Rory Sutherland, Elfried Samba and Nicholas Gruen on why systems break and how to fix them

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1:13Nicholas, it's great to have you on the episode. Really, really excited about this. I've been consuming your content now. Oh, have you? Ever since Rory was raving on about you, I was like, whenever Rory gets excited, I get excited. Whenever I get excited, he gets excited. Rory's a very generous man, so you have to exercise care. I'm late for this interview. He's been incredibly gentlemanly, making me feel as if it's entirely normal to turn up half an hour late for things. And I'm mortified. But anyway. Well, you've got some creatives on the podcast, so we tend to be very, very understanding. Well, that's great.

1:49That's great. The whole entire process. But do you know what? We'll just get straight into it. So for our guests that don't know who you are, it'll be great for you to give a bit of a summary of yourself, the work you've been doing, and we can start to dive into some of the bottlenecks that you've been experiencing along the way. Okay, good. So I am, let me tell you, a little story is that my father was an economist. My brother and I tried very hard not to be economists and we both failed. And, but I'm a kind of roving economist and I've spent 30-odd years thinking about public policy, economics, the inadequacies of economics, and I've spent the last five years fairly intensively looking at the inadequacies of our democracy.

2:37And I've been asking very simple questions and looking at things in a very simple kind of way. And when you do that, and you do, Sometimes it pays some dividends and you come to think that you understand certain things that are simple but that people are missing. And you try and point it out to them and they tell you you're wrong a lot of the time because it takes a while to kind of decompress and to see some of the things that some of the deep structures in the systems that we're all part of. And when you ask these simple questions, do people give you simple answers? No, no, no. Because what happens is that we are, as is natural and appropriate, we're acculturated.

3:26You know, we look at that thing over there and we see a chair and that's what it is. But it's also a bunch of other things. It's plastic, it's wood, it's, it's, it's there. And so if you look at something and you start asking yourself, why isn't this thing working the way everyone says it should work? Is the fact that everyone is preoccupied with how a thing should be actually part of the reason why it's not that way? So how you categorize a thing automatically then induces kind of biases and habits of thoughts. Exactly. Simply as a product of the categorization. Exactly. But if a thing is a planet, you might not have a very strong idea of what a planet should be.

4:20But if a thing is a politician, you have a strong idea that this politician is a politician, is in the House of Commons, and they're doing the wrong thing, and they should do the right thing. And so you can go one of two ways. You can go the way that most politics goes, which is to wag the finger and say, should, should, should, should, should, should, should, or, well, why isn't he doing the right thing? Are there things about the way we've set this up that mean that it's not doing the right thing. And one way to think about our political system, one way to think about left and right, is to ask the question, what is shooting doing here?

5:07What is the desire to look at something and say, you should be not the way I see you, but some other way? And so I would say that the left do shooting all the time. Yes. And the right do suck it up. That's the way it is. And they just don't understand each other in that way. But I think the left have really got themselves rather unmoored through the woke adventure and all that sort of stuff, which was endlessly shooting and shooting and shooting and shooting, and then we say that trans women are women, therefore someone self-identifying as trans, born a man, gone through puberty as a man, goes to a male prison, sorry, goes to a female prison, and they have been convicted of a sex offence.

6:08You know, that's just completely nuts. And what's happened to society? Because just like this podcast, I really like the ability for people that even if you don't have the same views, you can at least have a conversation around something. What's happened in society where everybody's kind of like gone to their direction and they've stuck to their guns and not willing to cooperate and have a conversation? What's happened there? What's happened is that for the past 250 years, we've set up everything that matters to us and our society as a competition between for and against. Everything. So the very terms left and right, where do they turn up?

6:53In the French Revolution, where you sat in the assembly meant whether you were for or against. So everything we have, even when it's brand new, like where did COVID come from? A few months, people go by and they're kind of actually curious. And then somehow it gets assured, it gets an ideological orientation, which is absurd for the question of where did a virus come from to acquire an ideological connotation. We can do it in months. We can do it in weeks. And that's what we did. And that's what we do with everything. And so we can't really... And so everyone participates in discussions as if they already know the answer.

