In a recent post (see the comments of that post) I alluded to the problem of having all the facts available while remaining oblivious to the connection between them. To wit, let me give you an example.

All insurance companies advertise that they are trying to offer the lowest rate. It is [too] easy to draw the conclusion that they are competing to offer the lowest rate. This is only true insofar their customers are efficient in the same way the stock market is believed to be efficient: Everybody has all the information available and make rational conclusions.

I’m sorry, but I don’t have that much faith in humanity.

What actually happens is that each company offers a range of prices, high and low and they are aiming to take each other’s high paying customers by offering a lower rate while retaining their own high paying customers.

This maximizes profit of both the individual insurance company and the insurance industry as a whole. What is happening is that the insurance companies are not actually competing against each other but rather against their customers.

I hope I am not stating the obvious.

Think of it as a game with certain rules. You all know the rules. Work hard and you shall be rewarded. Call the insurance company following this script and you shall get your rate lowered. This does not just concern the insurance industry but also the investment industry (why are index funds popular? Is it because they are simple or because they provide the industry with cheap non-controlled funds?), the drug industry (drugs for everything), and so on. There are a lot of well-intentioned stooges in the world willing to help you compete. But who wins …

Maybe the best way to think of it is to see the world as a casino. There are players and there’s the house; except nobody realizes there is a house and perhaps there is no house or man behind the curtain in the first place.

It is very convenient to believe that there is a powerful man or group or being behind everything, but it is just an anthropomorphized/animistic way of seeing things and it does not explain anything.

The so-called man behind the curtain is an emergent property of the system. It is a pattern originating and slowly developing as all the actors play out their role and try to maintain their vested interests. It can happen as most people are just interested in living a simple non-complicated life just doing their thing and going about their ways. This pattern can not be reduced to individual components in the system. In other words, there is no one person or group of persons that are pulling the strings.

No, everybody is pulling each others strings and so the strongest emergent qualities stay alive almost in an evolutionary sense. You may think of these as “supermemes”. (You are probably already familiar with memes.) A supermeme would be a meme that no person would really hold but would exist on the meta level of human behavior. It is like how air molecules organize themselves in a hurricane. The individual molecule knows nothing about the hurricane.

For instance, it would be a quality that lets the media companies that promote fear draw the most attention and thus be the most profitable. It would be a quality that means that reinforcing the status quo is more powerful that challenging it.

These supermemes are controlling the regular memes in the sense that they determine the available choices. It is maintained by the limited choices that people have. They think they have many choices, but what they really have are many options and no choices.

Few get to choose their choices and make their own way.

I recently saw a poll asking people what their most important goal was for 2010: Earn more, be more productive, start a business, travel. Four choices meant to appear exhaustive. What is more telling is the absence of other choices: Gain friends, attain enlightenment, become a better parent, … A similar effect is seen during elections. Too many people believe that a vote on a third party in a two party system is wasted. This is only true insofar that enough believe it!

Consider your environment. Your behavior. Everybody else’s behavior. How much of that is due to the belief that they are doing the right thing without knowing why. How much of this behavior is simply “going along”? If you look at your 20 biggest influences to which degree are they all saying the same thing and have they reached this conclusion because it is epistemologically true or merely by parroting each other?

Fun fact: Humans are more likely to believe something that is repeated often rather than something that is demonstrably true.

Originally posted 2009-12-30 22:50:25.