Frames, stories and political change

Sometimes, opinions change a lot even though the facts change only a little. So it seems to be with the case of MPs second jobs. Everybody knew for years that many MPs had them but most regarded it as acceptable. Until, suddenly, it is sleaze.

What’s happening here is not so unusual. We often see it in financial markets. In the mid-90s, for example, several Asian countries ran large external deficits. And for a long time, these were seen as healthy because fast-growing countries should suck in foreign investment – until, suddenly, they weren’t and we had a financial crisis. As Sushil Wadwani, a former MPC member said (pdf):

Countries with a current account deficit can have a currency that stays strong for a surprisingly long period, until, sometimes, there is an abrupt adjustment.

Similarly, in the late 90s high prices of tech stocks were seen as justified by the prospect of a new economy – until they suddenly were not. And the US housing market started to cool off in 2006, but for months nobody thought this was a problem – until suddenly it was.

A similar thing might be happening to Boris Johnson. Everybody has known for ages that he is a lightweight comic charlatan. He has not changed, nor done anything surprising. It’s just that the same person is now provoking different feelings amongst his erstwhile supporters.

To understand what’s going on here, we must remember that we rarely see things in isolation as bald facts. Instead, we select and interpret them. As MLJ Abercrombie wrote:

The information that a person gets…depends on the context, or total situation, and on his past experience, which is usefully thought of as being organized into schemata. Human relations play an important role in perception both in that they are often a significant part of the context, and in that they have contributed to the formation, testing and modifying of schemata (The Anatomy of Judgment, p18)

This is why we are so prone to mis-readings, typos and optical illusions: squares A and B in my picture are in fact the same shade.

Facts, then, come within frames (pdf). And as Daniel Kahneman wrote in Thinking Fast and Slow, “different ways of presenting the same information often evoke different emotions.” He gives the example of how even trained doctors react differently to the statement “the odds of survival are 90%” than to “the mortality rate is 10%” even though they are different frames of the same facts. And, he adds, “your moral feelings are attached to frames, to descriptions of reality rather than to reality itself.”

Even irrelevant changes – from a 90% survival rate to a 10% mortality rate – can elicit big changes in emotions. And if irrelevant changes can do so, so too can small ones. Owen Paterson’s corruption, for example, might not be much different from that of other MPs in the past. But it has changed the frame. In the same way, small changes have tipped investors from not worrying about current account imbalances, valuations or housing markets to panicking about them.

But there’s more. Frames are created by stories. And as Robert Shiller shows (pdf) in Narrative Economics, these are like viruses: some just die whilst others spread rapidly. And as they spread, so they change the frames in which we see things. Sir Keir Starmer is trying to achieve just such a change when he says of Johnson that “the joke isn’t funny any more.”

What I’m describing here is similar to but different from Timur Kuran’s account of preference falsification. He shows how oppressive regimes can survive for years because everybody believes that everybody else supports the regime and so keeps quiet. But when, suddenly, people realize their error they rise up and topple the government. In this way tyrants such as Harvey Weinstein or Nicolae Ceausescu saw their power disappear overnight.

My account differs from his because people aren’t misrepresenting their opinions. Sure, they are going along with the crowd – peer pressure being so powerful as Robert Frank has shown – but their expressed opinions are what they genuinely believe.

But it has something in common with it too. What we have in both cases is something described by Didier Sornette and Peter Cauwels; that social structures can seem stable only to suddenly change a lot.

And we cannot predict when or if this will happen or what will cause it; the triggers often seem innocuous. Which vindicates Jon Elster’s crucial observation – that we can sometimes explain without being able to predict. All of which means we must be much more humble about our ability to foresee political change.

Comments

[Dave Timoney]

As Hemmingway noted, "How did you go bankrupt? Two ways: Gradually, then suddenly."

[rsm]

Better than the last blog, but does our blogger still not understand that Greenspan caused the Asian financial crisis by raising US rates? And that Greenspan could have solved it quicker with currency swap lines? Is the current account story hopelessly old-school mainstream, thus wrong, because it ignores (or at least severely downplays) finance?

Can you consult https://www.bis.org/publ/work890.htm "How does international capital flow?" for a mainstream model that includes a properly-scaled financial sector?

《Gross capital flows play a central role in today's policy debates. Yet current theory largely relies on net flow models of saving and current accounts. This limits the scope of policy advice.》

[Blissex]

this is all a tempest in a teapot, manufacturer outrage, the whole narrative seems driven by:

* Starmer is the great hope of the "whig"/"remain" thatcherites (even if he has turned arch-brexiter).

