Alec Hogg: Use Einstein, Munger genius and then watch economy boom

Every quarter I get to apply my mind for my column in The Comet, a digital magazine produced by BrightRock. They're happy for us to republish the pieces on Biznews, which is what we're doing here with one I wrote a little while back. It's perhaps even more relevant now. Wisdom begins when the reality dawns that to learn, it's not necessary to experience everything personally. Best to use what others have been through to your own advantage. Warren Buffett's long-time business partner Charlie Munger picked this up many years ago. And still applies learnings from Albert Einstein, Charles Darwin and others to avoid making wasteful errors. We should too. – AH .By Alec Hogg .The Americans have a wonderful way of extracting wisdom from their society's best. They use something called the Commencement Address, a motivational speech by an invited guest to graduating college students. The more prestigious the university, the more that's expected of the presenter..California's Stanford University is among the leaders. This year its Commencement Address was by Bill and Melinda Gates. Last year it was New York Mayor Michael Bloomberg. But the most famous of all was the 2005 masterpiece by Apple's founder, the late Steve Jobs. The Youtube video of that 14 minute speech has been downloaded more than eight million times. It's a must-watch for anyone seeking a burst of inspiration..Most Commencement Addresses provide advice to the rising generation on how the right things to do. But occasionally someone takes the opposite approach, using inversion to advise what not to do. Specifically, super-rational vice chairman of Berkshire Hathaway and Warren Buffett's business partner for 54 years, the inimitable Charlie Munger..There are two great ways, Munger says, of discovering the solution to the most difficult problems. The first is to explain it to someone who simply nods in response. It's what Munger calls the Orangutan Method. If you enter an orangutan's cage, give him a banana and talk about the problem, when you leave the orangutan will still be eating the banana. But you'll be a little bit closer to a solution..The second is encapsulated in the 1986 Commencement Speech Munger gave to the Harvard School (corrected – see comment below). Drawing on the experience of the great algebraist Carl Jacobi, he urged the graduating class to "Invert, always invert." What Munger (and Jacobi) meant was even the toughest problem can be solved if approached backwards. That the solution often emerges after trying to discredit your assumptions..Munger used namesake Charles Darwin as an example of one who wasn't afraid to work hard on attacking theories he cherished. And in the memorable address quotes Albert Einstein who put his string of successful theories down to "curiosity, concentration, perseverance and self-criticism – the testing and destruction of his own well-loved ideas.".Right now, South Africa could do with a generous application of Einstein's approach..After Nazi Germany, this country comes closest to world champion of social engineering. First we had Apartheid, present since European settlers arrived in the 1600s but institutionalised after DF Malan's National Party took power in 1948. The essence of which was discrimination based on the colour of a person's skin..Soon after democracy arrived in 1994, the nation celebrated its new Constitution, the most admired on earth. It provided a foundation from which to unleash human potential. The ultimate law of the land. The blueprint for a democratic, non-racial, non-sexist, happy and prosperous nation..But no sooner was this magnificent document unveiled than the social engineers got back to work..We were told that past needed redressing. Those one tenth of South Africans who benefitted under the old regime needed to be put in their place in the new. They must give back ill-gotten gains. And stand back for previously disadvantaged brethren. On sports fields, at universities, in business. Everywhere, the New South Africa was to reflect the "demographics"..Leaders of the previously advantaged population group (ie whites) supported these calls. Under their stewardship, shareholders of public companies gave away hundreds of billions in Black Economic Empowerment schemes. Sports administrators applied racial quotas to select national teams. White graduates, realising they weren't wanted, sought employment outside the country..Everyone all knew it was against what had been written in the Constitution. But redress was required. And this was the way everyone agreed it should happen..Two decades later, we have a serious problem. Those who made the transfers of wealth believed it was a one-off. A temporary adjustment to hasten normalisation of the new democratic society. Those in charge of the redressing see things differently. For them, those initial BEE deals were only the beginning. The previously accepted principle of once empowered, always empowered has been tossed aside. The agreed Sunset Clause in Affirmative Action, too, has vanished..Twenty years after democracy dawned, new laws are being enacted to ensure the transfer of wealth is continuous and accelerated. In effect, they will entrench a situation where the previously advantaged, judged purely on the colour of their skin, become permanently disadvantaged. Based on the ridiculous premise that the 90% majority need protection from a 10% minority. Social engineering at its most repugnant. But this time, so warped that even its protagonists fail to provide any rational argument..The biggest problem with all of this is no matter how hard their toil, the former "haves" will never generate enough to make a difference to the previous "have nots". Racially-driven legislation might sate vengeful instincts of those with long-term grudges. But it does not address the nation's underlying jobless problem. No country in history has borne as high a level of unemployment for as long. During the US's fabled Great Depression, unemployment only briefly exceeded 20%. South Africa's has remained stubbornly above 25% for many years..This obsession with race is one of the big things hobbling a potentially prosperous nation. Another is the least flexible labour laws in the world, a cornerstone of the ruling political party's anti-business philosophy. Something that's ingrained into its mostly Socialist-trained leadership. A gremlin that lies so deep these otherwise rational beings remained blinkered to abundant evidence of the economic destruction their dogma has wrought everywhere applied..Insanity is described as doing the same thing over while expecting a different outcome. South Africa is a close to perfect example. Our leaders talk about creating jobs. They delude themselves with unrealistic economic growth targets. But instead of smelling the coffee when the predictions and undershot, repeat the same, tired rhetoric, believing this time will be different..What the nation needs right now is a large dose of Einstein with some Munger and Darwin thrown in. A backward examination of its problem. A "testing and destruction of well-loved ideas." That will liberate solutions that will get the country back to work. And unshackle the best Constitution on earth. Allowing it to the unleash human potential champing at a collective bit..* Alec Hogg is the founder and editor of Biznews. This article was written for BrightRock's quarterly digital magazine The Comet, where it appeared first.

Alec Hogg: Use Einstein, Munger genius and then watch economy boom

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