Do You Give Your Power Away?

The above question is much important and relevant than it has ever been. The issue of giving your power away might be the underlying cause of the current financial crisis. Let me explain.

Others have only as much power as we choose to give them. Your government, your boss, your girlfriend, your children, your co-workers, your friends, your enemies have only as much power as we choose to give them. In essence, power is about choice. Under normal circumstances, nobody can make you do anything against your will.

You can and should do things you enjoy, and shouldn’t do things that are against what you stand for. Yet, life is not that simple. Many people don’t know what they enjoy or what is good for them. There is a good reason for it. The life and information is complex and it takes time to understand it.

For example, you may know that you like strawberries, walks in the park, rock, and playing basketball. In situations concerning the above mentioned items, you should be able to make up your mind quickly and should state your preference. Yet, chances are any of the above activities are not going to have a huge impact in your life.

What about the following situations: do you buy or do you rent a house? is this really healthy? where should I invest? is this person/friend right for me? where should I go to school? All of the above situations represent really important, possibly life changing choices.

Suprizingly enough, it seems that the more important the decision the more people seem to give their power away and let others decide it. Others might  include your banker, your investment adviser, your friend, your parents, your mortgage originator, your doctor. These are the people that we call experts. They know, or should know what is going on.

So we trust them. We give our power away and let them decide what is best for us. The main reason is that the issues that your banker, doctor, etc seem to be dealing are so complex that we do not want to invest our time  in learning of what really is going on behind the scenes.

Yes, the so called experts might really know what is going on, but it does not mean that they will tell you or even want to tell you. It might be against their self-interest to do so. That creates information asymmetries, where the consumer knows less than the producer of the information.  That puts you in the tough spot, where you cannot really trust the experts.

In today’s world driven by profits, the conflicts of interest are plenty. The conflicts of interests is precisely what caused the financial crisis. That is why it is more important than ever to not blindly give your decision making power away. The best way to do that is to educate yourself about the issue at hand, so that you are confident about the decision that you are making.