BOOK DETAILS

Killing Sacred Cows: Overcoming the Financial Myths That Are Destroying Your Prosperity

Killing Sacred Cows: Overcoming the Financial Myths That Are Destroying Your Prosperity

by Garrett B. Gunderson

ISBN: 9781929774517

Publisher Greenleaf Book Group

Published in Business & Investing/Personal Finance, Business & Investing/Popular Economics

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Sample Chapter


Chapter One

MYTH 1:

{The Finite Pie}

The number of mouths to be fed will have no limit; but the food that is to supply them cannot keep pace with the demand for it; we must come to a stop somewhere ... in this state of things there will be no remedy ... famine, distress, havoc and dismay will spread around; hatred, violence, war and bloodshed will be the infallible consequence; and from the pinnacle of happiness, peace, refinement and social advantage we shall be hurled once more into a profounder abyss of misery, want, and barbarism than ever by the sole operation of the principle of population! -Thomas Malthus (1766-1834)

The way we think is costing us money-and more than money, our quality of life. Without knowing it, we're missing opportunities, wasting our potential, and letting our dollars and destinies stagnate. But all of this comes from one pernicious root belief: Most of us believe that there is a finite resource "pie" from which we all share and that the more we have, the less others have, and vice versa. We believe that all resources are scarce. It's not unusual that so many of us believe this, though. From birth a mindset of scarcity is ingrained in us. In school we're taught that economics is the science of allocating scarce resources. On television, in magazines, in newspapers, on the Internet, and in virtually every other form of media, we are bombarded with claims that there isn't enough to go around. The theories and strategies of intellectuals like Thomas Malthus articulate such a convincing case for scarcity that it becomes difficult to see the deeper truths beyond what the data seems to suggest on the surface.

In the scarcity mindset, we take it for granted that our society does not have enough resources or productive capacity to fulfill everyone's needs and desires. Consequently, we believe that our material gains come only as a loss to others, and that when others possess more it means less for us. It's easy to see how a culture that accepts the notion of scarcity quickly becomes ultra-competitive and selfish.

But the scarcity mindset is predicated on false beliefs, misinformation, outdated ideas, and fear. While scarcity may be a valid concern at times in the physical world, I will show how human innovation and the principle of exchange render those facts obsolete and add much deeper context to the surface realities, and how we can overcome scarcity and its ill effects in both our minds and our finances.

Scarcity is the belief that resources are limited, and the world is a stage for a zero-sum game of accumulation. In a zero-sum game, anything that another wins is no longer available to all others playing the game. Further, these winnings are not replaced or transformed into anything of equivalent or greater value that remains in the game, available to other players. In scarcity, ownership by another means the loss of opportunity for oneself.

The opposite of scarcity is abundance. The concept of abundance is that there are more than enough resources to fulfill the desires of all the people within a society, a far more inspiring and productive way to look at the world and well supported by the facts, as I'll show you. This is the approach that many successful people and organizations take to their financial decisions, and for obvious reasons. This mindset sets a positive, clear path to achieving your financial potential and your purpose.

The Destructive nature of Scarcity thinking

At some point or another in their lives, most people experience scarcity as a reality on a personal scale. But to extrapolate this beyond its true importance and adopt the belief that scarcity represents the nature of our economy, our culture, our environment, or even our universe is destructive and limiting in every aspect of our lives.

When our actions are based on a scarcity mindset, we are acting on fear: fear that we won't get our fair share, that somebody else will reap rewards that we won't, or that we'll have to fight tooth and nail against others to achieve the level of success or prosperity we desire. And this fear causes us to make irrational decisions (especially when it comes to our finances) that limit our potential rather than enhance it.

Nevertheless, the scarcity paradigm dominates our culture today. Consider an example from the media:

Of all the impulses in humanity's behavioral portfolio, ambition-that need to grab an ever bigger piece of the resource pie before someone else gets it-ought to be one of the most democratically distributed. Nature is a zero-sum game, after all. Every buffalo you kill for your family is one less for somebody else's; every acre of land you occupy elbows out somebody else. (Jeffrey Kluger, "ambition: why some People are Most likely To succeed," Time, November 14, 2005, vol. 166, no. 20.)

Note the author's assumption that scarcity is the nature of the universe, and how he perceives that human behavior should flow from that assumption. That philosophy justifies hostile, destructively competitive action and the perception that all economic transactions are win-lose, and unapologetically so. After all, if we do not "[elbow] out somebody else," according to Kluger, we are left with nothing ourselves.

