Sunday, December 11, 2016

Michael Lewis on Trump and Obama

Michael Lewis has written a number of wonderful books, from Moneyball to  Liar’s Poker to The Big Short. He explains complex financial realities in cogent and intelligible terms.

Now, Lewis has just written a book about the two founders of behavioral economics, Daniel Kahneman and Amos Twersky. The book is called, The Undoing Project: A Friendship that Changed our Minds. It is doing very well on Amazon, and thus looks to be a best seller.

As part of his marketing campaign Lewis has been giving interviews to the press. He wants to show that the discoveries of behavioral economics can offer new insights into political leadership. He wants to show how it’s relevant to our everyday life. How better to seduce new readers?

And yet, when you get to the bottom of it, Lewis’s conclusions are anything but earth shattering. They are: Obama good; Trump bad. We did not need prize winning behavioral economists to tell us that. We could have turned to a column by Paul Krugman or by any suitably biased hack.

Apparently, Obama took behavioral economics seriously and used it to run the government and the country. Trump, it appears, is not as tuned in to this latest academic production. Which means, precisely, nothing. Or better, it means that Obama has sucked up to the behavioral economists in ways that Trump has not.

One notes that Lewis’s views of Trump are based largely on his campaign. If it is true, as Selena Zito has famously pointed out that Trump’s detractors took him literally but not seriously while his supporters took him seriously but not literally, then they are chasing a phantom.

Besides, behavioral economics seems to want to reduce decision-making to manipulation. Might this not mean that these members of the guardian class want to arrogate to themselves the power to make decisions for the rest of us?

Behavioral economics seems to devalue rational decision-making and even free will in order to explain decisions as a product of manipulation and exploitation. Everyone seems to find this to be a great idea, which means that it probably is not. One wonders how these self-aware psychologists and their self-aware chronicler have failed to examine their own biases—are they enamored of Obama because he has been stroking their ego and appalled at Trump because he has not surrounded himself with behavioral economists?

Jesse Singal summarized the Lewis argument in New York Magazine:

Kahneman is right, of course, that “the fate of entire societies may be sealed by a series of avoidable mistakes committed by their leaders.” The parent of all these mistakes, at least arguably, is overconfidence in one’s own abilities and perception. Here the divide between Trump and Barack Obama is profound. Say what you will of Obama, he recognized human fallibility: The first president to express active interest in applying cutting-edge behavioral science to his role as chief executive, Obama famously told Lewis that he had decided to wear only two colors of suits to cut down on the potential for “decision fatigue” — a concept straight from the decision-science literature (though part of a cluster of findings facing replication issues) — to color his judgments. Obama also launched the so-called Social and Behavioral Sciences Team, the homepage of which prominently displays this quote from the president: “A growing body of evidence demonstrates that behavioral science insights — research findings from fields such as behavioral economics and psychology about how people make decisions and act on them — can be used to design government policies to better serve the American people …”

Just in case you did not know that behavioral scientists are self-interested. Amazingly, the scientists do not factor in Obama’s lack of any serious qualifications for the office of the presidency. One might say that a rank outsider like Trump did not bring any experience in politics to his candidacy, but if we are going to be fair and balanced, we need to notice that Obama had far less executive experience than Trump. He did know more about the law, however.

But, why doesn’t Lewis deal with the track record of the Obama presidency. Does behavioral economics give anyone a special insight into policy and politics? Does it tell us why the economy has sputtered along for eight years? Does it tell us how much of a mess Obama made out of the Middle East? Does it tell us why the refugee invasion of Europe played in the minds of Europeans and even American? Does it tell us why Obama has been an appalling bad negotiator?

We could go on. I am sure you would rather I did not. Lewis will claim that Trump was manipulating the minds of voters by pegging immigrants as rapists, but the truth of the matter is, in Europe, in sanctuary countries like Sweden and Germany refugees have been committing far more than their share of rapes and other crimes. And let’s not forget the terrorist actions in France.

To say that fewer people died at the Bataclan than on the roads of France misses the civilizational threat that an invading army of Muslim immigrants poses to Western Europe.

To think otherwise is to bury your head in the sand.

To think that people who take these matters seriously are bigots who have not drunk deep of the wisdom of behavioral economists is insulting. It’s the kind of insult that caused people to vote for Donald Trump.

In another interview for New York Magazine Lewis offers up his enlightened opinion that giving power to Trump is dangerous.

