- States try to vote out electoral college
- Markets tense & uncertain, awaiting election results
- Past shows to revisit on control of information
- Nazli Choucri Cyber Politics and You
- Monroe Price: Free Expression and Strategic Communication
- Robert Jervis – Does Instant Twitter Diplomacy Change The Game With China, Iran, & North Korea?
The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick
Election 2020: What Can Gilgamesh Epic Teach Us?
November 4, 2020
“Biases lead to looking at information that is most readily available, and it’s easiest to process and most understandable, rather than to probing more deeply for what is more illuminating and diagnostic. When we look at this election and we say, ‘Oh, well, this was obvious, this is how it happened,’ we need to make sure that we’re not the drunks under the light looking for our keys. And so accounting for our bias is a pretty important part of sorting through perceptions, and, of course, what could potentially be misperceptions.”
– David McAlvany
Kevin: Well, many people have just voted as we record this program because we’re recording a couple of days before Election Day. But let me ask you, what are you going to be doing on Election Day?
David: The market is always concerned about things like taper tantrums and what there’s going to be in terms of a market response to this or that, and we’ve got a really big weekend. I’m not so much concerned about the tantrum following the taper, but I am in a taper, which is to say, my exercise load is decreasing each day until the race this next Saturday in Florida.
Kevin: Yes, 140 miles. And actually, I remember those tapers. I only did the half Ironman with you a few years ago, but I just I loved those last two weeks. It was weird because you get antsy. All you’ve been doing up to this point is training. And now you’re tapering. They’re actually saying, Dave, relax.
David: Yes, it’s going to be interesting being in Florida away from our house and all the things that are sort of naturally comfortable in the context of not only the election but what may end up being a very tumultuous period of time. So we’ve already got our meetings lined out for the Wealth Management group in terms of when we’re talking and how we’re operating and what our protocols are. So that’s fine.
Kevin: This working remote goes anywhere, doesn’t it?
David: It does. It does. So it will be a fascinating week. Looking back at last week, I think this is really critical. We had stocks down. We had Treasuries down. We had the Blue Wave narrative shifting from being advantageous to potentially being problematic. And most importantly, we saw that the market is saying, “Wait a minute. There is a risk in the credit markets.”
So far the equities markets have been able to ignore that. It’s kind of the elephant in the room. We’ve seen such massive distribution of credit into the system this year. But finally this last week, a bit of an outflow from high-yield, anywhere from $2.5 to $3.7 billion coming out of HYG and your other high-yield products.
Kevin: Just call them junk bonds.
David: Yes, exactly. That’s the euphemism. But we’re in an interesting place. We’re recording this commentary prior to the final vote count, which means there are significant data points we don’t have, mainly who won the election, and by what margin. And nothing’s conclusive. It’s thought that a decisive win may take some time to determine, because of the millions of mail-in votes. And you’ve got the contested election, which would be sort of the worst outcome in the short run, a disaster for the equities markets just because people don’t know what to do with uncertainty.
Kevin: Well, I liked what Lila Murphy had to say, too, though. She said a lot of what you’re calling disaster would look like disaster at the time, but probably is just noise because the overall trend does not necessarily change with the noise of the contest on the votes.
David: You’re talking about short-term, 10 days to three weeks kind of volatility, but doesn’t change anything else.
Kevin: So popular vote, electoral vote – make a couple of predictions so that people can see whether you’re good or not at this type of thing, Dave, because you’re recording before it happens.
David: I know, but it’s foolhardy to put it out there, frankly, because nobody knows. But if I were to guess, and this is a wild guess, not a desire, not backed by probabilities, but I would guess that Biden wins the popular vote, and I would guess that Trump wins the Electoral College, and I would guess that the chaos which comes from that is from a contingent who has raged about the difference between the Electoral College and the popular vote. And so I think it’s going to enrage many. I think it’ll console many others. I, for one, not knowing the outcome, see the wisdom in a broadly dispersed population. I like the fact that there are people in Nebraska and North Dakota…
Kevin: Who have a voice. If it were the popular vote they wouldn’t have a voice. Dave, we brought up Howard Onstatt, my free market mentor who passed away last year. He was very close to you, me, the family. Howard set me straight back in my twenties, not just on free markets, but I was a big popular vote guy. I was like, this is wrong. What’s this Electoral College?
