What ancient Chinese philosopher Lao-Tzu can teach you about living and investing. Plus two contrasting views of today’s market environment and what to do about it.
In this episode you’ll learn:
- What Lao Tzu (Laozi) taught about living a successful life.
- What is hedonistic adaption.
- What are the new risks with money market funds.
- Two contrasting views of today’s market environment and what to do about it.
In Little Is Contentment
A few weeks ago, I was wandering through one of my favorite places: A college bookstore. I like to browse the text book section because the books are displayed by class and major rather than alphabetically or by topic.
This somewhat random/ organizational structure with books piled horizontally in stacks rather than the typical vertical display of most bookstores is appealing to me.
I had only a few minutes but found and bought a book I have been meaning to read.
The Classic of the Way and Virtue
It is the Tao Te Ching by Lao Tzu.
Tao or Dao means the Way. Te means virtue or inner strength, and Ching means classic or great book. Hence, the title can be translated the The Classic of the Way and Virtue.
The book dates from around 600BC and consists of cryptic poems that probably rhymed in the early Chinese pronunciation.
Edward Slingerland in his book, “Trying Not To Try,” writes that “Lao Tzu saw himself living in a profoundly corrupt age, characterized by glaring social inequities, economic chaos, and superficial consumerism.”
One wonder if most sages believe they live in profoundly corrupt times.
Lao Tzu writes,
“The court is corrupt,
The fields are overgrown,
The granaries are exhausted,
And yet some wear clothes with fancy designs and colors,
Hang sharp swords from their belts,
Stuff their bellies with fine food and drink,
This is what is called ‘being proud of being a robber,’
Far is this from the Way.”
Lao Tzu versus Confucius
Lao Tzu differed from his contemporary Confucius in his solution to this corruption. Lao Tzu thought humans were fundamentally good, and if we followed our inner selves we would do just fine. The problem is people don’t look inward but outward and are led astray.
Confucius thought humans were fundamentally flawed and needed rigorous training in order to act properly. He believed in systems and training. Lao Tzu believed the opposite. He would probably resonate with today’s unschooling movement.
Slingerland writes that Lao Tzu’s “philosophical target…is the Confucians, with their clear standards concerning the right kind of music to listen to, the right kind of clothes to wear, the right way to enter a room and perhaps most damaging, the precise way to be ‘good.’ Laozi’s argument is that calling some behavior ‘good’ ensures it will not be good, because conscious labeling and explicit effort poison our experience.”
Lao Tzu believed we think and speak too much, and we let our desires run amok.
As Slingerland puts its, “our thinking and verbalizing” interferes with “our ability to simply experience life.” This combined with the “tendency of our desires to grow incessantly, becoming temporarily sated but then aroused again by some more desirable mirage in the distance” is what leads to unhappiness.
Lao Tzu writes,
“There is no crime greater than indulging your desires,
There is no disaster greater than not knowing contentment,
There is no calamity more serious than wanting to get ahead,
If you know the contentment of contentment, you will be forever content.”
Lao Tzu was ahead of his time in teaching that getting more things will never completely satisfy us. Humans are hedonistic adapters. We quickly adjust to good and bad events or new levels of wealth or fame, and then return to our base level of contentment.
I have recently experienced this. We moved to Teton Valley full time about three months ago. For the first few weeks, we would awake each morning and be astonished at the beauty and grandeur of the Teton mountain range.
Now I can go an entire day and not really notice the mountains unless I deliberately stop and acknowledge their presence and magnificence.
Yet, we still crave the novel and new. Perhaps one key to contentment is to make and look forward to little changes: a dinner out, a weekend road trip, a new dessert or a new pair of earrings. Changes that bring novelty but don’t overextend us financially.
Lao Tzu writes, “To know when you have enough is to be rich.”
Focus on the Small
Another key to successful living according to Laozi is stop trying to change the world. It is too complex and unpredictable.
“For those who would like to take control of the world and act on it—
I see with this they simply will not succeed,
The world is a sacred vessel,
It is not something that can be acted upon,
Those who act on it destroy it,
Those who hold onto it lose it.”
Instead we should follow what Lao Tzu calls, “the bent over you’ll be preserved whole” strategy of the ancients.
“Bent over, you’ll be preserved whole,
When twisted, you’ll be upright,
When hollowed out, you’ll be full,
When worn out, you’ll be renewed,
When you have little, you’ll attain much,
With much, you’ll be confused.”
This first translation is by Robert G. Hendricks. Here is a different translation of the same text by David Hinton that provides a little more insight:
“In yielding is completion. In bent is straight. In hollow is full. In exhaustion is renewal. In little is contentment. In much is confusion.”
Rather than try to control what cannot be controlled or predicted, we should have sufficiently flexibility and reserve to yield to what happens. We should bend forward so we don’t take the brunt of what comes our way.
Chinese scholar Sam Crane in commenting on these passages writes, “If we are open to the impermanence of the self, to the constant flux and change of circumstance, then we can get out from under the sense of “loss” when circumstances change.”
Not that we shouldn’t act. But instead of going big and trying to change the world, we should focus on the small.
Renowned marketer Seth Godin said recently on The Tim Ferriss Show that “whenever possible ask yourself what’s the smallest possible footprint I can get away with. What is the smallest possible project that is worth my time? What is the smallest group of people who I can make difference for or to? Because smallest is achievable. Smallest feels risky. If you pick smallest and you fail, then you really screwed up. We want to pick big because infinity is our friend, infinity is safe, infinity gives us a place to hide.”
Focus on the small because as Lao Tzu stated, “When you have little, you’ll attain much.”