by Brooke Allen

I was eight when we got our first television. Although it cost a month’s take-home pay, my parents consumed it sparingly, as if it were candy.

In the eighth grade I became interested in Amateur Radio, and lost interest in TVs configured as receivers, so I took one apart and rebuilt it as a shortwave transmitter. When my friends watched the Flintstones, I talked to people all over the world.

Yet television is insidious and relentless, and by my senior year in high school, my father, mother, sister, and I would spend hours each day sitting together as we drifted apart.

My freshman year at college was 100% TV-free and it felt great. As I flew home for the summer I formulated a speech about how I had no time for television.

Before I could speak, my dad told me the TV was in the barn if I wanted it for parts. My family had figured out what was happening to them. One night after dinner, my mom and my sister watched as my dad took out a .22 and put a bullet through the picture tube.

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Clay Shirky discusses television and brains with time to spare in his book Cognitive Surplus – Creativity and Generosity in a Connected Age. He says TV claims about 200,000,000,000 brain-hours in the United States each year. He estimates this to be about 2,000 times the effort that it took to build the Wikipedia in all its various languages.

Broadcast television and the Wikipedia are both things your brain can consume, but the Wikipedia is also something you can help produce. And if you do, two things will happen: 1) The world will be a better place, and 2) You will increase your connectedness with others.

In 1973, my girlfriend and I hitchhiked to Appalachia to spend a week with her aunt and uncle, who had surprisingly little news to convey about her childhood friends. “Don’t worry,” my friend said, “we’ll get the low down at the hoedown on the weekend.” It turned out there were no more hoedowns; they had been canceled once Hee Haw went on the air.

Shirky says that when lonely people watch TV, they report feeling less lonely, even though their passivity and the one-way nature of the experience makes them even more alone.

Q. What do people do when they lose a job?

A. They watch more TV. (Click on the graph above to see an interactive version of how people spend their time throughout the day. The big dark red band is TV viewing by the jobless. The tiny orange sliver is time spent working.)

When you lose a job, it is easy to feel useless and disconnected. And yet, watching TV is a useless activity that does not make you more connected – it just makes you feel as if you are.

Instead, do something with your excess brainpower (cognitive surplus). Even if you can’t find someone to pay you right away, I’m sure you can find something you enjoy doing for its own sake.

View the rest of this article for more pictures from people who have better things to do than watching TV all day (such as taking photographs). Copyrights are reserved by all original photographers.

The photo above was conceived of by model Miss LoLo who says, “The inspiration behind it was to display an independence from TV and to motivate people to think outside the idiot box.” The photo was taken by  Dave Wolanski who says, “My50th birthday was a month ago. I can hear the clock ticking and I don’t want my legacy to be that I knew all the quirks of the characters of NCIS, one of my favorite shows by the way.”

Would you go out of your way to take a photograph for a complete stranger for no money?

Eleven people did that for me.

TWICE!

The First Time: I wanted to illustrate an article about my favorite park in Japan so I wrote to people who lived near the park on my favorite social networking site, Couch Surfing, and asked if anyone had a photo lying around. None did, but 11 people went to the park to take pictures just for me. This is free time and generosity at work.

This Article is the Second Time: Zillions of people have posted gadzillions of photos on Flickr, including hundred of smashed TVs.

We asked 12 people for permission to use there photographs for this article and 11 said yes. (Still have not heard from one of them.)

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Ede swares he does not have a gun. However my father did, and Ede has the perfect photo to go with the story of how my dad shot the TV.

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Hopefully Andrina did not waste too much of her day watching this TV.

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Chase says, "The economic downturn may make it hard to find a regular job, but it can also be a great time to go into business for yourself. Invest that time in yourself in one way or another."

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Reed says his brother, his girlfriend, and he found this old TV in the desert and decided to put it out of its misery.

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Jim says, "I find that ordinary television just sucks the intelligence right out of my head. The best use for a TV is as a DVD monitor so that you can at least choose exactly what to put into your mind. Have you heard the Groucho Marx quote about TV, probably from the ealry 1950s? He said, "I find television very educating. Every time somebody turns on the set, I go into the other room and read a book."

