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6 Elevate Your Perspective

The Law of Shortsightedness

It is in the animal part of your nature to be most impressed by what you can see and hear in the present—the latest news reports and trends, the opinions and actions of the people around you, whatever seems the most dramatic. This is what makes you fall for alluring schemes that promise quick results and easy money. This is also what makes you overreact to present circumstances—becoming overly exhilarated or panicky as events turn one direction or the other. Learn to measure people by the narrowness or breadth of their vision; avoid entangling yourself with those who cannot see the consequences of their actions, who are in a continual reactive mode. They will infect you with this energy. Your eyes must be on the larger trends that govern events, on that which is not immediately visible. Never lose sight of your long-term goals. With an elevated perspective, you will have the patience and clarity to reach almost any objective.

Moments of Madness

All through the summer and early fall of 1719 the Englishman John Blunt (1665–1733), one of the lead directors of the South Sea Company, followed the latest news from Paris with increasing anxiety. The French were in the midst of a spectacular economic boom, fueled primarily by the success of the Mississippi Company, an enterprise started by the expatriate Scotsman John Law to exploit the riches in the Louisiana territories controlled by the French. Law sold shares in the company, and as its price kept rising, Frenchmen of all classes were cashing out and becoming fabulously wealthy. The word millionaire itself was coined in these months to refer to such nouveaux riches.

Such news made Blunt angry and envious. He was a loyal Englishman. With the success of the Mississippi Company, Paris was drawing in investment capital from all over Europe. If this continued, France would soon become the finance capital of the world, surpassing Amsterdam and London. Such newfound power for the French could only spell disaster for England, its archenemy, particularly if another war broke out between them.

More personally, Blunt was a man of great ambition. He was the son of a humble shoemaker; from early on in his life he aimed to ascend to the highest levels of English society. His means of getting there, he believed, would be through the financial revolution sweeping Europe, which centered on the increasing popularity of joint-stock corporations like Law’s and like the South Sea Company. As opposed to building wealth through the traditional means of owning land, which was expensive to manage and highly taxable, it was relatively easy to earn money through purchasing stock, and profits were tax free. Such investments were all the rage in London. Blunt had plans to turn the South Sea Company into the biggest and most prosperous joint-stock company in Europe, but John Law had stolen his thunder with a bold venture, and with the full backing of the French government. Blunt would simply have to come up with something bigger and better, for his sake and for the future of England.

The South Sea Company had been formed in 1710 as an enterprise that would handle and manage part of the English government’s enormous debts, in exchange for which the company was to be granted a monopoly on all English trade with South America. Over the years the company did almost no trading but served as an informal bank for the government. Through his leadership of the company, Blunt had forged relationships with the wealthiest and most powerful Englishmen, most notably King George I (1660–1727) himself, who became one of its biggest investors and was named governor of the company. Blunt’s motto in life had always been “Think big,” and it had served him well. And so, as he racked his brain for a way to outdo the French, he finally hit upon a scheme in October of 1719 that was worthy of his motto and that he felt certain would change the course of history.

The greatest problem facing the English government, headed by the king, was the massive debts it had incurred over the course of thirty years during the wars that had been fought with France and Spain, all financed through borrowing. Blunt’s proposal was simple and quite astounding: The South Sea Company would pay the government a nice fee in order to completely take over the debt, valued at a whopping £31 million. (The company would receive in exchange an annual interest payment on the debt.) The company would then privatize this £31 million debt and sell it as if it were a commodity, as shares in the South Sea Company—one share equaling £100 of debt. Those who had lent the government money could convert their IOUs into equivalent shares in the South Sea Company. The shares that were left over would be sold to the public.

The price for one share would start at £100. As with any stock, the price could rise and fall, but in this case, if played right, the price would only go up. The South Sea Company had an intriguing name and held out the possibility that it would also begin trading in the vast wealth in South America. It was also the patriotic duty of English creditors to participate in the scheme, since they would be helping to cancel the debt while potentially making much more money than the annual interest payments the government paid them. If the share price rose, as it almost certainly would, buyers could cash out for a profit and the company could afford to pay nice dividends. Like magic, debt could be transformed into wealth. This would be the answer to all of the government’s problems, and it would assure Blunt lasting fame.

When King George first heard of Blunt’s proposal in November of 1719, he was quite confused. He could not understand how such a negative (debt) could be instantly turned into a positive. Besides, this new jargon of finance went straight over his head. But Blunt spoke with such conviction that he found himself swept up in his enthusiasm. After all, he was promising to solve George’s two greatest problems in one fell swoop, and it was hard to resist such a prospect.

King George was massively unpopular, one of the most unpopular English kings of all time. It was not totally his fault: he was not English by birth but German. His title previously had been the Duke of Brunswick and Elector of Hanover. When Queen Anne of England died in 1714, George was her closest living Protestant relative. But the moment he ascended the throne his new subjects found him not to their liking. He spoke English with a horrific accent, and his manners were so coarse, and he was always avid for more money. Despite his advanced age he was constantly chasing after women other than his wife, none of whom were particularly attractive. In the first years of his reign there were several coup attempts, and the public might have welcomed the change if they had succeeded.

