The root of all evil

How corrupted money, cognitive biases and pernicious education have caused most of humanity's woes

Introduction

Humans have had to overcome an untold number of difficulties since first appearing on earth around 300,000 years ago. Some of these difficulties were external, circumstantial and out of our control, like the elements of nature, while others were consequences of our own doing. The larger the network of humanity and our interconnectedness, the larger an impact our actions have on the lives of other humans and non-humans alike. It is undeniable that despite many advances in technology and the general comfort of a large number of humans in modernity, we can’t seem to avoid repeating or even increasing destructive behavior, extreme wealth inequality, polarization of politics and social relations, parasitic relation with other lifeforms, short-term thinking, among others.

Below is a description of three main factors which are hypothesized to be at the root of the aforementioned problems.

Cognitive Biases

While we tend to think we are the owners and masters of our thoughts, the whole field of social psychology has shown countless times that we are victims of our own cognitive biases. This is independent of formal education level or even awareness of the existence of the biases themselves.

Most if not all of these are rooted in mechanisms which conferred us evolutionary advantages and are therefore profoundly crystallized in our being. We even see different types of cognitive biases in the animal kingdom.

An example we are constantly subject to is affinity bias, when we tend to be favorable to people who are similar to ourselves (and unfavorable to those who are different), originated in the basic necessity humans have to belong. Humans in the wild do not have a good chance of surviving alone. Participating in groups historically allowed us to benefit from the effectiveness of the division of labor and the safety of mutual protection, helping us overcome many of the uncertainties and dangers of life.

When it comes to defining ourselves and relating with others, we will defend our groups vehemently, generally citing the positive aspects of our groups in contrast to the flaws seen in the opposing sides. It’s also important to note that historically a struggle with another group often meant literally fighting to the death, so it’s no wonder sports competition, political rivalry and nationality, to name a few, are often sources of aggression.

A cognitive bias can also be seen as a shortcut, a way to save energy. They are assumptions we make to automate a task in order to free up mental space and energy for other more important or novel tasks. If every time we tried to use a door handle we had to re-learn how it works, the simple task of opening and closing doors in our daily lives would take a tremendous amount of time. We assume all door handles function as the ones we have seen before, in much the same way that we assume people from group X Y or Z will act in the same way as others from that same group. In the case of door handles, though, there is a greater homogeneity, and furthermore, a wrong assumption would have no negative consequence, at worst the handle was incorrectly installed and the door wouldn’t open and we’d try again by turning it to the opposite side. On the other hand, under many possible scenarios, judging a person based on nationality or skin color can have very bad consequences.

It is likely not possible to completely stop all cognitive biases. What we can, though, is to inform ourselves and be aware of the different types of biases, so we can attempt to detect them in circumstances where those biases can lead to wrong conclusions with significant negative consequences. There are different cognitive debiasing techniques that can work, some of which can be done individually and while others can be instated structurally through schools, workplaces and other institutions.

Together with the cognitive biases, we have other behavioral predispositions that may have a genetic basis and influence us in daily life. Think of a dog that eats in excess, devouring anything that is in the food bowl or whatever is even remotely edible around the house. A dog won’t count calories or keep to his exact ideal portion… The historical uncertainty of food crystallized in his genes pushes him to eat as if he will get no food tomorrow. In a similar fashion, is it possible our human greed is merely a genetic predisposition for accumulative behavior due to the uncertainties of life?

In short, cognitive bias and genetic predispositions affect our daily life and in order to reduce the errors that can come from them, we must first of all recognize their existence and accept we are all subject to them. At the same time we must try to be vigilant and question ourselves and our conclusions to try and detect those biases at work, preventing some of the pernicious consequences.

Lack of awareness and improper education

Awareness can help us see in action some of the biases and behavioral patterns mentioned above, but more importantly, it can help us understand the interconnectedness of the world and the impact of our actions, leading to more beneficial behaviors.

With a lack of awareness, we are more likely not to see the signals that point to our mistakes, for example the long-term impact our actions have to the environment or others, or even something as seemingly insignificant as the body language of a person hearing us speak and letting us know we are wrong.

Even if we did see where we are personally mistaken or where the world has a problem, with a lack of awareness we are less likely to understand the root of the issue and to prevent the unintended consequences that may arise from our attempts to fix the problem.

