Rules and Duties

Leave a comment

August 23, 2026

By Stephen Stofka

Last week I wrote about the role that media plays in our group formation. This week I want to look at the unwritten rules or norms that form the structure of social and political groups. In an interview with Ezra Klein on July 31, 2026, the author and journalist Maggie Haberman recalled, “A Democratic strategist said to me in 2016, right after Trump won, that the entire country was about to finally understand how much of our system is norms and not laws.” After three years in office, Trump was learning to push the boundaries of those norms when the pandemic got in the way.

“I’m back!” Trump might have announced at the start of Trump 2.0. Within months, he bulldozed a number of norms. These included tearing down part of the White House, enacting a punishing series of tariffs on allied nations like Canada, and attempts to rewrite the citizenship clause of the Constitution by Presidential edict. Trump voided a campaign promise to avoid forever foreign wars and joined an Israeli attack on Iran in June 2025. Prime Minister Benjamin Netanyahu had tried to persuade Presidents Obama and Biden to conduct a war against Iran. They declined to join Netanyahu’s holy crusade. This past February, Netanyahu found his sucker, convincing Trump that a quick and decisive strike at Iran’s top leadership and nuclear sites would usher in a regime friendly to Israel and the U.S.

Common Rules

Psychologist Joshua Greene (2013) began his book Moral Tribes talking about the tragedy of common sense morality. For each tribe there is a set of common sense rules or norms. What makes common sense to the members of one group, though, may not make sense in another group. Naturally, this leads to conflict between groups. In 1992, Rodney King pleaded, “can we all get along?” (Source) That plea echoes in our ears. Why can’t we get along?

Greene cites several studies that show that both humans and monkeys have an in-group bias. White adults and children as young as six years old show a preference for white faces over black (p. 52). Monkeys associate tasty fruit with the faces of other members of their group. They associate unpleasant things like spiders with members who are not in their group. The neural responses come mainly from the amygdala, the region of our brain responsible for emotion and heightened vigilance. Green concludes that “our brains are wired for tribalism” (p. 54).

In his book Determined, neuroscientist and primatologist Robert Sapolsky identifies the hormone oxytocin, produced by the hypothalamus, which is responsible for this in-group bonding (p. 54). It is the Us and Them hormone that strengthens bonding with other members of our group but also makes us more aggressive toward those we perceive as opponents in other groups. The levels of oxytocin and the receptors for the hormone vary with each individual.

We are more likely to survive in a group with others like us because they are more likely to know and follow the norms of the group. I’ll remind readers of a theme that I’ve discussed in the past several weeks. We come in contact with the world through our senses, but we engage with the world through our errors. We favor any behavior or group that helps us achieve more accuracy in our predictions.

Fairness

If someone sues me and I win, I think that the person who sued me should have to pay my legal costs. That’s only fair. Greene references a 1995 survey by the magazine U.S. News and World Report in which respondents were asked the same question and 85% agreed with me. Some of the surveyed respondents were asked the opposite question. What if the shoe were on the other foot and you were the one who sued and lost? Only 44% thought they should have to pay the other person’s legal fees. Greene calls this biased fairness and numerous studies have confirmed this tendency. Our self-interest modifies our sense of fairness.

Cooperation

The survival of a group depends on collective action, a coordination between leaders and followers. A leader makes a decision. Others in the group follow. The followers may be loyal to the leader or loyal to the group as a matter of principle. In 1934, Germany’s President Paul von Hindenburg died. Members of the armed forces no longer swore a traditional oath to Germany’s constitution and the republic but to Adolph Hitler personally. The so-called Führer Oath was

“I swear by God this holy oath, that I will render to Adolf Hitler, Führer of the German Reich and People, Supreme Commander of the Armed Forces, unconditional obedience, and that I am ready, as a brave soldier, to risk my life at any time for this oath.” (Source)

Strangely enough, it was not Hitler who created the oath but the top military brass.

Justification

The German philosopher Immanuel Kant (1724 – 1804) formulated a categorical imperative to evaluate the moral motivations of any act. We should act according to a principle that we wish were universal law (Source). For Kant, the group was the entire community of rational human beings.

