Predictions

Summer Rerun: Catalist, “The 480”, and The Real 480

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There was much discussion in 2014 of Catalist, a database system being used by the Democratic Party to optimally target their electioneering efforts…see Jonathan’s post here.  I’m reminded of Eugene Burdick’s 1964 novel, The 480.   The book’s premise is that a group within the Republican party acquires the services of a computing company called  Simulation Enterprises, intending to apply the latest technology and social sciences research in order to get their candidate elected.  These party insiders have been inspired by the earlier work of the 1960 Kennedy campaign with a company called Simulmatics.

Simulmatics was a real company.  It was founded by MIT professor Ithiel de Sola Pool, a pioneer in the application of computer technology to social science research. Data from 130,000 interviews was categorized into 480 demographic groups, and an IBM 704 computer was used to process this data and predict the likely effects of various alternative political tactics.  One question the company was asked to address by the 1960 Democratic campaign, in the person of Robert F Kennedy, was:  How best to deal with religion?  There was considerable concern among some parts of the electorate about the prospect of choosing a Catholic as President.  Would the JFK campaign do better by minimizing attention to this issue, or would they do better by addressing it directly and condemning as bigots those who would let Kennedy’s faith affect their vote?

Simulmatics concluded that “Kennedy today has lost the bulk of the votes he would lose if the election campaign were to be embittered by the issue of anti-Catholicism.  The simulation shows that there has already been a serious defection from Kennedy by Protestant voters. Under these circumstances, it makes no sense to brush the religious issue under the rug.  Kennedy has already suffered the disadvantages of the issue even though it is not embittered nowand without receiving compensating advantages inherent in it.”  Quantitatively, the study predicted that Kennedy’s direct addressing of the religion issue would move eleven states, totaling 122 electoral votes, away from the Kennedy campbut would pull six states, worth 132 electoral votes, into the Democratic column.

It is not clear how much this study influenced actual campaign decision-making…but less than three weeks after RFK received the Simulmatics report, JFK talked about faith before a gathering of ministers in Houston.  “I believe in an America where religious intolerance will someday end,”  Kennedy said,  “where there is no Catholic vote, no anti-Catholic vote, no bloc voting of any kind.” (Burdick’s novel also suggests that the Kennedy campaign used Simulmatics to assess the effects of a more-forthright posture on civil rights by the campaign, and furthermore to analyze Kennedy’s optimal personality projection during the debatesI don’t know if these assertions are historically correct, but the religion analysis clearly was indeed performed.)

Considerable excitement was generated when, after the election, the Simulmatics project became publicly known.  A Harper’s Magazine article referred to to the Simulmatics computer as “the people machine,” and quoted Dr Harold Lasswell of Yale as saying, “This is the A-bomb of the social sciences.  The breakthrough here is comparable to what happened at Stagg Field.”  But Pierre Salinger, speaking for the Kennedy campaign, asserted that “We did not use the machine.”  (Salinger’s statement is called out as a lie in the recent book,  The Victory Lab: The Secret Science of Winning Campaigns.)

In Burdick’s novel, the prospective Republican candidate is John Thatch, head of an international engineering and construction company.  Thatch has achieved popular renown after courageously defusing a confrontation between Indians and Pakistanis over a bridge his company was building, thereby averting a probable war.  Something about Thatch’s personality has struck the public imagination, anddespite his lack of political experiencehe looks to be an attractive candidate.  But initially, the Republicans see little hope of defeating the incumbent Kennedy“the incumbent is surrounded by over four years of honorific words and rituals,” a psychologist explains.  “He seems as though he ought to be President.  He assumes the mantle.”  This outlook is deeply disturbing to a Republican senior statesman named Bookbinder, who strongly believes that defacto 8-year terms are bad for the country…but if it is true that Kennedy is unbeatable, then the best the Republicans can hope to do is lose as well as possible.  Things change when Kennedy is assassinated and the election becomes a real contest.

Bookbinder and Levi, another Republican senior statesman, are introduced to Simulation Enterprises by a young lawyer named Madison (Mad) Curver and his psychologist associate (quoted above), a woman named Dr Devlin.  Mad and Dr Devlin explain that what Sim Enterprises does is different from the work done by garden-variety pollsters like the one they have just met, Dr Cotter:

“The pollster taps only a small fragment of the subject’s mind, attention, background, family influence, and habits.  The Simulations thing, just because it can consider thousands of elements influencing the subject, even things he may not know himself, gets much better results.”