7:44It's very interesting. I mean, the distinction I always make is, do you want to win an argument or do you want to solve a problem? Yeah. Because if you think about probably the worst influence on British politics is the PPE degree at Oxford. In fact, Oxford in general, I would extend it even more broadly and say that effectively, it's three to four years training in argumentation. And therefore, the consistency of your rationale is more important than the consequences of the implementation of that idea. Yeah. Okay. And that, I mean, it always interests me partly because what's quite interesting about the advertising industry is I always joke about this in most areas of decision making, rationality is the gold standard.

8:30And I always argue at advertising, it's the bronze standard. That makes sense, but it's a bit boring. Can we do something a bit better? And it's always been interesting because it's a different way to think because most people are thinking in a way which is as long as you can create a kind of internal consistency to your model, therefore the model is valid, and you should therefore apply it very widely regardless of the consequences. And I think argumentation, and this is why I'm occasionally seen as kind of anti-rationalist, because I think rationality is often quite a low bar in many ways. But you are associating rationality very much with this idea of having it out between two sides.

9:11Yes. And so if we're trying to work out something that we don't know much about, well, you might arrange yourself into two sides, but then you will also be both aware of all the things you don't know. And anyway, so an argument or discussion is an ecology of shared things and contested things. And so I would say that simply imagining that a discussion which is a debate between two people who disagree with each other, simply imagining that as a paradigm of rationality is irrational in itself. in itself because we have to be able to feel towards the truth together. And sometimes I'll say, no, no, I don't think that's right.

10:07You might say, no, no, it is right. And then we might say, right, okay, well, we've come to an impasse there. Let's go look somewhere else. Or is there another way of looking at things. There are all those things. And in our universities, we teach over confidence in what we know, all this kind of stuff. Also, there's a weird thing, which is the urge to be singularly right. The byproduct of that is you automatically reduce the solution set. Because if you have a large solution set, that requires subjective judgment, intuition, and actually probably debate and discussion, and you will actually inform your own opinions as a byproduct of that discussion.

10:52If you want to be right right now, what you do is you limit the number of variables. Typically, as an economist, you'll create it as a trade-off between two things with a single opt-in and somewhere in between. Or, if you're a politician, you will engage in what I call peremptory framing. So you will say, as Tucker Carlson said to somebody in the military, so tell us how your policy of not discriminating against gay people will help us win a battle in Iran. Well, it won't do that. It's not, that's not its function. It's the, the, the, the, the, you know, this is, these are people, these are human beings.

11:41There's a lot of things to think about, but you can frame it in a particular way that you look silly defending what we need is more gay soldiers. You know, they're just different things. And so a huge amount of politics, think of the two terms, um, pro-life and pro-choice. Well, those are peremptory framings. What they're saying is you couldn't possibly, you know, could you be anything but pro-choice? Could you be anything but pro-life? And so the whole point of this maneuver is to foreshadow, is to forestall the possibility of debate. So it's a crazy, it's a crazy term. Give me a very interesting example of where debate comes to a better answer.

12:27And funnily enough, this is where marketing slightly helps, because interestingly in marketing, every individual is a potential market. So you have to be interested in everybody to some extent if you want to actually grow your business. And this was one, I think, that happened in the UK, which was a discussion on effectively taxation of taking airline flights. and it started off framed in yes we should tax uh every flight people take yeah no we shouldn't yeah and eventually i think there was some sort of effectively deliberative democracy took place and they took a representative sample of people and they arrived at what was actually a very clever reframing of the whole question which is basically everybody's got the right to their fortnight in Tenerife, okay?