Julia says, "I like watching TV as much as any other teenager, but I don't think that a life should depend on that."

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Whitney and some German friends found this shirt in a store and althought they did not have enough money to buy it, they tried it on in the changing room. "I, however, snuck a photo, SHHH"

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Dustin says, "I'm proud to say I watch zero TV and haven't had cable for multiple years. Life's too short to spend yours watching someone else's."

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A DISCUSSION WITH BILL BLACK.

by: Brooke Allen

William Black is an Associate Professor of Economics and Law at the University of Missouri-Kansas City. He was the Executive Director of the Institute for Fraud Prevention from 2005-07. Bill is an outspoken critic of our regulators, banking, and business leaders. You may have caught him on Bill Moyer’s Journal, or in his congressional testimony where he stressed accountability and the fact that elites refuse to accept responsibility.

I recently attended a conference on institutional decision making and group behavior. Many academics presented experimental results and mathematical models to explain how we make bad decisions. Yet, when I asked about the role morality plays in individual decision making, I was told that little research has been done and therefore there was not much that can be said about the topic.

So, I called Bill Black. I caught him at a conference run by the Gruter Institute for Law and Biology.

Brooke: You coined a term, “control fraud.” Could you tell us what that is?

Bill: Yes, control fraud is when the people that control a seemingly legitimate entity, whether it is private, non-profit, or governmental, use it as a weapon of fraud.

Brooke: There seems to be a lot of that going on now.

Bill: Yes, way too much. And the FBI just announced that property crime had fallen to yet another all-time low, because we don’t count serious white collar crime. None of the major things that cause massive losses are even counted. And, if you don’t count it, at the end of the day, it doesn’t much exist [as far as they are concerned].

Brooke: I recently sat next to a young soldier coming back from Afghanistan; a wise man at age 20. I asked him, “What have you learned?” And he said, “I have learned to make apologies, not excuses. If your gun jams because you have not maintained it, and your buddy gets killed because you can’t cover him, you have to apologize to his widow, and it is not your gun jamming that caused his death.”

He also said, “I now see my country as a nation that cannot apologize, and that is full of excuses masquerading as reasons.”

How can we be excused just because we haven’t modeled morality mathematically therefore we can’t know anything about it? This young man knows something about it.

Bill: Brigadier S. L. A. Marshall found that small unit cohesion was the absolute key. You will do astonishing acts of bravery for your little group, and you will do it for members of your group who you actually hate. And they’ll do the same thing for you.

What you see from our elites is an almost complete unwillingness to take responsibility. We even have all these flakey apologies. To take the soldier’s statement, when he apologizes, he doesn’t say, “I am sorry if you have interpreted my comments in a manner that caused you distress,” which is the standard non-apology apology that people use today that puts it on you; there must be something flawed about you that led you to take offence at your husband being shot down because my gun jammed.

Brooke: I have an MBA in Finance, and I took an ethics class, which was all about how to stay legal, and not about ethics. The strongest impact for me was in a course called Managing Organizational Behavior where we talked about the Milgram Experiments. [A series of experiments conducted by Stanley Milgram of Yale University, where he showed that most people would go so far as to give people an apparently lethal shock when instructed to do so by an authority figure.] These experiments were presented in class as things that couldn’t be repeated again. We are obligated to mention them, but don’t worry about them because we can’t repeat the experiment. But, isn’t that experiment repeated all the time? I had a hard time sleeping after that because I saw it in all our behavior. It was not Germans in Germany who did what they did in World War II, but humans, just like the rest of us, and we are all capable of that. That, combined with small unit cohesion (you fight for your buddies, not your cause) is a combination that is extremely powerful and scary, isn’t it?

Bill: It’s weird, but I had the same experience. That is the single scariest thing I have ever watched in my life, and of course, I have seen much more horrific, graphic, violent things that are real – and that was an experiment. My fear was, my god, what would I have done? I know what I hope I would have done, but after you see that film, you have to wonder. [He continued with a discussion of the Stanford Prison Experiments.] That’s why you have to have immense restrictions on abusing people you have made powerless, because it is such a human thing to abuse them.