However, Kant’s moral imperative promotes greater conflict because people are not entirely rational. Greene, Sapolsky and others point out that the neurology of our brains is bimodal. We have an automatic mode that is instinctive and emotional, and a manual mode that is deliberative (p. 137 in Greene’s book, for instance). We need both modes to survive.

In some cases these two processes work in tandem to justify our actions. Consider the case of an abortion protestor who detonates an explosive in or near a clinic. The aim of his automatic brain process is a visceral desire to close the clinic. Enter Kant doing a voice over like Rod Serling on the Twilight Zone. How should we evaluate this protestor’s actions? Should we make a universal law that we can bomb any institution that we consider evil or whose aims we disagree with? The protestor might respond that he is engaged in a war against evil and war justifies the bending of universal laws. After all, we permit killing during war in violation of the commandment not to kill.

Common Duties

Duties are behaviors that demonstrate loyalty to a group. They acknowledge and respect the rules and the group. Some duties are enforceable with punishment. A soldier in the military has duties to his group, his company or platoon. Failure to abide by those duties can ultimately mean court martial. A doctor has certain professional duties, chiefly among them a duty to care. Any lapse in care on his part might cause a patient or family to start a lawsuit. Punishments help enforce adherence to duty and loyalty to the group.

Some duties are enforceable only by ostracization. The Amish community practices Meidung, a shunning of a member who violates the rules of the community or disrespects the elders (Source). Members of the community should restrict eating with the shunned member, conducting business, or certain forms of social interaction with that person.

This year, the Vatican excommunicated Catholics who continue to practice in services by a conservative Catholic splinter group called the Society of Saint Pius X (Source). Excommunication in the Catholic Church does not void a person’s baptism but forbids and voids any participation in the other sacramental ceremonies like Communion.

Here Come The Judge!

We judge others and are conscious of being judged by others. We want to avoid blame. Next week I want to continue to explore these aspects of group dynamics. I hope to see you then!

//////////////////

Photo by Mario Purisic on Unsplash

Greene, J. D. (2013). Moral tribes: Emotion, reason, and the gap between us and them. Penguin Press.

Sapolsky, R. M. (2023). Determined: A science of life without free will. Penguin Press.

The Media is the Mirror

Leave a comment

August 16, 2026

By Stephen Stofka

Last week I discussed how we deceive ourselves. This week I want to explore how we define ourselves through our affiliation with and membership in groups. Growing up we are part of a family, a group of students in school, congregants at church, players on a team, members of our local community. Many of these group affiliations are endowed to us by our parents, by our circumstances and the institutions within our local community. Later we associate with others of the same profession or job, who have similar political sympathies, or similar interests and hobbies. Are we passive victims of group psychology or do we actively, perhaps unconsciously, seek out groups that will confirm our opinions, values and perspectives? How does the development of different media change the composition of our social groups?

In 1956, the sociologist C. Wright Mills (1956, p. 304) argued that the country was developing from a community of publics into a mass society. What’s the difference? In her book These Truths, historian Jill Lepore explained what Mills meant by the two terms. “A community of publics is a population of people who talk to one another; a mass society receives information from the mass media. In a mass society, elites, not the people, make most decisions, long before the people even know there is a decision to be made” (2018, p. 566). In a community of publics, communication is a two way street. People communicate with their governing institutions and with each other. In a mass society, communication is a one-way street. Centralized organizations communicate to large populations who have little opportunity to respond.

Mass Media

Until the last decades of the 19th century, newspapers, magazines and books did not have a circulation wide enough to be considered mass media. Shortly after the Constitution was drafted, Alexander Hamilton, John Jay and James Madison published a series of 85 essays arguing for the ratification of the new Constitution. The essays were first published in two New York City newspapers. They were reprinted by a few newspapers in other cities but many Americans would not have read those arguments (Source).They might have heard about them from neighbors or at local meetings where a state legislator revealed those arguments. America was a jigsaw puzzle of communities without any unifying identity.

