Charlie Munger had this to say about rationality:

“I just think that you can see how awful it is when people get into these furies of resentment and anger, and sure they’re right about everything…I actually work at trying to discard beliefs. Most people just cherish whatever idiotic notion they already have because they assume it must be good. Think of the brilliant people who do some of the dumbest things.

Rationality is something you get slowly, and it has a variable result, but it’s better than not having it.”

I wholeheartedly agree with Charlie. My personal and professional experience taught me the value of rationality.

I had a friend whom I have known for 17 years. We used to be the best of friends before both leaving for the US seven years ago. As friends, of course, we stayed connected and, of course, we talked about a lot of things, including politics. That’s when fractions came. He vehemently supported Trump and I ferociously despised the 45th guy. Arguments happened more often. Tension rose. Words were exchanged. Then, there was nothing but silence. For almost five years.

During that time, a lot changed. We grew older. I got married and he now has two kids. I often confided in my wife how stupid it was for us to break the relationship over such a meaningless thing and how dumb I was for being so extreme in my views. I always consider myself a reasonable guy. But I was not as good as I thought I was. Not even close. Bottom line is that I regretted how the friendship turned out. I told my wife multiple times that I wished we could be friends again.

One day about a month ago, he reached out. Out of nowhere. Then we started to catch up. At first, it was about family. Then it was about where we are living and where we will want to settle down. Gradually and inevitably, the conversation drifted towards politics. Ugly heads reared again. This time, I am very mindful of what happened in the past. I tried showing him that my views softened and that I saw more where he was coming from. Whenever I thought there was no good response, I stayed silent. Still, I could feel the rage that he had for Democrats and Biden. To the point that I don’t think he acts reasonably any more.

I felt sad. It’s a tremendous waste to see that a relationship that lasted almost half my life can’t be what it was before the US. It’s equally sad to see a smart guy, who is a licensed doctor and surgeon, have such irrationality and that kind of viewpoints.

What I experienced is somewhat typical of the political discourse I have seen. One party and its supporters argue for one extreme while the other party and its proponents call for the opposite extreme. Whoever is in power can do what they want, until their rivals get elected and undo everything. There is no middle ground. It’s either them or us. There is no nuance or right and wrong. The only thing that matters is whether something fits a prior belief.

Irrationality is also prevalent in the workplace. Take the recent bubbles such as Metaverse, cryptocurrency, NFT or AI. Everything received a giant amount of hype and claims of absolute certainty. “Metaverse will change the world”. “Cryptocurrency is the game changer”. “AI will alter everything”. You know those claims.

Yet, most of those trends have subsided significantly. The only firm that pushes Metaverse is Facebook/Meta. Cryptocurrency still exists, but is no longer as trendy as it once was. About NFT, let me just say that the first tweet by Jack Dorsey, which was bought for $2.9 million, is now valued at $280. The jury is still out there for AI. The point here is that while I believe these concepts mentioned above have value and may be commercialized to some extent, claiming that each of them will change the world when there is no substantiating evidence is just folly. A folly driven by greed, ego and irrationality.

At work, I see irrationality too. Every company wants to generate as much revenue and profit on every dollar of expense as possible. “More with less” is the name of the game. Specifically, managers and leaders want to achieve a lot with either the same number of employees or fewer. And without any significant investment in tools. Well, there is only so much a pair of hands can do in a week day over a period of time before burn-out. There is only so much productivity gained from pushing internal teams to the limit. And it’s possible that saving money in the short-term can jeopardize a firm’s long-term. Here are a couple of examples.

Walmart could have competed with Amazon in e-commerce when the latter was still scaling. But the urge to save money to appease investors while Amazon poured billions in investments changed the course of the two companies forever. Blockbuster didn’t want to lose renting fees which made up 12% of its revenue at the time. Today, I think there is still only one Blockbuster store left and Netflix is the leader in streaming.

The older I get, the more I believe in the value of staying reasonable and rational. Whenever I look at my growth arc in the last 20 years, every step of improvement I made is related to being reasonable. I understand more the value of experience and wisdom passed down by the elderly. And if a 99-yeard-old billionaire revered around the world says that I should stay rational, that’s what I will do.