Many wise men and women throughout history have tried to help us to become more aware, through explicit teachings or through different art forms. The search for awareness is the individual evolution we must go through as human beings. It is the search for enlightenment of the Buddhists, the individuation process of Carl Jung, the Magnum Opus of the alchemists. It is the journey the hero of a thousand faces from Campbell must go through, overcoming the difficulties and returning home with a new found wisdom. It is the man that has created his soul according to Gurdjieff. This final state of perfection is most likely beyond our reach, but we can get closer, gaining more awareness and becoming a better version of ourselves through intentional effort and strategic goals.

Awareness, like a plant, needs to be cultivated, cared for, given the right nutrition and environment. It can be developed with different techniques, whether that is introspection, meditation, mindfulness, psychedelics, appropriate education, general life experiences and maturity, professional counseling or other methods. Unfortunately no method seems to be fool-proof, they all have trade-offs and also have to be adapted to the individual and context.

“A liberating education consists in acts of cognition, not transfers of information.” Paulo Freire

Education is an essential part of our human development and has been around us since the ancient times. We are continually learning in all contexts, formal and informal. Formal education is significantly lagging behind this age of distributed knowledge and abundance of information, and is risking losing relevance. Schools are still following an outdated assembly line model from the industrial revolution, trying to cram people’s head full of arbitrary knowledge with the illusory promise of a good job in the future. Hours upon hours are wasted with the force-feeding of unconnected “facts” that must be remembered until the next exam. Learning how to learn, learning life-skills, learning how to deal with emotions, how to develop critical thinking, how to become more aware, how to sift through the sea of misinformation in the internet, are all rarely seen in schools. Some attempts at alternative schooling are out there, but are far from the norm. Nevertheless if we can promote proper education it will most definitely help with developing individuals and society in a more harmonious way.

Corrupted money

“Money, so they say

Is the root of all evil today

But if you ask for a rise it’s no surprise that they’re

Giving none away” Pink Floyd — Money

Money is the base layer of human interaction on a large scale. Within one’s close family or close circles, there is no need to “tally up” the contributions each person makes. The trust model works on this scale because you know the people being trusted and there is a personal accountability anchored to the emotional relationships being cultivated daily. You can eat the apples I brought home, I don’t need to count them because I know you won’t eat all of them, or if you do you’ll care enough to get some more later, or you’ll contribute in another equivalent way.

When we scale up, the trust model breaks down. Cognitive biases such as diffusion of responsibility kick in: When there are too many people, we don’t feel as responsible for an issue that needs fixing because “someone else will likely fix it”. The value of our actions are not properly measured anymore, and people will tend to revert to their basic selfish interests.

Bartering was the first level of interaction with others beyond the communal family. The exchange of goods is based on the consensual valuation agreed on by the trading partners. But this system has limitations because the different goods don’t have the same timing of production and supply, shelf-life nor divisibility. If I only have a cow, how do I trade it for 4 tomatoes from you today plus a sack of potatoes from John next week, plus Jack’s help for 10 hours to build my house 2 months from now? This is why money was invented, a technology that allows us to store and transmit value and therefore be able to form and interact with a much larger network of humans, potentiating our collective evolution.

What humans have chosen to use as money has changed over millennia, (see Nick Szabo’s Shelling Out ), but the properties generally have always been the same. Money is a token that represents value and can be exchanged for goods and services, and for it to do so properly it needs to have the following properties: scarcity, durability, portability, divisibility, fungibility, and recognizability.

Without going into each of them, we’ll talk specifically about the scarcity, which is the main attack vector that has been used against money and in great part responsible for humanity’s woes.

Thinking in first principles, we can intuitively understand that whenever something is extremely common, the value will tend to zero. Alternatively, if something is exceedingly rare, it will more likely achieve a higher valuation. Even kids when exchanging collectible stickers or cards already know better than to change some rare collectible for another that is dime-a-dozen.

Money is the most salable good, and as the representation of all the value humans can create, there is an inevitable incentive to create more of it. We humans are genetically programmed to search for our prosperity and of those closest to us. Would you say no if the government gave you a license to be the only person in the world to be able to print money at home?

If money is tracking value added to the world, what value is added when you print money? If you are suddenly able to buy an airplane, did you add the equivalent value to the world by just printing it? And if you didn’t, then how is it possible you suddenly were able to exchange that value with someone else?

The answer is that no value was created, but value was stolen. For every 1 unit of new money printed, 1 unit of old money was stolen, but it is a distributed theft coming in small amounts from each of the other pre-existing monetary units. As the law of supply and demand will dictate, if you flood the market with a particular good, it becomes less valuable. The exact same is true with money.