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Perhaps psychologists consider running the Milgram experiments to be unethical these days, but reality TV producers do not. In 2006, a British TV station produced a show called The Heist in which illusionist, Derren Brown, began with 13 businessmen and women, and was able, in just two weeks, to persuade four of them to commit what they believed to be an authentic armed robbery. As part of the show, he reenacted the Milgram experiment as a test to identify his four most obedient participants. Darren got the same results Milgram did in 1963: over 50% of the subjects administered what they believed to be lethal shocks simply because a man in a white coat told them to. You can watch a report on the TV show here.

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Brooke: Are business schools doing a good job of teaching ethics?

Bill: When I am in a dispirited mood, I refer to them as “fraud factories.” They do a miserable job right now. We know empirically that in business schools and econ programs, when people enter they are materially less altruistic than their peers, and we know when they get done with the program, that is even more true. (See a paper by Gintis and Khurana.) So, through self-selection, training, and peer effect, we are turning out people who find it easier to cheat other people and to not care about other people. So, yes, we are teaching ethics, and we’re teaching it effectively, but it should be called “anti-ethics.”

Brooke: So, if you want to get a good ethics education, you should take diligent notes, and then negate whatever you are being told.

Bill: Yes, put a negative sign in front of most anything.

I refer to our prior conversation with Professor Mintzberg of McGill University, in which he said there is a clear moral obligation for colleges to disclose the flaws in their education, but not a legal one. Bill and I continued to discuss how a moral obligation is enough of a reason to refuse to do something that is wrong, and you don’t need to discuss it any longer.

Bill: That’s right. You’re done. Period. It doesn’t matter how fancy you make it, how many excuses you create, you’re done. End of story. It’s off the plate as an option if it’s unethical.

Bill explains how our simple social rules keep most of us from cheating each other. He continues,

Bill: What if you say my job is to maximize return to the shareholders, and, if it is not illegal, and short-term profitable, then am I supposed to do it even when it is immoral? If that’s the rule, then you have just developed a rule that will destroy America.

Brooke: A psychologist friend of mine says that many of her patients don’t have psychological problems; they have morality problems. They want to feel good about themselves while they cheat on their spouses, screw their business partners, or steal from their clients, and if she can’t help them with talk therapy, they want a drug. She says, “They don’t have an emotional problem. The problem is their emotions are working fine.”

Bill: Exactly. The problem is they are not listening to their body. There is something in their system that is telling them that what they are doing is very wrong.

We return to the question of whether ethics can be taught.

Brooke: A fellow applied for a job with me, and I asked if I hire him, could I introduce someone to the job he currently has because I am all in favor of helping improve employment, and when I hire someone away from another employer, I haven’t decreased unemployment, I’ve just transferred my problem to his prior boss.

He said, “I would never recommend anyone to my job because I am asked to do immoral things.”

So, I asked him why he had not quit.

He said, “What are you talking about? I need a job.”

I said, “Let me see if I have this straight. What you are doing is immoral and you don’t think anyone on the planet should do it, but you are willing to do it.”

How does this work? How can I teach someone that, if they have that feeling, they have to stop, and it doesn’t matter if they are getting paid to do it; they have to stop?

Bill laughed: Did he get it, once you talked to him?

Brooke: I might have succeeded in sending this guy home much more conflicted, because he came with an attitude that it was his employer that was causing his problem, and the solution was to get Brooke to hire him. I made it clear to him that he was not qualified to work for me. I said, “If I do something immoral, which can easily happen – I’m deathly afraid of that – I need you to tell me that I am doing something wrong. And if I don’t respond, you need to tell my boss, and Compliance, and if the organization doesn’t respond, you need to quit your job and you have to go to the regulators.” I need that because I do not think I am immune from what Milgram showed.

Bill: You expressed that it was an ethical issue where the individual had deliberately put scab tissue on to make sure he did not internally frame it as an ethics issue. All you can do with a person like that is make the point that they are acting immorally directly to their face, in a naked way, and you did it where there was an actual consequence of his unwillingness to take a moral stand.

