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Understanding Trump: Dunning-Kruger Cognitive Bias

By Shlomo Maital

     Having trouble understanding President Trump?   Read thousands of words and columns, blasting Trump, but you still (like me) do not understand who IS this guy?

     Read David Brooks (Op Ed, New York Times, May 15)….   He has figured it out. Trump has a syndrome. Dunning Kruger Cognitive Bias.

       What is it?   Here is the definition: *

     Across 4 studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in metacognitive skill, or the capacity to distinguish accuracy from error.

     Meaning?   Incompetent people think they are more competent than they are, precisely because…they are incompetent. Trump highly overestimates his abilities (“best speech ever to Congress on healthcare”,   “how to fix America’s aircraft carriers”, etc.).

       People with Dunning-Kruger, who lead nations, are very very dangerous. Not knowing is one thing. Not knowing you don’t know is quite another. And when you lead the world’s most powerful, wealthy nation?   Disaster. Moreover, people around Trump cannot control him, and are fired abruptly when they oppose him, a corollary of Dunning-Kruger.  Trump is at the summit of Mount Stupid (see diagram), and since January 20, has proven to be there with blunders almost daily.

       What will happen?   Let’s see if America’s constitution and political institutions are capable and resilient enough to deal with this disastrous cognitive bias.

 

* Kruger, Justin; Dunning, David “Unskilled and unaware of it: How difficulties in recognizing one’s own incompetence lead to inflated self-assessments.” Journal of Personality and Social Psychology, Vol 77(6), Dec 1999, 1121-1134.

 

 

The World Economy: Upbeat

By Shlomo Maital

 “Ifo” is a German research institute that sends out regular questionnaires to experts, with two parts: the first, about global conditions, and the second, about local (country) conditions. I respond to the questionnaire regularly.

   Here is Ifo’s latest assessment:

       Munich, 11 May 2017 – The ifo World Economic Climate improved markedly in the second quarter, with the indicator rising from 2.6 points to 13.0 points. Experts’ assessments of the current economic situation were considerably more positive, making their sharpest increase since January 2013.

       Not only did the global economy improve, but so did expectations about the future:

   Economic expectations also improved. A further recovery was seen in the world economy in the second quarter. The ifo World Economic Climate improved in nearly all regions of the world. The main drivers remained the advanced economies, and especially the European Union. Both assessments of the current economic situation and expectations continued to follow an upwards trend in most countries.

   As usually happens, the upbeat outlook is not uniform. Latin America and Africa and the Mideast lag:

In Latin America assessments of the economic situation remained largely poor, but expectations brightened markedly. There was also a significant improvement in the developments and outlook for emerging and developing economies. Africa and the MiddleEast were the only regions in which the economic climate deteriorated. The outlook for Turkey also remained overcast.

     The common denominator? Politics. Politics in Turkey, the Mideast and Latin America are rather chaotic (checked out Venezuela lately?)   Politics in Europe seem more positive, with the voters rejecting the far right. In America, politics are chaotic but this is not new…

   So, despite Trump, and an anti-globalization anti-trade sentiment sweeping the world, the world economy seems resilient. A new China-US trade deal is in the offing.     One dark cloud on the horizon – Brexit. The EU seems in a vengeful mood, and some there want to teach Britain a lesson. This would be a huge mistake. Hopefully wiser heads will prevail.

The Age of Wonkery

By Shlomo Maital

   In his New York Times Op-Ed piece, April 11, David Brooks supplies a crucial insight.

     Once the thinkers of the world were intellectual foxes. In Isaiah Berlin’s metaphor, they had many many ideas and challenged all of them.

     Today? We have wonks.   They are hedgehogs. They have one BIG idea. And they sell it ferociously, regardless of the facts.  In truth — they have given up thinking. 

     As Goethe observed, thinking is better than knowing (i.e. foxes are better than hedgehogs),   but …looking is best of all. And wonks do not look (at the facts).   Nor think about their Pablum ideologies.

       So – we are doomed to live in the Age of Wonkery. Not too good for humanity.