It wasn’t until the late 19th century that newspapers had a role in shaping public opinion and identity. William Randolph Hearst and Joseph Pulitzer built media empires that competed with each other for readership in several prominent cities (Source). Through their influence on public opinion, they had some indirect influence on public policy. In 1898, the U.S. sent the battleship Maine to Havana to show support for Cuba’s fight for independence from Spain. When the battleship blew up, the Navy initially determined that the cause was a mine, an act of aggression by Spain (Source).

Newspapers published by Hearst and Pulitzer featured hyperbolic headlines designed to stoke animosity against Spain. Did those alarmist headlines, known as yellow journalism, light a fire of public anger so hot that politicians in Washington declared war on Spain? In grade school I was taught that, but the truth is that there were several issues that accelerated tensions between the U.S. and Spain. It is unlikely that the newspaper coverage prompted the war (Source). However, it became clear that large media organizations were willing to shape their reporting of events to amplify public sentiment and attract more readers.

Thousands of newspaper readers riding a New York City subway car to work might be reading the same newspaper. Without being conscious of it, they were part of a group, bundled together and sold to advertisers as part of the newspapers’ circulation numbers. The small amount that readers paid for the newspaper had never been enough to offset the printing and distributing costs.

Broadcasting

On November 2, 1920, a station in Pittsburgh broadcast the election returns. Within two years, there were over 500 licensed radio stations (Source). In 1931, a CBS station in New York City became the first broadcast TV station (Source). By the end of World War 2, the three networks, ABC, CBS and NBC dominated the medium and competed with each other for listeners and viewers. In the 1920s, the Nielsen company began to sample the audience for radio stations. In 1950, they began measuring the viewership for TV programming (Source).

In the 1960s, a popular Top-40 radio station like WABC in New York might broadcast a variety of music that appealed to a wide range of people and musical tastes. Higher audience numbers led to higher advertising revenue.

There were songs from popular musicals, as well as American song book classics performed by artists like Frank Sinatra. There was a mix of rock and roll from bands like the Beatles, some R&B by Ray Charles and the soul music of James Brown. Mom and Dad tolerated the sound of the Beatles, the Rolling Stones and Who. The kids tolerated old fogey artists like Sinatra and Bing Crosby. People were exposed to a diverse collection of musical tastes played over and over again in rotation. Maybe a 12-year-old mentally tuned out Eydie Gorme’s song Blame It on the Bossa Nova, but if someone mentioned the song or sang a couple of bars, they would be somewhat familiar with the song. The exposure and repetition of this variety led songwriters to incorporate elements from a diverse collection of musical styles. That was AM broadcasting.

Narrowcasting

The rise of FM radio stations tailored a selection of music to a smaller audience. Until 1965, FM radio stations in larger cities simply simulcast what their affiliated AM Radio station played. In 1965, the FCC instituted a rule change that required the owners of AM and FM stations in large markets to broadcast distinct programming on their FM stations. Some FM stations became independent and adopted innovative programming to appeal to a narrower audience. WNEW in New York City played jazz, poetry readings and progressive rock (Source). A person no longer had to tolerate the music that they didn’t like. In fact, a popular artist or song from another genre might be unfamiliar.

Getting Choosy

In the late 1960s, 8-track players for cars became available. Music lovers took one step further to crafting a unique listening experience in their car (Source). People could be less tolerant of what they didn’t like and more in control of listening to what they did like. In the 1980s, people could create an intimate and unique listening experience with the newly introduced Sony Walkman, headphones and compact cassette.

The Internet

In the 1990s, the development of the internet allowed users to explore and share common interests, opinions and perspectives with strangers. By 2000, AOL Online had 20 million users and hundreds of forums, chat rooms and message boards (Source). Users were known to AOL by their real names and addresses but users could hide behind screen names and creative profiles with other users. As consumers of print, radio and TV media, we were anonymous. Through social media we could interact directly with other human beings and preserve our anonymity. Without anonymity, we might be reluctant to express our frank opinion. Behind the curtain of digital anonymity, we became like the wizard of Oz.

Shared Errors

Two weeks ago I wrote that “we come in contact with the world through our senses but we engage with the world through our errors.” As wizards in the digital realm, our anonymity meant that our errors might have little cost. In direct contact with others, we had to learn some restraint. Now we could try out controversial religious, political and social claims without worrying about social ostracization or physical harm.

