No one ever explained this to me, or if they did, it was in a stupid hand-wavy way. On figuring it out, I felt somewhat like Scott Alexander:
I’ve had to listen to so many people talk about how “we must respect native people’s different ways of knowing” and “native agriculturalists have a profound respect for the earth that goes beyond logocentric Western ideals” and nobody had ever bothered to tell me before that they actually produced more crops per acre, at least some of the time. That would have put all of the other stuff in a pretty different light.
Here’s how abundance works. It’s just a pairing of:
- Contrary to the marketing (“Give everything away! Expect more to come through magic!”), being very frugal and conservative in spending resources, so as to maintain a reserve or surplus
- Investing in ways that will have illegible returns—unpredictable, or in different forms than can be predicted.
EXAMPLE: Nassim Taleb’s investment strategy of regular purchase of options, most of which expire worthless. This may seem spendthrift, but it is actually quite “frugal” in that the loss is bounded. The returns come when some sort of “Black Swan” event happens, and will make the fund $UNKNOWN amount of money. It’s what happens when, in order to make money, you’re willing to sacrifice knowing when or how you will do so.
EXAMPLE: Helping your neighbor move in. Later, your water main breaks and he helps you clean it up.
EXAMPLE: Most learning, actually. Intrinsic to learning is that you don’t really know exactly what you’re going to learn—if you did, you wouldn’t need to learn it! So you’re spending time for an unpredictable reward. Academia makes it much more predictable, but often at the heavy cost in overhead and boredom.
EXAMPLE: Placing a little free library in your neighborhood. Just like countries benefit (mostly) from an educated populace, streets benefit from having books available—in a million little ways that add up, combine, and multiply.
ANTI-EXAMPLE: Polluting. What will happen as a result of pollution? a)a cost (waste disposal) will be reduced by a known amount, and the world will be worse in a bunch of ways, mostly small, but some unpredictably big.
Whereas most financial decisions are two-sided, i.e. investment and return, decisions made in an abundance paradigm are more one-sided, as the return is by definition incalculable. The chief question is: “Will this put me in the poorhouse/make other concerns fail from lack of resources?” The second question is: “Ballparking this, is this likely to lead to “good” returns, where “good” is basically defined by my gut, and “returns” are not well defined?”
Side benefits to this approach are at least threefold:
- A mandate to give forces discipline on the rest of the budget. If you’re giving 10% away, you will be all the more careful managing the 90%. And it’s the care, not the amount
- It also stimulates the search for other sources of income/resources.
- Keeping a reserve acts as a hedge against random disaster. The rarity of this scenario is matched only by its importance.