Speech and the Despot Franchise

"You can break a man's skull. You can arrest him. You can throw him into a dungeon. But how do you control what's up here? How do you fight an idea?"
--Sextus (Ben-Hur)

Escalating pushback against free speech reminds us once more of just how radical the notion of liberty is. The history of the world has been dominated by those who desire to dominate. Authoritarians who seek to control others through use of force.

Our founding ancestors developed a constitutional framework that proposed otherwise. At the top of the list was speak and write with no government interference.

Authoritarians despise this freedom to no end. They understand that minds exposed to alternative viewpoints threaten the despot franchise.

As current events demonstrate, statists will stop at nothing to silence dissent.

Hyper Connectedness and Hyperinflation

Hundred dollar car note
Two hundred rent
I get a check on Friday
But it's already spent
--Huey Lewis & the News

With 40 yr highs in official measures goods and service prices, it should not be surprising that inflation expectations are marking similar highs.

Although it is caused by increases in money supply, inflation's effect on prices can be shaped by buyer psychology. The greater the belief that money will be worth less tomorrow, then the more consumers will buy today in attempt to get ahead of that devaluation. Prices squirt higher as result.

That is why it is often said that once inflationary psychology takes hold, the toothpaste is out of the tube.

This time around, I wonder whether inflation expectations may be worse than in the past due to the amplifying effect of our increased connectedness. We know that networked individuals are more tightly coupled, meaning that they respond similarly to stimuli and disturbances. 

If the echo chambers of social networks, et al tell individuals that inflation is rocketing, might this exacerbate expectations and the 'buy today' behavior that serves as a coping mechanism?

Weimar Germany. Venezuela. Could hyper connectedness breed hyperinflation? 

Institutional Environments

Art Thomas: How old are you Mister, uh, Mister...
Brantley Foster: Whitfield.
Art Thomas: Yes.
Brantley Foster: Twenty-four.
Art Thomas: Well, I think you should keep quiet until you're at least 25.
Davis: If I may, I don't think Mr. Whitfield's age should be an issue here.
Art Thomas: No one is interested in your opinion, Davis.
--The Secret of My Success

The institutional environment can be seen as the rules and norms that define acceptable behavior in a particular society along with the structures that shape and transmit those rules and norms to societal members.

In some societies, institutional environments are strong and exert significant 'isomorphic' pressure on its members for conformance and sameness. In other societies, institutional environments exert little influence on people's behavior, with individuals consequently 'doing their own thing.'

At least two factors affect the strength of institutional environments. One is preference among individuals for legitimacy. Legitimacy in this sense is viewed as social recognition or acceptance. Those with a high preference for legitimacy seek a 'permission slip' of sorts from others in society to engage in behavior that is broadly condoned, or to shun behavior that is broadly discouraged. Those with a low preference for legitimacy don't care what others think and, instead, act on their own accord.

All else equal, the higher the preference for legitimacy among societal members, the more influential an institutional environment will be.

The other factor that governs the strength of institutional environments also involves the notion of legitimacy, but in this case pertains to the legitimacy accorded institutions themselves. To what extent do societal members recognize the validity of rule-making entities and processes? For instance, norms that have been around for long periods of time tend to be seen as more legitimate than newer ones. 

All else equal, the greater the perceived legitimacy of institutions and institutional structures in a society, the more influential an institutional environment will be.

What 'subfactors' shape these forms of legitimacy? We'll discuss in a future post.

Pandemic Network

"When I was at the top of my game, I felt connected. The victim. The killer. The crime scene. Everything...just felt like it was all part of me. It's beginning to feel that way again."
--Terry McCaleb (Blood Work)

Good question. Although I suspect all networked devices (phones, computers, etc) should be included.

A pandemic of the connected...

Imitation Gone Awry

"Hey, check out the Dukes over there. They must know something. Let's get in on it."
--Floor trader (Trading Places)

Although institutions are commonly viewed as people (the president of the United States), places ('institutes of higher learning'), and even dates (holidays), institutions are better seen as laws, customs, and other norms produced, practiced, or symbolized by those 'things.' A primary, but certainly not singular, purpose of institutions is to provide a stable social backdrop for human interaction.

