human factors in political ads

I heard a joking comment today but it got me thinking that the opposite of his joke was actually the truth.  A radio news host and a guest were talking about Republican consultant Fred Davis' proposal to launch a Super Pac that would bring back up Reverend Jeremiah Wright from the 2008 campaign.  As you may recall, he is an extremist pastor on a few race related topics and had been associated with Obama from years before.   At that time, Obama was forced to renounce Rev Wright’s comments, reject the relationship, and make sure everyone knew that he never agreed with his controversial opinions.  Once the New York Times found out about the Super Pac plan, Romney was forced to do the with  Davis.  The radio host's joke was basically that political ads usually say “I am candidate X and I approve this message.”  Now, the ads are going to say “I am candidate X and I repudiate this message.”  Hah hah.   Thank you Citizens United.

But then I started thinking about the way the brain processes information and how we can’t unring the bell.  People on the left (right) who are solidly behind Obama (Romney) would not be affected by the whole thing, no matter how it is handled.  But what happens to the people who are undecided or unaware of the past?  What would likely happen is a two step process.

First, they would hear the controversial message, develop negative opinions about the targeted candidate (in this case Obama), but also negative opinions about the candidate who is seemingly behind it (Romney).  During the time when they think it is an official campaign message, they wouldn’t necessarily doubt it too strongly.

Then when they hear the repudiation and realize that the message was sponsored by a hyperpartisan group, overwhelmingly exaggerated, and largely deceptive, they would try to erase the memory.  But they can’t help but be influenced by it because it has been sitting there in their heads for a few days, maybe even repeated several times before they see the repudiation.  You can’t erase a memory just because you want to.  Even if you know it is false.

Third, they get the message that the candidate who repudiated the ad was not involved and is really an honorable guy.  Again, you can’t erase a memory, but this is just a sense of like/dislike.  The original negative impression is not completely erased, but it also isn’t strongly ingrained.  

Net-net, the result is still good for the attacking Pac

When campaigns realize how great a trick this is, I suspect they will "encourage" SuperPacs to “independently” run ads like this and then the candidate can proudly walk up to the nearest podium (a few days later) and repudiate it.  Again, thanks Citizen’s United.

Should we support manufacturing as government industrial policy?

Earlier this year, Gene Sperling gave a speech about why subsidizing manufacturing is good policy, not a market distortion that is more likely to do harm than good net net.  His main point was about positive externalities.  Since externalities are a subject that is near and dear to me and a frequent topic of this blog, I put some serious thought in to his message.

Quick basic background.  There are two reasons for sticking to free market principles and two reasons to violate them.  If you are a libertarian by religion, then there is never a reason to deviate even a little.  When it is a religion – well, ‘nuf said.  On the other side, we look for externalities.  When a person or organization is able to get the benefits of an operation but pass off the costs onto someone else, they gain an unfair advantage.  In these cases it makes economic sense for society to add those costs back on through regulation, taxes, or other mechanism.  This is where environment regulations, labor laws, disclosure rules, accounting standards, etc come in. 

And when a person or organization’s acts create positive results for society, it makes economic sense for society to encourage it through subsidies, tax credits, and regulations.  This is where the earned income tax credit and charitable contribution tax deduction come in.

The problem is that when government intervenes, they often screw it up.  For decades, government thought the mortgage deduction had positive externalities because homeowners were more likely to keep up the house and the neighborhood.  But they didn't see the negative externalities and unintended consequences which magnified the real estate bubble and subsequent burst.  Government industrial policy often picks specific winners and losers, which skews the market.  Corn subsidies and oil exploration tax credits come to mind.  It is better to create more general interventions like an R&D tax credit that is open to every business in any industry and any domain. 

