly voices and accents “I am an airplane flying into your mouth”
  • Humour is one of the best antidotes to master/slave relationships at work or at home. If you can make your counterparty smile or laugh then you are in a strong position to influence and effect positive change. 
  • Pretend “We’re going through the enchanted forest to bed time.”
  • Painting visual pictures in the minds of your audience will get them far more into your mindset and ideas then otherwise. Visual hooks are a powerful persuasion technique. Pretending to fly in public might be embarrassing but it beats yelling at your kid! 
  • Play the incompetent fool “Where does this shoe go? On your head? On your arm? So confusing!
  • Making minor mistakes drives perfectionists mad. But perfectionists are rarely the most effective co-workers. As with your kids, little mistakes done playfully can unwire a bias toward ideological thinking and can unleash creativity in others. 

Tool 3: Offer a Choice

  • “Do you want to skip to the X like a bunny or crawl like a crab”
  • Probably the most widely used parenting technique. At work, if you give the colleague the power to choose a path for themselves they will be more likely to follow you. Avoid false choices like “I can spank you with my rights hand or my left hand.” 
  • Picky eaters for example: having a meal plan where the child can checkmark which option they would like to eat  is an example of empowering your child. 
  • If a colleague isn’t feeling a meeting, then you should consider closing up early. Do not feel obligated to take the full hour because you booked an hour. 

Tool 4: Put the Child In Charge

  • “Martha would you set the timer to let us know when to stop?”
  • “You are this angry” [have her draw an anger line]
  • Giving your co-worker the chance to present their views uninterrupted is important. Let them field their ideas in public or in private conversations. That will give rise to more cooperation. Same deal with kids.

Tool 5: Give Information

  • “Garbage goes in the trash” “Hands are not for hitting.”
  • Stating the rules, re-enforces their usage. 

Tool 6: Describe What You See

  • “I see most of the blocks put away in the toy box. There are only a few blocks left to go.”

Tool 7: Describe How You Feel

  • “I don’t like X” “I don’t like y” “I am frustrated” never “You did x, y….”
  • Instead of saying, “you spilled the milk” you can say “I really don’t like it when milk is spelt”. Instead of being accusatory towards the other person with “You”, you’re saying “I” have a problem with that this technique. This technique is universally effective wherever people are involved. Try it with your kids.

Tool 8: Write a Note in the Voice of Objects or Requirements

  • “Put me on your head before riding. Love, your bike helmet”
  • Make a sign that says kitchen open at 7AM so that your child knows not to come into the kitchen until 7AM.

Tool 9: Take Action Without Insult

  • “I’m putting X away for now. I can’t let you Y others”

IMPORTANT NOTES

  • Don’t turn choices into threats. Make sure the options are acceptable to you and your child.
  • Appreciate progress before describing what’s remaining to complete.
  • When expressing disapproval, always use “I” rather than “you.”
  • Express strong reactions sparingly, it can feel like an attack.

Part 1: Chapter 3

Resolving Conflict

On Rewards and Punishments:

  • If you do this then I give you that doesn’t work. Rewards don’t work because they are subject to inflation overtime and eventually he or she will wants a new house for getting dinner done for 6pm 5 days in a row. Reward to help with mechanical and simpleton tasks but as soon as it involves creativity rewards backfire.
  • There are three drivers for children:
  1. Autonomy: the ability to be self-directed;
  2. Mastery: to master a subject or problem;
  3. Purpose: the sense that the work has purpose or value.
  • Replace punishment with more peaceful solutions. The only consequences that you can really manage are logical ones which are subjective. Logic, math are human constructs. Punitive consequences aren’t viable in the working world because employees have choice. 
  • Timeouts do not work because it does not address the problem. Turns out that it doesn’t lead the child to think “Geez, I should respect my sister and brother, as a result of my actions, I am in a time out.” In reality, the child is more likely to think “it’s not fair and I hate my sister for forcing me to be in the time out. She pushed me first!” Or even worse, “I’m mean to my sister, I am a bad person! Unforgivable!” 
  • Natural consequences like gravity pulling you down causing your child to hit the ground are the best teacher because the child is 100% owning the decision, action and the consequences but when you’re intervening, you are applying a logic to the situation. 
  • For example, if you come to my class late “the door will be locked” or “you’ll have to stay after the class”…These aren’t really true exercises in logic. More of a free association to make the offender suffer. These approaches you between yourself and your child.
  • Getting a consequence and a punishment….the child is still getting pain in the hope of changing their behaviour.
  • But why do we punish? Physical abuse doesn’t really work. Punishment works for some kids, I was a miserable kid in the short-term. It produces quick results…
  • You might have to use the harsher punishment. But it doesn’t help in the long run. 
  • Kids who are punished through corporal punishment are more likely to misbehave in the future, according to some studies. Of course, in longitudinal studies of those children, it’s  hard to know how much personality/self discipline play into these decisions.
  • Kids who are punished hardly can develop fear and aggression towards other children! 