* Since Starmer's target constituency is "soft" tory voters, he cannot attack Johnson's policies because those of New Labour are much the same, and Starmer wants to look "responsible", "constructive".

* So the Starmer and his supporters are resorting to attacks on "competence" and "character" and "sleaze" as wedge issues between Johnson and "soft" tory voters. Those on "competence" and "character" did not work that well, so they are bigging up any whiff of sleaze that can be found.

The problem with that strategy is that "soft" tory voters may huff and puff about piffle-paffle but the don't really mind a bit of sleaze because:

* They believe all politicians, not just Conservative ones, are on the take. So what?

* They are often into self-dealing themselves, with voting themselves big property profits at the expense of those poorer, and in their own jobs.

* As long as Johnson is competent and trustworthy at delivering big property increases they don't care about his venial sins.

To me the sight of deeply cynical, opportunistic, self-dealing "centrists" making a big deal of "sleaze" after PFI anc much else is just hilarious.

[ltr]

A similar thing might be happening to Boris Johnson. Everybody has known for ages that he is a lightweight comic charlatan. He has not changed, nor done anything surprising. It’s just that the same person is now provoking different feelings amongst his erstwhile supporters.

[ Agreed, but Labour under Starmer will gain no advantage to the muddled Johnson. ]

[ltr]

November 20, 2021

Coronavirus

United Kingdom

Cases ( 9,806,034)
Deaths ( 143,866)

Deaths per million ( 2,104)

China

Cases ( 98,450)
Deaths ( 4,636)

Deaths per million ( 3)

[ Tragically shared Conservative and Labour failure to protect the public health service and public health. ]

[Chris Purnell]

This is a very clever version of *Tipping points*. I thought it quite brilliant.

[ltr]

Yes, this essay is brilliant. As though all of a sudden, Boris Johnson seemingly has no clothes. I am startled at the seeming change. Whether the change will weaken Johnson indefinitely, I have no idea.

As for economic policy, it now appears as though there will be weakness to come in the wake of interest rate increases. What then should the government do with spending and taxing?

[jim]

As things stand we get to 'choose' Tory or depending on Labour's mood that day Tory Lite or Feeble Socialism. A better way might be to tour a 'politician supermarket' and pick off the shelf the bits we like and the brands we trust.

We might leave Boris on the shelf but put Sunak in the barrow. Ms Rayner might go with a good Chilean Red but Gove would look a bit too slimy for anyone. Anyway, they all get to the checkout and get told - work together or don't get paid. In short a selection of politicians chosen by the customers rather than the entirely phoney party systems we have.

Just think, the Telegraph might become the new place for dumped supermarket produce. The supermarkets came about because of the sheer inconvenience of high street shopping - politics should do the same.

[andrew]

The _letters_ A and B are the same shade.
The squares with labels A and B are not.

[Jim]

A very sad person (like me) printed this out, cut out the suspect squares and made a mask. Lay the mask over the picture and voila - they are the same. Also the cutout squares are the same. Being old and mean I only use a B/W printer.

[Blissex]

«Lay the mask over the picture and voila - they are the same.»

But optical illusions are a bad illustration for many things being context dependent. Optical illusions happen because our brain's "scene reconstruction" modules are simply defective (usually incomplete), and break down in cases for which they have not been honed by "evolution".

BTW there is an international optical illusion competition and many entries are fascinating:

https://en.wikipedia.org/wiki/Best_Illusion_of_the_Year_Contest

This has pretty much nothing to do with "tipping points" which are better imagined with geometry as in Thom's "catastrophes", or in many cases with the simpler "sandpile" model, or for other phase transitions, "Ising" models (also related to "sandpile" models).

[jim]

@Blissex
Thanks for the pointer to tipping points etc. Yet more to ponder. And sandpiles etc.

[rsm]

《Optical illusions happen because our brain's "scene reconstruction" modules are simply defective (usually incomplete), and break down in cases for which they have not been honed by "evolution".》

How do we know Blissex's logic is not defective? Isn't politics in the eye of the beholder, making our blogger's usage actually pretty apt?

[Adrian]

Blissex, your comment at 05;09 is extremely perceptive. It's why we are in a deep mire, politically. I may share it, if I may.

[ltr]

Cancellation of rail projects in Northern England shows why fiscal rules with investment caps and debt targets just create short-termism

-- Simon Wren-Lewis

[ Boris Johnson wants to give away continuing as Prime Minister, but Keir Starmer is determined there will be no Labour government or even an effective opposition. ]

[Blissex]

«It's why we are in a deep mire, politically.»