A quick look at history shows us that printing money or money debasement is nothing new. The scaling up and worldwide institution of slavery by Europeans was only permited by the European “printing” of aggry beads which were traditionally used as money in Africa (read Masters and Slaves of Money for an incredible piece on the subject). Or the fall of the Roman Empire directly connected with the debasement of their money by the emperors. Or the effect David O’Keefe had on Yap islanders when he debased their Rai stone money by using modern technology to bring stones from outside. On the flip side, the Renaissance, an incredible period of innovation and timeless art was made possible thanks to the florin, the gold-based coin used at the time, which was not debased for hundreds of years.

Unfortunately the incentives to control and debase a currency are too strong for humans to resist for long. Desiring getting money “for nothing” stems from our natural inclinations at self-preservation and helping our group. It is too easy to debase the currency when you have that power, to privatize the profits while socializing the costs, especially when you don’t personally know all the people being affected by your actions. The effects are not noticeable by our limited perception, nobody seems hurt by a large amount so it’s easier to justify to oneself, as well as to accomplish without a significant pushback from others. This has made possible so many of the excesses of humanity, such as the lavish expenses of those in power, the parasitical political system, unnecessary wars and other such problems.

Currency debasement is an irreversible slippery slope, no government or leader ever returned gold to coins after removing it, nor burned dollars after printing them to restore the original ratios. If we understand money as the glue that holds the fabric of society together, a value-network that allows us to communicate across borders, then altering that for one’s personal gains is bound to have disastrous consequences.

Printing money generates the Cantillon effect, which is the benefit reserved to those closest to the money spigot. The first ones to receive the newly printed money can purchase things at the old cost, before the prices readjust due to inflation. This is why asset prices such as housing have skyrocketed, because those with cheap credit closer to the printer will purchase assets as a store of value. That increase in demand removes housing from the market that would otherwise have served for people to live in. Thousands of empty houses while many are homeless or forever chained to renting.

In a low interest-rate inflationary environment, keeping cash is a liability, like water running through your fingers. The Cantillonaires buy up the assets to preserve their wealth, while the wage-slaves further down the pyramid keep having to work harder, spinning the hamster wheel as fast as they can in the hopes one day they’ll own those coveted assets. Owning a house is barely a dream for young people nowadays, the best they can hope is to keep afloat. It’s like playing soccer in a field that is tilted at a 45 degree angle. Some of us are exerting ourselves very hard to kick uphill while others can let gravity do the job for them.

But the consequences of inflationary money doesn’t stop there. It acts as a corrosive substance that will destroy everything it touches. It creates an incentive structure that promotes the worse in humans. If your money is worth less every year, you are incentivized to spend, not to save. Consumerism is a clear consequence of this. People’s time horizon is significantly shortened, they think in the short term. If your money would be worth more each year, you’d think twice about spending it, you’d think longer term and properly measure the opportunity cost of your decisions. Capital would be better allocated to endeavors that matter.

This system incentivizes debt as a way to get ahead, and pushes business and investors to risky decisions in order to keep afloat. To top off the problem, we have government bail-outs (paid for with newly printed money), so those making wrong decisions suffer no consequences. Feeling the pain of a wrong decision is essential to error-correction, but when a system is leveraged to the extreme with an unserviceable debt, letting that pain be felt means systemic risk, a cascade of defaults, an unwinding of all the lies in this system. Unfortunately no person in power can propose or accept that, they would be crucified, so the can is kicked further down the road, effectively letting the next generations suffer the consequences.

Misallocation of capital and short-term thinking promoted by the so-called fiat money is also at the base of our impact on the natural world through climate change and pollution. The government subsidies that reinforce the petroleum hegemony are only viable in this fiat world where governments can acquire enormous debts that they print their way out of.

When entire generations are drowned in this corrupted environment, inevitably people will react. Even if those people are unaware of the true causes of their misery, victims of a terribly unjust system they don’t understand, they may not know why but they feel the pain, and they inevitably start kicking and screaming. Narratives of all kinds are used to co-opt the frustrations to different causes or groups: Some will use it to power the xenophobic views, others to power pro-government-intervention plans. Some will blame it on businessmen, others on the communists. Even religions and sects can take their piece of the pie, using the difficulties people face to justify their own beliefs and demands. This polarization may be malicious (“divide and conquer”), or an unfortunate mix of cognitive bias and lack of awareness of the source of systemic injustice . In either case, central banks and the injustices perpetrated through the monetary system are at the core of the issue, but it may be beyond the power of any central banker or politician, even if well intended, to actually and effectively fight against it. This is why left versus right in politics is ultimately meaningless in the context of the true evil of money corruption affecting all political sides.