Tool 1: Express Your Feelings….Strongly

  • “Hey, I don’t like to see people being pushed around!”
  •  Alternative to punishment: give the child the opportunity to learn from their mistake.

Tool 2: Show Your Child How to Make Amends

  • “Your boy was scared by you. Let’s do something to make him feel better. Perhaps give him X?”
  • If a colleague has made a grievous error, then give them a chance to be the hero. This is the same for children. Show your child how to make amends. The best chance to get a child to do something better is to give them a chance to redo what they just did. Give them a re-write. This way he or she can see there’s a potential actual to do good.
  • So first you comfort your daughter and express your disappointment with your son. You can come up with some ideas like he can play with the blocks in his room or he can play with the blocks when his sister is not around. Maybe he needs a special word for you to come in to intervene and prevent his sister from attacking his town. Get your son to think about how to make his sister happy so that she does not attack his blocks….

Tool 3: Offer a Choice

  • “We’re going to give the see-saw a rest. I can see you are in no mood to wait for a turn. Swing or sandbox. You decide.”

Tool 4: Take Action Without Insult

  • “We’re heading to the car. We’ll try the backyard another day. I’m too worried about children are getting pushed right now.”
  • I take action to protect the child from harm, this is not about providing consequences or punishment for those consequence. I’m putting the blocks away for now, I’m too worried. I don’t want to see broken heads or bones.
  • “We’re leaving the library, I can’t afford to have books thrown on the floor.” What could be more valuable than punishment as the average parent? Freaking artificial punishment for actions don’t work either.

Tool 5: Try Problem-Solving

Step One: Acknowledge feelings

  • “I can see that you don’t want to hold my hand. It makes your fingers feel squeezed. Let’s solve this problem…”
  • Get the child on the same team. First, except the emotional joy of riding a tricycle in the living room. Second, can you define what the problem is which is that your little sister could get her fingers caught in the wheels. Thirdly, we need an idea to solve for the problem.
  • Acknowledge their feelings then get them involved in the problem-solving. Don’t develop solutions in a vacuum.
  • Have your kids come up with a way to solve problems. Don’t try to solve the problem for the child.
  • If there is a dispute over who should have control over the remote, for example, don’t make the dispute something you can belittle because it’s important to the child.

Step Two: Describe the ProblemJoanna Faber and Julie King

  • “The problem is, I worry about children slipping in the parking lots”
  • Make sure you have a short explanation of what the problem is. The problem statement has to be short and touch on how that problem affects you as the parent. Simplicity is key at this stage. The classic business statement is: “I’m not sure we’re asking the right questions, solving the right problem.” 

Step Three: Ask for Ideas, Put Them in a table

  • “We need some ideas so we can go back to the park and have a good time without people getting mad or scared. What can we do?”
  • Giving your colleagues the chance to test out their ideas in the wild is critical to helping resolve deadlock. You need to ask to document out all the truly preposterous ideas from your child and put them down into this discussion. Build your list with your child’s and your ideas, find ideas that you both like. If the child has come up with a solution, then they will want to test it out if they never get a chance to test out the solution then they will not want to play. 

Step Four: Decide which ideas you both like

  • “So you like the idea of holding on to my sleeve and leading me to the playground.”

Step Five: Try out your solutions

  • “Here we are at the parking lot. Gram by sleeve and show which way to go!”
  • So you have an example of a kid who doesn’t want to take a shower because he doesn’t want to wash his hair and get water in his eyes. So you sit him down with a ledger but the kid wants to put down some strange ideas. That’s ok. He comes up with some creative solutions. Parent asks: “what animals do you like shower with?” Child says “A fish!” Parent replies: “Ok which animals don’t like showers and water?” Child answers “Cats!” Parent asks “what about at the swimming pool? How can wash your hair without getting water in your eye?” Child says “I wear goggles at the swimming pool…” Parent answers, “OK then next time you should wear goggles in the bath tub and I can wash your hair!”
  • The week before an airplane flight you can come up with a game with a list of things you can do while being stuck in the seat. Each kid might wanna pack colouring books instructions on how to build an airplane 20 questions game.

