Rahim Taghizadegan on Pioneering Spirit, Institutions of Becoming, and Nurturing Talent (Episode 5)

Transcript

[00:00:00] Introduction

Jesse: Hello and welcome to Journeys with Jesse. Today I've got the pleasure of talking to Rahim Taghizadegan. He's the last Austrian economist in direct tradition in Austria. He's also the founder and director of scholarium, a private education and research institute in Vienna. He's the president of the Free Private Cities Foundation, and he's also been a professor at various universities across German-speaking Europe. He has authored multiple books, including Austrian School for Investors. Rahim, welcome to the show.

Rahim: It's a pleasure. Thank you.

[00:00:58] Fun question

Jesse: Let's get started with a fun question. What do you like to do for fun that might surprise most students at scholarium?

Rahim: Oh, mostly these days is hanging out with my kids in the garden.

Jesse: So do you also do like gardening with them or is it more like playing?

Rahim: Yeah, my wife does the gardening, I do the playing.

[00:01:23] His definition of human progress

Jesse: Most of our waking time we humans spent working in contrast to playing and I would say work is striving for progress. How do you define human progress?

Rahim: I think it's about fulfilling the human potential, which is unlimited striving for ever higher uses of your potential. And of course, there's something normative in it which is quite problematic. And philosophers haven't really solved the issue. But I think if you look at it and you are interested in what human beings have achieved in the past, then you get a feeling for what may be a higher use of your potential in the world what's a lower use? 

[00:02:06] Spiritual stagnation

Jesse: I think the normative part is very much what makes it difficult to define, for instance, whether we have been making progress in the past 50 years or so because I would say before that there was probably much more an agreement on that.

And in the last 50 years there hasn't been. So some people say there has been progress, some don't. In the past, some of these narratives were nationalism and religion that made people sacrifice for progress. What is lacking in our post nationalistic or in post religious narratives to motivate humans to sacrifice for progress?

Rahim: Well, I buy the idea that we are in a face of stagnation but it's not obvious because on the material dimensions we've had huge progress. And then what I like is a kind of minimal morality, which was proposed by Ludwig von Mises of the Austrian School. It's just looking how life and health improves over time. And we've seen a miraculous improvement of the living conditions of billions of people in fairly recent time. But the kind of stagnation you can feel is that the link between these kind of progress and what human beings are doing with their time and what they think they're contributing and achieving, it seems to be widening. And a lot of the progress seems to be driven by itself in the form of technological progress. So it's easy in an information age to adopt technologies and then to scale them up. And there's a lot of progress done by just following the examples and by scaling them up and reaching every corner of the world.

So we've seen a lot of that. But in terms of quality progress, new heights in particular in culture and maybe theoretical sciences and so on. This gap is a bit disheartening that we are losing the kind of pioneering spirit even though the morality of celebrating the role of pioneers in arts and sciences and entrepreneurship we've lost track of that in particular in Europe, where it feels like a sclerosis. 

Where there's most progress, progress in the most dynamic parts. It seems that they can catch up pretty well in terms of technology and economic development, but the kind of cultural achievements and achievements and critical thinking and really moving humanity forward by new paradigms of thought and doing seems to be still lacking.

And it's still very much, I'd say US dominated or western dominated. So that's, that's a bit disheartening. There's a feeling of stagnation. While at the same time we can see the fruits of progress everywhere.

Jesse: Yeah. I do believe it's, there's some lack of spiritual motivation that drives that. I don't mean it in a religious sense, but more like in a sense some greater meaning that drives this progress. Can you pinpoint maybe some elements that are lacking?

Rahim: Yes definitely feels like a spiritual crisis. And maybe because some of the worst ideological answers we had in the last century were answers to a spiritual crisis and they failed. They terribly failed. They were efforts to find meaning in the kind of substitute religions and substitute identities, collective identities but even the individualist romanticism then failed utterly in seeking genius in a kind of collective role and, and collectivist identity in the end. So coming full circle. So that's how we ended up in postmodernism or post postmodernism. Like everyone is disheartened and the, the great answers of the past don't seem to be a fit, and now it's an age of disorientation figuring out what may be great ideas.

And of course, we are bit afraid of great ideas because we've seen how much harm they've caused and, and we've lost the kind of intuitive or naive faith in, in creates moral paradigms. So it's still an an age of uncertainty. And what can push people to get into spiritual mood for discovery, and playing with new ideas.

I think it's on, on the one hand somehow forgetting a bit of the more recent past. And I see that with the very young people who in a way are free to re-approach big issues again without that fear of falling into ideological traps again and all the baggage that historical baggage that comes with it.

