The acoup blog series on medieval agrarian societies made an interesting point that resonated with me.
Things that look like failures in long term planning (to people with resource surpluses) can actually be optimal decisions (to people without resource surpluses).
In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized.
In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils.
If you're poor and don't have a stable living situation, delaying gratification presents risks to you. (ones that people with money and stability don't have to consider)
Sometimes people are dumb, but sometimes they're optimizing for factors others are oblivious to.
People might reply, "Well, take the risk," without acknowledging that risk is two-dimensional. There's a range of success and and range of consequences. Something traditionally considered "high risk", like investing millions of a billionaire's money in a start-up, might have low consequences for the direct investor. It sucks if the start-up fails, but they're still a billionaire, probably. Their lifestyle doesn't change substantially. Compare to a low-income worker choosing a car: maybe a cheap used one that could break down at any time, or a more expensive one is less likely to break down (if you stay up-to-date with expensive maintenance), or a much more expensive new car that is unlikely to break down (but that puts them in a substantial amount of debt). In every case, there's a way for the prospect to go sideways in a manner that would likely end with the worker losing their job, with (statistically-speaking) no savings cushion. However you rank the risk of each (at least one being the lowest financial risk), you have high negative potential consequences.
My impression is that people who say "take risk" literally always mean "take bets where you have little to loose and a lot to gain". And they look down on people who took actual risk and lost.
What "take risk" means is that you should try to be entrepreneur in situation where you can fall back and be well paid programmer again if it does not work out. Or that you should risk someone elses money.
EDIT: I guess good rephrase would be that "take risk" usually means "overcome irrational fear when you are in perfectly safe situation". That is what actually people mean.
They also look down on people who could not take the risk, calling them cowardly, lacking boldness, entrepreneurial spirit, etc.
"Sell everything and fund my startup" is fine when you've got a 12 month emergency fund, living in a paid-off home, , and you parents are able to bail you out. It's not fine when failure means you're penniless and homeless.
Further: it's much less of a risk when you have a metaphorical rolodex of wealthy friends from university or business school. You're not cold pitching - not even slightly. Doors open for you, instead of being slammed in your face.
Yet they'll tell you shit like "Try hard enough and you will succeed! I worked long and hard, people saw that, and were willing to invest. Good hard honest work is rewarded."
The people working on their startup 12 hours a day who don't have connections have no idea that the bit left out is that "people were willing to invest in my idea because we chugged beers together in the basement of Sigma Chi."
This nails it. If Elon Musk loses 220 billion, he still does just fine. If a subsistence farmer in a remote place loses his couple hectares cassava crop, he and his family risks famine.
> Something traditionally considered "high risk", like investing millions of a billionaire's money in a start-up, might have low consequences for the direct investor. It sucks if the start-up fails, but they're still a billionaire, probably.
That's not so much about being a billionaire, but about diversification.
Fortunately, even people of very modest means have access to diversified index funds these days.
If you have a few thousand stocks in your index fund (eg like VWRA or VT), then in doesn't matter how risky any individual stock is (like the startup in your example), as long as holding them has positive expected value.
> But because these households wobble on the edge of disaster continually, that changes the calculus. These small subsistence farmers generally seek to minimize risk, rather than maximize profits.
> [...] Consequently, for the family, money is likely to become useless the moment it is needed most. So while keeping some cash around against an emergency (or simply for market transactions – more on that later) might be a good idea, keeping nearly a year’s worth of expenses to make it through a bad harvest was not practical.
> In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized.
> In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils.
Social ties are no more helpful in a famine than currency is. People who can't sell you food can't give you food either. They are insurance against the case that your crop fails, not that everybody's crop fails.
Currency is fine in that scenario. The tendency not to grow the most profitable set of crops is a method of avoiding crop failure, not a method of mitigating it when it happens.
> Avoiding risk for these farmers comes in two main forms: there are strategies to reduce the risk of failure within the annual cycle and then strategies to prepare for failure by ‘banking’ the gains of a good cycle against the losses of a bad cycle.
