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DECIDE D - Determine the Bottleneck E - Engage with the subject matter C - Clear distractions I - Implement mental models D - Decide how to proceed E - Execute next steps When you’re traveling or waiting for something to happen, instead of listening to a podcast or scrolling on your phone, you can use the DECIDE algorithm to convert that otherwise wasted time into a realization, a useful plan, or action. Here’s how: D - Determine the Bottleneck You can skip this step if you already know what you want to think about. If you don’t, cycle through the important things in your life (family, employees/coworkers, yourself, goals, your calendar) to seek out the single biggest problem in your life so you can solve it for a maximal increase in happiness. E - Engage with the subject matter Once you have determined what to think about, announce it to yourself using your inner monologue. “I will now think about how to solve X.” This will help you stay focussed and by verbalizing the problem succinctly, the problem will become easier to solve. C - Clear distractions The speed and quality of your thought processes improve if you can remove distractions. Go to a quiet room. Put away your phone. Go for a walk. You’re on a mission and it is not complete until you solve the problem and if you get distracted and switch to another task, you will have failed. I - Implement mental models To make good decisions you must have a repertoire of mental tools which you can apply. My favorite are thinking from first principles (something that applies to more than just problems of physics) and thinking about a problem in the context of my life’s greatest purpose. There many other useful mental models such as inversion (how would I NOT solve this problem), two way doors (can I undo this decision, if so, why overanalyze it?), the premortem (I made this decision, it failed, why?), or even asking an expert/AI. D - Decide how to proceed You’ve considered the options and have made a decision. Verbalize it to at least yourself, if not others. “I have decided to do Y to solve X because…”. If verbalizing your decision triggers a new important thought return to the previous step and reconsider. E - Execute next steps It is insufficient to reach a conclusion. What are the first steps that follow from this conclusion? Execute them. If you can’t in the moment, make a note to do so “to solve my lack of time, I will hire a cleaner, and I will write a job description on Monday to do so.” This technique will reduce analysis paralysis and ensure that you act on your hard fought realizations. Conclusion: Your standing in life is a function of the quality and quantity of decisions you make. Improving and speeding up your decision making will allow you to live a better life. Mnemonics such as the DECIDE algorithm allow you to practice your skills while reducing the chance that you forget critical considerations in deciding important matters.
People who succeed via analysis of numbers and facts need to learn that understanding of people can make that analysis unnecessary and can even outperform it. Examples: 1. Amazon did not make money between its 1994 founding through 2002. There was no financial or business fundamentals analysis that could’ve led you to buying the stock, which would launch AWS and FBA in 2006. The only way you could’ve profited from the 4000x share price growth between Dec 31 2002 and today was to figure out that Bezos was one of the greatest of all time and was pouring his best years into the company. 2. I was once doing a reference check for a new employee. You can make a quantifiable prediction of employee quality by creating a points system for traits correlated with future work quality. On paper this employee did not appear to be so great, however his reference, who was an accomplished businessman in his own right without an agenda stopped me and said “Hire this guy. Just do it. Trust me.” He was right. 3. Careers and health are complex systems. We can come up with rules of thumb like “work hard” or “exercise”, but, generally we know a lot less about what leads to good outcomes in these fields than we do in chemistry and mathematics where there are higher degrees of predictable certainty. When an older businessperson who has survived and thrived through multiple recessions tells you, someone much younger, less experienced, and successful, to do something like “call them” or “go to this event”, you just need to do it. When your grandmother tells you to stay slim, exercise, and spend time with friends, you just need to do it. There is no fact or data based analysis to support these recommendations, but decades of experience, of seeing people fail in business or die early and those who didn’t, inform these powerful inexplicable recommendations. Yes, facts and numbers are great, but they will only take you so far. Master the understanding of people and know when their recommendations outperform what we call rational analysis to go even father. And note that these two methods are even more powerful when combined. Trust me.