On the other hand a main issue of course is wealth. Once it's becomes sclerotic once it becomes something that you think is yours by right? Because you have a need and thus there's wealth. So that's a good fit. And everyone should get that kind of wealth, and you don't see it as the dynamic product of achievement. You just see the distribution, not the creation of wealth. And how it's not really about the material fruits because they come in the end, but in the joy of creating something that's get lost. So it, it's a kind of mix between a wealth based sclerosis because the links to the wealth creations have been lost to most people. They don't really see how the individual contribution leads to riches not only for themselves, but for other people. 

That's a kind of crisis of meaning not really understanding the kind of collaborative order that brings about progress and wealth.

[00:07:47] Pioneering spirit

Jesse: Yeah, I do agree. I think this is probably starting already very early in school or even kindergarten or at homes, that people are not encouraged to strive for value creation instead encouraged to live off what has been already created, so I think we would need this new narrative. If you were to sketch out a narrative to inspire individual and civilizational human progress, what essential elements would it entail?

Rahim: Mm-hmm. Yeah. I call it the pioneering spirit. And as a kind of entrepreneurial spirit as well as you take up uncertainty as a challenge and not something that leads to defeatism. As for many young people, it seems like all the big problems are solved or they are too big for me to solve or to contribute to solving. And that's a kind of sclerosis say and it leads to either geopolitical questions of making everyone else see something and move along where you as an individual have a very small role to play or there is no possibility at all to change something. And that's crazy there's so many problems which you can see as challenges and, and ages of uncertainty, of course, are great ages for pioneers. It's on up to everyone on his own to potentially figure out something that can change the course of history. And, and be really a contribution for the history books.

So you have to turn around your focus and not seeing it kind of uncertainty as something weighing onto you and not seeing the wealth as meaning that all the big issues have been solved already and there's nothing left to do. On the contrary it's an age where you have a lot of leverage. If you start up pioneering, because you're in contrast. It's not like we are all on a new planet. It's like most are trapped in hi historically achieved forms and historical capital and are living off that capital as this were a kind of golden cage. And it's for the few who see that there's a lot of meaning in, in asking. questions and trying to figure out in an age of uncertainty what may work in the future and what your particular individual role can be in that. I think it brings a lot of meaning and joy to people. so it's a kind of self-fulfilling thing. Then once you get that mindset, you stop seeing problems as problems.

You see them as challenges and there's so much to do. Then we have the demographic crisis or situation where the amount of young people in the best years of the life full of energy, is getting smaller. That means the leverage is even larger for you if you are a young person. Now, if you're full of energy.

Now if you're open to challenge and open to the challenges then there's huge leverage. And it of course means A huge amount of meaning but of course the chance to err a lot and make a lot of mistakes. So another thing from the spiritual side of you, you must lose fear of failure, and take mistakes as something joyful, as as well, and see it as a play thing.

So playing usually means trial and error. Try out something. Most things fail, but they try again. And it's fun because you're not doing the same thing until the end of your life, until retirement. You've gotta do something new every now and then, because the old things that you've tried have failed.

[00:11:26] History of institutions of becoming

Jesse: Yeah, following the interesting is much more fulfilling, at least to me, and I, I reckon to most people. We are gonna come back to the question of, and how to instill the pioneering spirit and uncertainty resistance, or even maybe anti-fragility. But let's first speak about the history of institutions of becoming those institutions that prepare young people to thrive in their later lives. Over the last centuries, I would say human progress evolved from being manifested in small hunter gatherer tribes, striving for survival and reproduction towards complex civilization with highly compartmentalized work. So in this process, institutions of becoming such a school, university, apprenticeships, or even patronage systems evolved.

What value did these institutions create historically, and how has that changed in our contemporary times?

Rahim: Oh, those institutions have been very crucial. They set apart first the western part of the world from the rest. And then fortunately we found out that it's not linked to just one particular culture, but it's a kind of universal thing. And it's a certain set of institutions. I think the most important one is really the free city, the autonomous city. it's the first institution of becoming, I'd say, where you also have the apprenticeship networks emerging merchants and craftsmen gathering in the density that brings about network effects. And then of course more importantly, linking those cities because the city on its own is still too small of a network effect already a big improvement.

But really important are then the links between the city, and that's another set of institutions, the monetary and financial institutions, and then transport institutions. Europe was one of the first places that had a postal system developed which was mainly used for flow of ideas which were relevant for merchants dealing in all corners of the world to have a trade network, a monetary network, a financial network, then a trade fair. Network and a transport network and then a network of ideas, of course with media emerging first in the form of letters. And the first kind of letters are really merchant letters. And then come the intellectual letters. It's what we call the Republic of ideas and it was really a crucial step, and that's an institution. Everything is an institution which kind of has a life on its own, doesn't depend on the individuals anymore because it's a kind of good routine that's working out that you can copy, you can imitate, and you can be part of that institution. And it was really a habit of great thinkers sharing their thoughts in letters to like-minded people which of course increased immensely the network effects.

