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The Wooden Nickel:  Duh

The Wooden Nickel: Duh

January 31, 2023

What do they say about hindsight?  It’s 20/20, right?

Some upscale subdivisions outside of Scottsdale, Arizona, built under an obscure provision in the zoning laws, have recently been cut off from water. Drinking water; these are million dollar homes with no running water. Scottsdale has stopped selling water outside of the city limits.

The state allowed the homes to be built in a desert and did not require the builders to prove the houses could get water on their own. Say what you want about “freedom from the tyranny of government oversight,” but this kind of thing is a now-obvious outcome of lax regulation.

Did anybody think that maybe water would be a necessity for homes? Duh. 


From 1980 to 2015, China had a policy that essentially restricted parents from having more than one child. The idea was to curb population growth. Not only did it slow population growth but since traditionally male children were more valued than female children, there is now a huge imbalance of adult men versus adult women. The Chinese government finally ended the policy when it realized that they were headed for a population bust. Unfortunately for them, their birth rate is now about 1.2 per couple, far below the 2.1 replacement rate needed to maintain population and sustain older generations as they age.

So in 2022, for the first time in six decades, the population of China declined. Now the economic miracle that pulled China out of poverty and into the modern world may be over. Who is going to do all the future work in Chinese factories and make all the stuff? China apparently didn’t foresee that as the population aged and got wealthier, its policies would have disastrous long-term effects.

Seems kind of obvious in hindsight. Duh.


The world was struck by a Covid virus. Even though experts had been warning for decades that the US was ill-prepared for a pandemic and we’d had small outbreaks that confirmed that lack of preparation (Sars, Zika, Ebola, etc.), we paid scant attention to the warning signs. When Covid came, we had little defense and no plan in place to respond competently.

We tried lots of things: shutting down the economy, no masks, cloth masks, N95 masks, wiping off our groceries, school and work from home, social distancing, air travel bans.  We had no idea which actions were helpful and which were not (although in hindsight the wiping of groceries seems crazy). Cloth masks, it turns out, were pretty useless. Closing schools might have done more harm than good.

But at the time we didn’t know, did we? Of course, now we do know that medical masks help keep you from spreading disease.

Shouldn’t that have been obvious earlier? Duh.


For decades we have been treating Russia and its leader, Vladimir Putin, like a country and a person who were, at the very least, rational. Sure, Putin was ex-KGB and Russia has been ruled like a big organized-crime outfit, but they supplied quite a bit of energy to the world.  A lot of companies, from McDonalds to IBM, set up shop in Russia to take advantage of a growing, developing nation. We saw them mostly as a jerky neighbor who sometimes screams at kids on the lawn, not an existential threat. We ignored the regular assassinations of opposition leaders, destruction of Chechnya, closing of the free press, takeovers of Georgia and Crimea, and the assistance to the Syrian government to gas its own people.  The Western democracies certainly acted like Russia wouldn’t do something truly awful on a large scale. 

You know, like start a land war in Europe. Duh.



The list goes on and on. We are constantly finding out that the solutions to our problems were in front of us the whole time if we had just thought through some of the consequences of choices.  Hindsight is pretty good, right? 


Humans are planners.  We are genetically wired to seek patterns, even when patterns don’t exist, because our survival depends on making the right decisions about threats. People buy houses in the desert and assume that even a “hand’s-off” government makes sure the houses have water. China sees population rising and it takes what seems like obvious steps to slow the birth rate. The world sees an out-of-control virus and decides, in part, that shutting schools and wiping off bananas is the right move. Everyone assumes Russia is controlled by bad but rational people who can be appeased if allowed to only steal a little; we let them do it for a long time and assume they will not affect the bigger world.

How does this matter to our financial plans?

Maybe it's not always obvious which of our assumptions about the world will be wrong. Our survival, like our plans, doesn’t depend on always being right. Instead, planning hinges on always being willing to be flexible and prepare for all kinds of outcomes. It might mean to stop building houses in the desert. Maybe we should continue to encourage people to have babies. We could prepare for inevitable diseases and educate people on how to prevent them. We shouldn’t allow dictators to do bad things, even if they are small things.

In financial planning, it means not reacting to the hot trends of the day, the daily news cycles, and the promises that are too good to be true. It means saving for all kinds of outcomes and take prudent risks in the long-term. It means being flexible and adapting to new information.

Flexibility is the key to survival of a species. Constant evaluation and learning are key. When you think you know everything, you surely are doomed.