Absolute Rules Are For Fools

Should we treat rules as absolutes?  Probably not.  It would be good to know when a given rule should be avoided or broken.  Without that ability, there can be no growth.

Rules come in many forms.

There is statute law that sets out prohibitions, often in considerable detail.  Detail is evidence that interpretation is required.  “Do not” is seldom absolute.  Even simple things like “don’t kill other people” have gradations of meaning.  Self-defense is the obvious one.  Capital punishment another.

Some rules are cultural or common practice.  Chivalry may be dying but many of its ideas live on.  Most cultural rules are about getting along with other people.  We need that because people are often in conflict. When is it okay to cut a line at the grocery store?  As people come closer physically there are cultural norms that we expect to rule.  Face the front in an elevator.  Let the people off the subway before going on.

Rules can evolve into checklists.  These are not quite the same but may represent accumulated experience.  Pilots use checklists prior to takeoff because human minds are easily distracted and the checklist provides focus.  Surgeons may have one.  Most good meetings have an agenda.  Not so much a rule but a way to promote organized achievement.

To-do lists are another organizing tool, but one not governed by rules.  They too are to help us focus.

The trick of course is to know when a rule does not apply.  That is where principles come in.  If we know why the rule came to be the way it is, we can have a better idea about when it does not apply.

Suppose my investing rule is to own 50% equities, 30% fixed income and 20% cash.  Suppose another rules says rebalance each quarter.  I might do better with this than if I had no rule at all, but sometimes the rule must be broken.  Current objective reality may be different than was objective reality when the rule came to be. Like early 2008. For an individual investor without vast research capability, the proper mix then quite possibly was 0%, 0%, 100% cash.  The trick there would have been to know when it was time to reinstitute the rule or have another.  Hindsight is easy.

There is the problem in the United States now of people who wish to devalue the words of their constitution.  The argument is rules created two and half centuries ago could not possibly still be applicable.  Things have changed too much.

That discussion would be more productive if people set out to discover the principles that led to the rules.  The proponents of change want to ignore the ideas that governments should be tiny and people should be able to make their own way with minimal restriction.  It is hard for the “big government can solve all problems” crowd to accept those principles so they must change the rules without the guidance of principles.  Have you noticed how many rules appear today that are unconnected to any objective principle?

Same idea with raising children.  Only a few well principled ideas should ever become rules.  Going to school with dirty jeans is not at the same level as committing felonies.  If something will not alter their future opportunities, give it a pass.  Help them learn to discipline themselves by their own standards.

Rules are mostly good, but rules applied mindlessly to situations for which they were not intended are trouble.  Reality changes and so should rules.  Be sure to carry forward the principles. 

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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