The Antidote to Narrative Control


Stephen Roach (former Chairman of Morgan Stanley Asia and now faculty member at Yale University) recently wrote a review of the actions and behavior of Arthur Burns, Chairman of the Federal Reserve from 1970-1978. According to Roach, Burns began to be very dismissive of inflationary data around 1973 and talked down higher price trends for oil, food, mobile homes, used cars, toys, jewelry, among other items. Even more remarkable, the Consumer Price Index (CPI) was repeatedly adjusted to avoid reporting high figures:


“By the time Burns was done, only about 35% of the CPI was left – and it was rising at a double-digit rate! Only at that point, in 1975, did Burns concede – far too late – that the United States had an inflation problem. The painful lesson: ignore so-called transitory factors at great peril.”1


That painful lesson about transitory inflation is interesting in the context of current economic conditions, but let’s put that aside for a moment. My point today is the example of Burns, as leader of the Federal Reserve, explaining away excessive price increases for all kinds of goods – not to mention manipulating the official data.


Unfortunately, this stuff happens all the time. It may not be staring us in the face every day but it’s there. Organizations take on lives of their own…what starts out as well intentioned purpose morphs into an abstraction of narrative control that looks nothing like the original purpose. Organization survival and status quo become the purpose.


We see it in our politics. We see it in the corporate world. We see it in economic leadership. We see it with charities.


Once the abstraction begins the slippery slope is set. Eventually our leaders don’t just give us the data and facts – they’ll insist on telling us how to think about the data and facts. It can all get a little Orwellian:


…the Fiat World of reality by declaration, where we are TOLD that inflation does not exist, where we are TOLD that wealth inequality and meager productivity and negative savings rates just “happen”, where we are TOLD that we must vote for ridiculous candidates to be a good Republican or a good Democrat, where we are TOLD that we must buy ridiculous securities to be a good investor, and where we are TOLD that we must borrow ridiculous sums to be a good parent or a good citizen.


And the most terrifying thing is that you start to think they might be right.”2


One critical reason why Bluestone is different is that we don’t accept conventional wisdom at face value. We don’t accept that such-and-such is an esteemed and highly regarded leader of XYZ organization and therefore we should take what they say at face value. We consider ourselves thoughtful, independent, skeptical; willing to embrace the social pain that comes with being an outsider if the data and our reasoning support that stance.


Is there anything more important than independent thought and reasoning in the face of narrative control?


Only the willingness to act on our conclusions.

 

1. https://www.project-syndicate.org/commentary/fed-sanguine-inflation-view-recalls-arthur-burns-by-stephen-s-roach-2021-05

2. https://www.epsilontheory.com/the-long-now-pt-4-snip/?utm_source=ET+Newsletter&utm_medium=Email&utm_campaign=website