“And one further thing, Book,” Mad said.  “Simulations Enterprises can predict what people will do in a situation which they have never heard of before.  That was the whole point of the UN in the Midwest example.  No one has gone out there and asked them to vote on whether we should get out of the UN, but Dev outlined a procedure by which you can predict how they will react…if they ever do have to vote on it.

Again Bookbinder had the sharp sense of unreality.  Unreal people were being asked invented questions and a result came out on green, white-lined paper…and when you got around to the real people six months later with the real question they would act the way the computer had said they would.

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Catalist, “The 480,” and The Real 480

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(In the light of the Cambridge Analytica revelations and controversy. I thought this 2014 post might be due for a rerun)

There has been much discussion recently of  Catalist, a database system being used by the Democratic Party to optimally target their electioneering efforts…see Jonathan’s post  here.  I’m reminded of Eugene Burdick’s 1964 novel,  The 480.   The book’s premise is that a group within the Republican party acquires the services of a computing company called  Simulation Enterprises, intending to apply the latest technology and social sciences research in order to get their candidate elected.  These party insiders have been inspired by the earlier work of the 1960 Kennedy campaign with a company called Simulmatics.

Simulmatics was a real company.  It was founded by MIT professor Ithiel de Sola Pool, a pioneer in the application of computer technology to social science research. Data from 130,000 interviews was categorized into 480 demographic groups, and an IBM 704 computer was used to process this data and predict the likely effects of various alternative political tactics.  One question the company was asked to address by the 1960 Democratic campaign, in the person of Robert F Kennedy, was:  How best to deal with religion?  There was considerable concern among some parts of the electorate about the prospect of choosing a Catholic as President.  Would the JFK campaign do better by minimizing attention to this issue, or would they do better by addressing it directly and condemning as bigots those who would let Kennedy’s faith affect their vote?

Simulmatics concluded that “Kennedy today has lost the bulk of the votes he would lose if the election campaign were to be embittered by the issue of anti-Catholicism.  The simulation shows that there has already been a serious defection from Kennedy by Protestant voters. Under these circumstances, it makes no sense to brush the religious issue under the rug.  Kennedy has already suffered the disadvantages of the issue even though it is not embittered nowand without receiving compensating advantages inherent in it.”  Quantitatively, the study predicted that Kennedy’s direct addressing of the religion issue would move eleven states, totaling 122 electoral votes, away from the Kennedy campbut would pull six states, worth 132 electoral votes, into the Democratic column.

It is not clear how much this study influenced actual campaign decision-making…but less than three weeks after RFK received the Simulmatics report, JFK talked about faith before a gathering of ministers in Houston.  “I believe in an America where religious intolerance will someday end,”  Kennedy said,  “where there is no Catholic vote, no anti-Catholic vote, no bloc voting of any kind.” (Burdick’s novel also suggests that the Kennedy campaign used Simulmatics to assess the effects of a more-forthright posture on civil rights by the campaign, and furthermore to analyze Kennedy’s optimal personality projection during the debatesI don’t know if these assertions are historically correct, but the religion analysis clearly was indeed performed.)

Considerable excitement was generated when, after the election, the Simulmatics project became publicly known.  A Harper’s Magazine article referred to to the Simulmatics computer as “the people machine,” and quoted Dr Harold Lasswell of Yale as saying, “This is the A-bomb of the social sciences.  The breakthrough here is comparable to what happened at Stagg Field.”  But Pierre Salinger, speaking for the Kennedy campaign, asserted that “We did not use the machine.”  (Salinger’s statement is called out as a lie in the recent book,  The Victory Lab: The Secret Science of Winning Campaigns.)

In Burdick’s novel, the prospective Republican candidate is John Thatch, head of an international engineering and construction company.  Thatch has achieved popular renown after courageously defusing a confrontation between Indians and Pakistanis over a bridge his company was building, thereby averting a probable war.  Something about Thatch’s personality has struck the public imagination, anddespite his lack of political experiencehe looks to be an attractive candidate.  But initially, the Republicans see little hope of defeating the incumbent Kennedy“the incumbent is surrounded by over four years of honorific words and rituals,” a psychologist explains.  “He seems as though he ought to be President.  He assumes the mantle.”  This outlook is deeply disturbing to a Republican senior statesman named Bookbinder, who strongly believes that defacto 8-year terms are bad for the country…but if it is true that Kennedy is unbeatable, then the best the Republicans can hope to do is lose as well as possible.  Things change when Kennedy is assassinated and the election becomes a real contest.