George desperately wanted to prove to his new subjects that he could be a great king, in his own way. What he hated most of all was the crushing debts the government had incurred before he ascended the throne. George had an almost allergic reaction to any kind of debt, as if his own blood were being leeched.

Now here was Blunt offering him the chance to cancel the debt and bring prosperity to England, strengthening the monarchy in the process. It was almost too good to be true, and he threw his full weight behind the proposal. He assigned the chancellor of the exchequer, John Aislabie, the task of presenting the proposal to Parliament in January 1720. Parliament would have to approve it in the form of a bill. Almost immediately Blunt’s proposal stirred up fierce opposition among several MPs, some of whom found it ludicrous. But in the weeks after Aislabie’s speech, opponents of the bill watched in dismay as support for their side slowly withered away. Advance shares in the venture had been virtually gifted to the wealthiest and most powerful Englishmen, including prominent members of Parliament, who, sensing the sure profits they personally would gain, now gave their approval to the bill.

When the bill passed in April of that year, King George himself showed up at the South Sea House and deposited £100,000 for shares in the new venture. He wanted to display his confidence in it, but such a step was hardly necessary, as the buildup to the bill’s passage had captured the public and interest in South Sea Company shares had already reached a fever pitch. The center of activity was an area of London known as Exchange Alley, where almost all stocks were sold. Now the narrow streets in and around the alley were clogged with traffic growing thicker by the day.

At first it was mostly the wealthy and influential who came in their fancy coaches to buy up shares. Among the buyers were also artists and intellectuals—including John Gay, Alexander Pope, and Jonathan Swift. Soon Sir Isaac Newton felt the pull and invested a good chunk of his savings, £7,000. A few weeks later, however, he felt doubt. The price was rising, but what rises can surely fall, and so he cashed out, doubling his initial investment.

Soon rumors began to circulate that the company was about to initiate trade in South America, where all kinds of riches lay buried in the mountains. This only added fuel to the fire, and people from all classes began to converge on London to buy up shares in the South Sea Company. Blunt, it was reported, was a financial alchemist who had found the secret of transforming debt into wealth. In the countryside farmers pulled up from under their beds their life savings in coins and sent their sons and nephews to buy as many shares as possible. The fever spread to women of all classes, who normally did not dabble in such things. Now actresses were rubbing elbows with duchesses in Exchange Alley. All the while, the price kept rising, over £300 and soon £400.

Like France before it, the country was now experiencing a spectacular boom. On May 28 the king celebrated his sixtieth birthday, and for someone who had been known for his frugality, it was the most lavish party anyone had ever seen, with enormous tubs full of claret and champagne. One woman at the party flaunted her new wealth by encrusting her dress with jewels worth over £5,000. Everywhere in London the wealthy were tearing down mansions and replacing them with houses that were even larger and grander. Porters and footmen were now quitting their jobs and buying expensive coaches and hiring porters and footmen of their own. One young actress made such a fortune, she decided to retire; she rented out an entire theater to say good-bye to her adoring fans. An aristocratic lady was astonished one evening at the opera to see that her former maid now occupied a more expensive box in the theater than her own. Jonathan Swift wrote in a letter to a friend, “I have enquired of some that have come from London, what is the religion there? They tell me it is South Sea stock. What is the policy of England? The answer is the same. What is the trade? South Sea still. And what is the business? Nothing but South Sea.” In this midst of this feverish buying and selling spree, there stood John Blunt at the pump, doing whatever he possibly could to stimulate the interest in South Sea shares and keep the price rising. He sold the stock in various subscriptions, offering generous terms of payment, sometimes requiring only a 20 percent advance to get in. For every £400 invested, Blunt would lend £300. He wanted to keep up the demand and make people feel that they might be missing out on their one chance for wealth. Soon the price had passed £500 and kept on rising. By June 15, he had set the subscription price at an astronomical £1,000, with only 10 percent down to get in and 10 percent installments spread out over four years. Few could resist such terms. That very month King George had Blunt knighted. Now a baronet, Sir John Blunt stood at the pinnacle of English society. Yes, he was rather unattractive to look at and he could be quite pompous. But he had made so many people so wealthy that he was now England’s most cherished celebrity.

As the rich and powerful prepared to leave London for the summer months, the mood was downright giddy. Blunt affected a confident and carefree air, but underneath it he was beginning to feel worried, even panicky. There were so many things he had failed to foresee. He had inadvertently inspired a rash of new speculative ventures, some involving legitimate ideas and some patently absurd, such as the development of a wheel of perpetual motion. People were now feeling the fever and were pouring some of their money into these new joint-stock companies. Every £1 of cash that went into these was one £1 less that people had to spend on the South Sea Company, and that was a growing problem, since there was only so much cash in England, and there were limits to how far he could go by offering credit. Similarly, people were beginning to pour their money into land as a safe investment for the future, often cashing out their South Sea stock for such purposes. Blunt himself had been doing that very thing, unbeknownst to the public.

More troubling still, the French had lost faith in the Mississippi venture and were pulling out their money; cash had become scarce and the French economy had now fallen into a sudden depression. This would certainly affect the mood in London. Before people returned from their summer holidays, Blunt had to take action.