And then based on that, fairly, late, I'd say we have two forms of the university emerging. One is the University of the clergy. Which based in, in Paris and which really is based on an intellectual revival within religion first because it was in the monasteries that the old of classical antiquity were rediscovered.

And this led to a kind of pre renaissance of thinking, within the church structure first because that was kind of, that the intellectual function was taken over by the clergy to a large part. But at almost the same time, we have a second form of university emerging, and that's the one based in Bologna, and that's entirely driven by the students.

And the students are the sons of merchants. And why are the sons of merchants gathering together? Because they see a value in this newly found renaissance which is understanding the high level of expressed thought thinking and juristics and, and interpreting law of classical integrity of the Greek and Roman heritage. And they see that immensely useful because the merchants are engaged in global trade which means very complex contracts. So being able to express yourself, to understand complex ideas and in particular to use logical reasoning, turned out to be very useful for those kind of trade networks. So the merchant sons got together and then of course, use economies of scale to hire the same teachers to save on the money that is needed. And that's the second rule of the university. 

So it can only be explained as a further combination of institutions leading to network effects. They are underrated in their importance Not only for the West, but for the world, of course, because that's behind the then ever increasing rate of innovation. We've had innovations all around the world. The Chinese were pretty much the first in almost any innovation due to the immense network effects of a fairly large share of the population. But it's then that institutionally built an increased network effects of Europe that really leads to a phase where innovations don't end.

Usually innovations end. We always have phases of innovations, new ideas, but they get forgotten because the challenge, a societal order. And you have of course the, the political incursions and trying to control and monopolize wealth creation and innovation. But it's only then in the West or in modernity, that we have an ever increasing rate of innovation. And after one innovation, it can become the carrier technology of a new set of innovations that are built on top of it. And this kind of exponential increase of knowledge in particular in the technological realm that comes to define modernity.

[00:17:24] Value of universities

Jesse: And how has the value changed in our times? What's still valuable and what's not?

Rahim: At university it's mainly the network effect that's valuable, bringing together young people that have leisure. And to a certain extent it's a class thing. It was in the clergy university of the past. It was mainly nobility, that had the leisure to go for that. And of course, it's perpetuating a class, but for this class, it brings a network effect.

You find other noble men, which can be very useful political connections than later on, and even professional connections if you like. So that's still there. If you are within the certain class and you have a certain leisure, you find other young people. Usually within the conglomerations, the larger cities. So going to university has the advantage of giving you a legitimate reason to move to a big city and leave your family, leave your parents, leave your parents' basement and go live in a big city and meet other young people and be exposed to other ideas. 

Having said that I think nowadays it's on the whole, the negative prevails most people think it's, it's a great thing that universities have become so accessible. It's like almost everyone can go to university, in particular in Europe, but of course in the US you have like this credit based crazy system of funding attendance. But I think it's worse for the people that don't belong to the ruling class. Because for those, those networks effects aren't really the crucial they are not learning any kind of useful knowledge. And so they just waste time and in the US even their life savings on something that, will be seen to have less and less value. Unless you belong to kind of ruling class and then you go to the centers of the ruling class, you attend to lead universities or you go to the big cities that are important if you want to have a career in finance and so on. Then of course it still makes sense and that's why even employers pay for MBAs and so on to get those kind of network effects.

[00:19:39] Value of cities

Jesse: Earlier you mentioned that free private cities were the first institutions of becoming, how would you say have these network effects of cities changed in our time?

Do you think cities are still as valuable or if you were maybe 20 years old, just finished learning, would you consider going to the city in order to benefit from the network effects or is remote organizations, is that enough?

Rahim: Yeah, I'm surprised that empirically it's still the cities. So of course we've have had information technology for a long time now. We have this international sphere of ideas even earlier than the internet. Lots of people have predicted that that will be the end of the cities. It has not happened yet, so it's quite interesting.

Of course, you have very strong lock-in effects once there are networks. So it takes a long time if now, of course, speaking about the future and I think it may change. But we underestimate how difficult it is to overcome locked in network effects. I would say if I was now without any bonds and seeking interesting places, I'd be more and more open towards the greenfield development, the new places, if the dynamics is right, and the dynamics can be right, because of our digital links.