I was 24 years old and I thought I knew a lot. Howard sat me down and he just showed me. He said, “Kevin, the difference is this. Do you want just the cities on the coasts winning the election or losing the election for you? Or do you want the broad populace to be able to have a voice state by state?”
David: That’s right. I think the founders were no fools when they sought to adequately represent the entire nation and not just a few large population centers. Regardless of who wins and loses, I think adequate representation for each part of the country via the Electoral College is key. If I’m wrong, it’s the other way around. Maybe we have the opposite outcome where Trump wins the popular vote. I’m not exactly sure how that would happen, but just theoretically, it’s possible.
And then what if it was the opposite? Biden wins the Electoral College. What I like is the system functioning as the system was designed to. I’m not going to call into question the engineering of the system in the middle of the functioning. To me, that’s the way you get into trouble. In fact, that’s reminds me of challenging complexity in the middle of an operation. What happened with Chernobyl? Just a complex system that was being tampered with a little bit and then it blew up.
Kevin: One of the guests that we’ve had in the past is Pippa Malmgren, and she talks about the freshwater fish and the saltwater fish. Remember that? She talks about the country mouse, city mouse thing we talked about with Gilgamesh. Really, the cities vote one way, the populous areas, and even our founding fathers understood that that would happen.
George Washington felt that the East Coast was going to become more and more like the European continent over time. And he predicted right. But the fresh water would be the free market guys, salt water would be more of the socialized, the big city, moving things as a system, not as an individual.
David: Yes, and there are benefits to being a part of an efficiently run system. We discussed the epic of Gilgamesh. You’ve got the two characters which emerge, Enkidu and Gilgamesh, and it is like the country mouse and the city mouse. You’re talking about different lives, different priorities, different ambitions. Ultimately, a very different distribution and need for resources. And in the case of the United States today, we must maintain a system that represents a voter minority that doesn’t too heavily concentrate power in a particular kind of geography, the cityscape. So we’re a nation with dozens of states and all of those disparate voices should be heard.
Here in the state of Colorado we’ve got a ballot measure, 113, to throw out the Electoral College votes, to give them to the candidate who wins the popular vote nationally, versus the current system, which is kind of winner take all based on the outcome within the state. That’s a majority of states, the way that have it structured winner take all. And I think that would be a mistake, in my mind, if that changed.
Kevin: And you voted, hopefully, correctly on that because even though you’re traveling on Election Day, Dave, I know that you cast your ballot early and you had some pretty strong feelings about some of the ballot measures.
David: Between last week, this week and next, I want to make sure that our listeners are prepared and encouraged to engage in the best possible conversations. Last week we talked about it in terms of generating light versus heat, and I think that’s going to be even more important over the next 10 days.
Kevin: And de-escalating a conversation versus escalation.
David: Right. This election has highlighted the importance of perceptions, and maybe it’s even underscored the irrelevance of truth as it’s presented by the mainstream media. You’ve got selective reporting. You’ve got outright deceit. These are some of the factors which have become 2020 hallmarks. Stanley Hoffmann in 1967 in the Journal of International Affairs was talking about international politics in a way that I think, actually, has sort of a domestic political ring to it. At least, this is the way it impresses me.
This is one of the reasons why we’re talking with a philosophy professor next week. Justin McBrayer will be with us next week. Hoffman says this: “Much depends on perceptions. Perhaps international politics today should be less defined as a struggle for power than as a contest for the shaping of perceptions.” That, I think, Kevin, is what we see and what we hear via the news media and by the social media. It’s a war. It’s a war of perceptions.