Working with Parliament, he got passed the Bubble Act of 1720, which banned all joint stocks not authorized by royal charter. This would put an end to rampant speculation. But this solution created consequences he did not foresee. Thousands of people had poured their savings into these new businesses, and as these were now outlawed, they had no way of getting their money back. Their only recourse was to sell South Sea shares. Many of those who had used credit to buy South Sea shares saw themselves facing installments they could no longer afford. They tried to cash out as well. The price of South Sea shares began to fall. That August crowds were forming outside the South Sea house as people felt desperate to sell.

Near the end of August Blunt became desperate himself. He decided to launch his fourth money subscription, once again at £1,000. Now the terms were even more generous than ever, and on top of it he was promising an astonishingly large Christmas dividend of 30 percent, to be followed by an annual dividend of 50 percent. Some were pulled back into the scheme by such alluring terms, including Sir Isaac Newton himself. But others, as if waking up from a dream, began to wonder about the whole thing: how could a company that had not traded for anything yet in South America, whose only tangible asset was the interest the government paid it on its debt, afford to dish out such large dividends? Now what had seemed like alchemy or magic appeared to be a downright hoax on the public. By early September the selling off had turned into a panic, as almost everyone rushed to convert paper shares into something real, into coin or metal of any kind.

As the panic for cash accelerated, the Bank of England was nearly brought down—it came close to running out of currency. It was now clear in England that the party was over. Many had lost their fortunes and life savings in the sudden downfall. Isaac Newton himself had lost some £20,000, and from then on the mere mention of finance or banks would make him ill. People were trying to sell whatever they could. Soon there was a wave of suicides, including that of Charles Blunt, Sir John’s nephew, who slashed his throat after learning the exact nature of his losses.

Blunt himself was hounded in the streets and nearly killed by an assassin. He had to quickly escape London. He spent the rest of his life in the town of Bath, scraping by on the very modest means still left to him after Parliament seized almost all of the money he had earned through the South Sea scheme. Perhaps in his isolation he could contemplate the irony of it all—he had indeed changed the course of history and assured his fame for all time, as the man who had conjured up one of the most absurd and destructive schemes ever devised in the history of business.

• • •

Interpretation: John Blunt was a pragmatic, hard-nosed businessman with a single goal—to make a lasting fortune for himself and his family. In the summer of 1719, however, this highly realistic man caught a fever of sorts. When he began to read about what was going on in Paris, he was struck by the drama of it all. He read vivid stories about average Frenchmen suddenly making fortunes. He had never thought prior to this that investments in joint-stock companies could yield such quick results, but the evidence from France was irrefutable. He wanted to bring similar good fortune to England, and in crafting his plan he naturally imitated many of the features of Law’s scheme, only increasing the scale of it.

What is striking here, however, is that one rather obvious question never seemed to cross his mind. The scheme would depend on the share price rising. If those who converted their government IOUs into shares had to pay £200 per share instead of £100, they would receive fewer shares, which would leave more shares for South Sea to sell to the public and make a nice profit. If the shares were purchased at £200 they were now worth more if the price continued to rise and were sold at some point. Seeing the price rise would lure more creditors to convert their shares and more people to buy in. Everyone would win only if the price kept rising. But how could the price keep rising if it was not based on any real assets, such as trade? If the price started to fall, as it inevitably would, panic would certainly set in, since people would lose faith in the scheme, and this could only set off a chain reaction of selling. How could Blunt not have foreseen this?

The answer is simple: Blunt’s mental time frame had shrunk to the point where he lost the ability to look months down the road and consider consequences. Mesmerized by events in France and imagining all of the wealth and power he was on the verge of attaining, he could focus only on the present, making sure the scheme launched successfully. Its initial success only made him imagine it would trend this way for a long time. As it progressed, he certainly understood that he had to make the price rise even more quickly, and the only means of doing so was to lure in more investors through generous terms of credit. This would make the scheme even more precarious, one solution incurring several new dangers. The Bubble Act and the generous dividends carried even greater immediate risks, but by now his time frame had shrunk to a matter of days. If only he could keep the ship afloat another week, he would find some new solution. Finally, he ran out of time.

When people lose the connection between their actions and their consequences, they lose their hold on reality, and the further this goes the more it looks like madness. The madness that overcame Blunt soon infected the king, the Parliament, and eventually an entire nation of citizens renowned for their common sense. Once the English saw their compatriots making large sums of money, it became a fact—the scheme had to be a success. They too lost the ability to think a few months ahead. Look at what happened to Sir Isaac Newton, paragon of rationality. In the beginning he too caught the fever, but after a week his logical mind could see the holes in the scheme, and so he sold his shares. Then he watched others making much larger sums of money than his paltry £14,000 and it bothered him. By August he had to get back in, even though it was the absolute worst time to reinvest. Sir Isaac Newton himself had lost the ability to think past the day. As one Dutch banker observed of the scene in Exchange Alley, “[It resembled] nothing so much as if all the Lunatics had escaped out of the Madhouse at once.” Understand: We humans tend to live in the moment. It is the animal part of our nature. We respond first and foremost to what we see and hear, to what is most dramatic in an event. But we are not merely animals tied to the present. Human reality encompasses the past—every event is connected to something that happened before in an endless chain of historical causation. Any present problem has deep roots in the past. It also encompasses the future. Whatever we do has consequences that stretch far into the years to come.