IMPORTANT NOTES

  • If nothing is working, you may have to reconsider your basic expectations: blood-sugar, sleep etc.
  • You don’t have to wait for a problem to occur in order to use problem-solving. When possible, plan ahead!
  • Show respect for the conflict. Don’t minimize.
  • Remove the disputed object temporarily.

Part 1: Chapter 4 

Praise and Appreciation

The Dangers of Praise

  • Praise can often backfire! For example it might make your child feel threatened. At work, the person receiving the praise may think that this is just to keep you off their back to give you a virtual sticker or badge to keep you motivated. In other words, it might seem fake. Sometimes appraise can seem performative.
  • If you are in the basketball court and you miss 10 shots and then you make the 11th while someone walks in and they say nice shot…do you play a pick up game with that person or do you rush home out of fear you’ll be exposed? Praise isn’t always a good thing.
  • Kids who get a lot of praise early tend to flounder in middle-school because they’ve done it. They start to think “So what?” When a child has been told that they are good, why would they risk their status to do another worksheet of math problems? If a child has been complimented in a descriptive way, they will proceed and progress. The kids who are told they are smart or bright tend to struggle when they encounter difficult problems. When they struggle, they might fail to rise to the challenge.

Tool 1: Describe What You See

  • “I see green lines that are zooming up and down the page. And look how they connect all these red shapes!”
  • Describe what you see; don’t evaluate what you see. “I see green lines that are zooming up and down the page.” And “I see a bare floor.” 
  • Instead of just saying “that’s really good” describe what you’re seeing because that is a form of affective praise since it gets the end-user to understand the situation.
  • Instead of a good job on getting your coat on, try “you kept on working on those buttons until they were in that little button hole.” 

Tool 2: Describe the Effect on Others

  • “The baby loves it when you make those funny sounds. I see a big smile on her face.
  • Criticism in the midst of a struggle hurts. To say that you are doing fine when the child is struggling. Motivation comes from progress, that “ B is well written.” Appreciate the positive, and then say what needs to be done instead of criticism. Instead of focusing on the mistakes, focus on what the child has already achieved. 

Tool 3: Describe Effort

  • “You kept working on that button until you got it into that little button hole!”
  • You should praise effort. Instead of good job on those gymnastics; try “you kept on walking on that beam, never giving up.”

Tool 4: Describe Progress

  • “You sounded out each of the letters and you put them together. You read a whole sentence!”

IMPORTANT NOTES

  • Consider asking questions or starting a conversation instead of praising.
  • Sometimes acknowledging feelings can be more helpful than praise.
  • Give a child a new picture of himself.
  • Instead of “I’m proud of you.” It’s more effective to say “you must be pretty proud of yourself.”
  • Praise descriptively; hold a mirror up to themselves. Children and coworkers are self-centred because they can only experience reality through their own perceptions.
  • Resist the urge to praise by comparison.
  • “You did this yourself, you’re sibling can’t!” Careful, that’ll backfire. The problem is we don’t want the child to then feel competition with their sibling. 
  • It is usually a dangerous thing to compare someone unfavourably in the work place. Avoid it if you can.

Part 1: Chapter 5

Differently Wired Kids

Tool 1: Join them In their World

  • “Can I play the Space Game with you? Will you show me how?”
  • You don’t want to have unrealistic expectations of your child. 
  • Optimistic plans get dashed. Have simple and less expensive disappointments. Setting expectations low is helpful with colleagues. If they surpass your expectations then you will be more grateful and they will feel more fulfilled. But don’t set expectations so low that it seem bigoted. 

Tool 2: Take Time to Imagine What Your Child Is Experiencing

  • “So to you, the seams of the socks are very irritating!”
  • Handle frustration with your frustration and support. Be on your child’s side.

Tool 3: Put into works what Kids Want to Say

  • “You bad old rain! You took away Johnny’s recess!”

Tool 4: Adjust Expectations: Manage the Situation not the Kid

  • “Let’s take a diaper vacation. We need some time to relax and not worry about peeing in the potty.”

Tool 5: Use Alternatives to the Spoken Word

  • Notes, Checklists, Pictures, Songs Gestures
  • Difficult visual styles will help sink in what it is that you are trying to convey here. 