Similarly, when you find somebody is unethical and you fire him you need to consider avoiding the advice you get from everyone and give him a negative reference. People have to take a willingness to get sued, and if that can’t work, then as a society, we have to give protection.

We must simply start teaching ethics in our own ponds with our own kids, or own friends’ kids, using our own behavior. You always look, as a parent, for teaching opportunities that are not didactic, so it was always great when someone gave me back too much change when my kids were present, because I simply made sure that they heard me giving it back, and that they were actually paying attention when I did it.

Brooke: Recently, I was on a train and sat with this young woman who is in her second week on the job working for a dubious corporation, that’s to say a large Wall Street firm, but I repeat myself.

I ask her, “What do you do if you are asked to do something unethical?”

She says, “What are you talking about? There are two sides to everything?”

I say, “But what happens when you are on the wrong side? Have you ever taken an ethics class?”

She says, “Of course. It was required. But, that’s what’s wrong with you old people, and how you guys used to be taught, because in our classes, we all get to discuss all sides, and everybody is entitled to their opinion.”

Do you think that is the right way to teach it?

Bill: I’ll give you my interaction with a young person who worked for a law firm who said, “What I like about my firm is that it is really ethical.”

You know, you don’t often hear that, so I said, “Wow, that’s great. How did you learn about that aspect of the firm?”

And she said, “Well, I know that my firm would never do anything against the interests of Israel.”

We both laughed. This would probably distress supporters of Israel, but Bill and I know that you can’t know in advance that Israel will be for all time on the right side of every issue.

Bill: I was dumbfounded. Frankly, I decided my powers of persuasion were probably impossible when dealing with somebody like that. It is bizarre what some people define as ethics.

The young woman you met was taught that ethics disappears because issues are complex, so there is never an answer, and we are not required to seek an answer.

Brooke: Many of our subscribers at www.NoShortageOfWork.com are in the New York area, used to work in finance, and are now unemployed.

One of the things I try to teach, which is probably the most useful thing from economics, is the concept of opportunity cost.

I say that when you’re unemployed, the advantage is that you can do anything because the opportunity cost is zero. You might have to struggle to get people to bid up your price, so it is a good idea to pursue things of value to others.

If you are not working at an unethical firm because you are not working at all, then you are not called upon to compromise your ethics. You will not have to say to yourself, “Oh, my god, if I don’t continue to do this, then I will lose my job, and I won’t have money to send my kids to college where they can take an ethics class.”

Perhaps, if you are on the street without a job, now you have time to reflect on those things.

Bill: That’s right. Reflect. Take the opportunity to read. And teach your children well.

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Bill Black recommends To Kill a Mockingbird.

What do you recommend? If you have read a book lately of interest to No Shortage of Work readers, let us know. We will even try to arrange for you to interview the author, although I wouldn’t count on getting Harper Lee to take your call.

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A conversation between Brooke Allen (founder of NSoW) and Tom Heinzen who is a Professor of Psychology at William Paterson University in New Jersey, a practicing psychotherapist, and co-author of Statistics for the Behavioral Sciences, Many Things to Tell You: Natural Poetry by People Living in Nursing Homes, and Eighty Dots. We met recently over bagels.

Brooke: Thank you so much for taking the time to speak with me.

Tom: You are most welcome. I am very interested in the premise of No Shortage of Work; it could be of great help to my students.

Brooke: How so?

Tom: I try to show them, as you do, how they might benefit from alternative approaches to the job market.

Brooke: For example?

Tom: Economics has the concept of “opportunity cost”. If you buy something with money, the direct cost is what you pay. But there may be other costs in terms of what you have to give up. If you were invited to someone’s house for dinner, but instead you bought Yankees tickets, in addition to the price of the ballgame, you also incur the cost of not having dinner with friends.

Brooke: How does understanding that help you find a job?

Tom: Rather than concentrate on doggedly pursuing the end goal, say an interesting and high-paying job, you might concentrate on just doing better than you are currently doing. If you are doing nothing, the opportunity cost of doing anything else is zero, so you can do anything and be better off even if it pays zilch, and it might give you skills. Then, if something else comes along, giving up the thing you are doing now becomes your opportunity cost. For example, perhaps a high paying, but boring job comes along. The cost of taking it might be giving up unpaid work that was interesting.. Eventually, you may become an excellent candidate for a high-paying and interesting job that you would have had no hope of getting directly.