Kevin: I had a good conversation with one of our commentary listeners last Friday. He lived in the Northeast and had been a news director, both for ABC and NBC, and I asked him. “Can you give me a feel, being in media, for what’s going on right now?” He said, “You know, Kevin, that’s an interesting question.” He said that it was about two years ago during the Russian thing with Trump and what’s real, and what’s not. “I was just standing there on the line, the director’s line, and I realized, “I don’t know what necessarily truth is. Are these stories true or not?” He said, “Kevin, this has been my life. This was my career. And I’m very, very disoriented at this point.” That’s what he shared with me. And if he is listening today, I appreciate that conversation. But that’s what we’re talking about. When we blame the media, sometimes it’s not the media. It’s the sources that are coming into media. And at this point, people are trying to figure that out.
You brought up Justin. Epistemology is the study of knowledge.
David: How we know what we know? How do you come to those beliefs? I went through Robert Jervis’s book. Again, when I think about politics and I think about international politics, there are obviously differences, but there’s some principles that cross apply. In his book, The Logic of Images in International Relations, there’s a reminder that in politics, both international and domestic, you’ve got signals and lies. You’ve got signals and ambiguity. You’ve got messaging, and you have the images that we project to a particular audience. And we can often have more than one audience in that communication scheme.
These images that we project, the messaging, is a high art and they are oftentimes not grounded in reality. And that’s not an accident. So that a news director does not know what the truth is, that is sometimes not an accident. To assume that political actors are primarily concerned with truth claims, I think, is to forget what clothes they wear. These are not priests. These are not men of the cloth. These are politicians. These are not philosophers asking questions about ultimate truth, whether that’s in ethics or metaphysics or epistemology. These are Machiavellis, men and women with a lust for power, and a willingness to push the edges to get it and to break the rules to keep it. And I think, for this reason, anyone in the category of a “professional politician” in my mind is suspect.
Kevin: You say professional politician. I think our country was built on citizen politicians. George Washington said no to that third term. He said, “No, we’re not supposed to have professional politicians.” We have as guests on this show, and friends, who are in the political arena, or have been, who are now participating in the citizen’s arena, before and after. Those, to me, are the politicians that are the best because they know they’re coming in from a job, they’re going to do a job for the country, and then they’re going to leave.
David: I think there are two very important points here. One is that term limits would have a tremendous value within the legislature because it would promote that citizen statesman. And I think it would recalibrate how, whether it’s people in the business community or in the legal community or in any professional community or non-professional, it doesn’t matter if it’s white collar or blue collar, the idea that you can make a contribution to the common good by setting aside what you do, your day job, for just a few years.
I think the other thing to add there is that I understand completely why there are not term limits for the judiciary. If you’re talking about an area that should not be politicized, it is the Supreme Court. And it would become a contest. It’s not a contest today. There are appointments, and they happen as they happen. I’m not saying that because of what has happened during the Trump administration, but I see the wisdom in term limits, on the one hand, which don’t exist, and term limits for them to exist within the judiciary, which actually do exist, that there is a rationale which makes sense in both cases.
Kevin: I was on a hike yesterday over at Mesa Verde, and I came across two people with A very strong accent. I said. “Where are you guys from?” I took a picture of them in front of the petroglyph. They were from Russia. And I think about it, Dave. Look at the system. They now live in California, but look at the systems around the world. As much as we criticize or critique what’s going on, we still have probably one of the greatest systems ever. Remember Aleksandr Solzhenitsyn, when he came out, he wanted us to understand that.
David: What is flabbergasting for most people from Eastern Europe or from Russia is that U.S. citizens have so much confidence in their news sources. It’s kind of considered a point of naiveté. In Eastern Europe there is an assumption that you’re being lied to, and so everything gets put through a very rigorous filter.
Kevin: The three Pravdas. You’ve got the red one, you’ve got the white one, you’ve got the green one. I think the red one is for party members only. I can’t remember how it works, but the news gets a little bit more filtered and propagandized as you go through those colors.
David: But here in the U.S., we do think that the news media is really about the truth. And perhaps it was at one time. There is a great book looking at the history of the development of the media and how politics has been such a part of the growth and maturation of politics. Paul Starr, The Creation of the Media: Political Origins of Modern Communications. That’s one that we may have in the 2021 Weekly Commentary guest list. It’s fascinating how it has grown and developed, but we have a lot of confidence in it.