Institutions operate by exerting 'isomorphic' pressure for sameness in behavior. Per their seminal work, DiMaggio and Powell (1983) elaborated three types of isomorphic pressure: coercive ("Do this or go to jail"), normative ("This is how we do things around here"), and mimetic ("Follow the leader"). Although these categories are often useful for analytical purposes, they are often blended in practice.

A common hypothesis in institutional theory is that, when uncertainty rises in the environment, mimetic pressure often dominates the landscape. Simply stated, when people don't know what to do, they copy the behavior of others who they think might 'know' something.

There is certainly some validity to this premise. It is hard to dismiss that much of the behavior during the CV19 pandemic seems to be driven by mimetic isomorphic pressure. For example, once an influential organization decides to mandate vaccines, other organizations quickly do the same. People see others wearing masks, so they put masks on too.

Mimetic isomorphism can lead to obvious dysfunctionalities. Imitating others is the basis for herd behavior. The 'blind may be leading the blind'...perhaps over the cliff.

It seems plausible that mimetic isomorphism can only 'work' for so long. If copying the behavior of others doesn't produce positive results within a reasonable amount of time, then people will being to discard this strategy in favor of something else. Probably not all at once, but gradually as people slowly conclude that their imitation strategies are not producing desired results. 

People more prone to think for themselves are likely to be early dissenters and strike out in search of alternatives. Those alternatives may take the form of non-isomorphic behavior entirely. Entrepreneurship, innovation, et al. This is sometimes called 'active agency'--i.e., pursuing interests that do not align with prevailing institutions (Oliver, 1991).

Perhaps much of the pushback to the new round of CV19 mandates that we're currently witnessing results from active agency driven by imitation gone awry.

Reference

DiMaggio, P.S. & Powell, W.W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48: 147-160.

Oliver, C. (1991). Strategic responses to institutional processes. Academy of Management Review, 16: 145-179.

Slowing Down

I'm in the mood
The rhythm is right
Move to the music
We can roll all night
--Foghat

Baby Boomers are known for shaping all sorts of economic and social trends as their demographic wave has splashed thru time. Now it appears that they are setting their sights on driving norms.

I drive several streets that have fairly long stretches of unencumbered straightaway roadway. Carefree, easy driving. 

It used to be that I would rarely encounter a car ahead of me driving below the speed limit on these stretches. Nowadays it happens routinely. So much so that driving at the speed limit or above has become exception rather than rule.

The Boomers are slowing down, it seems, in more ways than one.

Legitimacy

This city's mad in the head
And sick in the soul
All the stars flew away
A long time ago
Oh, isn't that nice
Like Miami Vice
--Flesh For Lulu

A central tenet of institution theory is that compliance with institutional rules (a.k.a. isomorphism) bestows legitimacy on the compliant. In this context, legitimacy is social recognition and acceptance, sort of a like permission slip to go about your business and function in society.

If you've been using a purely economic framework to make sense of the crazy behavior that we've seen recently, then you're probably scratching your head. But if you realize that sometime behavior is sometimes motivated by cravings for legitimacy, then things seem to fall more into place.

If the rules reward crazy behavior with legitimacy, then you'll generally get more crazy behavior.

Peak Mask

"Look at all those people down there. They follow the rules. For what? They're letting fear lead them."
--Han (The Fast and the Furious: Tokyo Drift)

Herd behavior tends to stampede past the reasonable to the unreasonable. The mask phenomenon demonstrates this in spades.

At my neighborhood grocery store, the rare mask wearer has been replaced with at least eight in 10 looking like either a doctor going into surgery or Jesse James entering a bank.

Outside, where risk of transmitting any infection is very low, 25%+ may be masked up--even when walking alone.

Do masks 'work?' Advice from the so-called public health 'experts' has been equivocal. Many who said early on that masks didn't matter now say they do. Some states have ordered mask wearing in public. But there has been no conclusive evidence. 

The experts, it seems, have merely joined the herd.

That mask wearing has intensified even as data suggest that the threat is passing demonstrates a classic characteristic of herd psychology. Herd behavior usually peaks somewhere on the other side of the objective.

If the objective is to profit from rising stock prices, the herd is still in stocks after prices start to fall. If the objective is to avoid infection from a communicable disease, then it is likely that people will be putting on masks even as threat of infection dissipates.

