There’s a difference between analysis and telling a rollicking good yarn designed to move people.
Good analysis draws from the scientific methodology of making falsifiable statements about the world, and testing whether they’re wrong. For example, economics sets up a logical mathematical model as a simplification of the world, and draws testable conclusions from the model about the world. It then goes that next step and tests those conclusions. If those conclusions are proven false, the model of the world changes, and we now know a little bit of something: the original model is untrue.
Storytelling is about bringing together all the elements of a story: a protagonist, an antagonist, a complication, a moral choice, and an outcome. A good story “resonates” with the audience – something about it connects with them, and at a psychological level, that resonation makes the other elements of the story more “true”.
For example, Santa Claus delivers presents to children at Christmas, but only to the children who have been good all year. If you’re not good, Grampus delivers you a lump of coal instead! Santa Claus is the protagonist. Grampus the antagonist. The moral of the story is to be good, and you will be rewarded. If you’re not good, you will not be rewarded.
We tell this story to kids because we want them to be “good people”, and we’re appealing to their sense of self-interest to bring about this behaviour change. And we use this story to change their behaviour. We have no evidence that Santa Claus doesn’t exist, so we tell children he does.
Both are communication mediums, so both are designed to lead to “Calls to Action”. But only one of these is trying to grope towards the concept of Truth, whilst the other doesn’t even pretend to be grounded in being true, and could quite easily lead you to a ginger-bread house with a witch who wants to put you into a pot.
See the difference?
… do you?
FREAKONOMICS: HAS GLOBALISATION FAILED?
This podcast got me thinking about the difference: Has Globalisation Failed
Trade economics, comparative advantage, and models of international trade underlay how economists view globalisation. In these models, countries are endowed with different quantities of natural resources, be it capital (physical land, financial resources, technology), or labour (people – and lots of them. Or smart people: quality over quantity). Different proportions of these things make for differences in comparative advantage between countries in what they produce. Countries trade according to their comparative advantage.
That’s one theory, but there are a handful of these. The difference is that they are all derived from models of the world. Some have been proven wrong for some countries at some times, but correct for other countries or in other times.
What comes out of these models are story about how a country should trade, and about the distribution of the gains from trade, about the impact of tariffs, about the reasons for differences between countries, and about the policy-related drivers of change countries might pursue to leverage the powers of comparative advantage. For example, maybe Singapore ought not to think about becoming an agricultural titan, and maybe New Zealand ought not to become a steel manufacturer.
Those are economic’s stories.
SIX STORIES ABOUT GLOBALISATION
In the above Freakonomic’s podcast, Anthea Roberts, a professor at the School of Regulation and Global Governance at Australia National University draws out six “narratives” about globalisation. These narratives are:
- Globalisation is good because “a rising tide lifts all boats” or it’s a growing of the pie so that everybody can have a greater slice. Globalisation has lifted hundreds of millions of people out of poverty, increased consumption, and it’s made our lives much more diverse in everything from food to electronics.
- Globalisation is bad because it steals jobs from one country to another. American economics conservatively estimate that more than a million manufacturing jobs in the U.S. were directly eliminated between 2000 and 2007 as a result of China’s accelerating trade penetration into the United States. In this “right wing” version of “bad”, right-wing populists like Donald Trump see the elite having allowed an external Other to take advantage of the people.
- Globalisation is bad because workers left behind either leaving the labour market, go into unemployment, or go on disability. The labour market reallocation process is to be slow, frictional, and leaves abandoned workers “scarred”. In this “left wing” version of “bad”, the redistribution effects of globalisation are unfair. The gains from economic globalisation have been accrued largely by the rich and at the expense of the middle class that has been hollowed out to the creation of now a much larger and more insecure service class.
- Globalisation is bad because it creates geopolitical instability between “rivals”. From a geoeconomic perspective, China and the United States have both gained in terms of absolute economic outcomes from globalisation. But China’s catch-up has reduced the U.S.’s lead economically, militarily, and technologically. And that’s now that’s “a problem”. If you dwell on the costs and benefits of the economics, you might miss the geopolitical ramifications of an Other becoming more powerful.
- Globalisation is bad because it concentrates economic power into the hands of corporations, billionaires and elites. The real winners from globalisation are not particular classes or particular communities or even particular countries. The real winners are multinational corporations that can use trade and investment deals to hop, skip, and jump all around the world. Globalisation has strengthened the hand of transnational capital against the hand of transnational labour.
- Globalisation is bad, because in the end, everyone loses. There are certain global threats that have either been caused or exacerbated by economic globalisation; for example, climate change, and the transmission of pandemics. On this idea, integrating economies and pushed relentlessly hard for economic efficiency has created or exacerbated global threats that now have put us on a collision course with our planet.
RESONATION
As Anthea and Stephen Dubner (the show’s host) discuss, each one of these stories will resonate with people differently and for different reasons. Both left and right will agree globalisation is bad, but for different reasons. And each one of these reasons has a measure of truth: billionaires have certainly prospered through globalisation (story 5), and become elites who might “influence” politics (story 2). And while we’re now driving more BMWs here in New Zealand, and typing on Chinese made computers (story 1), the quality of New Zealand rivers has been reduced through extensive dairying which has been sold overseas (story 6).
See how these stories work? They all “resonate” with elements of truth. And whether you believe globalisation is net good or net bad depends on how you value the American/Chinese made Tesla you’re driving compared to the domestic car manufacturing job you lost.
RESONANCE AND POLITICS
The outcome for the political process in the country you’re in depends on whether the political parties can tell convincing stories that resonate with “the median voter”, enough to secure the political majority.
But what’s lost in this debate is the idea that maybe these things we believe, and which resonate with us could be untrue. For example, is all economic development “unsustainable” – is story 6 true and inevitable?
Are labour markets “fractured, sticky and scarring” (story number 3)?
What’s missing from these stories is the evidence-base, and analysis which measures how many of these stories are actually true, and are they true for everyone, and are they always true? Unfortunately, when the evidence has been derived, will it be believed? Will it be complicated and its nuances be too subtle for the non-technical reader?
… do storytellers or politicians really care if Santa Claus actually exists?
In its essence, this is my reasoning for preferring smaller government involvement, rather than government in everything and everywhere: politicians don’t have enough connection to everyday outcomes and “skin in the game”. They can afford to tell themselves “narratives” and totally belief them, because for politicians, the facts don’t matter.
For business owners / workers and people directly involved in markets, market activity and market-decision making, truth matters.
Listen to Freakonomics Radio. It will make you think better 🙂