Of course, it's links of money finance and information flows. So I think you can have, at least more of the dynamic, maybe even SkyLink may contribute to that. I see kind of a ever a higher likelihood that it'll be the new hubs of the future won't be physical hubs or won't be necessarily the largest physical hubs, but the most dynamic hubs within the kind of digital network. I expect that, but again, empirically we can't see any of that. Even like the pandemic increase of going remote rewound a bit and turn back a bit. We'll see what remains of that. Still I expect with all the dynamics we see in free city creation, special economic zone creations, new ideas of living together, working together, I expect that we may be at the verge of leaving behind the physical density as a necessity for network effects.

But it's part of the uncertainty of the age maybe. So you gotta take a risk there and as a young person who wants to interact with other people and create something new, I wouldn't go to the countryside in the sense seeking the kind of refuge which a lot of people do in an uncertain age I think it makes sense if then you have kids, and start your family, of course, you're seeking a kind of safe refuge and particularly from the crazy ideas that prevail in the centers as well. But one has to be very wary not to lose the links to this professionally and intellectually important network effects. So an extra effort then has to be taken to remain part of the in of the nodes of thinking and progress.

[00:22:57] Building free private cities

Jesse: As president of the Free Private Cities Foundation. How close would you say are we in the actual creation of free private cities? Because the projects I've seen I think in Honduras, the one prospera or they seem to like have started and then they ran into issues. Can you share a bit about that?

Rahim: Yeah, I'm, I'm not a president anymore. I'm chief economist, now. 

So, and I've always predicted that with a new field emerging, most of the projects will fail. That's, that's obviously the case with every new idea. this particular approach is based on special administrative zones which is getting like a special economic zone plus and it wa s supposed to be conservative approach because there are lots of special economics and thousands and thousands and lots of those created because a lot of countries are competing for the kind of progress that they'd like to see. And in particular countries that are challenged in that field because international investors won't trust them and won't trust their institutions and courts.

So I think it's a great idea to look into that competition, something positive and, and rewarding those that have more forward going ideas and end up playing around this kind of trial and error field. But the problem is that nowadays venture capital, how we finance ventures is inimical to progress in a part and it's due to the monetary system. It's like there's lots of money that's not really linked to competence. Lots of money flowing around in age of uncertainty. Yeah, looking for exotic investments in the part. And I've seen, I've observed as someone who has been very early in Bitcoin, how venture capital has destroyed part of that sphere it has gone mostly for the scammy projects because it's always this kind of pyramid scheme, logic that you have now. And that's a big issue for new projects. So I, I think there's a high risk investments, and I would rather like to see them grow more organically from smaller scale things. And there's a lot of things to figure out, to figure out the trade offs. I mean, if we live in Europe or the west, Many people in particular, those who have the leisure to think about new ways of life.

We have a very comfortable life. So there's a lot of trade off in going now for different places in Africa or Latin America taking with you your family. And that's a big challenge. And to figure out what kind of infrastructure has to be there first to make the possible. And how do you finance that kind of infrastructure? You gotta have a business model that works out. And real estate business model makes sense because it's one of the biggest assets and the most known assets to middle class investors, it's also a very distorted market real estate and by the monetary system because people really are on the run, panicking how to keep the purchasing power of their savings and they panic into asset classes.

And we've seen it with crypto lots of people panicking into and then have the fear of missing out, FOMO kind of dynamic into scammy pyramid scheme like projects. And so be, I'd be very careful with everything that seems new and contrarian. And still having said that, I'm still a strong believer in, in Bitcoin or Bitcoin surviving through all this trial and error of the crypto field.

And I'm a strong believer that new autonomous zones even new city creations and formations will be a big driver of progress in the future. We see a lot of interest there. It's not just a question of alignment of the competence, the skill necessary the money necessary for that in the kind of offer, the kind of trade offs.

You have to make and the interests involved that we have to figure out what's the way forward there and we'll figure out not by one big project running and failing. Usually those projects that are best known are not the best projects in my eyes it's a kind of distortion of course in the media as well.

The media is another institution that's terribly failing has very distorted incentives. And there are some. very little known very impressive projects on a small scale. For example, in Honduras I think the best project is Morazán because it's done by a local entrepreneur who has a lot of experience in this market and is providing real value to the people living. But it's not a very interesting and appealing one to a Western audience because it's like in the middle of nowhere in Honduras for Honduran workers in the light industry. So it doesn't look fancy, doesn't have fancy renderings and so on. but I think it's, it's the most competent, most interesting project.

But of course it's suffering from the backlash of the Honduran government. And so probably, maybe it was a mistake, but we'll see that kind of link to constitutional laws and then of course within countries we can call or sometimes called in a cynical way to shithole countries because they have failed so many times and that's why they sometimes are open.