We could hang out in groups of people who made similar claims. Vaccines were a government conspiracy. The Trilateral Commission controlled the leaders of powerful countries through extortion or mind control. Most of the extraordinary technological and scientific discoveries in the second half of the 20th Century had come from aliens who had landed near Roswell, New Mexico after World War 2. Democratic politicians were sponsored by Communist sleeper cells intent on imposing socialism on America. They were part of a secret cabal of pedophiles. Republican politicians were puppets of big business and the military industrial complex. They would rather spend your taxes on war than health care and social programs.

We found groups and media channels that believed the same facts and came to the same conclusions we did. We could stand firmly on the principle that people should not be forced to buy healthcare insurance. But what about a 25-year-old without health insurance who got injured somehow? Should the emergency room refuse to treat her? We could believe that churches and civic organizations would voluntarily contribute to charitable funds that would pay for that expense. We could believe that and no one would challenge us with facts because we all had libertarian sensibilities and resisted most government programs.

Social media has helped us untie the restraints on our opinions, impulses and emotions. Next week I want to look at how we form and share common rules of morality in groups. I hope to see you next week.

/////////////

Photo by Ramon Kagie on Unsplash

Lepore, J. (2018). These truths: A history of the United States. W. W. Norton & Company.

Mills, C. W. (1956). The power elite. Oxford University Press.

Deception and Dreamweavers

Leave a comment

August 9, 2026

By Stephen Stofka

Over the past several weeks I have explored our predictive ability. Last week, I ended with an observation that we tend to look away from the mistakes in our predictions. At first glance, this does not seem to be a successful survival strategy. A student doesn’t submit assignments for the first few weeks of class, then asks how they can make up the work and get a good grade. We must reconcile the reality of our circumstances with a constructed fantasy future. Shouldn’t we be learning from our mistakes? Why are we so good at self-deception?

Dreamweavers

We are the most creative of social animals. Deception is the creation of an illusion. If we want the world to be a certain way, why shouldn’t we construct a reality that conforms to our desires? We have little control over our instinctual responses to sense data. We pull back our hand from the hot burner on a stove, for example. But we must interpret most of our sense data, and that interpretation depends on our ability to filter out data which is non-essential to our needs. We apply our own unique weighting system to the events around us.

Because of that, eyewitness testimony has been shown to be fallible. We do not record events and place them into memory like the footage of a surveillance camera. We use our perception,  our previous knowledge and beliefs as well as our expectations to construct a narrative. In her 1979 book Eyewitness Testimony, Elizabeth Loftus recounted several examples of the errors in our perception and memory. Erroneous eyewitness testimony accounts for two-thirds of all DNA exonerations, according to the Innocence Project.

Social Animals

Robert Trivers is an evolutionary biologist whose 2011 book The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life argued that we practice self-deception to become more effective at deceiving others. Natural selection would favor individuals who are good at self-deception. I think Trivers might have it backwards. Self-deception is an incidental effect of our need to deceive others. Our survival in a social group depends on camouflage. We get so good at it that we sometimes delude ourselves.

In his 1982 book, Chimpanzee Politics, Frans de Waal examined the strategic social interactions between chimpanzees at the Arnhem Zoo in the Netherlands. Subgroups within a colony form alliances in support of a particular leader who uses aggressive displays to enforce dominance. Sexual relations promote social cohesion. Diplomacy helps reconciliation after fights break out. Chimps practice concealment to make it difficult for another member of the group to predict what is going to happen. Hiding signs of aggression before launching an attack is one example. Chimps hide food, or hide their excitement at finding a food source to protect it for themselves.

Conspiracy Theories

Human beings use concealment as well, but also practice intentional deception designed to create a false belief in others. Concealment is a cloaking action. Deception is a creative act, the construction of an illusion. Conspiracy theories involve both concealment and deception.

Alex Jones, the former owner of the web site Infowars, promoted a conspiracy theory that the shooting of twenty first graders at Sandy Hook Elementary School in Newton, Connecticut was a hoax, a government conspiracy designed to arouse public anger and enact more gun control legislation. Jones’ accusations prompted some listeners to harass the parents of the slain children.

