30 July 2020 – Over the last few days, I’ve engaged in a social-media exchange about events in Portland, OR involving protest demonstrations there, and camo-clad so-called “Federal agents.” So, it seems timely to point out why we have a First Amendment to our Constitution, and remind readers that the American Revolution started with a protest demonstration—the Boston Tea Party. Lest we forget, the Portland demonstrations were organized (if that word applies) by the Black Lives Matter movement to protest police brutality, especially the alleged murder of George Floyd by Minneapolis, MN police officer Derek Chauvin.
The social-media exchange I mentioned above devolved into a dispute about where protest demonstrations fit into the workings of a democracy. My position, which I get to explain in this essay because I pay for this space in the World Wide Web to post whatever I darn well please, is that protest demonstrations are a necessary part of a properly functioning democratic society. My opponent (who will remain unnamed, as will the social-media platform that carried the exchange) took the position that such demonstrations were not. Effective or not, he (There, I’ve narrowed his identity down to 49.1% of the U.S. population!) claimed that protest demonstrations were not part of the formal functioning of government, and were, thus, illegitimate. In rebuttal, I pointed him to the First Amendment, which guarantees “the right of the people peaceably to assemble, and to petition the Government for a redress of grievances,” and to the history of the Boston Tea Party that effectively began the American Revolution.
In this essay, I’m not going to recite the history of the Boston Tea Party, which you can read for yourself by following the link above. It’s a pretty good account that agrees with the mass of American History texts I’ve read over the years. (It’s important to point that out these days, as an example of how we verify that something is not fake news.) Instead, I hope to point out parallels between Boston Tea Party events and public protest demonstrations in the 21st century.
The Revolutionary War in America is generally acknowledged to have started with what Ralph Waldo Emerson called “Shot Heard Round The World,” in Lexington, MA in 1775. The actual American Revolution, as an historical movement, began years earlier, however. A protest organization named “The Sons of Liberty,” which had by then been active for over a decade, was responsible for mounting a force of 100 protesters, who boarded the ships Dartmouth, Beaver, and Eleanor docked at Griffin’s Wharf in Boston, MA disguised as Native Americans. The Sons of Liberty, of course, are an exact parallel to today’s Black Lives Matter movement.
Once aboard the ships, the protesters dumped the ships’ cargoes of tea, belonging to the East India Trading Company and valued at $1 million today, into Boston Harbor. After dumping the tea, the protesters cleaned up the decks of the American-owned ships! This represents, of course, an ideal example of how a peaceful protest as envisioned by the First Amendment should be carried out
Protests this Summer in the streets of Portland, Minneapolis, and other cities have been far larger, involving hundreds of thousands of protesters. They have also sometimes devolved into violence. However, it should be noted that the 2020 demonstrations were in response to government actions (i.e., police brutality) that ended with loss of life, rather than just a tax on tea. It is reasonable to expect folks to get a bit more worked up after suffering homicidal attacks perpetrated by government agents (which policemen are)!
That said, the modern protest demonstrations have been predominantly peaceful. Most violence has occurred in situations where demonstrators have been met with armed resistance. The same thing happened in the American Revolution. Five years before the Boston Tea Party, British soldiers shot at demonstrators protesting the presence of armed troops in city streets, injuring six protesters and killing five. Called “The Boston Massacre, the moral of that story is that the surest way to make a demonstration turn violent is to send in armed troops.
To summarize my position on protest demonstrations’ place in a democracy, when government in a democratic society fails to function properly for any reason, the people have the duty to take to the streets in protest. It is every bit as important as having a free press, which is generally acknowledged as a requirement for proper functioning of a democracy. Far from being some kind of extra-legal activity, both are specifically written into the U.S. Constitution by the First Amendment. You can’t get more legal than that!
9 February 2020 – I’m about half way through a course on global economics at Keiser University, and one of this week’s assigned readings is a 2012 article by Argentine-American legal scholar Fernando R. Tesón discussing his views on the ethical basis of free trade. I was particularly struck by the wording of his conclusion section:
More often, trade barriers allow governments to transfer resources in favor of rent-seekers and other political parasites. … Developed countries deserve scorn for not opening their markets to products made by the world’s poor by protecting their inefficient industries, while ruling elites in developing nations deserve scorn for allowing bad institutions, including misguided protectionism. (p. 126)
This was unusually blunt in a scholarly article! Tesón, however, did a good job of making his case. Citing David Ricardo’s and Hecksher-Olin’s theories of comparative-advantage, He provided a well-thought-out, if impassioned, argument that trade barriers are misguided at best, and at worst unconscionable. Among the practices he heaped scorn upon are “tariffs, import licenses, export licenses, import quotas, subsidies [emphasis added], government procurement rules, sanitary rules, voluntary export restraints, local content requirements, national security requirements, and embargoes” (Tesón, 2012, p. 126).
Generally, that was a defensible list. All of those practices tend to slew market-based purchase decisions toward goods produced by firms lacking true competitive advantage. The case against subsidies, however, is not so simple. There are various reasons for creating subsidies and ways of applying them. Not all are counterproductive from an economic-development standpoint.
Stephen Redding, in a 1999 article entitled “Dynamic comparative advantage and the welfare effects of trade” pointed out that comparative advantage is actually a dynamic thing. That is, it varies with time, and producers can, through appropriate investments, artificially create comparative advantages that are every bit as real as the comparative-advantage endowments that the earlier theorists described.
The original Ricardian model envisioned countries endowed with innate comparative advantages for producing some good(s) relative to producing the same good(s) in another country (Kang, 2018). Redding pointed out that a country’s productivity for manufacturing some good increases with time (experience) spent producing it. He posited that if the country’s competitors’ comparative advantage for producing that good is not great, it may be possible for the country to, through investing in or subsidizing development of an improved production process, overtake its competitors. In this way, Redding asserted, the relative competitive advantage/disadvantage situation may be reversed.
The counterargument to subsidizing such a project is that the subsidy has an opportunity cost in that the subsidy uses funds exacted from the country’s taxpayers to benefit one or more selected firms. Tesón’s position is that this would be an inappropriate use of taxpayer funds to benefit only a small subset of the country’s citizens. This is ipso facto unfair, hence his stigmatizing such a decision. The reductio ad absurdum rejoinder to this argument is that it leaves government powerless to effect economic development.
In a democracy, government decisions are assumed to have tacit acceptance by the whole population. Thus, an action by the government to support a small group developing a comparative advantage through a subsidy must be assumed to have a positive externality for the whole population.
If the government is an autocracy or oligarchy, there is no legitimate claim to fairness for any of its decisions, anyway, so the unfairness argument is moot.
There are thus conditions under which subsidizing firms or industries to develop enhanced productive capacity for some good make economic sense. Those conditions are as follows:
Competitors’ comparative advantage is small enough that it can be overcome with a reasonable subsidy over a reasonable length of time;
There is reason to expect the country will be able to maintain its improved comparative advantage situation after subsidies have been removed;
Achieving a comparative advantage for production of that good will have ripple effects that will generate comparative advantage throughout the economy.
If and only if all of these conditions obtain is it reasonable to create a temporary subsidy.
An example of an inappropriate subsidy is that by the European Union for Airbus, which began with the company’s launch in 1970 to create an EU-based large civil aircraft (LCA) industry to compete with the U.S.-based Boeing Aircraft Company and continues today (European Commission, 6 October 2004). While this history indicates that item 1 on the list above was fulfilled (Airbus became an effective competitor for Boeing in the 1980s), and item 3 certainly was fulfilled, the fact that the subsidies continue today, half a century later, indicates that item 2 was not fulfilled.
On the other hand, the myriad salutary effects that came out of the Polaris missile program of the mid-20th Century shows that all three conditions were valid for that government-subsidized project (Engwall, 2012).
Engwall, M. (2012). PERT, Polaris, and the Realities of Project Execution. International Journal of Managing Projects in Business,.5(4), 595-616.
