VIDEO: Be Suspicious of the Stories We Tell Ourselves by Scott Sumner

People like to think in terms of stories:

It’s a movie classic. The lovers are out for a walk when a villain dashes out of his house and starts fighting the man. The woman takes refuge in the house; having seen off his rival, the villain re-enters and chases after her. Yet the hero returns, pulling open the door so that the heroine can escape. The villain chases the lovers, until they finally flee, and he smashes his own home apart in fury.

Who are these characters? None of them ever made another movie, and you won’t find them in any directories of famous actors. They are, in order of appearance, a large triangle (villain), a small triangle (hero), and a circle (heroine). The animated film was made in 1944 by the psychologists Fritz Heider and Marianne Simmel of Smith College in Massachusetts, whose paper ‘An Experimental Study of Apparent Behaviour’ is a milestone in understanding the human impulse to construct narratives.

At one level, their movie is just a series of geometric shapes moving around on a white background. It appears to lack any formal elements of story at all. Yet study groups (of undergraduate women) who saw the film in 1944 were remarkably consistent in their judgment of what it was ‘about’. Thirty-five out of 36 decided that the big triangle was a mean, irritable bully, and half identified the small triangle as valiant and spirited.

That’s a striking result: near unanimity on the emotional journey of a bunch of shapes. Then again, how surprising were these findings? Abstract animation existed as early as the 1920s, and experimental animators such as the Hungarian Jules Engel had already shown in sequences such as the Mushroom Dance in Walt Disney’s Fantasia (1940) that very little visual information is needed to create characters and story. So perhaps research was just catching up with what the empiricism of art had already discovered.

I’ve found that stories get in the way of logical thinking in economics. When I try to explain that a tight money policy led to the recession of 2008, I have to contend with the fact that people have already interpreted the events of 2008 through a very different set of stories, ones much more consistent with Hollywood. (Indeed there is a new example in the theaters right now.)

People don’t like my claim that the Fed needed a more expansionary policy because:

  1. It would “bail out” foolish borrowers (or foolish lenders?)
  2. I would simply be “papering over” deeper structural problems (or perhaps the failures of the Obama administration.)
  3. It would be taking the “easy way out”, not making the hard decision to endure a period of austerity.
  4. “There’s a price to be paid” for the reckless excesses of the housing bubble.
  5. It would just be “kicking the can” down the road.

These metaphors do more to obfuscate than enlighten, but they appeal to our sense that society can be understood through stories. Trump and Sanders have cleverly exploited this human weakness, in their current campaigns.

At times it seems like the press is so enamored with stories that they don’t even need any facts. Consider this assertion in a recent WSJ “story”:

After substantially revaluing the yuan over a decade in response to protectionist threats, China now finds the strong dollar has left its currency grossly uncompetitive with the euro, the yen and all the rest.

The alarming recent devaluation of the yuan, while a sensible response for China, is creating strains throughout emerging economies and deep uncertainty through all global supply chains.

When you look at the numbers, this comment literally makes no sense. The Chinese yuan has been very strong in the last few years, and has strongly appreciated against the other emerging market currencies. But it seems to fit a deeply held narrative, which people cling to because it makes a good story. China’s a “big triangle,” trampling all over the “smaller triangles,” like Brazil and Indonesia and Vietnam.

Banking is another example. In the recent crisis, the biggest problems were in the small and mid-sized banks. The FDIC (i.e., we taxpayers) spent tens of billions of dollars paying off the depositors of the smaller banks, who made lots of reckless subprime mortgages. But it makes a better story to blame the biggest banks, so that’s become the standard narrative.

Then there was the orgy of predatory borrowing: people lying about their incomes to get mortgages. But that doesn’t make a good story, so let’s make it “predatory lending.” Sometimes their are competing stories, as when the right claims the police are a “thin blue line” protecting civilization from barbarism, whereas the left sees the police as powerful bullies, picking on the most downtrodden members of society.

Bernie Sanders sees a financial system where Grandma (Jimmy Stewart banks) was replaced by the wolf (Goldman Sachs).

In my view, Alice in Wonderland best captures the counterintuitive nature of monetary economics.

PS: I’m sure I stole part of this from the very first TED talk I ever saw, by Tyler Cowen:

Cross-posted from Econlog.

Scott SumnerScott Sumner

Scott B. Sumner is the director of the Program on Monetary Policy at the Mercatus Center and a professor at Bentley University. He blogs at the Money Illusion and Econlog.