Tool 6: Tell Them What They Can Do, Instead of What they Can’t

  • Notes, Checklists, Pictures, Songs Gestures
  • “You can throw your stuffed animals”

Tool 7: Be Playful

  • “It’s time to put away the blocks. I need help from the human wheelbarrow”
  • Don’t expect new skills to be used consistently. 

Ensure the Following Conditions Have Been Met:

  • Not hungry.
  • Kids can’t act right when they don’t feel right. 
  • You don’t want to miss lunch! You have a fight and flight response, remember that the blood sugar level has to be in a reasonable range in order for any parenting techniques to work. 
  • Not sleepy.
  • Not too rapid back to back.
  • Not feeling overwhelmed.
  • Not enough development or readiness for something new.

Part 2: Chapter 1

Eating Food

Meal Etiquette

  • Don’t insist that your kids clean his or her plate, eat a specific food, or eat a predetermined amount; Maybe let the child pick what they want to eat. Put the food they would like on their plate.
  • Don’t offer dessert as a reward for eating healthy food or withhold it as a punishment for not eating. It creates a negotiation where there shouldn’t be one. I’ll do this if you do that. 
  • Don’t be a short order cook. You should have a substitute perhaps, but don’t make it a constant.
  • Don’t label your kid a “picky eater.”
  • Don’t make food a battleground!

Tool 1: Acknowledge Feelings

  • “Even if you usually like lasagna, you’re no in the mood for it tonight.”

Tool 2: Offer Choices

  • Put an empty plate in front of your child and let him serve himself, or ask for what he wants if he’s too young to serve himself.”
  • Serve some of the meal as simple separates so kids can make choices about what they put on their places.
  • Offer a simple alternative if kids don’t want the “grown-up” food – peanut butter sandwich, bread and cheese, hard-boiled.
  • Offer a simple alternative if kids won’t want the ‘adult food’.

Tool 3: Manage the Environment

  • Make it easy to avoid temptation! Keep sweets and sugary drink

Tool 4: Put the Child in Charge

  • Let the kids plan the shopping, meal prep and other planning

Tool 5: Give Information

  • Let kids know that ‘tastes change” so they don’t feel stuck with their limited palate. Tell them “You might
  • want to give this a try when you’re ready”

Part 2: Chapter 3

Sibling Rivalry

Tool 1: Accept Feelings

  • “It can be frustrating to have a baby sister!”

Tool 2: Give Wishes in Fantasy: let the child be a baby

  • “Come sit on my lap and be my super baby!”
  • “Rock-A-Bye Baby” wrap the old child and sing that song. 

Tool 3: Describe What You See:

  • “You figured out how cheer up your sister when she’s crying”
  • “Your old brother made peanut jelly sandwiches for us today!” 

Tool 4: Put the Child In Charge

  • “Can you pick a board book for the baby? She likes it when you read to her.”
  • “Can you read to your sister?” 

Tool 5: Reconnect with Your Child

  • Plan for a special One-on-One Time
  • “Would you like to make cookies when the baby takes her nap? Or snuggle up and read your pop-up books?”
  • Tell the older child about their Baby Days “I remember you…”

Tool 6: Take Action Without Insult

  • Don’t cast the child as the aggressor “I need to separate you two.”

Tool 7: Try Problem-Solving don’t take sides

  • “Both Martha and Daphne want to build towers. Any ideas?” 
  • “This is a tough problem. We need ideas.” 

Part 2: Chapter 5 

Lies

Tool 1: Describe What You See

  • “I see chocolate on your face.”

Tool 2: Describe How You Feel

  • “I’m upset that the cake was eaten! I wanted to serve it.”

Tool 3: Acknowledge Feelings

  • “It’s not easy to resist cake. I bet you wish you hadn’t eaten it.”

Tool 4: Try Problem Solving

  • “Next time you’re tempted, let me know. I’m sure we can find a way to help you wait.”

Tool 5: Adapt Expectations

  • Think to yourself, the next time I buy a chocolate cake, I’ll put it out of sight until it’s time for dessert.

Tool 6: Help the Child Make Amends

  • “We’re going to need something for dessert. Can you get out some cookies and arrange them on a plate?”

Part 2: Chapter 6

Parent Have Feelings Too

Tool 1: Express Your Feelings…Strongly

  • “Instead of “You’re being rude!” Try “I don’t like being told I’m mean. It makes me mad.”

Tool 2: Tell Them What They Can Do, Instead of What They Can’t

  • “You can tell me, “Mommy, I’m disappointed! I wanted to go!”