Here is another example about Wal-Mart, the company that zero-sum thinkers love to hate:

Wal-Mart's ascent ... has already placed it in the exclusive club of companies whose raw power makes them the most feared corporate animals of their time. Wal-Mart has killed or wounded competitor after competitor ... there's little doubt that Wal-Mart is among history's premier practitioners of Darwinian capitalism, red of tooth and claw. (Matthew Maier, "How to Beat Wal-Mart," CNN Money.com, May 1, 2005.)

Notice the words "feared," "killed," "wounded," "Darwinian," and the references to Wal-Mart as a corporate beast "red of tooth and claw." The underlying assumption here is that Wal-Mart's gains are painful wounds or losses to every other retail store.

It's clear that the scarcity mindset pervades our media and culture, but how does it practically affect us in our daily lives? Reacting out of fear of loss causes us to accept false theories on how to succeed, to neglect the opportunities that would lead us to true prosperity, and to suffer in bad jobs and unfulfilling lifestyles working for nothing but an illusion of security. And perhaps most important, scarcity negatively affects the way we interact with others because it's characterized by an adversarial, win-lose perspective of the world and relationships. When we compete in scarcity, we try to do so at the expense of others-we believe that we can only win if someone else loses. We view others as competition, as roadblocks in the way of our getting what we want. The destruction this attitude wreaks on our prosperity and our contributions to the world is wide-reaching and hard to see at first, but much of this book will be focused on uncovering it and helping to restore a more natural worldview.

In the thrall of scarcity thinking, we make faulty financial decisions. We buy things we don't need because we can never have enough, and we also postpone appropriate purchases, even when we have the money, because we can't let go of our precious dollars. We pull money out of investments when we should be buying more, and we buy investments at their peak when we should be selling. We're naive when we should be cautious, and skeptical when we should be optimistic. When we encounter challenges, our minds automatically focus on all the reasons why we can't succeed. We feel jealous and envious of others when we perceive that they are more intelligent or beautiful, make more money, have more friends, or have more opportunities than us. We feel superior to those who have less than us. We sue and are sued at the slightest grievances, and for trivial amounts of money, then complain when insurance rates raise. Scarcity even leads some to lie, cheat, and steal to get what is wanted, at the expense of others and our own integrity.

In the commission-based financial services industry, scarcity leads to a focus on making a sale instead of what our clients really want, which hurts both parties. My friend Dean, who is also in the financial services industry, told me about a realization he had as he was working with a client. His client came to him seeking advice on a new job. The client had to make a decision between two pay structures, and was also trying to weigh his children's school and his own work situation, which would be changing, into the equation. As the client bared his deepest concerns and hopes for the future, Dean found that he wasn't really listening or trying to meet the client's needs; rather, his thoughts were focused on how he could sell the client a life insurance product to generate a commission. After he made his presentation and the client shared more information, it became clear that the life insurance policy was completely unnecessary and Dean lost the sale. As he tried to figure out what had gone wrong, it became clear to Dean that he had acted with a scarcity mindset, and hadn't met the client's actual objectives, nor had he created real value for fear of losing a commission. Instead he lost the client altogether-after realizing Dean was only in it for the commission, the man never came back again.

When we live in scarcity, greed can blind us to common sense. My friend Cory lost fifty thousand dollars in a scam because he became overwhelmed with the prospect of high returns and thought that if he didn't act immediately, he would lose out. He was approached by a company who asked him to invest in a debt-restructuring and -assistance program and promised him a 10 percent per month return. Without doing any due diligence, he quickly wrote them a check for twenty-five-thousand dollars, and a couple days later gave them another twenty-five thousand because he was so excited about the potential returns. The next month Cory and the other "investors" were told that the company was still working through some issues and would be unable to pay. Each month after that brought another excuse, and several months later, with no returns ever paid, Cory found out that the company was a scam. The founder went to prison. Cory discovered that this person had already been convicted of similar activity and was on probation at the time Cory gave him money. A simple Internet search would have uncovered the fraud, but the lure of high returns prevented him from acting wisely.