Ideology, hidden obstacle to reason

I was recently surprised to note that a prominent British libertarian had sent out a bulk email suggesting that leaving the EU would not be much of a boon to the UK since such would not necessarily provide more “liberty” for Brits. Thus, he contends that UK “leaders” have the same totalitarian mindset as the EU “leaders” and the Brexit (exit of the UK from the EU) would not help matters. He mentioned that the UK government has at times exceeded even the legal limitations on power provided by the authoritarian EU and that offended Brits may occasionally benefit from European Court decisions that overturn excesses of UK authorities and judges. Since the European Court is an essential component of the EU, leaving the EU would therefore supposedly remove this supposed benefit.

This email did not contain the words Muslim or Islam. Yet the Islamization of the UK is one of the main concerns of those who support the Brexit.

I had tried to show my UK reader list how simply rolling over and playing dead, ie, not voting in the upcoming referendum or voting YES to stay in the EU was not an option, for one thing because it sends a signal to the EU top rank that the people of Europe have finally given up and are willing to acquiesce to total tyranny.

An article in The Atlantic reveals one very important reason why EU membership is a bad deal for the UK and all other industrial members, to whit:

“EU countries are legally barred from limiting immigration from other member states, a decision that has had a great effect on migration patterns on the continent.”

Now it is certainly true that the usurpers who have seized the internal UK reins of power (essentially Parliament and Downing Street) by deceit are, like the EU bureaucrats, also inclined to flood the UK with still more Muslims, a rapidly growing group that receives an inordinately high percentage of social assistance or welfare (as reported here and here) and which in polls is found to favor sharia law and jihad.

In 2014, Daniel Greenfield, discussing a recent poll in London, wrote:

“There are about 1 million Muslim settlers in London where they make up 12 percent of the population. These figures suggest that the vast majority of them, perhaps as high as 80 percent, support ISIS.”

A NO vote on the referendum would be a signal to the Brussels oligarchs that the people are no longer the lemmings they once were and will not take rampant Islamisation lying down.

It should not surprise anyone that libertarians tend to be more liberal on the issue of immigration. Their ideology teaches essentially that all humans must have the maximum freedom possible and is refractory to considerations of reality. The freedom to cross someone else’s border and gain access to another country’s welfare rolls could be seen as the ultimate in libertarian policy. US libertarians counter the fears of ordinary mortals by contending that welfare would be forbidden in a libertarian society, but their immigration positions ignore the fact that welfare is part of the current US reality, over which libertarians have little or no control, and the current socialist context is the one in which they propose to implement their immigration positions. Like their British counterparts, they therefore generally see even illegal immigration as either a non-threat or a boon. They believe that they could soon operate in a perfect world with no impediments whatsoever to individual freedom.

The trouble with this thinking — in case you are one of the few who need this pointed out to you — is that there really are two kinds of freedom, or liberty (liberté) as the French revolutionaries, ideological second cousins to today’s libertarians, called it.

ONE kind is individual freedom.

The SECOND is more subtle and easier to overlook, and that is, national sovereignty, ie, the freedom of a nation to chart and navigate its own course without interference from other nations or entities.

Today’s libertarians almost never talk about the second kind of liberty because to them, national sovereignty is an obstacle to individual liberty at all costs, which is the non-negotiable centerpiece of their creed. And non-negotiable here means reality be damned.

Ironically, however, this neglect of national sovereignty actually severely curbs individual liberty as well, at least in the real world down here beneath the rarefied stratosphere in which libertarianism thrives.

For example, if 80% of an indigenous population desires freedom of choice in its national lawmaking, then a rigid libertarian policy of legal residency for all and sundry may well lead to veritable inundation of this indigenous population with hordes of people who tolerate and even welcome totalitarianism. After all, to them, totalitarianism is their free choice. Once these hordes reach a critical percentage of the population, the tipping point will be passed and that one-time majority will now be subjected to the will of the newly arrived hordes. And here’s the real kicker: the libertarians who persuaded their unsuspecting countrymen to accept these hordes will now also be enslaved along with the rest. So much for liberté.

Worst of all, the above is not by any means just a hypothetical example. There is a projection that the UK will become a Muslim state by 2050, and while this has been poo-pooed by the Establishment media, The Commentator writes:

“This projection is based on reasonably good data. Between 2004 and 2008, the Muslim population of the UK grew at an annual rate of 6.7 percent, making Muslims 4 percent of the population in 2008. Extrapolating from those figures would mean that the Muslim population in 2020 would be 8 percent, 15 percent in 2030, 28 percent in 2040 and finally, in 2050, the Muslim population of the UK would exceed 50 percent of the total population.”

Thus the rigid and doctrinaire libertarianism with liberty as its Grail, is from the outset on a course of ineluctable self-destruction.