       Here is how Brooks frames it:

“People today seem less likely to give themselves intellectual labels or join self-conscious philosophical movements. Young people today seem more likely to have their worldviews shaped by trips they have taken, or causes they have been involved in, or the racial or ethnic or gender identity group they identify with. That’s changed the nature of the American intellectual scene, the way people approach the world and the lives they live.   In his book, “The Ideas Industry,” Daniel W. Drezner says we’ve shifted from a landscape dominated by public intellectuals to a world dominated by thought leaders. A public intellectual is someone like Isaiah Berlin, who is trained to comment on a wide array of public concerns from a specific moral stance. A thought leader champions one big idea to improve the world — think Al Gore’s work on global warming.”

Brooks does not say this but —   not only is President Trump a super-wonk but – he has peppered his so-called administration with similar super-wonks, who are not troubled by facts.   And in upcoming elections in France, Germany and elsewhere, we see rising political parties featuring wonkery at its extreme (e.g. get rid of foreigners, anyone not like us, that will solve our problems).

     What does this mean for thinking people? Continue to fight. Challenge unsupported ideas. Build on facts. Dig up the facts. Think through issues. And above all embrace complexity.   Wonks simplify…violating Einstein’s rule, simplify as much as possible – but not more so.   Life is complex. Truth is complex. It cannot be reduced to a single variable, a single formula.    

   Wonks succeed because people are confused by complexity and want simple formulae.   Don’t give in.   Embrace complexity as a way of embracing truth – and fight back.

How Trump Used Psychometrics to Win

By Shlomo Maital

 

   My friend Einar Tangen drew my attention to this article:

https://motherboard.vice.com/en_us/article/how-our-likes-helped-trump-win

     Here is the jist of it.

  • A psychologist named Michael Kosinski developed a method to analyze people in minute detail, based on their Facebook activity. The technique is known in general as psychometrics: Measuring psychological characteristics from available data.
  • The company behind Trump’s online campaign (a key part of his win) was Cambridge Analytica, a Big Data company, which also worked on the LeaveEU campaign for the pro-Brexit group.   Cambridge Analytica apparently used Kosinski’s findings…
  • How does it work?       Cambridge Analytica “buys personal data from a range of sources”… aggregates it with the electoral rolls of the Republican party, and calculates a Big Five personality profile… digital footprints “suddenly become real people with fears, needs, interests and residential addresses.” Motherboard was told: “We (Cambridge Analytica) have profiled the personality of every adult in the U.S. – 220 million people!”.  
  • An example:   Design an ad based on gun rights.   An image on the left: an intruder smashing a window.       On the right: a man and a child standing in a field, at sunset, both holding guns, clearly shooting ducks.       Tradition, habits, security, family.
  •    “Pretty much every message that Trump put out was data-driven”.         E.g., on the day of the 3rd presidential debate (the one Trump did well at),   Trump’s team tested 175,000 different ad variations for his arguments, to find the right versions above all, via Facebook.       They found what resonated most.       “We can address villages or apartment blocks in a targeted way. Even individuals”.
  • One goal was to “suppress” Hillary voters. How?       Keep left winters, blacks, etc. away from the polls, by (in Miami’s Little Haiti) stressing how the Clinton Foundation failed in its efforts to help, after the Haiti earthquake. These dark posts “can only be seen by users with specific profiles…”.  

 

   Amazing that Trump, who lacks even a computer on his desk, was elected by some very very advanced Big Data methods. Thank Steve Bannon, who is not to be underestimated…ever!

Why U.S. Dams (and Society) Are Crumbling

By Shlomo Maital

dam

      Two newspaper items (one in New York Times, the other, Financial Times) reveal why America is crumbling.

         California’s Oroville Dam, America’s tallest, has a crumbling spillway that forces evacuation of 200,000 nearby residents. (A dam collapse in California in 1928 killed 400, as a wave of water swept over them). As early as 2005, experts spotted a design flaw in the dam – never corrected. Heavy rains filled the reservoir to capacity, and severe weather because of global warming reveals that this dam, and many others, are not up to the changing weather patterns, for which they were not designed.

         There are 1,585 dams in California, notes the NYT, and 90,000 dams across the U.S. Many are in poor shape. Why? “Government is more inclined to invest money in building new projects, than in less visible and glamorous maintenance”.

