What are your core beliefs?
Have you ever questioned your thoughts or beliefs? Have you ever challenged your core assumptions? How do you know that they are right? I think that many of us don’t stop to question ourselves often enough, and we can take a lot for granted simply because we don’t have the time to challenge everything. I think that doing so can be beneficial, though, and can open yourself up to new ways of thinking.
One way to strengthen your own beliefs and validate them is to relentlessly challenge them from all sides. Imagine that you were the devil’s advocate, and that you had to defend him. Hard to do, since he’s evil incarnate, right? Well, that is an assumption which we need to challenge to see if it really holds up to scrutiny. Maybe upon closer examination we’ll simply reconfirm and re-validate our belief that the devil is well, the devil, or maybe we’ll learn something new in the process that we didn’t know before.
One thing that I’ve enjoyed about being part of a group such as the Yakezie and being part of the personal finance blogosphere is that there is a multitude of thoughts, beliefs, and opinions out there across the entire range of the spectrum. Many of these beliefs are not necessarily objectively right or wrong, but they are subjectively “right” in the eyes of the writer. Are you vehemently anti-debt? Or do you believe that debt can have its places and uses? Both opinions are valid within their own sphere of reasoning.
I’ll give an example:
Position: You should not carry a balance on your credit cards. Carrying a balance leads to interest-rate charges, which are a bad idea, financially-speaking. If you can’t afford it in cash or if you can’t pay off your balance before it’s due, then don’t buy it!
How could we challenge this, to see if this holds up to scrutiny? First, we could look for the hidden assumptions, and then, we could look at what supports that assumption and what goes against it:
Assumption #1: Paying interest is bad.
FOR: Many credit cards have interest rates in the range of 18% and up. You will be much better off financially if you pay off your balance before interest is charged, even if you have to forgo your purchases for a bit of time.
AGAINST: If you have an extremely high time preference, in that you MUST have your item this instant, then paying some interest may be an acceptable trade-off.
Here’s a more difficult example:
Position: Publicly-funded education is necessary and fundamental. We must impose a tax on all property owners in order to contribute toward the cause, so that the public education system itself is affordable to everyone. Otherwise, the poor will stay illiterate and ignorant, and only the rich will be able to afford to have any real education at all.
Assumption #1: Collecting taxes based on property-tax valuations is the fairest and best way of funding a public education system.
FOR: Everyone, whether renter or owner, whether on a low-wage income or making a six-figure salary, all have equal access to the system. Payment is based on property values, which scales with the price of property and usually the means to pay.
AGAINST: Property taxes don’t necessarily scale with the means to pay if housing assessments are overvalued. This system also means that rich areas will naturally have far more resources to throw against education than will a poor area, so the whole premise of “fairness” in the sense of equal access to equal quality is false. If anything, schools in poor areas are simply breeding grounds for continuing poverty.
Since public education is a monopoly, it isn’t enough for a poorer family to simply scrape up more money. Instead, they have to move into a richer area, a much more difficult proposition.
Assumption #2: The indirect funding of resources via property taxes and central planning of resources will give the best incentives to teachers and schools to offer a high-quality education to their customers: the parents and their children.
FOR: By placing the money in the trust of politicians, we expect that the money will be spent in accordance to voter preferences, and that the rich will not have the ability to “game” the system and that even the poor will have equal access to a high quality education, even if they lose their income or do not make a lot of money.
With access to teachers through parent-teacher meetings, we can ensure that education is disconnected from the price and the ability to pay, and becomes only about the quality of education that is delivered to the student.
AGAINST: Central bureaucrats spend money in line with their own preferences and not the preferences of the customers; indeed, the entire flaw behind central planning is that it is impossible to gather all the knowledge necessary through a central allocation system. Whether or not the costs are direct or indirect, costs must be paid out of real resources. Money is not just a bunch of numbers but represents people’s real savings and earned income.
As these bureaucrats are spending other people’s money, they have much less of an incentive to use this money wisely, and costs rise stratospherically as a result. From this waste of resources, everyone loses out. We all know about the “rubber rooms” and other bad outcomes of this system. As public education is a captive monopoly, it is difficult for customers to “vote” against the system with their dollar, as they can easily do with other goods and services.
We should keep looking for more assumptions and challenge them as well, and we can also challenge the results of our challenges, until we are satisfied.
First seen on The Daily Capitalist; thanks for sharing!
So, reader, have you challenged any of your beliefs recently? Try doing this with some of your core assumptions and beliefs, and see if you learn anything new as a result. If you do, why not write a post about it and let me know? You can also share in the comments below!