When we limit our thinking to what our senses provide, to what is immediate, we descend to the pure animal level in which our reasoning powers are neutralized. We are no longer aware of why or how things come about. We imagine that some successful scheme that has lasted a few months can only get better. We no longer give thought to the possible consequences of anything we set in motion. We react to what is given in the moment, based on only a small piece of the puzzle. Naturally our actions then lead to unintended consequences, or even to disasters like the South Sea crash or the more recent crash of 2008.

To complicate matters, we are surrounded by others who are continually reacting, drawing us deeper into the present. Salesmen and demagogues play on this weakness in human nature to con us with the prospect of easy gains and instant gratification. Our only antidote is to train ourselves to continually detach from the immediate rush of events and elevate our perspective. Instead of merely reacting, we step back and look at the wider context. We consider the various possible ramifications of any action we take. We keep in mind our long-term goals. Often, in raising our perspective, we will decide that it is better to do nothing, to not react, and to let time go by and see what it reveals. (If Blunt had only waited a few months, he would have seen Law’s scheme falling apart, and England would have been spared the ruin that came.) Such sanity and balance do not come naturally. They are powers we acquire through great effort, and they represent the height of human wisdom.

I can calculate the motion of heavenly bodies, but not the madness of people.

—Sir Isaac Newton

Keys to Human Nature

Almost all of us have experienced something similar to the following scenarios: Someone we need or depend on is not paying us proper attention, not returning our calls. Feeling frustrated, we express our feelings to him or double our efforts to get a response. Or we encounter a problem, a project that is not going well, and so we decide upon a strategy and take appropriate action. Or a new person appears in our life, and captivated by her fresh energy and charm, we become friends.

Then weeks go by and we are forced to reassess what had happened and how we had reacted. New information comes to light. That person who was not responding to us was himself overwhelmed with work. If only we had just waited and not been so impatient, we could have avoided pushing away a valuable ally. That problem we tried to solve was not really so urgent, and we made it worse by rushing an outcome. We needed to know more before acting. And that new friend ends up not being so charming; in fact, time reveals her to be a destructive sociopath whose friendship takes us years to heal from. A little more distance could have let us see the red flags before it was too late. Looking back on our life, we see that we have a tendency to be impatient and to overreact; we notice patterns of behavior over long periods of time that elude us in the moment but become clearer to us later on.

What this means is that in the present moment we lack perspective. With the passage of time, we gain more information and see more of the truth; what was invisible to us in the present now becomes visible in retrospect. Time is the greatest teacher of them all, the revealer of reality.

We can compare this to the following visual phenomenon: At the base of a mountain, in a thick forest, we have no ability to get our bearings or to map out our surroundings. We see only what is before our eyes. If we begin to move up the side of the mountain, we can see more of our surroundings and how they relate to other parts of the landscape. The higher we go, the more we realize that what we thought further below was not quite accurate, was based on a slightly distorted perspective. At the top of the mountain we have a clear panoramic view of the scene and perfect clarity as to the lay of the land.

For us humans, locked in the present moment, it as if we are living at the base of the mountain. What is most apparent to our eyes—the other people around us, the surrounding forest—gives us a limited, skewed vision of reality. The passage of time is like a slow ascent up the mountain. The emotions we felt in the present are no longer so strong; we can detach ourselves and see things more clearly. The further we ascend with the passage of time, the more information we add to the picture. What we saw three months after the fact is not quite as accurate as what we come to know a year later.

It would seem, then, that wisdom tends to come to us when it is too late, mostly in hindsight. But there is in fact a way for us humans to manufacture the effect of time, to give ourselves an expanded view in the present moment. We can call this the farsighted perspective, and it requires the following process.

First, facing a problem, conflict, or some exciting opportunity, we train ourselves to detach from the heat of the moment. We work to calm down our excitement or our fear. We get some distance.

Next, we start to deepen and widen our perspective. In considering the nature of the problem we are confronting, we don’t just grab for an immediate explanation, but instead we dig deeper and consider other possibilities, other possible motivations for the people involved. We force ourselves to look at the overall context of the event, not just what immediately grabs our attention. We imagine as best we can the negative consequences of the various strategies we are contemplating. We consider how the problem or the apparent opportunity might play itself out over time, how other problems or issues not apparent in the moment might suddenly loom larger than what we are immediately dealing with. We focus on our long-term goals and realign our priorities in the present according to them.

In other words, this process involves distance from the present, a deeper look at the source of problems, a wider perspective on the overall context of the situation, and a look further into the future—including the consequences of our actions and our own long-term priorities.

As we go through this process, certain options and explanations will begin to seem more logical and realistic than others that grabbed us in the moment. We add to this the lessons we have learned over the years about our own patterns of behavior. In this way, though we cannot re-create the full effect that time has on our thinking, we can approximate it. Most often the passing months give us even more information and reveal better options for us to have taken. We are manufacturing this effect in the present by widening what we consider and opening our minds. We are moving up the mountain. Such an elevated perspective can calm us down and make it easier for us to maintain our presence of mind as events unfold.