Bookbinder and Levi, another Republican senior statesman, are introduced to Simulation Enterprises by a young lawyer named Madison (Mad) Curver and his psychologist associate (quoted above), a woman named Dr Devlin.  Mad and Dr Devlin explain that what Sim Enterprises does is different from the work done by garden-variety pollsters like the one they have just met, Dr Cotter:

“The pollster taps only a small fragment of the subject’s mind, attention, background, family influence, and habits.  The Simulations thing, just because it can consider thousands of elements influencing the subject, even things he may not know himself, gets much better results.”

“And one further thing, Book,” Mad said.  “Simulations Enterprises can predict what people will do in a situation which they have  never heard of before.  That was the whole point of the UN in the Midwest example.  No one has gone out there and asked them to vote on whether we should get out of the UN, but Dev outlined a procedure by which you can predict how they  will  react…if they ever do have to vote on it.

Again Bookbinder had the sharp sense of unreality.  Unreal people were being asked invented questions and a result came out on green, white-lined paper…and when you got around to the real people six months later with the real question they would act the way the computer had said they would.

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Iconoclasm

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Something was nagging at the back of my mind about the recent push to destroy all Civil War monuments in the South. The argument usually advanced is that these statues celebrate the Confederacy and slavery so they should be removed. That case is facially plausible.

However, the destruction of monuments seems to be accelerating, with a move from organized removal, lawfully conducted, to mobs toppling the statues spontaneously.

Watching this video is a good example of the trend.

Then I saw today that activists are demanding that statues of Theodore Roosevelt be taken down, because he was apparently also “racist”.

And today the Lincoln Memorial was vandalized.

In the past, there have been outbreaks of this sort of behavior, and they have tended to get out of control. There was the original iconoclast movement in Byzantium. There was a massive destruction of religious images during the Reformation. There was a similar outbreak of mob attacks on religious statues and images during the French revolution. During the early days of the Spanish Civil War, mobs spontaneously attacked and destroyed churches. There is a famous photo of men in civilian clothes taking pot shots at a large crucifix, somewhere in Spain in 1936.

The Wikipedia article lists many such outbreaks.

The Chinese Cultural Revolution seems the most apt comparison to where this is going. The Red Guards tried to stamp out the entirety of Chinese history up to their own time. Everything that had occurred before their revolution was corrupt and any attempt to preserve it was a political offense requiring the harshest possible personal attack, including violent attack, and including death. Further, the activities escalate because people must engage in increasingly extreme behavior to show their commitment and fervor. Slacking off becomes suspect.

The fact that this is a recurring phenomenon, with similar patterns repeating in various cultures over thousands of years, suggests that there is a generalized psychological impulse which can express itself anywhere if conditions are right, especially an ideological motivation.

The inner logic of Political Correctness, in the USA, in 2017, has no stopping point.

The existence of Trump is a helpful rhetorical crutch, since people can say that they are just striking out in rage at having a fascist in the White House. But that is a justification not a cause.

Genuine, deep hatred of the past, of everything the USA has been and stood for, is the motivator.

This is the result of several generations of indoctrination, in the government schools. The indoctrination has been spectacularly successful.

Absolutely everything that occurred in the American past is necessarily, in this view, tainted and corrupt, valueless and worthy only of elimination. For example, most of the Founders were slave-owners. All depictions and references to them must be destroyed. George Washington, a slave owner, was no better than a Nazi. All institutions and documents associated with slave-owners, the Declaration of Independence, the Constitution, are no better than Nazi documents. All of them must be destroyed.

Christian churches have traditionally been associated with condemning homosexuality as sin, or fighting against Islam. These religious buildings and their images must also be destroyed, by this logic.

Buildings traditionally associated with male privilege, or capitalism, for example old office buildings with traditional lobby spaces, or clubs that were once restricted to men, are tainted. These also have to be destroyed.

At a certain point public monuments will be attacked if they are old or have figurative statues simply because everything from the past falls short of the ideal politically correct standard and is therefore evil.

If you watch the video of the crowd tearing down the Confederate soldier statue, they are not engaged in any kind of rational political act. They are in a frenzy. They are motivated by hate, and they are literally angrily kicking and punching an inert mass of crumpled metal.