But of course depending on those, the political systems of those countries also mean you can be tainted by those political failures. And certainly the regime the political class that brought about the constitutional change was not a good one, was a highly corrupt cynical group of politicians, of course, which are representative for that kind of Latin American maldevelopment, lack of development. So it's not a surprise, it's not a conspiracy, the need for money to bring that into the country. And it's the reason why those countries in particular need projects like these, but that's of course hard to see when you're on the ground and you see all and the party politics of the day then it's mostly if you don't like the politician and he did something, then of course you might be opposed to it because it's the bad guy who did it and you can't have him have a success story and you want to destroy it, even if you destroy the development perspective of your country.

Jesse: If you were to bet on one region where a network of free private cities would emerge in the next 20 to 30 years, which one would it be?

Rahim: I don't think it's too late to write off the west. So I see some tendency in the US and maybe even around Europe, if the pressure is stronger if it becomes more obvious to more people that a model is failing, that they feel that they are missing out, that their kind of deep crisis that hinder the belief in the all granting government that's solving all your problems. So I, I think it's possible there'll be US and Europe leading it, but more people and more need of course is where we have cities really being started and growing even without, you don't have to be an entrepreneur, it's pushed. And that of course is Africa and Asia. And in particular Africa for the demographic pressure, which already leads to, you'll have big cities anyway. So you better make them in a better way. Or you think about how to better create dense agglomeration of people that provide the wealth aspect of a network effect, but still be functional and use the competence and trial and error and finance of entrepreneurs to just make it better. Because if you look other way, these cities develop it's fairly easy to see that has a lot of upside for improvement. So I think there'll be most value if you can fix African cities, you affect a lot of people and you create a lot of value there. Even though it will not be something very attractive for Western citizens there won't be a role model for them. But then later on, maybe even African cities may provide role models for Europe and the US It's just a question of a generation maybe.

[00:31:27] Attending university

Jesse: Yeah. I do agree that there's a lot of potential in the demographic rise in Africa, for instance. Let's circle a little bit back to the history of becoming or more the current state. What will graduate from current or existing institutions be missing in 10 years from now? What kind of skills or mindsets?

Rahim: Yeah. Almost everything. I'm afraid. What they don't, so let's look at what they don't miss and what they have. They are mainly at university because it increases their employability. And why does it still increase employability? It's a signal. It's a less and less relevant signal, but still it's a minimum signal.

Having gone through a university and graduated means you have a minimum amount of discipline. You have the capacity to be somewhere at eight or nine o'clock in the morning and be clean and presentable and have a minimal work capacity. So it's a minimum signal if it doesn't cost you anything as an employer, you maybe want to take it. 

Second thing, and that may turn out to be a negative signal for more and more employers is of course at university you learn to follow instructions that you don't understand. And you will learn to be together with other people that have a similar lack of meaning and understanding and function. So it's basically the big corporation, that's simulated at university. You get tasks, they are usually written. They're abstract because large corporations, you can explain everything to you. You gotta read manuals, you gotta do your thing. And you've gotta work based on the kind of formal structure of surveillance, figuring out if you've done your job, you'll be evaluated and you'll be graduated in the sense after, once you advance in the career if you work out well, and in a sense that works because big corporation have economies of scale and they have network effects in them. Unfortunately, large part of those economies then are artificial or artificially inflated. And that's due to the financial economies of scale. And the regulatory economies of scale means a certain set of regulation. If you look at the cost of regulation per head employed or per dollar turnover, you see, of course it's an artificial network effect or artificial economies of scale for large scale corporations. 

So those large structures, which would have an advantage but wouldn't grow that large, are artificially inflated. And that's why the demand for those kind of zombie like workers is artificially inflated. Workers, they just function. Even though they can't figure out what's their role as a little quark in a big machinery of wealth creation, but they don't ask too many critical questions. They don't disturb the flow of production. They do their thing and they show up and the read instructions and are easily evaluated. And they're kind of standardized quarks. 

So I think one should see why there is a demand for that. And I think some of it, of course, are real economies of scale. But we already see that depending on the industry a degree may be a negative signal. Then you have to figure out what are these people, what's the selection process like and usually employers now look at age maybe more. They have figured out that well, you may have got a doctorate even, but if you are like now 35 or something, it's not a good sign. So they go all for the high potential. The high potentials. So they finish the studies early, not because they learn that much, it's because they're able to bring the master, the discipline of going through with something. And it's very difficult in an age of uncertainty. But that's a positive signal for employers. And I totally get that because if you work with millennials, you see, of course, this age of uncertainty has imposed on them so much that they feel lost and you can't really count on them.