Although this stands as an ideal, we must admit that such a perspective is rare among us humans. It seems to require an effort that is almost beyond us. The reason for this is simple: short-term thinking is hardwired into our system; we are built to respond to what is immediate and to seek out instant gratification. For our early human ancestors, it paid to notice what was potentially dangerous in the environment or what offered an opportunity for food. The human brain as it evolved was designed not to examine the full picture and context of an event but to home in on the most dramatic features. This worked well in a relatively simple environment and amid the simple social organization of the tribe. But it is not suited to the complex world we now live in. It makes us take notice mostly of what stimulates our senses and emotions, and miss much of the larger picture.

This has a decided impact on how we view the potential pleasure or pain involved in a situation. Our brains are designed to make us notice what could immediately harm us in our surroundings but not to pay great attention to other dangers looming in the future that are more abstract. This is why we tend to give much more attention to something like terrorism (immediate pain), which certainly deserves our scrutiny, than to global warming (distant pain), which in fact represents the greater danger since it puts the very survival of the planet at risk. But such a danger seems abstract in the present. By the time it becomes not abstract at all, it might be too late. We tend also to grab for things that offer immediate pleasure, even if we know about the negative long-term consequences. That is why people continue to smoke, drink, do drugs, or engage in any self-destructive behavior in which the destruction is not immediate and dramatic.

In a world that is complex, with myriad dangers that loom in the future, our short-term tendencies pose a continual threat to our well-being. And as our attention spans decrease because of technology, the threat is even greater. In many ways we are defined by our relationship to time. When we simply react to what we see and hear, when we swing from excitement and exuberance to fear and panic at each new piece of dramatic news, when we gear our actions toward gaining as much pleasure as possible in the moment without a thought for future consequences, we can say that we are giving in to our animal nature, to what is most primitive and potentially destructive in our neurological makeup.

When we strive to go against this grain, to consider more deeply the consequences of what we do and the nature of our long-term priorities, we are straining to realize our true human potential as the thinking animal. And just as short-term thinking can be contagious, one individual who embodies the wisdom of the farsighted perspective can have an immensely positive effect on the people around him or her. Such individuals make us aware of the larger picture and reveal a mind-set that we recognize as superior. We want to imitate them.

Throughout history there have been various icons of this wisdom to inspire and guide us: Joseph in the Old Testament, who could see into the hearts of men and foresee the future; Socrates of ancient Greece, who taught us how to be less foolish and more consequential in our thinking; the brilliant strategist Zhuge Liang of ancient China, who could predict every movement of the enemy; leaders such as Queen Elizabeth I and Abraham Lincoln, renowned for the success of their long-term strategizing; the very patient and prescient scientist Charles Darwin, who finally exposed the effects of deep time on the evolution of all living things; and Warren Buffett, the most successful investor in history, whose power is based on his farsighted perspective.

If possible, avoid deep contact with those whose time frame is narrow, who are in continual react mode, and strive to associate with those with an expanded awareness of time.

Four Signs of Shortsightedness and Strategies to Overcome Them

Most of us imagine that we engage in some form of long-term thinking; after all, we have goals and plans. But really we are fooling ourselves. We can see this most clearly when we talk to other people about their plans and strategies for the near and more distant future: we are often struck by their vagueness and the lack of deep thinking people generally give to such plans. They are more like hopes and wishes, and in the rush of immediate events, feeling pressure and the need to respond, such weak goals and plans are easily overwhelmed. Most of the time we are improvising and reacting to events with insufficient information. Basically we are in denial about this because it is hard to have perspective about our own decision-making process.

The best way to overcome this is to recognize the clear signs of shortsighted thinking in our own lives. As with most elements of human nature, awareness is the key. Only by seeing these signs can we combat them. The following are the four most common manifestations of short-term thinking:

1. Unintended consequences. History is littered with endless examples of this phenomenon. In ancient Rome, a group of men loyal to the Republic feared that Julius Caesar was going to make his dictatorship permanent and establish a monarchy. In 44 BC they decided to assassinate him, thereby restoring the Republic. In the ensuing chaos and power vacuum Caesar’s great-nephew Octavius quickly rose to the top, assumed power, and permanently ended the Republic by establishing a de facto monarchy. After Caesar’s death it came out that he had never intended to create a monarchical system. The conspirators brought about precisely what they had tried to stop.

In nineteenth-century India, under British colonial rule, authorities decided there were too many venomous cobras in the streets of Delhi, making life uncomfortable for the British residents and their families. To solve this they offered a reward for every dead cobra residents would bring in. Soon enterprising locals began to breed cobras in order to make a living from the bounty. The government caught on to this and canceled the program. The breeders, resentful of the rulers and angered by their actions, decided to release their cobras back on the streets, thereby tripling the population from before the government program.

Other notorious examples would include the Eighteenth Amendment, establishing Prohibition in the United States in 1920, which was designed to stop the spread of alcoholism but only ended up increasing alcohol consumption by a substantial amount; and the surprise attack on Pearl Harbor by the Japanese in 1941, designed to decimate the U.S. naval force in one blow and bring America to its knees. Instead it shook the American public out of its deep isolationism, ensuring the total mobilization of the country’s superior manpower and resources to not only defeat the Japanese but also to obliterate its military for good. The very success of the attack guaranteed the opposite of the intended result.

