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Activist excess, incentives, and the undersupply of grievance - Hello Friends as always i would invite you to join and Promote one of the world's premier top rated investment companies and pioneers in alternative assets: market investment in and purchasing of alternative asset classes including gold, precious metals, Bitcoin and other cryptocurrency for direct purchase investors, the vast US market of IRA, 401k and other retirement account holders, the Canada market for RRSP and TFSA holders (precious metals), high net worth individuals and families (HNWI), and more. Mutl-trillion dollar potential market with one of the highest paying affiliate programs in the world.

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In recent times in the West, we have seen a trend towards outraged activism being taken to sometimes absurd extremes. Furthermore, we have seen unprecedented steps taken to silence dissenting voices pushing back against these excesses, from the de-platforming (sometimes violently) of speakers in universities; silencing of the media; contrary voices on social media being blocked; and academic research - including in the hard sciences/maths departments - being quashed on account of its non-politically-correct conclusions.* Record numbers of people are also being publicly called out and shamed for apparent racism/sexism where no evidence of it exists. This 'culture of outrage' and PC authoritarianism has seemed impervious to the forces of reason, and the institution of free speech has also come to be seen as subordinate to the primacy of sparing people from offense or discomfort.

The outraged activist culture started on university campuses, but has spread to social media censorship, government, and now corporate HR departments as well. Examples of utter irrationality abound. For instance, African American and anti-racism proponent Darrel Davis befriended members of the KKK, to try to better understand their flawed way of thinking, and persuade them of the errors of their ways. It worked. He became friends with many of them, and his efforts resulted in 200 former KKK members renouncing their membership. He keeps their former uniforms in his closet as a symbol of his outreach's success. He has perhaps done more than anyone to fight genuine racism in the US. And yet he was viciously demonized by the black activist community as a KKK apologist.

What the hell is going on? How is this degree of patent irrationality even humanly possible? I've discussed in the past how motivated reasoning and emotion-driven bias can corrode peoples' capacity for rational thinking, but even I was bemused by this degree of stupidity. And when I don't understand something, I see it as a call to action. It means my mental model of the way the world works is flawed in some important respect, and so I better figure out why as soon as possible, because if I am not seeing the world as it is, my judgement on many issues will be flawed (including investment related). So I have dedicated some time to trying to understand what is going on here.

Like any complex phenomena, there are several underlying causes - some of which I have discussed in past blog research, and some of which I will reserve for future discussions - but there is one important insight I have recently had that I wish to share here, that relates to good old fashioned incentives, and I believe the implications are quite interesting and significant.

Some have criticised me recently for deviating from topics specifically concerned with investment/economics/stocks, which have shaded into politics. However, this ignores the fact that investing does not take place in a vacuum, and you need to understand both how the world works, as well as the socio-cultural-political context, and the risks that can entail. A swing to hard left socialist policies, for instance, can result in high inflation and eroded competitiveness. These things matter.

Furthermore, my intellectual interests are diverse, and I am a big fan of integrated, interdisciplinary thinking. I believe it is a huge competitive advantage in the field of judgment. Many major errors of judgment made by very smart people derive from seeing the world through an overly narrow prism. In the Munger tradition, I believe assembling a wide array of explanatory mental models is essential to being a good investor - and particularly to the extent that it informs one's understanding of human psychology and institutional dynamics. I hope the below is of interest to at least some readers.


The incentive problem with organised activism 

Charlie Munger once said that he believed he had been in the 95th percentile of his age cohort throughout his life when it came to understanding the power of incentives, but had nevertheless always underestimated their power. And the more I learn about the world, the more I see his point.

In this vein, something dawned on me recently with respect to the incentive structures embedded in organised activism - namely that activists have no incentive for the problems they agitate against actually being solved, and for various derivative reasons I discuss, that this is likely a big part of the culture of irrational outrage and toxic activism we are currently witnessing.

Milton Friedman once famously said that there is nothing more permanent than a temporary government programme, but he could just as easily have been talking about any institutional infrastructure that is established around the advocacy of a specific social cause, whether it be in academia, not-for-profit advocacy groups, government, the media, or even the HR departments of corporations. This is because a sort of 'institutional imperative' develops (to borrow Buffett's terminology), rooted in self-preservation, that will always find new ways to justify the activist organisations' continuing existence, irrespective of whether their underlying cause still holds objective merit.