Harold James is a commentary guest of ours. I think he is frustrated with the quantity of lies within the political system today. I think he would see the Trump administration as something of a lie factory. That’s not my point. He was just quoting 1974 scribble from Aleksandr Solzhenitsyn, and this was just before his arrest, and I thought this stood out. It was helpful.
Solzhenitsyn said that if we did not paste together the dead bones and scales of ideology, if we did not sew together rotting rags, we would be astonished how quickly the lies would be rendered helpless and would subside. That which should be naked, would then really appear naked before the whole world. Back to this idea of perceptions and truth, and this being one of the key lessons learned and things that we can reflect on as we transition from 2020 to 2021.
Kevin: Going all the way back to the Revolution, Dave, or the Civil War, or any of the wars that we’ve been in, the outside players, or the outside observers, which is the rest of the world, they play a role. They have an opinion in this election, as well. We are going to send a signal with the election result this time around.
David: A very significant signal. And I think what is heard or seen around the world will play into international relations and domestic politics very powerfully. This election, in particular, sends an important message. It may be easy for you to conclude what that is. You’ll have the benefit to know what the outcome is here in just a few days, and that from that vantage point, you may be very upset by the election outcome, or not, not upset at all.
I think it’s important to assess whether this victory improves our position in terms of not just international popularity contests, but our position in the world in terms of opportunity for our citizens and potential for economic growth. I think future conflict or the terms of cooperation, either case, depend on this proper assessment.
Kevin: Using Pippa Malmgren’s thought on salt water versus fresh water, you have countries that are saltwater. The European continental countries are very saltwater, very, very socialized, if you really look at their background. And they loved when Obama was in. If you recall, the reaction was great, and they were assuming a Clinton victory, and I think a lot of them were distressed at a Trump victory. And so, as we move into this election, I know I’m seeing leaning, and it’s not toward Trump. What are you reading?
David: It’s interesting. We love the history of The Economist. We love the history of Walter Bagehot and his insights into the credit markets and into market dynamics. I still read The Economist every week, and this week the lead article is why it has to be Biden. That’s the way the title reads on the front cover, and it’s a scathing discussion of Trump. It made it clear that from a British, and particularly from this magazine’s, perspective, a fairly internationalist perspective, Trump has made life difficult for others, and it’s not appreciated by the international community.
I think there may be an important corollary that Trump has made, and of course, this is in a very rough and tumble way. He has made things better for the U.S., just to be clear. That would be his argument, anyway. And you have policy objectives that put America first. He’s been very vocal about that. The paper lines up against Trump in a fairly predictable way, except that there is an acknowledgement of success in terms of employment improvement, economic growth and a variety of positive economic indicators. And then they transition right back to, up until the coronavirus at the start of 2020. I was surprised by that candor because it’s, he never should have been elected, it’s damaging the world as we know it, he was very successful when it comes to economic management – until coronavirus and the start of 2020. That candor actually took me a little bit by surprise.
Kevin: One of the illusions I think we have, Dave, and as we analyze what’s going on post-election, I think sometimes we think that we’re objective, but a lot of the conclusions that we are drawing are very much subjective. And they have to do with what our background is, what our thought process is. And actually, I think we’re going to find out as time goes forward how the news is fed to us, sort of personalized to each Google search.
David: Yes, I’d send you back to the May 2019 interview when we talked to Robert Jervis. What you think just happened in this election may not be accurate. If you consider Jervis’s approach, which is a psychological approach to politics – in other books he talks about international relations – he describes the mistake we often make in assessing a situation. He describes it as a drunkard searching for his keys, where you look for what you want. And in this explanation, thinking of the election outcome, you look for your keys under the light post because the lighting is better there. Now, of course, you may have dropped your keys anywhere but only the drunkard goes looking in the place where he thinks he can find them the easiest.
Basically, what he’s saying is that biases lead to looking at information that is most readily available, easiest to process, and most understandable, rather than probing more deeply for what is more illuminating and diagnostic. That’s how he says it. What he is talking about is the fancy word, heuristics. He’s talking about biases that we operate on the basis of which guide a lot of our thinking.