We can find less dramatic examples of this in our daily lives. We try to control a rebellious teenager by putting some restrictions on his behavior, only to make him even more rebellious and uncontrollable. We try to cheer up a depressed person by making her realize that her life is not that bad and that the sun is shining, only to find out we have made her even more depressed. She now feels guilty about her feelings, worthless, and more alone in her unhappiness. A wife tries to get her partner to open up more to her. With the hope of establishing more intimacy, she asks him what he is thinking, what happened during the course of the day, and so on. He interprets this as intrusiveness and closes up further, which makes the wife more suspicious and more prying, which closes him up even further.

The source of this age-old syndrome is relatively simple: alarmed by something in the present, we grab for a solution without thinking deeply about the context, the roots of the problem, the possible unintended consequences that might ensue. Because we mostly react instead of think, our actions are based on insufficient information—Caesar was not planning to start a monarchy; the poor people of Delhi despised their colonial rulers and would not take kindly to suddenly losing money; Americans would be willing to go to war if attacked. When we operate with such a skewed perspective, it results in all kinds of perverse effects. In all of these cases a simple move partway up the mountain would have made clear the possible negative consequences so obvious to us in hindsight: for example, offering a reward for dead cobras would naturally cause impoverished residents to breed them.

Invariably in these cases people’s thinking is remarkably simple and lazy: kill Caesar and the Republic returns, action A leads to result B. A variation on this, one that is quite common in the modern world, is to believe that if people have good intentions, good things should be the result. If a politician is honest and means well, he or she will bring about the desired results. In fact, good intentions often lead to what are known as cobra effects, because people with the noblest intentions are often blinded by feelings of self-righteousness and do not consider the complex and often malevolent motivations of others.

Nonconsequential thinking is a veritable plague in the world today that is only growing worse with the speed and ease of access to information, which gives people the illusion that they are informed and have thought deeply about things. Look at self-destructive wars such as the 2003 invasion of Iraq, the attempts to shut down the American government for short-term political gain, the increasing number of financial bubbles from tech stocks to real estate. Related to this is a gradual disconnect from history itself, as people tend to view present events as if they were isolated in time.

Understand: Any phenomenon in the world is by nature complex. The people you deal with are equally complex. Any action sets off a limitless chain of reactions. It is never so simple as A leads to B. B will lead to C, to D, and beyond. Other actors will be pulled into the drama and it is hard to predict their motivations and responses. You cannot possibly map out these chains or get a complete handle on consequences. But by making your thinking more consequential you can at least become aware of the more obvious negative consequences that could ensue, and this often spells the difference between success and disaster. You want depth of thinking, to go to several degrees in imagining the permutations, as far as your mind can go.

Often, going through this process will convince you of the wisdom of doing nothing, of waiting. Who knows what would have resulted in history if the conspirators had thought this out and chosen to wait until Caesar died naturally or in battle?

While this mode of thinking is important for individuals, it can be even more crucial for large organizations, where there is a lot at stake for many people. In any group or team, put at least one person in charge of gaming out all of the possible consequences of a strategy or line of action, preferably someone with a skeptical and prudent frame of mind. You can never go too far in this process, and the time and money spent will be well rewarded as you avoid potential catastrophes and develop more solid plans.

1. Tactical hell. You find yourself embroiled in several struggles or battles. You seem to get nowhere but you feel like you have invested so much time and energy already that it would be a tremendous waste to give up. You have actually lost sight of your long-term goals, what you’re really fighting for. Instead it has become a question of asserting your ego and proving you are right. Often we see this dynamic in marital spats: it is no longer about repairing the relationship but about imposing one’s point of view. At times, caught in these battles, you feel defensive and petty, your spirit drawn downward. This is almost a sure sign that you have descended into tactical hell. Our minds are designed for strategic thinking—calculating several moves in advance toward our goals. In tactical hell you can never raise your perspective high enough to think in that manner. You are constantly reacting to the moves of this or that person, embroiled in their dramas and emotions, going around in circles.

The only solution is to back out temporarily or permanently from these battles, particularly if they are occurring on several fronts. You need some detachment and perspective. Get your ego to calm down. Remind yourself that winning an argument or proving your point really gets you nowhere in the long run. Win through your actions, not your words. Start to think again about your long-term goals. Create a ladder of values and priorities in your life, reminding yourself of what really matters to you. If you determine that a particular battle is in fact important, with a greater sense of detachment you can now plot a more strategic response.

More often than not you will realize that certain battles are not worth it in the end. They are a waste of valuable energy and time, which should be high on your scale of values. It is always better to walk away from a circular battle, no matter how deeply you feel personally invested in it. Your energy and your spirit are important considerations. Feeling petty and frustrated can have reverberating consequences for your ability to think strategically and reach your goals. Going through the process delineated above in the Keys will naturally elevate your perspective and put your mind on the strategic plane. And in life as in warfare, strategists will always prevail over tacticians.