The institutional apparatus that builds up around a source of activism usually begins with a genuine and worthwhile social cause. Examples include the 1960s African American civil rights movement, and the 1970s Feminist movement. Both movements had legitimate sources of grievance and legitimate reasons to fight for changes in both policy and social attitudes. However, if and when real policy victories and revised social attitudes are achieved, it is then very difficult for these activist groups to declare 'mission accomplished' and voluntarily disband.

By voluntarily dissolving, the people associated with these movements would be abandoning not only their source of livelihood, but also their identities, sources of meaning, communities, and exalted reputations within their activist subcultures - something that experience teaches is extremely difficult for people to do. This is the same reason people hold on to discredited religious ideas with such tenacity - there is too much psychologically at stake for people to take an unbiased approach to new evidence, and then simply walk away if need be. Consequently, the incentive structures embedded within these activist movements, to the extent they succeed with their initial objectives, create a natural tendency towards 'grievance inflation' to justify their continuing existence, and this eventually manifests in the form of policy overreach. After all, a superhero, to be a superhero, requires a villain. So if no villain exists, one needs to be invented.

A fantastic example of these dynamics in play is the anti-smoking lobby, and its recent opposition to e-cigarettes, which I have blogged about previously (here). The anti-smoking lobby started with a good cause. The health dangers of cigarettes were under-reported, under-researched, and being denied by the cigarette companies. The anti-smoking lobby won several deserved and much-needed victories. Tobacco taxes were raised; health warnings were implemented; advertising was prohibited; and restrictions on smoking in confined public places instituted, to protect non-smokers from the dangers of passive smoking. Public awareness of the health hazards of smoking improved.

These were all well-deserved victories for the anti-smoking activists. However, at this point, they did not declare mission accomplished and disband. Instead, they have found new causes to advocate for to justify their continuing existence, which have become less and less reliant on hard science and data, and more and more driven by ideological activism pursued with a sort of religious zeal. Not content with their justified victories, they pursued unjustified ones. They pursued plain packaging legislation, for which there is no justified reason for believing it will reduce smoking levels. They have banned specialist cigar bars. They have advocated for the banning of smoking in private vehicles and homes, and they have extended smoking bans to many outdoor areas on the basis of 'second-hand smoke' risks which lack any scientific basis whatsoever.

However, the most egregious example is their widespread advocacy for e-cigarettes being banned in recent years. The unbiased scientific evidence that currently exists for e-cigarettes (not to mention common sense) indicates that e-cigarettes are likely to be at least an order of magnitude less harmful to health than traditional cigarettes, and there is not yet any conclusive proof they have any material negative health effects at all, period. The rational approach would be to say, wow this is wonderful - finally a 'safe'/'safer' cigarette has been invented. Let's advocate for a transition to e-cigarettes and a phasing out of traditional cigarettes - we can save millions of lives. More research on e-cigarettes is needed and desirable, of course, but let's withhold any further advocacy until we have a sound scientific basis for believing such advocacy is justified. In the meantime, with a 'safe' cigarette alternative finally being invented, we can now cease our advocacy and move on to another worthy cause.

Unsurprisingly in light of the argument I am making here, that is not what has happened. Instead, the approach has been to advocate for the banning of e-cigarettes - something that has now happened in many countries - on the basis that 'we don't yet know the full health effects of e-cigarettes', and that they 'could encourage people to start smoking'. In other words, people should only be allowed to smoke cigarettes proven to kill them, not ones that might entail harm but is not yet proven, and even where if there is harm, it will almost certainly be less than that occasioned by traditional cigarettes. Furthermore, we should also demonize nicotine usage with religious fever, irrespective of the delivery mechanism, even if there is no evidence of adverse health consequences (smokers smoke for the nicotine, but die from the tar/chemicals; nicotine is to cigarettes what caffeine is to a latte).

This approach is informing not only the approach of advocacy groups and government departments, but also what sort of academic research is being funded, and how the media reports on the issue. This reflects the fact that certain academics and journalists also carve out a niche for themselves advocating for certain causes, and find it difficult to relinquish this advocacy (and the intellectual capital they have acquired over the years) commentating on/researching a particular issue.