Mobs, once they taste the pleasure of mass violent action and ritual destruction, will want more of it. The conduct will not stop, but will escalate. It is a process that can get out of control.

The psychological compulsion to engage in this behavior, and the feeling of group solidarity which comes with the activity, the chanting, the sense of triumph in destroying something that is valued by people the attackers hate, is intoxicating.

Conventional politicians on the Left will find it hard to find a principled way to condemn the behavior, and will say they understand the impulse but condemn the excess.

Conventional politicians on the Right will apologize for racism and oppression in the past, but insist on law and order.

Neither will engage with the revolutionary and nihilistic impulses which underlie this behavior, or the indoctrination which made it possible.

Expect to see this behavior continue, ratchet up, break out in many places.

Expect high levels of serious vandalism and arson directed at the types of monuments and buildings I mentioned.

As usual with such predictions, I hope I am wrong.

Let’s see how it looks over the next few months.

UPDATE:

TThat didn’t take long!

In Chicago today: Local pastor calls on Emanuel to change names of 2 Chicago parks.

Bishop James Dukes sent a letter to Mayor Emanuel and the Chicago Park District on Monday asking the City of Chicago to rename Washington and Jackson Parks which commemorate former presidents George Washington and Andrew Jackson, key historical figures and known slave owners.

The article notes: “On the topic of removing the statute of Confederate General Robert E. Lee, the president said, ‘I wonder, is it George Washington next week? And is it Thomas Jefferson the week after?'”

President Trump is a pretty smart cookie!

But it didn’t even take a week.

According to the article, this pastor “is meeting with a city official soon to discuss the process for changing the names.”

We have a whole damn state named after Washington!

That has to change.

And Washington’s head has to be dynamited off of Mount Rushmore.

And the money? Washington’s face is on the money! That has to change!

And all those statues! Take ’em down!

That will help to bring about healing.

Stand by.

UPDATE 2:

Executive director and general counsel of the Congressional Black Caucus calls for statues of George Washington to “come down”.

WHAT HAPPENS AFTER YOU TURN IT UP TO “11”?

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A conversation elsewhere brought up a topic that lets me get ahead of things and put down a marker for future reference. It was noted that the Democrats and their allies farther Left have had their outrage meters literally turned up to “11” [on a 1-10 scale] since the election. The first calls for Trump’s impeachment actually came from the Democrats as soon as he was nominated. And for that matter, during the General Election campaign, it was not restricted to Democrats. Republican Congress-critter Mike Coffman [CO-6] was running radio ads in English and Spanish promising to oppose Trump in everything he tried to do if Trump was elected.

That outrage got a boost when Neil Gorsuch was confirmed to the Supreme Court. But the increase was slightly muted because it was a case of a conservative Justice replacing the late conservative Justice Antonin Scalia who died under questionable circumstances. It would not be a net change of the balance of the court.

Starting a few weeks ago, rumors started that Leftist supporting Justice Anthony Kennedy might retire. And the scale went at least a couple of notches higher. Then a week or so later people were reminded that Ruth Bader Ginsburg, who dares not visit a medical school for fear that her resemblance to a cadaver might get her dissected by a doctor in training, has health problems. She has had colon cancer and recovered after surgery and radiation therapy. She has had pancreatic cancer; it is said that she recovered from that. And three years ago, she had to have a stent placed in her right coronary artery. That medical history in an 84-year-old woman is not encouraging. Leaving aside the jokes about doing a Supreme Court remake of the movie “Weekend at Bernies”, the odds of her reaching the end of Donald Trump’s term in office [and age 90] are not good.

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Can Donald Trump Prevent the Economy from Falling Into a Black Hole?

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Interest rates will eventually rise without an even more devastating policy of financial repression. When they do, rising interest costs will produce a vicious cycle of ever more borrowing. We are already approaching the “event horizon” of spinning into this black hole of an inflationary spiral and economic collapse from which few countries historically have escaped. A substantially higher rate of growth is the only way to break free.

National economic growth is typically measured by the growth of GDP, and citizen well being by the growth of per-capita GDP. The long run trend of GDP growth reflects labor force participation, hours worked and productivity as well as the rate of national saving and the productivity of investments, all of which have been trending down.