That is a common statement, but look at it from the point of view of "Middle England" voters, millions of affluent families: in their world their economy (incomes, living standards, economic security) has been booming for 40 years thanks to the economic genius of Thatcher, Blair, Cameron, May, Johnson; politically there is a wide and vibrant choice between far right nationalist tories, rightist globalist whigs, and rightist globalist whigs also trying to pander to nationalist "one nation" tories, and no significant political presence for "scroungers" and "trots".

Thatcher and Blair are the alpha and the omega, and thatcherism is the truth and the way :-) or rather :-( :-( :-(.

«I may share it, if I may.»

Of course, these are public comments. I have said pretty much the same (depressing...) things in comments elsewhere with the same pseudonym (but I have seen several people using it, inspired by a Star Wars character name), for example on the "All that is solid ..." blog and BTL on "The Guardian".

[ltr]

...politically there is a wide and vibrant choice between far right nationalist tories, rightist globalist whigs, and rightist globalist whigs also trying to pander to nationalist "one nation" tories...

[ Why then are specific program proposals not demanded of politicians? ]

[ltr]

What is possibly most distressing to me, is that Britain developed over several centuries with openness and that openness was essential, while now Britain is drawing away from the rest of Europe. The US is not a generous partner for any country at present. China is treated almost with disdain...

How does a partially closed Britain get on from here?

[Blissex]

«This has pretty much nothing to do with "tipping points" which are better imagined with geometry as in Thom's "catastrophes"»

Related to that there is a strong link to the history of political economy: in even simple models but with more than one capital good (and therefore internally incompatible with Economics) there are "anomalous" situations called "Wicksell effects" or "reswitching" (etc.) that are tipping point between "techniques" and there is a blogger who is exploring the related parameter sets and trying to profile them; for example (but also many others before and after):

https://robertvienneau.blogspot.com/2021/09/summary-of-some-conclusions-from-my.html

[Blissex]

«Britain is drawing away from the rest of Europe.»

Not a big difference, even if it is a loss for the UK (not necessarily for the EU in the short-medium term).

«The US is not a generous partner for any country at present.»

It was a generous partner for Japan, Korea-south, Germany, China (and secondarily Mexico and Canada), as long as they act as satellites.

https://www.thebalance.com/trade-deficit-by-county-3306264

«China is treated almost with disdain...»

Don't confuse the coarse propaganda in the press with what the "deep states" think. It is precisely because the "deep states" respect and appreciate the success of China-mainland that it has been upgraded to "rival", unlike Brazil or India (that get very little respect from the "first world"), or Russia (“Russia is basically a gnat on the butt of an elephant”).

«How does a partially closed Britain get on from here?»

It is less closed than Japan or Korea-south, a lot less closed than Brazil or India or Mexico or Malaysia, and about as closed as Canada or Thailand. With EU membership it was a little less closed, but not dramatically so.
For an example, after 2016 net immigration has boomed until COVID, as third-world immigration more than replaced falling EU immigration.

[ltr]

Not a big difference, even if it is a loss for the UK (not necessarily for the EU in the short-medium term)....

[ Really fine response, changing my thinking, for which I am grateful. ]

Another question, would be whether the NHS is actually being seriously weakened by Conservative spending constraints or even a wish for more private healthcare spending.

[Blissex]

BTW in the trade statistics mentioned above which include:

“China - $559 billion traded with a $346 billion deficit
Japan - $218 billion traded with a $69 billion deficit”

There is a clever trick: a lot of the chinese trade surplus with the USA is actually japanese, korean, chinese-Taiwan and german trade surplus, "laundered" through China; that is it is high-value components exported to China-mainland "maquiladora" factories and re-exported inside finished products "Made in PRC" to the USA, even if most of the value added is from outside China-mainland. Look at this funny map:

https://cdn.howmuch.net/articles/chinas-exports-imports-trade-balance-im-d13b.jpg
https://cdn.howmuch.net/articles/chinas-exports-imports-trade-balance-bal-b52b.jpg
https://howmuch.net/articles/chinas-exports-imports-trade-balance

Note how much is laundered through HK.

[ltr]

BTW in the trade statistics mentioned above...

[ Really useful; however the nature of trade for China is changing dramatically in that China is focusing on producing high-value products-components domestically. The change was intended by Chinese planners but has also been forced by the US. The US trade war with China was actually a war against Chinese technology development. The war will prove ineffectual and self-defeating. After all, this is a country that already has an international space station.

China is not Mexico; not to disparage Mexico in any way but China has been emphasizing technology advance and will be successful in the emphasis.

I am grateful for the terrific references, and explanations. ]

[ltr]

The emphasis on technology advance in China was quietly stated for a while, but now is entirely and repeatedly pronounced and the results are continual. Beginning in the Obama years, an intent was formed to limit technology advance in China. The Trump years went further, and Biden is continuing.

