I wrote the third Flatland essay in late 2014. Most of that essay tried to explain the prevalence of bullshit in human affairs. It is now 2016, an election year, and it is obvious to the cognoscenti—those with functioning Flatland bullshit detectors—that self-serving nonsense crops up everywhere all of the time. It might be useful to repeat the definition of bullshit used in that essay.
In individuals or social groups, bullshit, or spin, is a self-serving post-hoc rationalization of some unconscious motivation. Bullshit arises when there is an unconscious need to—
(1) maintain a positive self-image or manage positive impressions of the self by others;
(2) deflect existential threats to the self or group; or
(3) advance the agenda of the bullshitter (representing himself or the group).
This list is not meant to be exhaustive, nor are these needs mutually exclusive.
Bullshit stands opposed to a reasoned, objective search for truth. Spin often departs from reality in a serious way, or, more commonly, contains "half-truths" which advance the agenda of the bullshitter. Otherwise, if speech or writing does not depart from reality by the 1) assertion of falsehoods or 2) omission of crucial facts, even when unconscious motivations exist—unconscious motivations always exist—the discourse in question is not bullshit.
The bullshit I'm going to examine today checks all the boxes—(1), (2) and (3) above. This bullshit is of such fine quality that I should create an annual DOTE Bullshit Prize to be bestowed on those who put out that year's best bullshit.
The bullshit in question comes from two related Yahoo Finance stories. The first is called Obama articulates why Americans are so unhappy (April 15, 2016). Let's dive right in. Keep a bucket handy.
The economy has improved substantially in the last seven years during the Obama administration.
Yet two-thirds of Americans still think the country is on the wrong track. And Donald Trump’s message that the American dream is dead has resonated with many Americans.
“Some people are still recovering from the trauma of what happened in 2007-2008. You know, we went through a really scary time. It was the fastest contraction that we've seen even before the Great Depression. By some measures the economy contracted faster and saw a steeper decline than you saw back in the late '20s, early '30s,” the President told Yahoo Finance in an interview on Thursday. “People still remember the uncertainty that came from their pensions shrinking. Their home values dropping precipitously...losing a job. And so I think there's still an insecurity there.”
The President pointed out that the economy is in better shape now than in 2008...
I emphasized the keywords—trauma and insecurity. In short, the President suggested that Americans are suffering from post-traumatic stress disorder (PTSD). That was the theme of the second story, which is called Obama uttered a word that explains so much about America today. You already know what that word is.
By most measures, the economy is doing great. The US labor market is creating around 200,000 jobs a month, which has brought the unemployment rate tumbling to 5%. Meanwhile, home prices are up and stock prices (GSPC) are near all-time highs.
So, why are there so many people so reluctant to acknowledge how good things are today?
One word: trauma.
In a word, this is beautiful. Having asserted the President's false premise—the economy is doing great!—the author Sam Ro will explain why Americans won't acknowledge this: they are still traumatized by the beating they took in 2008/09. Let the popular psychology begin!
“Some people are still recovering from the trauma of what happened in 2007-2008,” President Barack Obama said in an interview with Yahoo Finance’s Nicole Sinclair. “You know, we went through a really scary time.”
Trauma has the ability to distort how we perceive our present reality.
Are you seeing what's going on?
Consider the joy that comes from jumping on a trampoline or the thrill one gets from speeding downhill on a bicycle. For many folks, the unexpected and painful reality of a nasty spill and a couple of fractured bones will forever take away the bliss that once came from those activities. The trampoline and bicycle will continue to offer the same experience, but the trauma can be so intense that it can force many to keep their feet on the ground.
Losing your job, getting evicted from your home, and watching the value of your retirement savings crash can be deeply distressing.
And so even when you get a new job, move into a new home, and recoup all of your investment losses, that new persistent feeling of uncertainty that followed the traumatic will discount everything you have.
Recoup all your investment losses??? (Think about who actually makes all those "investments".)
Today, people may have just as much, if not more, than what they had during their best times. But many don't actually perceive that, and so they'll buy into the campaigns of presidential candidates like Donald Trump and Bernie Sanders, whose platforms are based on convincing Americans that things have been terrible.
“I think there’s still an insecurity there,” Obama said.
There's the not-so-hidden, self-serving, unconscious agenda (post-hoc rationalization) which inspired this bullshit. Americans are voting for Trump and Bernie because they are still traumatized and insecure. Here's the "fair and balanced" part, which is very, very short.
This is not to dismiss the Americans who are in fact struggling. As Yahoo Finance's Rick Newman pointed out, many are living their own personal recessions.
"A lot of Americans haven’t seen the benefits of [the recovery] yet," [Jamie] Dimon said.
Yes, you read that right. Yahoo Finance quoted JP Morgan Chase CEO Jamie Dimon to defend the notion that some Americans are still struggling.
Back to the main theme. Here reality gets turned on its head. Up becomes Down. Black becomes White.
Trauma intensifies our behavioral biases
People are irrational. No matter how hard we try to be rational, we often don’t act in the most rational ways because those ways often don’t feel like the right or best decisions.
Yes, humans really are irrational. For example, you might be told that our dismal high-debt/low-wage economy doesn't actually suck. Despite the fact that you can't make ends meet, you might be told that you are confused. You only think the economy sucks because you are traumatized. You only think it sucks because you have regret aversion, as Sam explains.
In the field of behavioral finance, one behavioral bias that is studied extensively is regret aversion.
Regret aversion occurs when the unpleasant memory of bad decisions in the past puts undue and irrational influence on future decisions. For example, you lose 20% in the stock market in a very short period of time, so you decide never to buy stocks again because of your perpetual expectation that the market will soon crash again.
There’s no easy way to deal with this, especially since there is a very real chance that something bad will indeed happen again. Indeed, when it comes to the markets and economy, it’s always something.
Yes, shit happens, especially to people don't have money in the bullish Fed-created stock market.
Now Sam Ro ties it all together. This is simply stunning.
Perhaps the first step is to acknowledge the possibility that it is our biases that are causing us to be so bummed out about the markets and economy all the time.
It's like a Human 12 Steps Program. The economy doesn't actually suck; it's our biases that make us think it sucks. Therefore, the first step is to acknowledge that we're "bummed out" for no good reason.
Maybe then you’ll begin to think like folks like Warren Buffett who can simultaneously appreciate that terrible things are always happening while acknowledging that things have never been better than they are today.
The second step is to acknowledge, as Warren Buffett does, that things have never been better than they are today.
I suppose the third step would be to take your savings—if you have any—and "invest" them in the phony stock market, or take on additional debt. After your money goes up in smoke, or your debt become unmanageable, the fourth step is to admit that "shit happens". And now go back to the first step. We might call this the Stay In the Game loop. Crooked markets are no fun if nobody plays!
If there were an annual DOTE Bullshit Prize, surely this astonishing story deserves a nomination.