When will we hit peak mask?

Cul-De-Sac Effect

Our house
It has a crowd
There's always something happening
And it's usually quite loud
--Madness

Soon after states began to issue lockdown orders, an academic from Yale penned a NYT editorial using a war analogy. Waging an open war against the virus using across-the-board lockdown strategies risked broad collateral damage. He suggested that a 'surgical strike' might be more in order--one that protects the elderly and other at-risk groups while letting those not at significant risk resume their lives to prevent economic collapse.

Two months later his words remain wise.

He also expressed concern that, by sending families home to huddle amongst themselves for extended periods of time, risk of transmitting the virus might grow within those groups.

I've labeled this the cul-de-sac effect. When we leave our homes each morning, we enter into a cross hatched open network where we interact with many people for relatively short periods of time. At the end of the day we retreat to a cul-de-sac--a closed network of fewer, more intimate contacts.

Shutting down didn’t work: 66% of New York coronavirus hospitalizations are people at HOME https://t.co/9iqOYp6TFD via @MailOnline

— Laura Ingraham (@IngrahamAngle) May 8, 2020

There is growing evidence that the cul-de-sac is in fact a major source of COVID infection. For example, data from New York indicate that most of the current COVID-19 hospitalizations in the state are coming from people who were staying at home.

Then, of course, there are nursing home and long term care cul-de-sacs that, when not properly secured, have become death traps for the elderly.

While potentially increasing exposure to infection, cul-de-sacs can also decrease resistance to them. If people are forced to remain in the cul-de-sacs by stay at home orders, then they will get less sunshine Vitamin D exposure and be more sedentary. Weakened immune systems are less capable of fighting infections of any type.

Indeed, the cul-de-sac effect may help explain why there is little evidence that lockdowns have been effective at curtailing COVID mortality.

Reason Awakens

Jared Cohen: This is weird. It's like...a dream.
Sam Rogers: Oh, I don't know. Seems like we actually may have just woken up.
--Margin Call

My sense has been that hysterical, fast thinking related to COVID 19 will wane as people begin to engage their more analytical slow thinking processes. There is evidence that this is occurring.

Perhaps most important is growing realization that resources should be focused on the most vulnerable rather than on the masses. Congressman Thomas Massie:

Can we focus on a strategy that protects the most vulnerable, while allowing healthy individuals under 50-60 to carry on productive lives, until the virus has circulated such that it can’t find enough viable hosts in the general population to infect those over 50-60? 2/x

— Thomas Massie (@RepThomasMassie) March 17, 2020

And even sports show host Clay Travis:

“There’s a lot of talk about social distancing right now, and what is most important is to keep young people away from old people. This is the best way to stop the spread of the virus as 97% of all of Italy’s victims of the coronavirus have been over 60 years old.”—@ClayTravis pic.twitter.com/T5mDdp7bu3

— Outkick the Coverage (@Outkick) March 16, 2020

As Travis notes, the economic costs of across-the-board quarantines and shutdowns must be considered (particularly in highly leveraged systems such as ours):

“My concern is we are making major economic decisions without considering all the costs. The smarter play is to allow everyone under the age of 60 to go about their normal lives while everyone above 60 should be self-quarantined for 2-6 weeks.”—@ClayTravis pic.twitter.com/RZVcdBz8d5

— Outkick the Coverage (@Outkick) March 17, 2020

There is also growing realization of the size of the COVID 19 'pandemic' vs common cold, flu, and the adaptive response and flexible capacity of the health care system to the current situation:

Happening now: @MorningsMaria @FoxBusiness @ClevelandClinic ceo "we have tested over 1400 people, only 3.5% tested positive. Flu & common cold still worse. But the measures to contain shd be followed. The hospitals have the capacity to treat this"

— Maria Bartiromo (@MariaBartiromo) March 17, 2020

Finally, interesting perspective by a Nobel laureate who forecast the slowdown in Chinese COVID 19 infection rates. His basic premise, similar to one advanced in these pages, is that parabolic epi curves are unlikely to last. One interesting twist in his explanation is the idea that, because people have limited social networks in a physical sense, infection rates wane after those people who routinely interact get exposed. People are unlikely to meet new people outside of their routine networks at the same rate as inside their network, causing infection rates, after a peak, to fall.