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop. “ Friedrich A. Hayek

Throughout history, the most successful money has been gold, and its adoption is intimately connected with the development of advanced civilizations. Nonetheless gold as a technology is not free from shortcomings. Gold has been great to transfer value across time, but not across space. While it has kept purchasing power throughout the years, it is very hard to transport in large amounts, and not practical to exchange in smaller amounts. Verification of authenticity by a layman is also not an easy matter so people have to rely on experts for it. This historically led to the centralization of gold reserves by banks and creation of paper promises on gold which common people could more easily transact with. But paper promises offer a very tempting power to the selected few that end up printing those promises beyond the actual reserves.

Countries in the past used to have a central reserve based on gold to finance the State doings. Whenever countries went off the gold standard in the past, it was always to fund wars. A clear example was Nixon’s ending of the gold standard in 1971 to pay for government debt, in large part incurred during the Vietnam war. Leaving the gold standard inevitably lead to disastrous consequences.

One would be hard-pressed to find examples of wars that were not made possible by the corrupted money. Taxation, whether overt or covert (such as with currency debasement) has financed war throughout the ages. The hyperinflation of the Weimar republic in the late 1910’s and 1920’s was both a consequence of the first world war as well as a main factor in paving the way for the second world war. More recently the petrodollar system also pushed the US to invade Iraq and Afghanistan, while turning the blind eye to the human rights violations committed by the Saudis.

Clearly the most effective way to fix all these major issues plaguing humanity is to remove the monopoly of money from the governments by creating a money that is truly scarce decentralized and uncensorable. A money they can’t print more of to fund their excesses, that is auditable and that does not depend on third-party custodians. Fix the money, fix the world.

Thankfully the digital age has made this possible, with the solution already existing and in clear sight. Unfortunately many are still held back from seeing what is in clear sight due to fears, misunderstandings and biases, but the transition to a sound money world is inevitable.

Evil trinity synergy and concluding remarks

The three factors mentioned above do not merely have additive effects, but they interact with and potentiate each other. Let’s look at a few more examples of what happens when we intersect cognitive biases (1), improper education and lack of awareness (2), and a corrupted monetary system (3).

Large sectors of society under economic struggles (3) + affinity bias (1) + lack of education about the economic system (2) + lack of awareness about our consequences of our action to others (2) = Extreme xenophobia and political polarization

Being close to the money spigot (3) + lack of self awareness (2) + attribution bias (1) = Extremely wealthy people who consider themselves and act as if they are superior to others

Short term (high time preference) thinking (3) + lack of awareness about consequences of our actions (2) + diffusion of responsibility (1) = Damaging actions to the environment

Over-dependence on government grants (3) + misallocated capital (3) + Status quo bias (1) + Sunk cost bias (1) + lack of awareness of the consequences of our actions (2) = Failed education system that forces reproduction of information instead of promoting the development of individuals, and a higher education system that forces teachers and academics to publish meaningless papers instead of developing teaching skills or providing real-world value.

Exacerbated wealth disparity (3) + lack of awareness about our place in the world (2) + illusory correlation bias (1) = Vandalism, hatred of anybody with financial success, destructive behavior, suicides.

Misallocated capital (3) + economic struggles in general populace (3) + poor critical thinking skills (2) + belief bias (1) + confirmation bias (1) + attribution bias (1) = People believing in and spreading absurd conspiracy theories

Each of these examples could be expanded on and countless other examples could be imagined but suffice to say that the interaction of the “evil trinity” is at the core of so many of the problems we face in our lives. Having potentially identified the root of our problems, the next step is to work on solutions. The solutions are at the same time about personal choices as well as structural changes.

On a personal level, it is imperative we educate ourselves, try to be vigilant about our biases and work on self-development and building awareness. We can make use of a number of strategies or guiding frameworks, but most importantly, we have to be consistent in our efforts, recalibrating when necessary. We need to work on being better parents and better students in our daily life. We can also personally adopt a sound money, which may be inevitable in the end but the sooner we do, the sooner we can free ourselves from the chains of the legacy system and jumpstart a new life of prosperity and freedom.

On a structural level, we need to make efforts into correcting the flaws in the traditional educational system, potentiating the best alternative methodologies as well as informal and non-formal educational initiatives that widen the reach of guided learning. In this way we help prepare the current and future generations to fix the problems inherited from the past.

Ultimately, if we can fix the money while investing in general education and awareness, we will create the perfect conditions to take humanity to the next step. What incredible things can we accomplish if we live in an environment conducive to the development of our potential as humans individually and collectively?