The Evolution of Everything Review – Episode 096

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, best-selling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome to another edition of the Prosperity Podcast. This is No BS Money Guy, Todd Strobel, and we’re going to be having some fun today. We have best-selling financial author, Kim Butler, with us, but we’re going to do something a little different, as we’re going to review somebody else’s book today, aren’t we, Kim? Yes, and I’m a voracious reader and love to share books, and this one, while a toughie to start, was a very worthwhile read. Can you give us the name and the author?

[00:52] Absolutely. It’s called The Evolution of Everything, subtitled How New Ideas Emerge by Matt Ridley, M-A-T-T, and then the last name is Ridley, R-I-D-L-E-Y, and Matt wrote The Rational Optimist about, I want to say, 10 years ago, and this is his new book, The Evolution of Everything, How New Ideas Emerge, and I cannot recommend it enough. And again, I want to prepare you, it was a really slow start and deep stuff, way deeper than I normally go with a book, but totally worth it. And in the latter chapters, in fact, there’s a specific one on the evolution of money that I found very interesting, and we’ll share bits and pieces of it with you, but there were some things at the very beginning that, in hindsight, I found directly

[01:42] related to prosperity, which is, of course, what we talk about every day. Super, I’m going to start off with one of those, and this is a direct quote from the book, and that’s, prosperity grows entirely organically without any direction from above. The division of labor has emerged uninvited within society. It has evolved and is stimulated by our natural willingness to trade, and the propensity to truck, barter, and exchange one thing for another belongs to human beings, but not to other animals. Nobody ever saw a dog make a fair and deliberate exchange of a bone with another dog. So this propensity, if encouraged, will cause prosperity to increase. Government’s role is to let it happen, not direct it.

[02:37] You’ve got to love the image of the dog with the bone, right? Yep, I can vouch for that. We don’t have a lot of other dogs around, but Emma Dogg, our big Great Dane, is not even willing to trade me for a bone, so I understand. So let’s think about this. Because prosperity grows organically without direction from above, it means that we, as individuals, can make a big difference with it, and there’s a great story a little bit further on in the book about farm workers in China and what they did when they decided that they wanted to control the output of their farm rather than just letting the government dictate it. They worked harder, they made more efficient decisions, and they produced massive amounts more food because of that good work and good decision making

[03:33] than they had earlier when it was government-controlled. And so we want to think about this when we’re talking with our children, when we’re building our businesses, and just remember that prosperity grows without direction from above. I think my first instinct when I hear that is to somehow or another, it’s an anti-religion thing, which at first made me a little angry for I don’t know what reason, but the second thing I thought of was, you know, I think there’s a fear that we’re going to run out, that there’s only so much planet and eventually we’re going to eat it up or destroy it or something like that. And by saying that what we’re seeing is the natural growth means that there doesn’t have to be a fixed end, correct?

[04:26] That’s right. And actually, Matt’s first book. So again, we’re talking about the book, The Evolution of Everything by Matt Ridley, but his first book was The Rational Optimist, and he proved that’s so well titled. He proved that the same kind of thing Peter Diamandis is talking about all the time is that prosperity is never ending. It’s unlimited and it’s our good human ingenuity and technology that will overcome it. And the less and less top down control, the more and more potential that there is. There was actually a free banking experiment that was created in Scotland and then replicated again in Panama, Ecuador and El Salvador, where they dollarized their economies. They actually took the central bank function away.

[05:19] And the central bank’s function is to operate as a lender of last resort. And our Federal Reserve in the United States does this job. And the consequence of removing that lender of last resort, in other words, the consequence of the equivalent in the US would be to get rid of the Federal Reserve, was that these countries which have dollarized their economies and now no longer have a lender of last result have behaved more cautiously. And so they actually have a more stable and even stronger economy because of it. In fact, the International Monetary Fund, and this is quoting from Matt’s book, has stated that the very lack of the lender of last resort has contributed to the resilience and stability of the system.

[06:12] Again, those countries are Panama, Ecuador and El Salvador. And so we want to think about this as we go forward in our own personal economies, having more control in leaving the banks and the Federal Reserve out of it. And the easiest way to do that is you’re still going to use your local bank for your checking account. You’re still going to use the local mortgage company for your home loan. But for a lot of your other transactions and the storage of your emergency slash opportunity fund, you need to look to the insurance industry to do that job for you because the insurance industry does not have a lender of last resort. There’s no Federal Reserve for the life insurance industry whereby the banks have that.

[06:53] And so consequently, they don’t act as cautiously as they should be. And these three countries have proved that that moral hazard, if you will, of turning to the slender of last resort once that safety net was gone, it forced them to operate more efficiently and more effectively. Makes me think of maybe you can help me with the title of this book. Is it I pencil? Yes, that is correct. There is a fun little pamphlet almost called I pencil put out by fee dot org. F E stands for something economic education. And it’s a helpful little book along these same lines. Yep. If you want a shorter read, go there. And just a quick summary of that book is, is that, you know, it takes what a million people to make one pencil, but yet no government is involved.

[07:45] And it’s a profit driven industry. And it happens every day. Absolutely. Yep. It’s a great, great story. And true. The next thing we want to kind of talk about was the evolution of the Internet is undesigned, unexpected and unpredicted. Nobody is in charge. Yet it is not chaotic. It is ordered, complex and patterned, a living example of evolutionary emergence of complexity and order, spontaneously created in a decentralized way without a designer. Wow. Yeah, that’s a mouthful. But that is how we should be building our businesses. That is how our finances should run. That is how we should be focused in our lives if we want true growth and unlimited prosperity. And it goes back to the very beginning of our quote from the book, meaning that prosperity is not a top-down deal.