European Commission. (6 October 2004). EU – US Agreement on Large Civil Aircraft 1992: key facts and figures. (MEMO/04/232). Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/MEMO_04_232
Kang, M. (2018). Comparative advantage and strategic specialization. Review of International Economics, 26(1), 1–19.
Redding, S. (1999). Dynamic comparative advantage and the welfare effects of trade. Oxford Economic Papers, 51, 15-39.
Tesón, F.,R. (2012). Why free trade is required by justice. Social Philosophy & Policy, 29(1), 126-153.
14 December 2019 – The following essay is a verbatim copy of one I recently posted to a Global Business discussion site in response to a link emailed to me by Dr. Tiffany Jordan of Keiser University.
Thank you, TJ, for sending along a link to Steve Sjuggerud’s documentary on Chinese development. History teaches us that 5,000 years ago, China was one of two (maybe three, if you count Central America) population centers (the other was Egypt) where folks independently invented civilization. You can’t go far wrong by betting on people that smart!
The second factor in this story is that one out of six human beings on this planet is Chinese. With that many really smart people let loose to work together, they’re bound to push the limits of economic development. The last time that happened anywhere was in the 18th century when steam technology was let loose among the newly liberated populations of England, North America, and Europe. The resulting Industrial Revolution was a similar game changer. People from the countryside flocked to the cities to make the most of revolutionary technology, and made vast piles of wealth in the process. Sound familiar?
So, what could go wrong? The known preference of the Chinese people for long power distance is what could go wrong (Hofstede, 1993). Since Qin Shi Huang patched together the Chinese Empire in 221 BCE (Shi, 2014), the country has had a nearly unbroken record of authoritarian rule, which is why, after all this time, they’re still stuck with “emerging nation” status. The latest period of lax central control started in the mid-1970s, when Mao Zedong lost control of his Marxist People’s Republic (PRC), and good things started happening in China.
China is home to two philosophies at opposing ends of the power-distance spectrum: Taoist egalitarianism and Confucian formality (Carnogurská, 2014). Taoists insist (among other things) on individual self-rule. Confucionists insist on respect for authority (Zhou, 2011). You can guess which philosophy Xi Jinping’s power-grabbing PRC favors! It is no accident that the slowing of China’s economic expansion immediately followed Xi’s re-institution of central authority. The stark contrast can be seen in the difference between the miracle on the Chinese mainland and the even-bigger miracle that has been playing out in Hong Kong.
I’m always ambivalent, however, about investing in the Chinese “miracle.” Back in the early 1990s I was asked to duplicate my success helping expand an American electronics publication into Europe by doing the same thing in China. With images from Tiananmen-Square events fresh in my mind, I declined. Unlike my corporate bosses, I just didn’t trust the PRC leadership to play nice. That corporation is now out of the publishing business! I’d done the same thing in the 1970s when I declined the last Shah of Iran’s invitation to take our Boston-based Physics Department to Tehran University–just before theirrevolution broke out. (Whew!)
China is not Iran, and Xi Jinping is not Mohammad Reza Shah. Pres. Xi likes leading the fastest-growing economy on the planet, but is facing his big test with current events in Hong Kong. Will he figure a way to defuse that uprising, or will his unenlightened cronies in Beijing push him into a disasterous reprise of Tiananmen-Square? I’m not jumping onto the Chinese bandwagon until I see the result.
Carnogurská, M. (2014). Xunzi, an ingeniously critical synthesist of Chinese philosophy of the pre-Qin period. Journal of Sino – Western Communications, 6(1), 3-25.
Hofstede, G. (1993). Cultural constraints in management theories. Executive, 7(1), 81–94.
Shi, J. (2014). Incorporating all for one: The first emperor’s tomb mound. Early China, 37(1), 359-391.
Zhou, H. (2011). Confucianism and the legalism: A model of the national strategy of governance in ancient China. Frontiers of Economics in China, 6(4), 616-637.
4 September 2019 – I’m in the early stages of a long-term research project for my Doctor of Business Administration (DBA) degree. Hopefully, this research will provide me with a dissertation project, but I don’t have to decide that for about a year. And, in the chaotic Universe in which we live a lot can, and will, happen in a year.
I might even learn something!
And, after learning something, I might end up changing the direction of my research. Then again, I might not. To again (as I did last week ) quote Winnie the Pooh: “You never can tell with bees!”
No, this is not an appropriate forum for publishing academic research results. For that we need peer-reviewed scholarly journals. There are lots of them out there, and I plan on using them. Actually, if I’m gonna get the degree, I’m gonna have to use them!
This is, however, an appropriate forum for summarizing some of my research results for a wider audience, who might just have some passing interest in them. The questions I’m asking affect a whole lot of people. In fact, I dare say that they affect almost everyone. They certainly can affect everyone’s thinking as they approach teamwork at home and at work, as well as how they consider political candidates asking for their votes.
For example, a little over a year from now, you’re going to have the opportunity to vote for who you want running the United States Government’s Executive Branch as well as a few of the people you’ll hire (or re-hire) to run the Legislative Branch. Altogether, those guys form a fairly important decision-making team. A lot of folks have voiced disapprobation with how the people we’ve hired in the past have been doing those jobs. My research has implications for what questions you ask of the bozos who are going to be asking for your votes in the 2020 elections.
One of the likely candidates for President has shown in words and deeds over the past two years (actually over the past few decades, if you care to look that far into his past) that he likes to make decisions all by his lonesome. In other words, he likes to have a decision team numbering exactly one member: himself.
Those who have paid attention to this column (specifically the posting of 17 July) can easily compute the diversity score for a team like that. It’s exactly zero.
When looking at candidates for the Legislative Branch, you’ll likely encounter candidates who’re excessively proud to promise that they’ll consult that Presidential candidate’s whims regarding anything, and support whatever he tells them he wants. Folks who paid attention to that 17 July posting will recognize that attitude as one of the toxic group-dynamics phenomena that destroy a decision team’s diversity score. If we elect too many of them to Congress and we vote Bozo #1 back into the Presidency, we’ll end up with another four years of the effective diversity of the U.S. Government decision team being close to or exactly equal to zero.
Preliminary results from my research – looking at results published by other folks asking what diversity or lack thereof does to the results of projects they make decisions for – indicates that decision teams with zero effective diversity are dumber than a box of rocks. Nobody’s done the research needed to make that statement look anything like Universal Truth, but several researchers have looked at outcomes of a lot of projects. They’ve all found that more diverse teams do better.
Anyway, what this research project is all about is studying the effect of team-member diversity on decision-team success. For that to make sense, it’s important to define two things: diversity and success. Even more important is to make them measurable.
I’ve already posted about how to make both diversity and success measurable. On 17 July I posted a summary of how to quantify diversity. On 7 August I posted a summary of my research (so far) into quantifying project success as well. This week I’m posting a summary of how I plan to put it all together and finally get some answers about how diversity really affects project-development teams.
What I’m hoping to do with this research is to validate three hypotheses. The main hypothesis is that diversity (as measured by the Gini-Simpson index outlined in the 17 July posting) correlates positively with project success (as measured by the critical success index outlined in the 7 August posting). A secondary hypothesis is that four toxic group-dynamic phenomena reduce a team’s ability to maximize project success. A third hypothesis is that there are additional unknown or unknowable factors that affect project success. The ultimate goal of this research is to estimate the relative importance of these factors as determinants of project success.
Understanding the methodology I plan to use begins with a description of the information flows within an archetypal development project. I then plan on conducting an online survey to gather data on real world projects in order to test the hypothesis that it is possible to determine a mathematical function that describes the relationship between diversity and project success, and to elucidate the shape of such a function if it exists. Finally, the data can help gauge the importance of group dynamics to team-decision quality.
The figure above schematically shows the information flows through a development project. External factors determine project attributes. Personal attributes, such as race, gender, and age combine with professional attributes, such as technical discipline (e.g., electronics or mechanical engineering) and work experience to determine raw team diversity. Those attributes combine with group dynamics to produce an effective team diversity. Effective diversity affects both project planning and project execution. Additional inputs from stakeholder goals and goals of the sponsoring enterprise also affect the project plans. Those plans, executed by the team, determine the results of project execution.