Brontosaurus skeleton at the Yale Peabody Museum of Natural History (allegedly) Let’s pretend for a moment that brontosauruses are made up, despite them being accepted by the public and scientific community, having ample evidence for their existence, and appearing in museums all over the world. Let me show you how this could come to be: Smart, but young, naive, and generally conformist people enter academia to study paleontology (the study of fossils) They learn about brontosauruses: They were up to 7 stories tall They weighed up to 70 tons They have no back teeth and swallowed all their food whole They would eat rocks to help with their digestion Their long necks were to "reach marshy vegetation some distance away or to reach leaves higher up in trees" (Encyclopedia Britannica) No skull has ever been found The bones you see in museums are mostly not real. They're casted. They get a PhD about how their poop is the size of a 737 Then one day they have a thought “you know…there’s a lot of stuff about brontosauruses which is pretty unbelievable” and they make a list They write a paper and submit it to a paleontology journal. If the paper is right, the journal must disband and all the people who work for it will lose their life’s work, so it gets turned down. The skeptical paleontologist turns to the press, but all the more senior paleontologists say that the skeptical guy is crazy, so now our skeptic’s reputation is ruined The skeptic can’t attract funding because they can’t get published and they’re a kook according respected paleontologists No museum will air the possibility that brontosauruses are fake because it’s one of the main reasons why people go to museums If the skeptical paleontologist is smart at all, they will see all this and they won’t say anything. They want to keep their PhD, their role in the group, and their prestige. It takes a unique and rare person to go against the flow and call something out like this and even if they do, their views mostly won’t be heard. Of course, I’m just joking around. Brontosauruses are real. But if they weren’t, the brontosaurus would be an uncoordinated conspiracy.
This article will explain the following: 1. What is a Fiacracy 2. How do Fiacracies NOT work 3. How Fiacracies work 4. Are Fiacracies sustainable 5. Why Fiacracies matter 1. What is a fiacracy? It’s government by fiat (money). The driving mechanism by which it works is not voting (democracy), a royal family (monarchy), or even a stable ruling elite (aristocracy, oligarchy). It’s a government driven mainly by the creation and movement of currency, fiat. 2. How do fiacracies NOT work? In school you were probably taught that your government works like this: A. People vote for politicians B. The politicians use tax revenue to provide services for voters C. If taxes get too high or services too bad, voters substitute the politicians responsible for new ones who will be better Fiacracies have voting, politicians, and taxes, but this is NOT how they work. 3. How do fiacracies work? A. People vote for politicians B. Politicians allocate money for services C. A central bank creates new money to pay for these services D. If voters do not like the politicians or what they are doing, they change them out for new ones What’s different between between this system and the last one? This system has only one check on government action, voting, whereas the other has two, voting and taxes. A concrete example: It’s much easier for fiacracies to go to war because taxpayers don’t need to pay for it, they just need to vote for it. And it’s also much easier for fiacracies to do handouts, whether it be for the rich, the poor, or the companies’ shareholders which benefit from war. Why is it so much easier? Because no one has to pay for it. All it requires is votes. An uncoordinated consensus exists between politicians, the central bank, and voters to keep the system going. If politicians don’t spend they don’t have political support and they get voted out. If the central banks don’t finance the spending they know the system collapses resulting in chaos. The voters are subjected to propaganda (oftentimes paid for by the government itself), don’t know what is happening, and if they do, why end the system and face chaos? Uncoordinated consensus. 4. Are fiacracies sustainable? Let’s answer the question in reverse: What would make a fiacracy unsustainable? A. People must be willing accept the newly created money, otherwise government cannot provide services nor effective handouts. B. People must believe in the system and its fairness or they will revolt C. It cannot be too easy to convert the newly created money into other currencies that are perceived to be more stable D. If money is created too fast, handouts will overtake the creation of value as peoples’ focus and people will stop working causing system collapse E. Handouts must be allocated fairly to system participants or the system will face instability from groups who feel shortchanged F. Greed. If a powerful group makes too much money for itself without acknowledging the delicate balance between the participants in the fiacracy, the system will destabilize and die. G. Immigration/emigration. Countries mostly are not closed systems and the arrival of new voters or their departure can cause violent swings how new money is allocated, which is the main determinant whether people continue to support the fiacracy system. We can see from how many different ways they can go wrong that individual fiacracies are generally unstable, but with proper management and the right general conditions they can last for a long time, particularly if culture, education, or propaganda (which can be paid for with fiat) are conducive to the maintenance of the fiacracy. 5. Why Fiacracies matter? They matter because of how ubiquitous they are and how increasingly large government spending is relative to the overall economy. Politics in a fiacracy is, at its core, a fight over access to the newly created money enabled by achieving a voter majority. Once you understand that and how fiacracies work at large, you can both benefit yourself, but also predict and maintain your country’s stability. The fiacracy is a useful mental model that explains better how things actually work than what we were taught in school and told by media.