Reasoning minds are waking up.

OK Boomer

Darby Shaw: Don't laugh. It was ludicrous of me to think I could solve it. Hubris of the young, huh?
Thomas Callihan: Don't knock the hubris that I love.
--The Pelican Brief

'OK Boomer' has become a popular catchphrase among younger generations used to taunt or mock behavior or attitudes of older generations--particularly the Baby Boomer cohort. Some claim that this is yet more evidence of disrespect and apathy running rampant among youngsters these days.

These claims tend to emanate from the oldsters, of course.

This back and forth is nothing new. Friction between young and old has been at work since the beginning of sociological time. The young have what seems to be limitless time ahead of them. They see themselves as growing stronger and gaining more control over their environments by the day. Some degree of arrogance naturally results from this process, as does proclivity for rebellion against establishment.

Youthful attitudes also foster covetousness and envy toward the old. After all, the old possess relatively large stocks of economic resources that facilitate prosperous life. It is only natural for the young to want some.

'OK Boomer' is just another expression of youthful energy and hubris. OK [fill in blank with words like whatever, pop, old man]. We've heard it before.

While the young see time as infinite, the old are learning the opposite. Family and friends are passing at increasing rates, and mortality looms. The reality is that life time is limited, and older generations are becoming aware that they are closer to the end than to the beginning. It is easy, therefore, for the old to envy the young, because the young have time on their side.

Because of their tendencies for rebellion and covetousness, the young are also seen as a threat. Youngsters want to tear down what oldsters have built. Oldsters see their institutions and legacies at risk.

Thus, the old push back with memes of their own to describe the young. Brats, scallawags, whippersnappers, slackers.

Same as it ever was.

Blinded by Political Affinity

With this very unpleasing
Sneezing and weezing
The calliope crashed to the ground
--Manfred Mann

One sure sign of partisanship: accusing some people of biased behavior or judgment that you know they have political affinities different from yours, while not making similar accusations of people that you know have a political affinities similar to yours.

There is perhaps no better expression of the core tenets of social identity theory than politics.

Militant Left

We'll be fighting in the streets
With our children at our feet
And the morals that they worship will be gone
--The Who

Some people are voicing surprise at the recent escalation in the militant nature of the left. But it should be no surprise. Leftists are statists. When they sense that their statist institutions are being threatened, leftists will do what they can to neutralize the threat.

In pretense that the state does not act aggressively, however, leftists will rarely begin with overt force. Instead, they will follow a familiar progression that unfolds as follows:

Social pressure. Public ridicule, belittlement, etc. aimed at embarrassing or shaming the target into 'voluntarily' removing the threat.

Legal action. Laws, law suits, arrests, impeachment meant to keep the threat at bay.

Physical violence. When the previous two measures don't work, then overt physical force is employed against the threat.

Because leftists are collectivists, they mistakenly believe that ridicule and shaming work against members of out-groups just as effectively as against members of their in-group. They fail to realize that out-group members are often less influenced by rhetoric than leftists are. As such, no matter how loud the left shouts--and they have been shouting--little social pressure is actually exerted on out-groups. Consequently, this tactic has been largely ineffective in quelling recent threats to the state.

Until recently, running to the courts to obtain legal recourse against state threats has been an effective fallback tactic. However, since President Trump took office, he has been nominating judges for benches from the Supreme Court on down that promise to tilt the balance of judiciary power away from leftist agendas.

Because legal channels are also failing them, leftists are increasing turning to overt violence as a preferred measure for preserving the state. This explains rising militant tendencies of the left.

Victimhood Markets

I heard about you and that man
There's just one thing that I don't understand
You say he's a liar and he put out your fire
How come you still got his gun in your hand?
--Eagles

Victim mentality and victimhood culture go hand in hand with markets for victimhood. On one side of the market are the sellers--people who want to trade their position as a victim or perceived victim for something of value.

Victims might value material wealth, as in the case of an accident victim suing for damages. In other cases, victims might welcome psychic income from people who sympathize with their victimhood. Victims might also gain social status if the culture tends to worship or otherwise elevate victimhood.