The proposed research will gather empirical data through an online survey of experienced project managers. Following the example of researchers van Riel, Semeijn, Hammedi, & Henseler (2011), I plan to invite members of the Project Management Institute (PMI) to complete an online survey form. Participants will be asked to provide information about two projects that they have been involved with in the past – one they consider to be successful and one that they consider less successful. This is to ensure that data collected includes a range of project outcomes.
There will be four parts to the survey. The first part will ask about the respondent and the organization sponsoring the project. The second will ask about the project team and especially probe the various dimensions of team diversity. The third will ask about goals expressed for the project both by stakeholders and the organization, and how well those goals were met. Finally, respondents will provide information about group dynamics that played out during project team meetings. Questions will be asked in a form similar to that used by van Riel, Semeijn, Hammedi, & Henseler (2011): Respondents will rate their agreement with statements on a five- or seven-step Likert scale.
The portions of the survey that will be of most importance will be the second and third parts. Those will provide data that can be aggregated into diversity and success indices. While privacy concerns will make masking identities of individuals, companies and projects important, it will be critical to preserve links between individual projects and data describing those project results.
This will allow creating a two-dimensional scatter plot with indices of team diversity and project success as independent and dependent variables respectively. Regression analysis of the scatter plot will reveal to what extent the data bear out the hypothesis that team diversity positively correlates with project success. Assuming this hypothesis is correct, analysis of deviations from the regression curve (n-way ANOVA) will reveal the importance of different group dynamics effects in reducing the quality of team decision making. Finally, I’ll need to do a residual analysis to gauge the importance of unknown factors and stochastic noise in the data.
Altogether this research will validate the three hypotheses listed above. It will also provide a standard methodology for researchers who wish to replicate the work in order to verify or extend it. Of course, validating the link between team diversity and decision-making success has broad implications for designing organizations for best performance in all arenas of human endeavor.
de Rond, M., & Miller, A. N. (2005). Publish or perish: Bane or boon of academic life? Journal of Management Inquiry, 14(4), 321-329.
van Riel, A., Semeijn, J., Hammedi, W., & Henseler, J. (2011). Technology-based service proposal screening and decision-making effectiveness. Management Decision, 49(5), 762-783.
17 July 2019 – It’s come to my attention that a whole lot of people don’t know how to calculate a diversity score, or even that such a thing exists! How can there be so much discussion of diversity and so little understanding of what the word means? In this post I hope to give you a peek behind the curtain, and maybe shed some light on what diversity actually is and how it is measured.
This topic is of particular interest to me at present because momentum is building to make a study of diversity in business-decision making the subject of my doctoral dissertation in Business Administration. Specifically, I’m looking at how decision-making teams (such as boards of directors) can benefit from membership diversity, and what can go wrong.
The dictionary definition of diversity is: “the condition of having or being composed of differing elements.”
So, before we can quantify the diversity of any group, we’ve got to identify what makes different elements different. This, by the way, is all basic set theory. In different contexts what we mean by “different” may vary. When we’re talking about group decision making in a business context, it gets pretty complicated.
A group may be subdivided, or “stratified” along various dimensions. For example, a team of ten people sitting around a table trying to figure out what to do next about, say, a new product could be subdivided in various ways. One way to stratify such a group is by age. You’d have so many individuals in their 20’s, so many might be in their 30’s, and so forth up to the oldest group being aged 50 or more. Another (perhaps more useful) way to subdivide them is by specialty. There may be so many software engineers, so many hardware engineers, so many marketers, and so forth. These days stratifying teams by gender, ethnicity, educational level or political persuasion could be important. What counts as diversity depends on what the team is trying to decide.
The moral of this story is that a team might score high in diversity along one dimension and very poorly along another. I’m not going to say any more about diversity’s multidimensional nature in this essay, however. We have other fish to fry today.
For now, let’s assume a one-dimensional diversity index. What we pick for a dimension makes little difference to the mathematics we use. Let’s just imagine a medium-sized group of, say, ten individuals and stratify them according to the color of tee-shirts they happen to be wearing at the moment.
What the color of their tee-shirts could possibly mean for the group’s decisions about new-product development I can’t imagine, and probably wouldn’t care anyway. It does, however, give us a way to stratify the sample. Let’s say their shirt colors fall out as in Table 1. So, we’ve got five categories of team members stratified by tee-shirt color.
NOTE: The next bit is mathematically rigorous enough to give most people nosebleeds. You can skip over it if you want to, as I’m going to follow it with a more useful quick-and-dirty estimation method.
The Gini–Simpson diversity index, which I consider to be the most appropriate for evaluating diversity of decision-making teams, has a range of zero to one, with zero being “everybody’s the same” and one being “everybody’s different.” We start by asking: “What is the probability that two members picked at random have the same color tee shirt?”
If you’ve taken my statistical analysis course, you’ll likely loathe remembering that the probability of picking two things from a stratified data set, and having them both fall into the same category is:
Where λ is the probability we want, N is the number of categories (in this case 5), and P is the probability that, given the first pick falling into a certain category (i) the second pick will be in the same category. The superscript 2 just indicates that we’re taking members two at a time. Basically P is the number of members in category i divided by the total number of members in all categories. Thus, if the first pick has a blue tee-shirt, then P is 3/10 = 0.3.
This probability is high when diversity is low, and low when diversity is high. The Gini-Simpson index makes more intuitive sense by simply subtracting that probability from unity (1.0) to get something that is low when diversity is low, and high when diversity is high.
NOTE: Here’s where we stop with the fancy math.
Veteran business managers (at least those not suffering from pathological levels of OCD) realize that the vast majority of business decisions – in fact most decisions in general – are not made after extensive detailed mathematical analysis like what I presented in the previous section. In fact, humans have an amazing capacity for making rapid decisions based on what’s called “fuzzy logic.”
Fuzzy logic recognizes that in many situations, precise details may be difficult or impossible to obtain, and may not make a significant difference to the decision outcome, anyway. For example, deciding whether to step out to cross a street could be based on calculations using precise measurements of an oncoming car’s speed, distance, braking capacity, and the probability that the driver will detect your presence in time to apply the brakes to avoid hitting you.
But, it’s usually not.
If we had to make the decision by the detailed mathematical analysis of physical measurements, we’d hardly ever get across the street. We can’t judge speed or distance accurately enough, and have no idea whether the driver is paying attention. We don’t, in general, make these measurements, then apply detailed calculations using Gallilean Transformations to decide if now is a safe time to cross.
No, we have, with experience over time, developed a “gut feel” for whether it’s safe. We use fuzzy categories of “far” and “near,” and “slow” or “fast.” Even the terms “safe” and “unsafe” have imprecise meanings, gradually shifting from one to the other as conditions change. For example “safe to cross” means something quite different on a dry, sunny day in summertime, than when the pavement has a slippery sheen of ice.
Group decision making has a similar fuzzy component. We know that the decision team we’ve got is the decision team we’re going to use. It makes no difference whether it’s diversity score is 4.9 or 5.2, what we’ve got is what we’re going to use. Maybe we could make a half-percent improvement in the odds of making the optimal decision by spending six months recruiting and training a blind Hispanic woman with an MBA to join the team, but are we going to do it? Nope!
We’ll take our chances with the possibly sub-optimal decision made by the team we already have in place.
Hopefully we’re not trying to work out laws affecting 175 million American women with a team consisting of 500 old white guys, but, historically, that’s the team we’ve had. No wonder we’ve got so many sub-optimal laws!
Anyway, we don’t usually need to do the detailed Gini-Simpson Diversity Index calculation to guesstimate how diverse our decision committee is. Let’s look at some examples whose diversity indexes are easy to calculate. That will help us develop a “gut feel” for diversity that’ll be useful in most situations.