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Add in the doom loop of an unprecedented credit-asset bubble and housing as a sector is in trouble. Sorry for the punnish-ment, but this nails it: How Contracting Work Became a Race to the Bottom The reality of being a contractor includes labor shortages, brutal competition and low, low margins. This is not a new or unique trend, but it's accelerating into a Doom Loop where the resources needed to reverse the decay are no longer available at the needed scale. As a former builder, I experienced this same dynamic back in the 1980s, after the 1981-82 recession gutted the auto and construction industries. The 1981-82 recession was the deepest economic decline since the Great Depression in the 1930s, as the Federal Reserve jacked up interest rates to snuff out the inflation expectations that were becoming embedded in the economy. Sectors that depended on consumer borrowing--autos and housing--tanked. Contractors' sunk capital--the investment of time and effort required to learn the tradecraft, the financial investment in tools and equipment, office leases, etc. and the social capital of relationships forged with subcontractors, suppliers, lenders, etc.--is substantial and not easily replaced. So everyone in the trades tries to survive the downturn by cutting costs, as the alternative--walking away from the construction industry and trying to establish a new career in a field that pays as well as construction--was difficult enough in good times, but in a recession became nearly insuperable. The building trades are unique in a number of ways. Skilled labor still commands a higher-than-average wage, which offers a rare leg up for those (mostly men due to the physical demands of the work) with little interest or aptitude for classrooms or white-collar office work. While manufactured housing and kit homes have been around for decades (Sears sold kit homes in the early 1900s with great success), the trades cannot be fully automated. Housing is one of the few things that's still expected to be durable, and so as dwellings age, repairs are needed, and each situation has both commonalities with similar repairs and aspects unique to the specific problem. All dryrot is the same, but each instance of rot is unique, and it takes a great expanse of varied experience to figure out the most efficient and effective solution. Those with deep tradecraft skills are naturally reluctant to abandon their livelihood, but recessions leave many with no choice. Before giving up, contractors will lower their bids to get work just to pay the bills, never mind make a profit. Offices can be given up, but there isn't much fat to be cut out of bids, as labor, materials and overhead expenses cost what they cost. There is one big expense that is temptingly open to arbitrage: labor overhead, the non-wages costs paid by employers for tradecraft workers. Due to the physicality and inherent risks of construction, injuries are common and so construction workers compensation insurance rates are high--generally between 25% and 50% of the hourly wage, but can approach 100% for high-risk work categories. There's a raft of other labor overhead expenses: disability insurance, unemployment insurance, and the employer's share of Social Security, currently 7.65%. In recessions, state unemployment funds are drawn down and so the rate paid by employers increases sharply to replenish the fund. Some states mandate healthcare insurance coverage for all full-time workers (or all employees working more than 20 hours, etc.), which is another labor overhead. Add these up and the cost may equal or exceed the wages paid to the worker. To pay a worker $25 an hour, the contractor is paying $50 per hour. So to survive lean times and not go bankrupt from a low bid, contractors either pay workers cash (i.e. under the table) to avoid paying the labor overhead, or they hire quasi-legal subcontractors who do the same thing--pay all their workers as 1099 independent contractors who are responsible for their own insurance, Social Security taxes, etc. The subcontractors aren't paying their workers $50 an hour, they're paying them $25 an hour, and the 1099 workers don't pay any overhead except the Social Security / Medicare taxes, if that. This was my experience in the early 1980s as the Great Recession crushed new housing and remodeling. The only contractors who made money were those who avoided paying labor overhead. The rest of us scraped by doing all the work ourselves or we lost money. (The old joke: we lose money on every job but we make it up on volume.) As the article describes, the same dynamic gutted the sector in the aftermath of the 2008-09 Global Financial Meltdown, with one key difference: many of the older, experienced tradecraft workers have