If you invest money in a young person, he can be gone the next year or the next month, or he just decide, oh, there's something else I'm really interested in. You can't get the drive that you'd need. So that's why you go for the high potentials. And that's why they all compete for those high potentials and that's why you can get very high entry salaries already if you prove to be a high potential. And that's what the universities are for. You get these network effects all the best finish early, already get the stints at big corporations, at big consultancy firms early on they'll make careers and they'll be richly rewarded materially if they can make up for the lack of meaning of just being quark in that kind of dynamic, which is not really a fruitful dynamic of value creation is a kind of panicking dynamic of adopting the production structure to distortion of the distortions of the financial system. And there you gotta be fast and you gotta be able to, to handle complex issues and lots of numbers and so on, that's ratioly rewarded.

And that's basically what you go to university for. If you go to university for an education, that's a very bad idea. You, you've gotta lose a lot of time because you wanna understand things and you wanna read something. You can't understand anything of course, if you learn for an exam if you do that, you may fail out.

You, don't show the kind of drive that increases your employability and you don't get the education neither. So just time and money lost.

[00:37:11] scholarium

Jesse: Yeah, I do share your observations and I think it mostly boils down to agency or more the lack of agency. and I think that's probably starting very early on, kind of how society is structured, how school is structured, that it's instilling the opposite of agency. You are the founder and director of scholarium, a private Education and Research Institute in Vienna, as I mentioned earlier. Can you tell me the founding story?

Rahim: I originally as a nuclear physicist, spent some time in the US and I've been studying economics and sociology on the side in Vienna. And then only in the US I discovered there was an Austrian School of Economics which had survived as a living tradition. I was surprised that I hadn't heard about it in Austria.

I'd known, I've known some of the economists since Hayek as a Nobel laureate, but I had no idea there was like a living tradition and not just a footnote and the history of ideas. Then I had the luck to the, the two most important representatives of the Austrian schools were German at the time, and they were based in Europe. And they became my teachers. And yeah saw it as my role to keep the tradition alive. And then I, with my interdisciplinary background it was easy for me to see the original appeal of the Austrian school emerging out of the Salon and coffee shop network effects of Old Vienna, which was a center of belated industrialization and entrepreneurship and trade in Central Europe. So it, it was really an, an network effect on lots of trends and development at the same time. When I got interested that was a long time ago already more than 20 years, 25 years ago. There was nothing left of that tradition in Europe almost.

And, and certainly nothing in Austria. Then it was the financial crisis in 2007, eight that triggered interest in alternative view. And I had started in 2006 an institute, already as a small group of people interested in that tradition and, and having events in that. And it was then some calls on investment that really provided a financial basis to really create an institution that's it is a bit unfortunate, but of course everything is about money. So you can provide some value there and you can provide some useful advice for everyday people, entrepreneurs investors and so on. That helped giving it a bit of a basis. And since 2006, it has grown organically. we've tried a lot of different educational formats. Usually. Funded by the attendants since it's an enterprise. We don't have a big philanthropic tradition in Austria anymore, as it's the case in the US. I don't believe in the public policy kind of thing where you get lobbies to pay for it.

So it was a self-funded educational enterprise. And as such, it had the two most important things was one was a practical program for young people which we had to stop due to the pandemic. It hasn't reemerged yet because it necessitated of course, being present at a physical place. And it was a lot of work, a lot of organization, and getting the hands-on experience for young people. It was I think one of, one of the best short programs of figuring out for a young person what to do in the world, but economies of scale we're lacking. And, and then of course that's being interrupted by the pandemic. We've had a hard time restarting all that and all the preparatory work that went into it. 

And now we have a studium generale which is also scholarium of course, but is a connotation coming from the university tradition. I saying that university comes from term universitas magistrorum et scholarium, which is the community universitas is community of the teachers and the students or the scholars. And I think one of the failures of the university is become a university of the certifiers the magistri. So the scholarium is like the community of those who want to learn and who have the leisure to learn, because that's where a scholae school comes from. It's a kind of leisure. You are not under pressure by the current circumstances so much that you are able to try out new ideas, try out new ways to do something that necessitates a kind of leisure. That's why it's correlated with wealth. The higher the wealth, the higher the learning usually. It's not the other way around.