So, let’s assume we look around our conference room and see six identical white guys and six identical white women. It’s pretty easy to work out that the team’s diversity index is 0.5. The only way to stratify that group is by gender, and the two strata are the same size. If our first pick happens to be a woman, then there’s a 50:50 chance that the second pick will be a woman, too. One minus that probability (0.5) equals 0.5.
Now, let’s assume we still have twelve team members, but eleven of them are men and there’s only one token woman. If your first pick is thewoman, the probability of picking a woman again is 1/12 = 0.8. (The Gini-Simpson formula lets you pick the same member twice.) If, on the other hand, your first pick is a man, the probability that the second pick will also be a man is 11/12 = 0.92. I plugged all this into an online Gini-Simpson-Index calculator (‘cause I’m lazy) and it returned a value of 26%. That’s a whole lot worse.
Let’s see what happens when we maximize diversity by making everyone different. That means we end up stratifying the members into twelve segments. After picking one member, the odds of the second pick being identical are 1/12 = 0.8 for every segment. The online calculator now gives us a diversity index of 91.7%. That’s a whole lot better!
What Could Possibly Go Wrong?
There are two main ways to screw up group diversity: group-think and group-toxicity. These are actually closely related group-dynamic phenomena. Both lower the effective diversity.
Group-think occurs when members are too accommodating. That is, when members strive too hard to reach consensus. They look around to see what other members want to do, and agree to it without trying to come up with their own alternatives. This produces sub-optimal decisions because the group fails to consider all possible alternatives.
Toxic group dynamics occurs when one or more members dominate the conversation either by being more vocal or more numerous. Members with more reticent personalities fail to speak up, thus denying the group their input. Whenever a member fails to speak up, they lower the group’s effective diversity.
A third phenomenon that messes up decision making for high-diversity teams is that when individual members are too insistent that their ideas are the best, groups often fail to reach consensus at all. At that point more diversity makes reaching consensus harder. That’s the problem facing both houses of the U.S. Congress at the time of this writing.
These phenomena are present to some extent in every group discussion. It’s up to group leadership to suppress them. In the end, creating an effective decision-making team requires two elements: diversity in team membership, and effective team leadership. Membership diversity provides the raw material for effective team decision making. Effective leadership mediates group dynamics to make it possible to maximize the team’s effective diversity.
10 July 2019 – ‘Way back in the late 1960s I spent an entire day as a news hawker. That is, I stood on street corners shouting things at passersby intended to induce them to by copies of a newspaper I was selling. The newspaper was something called The L.A. Free Press. It was produced and sold in Los Angeles, and the street corners I stood on had names like “West Hollywood Boulevard and Sunset.”
I’d recently transplanted from Boston, Massachusetts to the Los Angeles, California area and had never heard of The L.A. Free Press before. A small gang I’d been hanging out with that morning heard that I had a driver’s license on me, and knew that we could use it as collateral to get a great whacking stack of those newspapers to sell at a profit.
Seemed like a good idea at the time.
I initially thought the newspaper copies were somehow free for the taking (as so many local papers are today). I was quickly disabused of that idea because I got pretty decent money for buying copies of it at a low price, then selling them on street corners for a higher price. It clearly wasn’t that kind of free!
Then, I imagined that was (like so many thin publications of the time) some hippy-dippy propaganda rag full of free-love manifestos and ads for beatnik-poetry venues. Being a veteran hippy-beatnik-biker, that was okay with me. I didn’t care as long as there was coin to be had. I wasn’t one of Donovan Leitch’s “beatniks out to make it rich,” but I was interested in coming up with lunch money!
The main headline on the first page of the copies we got in exchange for a mortgage on my driver’s license sounded like a local-interest story that I was not embarrased to wave at potential newsprint buyers, so it didn’t seem to be some hippy-dippy propaganda rag, either. The papers actually sold pretty well!
I needed the money (being dead broke at the time), so I swallowed my pride and did the job. I kept the last copy from my stack, however, to read when I got back to wherever I was sleeping that night.
By the time I’d finished reading the thing I’d realized why the publication was called The L.A. Free Press. It was an independent newspaper founded by a small group dedicated to investigative journalism with nobody to answer to but their readers. I became proud to be working with them.
If I’d been smart and ambitious I would have tried to get a job with them writing copy. After all, part of my reason for relocating was to find some kind of writing gig. But, as is typical with homeless eighteen-year-olds living on the streets, I was more frightened and depressed than smart and ambitious. The next day I moved on to doing something that turned out to be another stupid career move.
Sometimes depression is not a sign of mental illness, but a rational response to the way your life is going.
What I learned from that episode of my misspent youth (What’s the point of misspending your youth if you’re not going to learn something from it?) was what intellectuals mean when they talk about “the Free Press.” It’s not just some empty slogan you hear once in a while on CNN. It’s how we, as citizens of a free country, keep track of what’s going on outside of our individual hovels.
The difference between we citizens of a free country and downtrodden medieval serfs slaving to feed their “betters,” is that we have some say in what goes on outside our hovels. We can’t affect things in a way that’s good for us and the people we care about unless we find out what’s actually going on out there. For that we hire independent journalists who have at least half a brain and make it their business to find out for us.
We pay them a living wage and (if we’ve got at least half a brain ourselves) listen to what they tell us is happening. The Free Press is not, as some dishonest demagogues try to tell us, “the enemy of the people,” but a necessary part of a free democratic society.
For this reason, the journalistic profession has been called “The Fourth Estate” since the Enlightenment. Originally, the term was meant to indicate that a Free Press was available – in addition to the three original estates of clergy, aristocracy and commoners – whose writ was to frame the debate upon which society made common decisions. Later political systems still had (usually) three competing authorities explicitly charged with governing, along with a Free Press implicitly charged with framing the debate about what to do next.
In the United States, our Constitution explicitly delineates a government made up of three co-equal branches: Legislature, Court System, and Executive. The Founding Fathers (If that’s not a sexist term, I don’t know what is!) realized they’d forgotten the Free Press in the original document when they couldn’t get anybody to ratify (agree to) the thing without immediately amending it to include a Free Press (as well as the rest of the Bill of Rights).
The Free Press was considered so important that it was included in the first amendment.
Before anybody gets the idea that I’m criticizing the Founding Fathers as incompetent, I want to point out that this error just goes to prove that those guys were human, and humans make mistakes. Specifically, they were exceedingly bright guys to whom the need for a vibrant Free Press was so obvious that they forgot to mention it. The first ten Amendments – the Bill of Rights – should be seen as an “Oh, Shit!” moment.
“How could we have left that out?”
Having a Free Press, and making good use of it, is the first thing you have to have to set up a democracy. In a sense, it’s not the “fourth” estate, but the first. All the rest is afterthought. It’s bells and whistles designed to be the mechanical parts of a democracy. They’re of no value whatsoever without a Free Press.
On the other hand, once you have a functioning Free Press and a society that makes good use of it, the rest of the bells and whistles will inevitably follow. In that sense, the Free Press is not an afterthought or a result of democracy. Instead, it’s the essence of democracy. That’s why the first thing would-be authoritarians seek to eliminate is the Free Press.
Apologies to all the folks whose words I’ve expropriated for this piece with insufficient attribution – mostly from Wikipedia and ASEAN sources. It’s already taken three days to piece this essay together and I’m trying to get it published while the dateline is still good! Just ONE more editing pass.
26 June 2019 – This is an appropriate time to visit a little-known and -acknowledged regional international community being developed in Southeast Asia: ASEAN. Last Sunday (23 June 2019) marked the 34th meeting of the ASEAN Summit in Bangkok, Thailand
The creation of ASEAN was originally motivated by a common fear of communism among the original five founding member states. ASEAN achieved greater cohesion in the mid-1970s following a change in the international balance of power after the end of the Vietnam War in 1975. The region’s dynamic economic growth during the 1970s strengthened the organization, enabling ASEAN to adopt a unified response to Vietnam’s invasion of Cambodia in 1979.