New York reports:

Yesterday I [Lewis} noted that The Undoing Project reemphasized for me just how dangerous it is to give power to someone like Trump, who has so little capacity for introspection and humility, who is never going to challenge his own biases and thinking in the way Kahneman and Tversky’s research suggests he — and everyone — should.

Lewis didn’t salve my worries at all. “If it works out, it’s going to work out purely by chance,” he said of the imminent Trump presidency. “There’s no design [with Trump]. He’s at the mercy of the very intellectual forces in the mind that Danny and Amos describe, and so we all are. I think they provide a really interesting filter to observe his political life through. They give you a lens onto his behavior, and in addition, the lens on the behavior of the people he energizes.”

Of course, Lewis did not consider that Trump was playing a part in his presidential campaign and that we ought not to take what he said very seriously. Obviously, this might well turn out to be a problem. I have mentioned the point myself on several occasions.

Yet, if we examine the developing Trump cabinet for hints about how Trump will govern, we note that he has chosen many people who have serious executive and leadership experience, and who do not need to read books about behavioral economists to figure out which suits to wear.

And we note that the generals and the CEOs are not political figures. They are not beholden to a political party and rarely, if ever to an ideology.

Will they be out of their depth on the world stage? Perhaps so. Perhaps not. Are they more or less likely to be warmongers? Historical evidence suggests that they will be less apt to engage in military conflict and more likely to want to win, as quickly as possible. Why are people opposed to that?

But many of them have already functioned quite effectively on the world stage. And surely, when academics object that generals and CEOs just give orders they are merely showing how little they understand about the exercise of power.

And what’s with this obsession with bias? Businesses do not run on bias. Corporations do not run on bias. Armies do not run on bias. To say otherwise is to obscure the issue with one’s own bias.

Speaking of bias, the Obama administration has generated an eight year national conversation about racial bias. Why is this such a good thing? One suspects that the American people, perhaps less irrational than the behavioral economists imagine, decided that they were tired of fighting the culture wars and that it was time to get down to business. You know and I know that if Hillary had been elected we would have gotten a four year conversation about sexism. All criticism of her presidency would have been greeted with cries about sexism. 

Generals and CEOs are not culture warriors. They are not ideologues. They are not political party hacks. Their loyalty has been to the nation or to their company.

Perhaps people voted for Trump because they wanted to bridge the American political divide, to put an end to the culture wars and to assert national pride. It may or may not work, but since Lewis and his behavioral economist friends have no awareness of the importance of national pride-- and have failed to see that Obama has diminished it significantly, thus producing the anger that they are so upset to see-- they should be less arrogant about their theories and should show more respect for people who have significant executive experience?

These great thinkers do not respect the free will of the American people. If the American people voted against the best interests of behavioral economists that can only mean that they are being irrational. Lewis thinks that they have been exploited by Trump… as though the American people were not conned and do not continue to be conned by Barack Obama and by his enablers in the media and the academy.

Lewis seems to think that the brouhaha over immigration is much ado about nothing. He should try to explain that to Germans and Swedes and the French and the British, all of whom have come to a different conclusion. Besides, if you are thinking about bad decisions, you should ask yourself what led the American people to put a neophyte like Barack Obama, a man with a minimal experience in the Senate and no executive experience whatever, in the White House. Was he qualified because he read the right books?

New York offers up other pieces of their interview with Lewis:

Trump both knows how to exploit other people’s biases and heuristics and appears completely biased to his own. Here, Lewis sees a stark contrast between our incoming president and our lame-duck one. “Obama was and is totally aware that you need to watch yourself when you’re making decisions, that the decision is influenced by all kinds of extraneous things, like the mood you’re in when you make it, the way it’s framed, the environment,” and so on, said Lewis.

As I said, one of the legacies of the Obama years is that we have become mired in endless conversations about bias. Do you really believe that once we overcome our bias we will see that Obama was a great president? This is not rational deliberation; it’s therapy.

Lewis seems to think that Trump will be more at the mercy of his advisors than Obama. Based on what empirical evidence, one might ask?

I too have occasionally mentioned that the risk with a Trump presidency is that he knows so little about the workings of government or about policy. Thus, he might allow himself to be manipulated by his advisors. And yet, how much did Barack Obama know about these matters? How does Lewis know whether Obama, bringing with him a mindset crafted by Jeremiah Wright, is not just functioning like Wright’s puppet?

