We live in a world in which we are increasingly ‘given the opinions we are supposed to hold’. One antidote to this is to apply the logic of received opinion number one to situation number two. This results in some interesting, if sometimes uncomfortable, results, in effect, rather awkward thought experiments or ATEs as we shall call them.

ATE 1

Imagine that the US was engaged in some ideological, economic or other political dispute with the UK and that as part of this process the US sought to destabilise the UK by supporting Scottish Nationalism. Imagine that, as a result, Nicola Sturgeon, Ian Blackford and assorted young ‘Cyber-Nats’ were invited to present their case for ‘freedom and Democracy’ to the US Senate and were given laudatory coverage in all the mainstream US media. Imagine further that the well known US State Department front, the National Endowment for Democracy (NED), admitted to providing funding and logistics in support of nightly rioting in Edinburgh and Glasgow with Molotov Cocktails and attacks on the police. Moreover that this telegenic staged violence was given high profile nightly coverage in the US media right up until a US Bill titled ‘Freedom and Democracy Bill Scotland’ was passed by the US House of representatives, giving the US unilateral ‘rights’ to sanction any prominent UK politician or business person deemed to be infringing the ‘human rights’ of the Scots.

Then ask the question if in acting to maintain national integrity and suppress the violence, violence that the vast majority of Scots do not in fact support, that UK would be ‘in the wrong’?

ATE 2

Imagine if China regularly sent a large naval fleet to patrol the Caribbean in order to ensure ‘freedom of Navigation’ for Venezuela, Columbia and Cuba and counter ” US aggression in the region”. Or if Russia sponsored a Central American Economic Union and regularly conducted military exercises in Guatemala, San Salvador and Honduras and then staged a ‘color revolution’ in Mexico, encouraging them to join the CAEU? Imagine further if the true purpose of the CAEU and the alliance with the Northern states of South America – which was run by Russia and called the South Atlantic Treaty Organisation (SATO) – was to ensure that members neither provide Oil (Mexico claiming all rights to the Gulf of Mexico) nor buy agricultural produce from the United States, insisting instead that the US import LNG and South America food from Russia.

Then ask the question, would the US be entitled to ask Russia to cease its territorial ambitions and to go back to it’s own continent, pointing out that none of the members of SATO were under any threat from the US, least of all Russia?

ATE 3

Imagine if, as the world’s largest Democracy, India had just elected a leader who had barely campaigned and whose failing faculties had clearly been deliberately obscured by his party. Moreover, imagine if, as a result of a largely untried postal voting system, there had been sufficient irregularities and lack of transparency that over 50% of Indians believed the Election to have been fixed. Imagine further if New Delhi was now effectively cordoned off by a giant Military presence justified by an apparent armed insurrection during which not one of those arrested had any weapons on them. In addition, imagine if the Indian Deputy leader, seen as representing the interests of powerful ‘businessmen’, was de-facto in charge, despite previously being rejected overwhelmingly by the party as a leadership candidate.

Would the west, especially the US, be entitled to ask for an audit of the Election process to ensure that the democratic rules were properly observed? Would the EU be entitled to request a second vote?

Furthermore, imagine if the Indian government had made it clear that qualification for high office was to be based around the caste system, but that the castes would be renamed. The preferred caste would no longer be referred to as Brahmin, but as Liberal Intellectuals, while the ruling Kshatriyas would henceforth be known as media tycoons, tech gurus and celebrities. The Vaisyas or merchant class would be known simply as ‘democrat professionals’, while the unskilled Sudras and untouchables would be known as white supremacists and deplorables respectively.

Would the west feel entitled to criticise or indeed sanction the Indians for breaching the notion that all men are created equal and that you should be judged on your character not the tribe or caste you belong to?

ATE 4

Sometimes merely changing the nomenclature might be enough to trigger a reassessment. Imagine therefore if the EU renamed itself the European Union of Social Democratic Republics (EUSDR) and referred to the European Commission as the Politburo. Would its desire for centralisation of power, its love of bureaucracy and the privileges it bestowed on the Apparatchiks lead people to question its true motives? Would its failure to deliver on the public goods needs of its citizens, its democratic unaccountability, its preference for the larger republics (and their institutions) over the smaller ones lead to demands for independence and breaking up the system? Ms Von de Leyen, tear down that Wall?