ASEAN’s first summit meeting, held in Bali, Indonesia in 1976, resulted in an agreement on several industrial projects and the signing of a Treaty of Amity and Cooperation, and a Declaration of Concord.
The end of the Cold War between the West and the Soviet Union at the end of the 1980s allowed ASEAN countries to exercise greater political independence in the region, and in the 1990s ASEAN emerged as a leading voice on regional trade and security issues.
ASEAN has a total population of 642 million people, which is nearly double that of the United States (327 million), and twenty-five percent larger than that of the European Union (513 million). Its average annual income per person, however, is only $4,308.00, putting it between the Israeli-occupied West Bank and Mauritania in the Western Sahara as far as average wealth per person is concerned. That means its people still have a long way to go! Its GDP growth rate, however, is 5.3% per annum, which is comparable to that of Egypt or Pakistan and ahead of the average for even emerging and developing countries.
Why Do We Care?
Why should Americans care about ASEAN?
First, it has aspirations to be a regional intergovernmental organization similar to the European Union in an region where the United States has economic and political interests. Their charter specifically calls for adherence to basic principles in line with those of the United States and other Western democracies. Notably the ASEAN charter specifically calls for adherence to democratic principles and maintaining the region as a nuclear-free zone.
Second, as a large and (aspirationally) politically and economically cohesive regional intergovernmental organization, ASEAN can provide a large and (again aspirationally) economically powerful ally in Southeast Asia to counterbalance Chinese efforts to extend its hegemony in the region. Especially, their actions reveal a desire to cooperate with the United States and its allies. For example, the charter refers in numerous places to working with United Nations principles and protocols, and establishes English as the ASEAN working language.
The figure below shows ASEAN’s top organization levels. At the top is the ASEAN Summit, comprised of the heads of state or government of the member states. By charter, they meet together twice a year, hosted by the member state holding the ASEAN Chairmanship, which cycles through the member states. At present, that is Thailand (Prime Minister General Prayut Chan-o-cha), so the latest meeting was held on 23 June 2019 in the Thai capital, Bangkok.
At the next level, ASEAN is divided into three Community Councils that represent the three pillars of ASEAN activity:
The ASEAN Political-Security Community Council
The ASEAN Economic Community Council
The ASEAN Socio-Cultural Community Council
Each of the three Community Councils has their own makeup and sphere of activity. The ASEAN Coordinating Council, for example, comprises the Foreign Ministers of the ASEAN member states and meets at least twice a year, not only to prepare the meetings of the ASEAN Summit, but to undertake other tasks provided for in the Charter, or for such other functions as may be assigned by the ASEAN Summit. For example, the Coordinating Council coordinates implementation of agreements and decisions of the ASEAN Summit.
In order to realize the objectives of each of the three pillars of the ASEAN Community, each ASEAN Community Council ensures the implementation of the relevant decisions of the ASEAN Summit; coordinates the work of the different sectors under its purview; ensures implementation of Summit decisions on issues that cut across the other Community Councils; and submits reports and recommendations to the ASEAN Summit on matters under its purview.
Each member state designates its own national representatives for each ASEAN Community Council. In addition, each ASEAN member state establishes an ASEAN National Secretariat that serves as a national focal point, the repository of information on all ASEAN matters at the national level, coordinates the implementation of ASEAN decisions at the national level, coordinates and supports the national preparations of ASEAN meetings, promotes ASEAN identity and awareness at the national level, and contributes to ASEAN community building.
ASEAN member states pledge to rely exclusively on peaceful processes in the settlement of intra-regional differences and with regard to their security. They are fundamentally linked to one another and bound by geographic location, as well as by a common vision and objectives.
The ASEAN Political-Security Community (APSC) aims to ensure that countries in the region live at peace with one another and with the world in a just, democratic and harmonious environment. The APSC Blueprint envisages ASEAN to be a rules-based community of shared values and norms; a cohesive, peaceful, stable and resilient region with shared responsibility for comprehensive security; and a dynamic and outward-looking region in an increasingly integrated and interdependent world. The APSC’s normative activities include: political development; shaping and sharing of norms; conflict prevention; conflict resolution; post-conflict peace building; and implementing mechanisms.
The inaugural issue of the ASEAN Economic Integration Brief (AEIB) was released on 30 June 2017. The AEIB provides regular updates on ASEAN economic integration progress and outcomes, and is a demonstration of ASEAN’s commitment to strengthen communication and outreach to raise stakeholder awareness of the AEC.
The ASEAN Good Regulatory Practice (GRP) Core Principles was adopted at the 50th AEM Meeting in 29 August 2018 and subsequently endorsed by the AEC Council. It provides a practical, non-binding set of principles to assist ASEAN member states to improve their regulatory practice and foster ASEAN-wide regulatory cooperation.
At the heart of the ASEAN Socio-Cultural Community (ASCC) is the commitment to lift the quality of life of ASEAN peoples through cooperative activities that are people-oriented, people-centered, environmentally friendly, and geared toward the promotion of sustainable development through member states’ cooperation on a wide range of areas including: culture and information, education, youth and sports, health, social welfare and development, women and gender, rights of the women and children, labor, civil service, rural development and poverty eradication, environment, transboundary haze-pollution, disaster management and humanitarian assistance.
The AEC aims to “implement economic integration initiatives” to create a single market across ASEAN member states. Its blueprint, adopted during the 13th ASEAN Summit (2007) in Singapore, serves as a master plan guiding the establishment of the community. Its characteristics include a single market and production base, a highly competitive economic region, a region of fair economic development, and a region fully integrated into the global economy.
The areas of co-operation include human resources development; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating industries across the region to promote regional sourcing; and enhancing private sector involvement.
The AEC is the embodiment of the ASEAN’s vision of “a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities.”
The average economic growth of member states from 1989 to 2009 was between 3.8% and 7%. This was greater than the average growth of APEC, which was 2.8%. The ASEAN Free Trade Area (AFTA), established on 28 January 1992, includes a Common Effective Preferential Tariff (CEPT) to promote the free flow of goods between member states.
ASEAN member states have made significant progress in the lowering of intra-regional tariffs through the CEPT. More than 99 percent of the products in Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0-5 percent tariff range. ASEAN’s newer members, namely Cambodia, Laos, Myanmar and Viet Nam, are not far behind.
ASEAN member states have also resolved to work on the elimination of non-tariff barriers, which includes, among others, the process of verification and cross-notification; updating the working definition of Non-Tariff Measures (NTMs)/Non-Tariff Barriers (NTBs); the setting-up of a database on all NTMs maintained by member states; and the eventual elimination of unnecessary and unjustifiable non-tariff measures.
I led this essay off with the comment that ASEAN does not seem to get the attention it deserves, at least in U.S. national media. Certainly, U.S. President Donald Trump seems to feel it’s not worth a tweet. The closest I was able to find with a quick Internet search was a report that he insulted Philippines President Rodrigo Duterte before meeting him on the sidelines of the Winter 2017 ASEAN Summit meeting!
That said, I must report that I became interested in ASEAN through a segment in Fareed Zacharia’s GPS show on CNN. So, not everybody is completely ignoring what I’ve come to realize is potentially an important regional intergovernmental organization.
I encourage you to learn more about ASEAN by visiting the various links peppering this column. Maybe together we can generate more interest in what could be a powerful U.S. ally in the Eastern Pacific.
22 May 2019 – I grew up believing in the myth of the rugged individualist.
As did most boys in the 1950s, I looked up to Davy Crockett, Daniel Boone and their ilk. Being fond of developing grand theories, I even worked out an hypothesis that the wisdom of any group’s decisions was inversely proportional to the group’s size (number of members) because in order to develop consensus, the decision had to be acceptable to even the stupidest member of the group.
With this background, I used to think that democracy’s main value was that it protected the rights of individuals – especially those rugged individuals I so respected – so they could scout the path to the future for everyone else to follow.
I’ve since learned better.
