Lin Yutang

Work: The Three American Vices
by Mark Skousen
The Daily Reckoning
London, England
Tuesday, April 12, 2005

---------------------

--- Advertisement ---

---------------------

Our train has come to a complete halt in the middle of nowhere. The Eurostar is normally a reliable and convenient way to travel between the two cities, London and Paris. But occasionally, and for no apparent reason, it stops.

We have nothing to read except clippings from last week's Barron's…and half a dozen books on WWI. First, we turn to Barron's…

American executives are the best paid in the world. It is commonly believed that they are compensated so richly because they make money for shareholders. Why else would capitalists want to give away a significant portion of their profits?

In the last 10 years, Barron's tells us, the compensation of top executives in America grew at twice the rate of corporate profits. In 1993-1995, the top five officers of public companies were paid 4.8% of corporate profits. In 2001-2003, the level had jumped to 10.3%. In the decade ending 2003, these executives took $290 billion to the top officers. Why would capitalists allow their paid employees such a large, and growing, share of what should have been theirs? Could competent people not be found for less? And yet, you read the story of Enron's management…or of WorldCom's…and you see that many of these highly paid executives shouldn't be allowed to run a grocery store, let alone a billion-dollar public corporation.

What gives? Over time, institutions - even one as nimble as capitalism - have a way of degenerating and corrupting themselves. Everything falls apart. The Catholic Church under the Medici popes would have been barely recognizable to St. Peter. America under George W. Bush would have been repulsive to Thomas Jefferson. And American capitalism in 2005 is a far different thing from the capitalism of Andrew Carnegie or John D. Rockefeller.

American investors are getting worn down. Major stocks are topping out and falling. Mutual funds are losing money. Executives get rich…lawyers and stockbrokers still make money…but the little guys' retirement portfolios whither. So, the money and enthusiasm leaves the stock market…and moves to houses. Soon, stock prices will fall. And the real estate market, too, is bound to come to a complete halt early or late.

A generation ago, people owned houses because they provided financial and physical safety. They were loath to mortgage them, if they could avoid it, because the mortgage made the house less secure. In hard times, they might lose the house - and have no money and nowhere to live.

Who among the dead could have imagined how things would change!

More news, from our team at The Rude Awakening:

--------------

Eric Fry, reporting from Manhattan…

"Down here on Wall Street, the signs of spring are somewhat less evident. Even so, a stock market rally seems to be budding. This sporadic bloomer does not always germinate, but the early indications seem quite promising this year…"

For the rest of this story, and for more market insights, see today's issue of The Rude Awakening:

Springtime on Wall Street

--------------

Bill Bonner, back in London:

*** A reader comment:

"Bill, you wrote last week, 'This part of Johannesburg is so much like Texas. We work in office parks…and go to malls for dinner. We were hoping for something better.'

"You should have come down to Cape Town. There is a reason most of the people living in the Jo'burg spend their holidays here. That might also account for how fast the property prices are rising in the Mother City, it's scary.

"A few days ago, I saw a local celebrity on television informing the masses how easy it is to re-mortgage their houses. The advert actually featured an ATM in the kitchen.

"Great, we are all rich, now we too can afford to buy flat screen televisions from China. It would appear that the American nightmare is exportable, it's a pity it will not sort out your trade deficit. But as the saying goes, misery loves company.

"As always, keep up the good work."

[Ed. Note: Your home can be a good investment - but treating it like your personal ATM can be a very costly mistake. If you learn the "rules" and play the property bubble right, you can protect yourself and your home when the walls come tumbling down around the real estate market. See here:

Play by the Rules 
 
*** Here in Europe, the European Union is falling apart - right before our eyes. Polls in France tell us that the French are going to vote "no" on the new European Constitution. Where will that leave Europe? No one knows. "Europe will be without a unified government for a long time," say press reports. It will probably be better off that way.

*** Maria's new "friend" came to visit. The young man is very handsome…

"Is he a boyfriend…or just a friend?" someone asked.

"I don't know yet," said Maria.

We'll see…

--- Advertisement ---

Sign up for The Daily Reckoning… Learn what you can expect from today's markets and how to prosper in the face of uncertainty. Enter your e-mail address below: We will not share your email address with anyone else, period. -Andrew Palmer, Director E-commerce Marketing We Value Your Privacy

---------------------

The Daily Reckoning PRESENTS: Americans take pride in their workaholic tendencies and their desire to succeed at all costs…but a Chinese philosopher asserts that this way of life will only be successful in working yourself into an early grave. Mark Skousen explores…

THE THREE AMERICAN VICES
by Mark Skousen
 
 "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."
 -John Maynard Keynes (1936)
 
A reader approached me last month at the Investment U conference in Delray Beach and said, "You sure have a knack for picking winning stocks. How do you do it?"
 
"It's very simple," I said. I then whispered in his ear, "Lin Yutang."

"Lin Yutang?" he asked. "Is that a new Chinese trading system?"

"No, I'm afraid not. It's a philosophy of life."

He seemed intrigued. I went on to explain that Lin Yutang was a very unusual Chinese philosopher and writer who lived in both in both China and the United States, and understood both cultures. He is known as the philosopher of leisure and "letting go." I quoted his most famous line - a line that usually angers Americans:

"The busy man is never wise, and the wise man is never busy."