This approach is clearly irrational from the point of view of good policy, but it is rational from the point of view of the narrow self-interest of the activists themselves. The reason they have taken this approach is that e-cigarettes are a threat to their source of activism; e-cigarettes risk putting them out of the 'advocacy business'. This is also why despite almost every conceivable restriction to smoking having been advocated for, the complete banning of cigarettes has never been a source of advocacy. Why would they not simply advocate for the banning cigarettes, period? I'll tell you why - because that will put them out of the advocacy business. They will then have nothing to do.**

This is the real reason e-cigarettes are being opposed, and in an exactly analogous fashion, it is the real reason why black lives matter advocates have demonized Darrel Davis, as he was a direct threat to their continuing source of activist business. These activists don't actually want to reduce racism - they merely want to raise 'awareness' to attract increasing sources of advocacy dollars. And they need real racists to continue to exist and be called out, to create a focal point for their activism.

This is where the very real human nature of activists becomes clear - they don't and never really did care about the cause itself - instead they have merely used it as a vehicle to achieve self-interested outcomes, including a source of employment, self-esteem, meaning, reputation, and platform for virtue signalling - look how good a human being I am for dedicating my life to a worthwhile cause. This is why they instinctively resist developments that would actually solve the problems they are ostensibly advocating to solve - it is a direct threat to their comfortable position.

This self-interested approach is not a problem in the early stages of advocacy for a worthy cause - it is possible to 'do good' while also advancing one's self interest. Martin Luther King Jr. achieved personal fame and renowned, but also advanced a worthy cause. Indeed, that is very much the optimal win-win approach in life. However, once the underlying justification for advocacy ceases, activist efforts morph into something entirely different and toxic. In the case of the anti-smoking lobby opposing e-cigarettes, they are now contributing directly to millions of avoidable deaths, by depriving addicted smokers of the opportunity to transition to a safer form of nicotine delivery.

This morphing also creates another unfortunate impact - it tends to drive out the principled people that do not approve of the new direction of the movement. They leave. One of the co-founders of Greenpeace, for instance, left in protest in the 1980s after the movement stopped being grounded in science/data, and morphed into ideological activism. So the institutional apparatus over time also self-selects for the least ethical and least intellectually honest people, further worsening the problem. This is likely why Greenpeace has continued to (successfully) oppose nuclear energy for decades, in complete disregard to the evidence, and thwarted a promising technology that could have both radically reduced carbon emissions, and also made the world safer and cleaner.***


These incentives are driving toxic advocacy in the 'grievance study' departments

I submit that exactly the same thing has happened with the 'grievance study' departments in universities (e.g. gender studies/feminism, and ethnic studies and the like), which has also spread into institutions such as the media, political parties, not-for-profits, and corporate HR departments. Over the past 50-70 years, these movements started out with very worthy causes. Prior to the 1960s Civil Rights Movement in the US, black Americans were subject to completely unjustified and unfair institutionalised racism, and prior to the 1970s feminist movement, women also suffered from a variety of unjustified, unequal treatment, and were deprived of equivalent educational and economic opportunities to men, amongst other things.

The 'problem' for these activists, however, is that their fight for equal treatment has been too successful. By the 1990s, the battle had largely already been won - at least to the extent that government policy and institutional factors were contributing to socially undesirable outcomes (it's impossible to completely eliminate instances of racism/sexism deriving from individuals, in any large society, or other socio-cultural factors not amenable to government policy intervention). This has created a major problem for activists, and particularly for professors of 'grievance studies': namely a chronic undersupply of genuine grievance (and by extention, a chronic undersupply of genuine racists/sexists), at a resultant oversupply of grievance activist infrastructure.

The reaction has not been to reduce supply, but to increase demand, and hence find or invent new sources of putative systemic sexism/racism, even where evidence for its existence is extremely tenuous (and of associated necessity, to see racists and sexists where they don't exist as well). And there is a need to shout from the rooftops (e.g. social media) whenever an isolated example of real or imagined sexism or racism is uncovered as well. This is likely what is driving the culture of 'outrage', as well as a growing level of policy advocacy overreach (e.g. there are now policy initiatives being advocated to make wolf-whistling illegal in the UK).