Scarcity is about so much more than money and material resources. It's a mindset, a way of viewing and interacting with the world, and it permeates everything we think and do. In large part, it determines who we are and how we act. It robs us of hope, steals our dreams, presents us with supposed evidence for living small and treating others badly, and renders us impotent, despite our infinite potential to create and make the world a better place. In a world of possible freedom, joy, abundance, and service, a scarcity mindset cripples us and aids us in seeing not much more than limitations, suffering, poverty, and selfishness.

The scarcity mindset can also limit the potential of the people around us, our community, our economy, and our society. This is because the scarcity mentality is characterized by adversarial, win-lose relationships. When we compete in scarcity, we try to do so at the expense of others-we believe that we can only win if someone else loses.

Some people might argue that adversarial competition is a critical element of free enterprise, that it's impossible to have a free market economy without it. However, it's clear that a free market economy is more productive when everybody adopts an attitude of cooperative competition and fosters win-win relationships. That sounds a lot better than "for every winner there must be a loser," doesn't it? The myth of scarcity destroys our potential because it pits us against each other rather than helping us work with each other.

More than simply derailing individual financial success and human potential, scarcity thinking tears apart communities, relationships, and families. Under the scarcity paradigm, money and goods aren't the only finite resources-everything is grounds for competition and resentment, from jobs to abstract qualities like beauty and intelligence. Everything someone else possesses represents something that you cannot have.

Even people who consciously reject the idea of scarcity can be subconsciously subject to the negative effects of the myth, whether because they copy behaviors their parents and family members have modeled, because scarcity simply feels safer, or for some other unexamined reason. Most of us operate with unconscious paradigms of scarcity that we don't verbalize or try to express. If we did, we might recognize their destructive nature and seek out a better ideology that wouldn't cripple our ability to think and act creatively or productively. This is exactly what the concept of abundance can do for us.

YOU KNOW YOU'RE IN SCARCITY WHEN ...

Your friend at work gets a promotion and you find yourself feeling jealous, rather than happy for him.

You see a person driving an expensive car and find yourself feeling resentful or judging her.

You make purchases on credit and live beyond your means; you're dissatisfied with what you have.

You postpone important purchases that would add dramatic value to your life, even when you have the money to make them, because you can't stand to part with your cash.

When your spouse or child asks you to buy something, more often than not your immediate response is that you can't afford it.

You find yourself frequently wishing for a better life, yet you think that it would be futile to strive for something better; there's never enough time or money to do the things you want to do.

You have ideas about how to make your life better, like switching careers or starting your own business, but are afraid to put them into action.

You keep your money in "safe" investments like CDs and money market accounts because you fear losing it.

You pick the riskiest investments, cross your fingers, and hope for high returns, thinking that gambling and luck is your best path to wealth.

Replacing Scarcity with Abundance

Scarcity thinking is holding us back, individually and as a society. Because of this, we must find a way to replace scarcity thinking with a mentality of abundance. Scarcity thinking says, "I can't afford it," or "I just don't have any options," or "I never have enough time to pursue my ideal life." Abundant thinking says, "How can I afford this?" or "I know I have unlimited options; I just have to find a way to realize them," or "How can I create more space so I have time to pursue my passions?" Scarcity is limited; abundance is limitless.

We can consciously choose to view life abundantly, to think and act abundantly, and to eliminate our fear of loss. The path to overcoming the myth of scarcity requires us to recognize and accept the abundant nature of our environments and of our potential as creative beings. When we face hardships that seem to reveal that life is harsh and the nature of our existence is combating scarcity, we need to take a broader view and realize that what has happened is that principles of abundance have been violated. If more people live with an abundance mindset, we will all experience less hardship.

Take, for example, people who have lost money through investments in mutual funds or the stock market. With a scarcity mindset, they will believe they have learned that investing is risky and that profits from investments are scarce. But the true lesson could be that a person or group of people involved with the investment-the investor, the fund manager, the CEO of a business in which the money was invested-made choices that limited or destroyed the potential return of the investment. Investors could also learn lessons from the experience that will propel them to greater success with investments in the future-such as better ways to select fund managers or businesses to invest in. They might examine their investment options more closely in the future to ensure that they are aligned with the principles of abundance, or think of a new way to earn returns from their money. Through abundance, they can view their mistakes as positive lessons that can be applied to minimize risk, and continue to invest, becoming wiser with each investment, each success, and each mistake.

(Continues...)

Excerpted from "Killing Sacred Cows: Overcoming the Financial Myths That Are Destroying Your Prosperity" by Garrett B. Gunderson. Copyright © 0 by Garrett B. Gunderson. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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