The parents sued Jones for defamation. A jury found Jones guilty and awarded the parents over a billion dollars in damages. Jones declared bankruptcy and was forced to auction Infowars to pay the damages (Source and Source). Jones’ deception fostered a belief in his listeners that the parents and the government were concealing the real events of the school massacre.

Nothing to See Here

A chimpanzee learns to act noncommittal to avoid suspicion from a dominant member of the troop. In 2005, John Roberts was nominated first for associate justice then Chief Justice of the Supreme Court. At a Senate confirmation hearing he said, “[I]t’s my job to call balls and strikes, and not to pitch or bat” (Source). As a lawyer in the Reagan Administration, both Roberts and Samuel Alito had supported the unitary executive theory. This was a controversial reinterpretation of Article 2 of the Constitution that expanded the power of the president beyond the bounds of any Congressional checks (Source). Once confirmed, Roberts would no doubt pursue this and other conservative theories that aimed to overthrow established court precedents regarding abortion, gun control, campaign finance and the limits of free speech. To get confirmed, however, he skillfully concealed that agenda (Source).

In 1987 the Senate, led by Democrats, voted down the nomination of Robert Bork to the Supreme Court. Because the confirmation hearings were broadcast, the Senators were apt to strike performative poses much as they do now. Senator Ted Kennedy, brother of the assassinated John F. Kennedy, issued a vituperative public statement that predicted an undoing of all the liberal reforms of the past 50 years if Bork were confirmed. Decades of Bork’s past writing were introduced at the Judiciary Committee headed by Senator Joseph Biden (Source). Bork’s supporters felt that they had little opportunity for rebuttal in the public arena.

Since then nominees to the court undergo extensive preparation for the confirmation hearings (Source). They are taught to adopt a noncommittal attitude when answering questions from Senators. To avoid prejudicing future cases, they elect not to comment on any issues that might come before them. Within this institutionalized and ritualized confirmation process, concealment is a survival strategy.

Groupthink

Self-deception exists both at the individual and group level. In the 1970s and 1980s, Psychologist Irving Janis published several books on groupthink, a term he coined in 1971. In a group of individuals, loyalty and consensus take priority over a dispassionate evaluation of evidence (Source). A case familiar to many of us is the justification that the Bush administration used to initiate a war against Iraq. Based on hearsay and sketchy evidence, President Bush and a key group of advisors became convinced that Iraq’s leader, Saddam Hussein, had weapons of mass destruction. They ignored and concealed any evidence to the contrary as they presented their justification for war to the international community (Source).

President Trump surrounds himself only with those who agree and submit to his ideas, values and theories. Like a troop of chimpanzees, loyalty to the leader is paramount. In February 2026, Trump became convinced that a “shock and awe” strike on Iran’s leadership would cripple the Iranian military and perhaps usher in a more compliant regime (Haberman & Swan, 2026, p. 396) Vice-President Vance was one of the few in the cabinet to question the viability and success of such a plan. He is the only member of the cabinet that Trump cannot fire.

Conclusion

Last week I made the distinction between how we come in contact with the world around us through our senses and how we engage with the world through our errors. We want to avoid harsh judgment from ourselves and those around us. We deceive ourselves because we must live with ourselves. Next week I want to explore how we engage in self-deception as groups. I hope to see you next week.

//////////////

Haberman, M., & Swan, J. (2026). Regime change: Inside the imperial presidency of Donald Trump. Simon & Schuster.

Photo by Chase Clark on Unsplash

The Errors of Our Ways

Leave a comment

August 2, 2026

By Stephen Stofka

Last week I asked how we cope with the errors of our voting predictions. Do voters, in fact, make such errors? In 2024, 97% of House incumbents were reelected (Source). Voters overwhelmingly confirmed their choice of House member to represent their interests. On the other hand, a Gallup poll this past April showed that 86% of those polled disapproved of the House, a record high.

