Acharya Prashant explains that humans often categorize things as good or bad based on value judgments inherited from their environment, such as family, religion, and country. He suggests that instead of asking whether something is right or wrong, one should investigate the source of these labels and ask, 'What is it?' He emphasizes that identities are almost always given by others and that living through these identities prevents a person from experiencing the freshness of the present moment. When one operates out of memory and identification, life becomes closed, and responses become stale and repetitive, leading to a loss of the opportunity to truly live.