Tool 3: Don’t Do Basics – Give Yourself and Your Child Time to Recover

  • “I’ll talk to you about it after dinner. Right now I’m too upset.”

Part 2: Chapter 7

Tattling

Tool 1: Acknowledge Feelings “It hurts to be poked!”

  • Tattle for the pleasure of power. If you set up rules and one child tattles about something he did then it’s like building dirt on other people. “I can see why you would want to have me punish the other person here.”

Tool 2: Help Make Amends “Let’s clean up the mess”

Tool 3: Try Problem Solving

“How will we remember not to touch the stove dials? We need ideas”

Part 2: Chapter 8

Cleanup

Tool 1: Be Playful

  • Talking shoes “Please put me in the closet”
  • “How many minutes to put away your toys?”

Tool 2: Offer a Choice

  • “Do you want to be in charge of putting away the books or car?”

Tool 3: Write a Note

  • “Please hang me on the hook. Love, Your Winter Coat.”

Tool 4: Describe What You See

  • “I see banana peels on the floor.”

Tool 5: Give Information

  • “Peels belong in the compost.”

Tool 6: Say it with a Word

Tool 7: Describe Progress

  • “You got that whole pile of dirty laundry in the basket!”

Tool 8: Describe What You See with Appreciation

  • “Wow, look at this cleanup you did. The floor was covered with dirty laundry and train tracks, and now it’s cleared.”

Part 2: Chapter 9

Shy Kids

Tool 1: Acknowledge Feelings

  • “It can be hard to walk into a new house filled with relatives. Lots of people want to say hello to you. That can feel scary.”

Tool 2: Adjust Expectations

  • “You can carry in the chips and put them into the bowl for people to eat.”

Tool 3: Offer a Choice

  • “Do you want to sit on the couch and watch kids set up the trains? Or do you want to have a snack with the grown-ups first?”

Tool 4: Be Playful

  • (Sock puppet talking) “Would you like a corn-chip?”

Tool 5: Put the Child in Charge

  • “He will join you when he’s ready!” 

Part 2: Chapter 10

Little Runaways

Tool 1: Adjust Expectations: Manage the Environment Instead of the Child

  • Avoid outings that seem like fun but will be more stress than pleasure with a small child.

Tool 2: Acknowledge Your Child’s Feelings

  • “You don’t like it when your hand is squeezed. You want to be free to look around.”

Tool 3: Describe Your Own Feelings

  • “I worry that drivers backing out of parking spaces can’t see children.”

Tool 4: Offer a Choice

  • “You can ride in the cart or you can help push.”

Tool 5: Be Playful

  • “We need to stick close together. It’s a jungle out there. I think I just saw the tail of a lion behind that car.”

Tool 6: Try Problem-Solving

  • “Let’s think of a secret signal we can use that means we have to get to each other as fast as possible.”

Tool 7: Take Action Without Insult

  • Grab your child and go home

Troubleshooting

Tool 1: When a child is too upset to cooperate, go back to Acknowledging Feelings

  • “You don’t even want to think about visiting your friend another time. You were looking forward to going today!”

Make sure your tone of voice matches the emotion

  • “That’s so disappointing!”

Try a grunt a instead of words

  • “Ugh!” “Mmph!”

Put your child’s thoughts into words

  • “Stupid Legos! They should stick together and stay together!”

Tell the Story of what happened

  • “You worked for a long time on that spaceship. You used blue blocks for the base and red bricks for the lights and it was almost ready to launch! All it needed was the fins on the rockets.”

Tool 2: Give your child Time to Recover

  • “I can see how sad you are. I’ll be in the kitchen making dinner. Come join me when you’re ready!”

Tool 3: Help a child climb out of the pit of despair by Acknowledging Feelings, Giving Information, and Offering Choices

  • “Oh no, the skin got ripped! That hurts! Good thing skin knows how to repair itself. It’s getting busy right now growing more skin cells to cover that poor knee and make it as good as new. How many days do you think it will take? What kind of Band-Aid should we cover it with?”

Tool 3: Describe Your Own Feelings

  • “I worry that drivers backing out of parking spaces can’t see children.”

Tool 4: Take Action

  • “You want candy for breakfast! I’m putting it out of sight. It’s eggs or cereal this morning.”

Tool 5: Check on “The Basics”

  • Is your child lacking food or sleep, or feeling overwhelmed? Is your child developmentally ready to do what you’re expecting?” 