Brooke: That is a core idea at NSoW.

Tom: Another idea comes from statistics. For example, imagine Company A advertises a job – that is certain. Company B advertises no job. What is the probability you will get a job at A vs. B.

Brooke: You want me to say it is more likely at A – but there’s got to be a trick here, doesn’t there?

Tom: Right. It depends on, among other things, how many people are competing for the job at Company A. Imagine both companies have 100 managers. Company A has one manager offering one job that has received 500 applicants. Your chances of convincing that one manager to hire you may be very slim, no matter how good you are, just because of the competition. The chances of convincing one of the 100 managers at Company B to hire you might be so high, it isn’t even worth your time to apply at Company A.

Brooke: That’s another theme of ours. Why wait around for other people to identify their needs – do it for them. Did you learn that in school?

Tom: No, I learned that as a salesman. I worked as a salesman before going to college.

Brooke: Well, we have a problem of selling the idea that there is no shortage of work. For some people, it seems obvious, and when they embrace the idea they reap all the benefits of it being true. And others embrace the opposite belief, and they experience the world as there was no work anywhere.

Tom: Sometimes a little self-deception is a good thing.

Brooke: Huh?

Tom: There was this study of some 80-year-olds who had convinced themselves they were 65. They actually behaved like they were 65, even had the physiology of 65-year-olds. It was as if believing they were 65 made them so. But if they had believed they were 20 they might have gotten in trouble attempting the things 20-year-olds do.

Brooke: Like trying to pick up 18-year-olds?

Tom: No comment.

Brooke: My grandmother was fond of quoting Henry Ford who said, “Whether you believe you can do a thing or not, you are right.”

Tom: That is true; within limits. Believing you can fly by flapping your arms doesn’t make it so.

Brooke: Are you saying that we are wrong – there is a shortage of work?

Tom: No. It is a fact that there is no shortage of work, at least the way you define it. But I am saying that if you don’t believe it, you won’t act as if it were.

Brooke: So, if you don’t believe it is true, what do you do?

Tom: You might consider acting as if it were true even though you know it isn’t, just to see what happens.

Brooke: That is amazing. A very busy man gave me about 5 hours of his time last summer. I thanked him. He said, “No problem, there is plenty of time for everything.” I said that surely can’t be true, we might not know how much time we have on the planet, but it isn’t infinite. He said, “Just act as if it were infinite and see what happens.”

Tom: Does having infinite time mean you don’t have to do things now because you can put them off into the future?

Brooke: Funny, I wrote to him later and asked if he was talking about the afterlife – that everything didn’t have to be done in this life; it can wait. He wrote and said he saw no evidence for an afterlife.

Tom: Did you change your beliefs?

Brooke: Not really, but I have started to act as if time were infinite and something weird is happening. It feels as if I have more time and I’m getting more done because it feels like I have more time for things. It has cut into the time I spend watching TV, however.

Tom: Interesting.

Brooke: You teach psychology, and you are a therapist. Another thing I run into is the concept of fairness. People say, “How do I know if I work to benefit someone else without being paid now that I will eventually be rewarded?”

Tom: You don’t know. How can you? It is kind of like raising a child.

Brooke: How so?

Tom: All you can do when bringing up your kid is to try to load the dice in their favor. The more lottery tickets you buy, the greater the chances of winning.

Brooke: But, lottery tickets are a sucker’s bet.

Tom: True, but free lottery tickets are not. If you are not giving anything up to do something of value to others, it is like getting a free ticket; no guarantees, but worth more than nothing.

Brooke: One NSoW idea is that time is a wasting asset, use it or lose it.

Tom: This really comes home when I do the eighty dots with my students.

(Eighty Dots is the name of a book by Tom. In it he describes a technique he uses with his students – he draws eighty dots on the board to represent 80 years of life expectancy.)

When I cross off the first twenty dots, it really drives home the point that their life is already one quarter over. Then I begin crossing off years for school, work, family, and so on. Eventually the question arrives, “Hey, when is any of this for me?”