1. Ticker tape fever. During the run-up to the 1929 crash on Wall Street, many people had become addicted to playing the stock market, and this addiction had a physical component—the sound of the ticker tape that electronically registered each change in a stock’s price. Hearing that clicking noise indicated something was happening, somebody was trading and making a fortune. Many felt drawn to the sound itself, which felt like the heartbeat of Wall Street. We no longer have the ticker tape. Instead many of us have become addicted to the minute-by-minute news cycle, to “what’s trending,” to the Twitter feed, which is often accompanied by a ping that has its own narcotic effects. We feel like we are connected to the very flow of life itself, to events as they change in real time, and to other people who are following the same instant reports.

This need to know instantly has a built-in momentum. Once we expect to have some bit of news quickly, we can never go back to the slower pace of just a year ago. In fact, we feel the need for more information more quickly. Such impatience tends to spill over into other aspects of life—driving, reading a book, following a film. Our attention span decreases, as well as our tolerance for any obstacles in our path.

We can all recognize signs of this nervous impatience in our own lives, but what we don’t recognize is the distorting effect it has on our thinking. The trends of the moment—in business or politics—are embedded in larger trends that play out over the course of weeks and months. Such larger spans of time tend to reveal the relative weaknesses and strengths of an investment, a strategic idea, a sports team, or a political candidate, which are often the opposite of what we see in the microtrends of the moment. In isolation, a poll or stock price do not tell us much about these strengths and weaknesses. They give us the deceptive impression that what is revealed in the present will only become more pronounced with time. It is normal to want to keep up with the latest news, but to base any kind of decision on these snapshots of the moment is to run the risk of misreading the larger picture.

Furthermore, people tend to react and overreact to any negative or positive change in the present, and it becomes doubly hard to resist getting caught up in their panic or exuberance.

Look at what Abraham Lincoln had to face in a much less technological age. At the outbreak of the Civil War, he looked at the larger picture—as he estimated it, the North should prevail because it had more men and more resources to draw on. The only danger was time. Lincoln would need time for the Union Army to develop itself as a fighting force; he also needed time to find the right generals who would prosecute the war as he desired. But if too much time passed and there were no big victories, public opinion might turn against the effort, and once the North became divided within itself, Lincoln’s job would become impossible. He needed patience but also victories on the battlefield.

In the first year of the war the North suffered a great defeat at Bull Run, and suddenly almost everyone questioned the president’s competency. Now even levelheaded Northerners such as the famous editor Horace Greeley urged the president to negotiate peace. Others urged him to throw everything the North had into an immediate blow to crush the South, even though the army was not ready for this.

On and on this went, the pressure continually mounting as the North failed to deliver a single solid victory until finally General Ulysses S. Grant finished off the siege at Vicksburg in 1863, followed soon by the victory at Gettysburg under General George Meade. Now suddenly Lincoln was hailed as a genius. But some six months later, as Grant got bogged down in his pursuit of the Confederate Army under General Robert E. Lee and the casualties mounted, the sense of panic returned. Once again Greeley urged negotiation with the South. Lincoln’s reelection that year seemed doomed. He had become immensely unpopular. The war was taking too long. Feeling the weight of all this, in late August of 1864 Lincoln finally drafted a letter spelling out the terms of peace he would offer the South, but that very night he felt ashamed for losing his resolve and hid the letter in a drawer. The tide had to turn, he felt, and the South would be crushed. Only a week later, General William Tecumseh Sherman marched into Atlanta and all the doubts about Lincoln suddenly vanished for good.

Through long-term thinking Lincoln had correctly gauged the relative strengths and weaknesses of the two sides and how the war would eventually trend. Everyone else got caught up in the day-by-day reports of the progress of the war. Some wanted to negotiate, others to suddenly speed up the effort, but all of this was based on momentary swings of fortune. A weaker man would have given in to such pressures and the war would have ended very differently. The writer Harriet Beecher Stowe, who visited Lincoln in 1864, later wrote of him: “Surrounded by all sorts of conflicting claims, by traitors, by half-hearted, timid men, by Border States men and Free States men, by radical Abolitionists and Conservatives, he has listened to all, weighed the words of all, waited, observed, yielded now here and now there, but in the main kept one inflexible, honest purpose, and drawn the national ship through.” Lincoln provides the model for us all and the antidote to the fever. First and foremost we must develop patience, which is like a muscle that requires training and repetition to make it strong. Lincoln was a supremely patient man. When we face any kind of problem or obstacle, we must follow his example and make an effort to slow things down and step back, wait a day or two before taking action. Second, when faced with issues that are important, we must have a clear sense of our long-term goals and how to attain them. Part of this involves assessing the relative strengths and weaknesses of the parties involved. Such clarity will allow us to withstand the constant emotional overreactions of those around us. Finally, it is important to have faith that time will eventually prove us right and to maintain our resolve.

1. Lost in trivia. You feel overwhelmed by the complexity of your work. You feel the need to be on top of all the details and global trends so you can control things better, but you are drowning in information. It is hard to see the proverbial forest for the trees. This is a sure sign that you have lost a sense of your priorities—which facts are more important, what problems or details require more attention.