It's not first year of education and then you become rich. Usually it's particular on the largest scale it's the other way around. You are rich enough to pursue an education. And being rich doesn't mean you have a lot of money, is the kind of mentality that you are free and don't risk too much by being able to fail in something and figuring out, oh, that was a dead end. Now I spend the year, looking into something that's didn't really get me anywhere. You don't need to have a lot of money, just need to have the right mindset. But also, of course, the societal wealth to allow for that kind of figuring out where to go and what to do, and just asking questions because the same, interesting, not because they get you anywhere necessarily. So it's the study program. Studium Generale was the title of the general education at a university, which was mainly in the beginning and then in the humanistic kind of development that was behind the Renaissance is being exposed to the highest level of critical thought that meant going back to classical antiquity, but only as a measure.

So of course, it turned into a dead end. If you're just reading the dead philosophers you have to understand that it just is a kind of measuring rod. At least you gotta have the level and the spectrum of classical integrity the kind of linguistic mastering and mastering of logical thought and analysis. And then of course, you want to understand present problems and future problems. And there's a lot been thought about and tried out since antiquity, of course, but it's kind of measuring. It's a very generalized, interdisciplinary approach. It's not because you can't know now what kind of answer will be right in the future. So it's more the capacity to ask the right questions, this capacity of critical thought and critical understanding of very complex issues and problems. and it's a very generalized approach. 

The Austrian School of economics lends itself perfectly to that because it's not originally tradition of economics. It's a tradition of interdisciplinary thought. Where in the Mises Kreis which was I think one of the highest the peaks of the Austrian school was mainly about epistemology and had a lot of practitioners, a lot of artists, entrepreneurs managers and scientists from all disciplines joining in this quest understand the society they're living in, figure out where it's going. understand where knowledge come comes from. It's a kind of becoming as you are calling it which is in an end in itself. You wanna become a better person, a more knowledgeable person, a wiser person by mastering the most complex problems your society provides you with.

[00:44:39] How to inspire & facilitate young people

Jesse: Drawing from your experience at scholarium with your program for young people, what would you say are the essentials to inspire and facilitate them? Give them some direction or help them find or choose their own direction.

Rahim: Well we thought it is it was about looking at practical issues and potentially become passionate about very different ways. So we had a lot of successful people in their fields come in, successful entrepreneurs, some successful craftsmen, even we did some farming. And like everything that seems relevant to future needs as well, and where people have a kind of implicit practical know-how that you can convey. And then of course we have the reflection as well, but that was the smaller part of these tradition of critical thought, trying to understand what is working, why are people doing that?

How is it changing, how has it, has it changed from the past kind of open approach? Now the issue with that is almost everything looks fun at the superficial level. So it's, of course, it is great fun to farming once, and then you learn something of how complex it is, how much knowledge goes into it in modern farms, of course. but who tells you that it'll be fun if you do it for months and years on end, of course, only if you can become passionate about it. So that was one of the biggest challenge I'd say. And I was maybe a bit disappointed that then a program like that competes mainly against world travel nowadays is you have leisure, you have rich parents compared to the rest of the world, you're able to go every place.

You'll do a month there and a month there. And, and it's great fun if you're there. And, and I think our program was more impactful than the other ways you could spend your time. But there's not these urgencies because it's also not elevated to the status of now professional education, which our university is not.

But still it's like your parents know you're at the university, you're supposed to be there, you gotta do something. Now you, you've studied for four years. What are you gonna do with that? And there's a kind of urgency to then make a career decision, which after those kind of programs, it's not. So there's a lot to be figured out on your own. And if you approach it as an educational program, for most it means okay, I'll be told, what to do in the end. So that was a challenge still. I, I think it was a success, what we did with the program. But it was a challenge. In, how are you within the context of the market? Of course, what are you competing against?

What kind of people will be selected to go there? And you have to convince the young people and you usually have to convince their parents as well. If it's self-funded, that's an additional challenge. I believe every enterprise really should be self-funded. I don't really believe in this kind of, you get paid for attending as well. Of course, you, for the project. It's nice because you gotta select from even broader range of people. But it's not a really sound business model. I'd say it's philanthropy. And then I think there are much better ways to use philanthropy in the kind of patronage. Usually you do patronage for people already creating. great works not for those who may potentially one day. It's really a challenge. I figured out education is one of the most distorted markets around I figured out that because I, I've been teaching for a long time now, mainly universities and also private universities.

I figured out that a lot of the private offers are not any better than the public state funded offers. Because it is the question, I mean, what do you provide? And if you provide certification, that's like the service you're providing. And then of course, the students don't appreciate if you make it more difficult than it can be.

And the easiest way to get a certificate is to reproduce some knowledge that's easily evaluated, but terribly outdated because most people would be surprised how it's decided, what you're taught at university. It's basically 15 years ago, someone wrote the curriculum and went through procedures of being accepted and textbooks being written. Being a kind of standard consensus of a field that then has to be very similar at every place because we have this kind of, in Europe in particular, kind of same standards. You should be able to start your studies at any place you like the EU and and continue at another place. That, of course, only works out if they're taught teaching the same things everywhere, which doesn't make any sense. This is in Charlie Stupid now will have people teaching in English, the same kind of textbooks, the same content everywhere around Europe with this rich heritage of diverse approaches.