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Business, Finance

Howard Schultz on Leadership and Politics

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Jump Into The Pool

Entrepreneurship is getting increasingly possible with technology and access to capital. This is an enormously good time to become one, you need to understand fiduciary responsibility and the values you want to bring to the business. If you have a great idea that you are passionate about you need to decide if you are willing to make the sacrifice. There is no mentor, no instruction manual; you simply need to jump into the pool. 

Find out what the price of success is and pay it.

Starbucks as a Value Based Company

In 1986, Starbucks was a coffee supplier with 10 stores. They believed that values and profits were not mutually exclusive. Schultz grew up in the projects and when his father broke his hip, he was fired and there was no hope in the family. That memory sticks with Schultz so much that Starbucks has an employee healthcare plan that invests in people. There is an employee college degree program. Starbucks had a race relations day in 2018 in light of a discrimination in their stores. Starbucks values are progressive.

Starbucks China

Starbuck has >3500 stores in China. So how do you transfer your culture in a different market? Howard Schultz actually had struggled with China, he sent two Americans to lead the Chinese expansion. It was a Tea-drinking society. But bad management decisions were reversed when Belinda Wong became CEO of Starbuck China, she was able to attract great people, identify the right cultural mix and bring the Starbucks brand into the heart of the Chinese consumer.

Localizing Your Brand to Other Cultures

Jack Ma asked Howard Schultz to speak in China in front of his Alibaba staff. As Schultz was talking, he noticed that most of the people in the audience were really old. But it was explained to him that those were the parents of the employees. Every company wide event, Ma invites the parents of the employees because the family unit is so important to Ma. Jack Ma created a family company. Howard Schultz copied that so that Starbucks employees invite their parents, aunts, uncles and celebrated the children and the family, to grow with the company. They want Starbucks healthcare for the parents; created with the Chinese government and an insurance company. The price of admission is that you need to be value based but you need to have the financial performance as well. Again, these aren’t mutually exclusive things, according to Schultz.

Be Intellectually Curious

You should be looking around corners and see what others don’t. Sometimes you will be in an uncomfortable situation because of that. You can’t learn stuff in a textbook. It’s not the worst thing to make a career mistake. Learning and practicing your craft in whatever role you are in now is critical.

For example, Howard Schultz worked for Xerox because it was considered such a great company. Xerox training centre for professional selling skills. He became an assistant of a sales. You had to take the humility of rejection and perseverance and keep going in sales. Creating leads for the actual sales person.

Ask HR What You Can Do

Ask them by stating: This is where I am today, what can I do outside of the reference of my immediate job to go get myself more informed and more involved. Ask your manager, why was that decision being made? You have to be prepared to learn, asking questions.

Easier to Disrupt Rather Than Invent a New Category

Most business ideas that turn into startups: those businesses to do not succeed. As a baseline, the odds are against you. There is always this question of what is the best road to take. Should I disrupt a category or invent one. It is very very hard to change consumer behaviour. Unless you have the most compelling platform and win the long race of losing money, it is much easier to disrupt an existing space.

What size of a business are you thinking about?

Howard Schultz invested in AllBirds shoes, the ethos and the quality of the shoe, social media and emotionally engaging with the consumers set them apart. There is always an opportunity for a niche player and we will have the nibble-ness that big companies simply don’t.

Importance of Focus

You need to have Focus on the business. Where can you add to the business. You will have a challenge and see where you can see where you are applying your time. Assess what you think that you have had the impact that you think you should have had.

Ensure Your Economic Model is Viable

Everyone has a financial model and economics. If you can get 20% operating margin, you’re good ie if you have a 1M store you want to get a profit of 200K. If you are getting only 10% then you aren’t doing it right. Use the monthly income statement as a report card of what you already know. The income statement is just on aspect of the company. But the other issue is the values of the company. You should be engaging people on what is going on. Don’t be formal about these things; you need to be in the mud.

Think Customer First

Always imagine the customer and the employees at the table during your decisions. Does this solution improve the customer and employee story?

Do Your Due Diligence

If you are getting investors, do your due diligence on them. Their history should be the due diligence on the company. Talk to the entrepreneurs on how they acted in the past given a certain situation. You should want to know how that person has acted in the board room. One question is going to be how will we work together when/if things go wrong. Then set up a hypothetical. How can I rely on you. Then ask that person with the investors. Do your homework on your investors.

How much equity to give up?

As little as possible. At the same time, most CEOs are worried about control, but you can maintain control of the company even was 10% or less of the ownership as long as you lead well and keep making money.