On the other side of the market are the buyers--those who seek to benefit from the victimhood of others. Overt examples are ambulance chasing attorneys who take on victimized clients under the auspices of obtaining a slice of a legal settlement.

More subtle are charitable people who wish to help others perceived as victimized. In exchange for their assistance, charitable people gain psychic income from the satisfaction of helping others. If they believe in God, charitable people might also gain a spiritual sense that they have strengthened their case for progressing to the afterlife.

Increasingly active on the buy side of victimhood markets are political factions. These groups seek to leverage the victimhood of others to gain political capital that will help them advance their agendas. By acquiring elements of victimhood and the emotional capture that comes with it, political factions calculate that they will gain votes or similar assets that they can ultimately convert into control of the strong arm of government.

When political factions are involved, victimhood markets are a means for gaining power and authority over others.

Confidence Means Caution

Things are going great
And they're only getting better
--Timbuk 3

These pages have recently observed the weak relationship between high consumer confidence and future economic growth. Instead, confidence appears to be a coincident or perhaps even lagging indicator. Stated differently, consumer confidence is more reflective of present or past economic growth rather than serving as a harbinger of future strength.

That linkage is shown pretty clearly in this article. Consumer confidence is at historical highs. In the past, such highs suggest that economic expansion is late in the cycle and that recessionary periods are approaching.

Sanity check. The annualized return in the Russell 2000 when small business optimism is above 107 has been -3.5%. pic.twitter.com/rsZt4Dn94k

— SentimenTrader (@sentimentrader) September 11, 2018

Jason Goepfert chimes in, noting the low historical returns in small cap stocks when small business optimism hits high marks like current levels.

Historically, then, high levels of confidence about the economy should not inspire euphoria...but caution.

Ultimate Learning Disability

"Why don't you do yourself a favor and go back to your white-bread, suburban, cesspool land while you still have a chance?"
--Victor Duncan (The Principal)

There are those who refuse to learn because an instructor (defined as anyone who has something useful to teach) is not like the student in some demographic way. The instructor might have a different skin color, gender, country of origin, social status, income level, et al.

Although social identity theory suggests we might expect as much, this is a foolish form of discrimination. Choosing not to learn because the teacher is not 'like me' may be the ultimate learning disability.

Doing so compromises the quest for knowledge and truth.

Affiliation Bias

Director Nicholas Spikings: You were in the Olympics. You know about being a team player?
Agent Nina Chance: Sharpshooting isn't a team sport.
Director Nicholas Spikings: This is.
--Murder at 1600

Collectivists are, by definition, prone to elevate the wishes of the group over their own. This makes collectivists particularly vulnerable to biases that accompany group affiliation. These include:

In-group favoritism. Affinity for people who belong to the same group. Special treatment is given to in-group members that is not afforded to outsiders.

Out-group derogation. Those in out-groups are seen as threating and inferior. Outsiders become targets of discrimination and ridicule.

In-group influence. In-group members will be prone to shift their personal views toward those of the group.

In-group extremity. Extreme behavior that individuals would never condone by themselves is endorsed when they are members of a group.

Group uniqueness and superiority. Belief that the in-group possesses characteristics that are unique and superior to those of other groups.

The higher a person rates on the collectivist scale, the greater the tendency that this person will display these affiliation biases.

Total War

Otto Heidemann: Yes, I understand. But I don't agree with killing helpless men.
General Count von Klugermann: Otto, this is 1918. Things have changed. Unrestricted submarine warfare, bombing of civilians, poison gas. Ask your wife. She's a nurse. Ask Elfi about the mustard gas casualties.
Otto Heidemann: So you approve of this kind of ruthlessness?
General Count von Klugermann: We fight to win, Otto.
--The Blue Max

Article discusses the decisive German Spring Offensive of 1918 and its consequences. The offensive was the last great campaign of WWI. German leadership essentially bet the house on a massive assault on the Western Front that would end the trench warfare stalemate and win the war.

The author suggests that the German Spring Offensive was the product of a 'total war' idea that had infiltrated Germany over the course of time. Integrate the war effort with the economy by installing military heads in government seats, and cut deals with industry verticals to tilt economic output toward the military goods necessary for victory. Those who were not serving in the German military were essentially conscripted to produce output for military consumption.