So where does manufacturing come in?  If the government supports manufacturing over other kinds of business (service, agriculture, natural resources, science), will that create a distorted market and/or are there positive externalities that justify the distortion?  Gene Sperling suggested that there are.  Manufacturing creates positive externalities in the form of innovation, spin-off jobs, supplier jobs, new technology expertise, and more.  This happens in greater degree than in other sectors and therefore justifies the distorting nature of a targeted subsidy.

The problem is when lobbyists get their hands on the final regulations and skew the benefits towards one manufacturing sector over another.  Cars over trains.  Tablets over ultrabooks.  OLED lights over fluorescents.  Or whatever. This often skews the market to the point where the negatives outweigh the positives.

My thoughts on this won’t surprise any of my regular followers.  The idealist in me knows that Sperling is correct in theory and that supporting manufacturing could lead to these positive externalities.  But the realist in me knows that it not going to happen quite as purely as it should.  And the result might not be net net positive.  Shame too, because we could use a good boost to jobs right now.

Shooting in Florida

Many people have been sharing articles about this case, and "liking" the ones describing how international pressure FINALLY (their emphasis) got charges filed against the night watchman shooter, and from the Feds as a bonus. 

Personally, based on the stories I have heard about the shooter, the situation, and the 911 tapes, I think the shooter is certainly guilty of something.  But I am not sure that there is enough real evidence to support a conviction given Florida's laws about self-defense.  And this brings some real concerns:
 
1.  If the jury convicts because the "just know" he's guilty, this would be a travesty of the US justice system.
2.  If the jury finds him 'not guilty', the public uproar will be even worse.
3.  If the Feds exert jurisdiction in a case where they normally wouldn't, in response to the public pressure, it sets a dangerous precedent for future lynch mob justice.

Even though I suspect the shooter is in fact guilty of something, I don't like the path this is taking to get there.  I am not sure this is really the "justice" that many of us think it is.

demographics

Have you ever had one of those thoughts that really makes you stop and think?  I just had one that sent me immediately to the blog to get it down on paper (on keyboard?). 

I am sure this parallel has been seen and discussed at length by experts, but I have never seen it.  I major discussion in Middle East peace politics is the peril of demographics for Israel.  The Arab population is growing much faster than the Jewish population, particularly in Gaza and the West Bank.  If Israel wants to remain a Jewish State (which many think is necessary for its survival, let alone its identity), it is simply a fact that it needs to pursue a two-state solution. 

As we approach Passover, I was thinking that in the Exodus narrative, Pharaoh sees the growing Jewish population in Egypt and fears that at some point they will revolt.  As a result, he forces them into slavery and hard labor.  The worry originated in demographics rather than any revolutionary actions by the Jews. 

The parallel is not exact for a variety of reasons, but the similarities are relevant.  If peace gets delayed over and over and over again as it has been over the recent decades, what will Israel do when the population hits an inflection point?  Then, it will too late. 

lobbyists taking over the world

I think this one is the final straw.  I may just become a cynic forever.

Michael Smerconish was discussing this case on his radio show yesterday.  On the surface, a pre-k teacher confiscated a 4-year old's lunch because it was not well balanced, threw it away, and gave them a lunch from the school cafeteria.  But there are some details that make this more of a conspiracy theory.  I can't verify and of them personally, but I am sure you can Google the story.

First, what right does the school have to overrule the parent's choice?  Obviously a four-year old isn't making his own lunch.  This is the parent's call - good or bad (to a point, perhaps)

Second, the kid's original lunch was a turkey and cheese on whole wheat.  The replacement from the cafeteria was chicken nuggets.  WHAT ?!?!?!!?

Third, Smerconish reported that each class had a quota for how many kids had to buy lunch from the cafeteria (to keep it in business).  So a hidden agenda might have been to make the quota.  But still, tossing a turkey and cheese on wheat?  That's just crazy.

Fourth, the school sent the kid home with a note that if they had to do this again, the parents would be billed for the lunch.

A caller mentioned (again, this is not verified) that this town in N Carolina happens to be the home of one of the largest chicken nugget factories in the country.  The quota system could be the result of this company lobbying the school board.