Brooke: How old were you when you wrote it?

Tom: Early fifties?

Brooke: The teacher in the book is called Professor Midlif. What is that all about?

Tom: Isn’t it obvious?

Brooke: Many friends have told me that periods of unemployment have been the turning points in their lives when they change direction and get more control.

Tom: As a therapist, I can tell you that making changes like that can be a lot of work…

Brooke: On the other hand, I know people who spend 20 years complaining about their job, get laid off, and then spend years trying to get exactly that same job back. I try to suggest that the reason they got laid off, and the reason they aren’t landing a new job, is because nobody needs that sort of work done any longer.

Tom: That happens a lot.

Brooke: I know unemployed people that spend their days playing on-line games instead of working, or even looking for work. They also have kids sitting at home who don’t lift a finger to find a job. How can they tell their kids to go get a job if they don’t set a good example?

Tom: My wife and I were late bloomers. So, when our children were in grammar school, we were in college. We didn’t have time to watch TV, help them with their homework, or even spend time yelling at them for not doing theirs. We were too busy studying, so that is what they saw us do. On the other hand, your kids can be motivated to not be like you. Psychologists refer to the “possible self” – all the people you might become. Your child may see someone they want to become, or someone they don’t want to become.

Brooke: Funny. I don’t smoke and my sister does. We both have the same reason, “What do you expect; dad smoked four packs a day.” My dad was a sculptor, and all I can tell you was that when I was a kid I didn’t want to be one.

Tom: I bet you don’t actually know much about what you thought of your dad being a sculptor as a kid. You remember things, but there is a good chance you remember things that never were. There was an interesting study about how young women, who are not virgins, lose all memory of having lost their virginity after signing vows of celibacy, and women who have rescinded on those vows, lose the memory of having signed. (citation/link needed) Rewriting a memory can be a good thing, as when a couple fondly recalls their time spent on a vacation that would have invoked horror if remembered accurately. Or it can be bad, as when a young girl leaves an STD untreated because she remembers herself as a virgin.

Brooke: Barbara Ehrenrich takes aim at the whole “positive psychology” movement in her book, Bright-sided: How the Relentless Promotion of Positive Thinking Has Undermined America. Have you read it?

Tom: Yes. She has a point. Even though I was helped by my training as a salesman when I was younger, which has many of the elements of positive psychology, I do think you can go overboard and slip into wishful thinking.

Brooke: I took a one-day class on selling once. It was mostly about staying optimistic in the face of rejection. What else did you learn in selling?

Tom: I learned to think of my job as being of help to my clients.

Brooke: You mean, being a false friend?

Tom: No, I mean being a business consultant.

Brooke: I met this fellow whose daughter had been diagnosed with autism. He believed that she was destined for an unhappy future. He was trying to hit it big on Wall Street so as to make enough money to give his daughter the best therapy money could buy. I introduced him to my friend, Rob, who has an autistic son. Rob told me once that, while he feels lucky to have made so much money, having an autistic child was a gift. Helping that child, and advancing the understanding of autism, has given meaning to his life in a way that making rich people richer does not. His advice to the father of the daughter was that he develops more positive expectations for his daughter.

Tom: That is very interesting.

Brooke: But some friends who are critics of “positive thinking” would be skeptical. Rob founded a school for autistic children, and has done original work to advance the understanding of the condition. He takes personal responsibility for helping his son, and the results are dramatic. I can’t imagine he could have been so successful while maintaining a sense of hopelessness. Was his success a result of the kind of self-deception we talked about earlier?

Tom: There is another concept we call “framing” which refers to how we view the problems in our life, and the orientation we take regarding their solutions. If Rob sees his son as a gift that gives him a focus to his efforts, and if the other person views his daughter as a burden, that makes it necessary that he make a lot of money, then of course their attitudes will differ.