And so when we look at this election and we say, “Oh, well this is obvious, this is how it happened,” we need to make sure that we’re not the drunks under the light looking for our keys. What are we actually looking at here? I think there’s a role for psychology to play here. And so accounting for biases is a pretty important part of sorting through perceptions, we mentioned earlier, and of course, what could potentially be misperceptions.
Kevin: And we’re only human. We have to operate on heuristics. Otherwise we’d be completely frozen in our tracks if we’re trying to be completely objective on everything that we do. We have to make judgment calls for our own good and for our own safety. I’m hoping the conversation next week with Dr. Justin McBrayer will give some insight into how to operate with a little bit more clarity, not necessarily giving up heuristics completely.
David: Exactly. It’s just a question of accounting for them, and actually, because I’ve read the book, he would describe them as mental shortcuts. There’s nothing wrong with a mental shortcut, you just have to recognize that there might be a trade-off when you’re using it. So signals are, as Jervis writes about them, the messages that are being communicated, whether it’s communicated to an international audience, certainly, this is an interesting signal, the result of this election.
To Jervis, when you have an election, when you’re in a democracy, this tells the rest of the world what they have to deal with, not just who is in power but, very importantly, the voice of the people. And this is where it could get very interesting because you’ve got you could have you could have the popular vote and the Electoral College sending two very different signals. In the case of a Trump election, for instance, it signals a remaking of the world order with a U.S. bias.
And too, as I mentioned The Economist earlier, that disturbs the globalists, those bodies of unelected power which benefit from treaty diplomacy or regulation which is passed by non-legislative bodies. You’ve got that scenario.
Kevin: And he’s relatively unpredictable. If you think about it, he’s predictably unpredictable, but you really don’t know what’s going to come out next.
David: Right. And so a Trump election also represents surprise in terms of the international audience, that the electorate, outside of a handful of large cities, again, thus the importance of the Electoral College, that the electorate is able to sort out media bias. Or you might read that differently. Let me say it more accurately – prefers the bias of the right versus the left. Media bias and the supply and demand for information, that’s an important conversation point. And that’s what we will be talking about with Justin, this supply and demand for information or even supply and demand for misinformation.
Kevin: Sometimes it’s not even misinformation. It’s what we want to believe. Let’s say crowd size when you’re looking at, you know, the rallies that Trump has been having, and some for Biden. Biden’s been having fewer of them. It would be easy to judge. As you look at the TV with the crowds, you’d be like, Well, you know, Trump’s a shoo-in. He’s got the people. Look at the pictures now.
David: It’s fascinating to me, just going back through Paul Starr’s history, The Creation of the Media. There’s a point where the AP news wire, they’re being legislated against, and they’re being mandated to provide news to all. And so it’s very interesting to see how politics drives the development of news media. What we have right now is in the political sphere, legislation actually has not caught up with our technological advancement. So preview of coming attractions, the next four years will be very interesting in terms of the legislative ramifications for the way media, and I include social media in that, will have to manage themselves.
Kevin: Yes, you’re talking about legislation. I’ve got a friend who was in search engine optimization before it was a thing back in the 1990s, became a multi-millionaire.
David: That’s almost before the Internet was a thing.
Kevin: It really was, and actually he was early on, and so he became a multi-millionaire in the dot.com era because he had figured out how to make a search engine direct traffic certain ways. All businesses have to have an SEO specialist at this point. When somebody googles McAlvany, you want to show up on top. That’s just part of search engine optimization. There’s something called organic traffic and paid-for traffic. The organic traffic actually shows how you are optimized as you are searching. He did research over the last few years because, like I said, this has been his specialty since the 1990s. He’s a consultant for some of the top, top organizations out there. He said that, of religious sites, for the sites that he oversees on the Christian side of things, he’s been tracking this for years to see how the organic traffic is coming in. He says censorship has changed dramatically just from June of 2019 to June of 2020. He said that there’s been a 44.8% drop in organic traffic through Google, and it is very much a concern.