13:19But if you fly as an individual more than a certain number of times a year, then there should be a kind of sliding scale of how much tax you pay on your flights, which is completely different. If you like, it's sort of squaring the circle between more tax, less tax. It's taxed differently. Now, one of the things I said to Transport for London is the whole policy of the, what is it, effectively, there's this clean air area. If you've got an old diesel car, you've got to pay, what is it, 15, 20 pounds or something every time you drive into, more or less, even out of London. And my only argument was, look, there's a huge difference between 100 people paying 20 pounds once and one person paying 20 pounds 100 times.

14:04If you're a nurse, you've got an old diesel, you've got no choice but to drive into work at five in the morning. OK, charging that person£2 ,000 is ridiculous. And there needs to be some sort of capping system. Or Amazon Prime, you know, if you pay£150 and then you're exempt for two years. And then you've got two years to replace your car. And this very, very crude, effectively, I suppose, one of the things I think Gary Stevenson, I don't know if you've come across Gary's economics, kind of dis-economics challenge. Yeah, I know that. One of the points he makes, which I think is a totally valid criticism of mainstream economics, is the single representative agent model, which is you optimize for a single average person.

14:46And it's assumed, therefore, that you've optimized for everybody, which becomes, I think, less and less successful in a world where, of its nature, people are just more different in their circumstances. And so, you know, I've always thought that optimized for the average is a fundamental flaw of economics. That, you know, essentially, one of the points Gary makes is it doesn't really capture inequality, of course, because you can have six people becoming monumentally wealthy. And as far as an economist is concerned, the economy is doing great. Yeah, yeah. They always say that there's no one more dangerous than an intelligent person with a fixed mindset, right?

15:25Because they'll stick to their guns and they'll bullshit their way through and say, you know, smart things. Well, this is a great point that Alexander Solzhenitsyn makes, which is, he says, you know, of all the villains in Shakespeare, about 200 people are killed. But in the modern world, the villains have got ideology and tens of millions of people get killed. Oh, wow. And then, going back to the whole conversation, everybody thinks that it's one or the other, but really, it's not an all conversation, it's an and conversation. And no one ever considers the and because people are not looking to actually solve the problem.

16:01It seems like it's more linked to people's identity now. Yeah, yeah. So it's like, I remember when I was at Sixth Form, and I think it was the time when Nick Clegg, that almost like political run was happening. and I was labor, right? And I said, okay, but then if I actually just like made my answers based on the policies that I believed in, what would I actually end up being, right? But then because I put it into my identity that I'm part of a party, it's almost like blindly you have to choose one side or the other, right? That's right. And what you do is you should your opponents and you make excuses for your own side and you go, yeah, yeah, Well, he, you know, didn't answer the question in Prime Minister's questions, but that was because, you know, if he'd done that, then they would have done this really unfair thing to him or whatever.

16:57And, yeah, so this is the same ability to get away from the facts with spin, effectively, sort of self-spin, saying they should have done this, they should have done that. It seems like, why is the world, because it was already a little bit like that 10 years ago, 10 or so years ago. It's become even more polarizing now, right? It's almost like, and I think Rory talked about this in the last episode, that if you're moderately left or moderately right, it's almost like no one listens to you. That's right. If you're far one end or far the other side, that's the people that... I'll give you the answer to your question in one word.

17:38Entertainment. Much more entertaining to run a story about some extreme view, some extreme event. So that's the bias. And it then becomes a tool of political combat. So you'll pick some completely crazy, some crazy proposition from among your opponents. That's political combat. There's another thing, too, which I don't think anybody's remarked on, which is when you introduce prohibition in the United States, no one bothers with beer anymore. Because what the hell's the point of smuggling beer? It's massively high in volume. OK? Similarly, if you watch Narcos, they were basically cannabis smugglers.

