LUCK IN LIFE

I am quite impressed by the comments posted by Takpandai who is in fact quite a smart person. I am glad that he thinks carefully of what I have written and I would definitely encourage him and the readers to continue with his thoughtful mind. This piece that I am going to present specifically addressed to the points that Takpandai has raised – namely that life is about hard work and not luck.

Let me start with a bit of probability: The probability of drawing an Ace from a deck of cards is 4/52 or 1/13. If you have 10 person, each with a deck of card, the probability of at least one person getting an Ace is 10/13 + 45/(13)^2 + ….+ 1/13^10 or we can just say at least 10/13. If we have 2 persons drawing the cards, then the probability is 2/13 + 1/13^2. If we have 10 Chinese and 2 Malays; the probability of having at least 1 Chinese getting an Ace is bigger than having at least 1 Malay getting an Ace.

That is the message that I am trying to convey. Luck in life depends on the number of draws (i.e. number of people) attempting at it; the more numbers you have, the bigger the chance will be. There were many more Chinese engaged in drawing the luck than the Malays, therefore the results are quite predictable. Luck in life is similar to drawing the cards; none are guaranteed to get an Ace, except that if you are lucky. Life is finite, hence we can’t have infinite times of drawing into the cards, in which case one day you are bound to get an Ace. Therefore, for a finite number of tries and if you happened to get an Ace, then you are lucky, while many others who didn’t get it, are not.

The “probability curve” of life in actuality is even more complicated than the one that I have presented; it is highly non-uniform and asymmetrical. The game of cards is a uniform distribution which comes from the normal curve (i.e. symmetrical). In another words, it does not matter who draws the card, their chances are the same. The true picture of life is such that person C may have a deck of 52 cards (with 4 Aces in them) while another person, M, may even have 1000 cards (with 4 Aces in them). Therefore the probability for C and M are totally different. Even if you have 10 C and 30 M, the chance of having at least one person having an Ace is still in favour of C.

The reality of what had happened (historically in Malaysia) was as follows; many people from C type are having a smaller deck of cards compared to others. Therefore, you will end up having many tycoons from the C type compared to M type. But does that mean that C is smarter than M or luckier than M? The answer is NO to both. It is just the way the “game” is being set up. But does that mean “luck” does not have any role? It does, since regardless of the setup, drawing an Ace is still resulting from luck. The only difference is the chance is higher for C, compared to M. (By now you should have guess that C are “Chinese” and M are “Malays”).

Why did C have a smaller deck of cards than M? Because C had been in the game longer than M; they have learned how to reduce the stack of cards, whereas M was a new player and has yet to learn the trick of the trades. In time, M also learnt the game and be able to reduce his deck of cards and may be at par with C. There is no reason why that can’t be so. Off course education is one of the way how to reduce the deck of cards – because it eliminates many of the options that are not viable. It also breeds players that are more informed and learn how to choose in much better ways. And off course, those who tried more (i.e. by hard work), will have more chance of drawing an Ace than those who tried less. But doesn’t mean that trying more will ensure you the result: it just increases your chance of finding an Ace. Obviously trying less or not trying at all will give a definitive result: almost zero chance. That’s why when we look at the outcome today; we saw C produced more tycoons than M. But then it seems to contradict my statement that no race have an upper hand to be successful in business?

What I meant is that if we take away those tycoons and small select group of people out our equation and focused on the common people at large and the environment that we are in now: all of us were born with pretty much the same deck of cards regardless of race. The young people of Malaysia, regardless of race are having almost the same starting point. This is the point that I am alluding to. However, even though everyone is facing almost the same chance; the results will depend on how each group enters into the game: more entrees from one group will improve the chance for that group to record more success. And the faster each group learn, the lesser their stack of cards will be. Therefore, if the Malays want to see many more successful entrepreneurs, then there should be strong encouragement for more numbers of them to be in business and they need to get into the game fast. One thing that we have to bear in mind: what we saw today is the result of the “experiments” from the past. The results of the current “experiments” can only be seen twenty or thirty years down the road. The problem for most people is: they make judgements based on what they see now, and conclude that it will be the same for the future. This is a flawed judgement, at least from my point of view.

