IN a speech to the Modern Language Association in 1972, the famous American film critic for The New York Times said this about that year’s US presidential election: “I live in a rather special world. I only know one person who voted for Nixon. Where they are I don’t know. They’re outside my ken”.
Incumbent President Richard M. Nixon won that election over George McGovern by a monumental landslide. Nixon gained 60 percent of the popular vote and 520 electoral votes to McGovern’s 17 votes.
Pauline Kael’s quote has been distorted and used to display how out of touch the “elite” is from the ordinary citizen. In the past three years or so we have seen how the so-called intellectual, political and economic elite is disconnected from the people. Across the globe voters have rejected what was once called “The Establishment” and leaders who are seen representing the interests of the members of the ruling class.
However, what is profound about Kael’s revelation is the fact that she recognizes that she operates in a closed bubble. Born in a dirt-poor chicken farm, for 40 years she was the toast of the wealthiest and powerful of New York High Society.
Feedback “occurs when outputs of a system are routed back as inputs as part of a system that forms a loop.” We have all experienced it—when a microphone is too close to the speakers, the sound goes from one speaker to the other as it gets louder and louder with that ear-piercing screech.
We also experience it when what we hear and read support our predetermined views, which then makes our bias even stronger. A person might think that maybe the Earth is flat and then talk to people that do think the Earth is flat and eventually the person absolutely knows the Earth is flat because everyone around him believes exactly the same thing.
“Fake news” is not harmful because it may be untrue. It is damaging because it supports a particular position. In the past, celebrities’ careers were ruined not by ridiculous lies but that those lies supported previously held negative views about them. Look how people go hysterical about a completely untrue story published on a satire or parody web site.
We find this kind of feedback loop in almost everything. Well-respected local journalists and authors that I know, on Facebook feed each other information that supports previously held opinion and refuse to accept it when the facts prove something differently. A feedback loop is difficult to break unless you are intellectually aware of being caught in it, as was Ms. Kael.
There is that cartoon of a stockbroker saying, “I’ve got a stock here that could really excel.” The word “excel” is passed on as “sell” and becomes a massive wave of market crashing panic. Another broker down the line says, “This is madness. I can’t take it anymore. Goodbye.” And, of course, this feedback loop becomes a massive wave of euphoric buying.
Even economic conditions are subject to a feedback loop, inflation being the best example. A storeowner raises prices because he sees another one increasing her prices and then another storeowner follows them.
The same conditions are doubly true for the stock market. Members of the “Billionaire Boys Club” of fund managers are always watching the other guy, not wanting to be the last one in during a Bull Market or the last one out in a Bear Market.
That is how a “correction” on the local stock market at the 8,100 index level in the middle of March—when we went to 90-percent cash —turned into a bloodbath to 7,300 by the middle of June. Think of how wonderfully profitable it is going to be when the loop reverses direction.
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