ATE 5

In terms of delivering public goods rather than private profits, imagine that the US had built 38,000km of high speed rail whilst it was China that had built none, but instead had built 800 military bases around the world to the USA’s single one. Imagine if China was criticising the US for building a trading infrasturcture throughout Latin and South America with thousands of miles of roads, bridges and tunnels on the basis that the US would take ownership of the infrastructure if the borrowers defaulted. Would the US respond that China had spent decades exploiting the cheap labour of these countries with only minimal infrastructure and that its private companies took advantage of the ineveitable inflation/devaluation/default cycle to take possession of large amounts of assets, usually at the expense of the Chinese taxpayer?

What if the leadership of the US or the UK was based around engineers, scientists and PhDs all of whom had come up through years of experience in regional government, while China was run by career politicians and lawyers?

‘News’, is something which somebody wants suppressed: all the rest is advertising or propaganda’

William Randolph Hearst

Errors of Omission rather than Commission

Of course, much of this is simply a question of ‘the mote in your own eye’ and much of the propaganda from the west is both a combination of projection and hypocrisy. Either the west doesn’t see that it is accusing others of the behaviour it does not recognise in itself, or it is fully aware but sees the statement as one of power. Indeed, hypocrisy might alternatively be defined as a definition of who exactly has the power.

Some of this is in plain sight of course, and the errors are as much of omission as commission. We are simply not told certain things not deemed suitable for us to know. For example, imagine if the World Cup in Russia had led to the deaths of thousands of foreign construction workers, as opposed to Qatar. Similar double standards apply to the (lack of) criticism of Saudi Arabia, especially with respect to the Yemen. What if Donald Junior has a business partner who claimed that he had taken money for influence with his father and that the FBI had a laptop that could ‘prove’ collusion?

Hypocrisy is a demonstration of who has the power, as is the answer to the question ‘who can you not criticise?’

To bring it back to markets – as we always/mostly try to do – the point of this is to highlight that PRopaganda is everywhere – as William Randolph Hearst, himself no stranger to the dark arts of propaganda (as viewers of the rather ordinary Oscar favourite ‘Mank’ will appreciate) acknowledged in his quote of the old journalist maxim that the news is what certain people don’t want you to hear. What they do want you to hear is their advertising or PR. Investors, and too many financial journalists have become rather too happy to soak up the PR and not ask the right questions. “Why was Lex Greensill able to make so much money out of an old low margin business that he could afford 4 private jets?” “Didn’t Credit Suisse and GAM get in trouble with defaulted loans from Sunjeev Gupta a few years ago? Are these the same debts repackaged? How does a commodities trader buying old steel businesses afford yachts jets and multi million pound homes around the world when the businesses seem to struggle for cash flow?”

“Why are active managers forced to shadow a benchmark expensive on 40bp, but hedge funds ‘good value’ on 2 and 20? Why does the private equity fund get so much upside from institutional savers’ capital?” “What is the regulator doing about SPACs?”

Alternatively they might ask “Why are ESG funds being benchmarked against the S&P when they outperform but an ESG benchmark when they don’t?” “Why are they allowed to be underweight an entire sector when other funds with the same apparent risk profile are not?” Or even more fundamentally “Why is low daily volatility important for long term unleveraged investors as opposed to short term leverage traders? Why do we use the monitoring tools for the latter for the former when they are not appropriate?” “Why do we think illiquid products that don’t mark to market are less risky than ones with full liquidity and transparency?”

Asking awkward questions should be the job of the enquiring investor and the risk manager/regulator. The fact that the Politicians, the PR machine and the snake oil salesmen don’t like it should be taken as a sign of encouragement, not deterrence. We can leave on one, final ATE: What if the US, in addition to providing all the public goods infrastructure in terms of high speed rail, 5G, airports, roads and housing had a system where if one individual got too powerful on the back of state investment in what now amounts to a monopoly, that he is required to step down?

‍