I also have not included some other elements in the analysis to make it complete: such as the socio-economic setup, cultural background and government policies into the equation. It could be done – but then the discussions will be a bit more complicated. You can try to input them into the model and be more rigorous: but the result does not in any way change the arguments that I have put forth above.

In regards to Li Ka Shing, I would like to correct a few things: Yes he is a hard worker without any doubt; but at the same time he manipulates the situation such that his cards are not even a 52 deck. Probably he is playing with a deck of 10 cards (with 4 Aces in them). How he did it is by sheer manipulations to eliminate his competitors. In this case – should we call him smart? Or lucky? Or in the real sense: manipulator? There are many other people who are working even harder than him (and smarter than him), but with no results; because they are playing with a deck of cards of maybe 1000 pieces. I despise such figures as they are epitomes of greed and arrogance and I don’t care whether he succeed or fail, because to me he is playing a different game than mine.

Finally, let me just restate my points: Education, smartness, hard working and other attributes are necessary for success (because it reduces the number of cards you are playing and increase the number of tries at the game); but the final result is still pure luck: that is if you can manage to pick up an Ace from your deck of cards. Nobody can guarantee that except by the will of God – and that is what God has dictate that the “Rizq” is determined by Him and Him alone, as the saying goes: “Man proposes and God dispose”.

End notes:

1. For those interested in more discussions about the above subject, you can get it from “Fooled by Randomness” by Nasseem Nicholas Taleb. On the Chinese Tycoons of Asia – read “Asian Godfathers” by Joe Studwell – you can get details of how many of these tycoons started their game.

2. In regards to Black-Scholes Option pricing models: it is flawed in many ways when you assume certain distribution functions that are Gaussian based (e.g. normal distribution). But that does not mean the ingenuity of the idea is flawed. In fact, the main contribution of Option pricing models are not in its mathematical accuracy, but the logic that it provides for us to understand risks in a much deeper manner (or to enlighten our lack of understanding of it – to be exact).

3. And finally, I do not intend to ridicule the Chinese or the Malays. I am just stating the fact that in life, we all should understand the interplays that are going on; rather than just lamenting about this or that. What I am saying is actually true for Chinese or Malays or anybody for that matter; because when it comes to life – everyone has their own deck of cards to deal with, doesn’t matter who you are.

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One thought on “LUCK IN LIFE

  1. Good day, Dr. I have carefully analyzed your “deck of cards” model, but frankly speaking and in humble opinion I feel that it is rather inaccurate. I agree to your final points.. Education, smartness, hard working and other attributes are necessary for success, but I do not subscribe to the fact that “at the end of the day, final result is pure luck”. Allow me to present you another more complex, yet easier to understand model, combined with concepts such as outliers or Black Swan events.

    Basically your/our whole idea of hard work, luck, draws, aces can be made into an analogy similar to the ecology system of say, the diamond mining industry. Let’s just assume the diamonds/aces here are business opportunities and starting conditions are such that everyone is educated and they know that diamonds exist out there. To become wealthy or rich (in reasonable terms) one must, of course mine the diamonds and sell them off for profit. A strictly competitive, free-for-all environment where hard working and smart folks will be meritly rewarded based on their efforts, which is one would find in economics books.

    The main points I’m pointing out here are education and hard work. For, without education in the first place, no one would knew the existence of diamonds. Henceforth education is the primary and the most fundamental requirement in the quest of achieving financial freedom. Secondly hard work or determination/drive is needed so that one would physically go the mines itself and mine the ores themselves. Knowing about the existence of diamonds, but not physically mining them is basically 0% of achieving wealth.

    Of course things would later become more complicated, such as setting up mining companies (political parties), establishment of cartels (state government) and creation of markets (gov policy), let it be monopoly, oligopoly etc.