The total war strategy is high risk. A country weakens as production veers away from satisfying everyday economic needs and toward a centrally planning focus on military victory. If that victory is not quickly achieved, then the feeble country is exposed to counter strikes by the enemy and, ultimately, conquest.

As we now know, that risk was realized when the German Spring Offensive failed. By the end of 1918, Germany had surrendered and the unfavorable terms of the Treaty of Versailles left the country broken and vulnerable to generations of economic and political distortion.

Unfortunately, the total war idea did not die when Germany 'went under.' In many ways, it has become the blue print for the prosecution of modern war both here and abroad.

MLK and the Racism Narrative

"It will happen again because people like you and me like to be lied to. We like bedtime stories."
--Jake Moore (Wall Street: Money Never Sleeps)

When a black person goes down as the result of crime, there is a large group that prefers the perpetrator of the crime to be white. Because this group believes that racism runs rampant in this country, acts of aggression by whites against blacks fall in line with the group narrative.

This is confirmation bias writ large. It offers convenient cover for actual criminals targeting black victims. Find fall guys who are white, label them as racists, and perhaps you can get away with...murder.

For years, a dedicated group of researchers have been mining evidence that refutes the 'official' story of Martin Luther King's murder. They present a compelling case that James Earl Ray was a patsy framed by a predatory state and compliant media.

In the case of JFK, invent a communist shooter to get the public behind the story. In the case of MLK, concoct a racist assassin for similar, or perhaps even more effective, purpose.

Feed the public what they want to hear and any crime is possible.

Facebook and Personal Productivity

"Come. Waste time here."
--Miyagi (Karate Kid 3)

I joined Facebook in the early days when a .edu email address was still required. To join the network, enrollees must agree to Facebook's policies regarding property rights and information sharing. The content on your page is not your own. Facebook can share your information with whom it wants. It can even mine your site for data that it can use.

Despite the restrictions on privacy, I enrolled. The privacy issues did not bother me initially because my primary motivation for joining Facebook was job-related. I was working with an entrepreneurial financial media firm that sought extend its reach toward the academic community and I wanted to learn about Facebook's potential to connect with college students and perhaps even market to them.

After creating an account, I immediately commenced with the 'friending process,' sending requests to pretty much anyone I could think of in my higher ed circle. Upon confirming my request, a grad student acquaintance at the University of Wisconsin became the first to write on my wall. His message was, "Wow, welcome to the number one time waster for college students!"

It did not take long before I realized that my friend was right about Facebook as a magnet for people's time. Here was an novel, easy-to-use, and free platform for virtually networking with others. You could connect with friends anywhere. You could see what they were up to. You could build a 'profile' that conveyed your identity. You could 'like' what others were doing and saying, and others could do the same for you. You could measure how popular you were by the size of your network. The more people that you connected with, the more alluring the platform became.

Over time, I overstepped my original work-related scope. I had a profile. I was posting on my wall and on the walls of my friends. I was also, for lack of a better word, snooping. I was spending hours reading what others were saying in various threads. Occasionally, I'd jump into those threads and reply myself. I would engage in those mindless debates commonly seen in 'comments' sections of on-line posts. I began anticipating push-back, and looked forward to posts that I could counter.

After this process intensified over the course of years, I finally caught myself. An audit of my time revealed that I was spending at least an hour per day on Facebook--most of it unproductively. It had become, as my friend observed on my first day, my 'number one time waster.'

So I quit.

That was 5 or so years ago and I'm a better person for it. I am now considering the merits of my remaining social network connections, namely Twitter, the networks implied by by gmail and hotmail accounts, and, of course, this blog. My concern this time is not the snooping and debate problems I had with Facebook. Twitter, for example, has become almost exclusively an news and information feed for me. Almost all inbound with an occasional outbound.

Instead, my concern is privacy, and what I concede through my on-line choices and activity. Facebook is currently being questioned about how far the company has taken its access to user information, but it should not be surprising given what users agree to upfront.

It really is amazing what we seem to be willing to give away when we go on-line. In fact, this is a phenomenon that I would like to address in future posts.

Provided that I decide to remain here, that is.