         America is a consumption-driven society that under-saves. A $500 b. trade deficit (imports minus exports) for nearly 3 decades is a symptom. China is not to blame. The U.S. itself is. It is comfortable to borrow money from China to buy consumer goods. Some 23 years ago, my wife Dr. Sharona Maital and I published an article, in the Journal of Socioeconomics, in which we warned about a drastic fall in savings behavior in the US and    Western countries. *   Nothing has changed since.

           The Financial Times notes today:

     “China ended a six-month streak disposing of its US Treasury holdings in December, adding to its position for the first time since last May as the country’s central bank seeks to manage capital flight. The country, which ceded its status as the world’s largest owner of haven Treasuries in October to Japan, added $9.1bn of US sovereign debt to its reserves in the final month of 2016, new data from the Treasury and Federal Reserve showed on Wednesday.”

         So, in the post-Trump era, America has gone back to borrowing, to buy consumer goods rather than maintain its dams, its roads, schools and infrastructure.

       And President Trump? He is rapidly running down his checklist of promises, issuing so far 11 Executive orders.   But what about that trillion-dollar infrastructure plan? Dead silence. Why? Because it will take a vast plan to design and implement it. In the current chaos of the new Administration, it is unclear whether the Trump presidency is up to the challenge – or even whether it is aware of the problem.  

         So America – at least, its dams and roads – are crumbling. I don’t see a solution in the near term.

 

* Shlomo Maital and Sharone L. Maital. “Is the Future What It Used To Be? A Behavioral Theory of the Decline of Saving in the West”. Journal of Socio-Economics, vol. 23, 1,2.   1994.

Ashley vs. Ivanka: Choose Your Role Model

By Shlomo Maital

  biden

Ashley Biden & Father Joe

   President Trump recently tweeted his recommendation, that people buy his daughter Ivanka’s upscale fashion designs, after retail chain Nordstrom took her clothes off its shelves. (“They don’t sell,” Nordstrom claimed).

   Another famous politician has a designer-daughter – former Vice President Joe Biden and his social worker daughter Ashley.   Her story, and product, are a bit different.

   According to Elle Magazine: “Ashley’s new ethically produced, American-made clothing company, is a project any dad would be proud to get behind. It kicks off with a range of supersoft organic cotton hoodies on sale for just a few weeks, starting February 8, in partnership with the flash-sale behemoth Gilt: The entirety of the proceeds from the debut collection will be channeled to programs that work to alleviate poverty through education, training, and job placement.

     “Ashley, 35, who is also the executive director of the Delaware Center for Justice, a nonprofit that serves children and adults impacted by the criminal justice system, had toyed with the potential nature and mission of Livelihood for years. One thing that never wavered was the idea of the hoodie. This is partly because Ashley herself—who has a stealth charisma and a fondness for phrases like “heavens to Betsy”—describes herself as a “jeans-and-T-shirt kinda gal.” It’s also because she appreciates the symbolism of an item long connected to American laborers and more recently to Black Lives Matter. “Livelihood is specifically about income inequality,” she says. “And racial inequality and income inequality are directly related.”

     “By the time her parents moved into the VP’s mansion in 2009, Ashley—who did her undergrad at Tulane, then earned a master’s in social work from the University of Pennsylvania—had a job serving kids in the foster-care system. It was disorienting, to put it mildly, to travel from a juvenile detention center to, say, Air Force 2. What did become increasingly clear was how little privileged Americans understood about life below the poverty line, where 13.5 percent of the U.S. resides. “I’d hear about five siblings sharing one burger,” she says. “How does a kid do homework when there’s no desk or lamp? One of the biggest things I’ve seen in my work is that a lot of social ills directly result from poverty.”

   Does it take a privileged daughter of the U.S. Vice-President, to explain to us how little we the privileged understand about the life and hardships of the one in seven who live in poverty? And will we opt for the role model of Ivanka Trump, who sells to the wealthy, or Ashley Biden, who works for the poor, and has done so for her whole career?

Charles Feeney: James Bond of Philanthropy

By Shlomo Maital

  feeney

Charles Feeney

     I doubt readers have ever heard of Charles Feeney. Today’s New York Times tells his amazing story. It deserves to be widely known and imitated.

