• There are two ways to look at the world
  • The individual has good incentives, the group does not
  • From victimisation to victimhood

[This article was first published by our sister business in Australia. But it has triggered such a flood of feedback from so many of my readers and mentors that I thought you should see it too. Quite frankly, I’m not sure what chord it has struck, but it definitely got one… But before you read on, my old friend Sam Volkering has something he reckons is far more important to tell you about. One thing’s for sure: it’s more optimistic and potentially more profitable…]

There’s a lot of funny business going on. Both in the street and on my TV. Things that just don’t make sense.

Our bizarre energy policy, our cultural chaos, vehement debates and protests about things that don’t impact us, immigration policy that nobody wants but everybody is getting, housing shortages while builders go bust, children that claim to have actually become animals rather than just behaving like ones, gas shortages during a gas export boom, supranational treaties that supersede democratic will, excess deaths that nobody wants to talk about, politicians vying for who can be the most incoherent criminal, and so much more.

It’s all just getting a bit too weird for my liking. And it’s my job to write about this stuff!

Pointing any of it out has become a risky business. Put a foot wrong these days and you might find yourself the subject of an international cancel campaign, protestors outside your office, your customers boycotting you, billion-dollar companies deplatforming you, your employer announcing your retirement, your friends “unfriending” you, or the police are at your door asking about someone else’s social media posts.

It’s become a high-stakes game of mob rule, and nobody has explained the rules. What happened to the good old complaints department and letter writing?

But if you feel like the world has gone mad, you may just be missing the right perspective. Not that it hasn’t gone mad. But there may be a way to explain and understand what’s really going on. What’s behind the change we’re undergoing?

Today, I’d like to offer you one such prism that unlocks the more bizarre things we see on the news and in our lives each day. I just haven’t figured out what to call it. Maybe you can help?

Here’s how it works though…

When we look at the world, different people see completely different things. The distinction is that some of us think in terms of groups and some in terms of individuals.

If you think in terms of individuals, you believe people carry personal responsibility and that they can only be held responsible for their own actions. Similarly, they are entitled to be treated equally, without bias, because they are an individual.

For those who think this way, making the world a better place is all about giving individuals freedom to choose for themselves. Because, being individuals, nobody else can possibly know what they want or need. Nobody else knows their dreams or intentions.

The only guidance individuals need are the harsh teachers of success, failure and the consequences of taking personal responsibility for themselves.

Those individuals who need our help should get it, on an individual level. And it should be given by individuals choosing to provide it, from their own pocket, not someone else’s.

Institutions like healthcare, government and education are there to serve us, as individuals. We are not there to serve them. Nor do we serve some greater good like a leader, country or ideology. Everyone has their own beliefs, held as an individual.

The fact that individuals seeking to improve their own lives leads to a society that is harmonious and prosperous is an important discovery we only made a few hundred years ago. Cooperation, not coercion, is the only way to interact, if you believe in the individual.

The hand that guides us in our everyday decision-making isn’t invisible. Adam Smith was very clear that it’s “as if guided by an invisible hand,” because there isn’t one. Those who believe in the individual argue nobody should be in charge of anyone else’s life. That’s because the individual is the sovereign over their own life.

That’s one side of the story – one way of looking at the world.

Those who think in terms of groups see the world very differently…

Each person belongs to a segment of society. Your race, you gender, your wealth, your education, your profession, your family history and countless other classifications all define you. They determine how you see the world had how you live in it. They define your decisions by constraining them.

Reality is what you perceive from the context of the group you belong to. There is a different reality for each group.

Because these groups have very different histories, beliefs and face very different conditions and constraints, making the world a better place means correcting for these differences in order to ensure a fair outcome between the groups.

Those who belong to historically oppressed or disadvantaged groups must be given a helping hand, as a group. Those who belong to historically advantaged groups must be disadvantaged, as a group. Then things can be “fair” between the different groups. This is a correction – the right thing to do and the purpose of government.

Feminism perceives everyone as being in two groups, for example. It is about making women and men equal, or correcting for the historical inequalities in various ways.

This way of thinking only makes sense in the context of sweeping generalisations and characterisations of people. And there can be plenty of debate about who really is disadvantaged and who is advantaged. Not to mention what should be done about it.

But there’s no doubt there’s plenty of truth to the idea that society is full of groups of people who are unequal, once you accept that way of looking at the world. In fact, once you accept it, the unequal groups are all you can see.

It’s where the idea leads that worth noting: it’s righteous to intervene in people’s lives because of the way the world looks when you think in terms of groups. It looks unfair in a way that you can fix. You just need to treat people as groups that need uplifting and bringing down to a fair level.