The population grows at about 1% annually and actual GDP growth averaged 2% overall for 2010-2016 (using the new World Bank and IMF forecast of US GDP at 1.6% for 2016), hence per capita GDP grew at only 1%. Moreover the income from that 1% growth went primarily to the top one percent while 99% stagnated and minorities fell backwards.

Why we are approaching the Event Horizon
The Obama Administration annually predicted a more historically typical 2.6% per capita growth rate, consistent with the historical growth in non-farm labor productivity. How could their forecasts be so far off?

The Obama Administration pursued the most massive Keynesian fiscal and monetary stimulus ever undertaken. Such a policy generally at least gives the appearance of a rise in well being in the near term, as the government GDP statistic (repetitive, as the word “statistic derives from the Greek word for “state” ) reflects final expenditures, thereby imputing equal value to what governments “spend” as to the discretionary spending of private households and businesses in competitive markets. But labor productivity gains stagnated at only about 1%, most likely reflecting the cost and uncertainty of anti-business regulatory and legislative policies that dampened investment, something the Administration denied, trumping even a short term boost to GDP.

As a result the national debt approximately doubled from $10 trillion to $20 trillion, with contingent liabilities variously estimated from $100 to $200 trillion, putting the economy ever closer to the event horizon. Breaking free will require reversing the highly negative trends by reversing the policies that caused them.

Technology alone isn’t sufficient
Obama Administration apologists argued that stagnation is “the new normal” citing leading productivity experts such as Robert Gordon who dismissed the potential of new technologies. Many disagree, but Gordon’s findings imply even greater reliance on conventional reform.

Fiscal policy won’t be sufficient
Raising taxes may reduce short term deficits but slows growth. Cutting wasteful spending works better but is more difficult.

The list of needed public infrastructure investments has grown since the last one trillion dollar “stimulus” of politically allocated and mostly wasteful pork that contributed to the stagnation of the last eight years. Debt financed public infrastructure investment contributes to growth only if highly productive investments are chosen over political white elephants like California’s bullet train, always problematic.

Major cuts in defense spending are wishful thinking as most geopolitical experts view the world today as a riskier place than at any prior time of the past century, with many parallels to the inter-war period 1919-1939.

The major entitlement programs Social Security and Medicare for the elderly need reform. But for those in or near retirement the potential for savings is slight. Is Medicare really going to be withheld by death squads? Are benefits for those dependent on social security going to be cut significantly, forcing the elderly back into the labor force? Cutting Medicare or SS benefits for those with significant wealth the equivalent of a wealth tax won’t affect their consumption, hence offsetting the fall in government deficits with an equal and offsetting liquidation of private wealth. Prospective changes for those 55 years of age or younger should stimulate savings and defer retirement, improving finances only in the long run.

The remaining bureaucracies are in need of major pruning and in numerous cases elimination but they evaded even budget scold David Stockman’s ax during the Reagan Administration.

Americans will have to work more and consume less
That is the typical progressive economic legacy of excessive borrowing from the future.

The first Clinton Administration created the crony capitalist coalition of the political elite and the politically favored, e.g., public sector employees and retirees, subsidy recipients and low income home loan borrowers. The recent Clinton campaign promised to broaden this coalition, which would have accelerated the trip over the event horizon.

Reform that taxes consumption in favor of savings and a return to historical real interest rates could reverse the dramatic decline of the savings rate. Regulations redirecting savings to politically popular housing or environmental causes need to be curtailed in favor of market allocation to productive business investment.

Repeal and replace of Obama Care could reverse the trend to part time employment. Unwinding the approximate doubling of SS Disability payments and temporary unemployment benefits could reverse the decline in labor force participation.

Service sector labor productivity has been falling since 1987, the more politically favored the faster the decline. Legal services are at the bottom, partly reflecting political power of rent-seeking trial lawyers, followed by unionized health and then educational services. Union favoritism through, e.g., Davis Bacon wage requirements and “card check” increases rent seeking, particularly rampant in the unionized public sector.

Competition, of which free but reciprocal trade has historically been a major component, has traditionally provided the largest boost to well being by realizing the benefits of foreign productivity in a lower cost of goods while channeling American labor into employment where their relative productivity is highest. The transition is often painful, but paying people not to work long term is counterproductive. Immigration of both highly skilled and low cost labor (but not dependent family) generally contributes to per capita labor productivity in the same way as free trade.

None of this will be easy. The alternative is Greece without the Mediterranean climate or a sufficiently rich benefactor.

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Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.