> If you only farm one crop (the ‘best’ one) and you get too little rain or too much, or the temperature is wrong – that crop fails and the family starves. But if you farm several different crops, that mitigates the risk of any particular crop failing due to climate conditions, or blight (for the Romans, the standard combination seems to have been a mix of wheat, barley and beans, often with grapes or olives besides; there might also be a small garden space. Orchards might double as grazing-space for a small herd of animals, like pigs). By switching up crops like this and farming a bit of everything, the family is less profitable (and less engaged with markets, more on that in a bit), but much safer because the climate conditions that cause one crop to fail may not impact the others.
Under "Banqueting the Yields":
> The most immediate of these are the horizontal relationships: friends, family, marriage ties and neighbors. While some high-risk disasters are likely to strike an entire village at once (like a large raid or a general drought), most of the disasters that might befall one farming family (an essential worker being conscripted, harvest failure, robbery and so on) would just strike that one household. So farmers tended to build these reciprocal relationships with each other: I help you when things are bad for you, so you help me when things are bad for me.
You might notice that this is exactly what I said above. What did you want me to see?
> Social ties are no more helpful in a famine than currency is. [...] Currency is fine in [a famine] scenario.
Social ties are more helpful than currency, even in a famine, because at that point resources are shared based on relationship rather than value. Triage, not optimizing future gain.
See also all the bits about why currency at that point was a terrible store of value.
Currency wasn't a terrible store of value. The essay says as much:
> Ok, so why not sell the grain and store something less perishable, like money? Sure, you can’t put it in a bank, but you can just keep it. And indeed, our ancients do this
The problems with currency are listed as:
1. Someone can come into your house and take it.
2. Ordinary farmers cannot afford enough currency to replace the value of a failed harvest. (An entire year's revenue.)
3. In the event of a famine, the price of food rises, making currency a poor hedge against famine.
Only #3 applies to how valuable currency is in a famine, and it remains superior to local social ties when the famine strikes.
But because of its unaffordability and undesirable correlation with famine, it is not the favored solution to famine. It's just a much better solution than local friendships.
You read the wrong essay; the standard defense against famine is discussed in the following one:
> So we’ve established what the big landlord gets out of working with the smaller subsistence farmers around them – they get labor to put more of their large holdings under cultivation and even a degree of labor flexibility with wage laborers and sharecroppers drawn from the existing rural population. In this sense – and I want to stress this – the large estates need the rural small farmers to survive. This is why, even in periods of rapid growth among large landholding estates (like the steady expansion of latifundia in the Roman late Republic and early Empire), there remained lots of these smaller farmers. But what do the small farmers get?
> Just like the smallholders could establish horizontal ties with fellow small farmers, they could also try to establish those ties with the big fellow in the big house. Of course the mechanisms for establishing the ties were different: few peasants could banquet an aristocrat and most aristocrats would be insulted by a suggestion of an alliance through marriage. Instead the ties were strictly vertical – that is they were unequal. They often began with the farmer working at least a bit as a tenant on the big farm, but also typically included political support, sometimes military support (that is, coming out to fight when the large landholder did, often as common troops in his retinue) and no small amount of social deference.
> In exchange, in theory, the large landholder could provide the ultimate backstop against catastrophe – even a catastrophe that might ruin an entire village or rural area all at once.
In the event of a famine, the farmer has two options:
1. Leave the stricken area, in which case he's dependent on his stock of currency.
2. Hope for relief to be delivered by his social superiors, which depends on their stock of currency.
Things that look like failures in long term planning (to people with resource surpluses) can actually be optimal decisions (to people without resource surpluses).
In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized.
In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils.
If you're poor and don't have a stable living situation, delaying gratification presents risks to you. (ones that people with money and stability don't have to consider)
Sometimes people are dumb, but sometimes they're optimizing for factors others are oblivious to.