retired or left the construction industry, and the people doing the work now often lack the kind of deep, varied experience needed to do work above the most routine kind. I've discussed the crippling long-term consequences of this under-competence at some length: workers are trained just enough to competently complete routine tasks, but they lack the training and experience needed to problem-solve / do demanding work outside the narrow boundaries of routine tasks. The Catastrophic Consequences of Under-Competence (8/17/24) Automation Institutionalizes Mediocrity (2/14/25) The soaring costs of materials and construction-related regulatory burdens have now systemically optimized construction-worker under-competence as contractors cannot afford to hire competent workers and still win bids. Homeowners facing sticker-shock on bids for repairs, additions and remodels gravitate to the lowest bid regardless of such niceties as contractors paying all the required labor overhead. The combination of high costs, optimization of under-competence and the scarcity of truly experienced workers generates a doom loop: shoddy workmanship and low-quality materials cause leaks, but few have the experience to make the needed difficult repairs. The cultural penchant for McMansion-style homes with complicated roofs generate more opportunities for slipshod workmanship to cause leaks, and the substitution of cheap materials adds to these risks, many of which remain hidden until major damage has been done behind the drywall or siding. McMansion-style homes built in a hurry by inexperienced crews may pass the purchaser's home inspection, but harbor defects that will manifest later as horrendously costly repairs. As for who can do the work competently and on time--good luck finding "old timers" who are still in the trades. Those few who can do the work have high costs and are often booked far in advance, and so they can charge a premium. As a result, you hear about roof replacement bids in the $40,000 to $60,000 range--sums that would have been considered astronomical in decades past. Many homeowners can't swing the costs of repair, so the house rots away. Personally, I wouldn't do any work in this environment by bid; I'd only work by the hour. This requires an element of trust in the contractor to not pad the daily expenses, but unfortunately it's boiling down to either take a chance on the low bid, knowing the workers are likely getting stiffed because the labor overhead costs that protect them aren't being paid, or the customer pays the contractor the full costs plus a fee for their time and expertise. There aren't many old hands left in the trades who have the decades of experience necessary to do a wide range of tasks. Add in the doom loop of an unprecedented credit-asset bubble and housing as a sector is in trouble. Here's a snapshot of housing affordability, which is in the basement: The monthly payments are at historic highs, while the cost of non-mortgage expenses such as home insurance and property taxes soar. If you can find an old hand who's still working, don't try to chisel their price down or hurry them. Be grateful you'll only pay once, cry once rather than pay later and cry a river. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. 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Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios. initial weekly unemployment claims report will be released. The consensus is for 224 initial claims up from 223 thousand last week. Housing Starts for March. The consensus is for 1.410 million SAAR, down from 1.501 million SAAR in February. Philly Fed manufacturing survey for April. The consensus is for a reading of 6.7, down from 12.5.
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Today, in the Calculated Risk Real Estate Newsletter: Housing Starts Decreased to 1.324 million Annual Rate in March A brief excerpt: First, from Reuters: D.R. Horton cuts 2025 revenue forecast on weak demand for homes U.S. homebuilder D.R. Horton lowered its full-year revenue forecast and missed second-quarter profit and revenue estimates on Thursday due to weak demand for homes. … It sees about 85,000 to 87,000 transaction closings from homebuilding operations, down from its earlier forecast of 90,000 to 92,000 homes. I discussed weaker demand and higher costs last month in Policy and 2025 Housing Outlook Housing Starts Decreased to 1.324 million Annual Rate in March Total starts were up 1.9% in March compared to March 2024. Year-to-date (YTD) starts are down 1.5% compared to the same period in 2024. Single family starts are down 5.6% YTD and multi-family up 9.0% YTD. There is much more in the article.
How and why the Jobs to be Done Framework can help you sell more, faster, and accelerate your understanding of demand.