As of today, Trump has not made any real decisions besides choosing his cabinet. You can ask yourself whether he has made good decisions or bad decisions. You can ask whether his generals are as likely to make a mess of the Middle East the way Obama did. You can ask whether they will be as likely to encourage an Iran nuclear deal that, if it is not overturned, might very well turn out to be a world class catastrophe. But, to present Obama as a model for good decision making is absurd.

I will grant that Obama has been great for the reputation of behavioral economics? Why do these great scientists ignore their own bias?

New York reports on Lewis’s comments:

“Among other things,” he continued, “Obama was not nearly as much at the mercy of his advisers as Trump will be, because people will be able to manipulate Trump by the way people describe things to him, and Obama is able to change the frame, so he can see the decision for what it is rather than how it’s presented to him. I like that in a president — in a weird way I think a lot of Trump’s decisions are going to be made for him by the people around him because he’s manipulable. This is why people say about him, it all depends on who he’s seen last, what he decides to do. I like having a president who is aware of the forces that are at work in his own mind, and now we have a president who seems to be oblivious, and just loves the forces that are at work in his own mind unconditionally.”

Do you really believe that self-awareness trumps experience? True enough, Trump often claims to be making decisions with his gut. And yet, as I have  pointed out, there’s gut and then there’s gut. Warren Buffet says that he relies on his gut. He means that after having spent seven decades reading and studying businesses and the market, his can think more quickly and make better decisions than many of the rest of us. If you wish to rely on Buffet’s gut in choosing stocks you are welcome to buy shares in one of his funds. Just don’t pick stocks by relying on your own far-less-educated gut.

The same applies to Trump, especially when he offers advice on how to negotiate. Again, a real estate developer has far more knowledge of such deals. He gained it from experience, from, let us note, good and bad decisions. He will make quicker decisions than the rest of us more rapidly. Nothing guarantees that his decisions are always right, any more than that Warren Buffet’s decisions are always right.

One is concerned and one has expressed concern over Trump’s inexperience in government. Yet, he does have experience in making executive decisions, something that Barack Obama did not have. It’s not just about shifting the frame. It’s about possessing the information needed to make a decision and about having made a sufficient number of executive decisions to know how to do so.

On that score Obama has certainly not been a success. He has not made deals. He did not negotiate with Republicans and failed to negotiate a Status of Forces agreement when walking away from Iraq. He allowed his IRS to persecute his political opponents and incited his Justice Department to cover it all up.

I do not know how well the Chairman of Exxon Mobil can negotiate with foreign governments. And yet, he has garnered experience managing a massive corporation and dealing with foreign leaders in his current job. Is it really a terrible thing to have a Secretary of State who is trusted by the Russians or an ambassador to China who is trusted by the Chinese? Or, would you rather have the monumentally unqualified Hillary Clinton back running the State Department?


Anonymous said...

"Overconfidence in one's abilities & perception". The hallmark of Western Elites since Rousseau.

Marx, Lenin, Stalin, Hitler. They had tons of Confidence.

Our current Leadership does too.

How's that workin' out for 'ya? -- Rich Lara

Anonymous said...

"Behavioral economics seems to devalue rational decision-making and even free will in order to explain decisions as a product of manipulation and exploitation."

Much of society is indeed driven by manipulation.

The problem of Behavioral Economics is that it doesn't try to waken people to their rational potential but instead seeks to manipulate them toward certain agendas.
Behavioral Economics accepts Human Stupidity & Gullibility as unalterable givens, even as preferred conditions, on the basis that it is easier to manipulate idiocy and infantilism toward certain ends than to convert critical & rational minds. It is no wonder that the elites push PC that stunts the mind and Pop Culture that stunts the soul.

Take the homo agenda. It wasn't argued rationally and morally but promoted and celebrated through media hype, glitz, sass, and glamour.

This is Obama-ism, just another infantile version of Oprahism.

David Foster said...

The scribes and the idea of freedom:

Trigger Warning said...

Economics, unless viewed in the broadest possible terms, is a bit like voodoo. Despite Nobel Prizes and so forth, very little is really known to any degree of certainty.