My theory for what is going on in our culture, which explains some of the stranger things we see each day, is that people are increasingly looking at the world ever more in terms of groups and ever less in terms of individuals. The chaos follows from this characterisation.

We are constantly being “asked” to sacrifice our ability to be individuals who make our own choices and decisions in favour of doing so in groups. We were forced into lockdowns to protect our health services and the vulnerable. The same for vaccinations, which risked harm to some individuals, but supposedly protected the group.

We are asked to pay vast shares of our income to the government for redistributing amongst needy groups like EV buyers, the defence industry and solar panel installers.

We are asked to deny biological reality to make an oppressed group of people feel more welcome when competing in a sport.

Protests in favour of the individual’s rights during the pandemic were not allowed. But protests in favour of a suppressed group were allowed.

The individual’s freedom of speech is denied if it makes an oppressed group feel bad, and I don’t mean physically. But an oppressed group can say what it likes about a group or an individual who are privileged. In fact, they can do what they like to that group. Looting from big companies’ shops, for example, is ok when it is done by an oppressed group.

The rights of migrants, a disadvantaged group, are superior to the rights of those unfairly advantaged enough to already live in a stable place.

All around us, the individual’s rights are giving way to group entitlement.

Perhaps the best way to describe all this is collectivism. Although that has a “we are all in this together” feel about it, historically speaking, it descended into just the same sort of chaos.

Countries that attempted collectivism all featured vetting different groups of societies against each other. The farmers versus the factory workers. The intellectuals versus the oppressed. The rich versus the poor. Agriculture versus cities. The landowners versus the serfs. The capitalists versus the workers. That’s how revolutions were justified and empowered in the past – pitting arbitrary groups against each other.

The collectivist theory was just the lipstick on the pig. It was all about defining groups, dividing them and then demanding retribution for one group by dispossessing another.

As China and Russia went communist, it was popular for ideological mob trials to demand of their victims that they admit to the crime of being part of an advantaged class like the nobility, intellectuals or bourgeoise. These days, we must admit to white privilege and kneel. Academic high achievers must make way for those who didn’t achieve because of the group they came from. Those who can read and write must refrain from doing so to stop making those who can’t feel inferior. Spelling and grammar are in the eye of the beholder.

The problem with looking at the world in groups is the incentives it creates. As Warren Buffett’s right hand man Charlie Munger once said, “Show me the incentive and I’ll show you the outcome.”

The incentive for individuals who see themselves as taking personal responsibility for their lives is to improve their own lot by doing something useful, usually for others. We create products or perform services others want to buy.

But those who see only oppressed and advantaged groups have the incentive to “fix it”, by imposing a correction on others, whether they agree or not. That’s why collectivist societies go totalitarian. It’s the only way to reverse supposedly unfair inequality and enforce equality between groups.

But what is the incentive for the individual in a world dominated by those who see only groups, not individuals? If government policies, social norms and economic incentives are defined by thinking in terms of making groups equal, how do people begin to behave?

Do they take responsibility? Do they try to build and create something? Do they try to innovate? Are they productive? Do they work hard?

Or do they try to become politically powerful to lord over others? Do they try to play the victim to get benefits? Do they try to belong to disadvantaged groups and disavow being part of advantaged ones? Do they disavow ambition in favour of appearing oppressed?

Do athletes win races by training hard, or by changing their gender and complaining about it?

Do politicians win elections by appealing to people as individuals, or by dividing society into “groups”.

Do businesspeople compete by improving their products, or do they stage marketing campaigns pandering to victimised groups?

Are comedians funny, or just bullies the crowd is cheering on?

I think the incentive structure of our society is radically changing because of the world view we’ve adapted. I’d call it groupthink, if that term wasn’t already taken. But you get the idea.

This is an understandable reaction in many ways. Young people face some rather large challenges should they think about their world as being made up of individuals who take personal responsibility for their own lives.

How many can afford to buy a house if they believe it is their own responsibility to secure one, not the government’s responsibility to do it for them, and their right to have one?

Can the people who have bought a house afford to save for retirement if they accept the premise that it’s their own responsibility to do so? Wouldn’t it be easier to just claim that it’s the government’s job to help that disadvantaged group which can’t afford retirement?

Can people be entrepreneurial in a society so strangled in red tape? Better to forge a career adding to that red tape and then collect a safe pension.

If you feel like society is falling apart at the seams, I think you should acknowledge that it is merely changing in the way that the incentives we created demand it to change.

If you agree, there’s not much you can do to avoid the consequences. We have to let them play out and wait for people to wake up.

But some assets have a very long history of helping their owners protect their wealth during unstable times like this, when having any wealth at all puts you at risk.

When it’s all about financial survival, gold is the best place to be.

Until next time,

Nick Hubble
Editor, Fortune & Freedom