There were, of course, a lot of holes in this philosophy, not the least of which was that it matched up so well with the fevered imaginings I saw going on in the minds of authoritarian figures and those who wanted to cozy up to authoritarian figures. Happily, I recognized those philosophical holes and wisely kept on the lookout for better ideas.
First, I realized that no single individual, no matter how accomplished, could do much of anything on their own. Even Albert Einstein, that heroic misfit scientist, was only able to develop his special theory of relativity by abandoning some outdated assumptions that made interpreting results of experiments by other scientists problematic. Without a thorough immersion in the work of his peers, he wouldn’t have even known there was a problem to be solved!
Similarly, that arrogant genius, Sir Isaac Newton recognized his debt to his peers in a letter to Robert Hooke on 5 February 1676 by saying: “If I have seen a little further it is by standing on the shoulders of giants.”
For all of his hubris, Newton was well known to immerse himself in the society of his fellows.
Of course, my childhood heros, Davy Crockett, Daniel Boone, and Captain Blood, only started out as rugged individuals. They then went on to gather followers and ended up as community leaders of one sort or another. As children, we used to forget that!
My original admiration of rugged individualists was surely an elitist view, but it was tempered with the understanding that predicting in advance who was going to be part of that elite was an exercise in futility. I’d already seen too many counterexamples of people who imagined that they, or somebody they felt inferior to, would eventually turn out to be one of the elite. In, for example, high school, I’d run into lots of idiots (in my estimation) who strutted around thinking they were superior to others because of (usually) family background or social position.
We called that “being a legend in their own mind.”
Eventually, I realized what ancient Athenians had at least a glimmer of, and the framers of the Declaration of Independence and the U.S. Constitution certainly had a clear idea of, and what modern management theorists harp on today: the more diverse a group is, the better its decisions tend to be.
This is, of course, the exact reverse of my earlier rugged-individualist hypothesis.
As one might suspect, diversity is measurable, and there are numerous diversity indices one might choose from to quantify the diversity within a group. Here I’m using the word “group” in the mathematical sense that such a group is a set whose members (elements) are identifiable by sharing specific characteristics.
For example, “boys” forms a group of juvenile male human beings. “Girls” forms another similar, but mutually exclusive group. “Boys” and “girls” are both subsets of multiple larger groups, one of which is “young people.”
“Diversity” seeks to measure the number of separate subgroups one can find within a given group. So, you can (at least) divide “young people” into two subgroups “boys” and “girls.”
The importance of this analysis is that the different characteristics common within subgroups lead to different life experiences, which, the diversity theory posits, provide different points of view and (likely) different suggestions to be considered for solutions to any given problem.
So, the theory goes, the more diverse the group, the more different solutions to the problem can be generated, and the more likely a superior choice will be presented. With more superior choices available and a more diverse set (There’s that word again!) of backgrounds that can be used to compare the choices, the odds are that the more diversity in a group, the better will be the solution it finally chooses.
Yeah, this is a pretty sketchy description of the theory, but Steven Johnson spends 216 pages laying it out in his book Farsighted, and I don’t have 216 pages here. The sketch presented here is the best I can do with the space available. If you want more explanation, buy the book and read it.
Here I’m going to seize on the Gini–Simpson diversity index, which uses the probability that two randomly selected members of a group are members of the same subgroup (λ), then subtracts it from unity. In other words in a group of, say, young people containing equal numbers of boys and girls, the probability that any pair of members selected at random will be either both boys or both girls is 0.5 (50%). The Gini-Simpson index is 1-λ = 1 – 0.5 = 0.5.
A more diverse group (one with three subgroups, for example) would have a lower probability of any pair being exactly matched, and a higher Gini-Simpson diversity index (closer to 1.0). Thus, the diversity theory would have it that such a group would have a better chance of making a superior decision.
Authoritarians Don’t Rule!
Assuming I’ve convinced you that diversity makes groups smarter, where does that leave our authoritarian?
Let’s look at the rugged-individualist/authoritarian situation from a diversity-index viewpoint. There, the number of subgroups in the decision-making group is one, ‘cause there’s only one member to begin with. Randomly selecting twice always comes up with identically the same member, so the probability of getting the same one twice is exactly one. That is, it’s guaranteed.
That makes the diversity score of an individualist/authoritarian exactly zero. In other words, according to the diversity decision-making theory, authoritarians are the worst possible decision makers!
And, don’t try to tell me individualist/authoritarians can cheat the system by having wide-ranging experiences and understanding different cultures. I’ve consciously done exactly that for seven decades. What it’s done is to give me an appreciation of different cultures, lifestyles, philosophies, etc.
It did not, however, make me more diverse. I’m still one person with one brain and one viewpoint. It only gave me the wisdom(?) to ask others for their opinions, and listen to what they say. It didn’t give me the wisdom to answer for them because I’m only the one person with the one viewpoint.
So, why do authoritarian regimes even exist?
What folks often imagine as “human nature” provides the answer. I’m qualifying “human nature” because, while this particular phenomenon is natural for humans, it’s also natural for all living things. It’s a corollary that follows from Darwin’s natural-selection hypothesis.
Imagine you’re a scrap of deoxyribonucleic acid (DNA). Your job is to produce copies of yourself. If you’re going to be successful, you’ll have to code for ways to make lots of copies of yourself. The more copies you can make, the more successful you’ll be.
Over the past four billion years that life is estimated to have been infesting the surface of Earth, a gazillion tricks and strategies have been hit upon by various scraps of DNA to promote reproductions of themselves.
While some DNA has found that promoting reproduction of other scraps of DNA is helpful under some circumstances, your success comes down to promoting reproduction of scraps of DNA like you.
For example, human DNA has found that coding for creatures that help each other survive helps them survive. Thus, human beings tend to cluster in groups, or tribes of related individuals – with similar DNA. We’re all tribal, and (necessarily) proud of it!
Anyway, another strategy that DNA uses for better survival is to prefer creatures similar to us. That helps DNA evolve into more successful forms.
In the end, the priority system that necessarily evolves is:
Identical copies first (thus, the bond between identical twins is especially strong);
Closely related copies next;
More distantly related copies have lower priority.
We also pretty much all like pets because pets are unrelated creatures that somehow help us survive to make scads of copies of our own DNA. But, we prefer mammals as pets because mammals’ DNA is very much like our own. More people keep cats and dogs as pets, than snakes or bugs. See the pattern?
We prefer our children to our brothers (and sisters).
We prefer our brothers and sisters to our neighbors.
We prefer our neighbors to our pets. (Here the priority systems is getting pretty weak!)
And, so forth.
In other words, all living things prefer other living things that are like them.
Birds of a feather flock together.
That is the basis of all discrimination phenomena, from racial bias to how we choose our friends.
How Authoritarians Rule, Anyway.
What has that to do with authoritarianism?
Well, it has a lot to do with authoritarianism! Authoritarians only survive if they’re supported by populations who prefer them enough to cede decision-making power to them. Otherwise, they’d just turn and walk away.
So authoritarian societies require populations with low diversity who generally are very much like the leaders they select. If you want to be an authoritarian leader, go find a low-diversity population and convince them you’re just like them. Tell ‘em they’re the greatest thing since sliced bread because they’re so much like you, and that everyone else – those who are not part of your selected population – are inferior scum simply because they’re not like your selected population. The your followers will love you for it, and hate everyone else.
That’s why authoritarian regimes mainly thrive in low-diversity, xenophobic populations.
That despite (or maybe because of) the fact that such populations are likely to make the poorest decisions.
Beside having a writing style that’s easy to follow and pleasant to read, Levy’s book provides a look at world events from an unusual perspective and lots and lots of details that I could never have known otherwise. Whenever I can learn something new, I count the time well spent. Learning so much in 250 pages (I didn’t read the Index that takes up the last 11 pages) counts as time very well spent!
I do have to say, however, that Levy trots out words even I have to look up! His delight in his massive vocabulary I have to forgive, though. After all, I long ago decided not to coddle my readers with restricted word choices. If they have trouble puzzling out words that I use, they can just bloody well go look ‘em up!