I am not sure how much of this is true.  But I can't think of any reason a teacher would throw away a parent-made turkey sandwich and replace it with chicken nuggets if there wasn't some kind of politics behind it.  Luckily, they appealed to their local state rep and he intervened in the situation.

But still, this could really be a sign of the apocalypse.

political attention

There was a fascinating study just published by a team from the University of Nebraska.  What they did was flash pictures of politically charged individuals (e.g. Bill Clinton, George Bush) on both sides of the aisle to people with strong political orientations.  Then they measured both galvanic skin response (physiological arousal) and visual attention. 

What they found is really interesting.  The liberal subjects had a stronger physiological response and longer visual attention for the pictures of people they liked (e.g. Clinton).  On the other hand, conservatives had stronger physiological response and longer visual attention for people they don’t like (e.g. Clinton again).  They used a variety of people in the images, so it wasn’t Clinton himself that caused the reaction.

They promote a hypothesis for why this happened that I would like your opinion on.  I am not sure if I buy it, although it sounds reasonable.  The conservative mentality is about protecting us from out-group threats (anti-immigration, strong military) and in-group threats (people with non-traditional values or behaviors).  So their attention is naturally fixated on things they don’t like.  On the other hand, the liberal mentality is about improving the world for out-groups (foreign aid) and in-groups (minority rights).

What do you think?  The actual physical responses are statistically significant, but they are really speculating about the explanation.  Could it be?

Global Business Ethics

I just attended a fantastic seminar on Business Ethics.  It was given by one of the pre-eminent experts in business and professional ethics – Patricia Werhane.

I don’t want to summarize her entire week-long visit at Bentley, you can buy her books if you want that much!!  But she discussed one tradeoff over lunch today that I think is really critical for anyone doing business internationally and which I find personally fascinating.

The tradeoff is what you do when another country/culture has different standards than your home base does.  It could be bribery (Siemens), environmental standards (fracking), worker safety (Foxcon), privacy/censorship (Google in China or Twitter in Syria), discrimination (Apartheid back in 1980s S Africa), etc.  Many NGO groups automatically come to the conclusion that companies should remove themselves from any location that forces them to break their home base ethical standards.  Libertarians reject absolutism and think “when in Rome” is the appropriate standard.  Macro-economists suggest working in the system to try to encourage change by being successful as a business and a role model for gradually improving the ethical situation.

I like Patricia Werhane’s answer better.  She says “You just don’t know.”  Sometimes, you go in and work from the inside to fix the problem (the Sullivan Principles helped to end apartheid in South Africa).  But then she cited cited a group that tried to take down Hitler by infiltrating the concentration camps.  They spent years assisting in heinous activities hoping that they could topple the system from the inside.  They failed.  But was their original decision to try wrong?  Hard to know for sure.  Maybe given a second try they could do it.  Sometimes you make a big statement by refusing to do business at all (Google in China – result yet to be determined).

As a pre-eminent ethicist, I put a lot of weight in her recommendation.  She said you make the best prediction you can and go with it.  All choices have some ethical risk to them.

From a behavioral science point of view (we are on to my thoughts now), we have another challenge to overcome.  Motivated reasoning.  If we are allowed to decide for ourselves which way to go, then our brains can easily play tricks with us.  Our nucleus accumbens is going to prefer the option that makes more profit (for the company or for ourselves personally).  It will unconsciously be convincing the amygdala, hippocampus, and frontal cortex that this is the best way to go ethically too.  Since we can’t access those conversations consciously, we can be easily fooled into the selfish choice and rationalizing it to ourselves (and to our CEOs and stakeholders).  To overcome this, we need our organizations to have both a strong liberal and a strong libertarian as co-directors of ethics.  Have them duke it out in the open.  Whichever one has the more convincing argument wins. At least this way, the two arguments can be documented and slept on.