Older economic theories weren't much different from the armchair anthropologies of an earlier era. A perfect example is Lord Keynes' economics, which basically relies on elites like Lord Keynes to manage an economy. Keynes' work was embellished by the "Keynes multiplier", which basically says that a given percentage P of government spending will result in an increase in GDP of P+N. Absurdly, some even argue N of 0.5% or larger, implying that, in the limit, government actually should borrow and spend infinite sums on stimulus. Show me an investment with a guaranteed 1.5% multiplier over, say, a four-year Presidential term, and I'll invest every cent I have and every cent I can borrow at a reasonable interest rate in it.

Mathematical modeling in recent decades has also become quite popular in economics, much to the detriment of the field. It eventually ended up with models like Black-Sholes, which crashed on the rocks of the mortgage debacle. The limitations of this approach were beautifully described in Taleb's The Black Swan. The less said about that particular load of mathematical codswallop, the better.

Now we have behavioral economics, which derives its prognostications and prescriptions from laboratory psychology experiments using toy problems. Dan Ariely makes a living doing this. The book Nudge by Thaler and Sunstein is the holy text, and the Obama Administration is obsessed with it to the point that, by decree, it's embedded in regulatory law...

Consequently, we have the Agriculture Secretary recommending that school lunch programs lie to children by telling them that eating carrots will give them X-ray vision, a strategy designed to keep Michelle's school lunches out of the garbage c.. - sorry, recycling bin, all based on a small experiment with "significant" effects. Apparently, these people haven't heard of the Hawthorne Effect, and don't know anything about statistics beyond how to plug numbers into canned programs and get numbers back out.

Obama is constantly being described as a guy who plays 3-D chess while chewing gum in a moving golf cart, but my view is he's not terribly bright. But if The Narrative demands that he is bright, by gosh, we'll use inductive reasoning to show he is by claiming that Porkulus was a brilliant economic move that yielded the yet-to-be-detected-but-soon-will-be Summer of Recovery. And when enthusiasm for that canard dies an ignominious death, we can say he was still right all along, this is just the New Normal and no one on the planet could have done any better.

Sam L. said...

"Speaking of bias, the Obama administration has generated an eight year national conversation about racial bias." I see this more as speechifying from one side saying the other side is biased. As Jon Gabriel has tweeted, "The thing I like most about the Obama era is all the racial healing."

Ares Olympus said...

Stuart: On that score Obama has certainly not been a success. He has not made deals. He did not negotiate with Republicans and failed to negotiate a Status of Forces agreement when walking away from Iraq. He allowed his IRS to persecute his political opponents and incited his Justice Department to cover it all up.

If Trump actually makes it to his inauguration on January 20, it would seem to be a miracle. The momentum says he'll make it, while Trump's behavior seems to imply he's still hoping someone will say "no" to him, and he can get out of this gig.

Obama did have 2 years of Democratic control over the House and Senate, and he tried his best to reach out to minority republicans, and they would have nothing of it. Republicans have learned the secret to power is to refuse to cooperate with the opposition, and blame the president for their inactions.

And now that strategy has won them the Presidency, Senate and House, for at least 2 years, and we don't have to worry about the Republicans reaching out across the aisle, and they'll do whatever they want for 2 years. Or except for the fact they've rallied behind an assclown for a president, one who has been kind enough to give the entire ship to corporate republicans at least, but he's still a loose cannon.

I presume the Senate democrats will use their Filibuster power, and they'll be called out on it as obstructionists, even if they use it 10% as much as the Republicans did. But I expect the Republican's divisions are now going to explode, and the real battle will be between all the dijointed factions among them all.

I don't know what to make of all the imaginary charges against the Obama administration, but I'm quite sure the Democrats need to do nothing except give Trump enough rope to hang himself, unless that is also the plans of the Republicans as well, and they beat impeach Trump first.

Trump is an utter embarrassment to this country. Everything he says out of his mouth is an insult to life itself, and the only way that ordinary republicans can handle this cognitive dissonance is to keep their focus on imaginary crimes of Democrats.

Surely imaginary crimes of Democrats can keep the Republicans distracted for 2 years? And then we'll see the real crimes coming to the surface, and everyone will blame Obama for Trump, because if he hadn't shamed the Republicans so badly, they wouldn't have been so hysterical to pick such a madman as Trump.

Come on, Republican electors, just 37 of you, 18% of republicans must know that Trump is a dangerous clown? Do we have to keep reminding ourselves how incompetent republican leadership is every 8 years or so?

At least if we defect to Pence, we won't have a loose cannon to blame. We'll have an ordinary Christian bible thumper to blame, and is 6000 year old chronology of life on earth.