History presents us with a parade of ideologies, all of which have failed one after the other. Yet some flaw in the character of Homo sapiens leads us invariably to put aside our perception of reality, our built-in logic and reason, and even our sense of self-preservation in favor of untested ideologies propped up by high-sounding rhetoric. Somehow, our species never seems to notice that, precisely because ideologies supersede and subtly supplant reason and the perception of reality, all ideologies will eventually fail, always, just as they always have in the past.

The question is: Can we ever come to understand this simple fact and overcome this flaw in our DNA?

Rules of Logic, Reason and Debate for Radicals

Comrades! Perhaps all of us, while debating the enemy, have been subjected to accusations of logical fallacies. Ignore such accusations. The non-concept of “logical fallacy” is a tool of capitalist propaganda, designed to expose us to a retrograde pre-twenty-first century mindset, which may cause the weakest of us to question their allegiance to Progress. But that is the enemy’s mindset; it no longer applies to the new era. Progress calls us to destroy the straightjacket of linear thinking.

There are no absolutes. The outdated scientific methods of hard logic and cold reason have now been replaced with soft logic and cozy reason, especially when dealing in political science.

Here are the Rules of Logic, Reason and Debate for Radicals for the 21st century. Learn them, know them, use them. You have nothing to lose but your logical chains.

Radical Political Science Terms

Seductive Logic – If the parts of the premise are true, or true enough, the conclusion is proved.

Premise: Hitler would hate President Obama and have him liquidated. Tea Partiers hate big government.
Conclusion: Tea Partiers are Fascists plotting a coup against President Obama.

As you can see, statement one is true, as is statement two. So the conclusion, statement three, is proven.

Preductive Logic – If the conclusion is true, the premises are proven.

Conclusion: Stimulus hasn’t worked.
Premise: George Bush’s economic policies were stupid. George Bush is to blame for everything.

Similar to seductive logic, as statement one is true, statements two and three are proven.

Unductive Logic – If the evidence doesn’t support the conclusion, the evidence is in error.

Conclusion: Man-made CO2 causes global warming.
Evidence: From 1950 to 1975 temperatures fell as man-made CO2 increased. therefore, the temperature data must be wrong and altered accordingly.

This one is particularly useful as it makes disproving any assertion on your part impossible. Contrary evidence is simply wrong and those using it are liars, deniers, and anti-reality based imbeciles.

Primary Reason – Something is true when you have the right reason, or motives, to believe it, not the right reasoning. In other words, if it just feels right, that is reason enough. (Though evidence is unnecessary, if desired such can be obtained with the rules of logic above. i.e, can be fabricated.)

Secondary Reason – When those who share your Primary Reason agree with your assertion, it is therefore well-reasoned. Which in turn makes those who agree with you reasonable individuals, and those who disagree intolerant imbeciles.

Radical Political Science Tactics

Any statement prefaced with “obviously,” “no doubt,” or “everyone knows” is accepted as proven. Nothing more need be said nor evidence produced. No doubt everyone knows this is obviously true.

Exclamation marks and all caps add weight of truth to any statement. This simple method is ABSOLUTELY, POSITIVELY TRUE!!!!

Should your adversary press on despite these logically reasoned assertions, any of the following will put an end to him and thus his argument.

Method one: Call them stupid. This is almost fool-proof because there is no good defense. How do they show otherwise? Recite the times tables, name the state capitals, produce Mensa membership cards? After all, they don’t agree with you or believe what you do, therefore, ipso facto, QED, they must be stupid.

This method has worked for years. Think of Reagan, Quayle, Bush, Palin.

Method two: Call them racist. This is just as effective and is also virtually impossible to defend. How can they prove they’re not? If they aren’t racist there will only be an absence of evidence that they are. Let them try to produce the absence of evidence. They can’t do it. Therefore, ipso facto, QED, they must be racist.

This method has worked for years. Think of… everyone but us.

Method three: Call them heartless, evil, intolerant, bigoted… Are you beginning to get the idea? Call them anything you like, no need to provide any evidence. Yet it still puts them on the spot, requiring them to prove a negative, which is impossible. Once a label sticks they’re defenseless.

After this is done, you can defeat any assertion or proposal they make no matter how well-argued or thought-out on their part. After all, why should anyone listen to a stupid and heartless racist bigot?

Against socialized medicine? Heartless! Against Cap and trade? Stupid!! Against President Obama’s multi-trillion dollar stimulus? RACIST!!! You win EVERY TIME. And the more exclamation marks the better!!!!!

You might think these simple rules are a little too simple, or too simplistic, or too simple-minded even, but they work. After all, look who occupies the White House or owns the media, academia, and entertainment establishments.

EDITORS NOTE: This column originally appeared in The Peoples Cube.