Daily Archives: October 1, 2012

Federalist No. 2

Today, we continue our review of the Federalist. The goal, to review the first thirty (30) before Election Day in the U.S. Why 30? When the Federalist essays — which first appeared in the Independent Journal, the New-York Packet, and the Daily Advertiser between 1787 and 1788 — were first collected and printed in book form in 1788, only the first 36 essays were included, which covered the first three topics that Hamilton said the essays would cover in Federalist No. 1:

  • The utility of the UNION to your political prosperity,
  • The insufficiency of the present Confederation to preserve that Union, and
  • The necessity of a government at least equally energetic with the one proposed to the attainment of this object.

And since we only have enough time to cover thirty (30) at the rate of six (6) a week, we will content ourselves with that number, as it is still quite significant. 

Federalist No. 2 begins the discussion of the utility of the Union to your political prosperity. One of the four essays authored by John Jay, and also addressing the people of the State of New York, the essay addresses the dangers from foreign force and influence, but the key message is the strength of the Union as a whole compared to the sum of its parts.

The essay, that notes that independent America is one connected, fertile, wide-spreading country with a succession of navigable waters [that] forms a kind of chain round its borders, as if to bind it together while the most noble rivers in the world, running at convenient distances, present them with highways for the easy communication of friendly aids, and the mutual transportation and exchange of their various commodities, states that this country … should never be split into a number of unsocial, jealous, and alien sovereignties. Because, as a nation we have made peace and war, as a nation we have vanquished our common enemies; as a nation we have formed alliances, and made treaties, and entered into various compacts and conventions with foreign states. In short, the prosperity of America [has] depended upon its Union.

The essay, which ends with the statement that whenever the dissolution of the Union arrives, America will have reason to exclaim, in the words of the poet: “FAREWELL! A LONG FAREWELL TO ALL MY GREATNESS“, insists that for America to remain strong, it must be a Union, and not a collection of state level confederacies. It is essentially stating that the whole is stronger than the part, and this is a key tenet in the argument for a Union, and a key tenet for one who wants to be an elected representative to take to heart. The idea of a Senate and a House of Representatives is that, as a whole, the representatives in the room are collectively wiser and more capable of serving the nation than each on his or her own. So while a candidate is in a battle during a campaign in which she is vying for the privilege of representing the people in the constituency in which she is running, once elected, she has to stop being combative and start being collaborative, looking for solutions that benefit everyone, not just his or her constituents. Just like failing to put the good of the nation ahead of the good of the state will lead to dissolution of the Union and the greatness it offers, failing to put the good of the people as a whole ahead of select groups of individuals will limit the prosperity of the people as a whole.

Want to discuss? Join The Federalists on LinkedIn. The open group has been created specifically to discuss the philosophical underpinnings of the governance of nations and their ramifications on the national and international economics and global trade.

Are You Biased? Here’s What To Do About It!

Every day, senior managers are tasked with making very significant strategic decisions for their companies, which usually require support by teams of internal and external experts and a heavy dose of research. And every day, across the world, these managers screw up. Without fail. Why? Hard to say. Sometimes the experts are wrong. Sometimes the data is faulty, either due to collection, storage, or retrieval error (and, hence, the derived conclusions by the experts are faulty). And sometimes it’s the managers who are at fault. Sometimes they trust their gut when they should trust their brains, and vice versa. And sometimes, they are just biased and ignore the facts that suggest their bias is the worst decision they can make.

So what can they do? They can do whatever it takes to minimize their biases, especially if it impacts supply management, the lifeblood of a modern organization. How can they do this? They can take some tips from this recent post over on the HBR Blog Network on How to Minimize Your Biases When Making Decisions.

The first tip is to recognize the common biases that arise in corporate decision making. The common biases are:

  • Anchoring
    This comes in two forms, number fixation and target information fixation. In the first case, we get fixated on numbers, even invalid ones, and don’t adjust away from, or ignore, them when we should. In the second, our questions can lead us down a path where we focus on a specific set of data to the point where we’ll ignore or omit contradictory data.
  • Framing
    We are often persuaded to judge a situation by how it is presented. If it is presented as difficult to the point of painful, given our natural aversion to pain and preference to pleasure (as has been argued by philosophers throughout the ages), we’ll tend to shy away from it, even if the pain will be worth the gain in the end.
  • Availability Heuristic
    We tend to weight recent events as more prominent than not-so-recent events and events we can easily imagine, such a those presented vividly to us, more than events we can’t easily imagine, even if the latter is much, much more common and likely to happen. (Remember, most companies FAIL!)
  • Confirmation Bias
    We tend to seek out evidence that confirms our initial decisions, ignoring information against them.
  • Commitment Escalation
    It’s our tendency not to accept sunk costs and throw good money after bad, even when no amount of money can save the situation. We act like captains with a bucket after a pirate has blown a hole in the side of the ship with a cannon ball.
  • Hindsight Bias
    Once we know something, we find it difficult to remember when we did not know it and this limits our ability to learn from past failures.

Then, once we are able to recognize the biases, we must follow the following tips offered by the blog post to minimize them:

  • relentlessly search for relevant or new disconfirming evidence
  • seek diverse outside opinions that challenge our overconfidence
  • flip the problem on its head to see if we are viewing the situation positively or negatively
  • constantly redefine the problem to avoid escalation
  • develop systemic review processes that contain well-defined committed “outs”

In addition, SI suggests that you also:

  • have at least two parties run the numbers, and present them as they see them to minimize anchoring
  • for every proposed course of action, ask a party who takes the opposing viewpoint to present the situation from her viewpoint to minimize framing
  • take methodical notes at each step of the analysis and process that document knowns and unknowns so you can clearly identify not only when you learned something, but what process you used — if the process is repeatable, it may accelerate organizational learning in the future