If voters are so loyal to their House members, then why the thumbs down on the institution? Is it the House’s institutional rules that disgusts everyone? The Constitution specifically states that each house of Congress will determine its own rules, and the rules reward tenure. The House is a majoritarian institution, meaning that the number of elected party members determines which party’s priorities will dominate the agenda for the next two years. In an evenly divided House like we have had for several terms, half of the country’s voters are marginalized. Constituents vote yeah, whatever and reelect incumbents.

How we engage

We come in contact with the world through our senses but we engage with the world through our errors. Before electronic bookkeeping, accountants used pencils, making it easier to correct errors. We learn to walk by propelling our body forward in a series of interrupted falls. To catch a ball, a child learns how to predict the flight of the ball through trial and error. We drive a car by predicting how it will respond to our steering, and the pressure of our foot on the brake and gas pedals. We learn to predict the actions of other drivers, although sometimes we make critical errors.

Don’t Blame the Gods

At the beginning of the Odyssey, Zeus, the “father of gods and men,” says “Look you now, how ready mortals are to blame the gods. It is from us, they say, that evils come, but they even of themselves, through their own blind folly, have sorrows beyond that which is ordained” (Source).

When we vote, we predict the character and behavior of a candidate. In a 30 minute video, author Yuval Harari notes that we often mistake confidence for competence in our leaders (Source). We may be drawn to a candidate who promises a simple solution to a complex problem. Who doesn’t like simple? We may turn away from a candidate who has a deeper knowledge of the problem because they cannot express the problem in a short sound bite.

“Drill, baby, drill!” and “Lock ‘em up” are political slogans that fit on a postcard. Even politicians who understand the complexities of a problem know that they will lose the attention of many voters, so they choose the overly simplistic slogan. Modern political campaigns use the association of beliefs and identity to brand political opponents with short negative epithets. Campaigns throw labels like communist, socialist, authoritarian, tax and spend, big government, oligarchs, and see what sticks with voters. Coupled with that negativity is an appeal to the nobel side of voters on our side.  A vote for our candidate, or our side of an issue is a defense of goodness, virtue, and American principles against the barbarians from the other party.

The Mote in Your Eye

We are attentive to the errors in other people’s opinions, yet we dislike other people offering to correct our opinions. Substack author Kati Rae points out that a belief or opinion may support a person’s identity. Offering to correct that belief or opinion is perceived as an attack on the person (Source). Our reluctance to perceive or admit the errors in our predictions contributes to the inaccuracy of those predictions.

In his book Fooled by Randomness, Nassim Taleb tells the story of George Soros, one of the most successful investors of all time. His accuracy rate? About 53%, just a bit better than random chance. What’s the secret? A prediction is an outcome, but every outcome has a story. When the narrative does not unfold as Soros predicted, he admits his error, unwinds his position and minimizes his losses. The secret to winning is acknowledging error. Why then is that so hard for many of us?

Divided by Interest

At the founding of the country, two groups emerged to represent different regional economies and interests. The Democrat-Republicans, led by Thomas Jefferson, served the priorities of farmers and others who worked the land. The Federalists, led by Hamilton and Adams, were the party of choice for those who lived in the urban areas. The economies of North and South were very different. The north relied on value added manufacturing and trade businesses. The economy of the southern states was based on agriculture.

The Constitutional structure was built on hard fought compromise. In the decades following the ratification of the Constitution, the non-compromisers in the northern and southern states took over the political machine. Most states adopted the practice of awarding all of their Presidential electors as a state block. This “winner-take-all” policy hardened the divisions among voters in each state. Why don’t moderates of both parties separate themselves from the extremists? Because extremists in each of the two dominant parties have structured state and national politics to lessen the influence of moderate voters. When will moderates take back the country?

Memory

There is no identity without memory, a vital tool in shaping our predictions. We remember economic shocks and misbegotten wars when the other side was in power. High inflation, a housing crisis, a recession, high gas prices, and major tax increases. We may excuse such incidents when our side was in charge. It couldn’t be helped. Circumstances beyond control. Or we blame the “establishment” of the party. Factions form within the two dominant parties, trying to wrest control of the party’s direction from the party’s leaders. The media, mainstream or not, plays to our selective memory.

