Breakfast Notes #39 (Soros, Propoganda, Nikon)

Good morning friends.

Here is what I want to share this week.

• Working Wednesday Reads. Every Wednesday, I take a 45-minute bus ride to the office. I share with you links worth your time. From next week on, I will publish them weekly.
• LKYSPP For 2054. I am running for the President of the LKYSPP Alumni (Singapore Chapter). You can look at my essay here to understand why a junior civil servant like me is taking this big swing.

Here is the 39th serving of the Breakfast Notes.

Fallibility and Reflexivity

In Economics, we assume that humans are rational creatures with perfect information.

It is a dumb assumption, but we still do it because it allows us to create stable (and sometimes useful) models.

According to George Soros, we have the Siamese twins of 'fallibility' and 'reflexivity.'

First, we are fallible because our worldview never perfectly maps to the real world. We can know of a fact, but our perspective will either be biased or inconsistent when it comes to creating a coherent theory.

We suffer from reflexivity because our imperfect views fundamentally affect how we act, which will affect the world works. This then generates a feedback loop that will only reinforce your existing worldview.

In finance, if investors believe that markets are efficient and that you are better off buying ETFs than individual stocks, you will likely invest in ETFs, which will cause demand for ETFs and their price to rise. Naturally, you see the appreciation as proof of your belief. Thus, you are less likely to consider other options.

This feedback loop also explains why we live in an increasingly polarized world. The more concentrated your source of information, the more likely you are to suffer from fallibility. It's often a fool's errand to tell people to 'read all sides' because a) that's an additional source of cognitive load they won't want to bear, and b) they already assume they are wrong and thus, are unlikely to change their position.

The better bet is to influence the suppliers of information and get them to tweak their product to optimize not just for profits but also for social good. How? Government intervention.

Visualization Of The Day

Question #1: How are CNN and MSNBC fundamentally different?
Question #2: How do you get Americans to watch CNN and Fox?

Visualization Of The Day #2

Nikon displays social proof that supports their headline by showing their best cameras of the past thirty years.

The True Power of Propaganda

Why do authoritarian governments engage in propaganda when citizens often know that their governments are propagandizing and therefore resist or ignore the messages?

This is the question that Haifeng Huang, a political scientist, sought to answer.

You might suppose that it's an attempt to brainwash the masses. But, for brainwashing to be effective, propaganda must match reality. The state must convince people that what they experience is true.

If I told you that Lee Kuan Yew was a remarkable man who took a mosquito-infested backwater and built it into a top city where businesses worldwide wanted to come, you might accuse me of being pro-PAP.

Yet, you would not say that was pro(PAP)aganda. The truth is even the firmest critic would begrudgingly accept that he did much for Singapore's current prosperity.

Now, if I said Chairman Mao fed the whole of China throughout the 1960s and I said, 'Long Live his thinking,'. You might reasonably assert that this is propaganda! The hungry folks then would dismiss such a message as silly and unpersuasive.

So why does propaganda have the luxury of being patently false?

Well, Hua answers that instilling pro-regime values and attitudes is one aim of authoritarian regimes. But it's not their only aim.

Propaganda has another aim of reminding people of who the REAL boss is. When citizens are bombarded with propaganda, despite its obvious falsehood, they are reminded that any attempt at resistance will be futile.

This insight was elaborated by Huang but intuited by Orwell.

Early in his novel 1984, Winston, the protagonist, writes that "Freedom is the freedom to say that two plus two make four." But after being barraged with propaganda and tortured at the Ministry of Love, he sits heartbroken, a shell of his former self, at the Chestnut Tree Café and traces "2 + 2 = 5" in the dust on his table.

Was it because he truly believed that 2+2 =5 or because he had come to accept that in such an oppressive environment, he had lost all freedom and that resisting was futile?

Thank you for reading this, and truly, may the sun shine upon your face,

Keith