Levy does not make the mistake Henry Miller was so notorious for: delighting so much in his facility with various European languages that he left his readers puzzling over long passages in French or German. If you haven’t traveled extensively in mid-twentieth-century Europe and lived there long enough to be steeped in the languages, you’re left wondering what he’s on about, and whether you’re missing something important to the story.
Levy no doubt is equally fluent in a long list of languages, but mercifully avoids tormenting us with them. The book is very definitely presented in more-or-less standard English.
To quote Levy’s bio on the back flap inside his book’s the dust cover: “Bernard-Henri Levy is a philosopher, activist, filmmaker, and author of more than thirty books …. His writing has appeared extensively in publications throughout Europe and the United States. … Levy is cofounder of the antiracist group SOS Racisme and has served on diplomatic missions for the French government.”
Joan Juliet Buck, former editor of French Vogue, writing in Vanity Fair called him “an action-driven intellectual who moves fast, writes fast, and is listened to with respect.”
“What is an ‘action-driven intellectual,’” you ask?
That is an important – arguably dominant – part of Levy’s character. Action-driven intellectuals are, as Levy admiringly describes in his preface, the “type of writer that a great French resistance fighter, Roger Stephane, called ‘the adventurer’ …” Levy lists among his admired adventurers, T.E. Lawrence, Ernest Hemingway, George Orwell, Andre Malraux and writer-mercenaries like Xenophon. He seems proud to count himself among their fellows.
From someone with fewer war stories to tell, that would sound like hubris. From Levy, however, it seems (in the immortal words of Walter Brennan in the first episode of the TV series The Guns of Will Sonnett) “No brag. Just fact.”
So, what does this action-driven intellectual have to say? Especially, what is he indicating by his title, The Empire and the Five Kings?
It is a little difficult to be sure whether his volume is a salutation to the embattled resistance warriors of the world fighting against the rise of autocratic dictators (especially the Kurdish Peshmerga resisting threatened genocide by Turkish President and would-be dictator Recep Tayyip Erdoğan), or a cry of warning about the chaos threatening Western democracy from all sides, or even a shout of hope for democracy’s future. Perhaps it’s best seen as all of the above.
The Empire, of course, is how Levy sees the United States. He sees it, however, as the best kind of empire: a reluctant one dragged to the center of the World’s stage by universal acclaim.
The United States never wanted to be an empire, he opines. Instead, after the double World War of the early twentieth century, the victorious allied western democracies desperately needed a leader; a standard bearer to head their parade into the glorious – and hopefully peaceful – future they were yearning for. And, there was nobody else around that was up to the job. So, the United States put on a sheepish grin and, channeling their inner Fess Parker, said: “Well, shucks, folks. If ya really want me to, I guess I could give it a lash.”
That’s how Levy sees America in the latter half of the twentieth and the first decade of the twenty-first century.
Then something happened.
Levy offers no blame or even critical analysis. I, however, am willing to venture an opinion.
Imagine Fess Parker standing up there with his folksy grin, pushed unwillingly into standing up to do his level best – only to be pelted by tomatoes.
It was bad enough to see angry crowds shouting “Yankee Go Home!” in the ‘50s and ‘60s. They’d all been through Hell, and were, in the immortal words of Arlo Guthrie: “Hung down, brung down, hung up, and all kinds of mean, nasty, ugly things.”
They’d been just havin’ a tough time.
It was reasonable that the world’s people would be feeling pretty awful and might take it out on the one who’d come through the whole experience looking like the Champion of the World.
That was the United States, so we could overlook a few over-ripe tomatoes and shouts for us to go home.
But, when a bunch of towel-headed Saudi Arabian expats from Afghanistan flew airliners into a few of our most iconic buildings, killing thousands of our friends and neighbors (not to mention relatives), that proved a bit too much.
Fess Parker decided to do what those ingrates told him to do: “Go Home!”
“You don’t like the way I’m policing the World?” he said. “Well, then, you can just go do it yourselves. I’ll just go home and mow my own grass. You can clean up your own darn messes.”
That, Levy sees in horror, leaves the field open for the Five Kings – the autocrats jostling to beat up everyone else in the schoolyard – to do their worst.
Putin wants to be crime boss in Russia and reconstitute the failed U.S.S.R. as a secular kleptocracy. Ali Khameni and his Revolutionary Guards want to bring back the theocracy that kept the Sultan’s subjects abjectly subjugated in twelfth-century Iran. Erdogan yearns for the glories of the Byzantine Empire. Mohammad Bin Salman wants the wealth and power he sees as his birthright “owning” a Saudi Arabia that dominates the oil wealth of the Middle East. Xi Jinping wants to rule China as a commercial empire dominating the Far East (at least).
They all want autocratic power sans censure, sans limit, and sans end.
Levy rightly surmises that the other seven-and-a-half billion of us living on this planet might object to being told what to do by those five.
At least, he suggests, we should!
I happen to agree.
Where Levy and I disagree is in his diagnosis of what’s going on in America.
Levy gets into minor difficulty when he tries to follow the footsteps of De Toqueville by explaining America to Americans. Like many of today’s observers (and especially rehabilitated Marxists like Levy) he fails to recognize how close rabid love of democracy is to rabid populism, and how short the fall is from there to that most virulent form of authoritarianism – fascism.
Levy is not the first cultural transplant who’s made critical misapprehensions about American character. Alistair Cook, embarrassingly blurted out an opinion to the effect that “Americans yearn for an aristocracy” on national television. He’d mistaken Americans’ yearning for material success (especially among ‘50s-era suburbanites) for an unmet desire to fawn over wealthy aristocrats.
America is not England. We remember suffering the birth pangs of the Revolutionary War to, as Tom Selleck’s “Mathew Quigley” character intoned: “… Run the misfits out of our country. We sent ‘em back to England.”
I especially censured rehabilitated Marxists above because the journey from Marxist to Stalinist is so short that it generally happens in the blink of an eye. It happens so fast that hardly anyone recognizes the change. It’s like a jump cut mid-sentence in a movie to catch a reaction shot. Above all, Marxists never seem to see it coming. But, that’s a rant for another day.
Lacking a view of that slippery slope from democracy to fascism, Levy seems at a loss to understand the Trump phenomenon. While Levy laments America seeming to lose its way on the world stage, what’s actually happened is that we’re in the middle of making the transition from democracy to fascism. While most of us are scratching our heads, trying to figure out why our democracy seems to have stopped working, large swaths of our leadership – led from behind by Donald Trump – are busy reconstructing our democratic government into the Fourth Reich!
I say “led from behind by Donald Trump” because, unlike Mussolini, Hitler, and Franco, it seems that Trump does not have a clear idea of what he is doing. Old-time (twentieth-century) fascists were quite sure of what they wanted and how to get it.
Trump does not seem to know that. It is unclear whether he has any coherent ideas at all. It’s like he’s suffering Wernicke’s aphasia: unable to understand or compose coherent language. He seems more like a cat reacting to movement of a laser pointer – all reaction and no thought. Others on the Far Right, however, do have a clear idea what they want and what they’re doing, and they are attempting to herd Trump’s scattered thoughts into their preferred direction.
Of course, when they stop needing him (specifically, his Reality-TV “charm”) as a front man, he’ll be gone in a heartbeat! See what what happened to Leon Trotsky.
8 May 2019 – There’s been a bit of noise in financial-media circles this week (as of this writing, but it’ll be last week when you get to read it) about Federal Reserve Chairman Jerome Powell’s talking up shifting the Fed’s focus to targeting something called “average inflation” and using words like “transient” and “symmetric” to describe this thinking. James Macintosh provided a nice layman-centric description of the pros and cons of this concept in his “Streetwise” column in Friday’s (5/3) The Wall Street Journal. (Sorry, folks, but this article is only available to WSJ subscribers, so the link above leads to a teaser that asks you to either sign in as a current subscriber or to become a new subscriber. And, you thought information was supposed to be distributed for free? Think again!)