[08:41] And so we can equate our economy and the goals that we have in our own personal economy, as well as that of our United States, to the Internet, where it’s undesigned, unexpected and unpredicted in that there is order and there is good and it is growing because of everybody’s involvement with it, not because of some top-down designer planned, oriented environment. And that’s why I have such a problem with the word plan. The government can’t plan and neither can we. And I just remember so well sitting with clients. I’m, you know, in my early 30s and I’m asking them these quote financial planning questions. Actually, I think the right time frame is more like late 20s. And I know in my heart that these are the most ridiculous questions in the world.

[09:34] Questions like, at what age do you want to retire? And do you want to educate your children? And if you died, are you going to want to pay off your mortgage? And people are struggling to answer these questions. And then I’m putting them into some financial planning software that is just not worth anything. And yet this financial planning software spits out this thing called a quote financial plan, which in hindsight was not worth the paper it was printed on. And yet we would turn to this notebook as if it held the answers to what we should do with our money. It’s the most ridiculous concept in the world. And if you want to hear a little bit more about my experience with that, if you haven’t read our little e-book called Financial Planning Has Failed, or listen

[10:19] to it, there’s an audio book as well. Turn to partners4prosperity.com slash e-book and grab that. I think it will be really helpful to you. I know we’ve got just a little bit more of the book that we want to share. Let’s do that. Super. Next thing we wanted to kind of discuss was just the education system and how that has functioned in the past, the present and potentially the future. Well it is an interesting environment and I’ve got kids in college right now and boy are they on what I would say is the transition of where education has been a completely top-down environment and where it is turning into being a much more bottom-up environment. There’s a term that I learned about in the book, backing up here a little bit,

[11:04] but it’s called a SOLE, S-O-L-E, Self Organized Learning Environment. And it’s where older kids help younger kids learn. In Britain, they even use grandmas to help the kids learn. But our education environment obviously is in massive need of reform and we’re so looking forward, just a little hint to some of the things that Partners 4 Prosperity is going to be working on, we’re looking forward to helping children become more educated about their finances. In fact, the new book that we have out, the Busting the Interest Rate Lives book, is just that. It’s a story of a kid in high school and all that he goes through his life around interest rates and this kind of thing is not taught in schools.

[11:52] And so if we can help and have personal finance taught in schools, we’ll have a much better, stronger environment where children can come forward and know what they need to know about finances instead of our clients that are you, the listeners who are in their 50s and 60s. Still, some of them don’t have good personal economics or personal monetary training. Now, there’s a list that Matt has in his book, two lists actually, that I think are so interesting. Munch, tell us about them. Well, it’s the difference between things that are intended and those that are not intended. And his point is, is the things that go well are largely unintended. The things that go badly are those that are largely intended.

[12:45] So he gives us two lists. First is the First World War, the Russian Revolution, the Versailles Treaty, the Great Depression, the Nazi regime, the Second World War, the Chinese Revolution, the 2008 financial crisis, were actually top down implemented plans that were, I, gosh, I mean, they couldn’t plan to, the end couldn’t have been planned. So they got exactly the opposite of what the plan was. And then he goes on to talk about the flip side, which is the growth of global income continues to happen, disappearance of infectious diseases, feeding of seven billion, clean up of rivers and air, reforestation of much of the rich world, the internet, the use of mobile phone credits as banking, the use of genetic

[13:41] fingerprinting to convict criminals and acquit the innocent. All of these were serendipitous, unexpected phenomenon supplied by millions of people who did not plan to cause these big changes. Wow. It is amazing. They’ve got a quote in here from Sir David Butler, not related. No, no, not related. And it’s that all of the interesting things are incremental. And very few of the major changes in the statistics of human living standards of the past 50 years were the result of government action because the changes were incremental. They were done by little steps and little people taking little steps and not by some big grand plan. So this is not a political statement. It’s just proof. And it’s something that we in our own lives can make a difference with.

[14:37] We can control our own personal economies by, as I’ve indicated, using the insurance industry instead of the banks. And again, we’ll use the banks for the job that they provide, a checking account and mortgages. And that’s really about it. Maybe an occasional car loan, but you can control your own wealth so much better when you’re not in all of the typical financial planning arenas, which are the banks, the stockbroker environment, the stocks, bonds, mutual fund environment. And even I would throw in their annuities and CDs. Now annuities, of course, are by insurance companies, but you give up control when you use them. Whereas when you buy whole life insurance, you maintain control. And as our listeners know, control is the fifth of seven principles

[15:24] of prosperity, again, which we cover pretty thoroughly in our little Financial Planning Has Failed ebook. But it is so amazing. If you get a chance to read this book, I highly recommend it. There are lots more pieces that we could talk about, but we tried to give you a good summary of what’s in there, slog on through those first couple chapters and get into the fun stuff. And my hat’s off to Matt Ridley and the evolution of everything, how new ideas emerge, because where we’re going with prosperity economics and the prosperity viewpoint or point of view that we want people to have is very distinctly supported by Matt and his well researched book, again, the evolution of everything, how new ideas emerge by Matt Ridley.

[16:11] I think my final comment on this is that I came away very hopeful knowing that we are going to continue to intentionally implement plans that will fail, but it is guaranteed that someone will unintentionally fix them and make them better. That is well said. And anytime we can give hope, I think it’s helpful because it is easy to get sucked in to the media and all of the apparent garbage that’s going on in our economy and our lives and our world, et cetera. But there is hope that human ingenuity and technology will overcome. And it certainly cannot be done with a scarcity mentality. It’s the prosperity thinkers in the world that are going to get it done. Super. Well, thanks so much to all of our Prosperity Podcast listeners.

[17:02] Again, this is No BS Money Guy, Todd Strobel. Thank you, Kim Butler. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.