    Mining companies, often motivated by greed and profit, would do whatever they to secure their diamond mines. Basically erecting entry barriers to their industry, be it physically (such as building fences) or by laws to discourage competition. Enterprising individuals who are locked out from this diamond rush, will have no choice but to move elsewhere and discover other diamond mines. That’s where entrepreneurship shines.

    On the other hand those who have the privilege to work in the mines would soon become comfortable and complacent, as they will enjoy comfortable profit while having their rights being protected by their “Masters”. They will have no incentive to move out and discover new diamond mines.. why the hard work when their Masters will manage for them (or so)? The complacency doesn’t just stop here. Their descendants, upon realizing such economic benefits bestowed to them by their Masters, may start conjuring the false illusion that their “Masters” could feed them for the rest of their lives.. basically by giving them free diamonds without the need to work. So do you see the cancer that’s growing here? They start small but eventually multiply exponentially.. and ending up killing the hosts. The solution? I’m not sure though, since I’m not an expert in medical field (though I read medical stuff). Giving free advice is a health hazard nowadays. The best thing to do is to consult an oncologist I think.

    And back to the sorry tale of those being left out (or so it seems), may God bless them in finding other undiscovered diamond mines, or if they decide to give up they can always venture into other fields such as crop planting or sheep breeding. Their chances of achieving something big is always higher than the complacent group, because they know that the odds are always stacked against them. To them it doesn’t really matter how many cards are there.. as long as they attempt to “draw”.. they will always be a chance of getting an Ace. A fate that is much better than say, having a small deck of cards but NOT drawing at all (like the protected group).

    “The “probability curve” of life in actuality is even more complicated than the one that I have presented; it is highly non-uniform and asymmetrical”.. I have to agree, and it has to be this way, assuming if there were any “bell shapes” in the first place. In my opinion the naturally occurring normal bell curve that many scientists notice when conducting experiments should in fact be kept and locked in the lab. Especially when it comes to wealth creation where it is dominated by outliers and black swans, which are always excluded from the curve itself.

    The normal curve is most noticeable in naturally occurring phenomena, such as the movement of particles (brownian motion) or the popular dice roll trials. Atoms are without brains and their movements are singularly dictated by physics laws. Humans on the other hand, make both informed and un-informed decisions, can become irrational, make mistakes etc.. and they do not bounce off randomly like what atoms do. We have to accept the fact that outliers and other black swan events occur naturally, be it positive or negative ones. Anomalies always occur, such as a random program crash in computer, an unpredicted tsunami, earthquake, volcanic erruption etc. Even in cosmology for example, scientists are still unable to explain the inner workings of black holes which to me are of great mystery (ability to pull light itself, stopping of time at the event horizon, it’s immeasurable density etc) and the laws of psychics basically breaks down there.

    In my opinion, the creation of billionaires like Li Ka Shing, Lim Goh Thong, Soros, Buffett, Mokthar, Bill Gates and the likes are basically outliers (entrepreneurs) who are taking advantage of black swan events (property crash, share market crash, invention of Internet, monopoly licenses etc). These people generally educated, expert in their field and have strong business acumen. And of course plenty of hard work. Can you name me one of them who are lazy? LKS may be manipulative in the sense that he basically controls all the property in HK now, but remember that during 1967s riots were happening in HK and many people fled leaving the property prices plunge. He foresaw that such event would only be temporary and took the risk and purchased the land parcels. And the rest is history. Similar story for Soros as well, whereby he shorted the pound when he predicted that the UK pound must devalue in the case of England withdrawing from the European Exchange Rate Mechanism.

    All of these anomalies are possible because they the fundamental flaws of capitalism. Great wealth can be generated and destroyed as well. It’s a net zero sum game, perhaps. Just like the futures.

    Ah.. the folly of men and the corruption of greed. As long as greed exists, humans civilizations would forever engage in wars and commit atrocities. Even now as we are speaking. But it should not be viewed from a negative perspective only, for such adversities will allow the true power of the human spirit to manifest itself and overcome all aspects of odds stacked against him. Perhaps this is truly a great gift from God.

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