Under promise and over deliver

The entrepreneurs should explain why they believe in the idea. It has to be personal relationship with the project. You have to promise the investor, with 100% conviction, that the investor will get the rate of return that they deserve.

Overinvest in Culture

Culture has been a catch-all but what does it really mean. It is vitally important in order to be success. You should understand human behaviour and then elevate your group of people that they are part of a company that is larger then themselves and their behaviour which will ultimately define the company. You want to have a company where your people are talking about their job in a positive light at the dinner table. They should love what this company stands for. You should also look at the actions you might not approve of and stand up and say that is not consistent with the brand of the company. And then have townhalls where people can express how they feel and where there will be no retribution and have it out. No retribution is key.

Hire a Values-Based Team

You should try to attract great people. People don’t want to be managed, they want to be part of something bigger than themselves, they want to see themselves as part of that vision, they want to be appreciated. So a good manager should create the atmosphere that we are building something larger than anyone of us.

You have to have a high standard, and you have to define what is mediocrity, what does it mean, what does excellent performance. “Our individual and collective responsibility is to the 300K employees of Starbucks” Howar Schultz. If you see something inconsistent with the value and you basically let it slide then you’re screwed.

Dealing with Competition

Do your homework about the marketplace. Features, benefits, price and experience understand it. Be mindful of the competition. We should be in control of our own destiny and need to believe in our own goals, regardless of the competition.

Cannibalize Yourself, Innovate and Undermine Your Comfort Zone

You have to be ahead of infrastructure, can the company take on a new startup like project? On the one hand companies chase too many things too early. Schultz doesn’t think that you can create value in having too many projects with the limited resources you have. You want to have incrementally accretive improvements to the brand.

Leadership

It’s easy to lead when things are going well, it’s harder to lead when things have gone the wrong way. Growth typically covers over the mistakes. So the challenge is to continue the behaviour of an entrepreneurial. Story telling is a great way to tell the story of the company.

Transparency Means Sharing the Responsibility

In 2008, Starbucks suffered from hubris. Howard Schultz had to return to the company as CEO. He wasn’t really paying attention at board of directors level. So on his return, he said that here is the real problem; we are losing money for reasons X, Y, Z and there is a financial crisis right now. Schultz believes that you should trust your people enough to give them that information. How can you ask of them if you don’t share with great transparency. 50% of our customers who came last year, aren’t coming to Starbucks this year. The economic crisis was completely challenging. Are you going to hide the ball or share that bad information? Schultz believes you should share it so that people can take action on the ground.

Cuts Sometimes Must Happen

You might have to make cuts if the downturn is serious. The sooner you make the cuts to the company the better. There will be a significant impacts. You need to show empathy in that situation. You should dream it, but never say it out loud. There is no straight line, most of the challenges are not going to appear in the textbook. Make sure you have the right team in your game.

Presidential Run – January – March 2019

Howard Schultz initiated a presidential run in 2019 that looked at running as an independent and not a democrat. While it was short lived, it was memorable and thoughtful.

Schultz Identifies the Problems in US Federal Democracy Well 

Parties Are Bunk

The two party system is a duopoly that does not represent the American public. 

Extremism

is both a means of intensifying the GOTV “get out the vote” and a product of gerrymandered seats where the only flank to worry about is even a less compromising extremist insurgency (progressive left and radical right). 

Hyper-Partisanship

If you say one thing positive about your opponent or move 5 inches away from the ideology, “you’re out” your own party will enforce a toll on you.They are unwilling to work together, hence the need to break the status quo…

Hyper-Media Partisanship

As mainstream media became increasingly under threat by a new online forces, they too have re-oriented over the last decade into hyper-partisan, re-enforcing.

The Public Doesn’t Get Represented

It’s so screwed up that really only 8 battleground states actually have impactful voters; the other 42 statesgo solidly one way or the other. While these 42 do fluctuate that gerrymandering certainly doesn’t help break the state by state red state blue state issue. If you are a democratic in a red state you’re screwed and vice versa. 

Legislative Gridlock

The federal government was not able to pass bills under Obama and then under Trump, executive orders shot up precipitously. If you read the Master of the Senate, you’ll see that parliamentary politics is a series of negotiations, faction building exercise. What Schultz was pointing out was evidently true, that the two party system has crushed compromise in the age of the internet. In the 1990s, everyone was worried that Gore and Bush seemed cut from the same wool, now it’s that the only way to get elected is to say the most unbalanced, irresponsible things.

