Is Control An Illusion?
Is Control an Illusion?
I have been talking a lot lately on the blog about control. Between black swan and white swan events it is easy to feel at a total loss at times. Is control an illusion? As chronic and conservative risk mitigaters we do our best not to feel as if we are slaves to the unknown. But, in reality, only so much of life can be planned for. We simply don’t know what the next year or decade will bring, much less the next day.
This can be disconcerting. No matter how we plot and scheme, there is no bulletproof plan. Yet to say that we have no control is also misleading. We actually have quite a say in how we spend our moment to moment existence.
In fact, we actually are mostly master of our destinies.
Work
Setting up a panel discussion for a podcast is not easy. Trying to get six people to agree to a given time, organize the tech, and then orchestrate a conversation can be difficult. Inevitably something goes wrong. Even after only eight recordings, we have had a number of cancellations and reschedules. Especially when the panelists are still working a 9-5 job. They unexpectedly get pulled into another call or a meeting and then have to cancel at the last minute.
Is control and illusion? If you are stuck in the grind of W2 employment than you may believe so. But many of us are escaping the traditional bonds of employment. We are retiring early, building our own businesses, and taking advantage of the gig economy.
More than ever, we as a society are working remotely and taking greater control of our time. It doesn’t mean that sacrifice is not necessary. But that sacrifice is controllable and modifiable. We are much more likely able to weigh the tradeoffs and make a decision based on our unique needs.
Finances
Although many feel like victims of their economic reality, it has become clear in this community that almost anyone can take control of their finances and create a better financial future than the lousy default that we used to accept. There are a number of levers just waiting to be pulled. Wages can be increased. Budgets can be modified and trimmed. And one can move to a lower cost of living neighborhood or even country.
Is control an illusion when it comes to finances? Resoundingly, we are doing our best to show that it is not. With careful earning, savings, and investing a much better financial future awaits the majority of us.
Relationships
The best things in life are free, and I am not talking about travel hacking. We ultimately have total control over who we choose to be, and who we associate with. While you can’t pick your family, you can definitely decide which of them to spend your time with.
You can choose friends who are kind and havre the same values as you. And even your own accomplishments are likely tied to the type of people you decide to surround yourself with.
Final Thoughts
It is easy in the personal finance community to spend time talking about all that can go wrong. With the likes of Suze Ormon screaming in our ear, we can become paranoid about all those risks lurking around the corner, and spend a huge amount of emotional energy on risk mitigation.
Yet, the truth is, that we have quite a bit of control of our work, finances, and relationships. Ultimately we have to decide what kind of people we are going to be.
Is control an illusion?
Not in my opinion.
I’ll take the other tact. Control is an illusion but then it depends on what you mean by “control”. If you shoot a bullet once the trigger is pulled you loose control. Your bullet will fly to wherever the barrel is pointed at the instant the bullet leaves the barrels control, and the barrel is no longer in your control. It’s under the control of the explosion going on in your hand, because that is what a gun is, it’s a method to hold an explosion in your hand and not pull back a bloody stump. If it hits the target, good deal. If it hits close to the target, it’s a miss, same as if it hits far from the target. Enter the mystery of probability. The bullet goes where it will and if you “control” the variables correctly and precisely the bullet goes where you want as well as where it wills. The two entities match. It’s about “controlling” error. It’s about reducing variance. It’s about improving the odds. In finance you over power the odds by a big pile, a small budget, the luck of a good SORR which can be better managed with something like a 50/50 portfolio in early retirement and a short period of retirement. If you set the risk right and reduce the variance the probability of hitting the target then improves dramatically. You can think of return as the path to the target. You can think of variance as every other path that misses the target. If you reduce your variance you greatly enhance the likelihood of success. You succeed by learning how to not fail. So it’s 2 perspectives inextricably linked. The FIRE perspective that focuses on return and downplays risk and the Suze O perspective that is bent on mitigating failure. Both points of view have their place but both points of view are incomplete. The efficient frontier is not a line but a line on a plane and the plane constitutes a set of points: risk,reward. The efficient frontier is the optimal set of points on a curve on the risk,reward plane that describes the most reward for the least risk. True control therefore is a probability function that reduces the variance and takes guessing out of the equation. Once you optimize risk and reward it’s as good as you can do, for a given portfolio and set of retirement circumstance. After that, life goes on so attend to the joy inherent in those possibilities. That was my motto at my retirement lunch. Today is day, before the night when life goes on.
I think the point of control being the art of reducing variance holds true. Then the rest is up to faith/fate.
So important. In work and personal finance it took me far too long to realize how fundamental this question was.
I’ve come to understand that we don’t control the outcome. But, we have control of many of the factors that produce the outcome and can work the odds. We can support the right people in a task, resource the project accordingly, diversify our investments, or increase our savings rate. That’s not the same as control in my opinion, but it sure makes it more likely we’ll be successful. Maybe that’s good enough.
Realizing this has made me both more successful AND less prone to stress and frustration. Thanks for capturing it so succinctly.
Working the odds. That’s a good way to put it.