Alchemy - Rory Sutherland

[cobafdek]

https://www.amazon.com/Alchemy-Curious-Science-Creating-Business/dp/006238841X/ref=sr_1_fkmrnull_1?crid=WVPXT5EWEE5I&keywords=alchemy+rory+sutherland&qid=1558141302&s=gateway&sprefix=alchemy+ro%2Caps%2C251&sr=8-1-fkmrnull

 

This is a book for all the anti-Trumper board members who are drop-outs from Prof. Munger's psychology class.  I referenced the author, Rory Sutherland, early in my Trump Derangement Syndrome thread in the Politics section.

 

Here's a sample of Sutherland from the introduction:

 

"Now, as reasonable people, you're going to hate me saying this, and I don't feel good saying it myself.  But, for all the man's faults, I think Donald Trump can solve many problems that the more rational Hillary Clinton simply wouldn't have been able to address.  I don't admire him, but he is a decision maker from a different mould.  For example, both candidates wanted manufacturing jobs to return to the United States.  Hillary's solution was logical - engagement in tripartite trade negotiations with Mexico and Canada.  But Donald simply said, 'We're going to build a wall, and the Mexicans are going to pay.'

 

"'Ah,' you say.  'But he's never going to build that wall.'  And I agree with you - I think it highly unlikely that a wall will be built, and even less likely that the unlucky Mexicans will agree to pay for it.  But here's the thing:  he may not need to build the wall to achieve his trade ambitions - he just needs to people to believe that he might.  Similarly, he doesn't need to repeal the North American Free Trade Agreement - he just needs to raise it as a possibility.  Irrational people are much more powerful than rational people, because their threats are so much more convincing.

 

"For perhaps thirty years, the prevailing economic consensus meant that no American carmaker felt they owed any patriotic duty to workers in their home country; had you suggested such a thing in any of their board meetings, you would have been viewed as a dinosaur.  So pervasive was the belief in untrammeled free trade - on both sides of the American political divide - that manufacturing was shifted overseas without any consideration about whether there might be a risk to losing the support of government or public opinion.  All Trump needed to do was to signal that this assumption was no longer safe.  No tariffs (or walls) are actually needed:  the threat of them alone is enough. 

 

"A rational leader suggests changing course to avoid a storm.  An irrational one can change the weather.

 

"Being slightly bonkers can be a good negotiating strategy:  being rational means you are predictable, and being predictable makes you weak.  Hillary thinks like an economist, while Donald is a game theorist, and is able to achieve with one tweet what would take Clinton four years of congressional infighting.  That's alchemy; you may hate it, but it works."

 

 

 

[Cigarbutt]

Interesting. Always looking for disconfirming evidence.

 

On the return of manufacturing jobs:

https://www.bloomberg.com/opinion/articles/2019-04-05/manufacturing-jobs-boom-is-fading

There has been some change in the trend (trend about to change again?) which occurred also in the context of a massive Keynesian-like stimulus (Keynes is dead but he had said during his lifetime that a stimulus was to be used counter-cyclically and that a surplus was to be built for times of duress).

 

On the new NAFTA.

Most suggest that changes will be relatively marginal (at least from my side of the border). It is expected (expectations vary according to allegiance) that auto manufacturing jobs will be created because of relocated production in the US but most balanced analysts mention the risks of increased auto prices for the consumers, reduced competitivity of North American producers and increased incentive for automation (may be a good thing but obviously not what is promised, in terms of jobs).

 

A large part of the alchemy is based on the premise that white american blue collar workers expect to go back to the golden days of manufacturing but an alternative scenario is that a synonym for alchemy is trickery.