Olympus Ares said...

Ares, the Bitter Clinger.


Trigger Warning said...

"Come on, Republican electors, just 37 of you..." You're cute when you snivel.

A guest columnist at the WSJ addressed your concerns today, Ares. She's a Kansas Republican elector, and her column is about you and your allies that havs taken the time to correspond with her...

"I noticed another theme in the thousands of missives I’ve received. They don’t seek to understand or persuade—only to insist. Most of these people want it their way and they want it now. As a mother of two small children, I know how to handle that."

Looks like she has your number, kid. :-D

Farm Boy said...

Two colors of suits only? Sounds like another lie from Mr 57 states you can keep your doctor if you like your health care premiums will go down I only heard about it in the newspaper most transparent administration ever. I recall, for example, the day he dug out his Century 21 realtor beige blazer from the closet. Boy that was snappy. If obama could look like even more of a moron, well that beige jacket did it. He got absolutely flamed on the internet and it went back into the closet never to be worn again in public, maybe even off to Goodwill over in SE DC. How many more days do we have to deal with this clown?

Ares Olympus said...

Trigger Warning said... A guest columnist at the WSJ addressed your concerns today, Ares. She's a Kansas Republican elector, and her column is about you and your allies that havs taken the time to correspond with her...

I see the article here:
...There is a reason this tactic has never been successful: It assumes the worst of Americans. These letter writers are asking me to disavow my own people, because they are supposedly racist and easily fooled. I don’t buy it. I won’t violate the will of the people of Kansas simply because coastal elites think Mr. Trump tweets too much.

I imagine it must be tough to receive thousands of emails and letter from people you don't know, people who don't know you, and have them insist they know better than you.

Myself, I've offered no direct communication to any of the 538 electors, and I wouldn't insist anything except that they consider themselves as more than rubber stamps for their party's candidate. And if there are Republican Electors for whom Trump was not their first choice, and who have observed Trump's behavior further for the 6+ months since Trump was endorsed and won their state popular votes, to consider what was observed.

But even if electors have convinced themselves that Trump is unfit, there's an open question what to do about it. Voting for Clinton isn't politically acceptable, even if she did win the national popular vote by 2.8 million. Voting for another Republican presidential candidate like Cruz or Kasich is problematic if we presume the republican primary voters rejected them as also "unfit".

So voting for Mike Pence seemed to me to be the most honorable way for republican electors to be "faithless", since 62 million voters also voted for him as vice president, and he'd become president.

And if 37 republicans did this, it would force a vote to the U.S. House, where republicans (grouped by state) would have to pick among the top-3 from the electoral college.

But probably Democrat electors find Pence almost as unacceptable as Trump, unacceptable on his theocratic principles rather than his temperamental unfitness of Trump. So if Democratic electors accept Clinton's defeat, their best bet would be to vote for a compromise candidate that Republicans might accept, for example 2012 Republican candidate Mitt Romney. He also got over 60 million republican votes in 2012, so he would seem to have legitimacy.

So I imagine a crazy scenario like this:
Trump: 269, Clinton 194, Romney 38, Pence 37.

So the Pence defections block Trump's election, and the Clinton defections block the Pence alternative. And then the U.S. House has to vote between the top-3 Trump, Clinton, and Romney. Trump will only get Republican votes, but not all. Romney can get republican AND democratic votes as a compromise candidate, knowing Clinton can't win.

So it could be possible on bipartisan appeal that Mitt Romney could become the 45th president of the United States. You can be sure Mitt Romney wouldn't embarrass our country every single day for the next 4 years.

I wouldn't tell any Trump or Clinton electors to do this. I'm merely saying this is theoretically possible, and when you have someone as offensive as Trump, this is exactly the sort of case that the Electoral college can handle.

I don't think it'll happen. I don't expect more than a half dozen Trump or Clinton defectors on December 19th, mainly because compromise is so offensive to the human heart, but listening to the conscience could make something like this happen.

And even if it doesn't, seeing ANY defectors at all from Clinton or Trump will show the degree of protest BOTH sides have, at the failures of their candidates.

Trigger Warning said...

"I wouldn't tell any Trump or Clinton electors to do this. I'm merely saying this is theoretically possible..."

Thank you for sharing.

Ignatius Acton Chesterton OCD said...

Clinging to what? Rank stupidity?