The problem is, that as their advocacy has become less and less data-driven, and more and more ideological, gaping holes have begun to emerge between the grievance narrative and the evidence, and this has provoked an incipient counter-activist movement, lead by folk such as Jordan Peterson. Unsurprisingly, the reaction has not been to engage in good faith on the issues, because the data and evidence no longer support the ideological positions of the grievance activists. Instead, the reaction has been to suppress (sometimes violently) opponents, and to publicly label them racists, sexists, and misogynists, in an attempt to have them deplatformed, fired, and banned from social media.

Trying to argue that the data does not indicate there is in fact a gender wage gap when controlling for factors such as hours worked, years of continuous service, and occupational choice? You're a misogynist and sexist that needs to be silenced and fired. We don't need to debate your arguments and data as they are motivated hate speech. Trying to argue that the data show white cops shoot blacks less than black cops shoot blacks? You're a racist and need to be shut down. And proving that KKK members are capable of remediation? You're an apologist for racists, who should be considered beyond redemption.

Scarily, these repressive efforts actually appear to be succeeding. Jordan Peterson even had his YouTube account blocked by Google for a period, until they realised he had reached a large and popular enough audience that that could trigger a reverse PR disaster for them. These, incidentally, are the exact same means employed by repressive socialist regimes in the past to silence dissent (often through mass imprisonment and murder), as repression is the only viable way to sustain a narrative in the face of contradictory data and evidence. If you can't win on the data and evidence, you must win through repressive means, and that is considered ok, because 'the ends justify the means'.

In retrospect, my own experiences at university should have helped me understand how this could have happened much sooner. I studied law and economics/finance at university. In the economics/finance department, they continue to teach efficient market theory, despite it being widely discredited by decades of empirical evidence. This is because there is a huge infrastructure built up around the assumptions underpinning this (and other) economic theories, including a lot of complicated math, such that the intellectual sunk costs for economics professors is too large for it to be abandoned wholesale. The actual reality is also too complicated to be easily taught to undergraduates.

Given the above, it is much easier to just stick with the dogma. This is why after events such as the 1987 stock market crash, the economics department did not react by saying, 'well I guess we were wrong about efficient markets - let's go back to the drawing board'. They simply ignored it like it never happened, and kept teaching the same theories.

I can absolutely imagine how the same thing would happen in academic gender/race grievance disciplines, if they can even be described as academic disciplines these days (rather than ideological training camps for outraged activism). There is too much infrastructure built up around the oppressed-oppressor narrative for it to change and respond to new data and evidence. There are too many people that have too much invested in the current ideology, and stand to lose too much, if the bases for their activist disciplines are effectively questioned.

Some new and worthy causes have been found. Gay rights have been a strong source of advocacy opportunities, which the activists have seized, and more recently this has extended to transexual activism as well. However, the 'problem' is that these issues are now also largely solved and so this well of grievance activism is also starting to run dry. The activists now need to move on to increasingly ridiculous imagined causes such as the putative 'rape culture' that exists on college campuses. In addition, more and more extreme policies continue to be pursued in the name of gender equality, which have morphed from policies to support equality of opportunity (which I support), to those mandating equality of outcome across the board through government force,**** while at the same time demonizing any members of a group that have achieved an above-average level of success in life as merely having being the undeserving recipients of 'privilege'.

In short, there is now a chronic shortage of genuine, provable discriminatory grievance relative to the supply of institutional activist grievance infrastructure, and this has lead to uncontrolled grievance inflation that lies at the core of the culture of excess and outrage we have started to see in society, I believe (and why many people are being labelled racist and sexist on illegitimate grounds).

Rest assured, nothing will ever be enough. Appeasement will be as futile as it was in combating Hitler. No matter how much reform is achieved, the activists will always find something else that needs to change, and if it does not stop, it will get taken to ludicrous extremes. It won't be long before it will be compulsory for companies to have someone gay and somebody Islamic on their board of directors, and for every second senior manager to be a women under penalty of law.***** And then it will continue to get even worse. This will continue unless and until there is a societal backlash.

Perhaps even more concerningly, we can expect academic research to become increasingly politicised even in the hard science departments. Biology and evopsyche, in particular, are already at serious risk, because sometimes their findings suggest outcomes in society may not be socially constructed. They will be the next to shamed and intimidated into silence. Then they will move on to taking down any material on youtube teaching biology/genetics and evopsyche, on the basis that it is offensive and 'advances harmful stereotypes'. Then they will move on to even more extreme targets.


Where does this leave us?

