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4 Financial Lessons From Deng Xiaoping

Posted in Money

In the last decade, China has risen to the most powerful country in the world. Historically, China has been a great power three times in its past history and has one of the most successful cultures in human history. Thomas Sowell points out that the Chinese are successful wherever they migrate. As an example, if we look at the top incomes by ethnicity in the United States, we’ll see that the Chinese are high up on the list (note that Taiwan is officially the Republic of China, or the non-Mao version of China, as Mao set China back, while Taiwan never had to worry about Mao). China has also impacted many other Asian cultures throughout history, which shows in other Asian cultures having the strongest levels of income and wealth in the United States and other countries. Yet, in the last century, China turned communist like Russia and almost lost ground against the United States. Deng Xiaoping changed China’s destructive communist fate and is one of many reasons China is the world power.

The Series

  1. The Poverty of Witch Hunts: Growing Character Through Biographies
  2. 4 Financial Lessons From Alexander Suvorov
  3. 4 Financial Lessons From Genghis Khan
  4. 4 Financial Lessons From John D. Rockefeller
  5. 4 Financial Lessons From Yuri Bezmenov
  6. 4 Financial Lessons From Deng Xiaoping
  7. The Full Series

The Lessons

1. Be quick to admit mistakes and adjust behavior.. True to his adaptable background, Deng Xiaoping admitted that China had jumped into socialism too early. Even though he adopted socialist thought when he was younger and was attached to socialism, he recognized the failure of China’s socialist adoption. Karl Marx had argued that capitalism would eventually make itself irrelevant. Marx was right and wrong: Marx is correct that capitalism will continue to increase productivity in time, making some labor irrelevant. However, labor will always exist – its manner will change. Deng Xiaoping understood that increased productivity can only come under a system that encourages competition and private property (both inherently capitalistic). Socialism cannot increase productivity; its an inherently predatory system, unless productivity has increased to such a level that output is guaranteed regardless of human labor (ie: robots that can make everything humans need will change the nature of human labor).

Why did Deng Xiaoping see this and not other socialistic academics? Deng Xiaoping put aside his ego and his attachment to socialism and accepted what reality said. Ego hindered others from adopting necessary change and China would have never been a world power had the academics succeeded, just like the United States has gone into decline as academics have had more power (the Soviet Union also had the same problem).

What makes a person exceptional is his ability to swallow his ego and accept what works. Not even 1% of people can do this. Deng Xiaoping did.

2. Deng Xiaoping, like Genghis Khan, proved that the underdog has the advantage.. Deng Xiaoping grew up as a peasant with agriculture experience (similar to Mikhail Gorbachev who ended the communist rule in the Soviet Union). Poverty and agriculture teach reality more than any school on the planet – you cannot escape reality when you’re poor. You cannot escape reality when you live by what you produce. By contrast, most modern education is nothing other than an escape from reality. Case in point, this TED talk we highlighted to portray another view of success and failure – though interesting, the talk is filled with inaccuracies and false assumptions. Anyone who’s actually raised livestock knows what mixing breeds with productive and less productive breeds results in catastrophe – in fact, breeds like Araucanas have been selected out of other breeds due to their laying frequency. While it’s true that a chicken will never lay 30 eggs a week (impossible), a chicken which lays 8 eggs a week versus 5-6 eggs a week is superior – this is why we have specific dog breeds, chicken breeds, etc. As humans, we select out the genes we want and this refutes the TED assertion. The difference is the experience of people who live in the reality (producers) versus the academics who postulate theories and formulate meaningless experiments (ie: A chicken only has so much potential so a “super chicken” isn’t a possibility anyway; by contrast, what’s the potential to consciousness? Consider that several hundred years ago people would have said flight was impossible yet the Wright Brothers refuted this).

After Mao Zedong passed, Deng Xiaoping should have been at a disadvantage. Yet, he outmaneuvered his opponents and was able to influence the direction of China. His poverty and experience in agriculture taught him to humbly seek results exclusively – never protect ego, as ego blocks results. When you look at modern education, what you see is the opposite of what success does: modern education protects ego by ignoring results.

Poverty is advantage because poverty forces reality.

Both images show self-righteousness and smug thinking (“I’m better than others”). This is commonplace in an overeducated world disconnected from reality. None of us are better than anyone else, nor will ever be. The images show arrogance; be humble.

3. The exception defines future rules and Deng Xiaoping was an exception. In The Power of the Powerless, Vaclav Havel identifies that a system which is built for the average person destroys everyone in the long run. Why is this? Anyone who undertands basic statistics knows that most people conform to the bulk of a standard bell curve – most people fall within 1-2 deviations of the mean. Why would a system designed for most people fail them in the long run? Because exceptions (statistical outliers) define future rules. The Wright brothers were exceptions – we now can fly. Sir Isaac Newton was an exception – our knowledge of mathematics and physics greatly expectanded because of him. Deng Xiaoping was an exception – he recognized the limits of socialism in its time and China is where it is today.

Average people hate exceptions, like Bill Gates, even though exceptions like Bill Gates drastically increase wealth for everyone in the future, and sometimes in the present. A system designed for average people ends up undermining those same people because no exception can exist in the system (the Soviet and communist systems remove exceptions), thus the people do not benefit from the wealth that exceptions create. A world without the Wright brothers, Bill Gates, Sir Isaac Newton, Deng Xiaoping, etc is not a world you want to live in – these exceptions made us all much richer.

“Isolation almost invariably means poverty and backwardness” (4:50). Take it from Thomas Sowell – echo chambers are incredibly dangerous and will lead straight to poverty.

4. Challenge yourself. We’ve heard and seen the “I’m triggered” from weak Millennials who can’t handle disagreement. The future for these Millennials is poverty, even if that poverty is only reduced opportunity (unseen). Deng Xiaoping never feared challenging his ideas; even as a devoted socialist when younger, he showed a willingness to hear and see other views. His willingness to challenge his own views led to massive wealth creation, not only for himself, but for others in China.

We can find echo chambers everywhere, but be aware – they are incredibly dangerous. They limit potential and wealth. Isolation equals poverty; challenge your views and always stay outside your comfort zone.

Conclusion

Deng Xiaoping lived as the exception that changed the rule, a reflect of how Mother Nature favors the one for the many. As China has grown into the most powerful country in the world for its fourth time in its history, it’s important to review what made China rise to its position and avoid the fate of the Soviet Union. Deng Xiaoping reminds us that poverty can create wealth, humility will lead us to results, and that we should always be where we’re most uncomfortable while staying grounded.

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