The icon for this syndrome would have to be King Philip II of Spain (1527–1598). He had a prodigious appetite for paperwork and for keeping on top of all facets of the Spanish government. This gave him a feeling of being in control, but in fact in the end it made him lose control. He fussed over the placement of toilets in his new palace at Escorial and their precise distance from the kitchen; he spent days deliberating on how exactly particular members of the clergy should be addressed and remunerated. But sometimes he would fail to pay proper attention to important reports on spies and national security issues. Poring over endless reports on the state of the Turkish army, he believed it showed signs of great weakness and decided to launch a war against the Turks. Somehow he had misjudged. The war would last eighteen years, have no definitive resolution, and bleed Spain of money.

A similar process occurred in relation to England. The king had to read every single report on the state of the English navy, the support of the people for Queen Elizabeth, every minute detail about the country’s finances and shoreline defenses. Based on years of such study, in 1588 he decided to launch his armada against England, feeling certain that, having made the armada large enough, Spain would prevail. But he failed to pay enough attention to weather reports, the most critical factor of all—for storms at sea would spell the destruction of the armada. He also failed to realize that by the time he had compiled and assimilated enough information on the Turks or on England, the situation had actually changed. So while he seemed extremely detail oriented, he was never quite on top of anything. Over the years Philip strained his mind with so much reading that he had frequent headaches and dizzy spells. His thinking was definitely impaired, and he made decisions that ended up leading directly to the irreversible decline of the Spanish empire.

In some ways you are probably more like King Philip II than you would like to imagine. In your life you are more than likely paying attention to some details that seem immediately important to you, while ignoring the weather reports that will doom your project. Like Philip, you tend to take in information without considering your priorities, what really matters in the end. But the brain has its limits. Assimilating too much information leads to mental fatigue, confusion, and feelings of helplessness. Everything begins to seem equally important—the placement of toilets and a possible war with the Turks. What you need is a mental filtering system based on a scale of priorities and your long-term goals. Knowing what you want to accomplish in the end will help you weed out the essential from the nonessential. You do not have to know all the details. Sometimes you need to delegate—let your subordinates handle the information gathering. Remember that greater control over events will come from realistic assessments of the situation, precisely what is made most difficult by a brain submerged in trivia.

The Farsighted Human

Most of us live within a relatively narrow time frame. We generally associate the passage of time with something negative—aging and moving closer to death. Instinctively we recoil from thinking too deeply about the future and the past, for this reminds us of the passage of time. In relation to the future we may try to think about our plans a year or two from now, but our thinking is more like a daydream, a wish, than deep analysis. In relation to the past we may have a few fond or painful memories from childhood and later years, but in general the past baffles us. We change so much with each passing year that who we were five, ten, twenty years ago might seem like a stranger to us. We don’t really have a cohesive sense of who we are, a feeling of connection between the five-year-old and thirty-five-year-old versions of ourselves.

Not wanting to go too far in either direction, we mostly live within the present. We react to what we see and hear and to what others are reacting to. We live for immediate pleasures to distract us from the passage of time and make us feel more alive. But we pay a price for all this. Repressing the thought of death and aging creates a continual underlying anxiety. We are not coming to terms with reality. Continually reacting to events in the present puts us on a roller coaster ride—up and down we go with each change in fortune. This can only add to our anxiety, as life seems to pass so quickly in the immediate rush of events.

Your task as a student of human nature, and someone aspiring to reach the greater potential of the human animal, is to widen your relationship to time as much as possible, and slow it down. This means you do not see the passage of time as an enemy but rather as a great ally. Each stage in life has its advantages—those of youth are most obvious, but with age comes greater perspective. Aging does not frighten you. Death is equally your friend (see chapter 18). It motivates you to make the most of each moment; it gives you a sense of urgency. Time is your great teacher and master. This affects you deeply in the present. Awareness that a year from now this current problem you are experiencing will hardly seem so important will help you lower your anxiety and adjust your priorities. Knowing that time will reveal the weaknesses of your plans, you become more careful and deliberative with them.

In relation to the future, you think deeply about your long-term goals. They are not vague dreams but concrete objectives, and you have mapped out a path to reach them. In relation to the past, you feel a deep sense of connection to your childhood. Yes, you are constantly changing, but these changes are on the surface and create the illusion of real change. In fact, your character was set in your earliest years (see chapter 4), along with your inclinations toward certain activities, your likes and dislikes. As you get older, this character only becomes more apparent. Feeling organically connected to who you were in the past gives you a strong sense of identity. You know what you like and dislike, you know who you are. This will help you maintain your self-love, which is so critical in resisting the descent into deep narcissism and in helping you to develop empathy (see chapter 2). Also, you will pay greater attention to the mistakes and lessons of the past, which those who are locked in the present tend to repress.

Like everyone, you enjoy the present and its passing pleasures. You are not a monk. You connect to the trends of the moment and to the current flow of life. But you derive even greater pleasure from reaching your long-term goals and overcoming adversity. This expanded relationship to time will have a definite effect on you. It will make you calmer, more realistic, more in tune with the things that matter. It will also make you a superior strategist in life, able to resist people’s inevitable overreactions to what is happening in the present and to see further into the future, a potential power that we humans have only begun to tap into.

The years teach much which the days never know.

—Ralph Waldo Emerson