I don't know what the cure for this is. We don't have any known mechanism for dismantling advocacy groups when they achieve their aims and then start to become counter-productive and toxic - particularly when they have the backing of governments and academia, because there is no 'market discipline' brought to bear on their activities. Over time, the size and influence of western governments and educational institutions has inexorably increased, and we have never seen a period of material and sustained shrinkage. Self-correcting forces do not appear to exist - particularly because activist capture of education will continue to increasingly influence democratic elections (today's students are tomorrow's voters).

Right now the forces of self-perpetuation rather than self-correction appear stronger - people are self-censoring and are terrified to speak out, and liberal-captured social media companies are also giving in to mob activists and banning unpopular opinions that run contrary to social-justice narratives as well, in the putative name of 'hate speech likely to cause offense'. I saw this coming when James Damore was fired from Google in 2017, and wrote about it at the time. Rest assured, things will only get worse and worse, and the forces of social media censorship will only become more extreme. I can easily imagine a world where this very blog post will be banned several years out on the basis of it being 'offensive', on current trends. Make no mistake, this represents an incipient slide into repressive socialism. The stakes here are quite high.

Free speech is an essential institution as this is the only non-violent way to counter bad ideas. Human beings are susceptible to dogma and ideology, and are incapable of fully comprehending an infinitely complex reality. That is why there must be a means for better ideas to emerge, and over time, win. But the activists are increasingly succeeding in stifling any and all dissent, and are forcing a mono-culture onto society that holds increasingly extremist liberal views. The media and academia/education are already almost fully captured by the activists, and are pumping out armies of radicalised left-wing idealogues. There are certainly some scenarios where all this could end very badly indeed for the West.

There are also more positive potential outcomes, however. Brexit, Trump, and the emergence of more nationalist populist parties in Europe partly reflect, I believe, a rising backlash against the above liberal excesses. However, there is always a risk that the cure here is every bit as bad as the disease, if it swings too far in the ideologically opposite direction, into hard-right fascist nationalism, and especially ethno-nationalism (there is currently absolutely no evidence of that, but things can build unexpected momentum).

It remains to be seen how things play out. Right now, however, I see greater risks from the 'left wing crazies' than the 'right wing crazies'. The best way to determine who is the bigger menace, in my view, is to look at who is being forcibly silenced. Right now it is the conservative voices that are being forcibly silenced, not the left wing extremists, and that speaks volumes about the current balance of risks, and this is objectively provable on a non-partisan basis.


LT3000


*See this link, for example, which is truly terrifying: https://quillette.com/2018/09/07/academic-activists-send-a-published-paper-down-the-memory-hole/

**This, incidentally, is a perfect example of how interdisciplinary thinking can yield important investment insights. Many decades ago, cigarette companies were very cheap, as investors feared the government and anti-smoking activists would put them out of business. If one properly understood these incentives, one would realise that that was unlikely to happen. Tobacco companies were - for this and other reasons - spectacularly good investments over the following 20-30 years.

***Deaths from nuclear accidents are a tiny fraction of deaths from coal mining and O&G accidents, as well as the health impacts of higher pollution/particulate matter in the air.

****Of course, activism always 'looks up', and focuses purely on gender-based equality of outcome in prestigious and/or high paying occupations. I have yet to see any activism supporting equal gender representation in coal mining, construction work, truck driving, or garbage collection. 

*****Merely a few hours after this blog article was published, I found the below from the Capitalist Exploits Blog, on a policy recently enacted in California. It would appear that the State of California considers the most important selection criteria for a corporate director not to be experience, expertise, motivation, stock ownership, or alignment with shareholder interests, but whether the said candidate has a vagina or a penis. It suffices to say that this sort of policy excess, if continued, is going to be extremely damaging to Western economies:

"California has enacted a new law mandating that companies incorporated in California as well as foreign corporations (such as Delaware corporations) headquartered in California, and which are listed on major U.S. stock exchanges, have at the close of calendar 2019:

*At least 1 female director.

At the close of calendar 2021:

*At least 3 female directors if the board of directors' size then is 6 or more members
*At least 2 female directors if the board of directors' size then is 5 members
*At least 1 female director if the board of directors' size then is 4 or fewer members.

The following penalties would be imposed by the California Secretary of State for violations of the new law: (1) a $100,000 fine for a first-time violation, and (2) a $300,000 fine for a second and each subsequent violation."








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