     Feeney will be 86 years old on April 23. Wikipedia recounts: He was born in New Jersey during the Great Depression and came from a modest background of blue collar Irish-American parents in Elizabeth, New Jersey. His ancestry traces to County Fermanagh in Northern Ireland.

     He served as a U.S. Air Force radio operator during the Korean War, and began his career selling duty-free liquor to US naval personnel at Mediterranean ports in the 1950s. He attended Cornell University on the GI bill, and in 1960, based on his navy experience, set up a company that sold duty-free items to travelers. It became a booming success. He used some of his money to invest cleverly in high-tech startups, like Facebook, Priceline, E-Trade, Alibaba and Legent.

     But Feeney’s story is not about another successful entrepreneur. In 1984 he founded Atlantic Philanthropies, a collection of foundations – without revealing he was the benefactor – and transferred all his billions to it, and promised to shut it down, after giving away his entire fortune, $8 billion. Five years ago, he still had $1.5 b. left. Would he succeed, before his passing? Yes. It is now officially all gone.

     And Feeney? He lives modestly with his wife, in a rented New York apartment.  He flies economy class. He eats in diners. He left himself $2 million.

       I have a somewhat personal link to Feeney. As a Cornell alum, he gave a huge sum, $350 m., to fund the Cornell-Technion project that will create a new high-tech university on Roosevelt Island, in Manhattan.

       His philanthropy has been effective. One of his grants proposed reforms to America’s healthcare system, which led to the Affordable Care Act. And Feeney has scrupulously avoided any limelight – his backing of the Atlantic Philanthropies was revealed against his wishes. His secretiveness led to the “James Bond” appellate.

       The New York Times article uses the story of Feeney to provide a backhanded slap at Donald Trump, who typifies the diametric oppositse of everything Charles Feeney stands for and accomplished.  

The Analytical Geometry of a Trump Administration

By Shlomo Maital

trump-x-y

   After the pundits and experts totally missed the Trump electoral wave, they now weigh in with predictions about what Trump and his administration will do. I’ve read these carefully, and they are largely frivolous, as frivolous as the punditry that assumed a Clinton victory.

     However, NYT columnist Ross Douhat weighs in today (Dec. 29), at the year end, with some wisdom, based strangely enough on analytical geometry.   Consider, Douhat says, an X Y diagram.

       On the X axis, place Trump’s policies. They can run from populism all the way to conservatism. Populism would involve spend-spend. Conservatism would involve cut-cut, put government at all levels on a starvation diet. Where will the Trump administration be?

         On the Y axis, place Trump’s approach to governance, ranging from ruthless authoritarianism (Putin-style dictatorship) to utter chaos (an inexperienced administration rife with scandals, incompetent and unable to organize a paper bag). Except for the scandals, remind you at all of the Obama 8-year term?   Where will Trump be?

         Here are four possibilities, according to Douhat: 1. Authoritarian-populist: Trump panders to the masses, ignores the Congress, uses executive mandates…sort of how he ran his businesses (into the ground). 2. Chaos-populist: Trump flies around the country and the world, gets nothing done, and ultimately, lets Paul Ryan (House Speaker) become the de facto President, because, well, being President is both boring and hard work, and you need to read a lot, and Trump only reads tweets. 3. Chaotic, conservative. Congress cancels Obamacare, with no replacement and millions have no health insurance. America’s role in the world shrinks, as the U.S. deals with its own internal mess. 4. Authoritarian-conservative. Trump is ‘managed’ by his conservative appointees and the Congress.     There is a fifth possibility: a Sweet Spot: X = 3, Y = 3, competence without dictatorship, moderate conservatism without cruelty.

     Douhat says “this is Donald Trump we’re talking about, so a happy medium seems unlikely”.

     What do YOU think? Where is America’s X and Y going to be?

    

Did Open Borders Destroy U.S. Manufacturing?

By Shlomo Maital

 open-borders

   In the recent US Presidential election, Donald Trump campaigned largely on how trade (i.e. imports, open borders) has destroyed blue-collar jobs. His voters agreed.

     But is this true? Have globalization, open trade in goods and services, and cheap imports, destroyed good US jobs? Or were there other causes?

