In the 2006 film Idiocracy, a dropped tin can sets off a mountain of garbage in the year 2505. The landslide pours into a ramshackle city occupied by a population of dumbed-down couch potatoes, and accidentally frees a cryogenically frozen army corporal, Joe Bauers. Crawling from his time capsule, the average Joe discovers hes an Einstein in this world, where people are named after corporate brands (Frito, Velveeta, Beef Supreme, etc.).
Idiocracys tin can scene may have been inspired by Malcolm Gladwells 2000 bestseller The Tipping Point, which examined how small-scale events have large-scale effects. Yet the notion is hardly original to Gladwell. In 1961, mathematician Edward Lorenz was programming a computer to predict weather patterns when he entered the decimal .506 as a shortcut, rather than the full sequence of .506127. The result was a radically different weather scenario. Lorenz later gave a talk entitled, Does the Flap of a Butterflys Wings in Brazil Set off a Tornado in Texas? The butterfly effect has since become shorthand for natures interconnectedness, and how big things can go sideways with considerably less than a shove.
Essayist Nassim Nicholas Taleb recently offered another angle. His 2007 best-seller The Black Swan: The Impact of the Highly Improbable, defined a black swan as a rare event of devastating impact in history, science, finance and technology. Experts only grasp such events retrospectively, and then talk of them as if they were predictable. Black swans are the scariest variety of tipping point: the kind that comes without a manual, roadmap, or flashlight.
Speaking of which, last Friday the ratings agency Standard & Poors downgraded the United States credit rating from TFA (Totally Freaking Awesome) to VNS (Very Nearly Splendid). What would become of the sacred stock market on Monday? As it turned out, a fair bit; there are real-world consequences for lapsed faith. The double-digit drops on the worlds exchanges are all the proof anyone needs that stocks are as much subjective whimsies as dollar-and-sense realities. They are worth whatever the herd, or the herders, believes them to be worth.
The ongoing scare is as much about belief systems as bean-counting. Consider the U.S. ceiling debt debacle that inspired S&Ps grime reappraisal of Team America, which led to this weeks global freefall. In itself, the ceiling debt debate wasnt so much a black swan as a lame duck. The deadline was reached in time before default. The whole debate had a theatrical feel to it, considering the U.S. debt limit was raised 18 times during the Reagan administration alone. This wasnt so much a dog and pony show as an Elephant-and-Donkey Steel Cage Death Match, sold to the domestic audience as a shock-and-awe tipping point. The elephant was poised to crush the donkey, but at the last minute the donkey pulled an agreement out of its ass, whichsurprise!contained most of the elephants demands. A fixed fight?
The U.S. Treasury claims S&P had made an accounting error of two trillion dollars in its re-estimate of the nations credit-worthiness, an Idiocracy-level mistake. (Lets not forget that S&P and other firms gave out triple-A ratings to the ticking time bombs of mortgage-backed securities.) Whatever the truth of this claim, economics remains a branch of social psychology, and high finance might as well be Freudian myth-making.
To shift the beliefs of an entire population, only 10 per cent of its members need to become convinced of a new or different opinion, according to a study from the Social Cognitive Networks Academic Research Center (SCNARC) at Rensselaer Polytechnic Institute. At that tipping point, the idea can spread through social networks and alter behaviors on a large scale, notes Discovery News. The idea doesnt have to be correct. It just has to connect.
One of the principle ways our neighbours have been fleeced, high finance, is now a Hogwarts-like game for Harvard-trained quants, with cheerleading supplied by Idiocracy-like experts like Mad Moneys Jim Cramer. Any further fiscal medicine offered to the American sheeple by the Wall Street-backed Obama will almost certainly contain class-war snake oil. And it will all be done to honour the sacred markets. The solution will be sold with a victorious banging of gavels, and a conga line of expert opinion in the editorial pages and broadcast booths.
www.geoffolson.com