18:31OK? And they suddenly go, look, if we're going to take all this risk of getting something through the American border, we might as well pack the truck with cocaine rather than cannabis because it's a high-intensity product. OK? Similarly, not many bootleggers bothered opening a brewery. It was all high-strength spirits. And similarly, if you're in a world where you're not allowed to make a mildly politically incorrectly incorrect joke, you might as... You end up with Andrew Tate. Andrew Tate is the cocaine or the bootleg djinn of incorrect opinion, you see? Exactly. Because it's, I suppose... Or Nick Fuentes is the current...

19:09It's kind of might as well be hanged for a sheep as a lamb. So, if you're actually going to transgress, and there's no distinction made between mild transgression and extreme transgression, well, what the hell, right? Well, they're called it rage-baiting now, right? Yes. Yes. And as somebody that obviously, like, specializes in digital marketing, et cetera, et cetera, you recognize that you need to do a lot to almost, like, set yourself apart in the doom-scrolling era, right? So you have to do something that jumps out at people and makes people feel something. Yes. And I feel like we're so hung up or we're so drained in dopamine excess that it seems like we not only want to experience the dopamine...

19:51And adrenaline. So it seems like we don't only want that in our digital lives, but also in our physical lives as well. And unless something hits a particular note, it almost like doesn't register in people's minds. Yeah. And is that one of the things that you think are... Yeah. Oh, sorry. One of the things that you think are influencing that? Um, yeah, I think our... See, sometimes people, someone like Ian McGilchrist will say this is Western, and it is Western, but it's now a Western institutionalized in this... in these adversarial structures. And so it makes it harder to represent the center.

20:29The center is boring. The center is not as immediately, you can't cut through quite as easily. Well, you can't be completely right as a centrist, can you? That's true, too. It's all a kind of bargaining thing. Yes, yes. I'm intrigued by this as an enthusiastic Georgist. because, of course, one of the reasons Georgism never takes any root is that it's inherently contradictory in that it's incredibly free market in terms of the fruits of people's labor's effort or, indeed, imagination. And it's socialistic with relation to what you might call, well, typically land, historically land. You could extend it, actually, to scarce resources like fossil fuels.

21:13Yes, indeed. Things with rent. So it was almost a religious distinction, which I think people understood in the 19th century, which is that land and oil are actually the creation of God. And therefore, the proceeds from those things should be reapportioned fairly, because the value of your land is as much to do with the efforts of your neighbors as it is of your own. But I think in the 19th century, they probably had a kind of religious way of understanding this, which is why Georgism went very big. You could extend it also to, I mean, Facebook or something, if you wanted to. You could just say, okay, there's a kind of Georgist approach to the web and that certain behaviors become essentially so habitual that the ownership of that behavior becomes a kind of extractive rent-seeking activity.

22:00And it stops being value creation. You go from being a property developer to being a slum landlord, effectively. But the George's thing is interesting because it's always difficult for it to take scene because it requires people to be both at the same time left-wing in relation to certain forms of economic activity and right-wing in relation to others. But I think it's actually inherently beautiful for that reason because it takes what appears to be a contradiction and says, well, you know, the extent to which you deserve to keep the fruits of your labor entirely depend on the social contribution that your labor makes.

22:42Yeah, it reminds me of a philosopher. He was a scientist, then an economist, then a philosopher, a guy called Michael Polanyi. Oh, yes, of course. Genius man. Well, he was very, so he was a liberal, he was a friend of Friedrich Hayek's and a strong free market guy, But he also thought that Keynes was right, which he was, in my opinion. And what he then did was he designed a system that would be Keynesian at the same time as leaving, as focusing the interventions of government as tightly around what Keynes had identified as the problem, which is the flow of money around the economy. Got it. And what had happened with Keynesianism is that it had picked up a lot of left-wing baggage, a lot of the idea that for more state investment, more state supervision of investment and stuff like this, more labor market regulation.