I’m not going to rehash what Macintosh wrote, but attempt to show why this change makes sense. In fact, it’s not really a change at all, but an acknowledgement of what’s really been going on all the time.
We start with pointing out that what the Federal Reserve System is mandated to do is to control the U.S. economy. The operant word here is “control.” That means that to understand what the Fed does (and what it should do) requires a basic understanding of control theory.
Basic Control Theory
We’ll start with a thermostat.
A lot of people (I hesitate to say “most” because I’ve encountered so many counter examples – otherwise intelligent people who somehow don’t seem to get the point) understand how a thermostat works.
A thermostat is the poster child for basic automated control systems. It’s the “stone knives and bearskins” version of automated controls, and is the easiest for the layman to understand, so that’s where we’ll start. It’s also a good analog for what has passed for economic controls since the Fed was created in 1913.
Okay, the first thing to understand is the concept of a “set point.” That’s a “desired value” of some measurement that represents the thing you want to control. In the case of the thermostat, the measurement is room temperature (as read out from a thermometer) and the thing you’re trying to control is how comfortable the room air feels to you. In the case of the Fed, the thing you want to control is overall economic performance and the measurement folks decided was most useful is the inflation rate.
Currently, the set point for inflation is 2% per annum.
In the case of the thermostat in our condo, my wife and I have settled on 75º F. That’s a choice we’ve made based on the climate where we live (Southwestern Florida), our ages, and what we, through experience, have found to be most comfortable for us right now. When we lived in New England, we chose a different set point. Similarly, when we lived in Northern Arizona it was different as well.
The bottom line is: the set point is a matter of choice based on a whole raft of factors that we think are important to us and it varies from time to time.
The same goes for the Fed’s inflation set point. It’s a choice Fed governors make based on a whole raft of considerations that they think are important to the country right now. One of the reasons they meet every month is to review that target ‘cause they know that things change. What seems like a good idea in July, might not look so good in August.
Now, it’s important to recognize that the set point is a target. Like any target, you’re trying to hit it, but you don’t really expect to hit it exactly. You really expect that the value you get for your performance measurement will differ from your set point by some amount – by some error or what metrologists prefer to call “deviation.” We prefer deviation to the word error because it has less pejorative connotations. It’s a fact of life, not a bad thing.
When we add in the concept of time, we also introduce the concept of feedback. That is what control theorists call it when you take the results of your measurement and feed it back to your decision of what to do next.
What you do next to control whatever you’re trying to control depends, first, on the sign (positive or negative) of the deviation, and, in more sophisticated controls, it’s value or magnitude. In the case of the thermostat, if the deviation is positive (meaning the room is hotter than you want) you want to do something to cool it down. In the case of the economy, if inflation is too high you want to do something to reduce economic activity so you don’t get an economic bubble that’ll soon burst.
What confuses some presidents is the idea that rising economic activity isn’t always good. Presidents like boom times ‘cause they make people feel good – like a sugar high. Populist presidents typically fail to recognize (or care about the fact) that booms are invariably bubbles that burst disastrously. Just ask the people of Venezuela who watched their economy’s inflation rate suddenly shoot up to about a million(!) percent per annum.
Booms turn to busts in a heartbeat!
This is where we want to abandon the analogy with a thermostat and get a little more sophisticated.
A thermostat is a blunt instrument. What the thermostat automatically does next is like using a club. At best, a thermostat has two clubs to choose from: it can either fire up the furnace (to raise the room temperature in the event of a negative deviation) or kick in the air conditioner (in the event that the deviation is positive – too hot). That’s known as a binary digital control. It’s gives you a digital choice: up or down.
We leave the thermostat analogy because the Fed’s main tool for controlling the economy (the Fed-funds interest rate) is a lot more sophisticated. It’s what mathematicians call analog. That is, instead of providing a binary choice (to use the club or not), it lets you choose how much pressure you want to apply up or down.
Quantitative easing similarly provides analog control, so what I’m going to say below also applies to it.
Okay, the Fed’s control lever (Fed funds interest rate) is more like a brake pedal than a club. In a car, the harder you press the brake pedal, the more pressure you apply to make the car slow down. A little pressure makes the car slow down a little. A lot of pressure makes the car slow down a lot.
So, you can see why authoritarians like low interest rates. Autthoritarians generally have high-D personalities. As Personality Insights says: “They tend to know 2 speeds in life – zero and full throttle… mostly full throttle.”
They generally don’t have much use for brakes!
By the way, the thing governments have that corresponds to a gas pedal is deficit spending, but the correspondence isn’t exact and the Fed can’t control it, anyway. Since this article is about the Fed, we aren’t going to talk about it now.
When inflation’s moving too fast (above the set point) by a little, the Fed governors – being the feedback controller – decide to raise the Fed funds rate, which is analogous to pushing the brake pedal, by a little. If that doesn’t work, they push it a little harder. If inflation seems to be out of control, as it did in the 1970s, they push it as hard as they can, boosting interest rates way up and pulling way back on the economy.
Populist dictators, who generally don’t know what they’re doing, try to prevent their central banks (you can’t have an economy without having a central bank, even if you don’t know you have it) from raising interest rates soon enough or high enough to get inflation under control, which is why populist dictatorships generally end up with hyperinflation leading to economic collapse.
Populist Dictators Need Not Apply
This is why we don’t want the U.S. Federal Reserve Bank under political control. Politicians are not elected for their economic savvy, so we want Fed governors, who are supposed to have economic savvy, to make smart decisions based on their understanding of economic causes and effects, rather than dumb decisions based on political expediency.
Economists are mathematically sophisticated people. They may (or may not) be steeped in the theory of automated control systems, but they’re quite capable of understanding these basics and how they apply to controlling an economy.
Economics, of course, has been around as long as civilization. Hesiod (ca. 750 BCE) is sometimes considered “the first economist.” Contemporary economics traces back to the eighteenth century with Adam Smith. Control theory, on the other hand, has only been elucidated since the early 1950s. So, you don’t really need control theory to understand economics. It just makes it easier to see how the controls work.
To a veteran test and measurement maven like myself, the idea of thinking in terms of average inflation, instead of the observed inflation at some point in time – like right now – makes perfect sense. We know that every time you make a measurement of anything, you’re almost guaranteed to get a different value than you got the last time you measured it. That’s why we (scientists and engineers) always measure whatever we care about multiple times and pay attention to the average of the measurements instead of each measurement individually.
So, Fed governors starting to pay attention to average inflation strikes us as a duh! What else would you look at?
Similarly, using words like “transient” and “symmetric” make perfect sense because “transient” expresses the idea that things change faster than you can measure them and “symmetric” expresses the idea that measurement variations can be positive or negative – symmetric each side of the average.
These ideas all come from the mathematics of statistics. You’ve heard of “statistical significance” associated with polling data, or two polling results being within “statistical error.” The variations I’m talking about are the same thing. Variations between two values (like the average inflation and the target inflation) are statistically significant if they’re sufficiently outside the statistical error.
I’m not going to go into how you calculate a value for statistical error because it takes hours of yammering toteach it in statistics classes, and I just don’t have the space here. You wouldn’t want to read it right now, anyway. Suffice it to say that it’s a well-defined concept relating to how much variation you can expect in a given data set.
While the control theory I’ve been talking about applies especially to automated control systems, it applies equally to Federal Reserve System control of economic performance – if you put the Federal Open Market Committee (FOMC) in place of the control computer that makes decisions for the automated control system.
“So,” you ask, “why not put the Fed-funds rate under computer control?”.
The reason it would be unreasonable to fully automate the Fed’s actions is that we can’t duplicate the thinking process of the Fed governors in a computer program. The state of the art of economic models is just not good enough, yet. We still need the gut feelings of seasoned economists to make enough sense out of what goes on in the economy to figure out what to do next.
That, by the way, is why we don’t leave the decisions up to some hyperintelligent pandimensional being (named Trump). We need a panel of economists with diverse backgrounds and experiences – the FOMC – to have some hope of getting it right!