Overlap of Self-Interest and Public Interest

Obviously successful politicians are interested in self-interest and self-preservation, and not doing the right thing on a regular basis but it is compounded by the fact that they do not know what the public actually wants…. just those who show up on their team as supporters + what can be legislatively accomplished after the election results are tallied.

Ideological Framework is A Form of Prejudice

The ideological framework that fits into two parties has been a taught way to organize voters into discreet camps. It has the comforting benefit of being able to distill complex reality into a coherent paragraph, the tragedy is that people actually believe that paragraph can make sense across all policy areas. The idea that ideology should be consistently applied is a marketing technique too, that you are voting for these specific policy preferences therefore “vote for me.” It’s goofy and wrong. The ideological spectrum does not overlay cleanly to delivery or outcomes across all policy areas. The budgetary and technical constraints of government do not match up with the ideological spectrum except in extremist regimes which are typically disastrously managed. And in fact, the spectrum is a crutch for our cognitive weakness and love of consistency and predictability, most voters should hate the left and right nomenclature because it does not reflect their needs and desires, but ultimately, people are busy and not compelling alternative is in place yet. Schultz simply said I would be the power broker between these two political machines…

Independents aren’t in the Middle

Instead, independents reject the spectrum. Being an independent is synonymous with being intellectually free. 40% of Americans are independents and it’s a mistaken idea that independents are in the middle, it’s more that they hate being owned by one or the other party which can then take them for granted.

The Schultz Brew

His solution is for him to run as a centrist that can deliver a bipartisan presidency. That can work with Democrats and republican lawmakers who he has pull but no allegiances to. Schultz wants to break the log jam in legislation. A fairly noble goal!

Getting People in a Room

Crowdsourcing policy solutions organically. This approach is a common one, but by lifting the partisan lens, Schultz is suggesting integrative solutions is what is needed.

What Schultz Got Wrong

Not offering anything truly innovative alongside his candidacy: he basically said he alone would fix the US.

Extremism is a bargaining position 1/2 of the time

The reason that hard left candidate can win is that about 50% of their supporters know intuitively that a lot of the ideas on the far left aren’t financially or economically feasible, but that the tactic Trump initiated which was to shift the overton window further to their position which will be a better starting point for negotiations in the legislative system that the US has. There are elements of free education at the university level, but education is certainly overrated, it’s the person learning that matters. The fact is there is never any thought put into the execution of the policy. Schultz has a sense of this which is his saving grace. The tepid and annoying middle, is far more likely the outcome in negotiations, and Schultz is saying “I’ll be standing right there to get deals done.” 

In Practical Terms

A big part of his gamble was that Bernie Sanders or a further left of centre Democrat would win the nomination. That turned out not to be the case as there were more centrist candidates vying for status in the eventual nomination’s team of rivals. So a running joke in Washington was that Schultz was enriching consultants who knew that he was not going to cross the finish line at all.

The Startup Logic In a Government Context

In order for Schultz to win, he has to win which seems circular but it’s true. Expectations of government are unrealistic, that projects have to be perfect from day one: Optics Optics Optics! Starbucks wasn’t built in a day though. For Schultz, he has to get Democratic and Republican voters to pivot to him in a system that has hardwired disappointing but binary choices for many many generation. The voter has to not worry that their vote is “splitting” or “spoiling” the vote before the election has been tabulated. Post-facto claims that X candidate split the such-and-such vote is a classic claim but it is wrong-headed since t only be derived after the vote. Pre-vote, it is a partisan campaign tactic. 

Howard Schultz Is Boring and Partisan

His ideas on what’s broken about US politics were spot on (I would have made drastic chances) but as a presenter, when you are competing with a train-wreck that everyone loves to hate or loves to love, Schultz was not the compelling story of 2019. He likely sold a few copies of his book however. By taking firm stances, he only subtracted from the coalition in his campaign, the triangulation trap being what it is. Saying that unions aren’t the answer to most companies he says, the management needs to do right by their employees. Don’t tell the teacher’s union of America. He was also saying the Democratic party was garbage, but then didn’t really show up with anything other than the line that he was the centrist candidate to steal votes from Trump and the eventual Democratic nominee. Ultimately, his talking points are simply a centric Democrat in the Joe Biden, Pete Buttigieg, Amy Klobuchar lane…If he had played in that arena, he might be president today. Not to say that would be how he would want to win…

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