However, China is not about to developmentally limited and the Chinese efforts have been stunning in affect while the intent is that they be more so and policy is completely supportive.

[ltr]

November 24, 2021

Coronavirus

United Kingdom

Cases ( 9,974,843)
Deaths ( 144,286)

Deaths per million ( 2,110)

China

Cases ( 98,546)
Deaths ( 4,636)

Deaths per million ( 3)

[ How was the British emphasis on public health seemingly forgotten by the Conservative government? ]

[rsm]

《Small changes in certain parameters of a nonlinear system can cause equilibria to appear or disappear, or to change from attracting to repelling and vice versa, leading to large and sudden changes of the behaviour of the system. However, examined in a larger parameter space, catastrophe theory reveals that such bifurcation points tend to occur as part of well-defined qualitative geometrical structures.》

So this theory is predictive? Why not use it to bet on future stock market catastrophes, then?

《In the late 1970s, applications of catastrophe theory to areas outside its scope began to be criticized, especially in biology and social sciences.[1][2] Zahler and Sussman, in a 1977 article in Nature, referred to such applications as being "characterised by incorrect reasoning, far-fetched assumptions, erroneous consequences, and exaggerated claims".[3] As a result, catastrophe theory has become less popular in applications.[4]》

Oh, is it not predictive because human shifts depend on each individual shifting their perceptions (i.e., seeing the picture another way) for irrational, emotional, trend-following reasons?

[rsm]

《China is not about to developmentally limited and the Chinese efforts have been stunning in affect while the intent is that they be more so and policy is completely supportive.》

Isn't CCP surveillance technology the envy of authoritarians everywhere?

[Blissex]

«the nature of trade for China is changing dramatically in that China is focusing on producing high-value products-components domestically»

That is, the China-mainland government is out to damage the exports to China of the USA, Japan, Germany, Korea-south, China-Taiwan. Mostly thanks to USA policy.

BTW I (ir)regularly read the english-language version of Qiushi, even if it takes skipping over much of the boilerplate, and in occasion of the party centenary Secretary General and CMC Chairman Xi made a truly important, history-changing speech directing the party and the country to radically change direction:

http://en.qstheory.cn/2021-07/08/c_641137.htm

There is a lot of boilerplate as usual but it contains clear, sharp insights and directions (for example starting "Given the backlash against economic globalization" and "there are some misunderstandings that we need to guard against").

In this case the "tipping point" was not just a cognitive one that "just happened at some point", but it was prompted by external pressure, which itself arose from another tipping point, the election of Trump, which happened as the mass of losers from globalization and immigration in the USA became large enough to swing presidential elections.

[Blissex]

«the election of Trump, which happened as the mass of losers from globalization and immigration in the USA»

Since this is directly relevant to the topic of this post, here is my usual quote as to this, from Grover Norquist in 2006:

«Pat Buchanan came into this coalition and said, “You know what? I have polled everybody in the room and 70 percent think there are too many immigrants; 70 percent are skeptics on free trade with China. I will run for President as a Republican; I will get 70 percent of the vote.” He didn't ask the second question … do you vote on that subject?»

That was not just about Pat Buchanan but also about Ross Perot before him. Not enough people did vote on that subject in 2006, as real estate prices were booming, but 10 years later enough people started voting on that subject to elect Trump, who had been an economic nationalist for a long time.

The real Trump-related issue was that while he was not anti-China, for him the big issue was offshoring, incidentally to China, the "deep state" turned that into a national security issue, with China as a rival for global domination, not merely the destination of most offshoring.

Indeed current american policy is still to offshore as much as possible, to push down USA wages, just no longer to China.

[rsm]

《In this case the "tipping point" was not just a cognitive one that "just happened at some point", but it was prompted by external pressure》

And this was all predicted by some multidimensional manifold, rather than the arbitrary fickle idiosyncratic thoughts of a single dictator? What if a different personality was dictator? Is there some inevitability that Xi was destined to become dictator, and is fated to make his decisions affecting billions? What if Tiananmen had gone differently because the CCP decided not to use tanks on their nonviolently protesting people?

Why did Trump lose in 2020? Were losers not satisfied with Trump's stimulus, and thought they could get more from Biden? Did the Great Political Manifold predict a pandemic?

Or is all this analysis just one story, no more or less valid than infinitely many others that can be told and supported with cherry-picked data and anecdotes?

[ltr]

Blissex:

Xi made a truly important, history-changing speech directing the party and the country to radically change direction:

http://en.qstheory.cn/2021-07/08/c_641137.htm

[ Truly important; I will respond further. ]