I made the mistake of writing this statement on the blackboard on the first day of class at Columbia Business School. A third of the students left and dropped the class immediately. [But those who stayed said it was the best class they ever took at Columbia. As one student said, "We've never been taught anything like this before at Columbia!"]

Lin Yutang: Why You Need Free Time

Yet there is wisdom in Lin's statement. If you are too busy in your work, you don't have time to learn new ideas, to discover new truths, to enjoy life's little pleasures, or perhaps to pick a winning stock! Beating the market requires you to look down un-trodden paths, and you need the free time to do it.

Lin Yutang criticized most Americans for being too busy, and therefore too subservient to the business culture and the old ways. Slaves to their work, they worry themselves to death. In another startling statement, Lin states, "The three American vices seem to be efficiency, punctuality and the desire for achievement and success. They are the things that make the Americans so unhappy and so nervous." Gee, I thought they were American virtues!

Lin goes on to say, "O wise humanity, terribly wise humanity! How inscrutable is the civilization where men toil and work and worry their hair gray to get a living and forget to play!"
 
Lin offers the secret to success for the businessman [busy man?] in this following statement: "Actually, many business men who pride themselves on rushing about the in morning and afternoon and keeping three desk telephones busy all the time on their desk, never realize that they could make twice the amount of money, if they would give themselves one hour's solitude awake in bed, at one o'clock in the morning or even at seven. There, comfortably free, the real business head can think, he can ponder over his achievements and his mistakes of yesterday and single out the important from the trivial in the day's program ahead of him."
 
Lin Yutang is a champion of the individual - "its unreasonableness, its inveterate prejudices, and its waywardness and unpredictability." But in today's society, the individual free thinker is being replaced by the soldier as the ideal. "Instead of wayward, incalculable, unpredictable free individuals, we are going to have rationalized, disciplined, regimented and uniformed, patriotic coolies, so efficiently controlled and organized that a nation of fifty or sixty millions can believe in the same creed, think the same thoughts, and like the same food." Lin goes on to warn, "Clearly two opposite views of human dignity are possible: the one believing that a person who retains his freedom and individuality is the noblest type, and the other believing that a person who has completely lost independent judgment and surrendered all rights to private beliefs and opinions to the ruler or the state is the best and noblest being."

I dare say which of the two applies to Daily Reckoning readers!

Lin Yutang: Don't Compartmentalize

Lin dislikes the popular trend of compartmentalizing people in groups and classes. "We no longer think of a man as a man, but as a cog in a wheel, a member of a union or a class, a 'capitalist' to be denounced, or a 'worker' to be regarded as a comrade…We are no longer individuals, no longer men, but only classes."
 
Lin Yutang experienced the brutality of Chinese communism and the heavy-handed bureaucracy of Washington during the New Deal era. Needless to say, he has a low opinion of government. "I hate censors and all agencies and forms of government that try to control our thoughts."
 
He also questioned the establishment economist and forecaster: "Perhaps I don't understand economics, but economics does not understand me, either. The sad thing about economics is that it is no science if it stops at commodities and does not go beyond human motives…It remains true that the stock exchange cannot, with the best assemblage of world economic data, scientifically predict the rise and fall of gold or silver or commodities, as the weather bureau can forecast the weather. The reason clearly lies in the fact that there is a human element in it, and when too many people are selling out, some will start buying in…this is merely an illustration of the incalculableness and waywardness of human behavior, which is true not only in the hard and matter-of-fact dealings of business, but also in the shape of the course of history."
 
Lin Yutang was probably unfamiliar with the one school of economics that does take into account human behavior: the Austrian school of Ludwig von Mises and Friedrich Hayek. That's why Mises's magnum opus is called Human Action!
 
Lin Yutang has many more things to say about our culture and how to live a happy and fulfilling life…about growing old gracefully ("The East and West take exactly opposite points of view. In China, the first question they ask is, 'What is your glorious age?'")…the need for women in conversation….the evils of Western wear…the only way to travel ("buy a one-way ticket!")…why he is a "pagan"…and his controversial views on smoking. I've only scratched the surface of this brilliant Chinese philosopher.
 
Regards,

Mark Skousen
for The Daily Reckoning

P.S. I encourage readers to buy Lin Yutang's book, The Importance of Living. It was written in 1937, but in today's' hustle and bustle world, it is even more relevant.

Editor's Note: I am going to be speaking on Lin Yutang and his Chinese philosophy at FreedomFest, a unique conference of "great ideas, great books, and great thinkers" May 12-14, at Bally's/Paris Resort in Las Vegas. FreedomFest is directly after the Las Vegas Money Show, May 10-12. Why not take a few extra days and join us? You'll be glad you did. For more information, call 1-800-USA-1776, or click on the link below:

FreedomFest

To purchase your own copy of Lin Yutang's book, The Importance of Life, see The Daily Reckoning bookstore:

The Importance of Living

--- Advertisement ---

The Daily Reckoning is FREE!
Click below…

The Daily Reckoning is FREE! Click below…