Brooke: You know, it is funny how money works. Thirty years ago, I was taking flying lessons but I had to drop out because I couldn’t afford it. I noticed that at the airport there were a bunch of high-school kids who would hang out all weekend, doing odd jobs for free, and when instructors had time, they would teach them how to fly. They were becoming pilots and I was not. One of the richest people in the world has an autistic son, and he has sponsored a great many efforts in the area. My bet is that if the man I met dedicates himself to helping his daughter directly, and if money becomes a missing ingredient, it will show up. I cannot base this statement on anything other than faith. However, I can tell you with certainty that you can dedicate your life to making piles of money, and fail miserably.

Tom: It sounds like the direct cost of learning how to fly was high for you. Those high-school kids were learning how to fly because the opportunity cost of their time was zero. Helping out at the airport gave them the chance to fly. Why didn’t you just go out to the airport and do what those kids were doing?

Brooke: Uhm, this is embarrassing… I hadn’t thought of it. One of those high-school kids might be an unemployed 50-year-old today. My goal is to teach him a lesson from his own past; one that you point out I hadn’t learned. He might not be working because he can’t find a job that will pay him the $100,000 he used to make, not because there is anything wrong with him, but because the jobs don’t exist. I want to teach him that, because his opportunity cost is not $100,000, but zero, he is now free to do anything that doesn’t cost him something. He could start hanging out at the airport again.

Tom: I bet that if you were to teach him that lesson from his past, his memory of his past will change.

Brooke: Interesting. There is a man I met who left a high paying job to spend a year sailing around the Pacific. Did he buy a boat? No. He cooked for a wealthy family on their obscenely big yacht and they taught him to sail. That was how he spent one of his dots. Before he left, he told me he didn’t want to go sailing some day; he wanted to do it now. Even though the direct cost of sailing was zero, the opportunity cost of taking that year away from work was huge. If he were unemployed, his direct cost and his opportunity cost would both have been zero, making a year in the Pacific an even more compelling option.

Tom: That is how I would like my students to frame their circumstances. Instead of “I can’t do anything because I can’t find a job?” I’d like them to think, “Because my opportunity cost is zero, I can do anything.” Of course they may not be able to do things that require other people to give them money, but there are still plenty of things they can do.

Brooke: You once told me that you believed the only two things you should borrow money to buy are a house and an education. Now that home prices have collapsed, do you still believe that?

Tom: Um… yes.

Brooke: I’d like to challenge you on that. As a trader, one thing I have learned is that no matter how good something is in terms of intrinsic value, the price can be too high. If it makes sense to borrow money to buy a house for $100,000, then does it make sense at $200,000, $500,000, $1,000,000? At some point the price is too high.

Tom: OK.

Brooke: Now, let’s talk about the opportunity cost of a graduating student with $50,000 in debt. Can they really do anything? If they choose to sail around the Pacific instead of taking a paying job, they might default on their loan. So, isn’t the cost a bad credit rating or possibly worse?

Tom: That’s true.

Brooke: But, if they turned down the chance to sail for a year, and instead spent their time looking for work and not finding it, they might still default. And if that happens, they would have been better off had they gone sailing.

Tom: But, if they spent the year looking for work, it would be like buying lottery tickets… there was a chance they would land a job, but if they sail around the Pacific it might make it certain that they will default.

Brooke: That’s right. They probably should keep looking and not go sailing. My only point is that, while education might open opportunity, incurring debt reduces your options.

Tom: It’s all a tradeoff.

Brooke: That’s right, but at some point, the price can be too high. I recently met a man who graduated with an MBA in Finance, and $250,000 in debt. He can’t find a job that pays enough to give him any hope of honoring his debts. He was very upset.

Tom: I can imagine.

Brooke: Now, I have an MBA in Finance which is all about assets, liabilities, probabilities, and prices. I paid cash for my education, so I could chalk it up as a sunk cost if it was worthless, as it eventually proved to be. But, at no time, in any of my classes, did anyone teach us how to evaluate our education as an investment. I think this is almost criminal, and in the investment world, it would be.

Tom: I think education needs to be reformed.

Brooke: I agree, although I don’t have the fortitude to tackle it. But, may we meet again to discuss education? My thesis at NSoW is that an education is one of the least expensive things you can get, often free, and I’m not talking about winning a scholarship, I’m talking about what you can do to learn without incurring cost.

Tom: Of course. Let’s talk again.