23:42And so Polanyi designed this system, which would be very, very free market, but would toss money into the economy when it needed to be tossed in and suck it back out when it was time to suck it out. So that's another example. That never took off either because you sort of have to. You have to ride two horses. Well, that's right. And so the right was successful at peddling their wares. So someone like Friedrich Hayek raised his money from the owners of capital. And Labor was much keener on Keynesian policies, which came with a bunch of other accoutrements of the left. So that's an analogy in macroeconomics.

24:34He was also interesting, wasn't he? Because he was an early AI pioneer, if I'm right. Polanyi. Because he invented this whole concept of tacit knowledge. Well, that's exactly, exactly. But yeah, he came up with a much more general way to show the way in which once you get a degree of complexity, you cannot govern from the center. And he, in fact, designed this model. It was a plywood model. And he showed that if you connect up all these planks to calculate, and then you stretch this thing that you've bolted together, if you had to calculate all the changes in angles at the center, you'd be calculating forever, whereas you just pull it, and the thing is a big analog computer and works it all out.

25:32Anyway, that's a, I don't know whether I've explained that very well. Oh, so literally the interconnectedness is incalculable effectively, but that if you do it physically in reality. But then it will calculate itself. It will calculate itself, obviously. It's a bit like the three-body problem or something like that. Yeah, yeah, yeah. But it's easier to do it than it is to try and predict it. And it's a much better, I think it's a much more general illustration of this point that you can't govern complex systems from the center than Hayek's argument, which was much more tied to economics and prices.

26:08And then business people ended up being the heroes. And I don't know how that's going right now. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College Deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC. We gather here tonight to bring women back to their rightful place.

26:50The Testaments, a new Hulu original series from the executive producers of The Handmaid's Tale. It's easier to accept a story than believe that the people around you are monsters. The battle isn't over. There comes a time when you have to take action, when you have to choose your own destiny. Never quite as it seems. Watch the new Hulu original series, The Testaments. Streaming on Hulu and Hulu on Disney Plus for bundle subscribers. terms apply. Talking about heroes, we were talking about superheroes before the podcast started. And there's a famous quote from... Well, it was from Two-Face in Batman that says, you either die a hero or you live long enough to become the villain, right?

27:28I see. Which is why... Right? Which is why I've always said that sometimes the value of being central but a little bit to one side is that you also think about what does the world need right now? Yeah. Because sometimes the world needs optimism or, like, free thinking on the other side. And sometimes you need to almost, like, go back to your conservative views, right? So, I think that, but then people don't think about it that way. They don't take, they don't go outside themselves to think, what does the world need right now? What kind of leadership do we need right now? And let's pivot to that for this season.

28:03Because everybody always thinks that something is like a forever decision. It's not a seasonal decision. and uh do you why do you think that people don't consider it that way uh all i can say is what we've already said which is that um memes travel in extremes there you are that's a nice rhyme for you um if you want to yeah if you want to get velocity on these things you make them simple and forever and tribal and left and right. However, one of the things I have thought, if you take this thing about what scales, what pointing scale, and by the way, there was a healthy number of Brexiteers whose motivation was essentially localist.

28:51In other words, they believed that decisions should be taken by people who actually get to experience the consequences of those decisions close to the point where the decision was made. And I've got friends who are in local politics, okay, and they say it's not actually very partisan. Most of the discussions in local politics are nothing to do with left and right. They're practical. Where do we put this incinerator? That's right. Okay. And very occasionally, there may be a political angle to it, which is obviously the left-wing people in the posh area. But broadly speaking, they solve problems through intelligent debate.

29:27And actually, I would also argue that if you look at polarization and the kind of weird woke thing, it doesn't really exist in provincial or remote areas. So this is the strangest thing. New York, friends, you're in COVID. It's very interesting. So universities can maintain it, the level of weird intensity that makes it possible. And very large cities like New York or London will maintain it. When I moved to Kent, you know, blessed decision in my opinion. Shout out to Kent. One of the first things I do is I go to one of these county fairs, okay? Yeah. And there are three stalls at the county fair.