     You won’t find a more authoritative answer than that from MIT, in Suzanne Berger’s 2013 book Making in America:   From Innovation to Market (MIT Press), based on her work with the MIT Task Force on Production in the Innovtion Economy.

       Here are some relevnt passages:

Even taking into account job losses resulting from outsourcing as well as import competition, it was difficult as recently as a decade ago to find clear evidence of a heavy impact of open borders on manufacturing employment. …In 2003, [such job losses] involved less than one percent of layoffs; in 2004 they went up to 2 per cent. …job losses in manufacturing were mainly the result of productivity gains which might reduce the total numbers of those needed to produce a finite quantity of goods. …[Studies showed] the bottom line was that Chinese imports accounted for 33 per cent of manufacturing job decline between 1990 and 2000 and 55 per cent between 2000 and 2007.   But [focusing mainly on rising Chinese productivity and falling China-facing trade barriers] 16 per cent of manufacturing job losses between 1990-2000, and 26 per cent between 2000 and 2007, were attributable to rising import competition from China.”

   Bottom line: At most, a third to a half.   And more likely:   one-sixth to one quarter of job losses were due to Chinese imports.  

     So what does that mean?   There were other causes, deeper ones. Labor-saving machinery and automation (robots). Low skills. And dumb policy. Berger notes: “Germany abandoned much of its low-end manufacturingwhile expanding employment in higher value-added segments.”   And America??

             Recently a former senior VP of Intel, Mooly Eden, spoke at Technion and noted that the moment manufacturing wages rose in China, Intel shifted to Vietnam and built 1 million square feet of manufacturing capacity there.  

             China lost jobs – why? Globalization? Or because their productivity failed to keep pace with wage increases?  

             It’s hard to predict the future. But here is one pretty safe guess. While Trump tackles America’s job problem and rebuilds manufacturing, based on a wrong assumption, he will fail.   It won’t help to start a trade war with China. So in four years, his supporters will find that he failed to deliver.

           What then? Will they vote Democrat? Or will we get an even farther-right crackpot candidate, as has happened in Europe?  

Dealing with the Trump Presidency: a Survival Guide for 4 to 8 Years

By Shlomo Maital

  trump1

OK, so counting four years from Jan. 20, or possibly eight – how do we survive?

Mark Blyth, a political science professor at Brown University, has some sage advice, published in the Washington Post.

   The basic problem: In democracy, we vote for what we want. And increasingly, Blyth notes, we are simply NOT getting it.

“Unsurprisingly, people are beginning to realize that they are no longer getting what they vote for. Instead, they are being asked to pay more and more for what they already receive through taxes, taken from stagnant or declining incomes, which also must service their debts. In such a world it’s great to be a creditor and lousy to be a debtor. The problem for democracy is that most people are debtors. In such a creditor-friendly world, however, democracy is reduced knowing that the menu of policy will never vary. Trump’s win in the Midwest, British voters deciding to leave the European Union, Italy’s referendum and Greece’s revolt against its creditors are all connected in this way.”

     In short: Most of us owe money. A few OWN money. The system has been rigged in their favor. And it may stay that way under Trump, the billionaire.

     So how do we respond? Blyth observes:

     “At the end of the day, when you no longer get what you vote for and when the role of voting is reduced to affirming the status quo, voters will vote for the most undemocratic of options if that is all that is “off the menu.” That’s democracy in action in a world devoid of choice. When you can’t get what you want and most people do not benefit from the economic outcomes of government, it’s also what makes democracy unstable.”

       Americans voted “off the menu” (a minority of them, true) because that was the only choice ‘off the menu’.   And it has made democracy unstable, and is doing so all over the Western democracies.

       We’ll survive this. Take a deep breath. Take a long view.  Watch how the brilliant, wise American Constitution protects its citizens from scoundrels. At some point, centrist politicians will begin to understand that voters want real change, want to unrig the system to help debtors not creditors, and want actions, not promises. It may take a few more ringing defeats, like Trump, Brexit, and Italy to wake these politicians up.

       For four years, or eight years, Americans must say clearly what they want, and vote that ticket in every election. Mid-term elections are only two years away.   How will Trump supporters vote, when they feel they are again, not getting what they want?

Blog entries written by Prof. Shlomo Maital

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