It doesn't make any sense, but of course, because not about knowledge, it's about a standardized certificates and there's a market demand for that. And I try to explain in a way where the market demand comes from. And I understand where it comes from. so it's a very challenging field to enter if you do it entrepreneurial. If you don't see the philanthropic project, then of course, yeah, you can waste someone's money and figure out afterwards, maybe there would've been better leverage. But it's not that crucial.

[00:50:04] How to develop one's potential

Jesse: All right, great. So I'm watching the time and I want to be respectful of the time, so let's finish this one off with a last question. If you were a high school graduate this summer, which. three steps or maybe less steps would you take to fully develop your potential?

Rahim: Yeah, I try to figure out if there was already an interest and a kind of capacity is there something you may be able to do better than other people. And even, if it doesn't seem like the most comfortable, easiest way look at someone, you can learn from some company that's already in the field. And try to make an offer to them to work there, to get a kind of the problem with it's a kind of apprenticeship approach of course, but the problem with it is that historically you had to pay or the parents paid for the apprenticeship.

So you gotta make an offer. I don't think you can go for a job right away. Of course. It's better to go for a job usually than, than go for education if you're not sure about it. If it's just like education is time spent because you haven't decided yet or haven't been able to decide yet, just as buying time in a legitimate way. So then it's better to do any job maybe. but working with people potentially as an education. And it can be startups, even though startups are highly distorted due to distorted venture capital. So I'd rather go you for established companies. They usually won't have interns or things like that.

So you gotta be very creative of demonstrating to entrepreneurs and potential employers what kind of value you can contribute. You maybe you figure out what problems is this company that's in a field that you are interested in or wanna figure out if that's something for you, what problems are they running into and try to solve those problems without being first in employee and then present your solution to those companies. I think that's be, of course it takes quite some guts to do that, but, if there's a recommendation, I'd recommend that. The kind of education I am in, which is the leisure based education. Which of course, again, with the Austrian School always has a practical link and always had a practical link. So many people are surprised that with the scholarium seeming theoretical now, and we have a very high level of, ideas and scholarship most people who spend some time, more time here end up in very practical fields.

So if it's every now and then very young people come here, spend more time, try to, learn at the institution. Most of them go into entrepreneurship and IT in the end, in coding and so on. And it's also good things they've learned here they're doing that. But in general, if you have a gut feeling of an industry already, go for the practical approach and look at education as something that you do in your leisure, and I recommend it to anyone. But the amount of leisure changes, of course, over time. So I think for most young people, if they read something on the side and the earlier you started, the better. that's why also most of our attendants nowadays it has also changed due to the pandemic are digital attendees and they do it on the site next to their job or studies. And I think that's the way to approach it. 

Most people only have full-time leisure for education when they've retired. And of course you can take mini retirements nowadays if you're successful quite early, but usually not at age 18 where you're supposed to go for education. So I think that's maybe the worst time that you can go for an education in that sense. Of course you can be lucky and you can be a full-time thing that's really education, but the risk is fairly high. Your parents will think you crazy if you go for those less, if you go for the scholarium, for example, instead of going to university, you'll have a hard time explaining that to your parents. 

That's probably okay. But if you really. no one ever challenged you to figure out on your own what's interesting in that world. And, and the usual answer I get from students at university. What are you interested in? I have no idea. I'm here to find that out. That's the worst place to be at a university. At the scholarium, maybe It's much better to find out. But then I think fairly soon you'll be pushed out of here once you've figured out something. 

If you don't know what you want to do, don't go for it. If you know what university is and what it provides, and you can say yes to that then go for it.

In particular in natural sciences where the network effects include access to labs, access to companies that won't hire you if you don't have that kind of signal that you've been, because the equipment is so expensive. So you can't have anyone get, have kind of filter of people who don't destroy everything once because they're undisciplined, because they can't follow instructions and so on then go for it.

So I'm not dogmatic. It's just important. It's part of education in the original sense to really figure out what's going on. Try to understand that and get a clue about why things, even things are prevailing that you think are stupid. Why is this still going on? And find out the reasons for that.

Jesse: Perfect. That's a great note to finish on. Rahim, thank you so much for coming on the podcast today. I thoroughly enjoyed our conversation. For those that are interested in the scholarium, it's in German, so go check it out at scholarium.at.

Rahim: Thank you. Thanks for your conversation.