But we talk about censorship. Next week when you talk to Dr, McBrayer, I think he’s going to be calling people to personal responsibility, not a public censorship responsibility. And I certainly hope, as we talk about these various … fake news, that’s a term we’ve been taught to speak. Fake news may not actually exist. We could name it something else. We’ve all agreed that fake news is now the name. But who determines what fake news is?
David: Yes, it’s pretty important here recently, and certainly both sides of the aisle are talking about it. What is it? Who has it? How do you know it is truth and not a part of a spun narrative? I would encourage any of our listeners to order the book from Amazon, Beyond Fake News: Finding the Truth In a World of Misinformation. And as you do, I would also encourage you to go back into three interviews we’ve done in the past. Go the archives. All of them are dealing with different aspects of communication, control of information, dissemination of narratives and, ultimately, who controls this thing called the Internet? Nasli Choucri from MIT was on with us December of 2014.
Kevin: Can you believe that was six years ago?
David: Yes, Nazli Choucri, December 2014. Go back and listen to that before you join us next week for the interview with Justin. January 2015 with Munro Price. He’s a Senior Research Associate at Oxford and Director of Global Communication Studies at U Penn in the Annenberg Communications Department. And then the Jervis conversation, which I mentioned earlier from May 2019, those, I think, will fill in supporting issues that we’re going to discuss next week with Dr. McBrayer.
As we think about information, as we think about the difference between disinformation, information, misinformation, we’re talking about data. We’re talking about the quality of data. We’re talking about the control of who allows what data to flow. And this is both a political conversation as well as a commercial conversation.
It’s a question of jurisdiction. It’s a question of quality. It’s a question of truth. There are so many things, depending on what your perspective is, whether it’s specifically through media and distribution, or, as Choucri talks about, who ultimately controls the kill switches, because you’re dealing with something that is transnational in nature.
It used to be that the FCC controlled the airwaves here and could determine who had a voice and who did not. But with the advent of the Internet, everyone has a voice. That is for better, and that is for worse. And so we are at an interesting juncture, and I think the next four years is going to be very telling as to how public policy comes to terms with commercial enterprises of a transnational nature.
Kevin: This friend of mine, who is into search engine optimization makes a suggestion that sounds radical, but it reminds me of the break-up of the monopolies that we saw back in the 1920s and 1930s. You have a monopoly of delivery of messages, and artificial intelligence is in many ways manipulating the way that information gets out.
We were talking earlier about the 44.8% drop in organic traffic to some sites. That drop probably has a lot to do with this artificial intelligence censorship. And what he suggests is this – just make the public source code for Google public. In other words, create competition, those algorithms that are filtering the news given to everybody, and then let that compete on its own. I thought it was a brilliant idea.
And actually, when we’re talking about legislating on something like this, I think of Nazli Choucri, when you asked her that question six years ago, who’s going to control the Internet? Because somebody is going to control it. And if I remember right, there were four outcomes in her book that she talked about, but it still was a problem. They knew that it was a dinosaur that was just about to come out of the grave.
David: Yes, you have the messaging, you have the reliability of the messaging and the control aspects of distribution, and they will be what they have always been in the years ahead. There’s going to be a political component to it. And policymakers will intervene just as the FCC did intervene in 1941 and forced NBC to sell off its assets, which gave birth to ABC. ABC didn’t exist. It was called the Chain Broadcasting Rules there in 1941, and it was too much power in too few hands.
And then we had the Department of Justice which brought antitrust suits against the big movie studios. They didn’t like the fact in the late 1930s that the big movie studios controlled all the outlets. Again, where do you go except the cinema? And they owned the cinemas, too. They were forced to sell the cinemas because they didn’t want too much power in the hands of the few.
And today it’s the search giants, it’s the social media giants. They’ll face the political music in ways they’ve only dreamed in their worst nightmares. I think Paul Starr chronicles the political nature of progress in the development of media here in the United States, and I think that’s one of the big, big issues to emerge out of this election.
So at the time of this recording, we can’t tell you who will win, but we can tell you what is to come in terms of changes and pressure, both within the markets as well as within media.
Next week, join us for our interview with Justin McBrayer where we’ll discuss Beyond Fake News: Finding the Truth In a World of Misinformation.