In many areas of our lives, we learn to correct our predictions through trial and error. However, some choices like voting are infrequent and are more difficult to correct. People may misremember a past voting choice so that their remembered choice aligns more closely with their current sentiments (Source). In panel studies, survey participants are asked shortly before an election which candidate they intend to vote for. Just after the election, they are asked which candidate they voted for. A year later, they are asked again who they voted for and sometimes their answer conflicts with the answer they gave shortly after the election.

Putting It All Together

Our predictions depend on the data we sample, our memory and identity. We look away from the mistakes in our predictions. We blame it on the candidate we voted for. He or she tricked us. We blame it on the party. They tricked us. We rarely look at the real trickster, the one in the mirror. Next week I want to look at why we are so good at self-deceit. And with that, I hope to see you next week.

/////////////////////

Photo by LATIKA SARKER on Unsplash

A landscape of brown hills and far off mountains framed by the entry of a cave

Beyond Our Cave

Leave a comment

July 26, 2026

By Stephen Stofka

For the past few weeks I have been writing about the political polarization of voters based on where they live. Last week I wrote that voting behavior depends on our prediction of how a particular candidate or party will affect our own well being or that of  our family, our community. A choice is the result of a prediction. A vote is a choice. Those who vote for a Republican candidate are making different predictions than those who choose a Democratic candidate. To understand the polarization in this country, I want to understand the prediction process itself. How much information do we need to feel like we have enough knowledge to make a prediction? That depends on many things – the circumstances and the consequences of making a prediction.

The Pool of Possibilities

The future is an infinity of possibilities. We cannot gather enough information in the present to flawlessly predict the future. What do we do? Take a small sample of the present and trust that that small sample will reliably represent the future. But how do we decide the size of that sample? Some voters meticulously research candidates and issues before voting. Some people vote by the dominant political party that represents their interests and values. However, in states that allow citizen ballot issues, there may be no clear party line. Some voters rely on a media source to do the research and make recommendations.

Some cities were large enough to support two daily newspapers. The editorial board of one newspaper would present a conservative position on candidates and citizen initiatives. The other newspaper would  present a liberal perspective on candidates and issues. Some people grew up learning only one perspective because their parents subscribed to that newspaper. People who moved to a city soon learned which of the two perspectives aligned with their personal values. The newspapers did the work of filtering all the information.

The Media Jungle

From 1970 to 1990, the circulation of daily newspapers peaked at over 60 million, almost the same number as the number of households in the country. By 2020, estimated circulation was about 25 million. Here’s a chart from Pew Research (Source).

In addition to local and national news, the newspaper had that day’s TV listings, the daily weather forecast, and the results of yesterday’s sports games. Readers checked their horoscope, read cartoons and played the games in the back pages of the newspaper.

Today, digital algorithms serve up news sources and content that engages a reader. We are like donkeys endlessly walking in circles, powering a flour mill as social media dangles a carrot to keep our attention. Like cute cats? Here’s more. Like hearing about Trump’s latest outrage? Here’s more. Before we show you that, here’s a commercial.

The General and the Particular

A President has a relatively small impact on the personal circumstances of most voters. People often vote based on their prediction of whether a particular candidate will be good or bad for the country as a whole, or an industry. Gallup conducts two separate polls for opinions on the general economy, the Economic Confidence Index, and people’s individual financial circumstances, the Personal Finance Survey.

The Economic Confidence Index plunged into negative numbers at the onset of the pandemic and was still negative on the eve of the 2020 election. Sentiments recovered somewhat shortly after Biden took office, then plunged again as inflation climbed to 9% in the summer of 2022. As inflation declined, those polled grew more optimistic. On the eve of the 2024 election, that index was still negative and voters elected Donald Trump, who promised to restore economic confidence. However, a few months after he took office, Trump initiated his “liberation day” tariffs. Public sentiment and the stock market both fell in response. While the stock market recovered, people’s confidence has not. Confidence in the economy is now lower than when Trump left office in January 2021 (Source).

What about people’s personal financial circumstances? In a poll conducted during the first quarter of this year, a third of those polled were “very worried” that they would not have enough money for retirement. Another third were “moderately worried.” Sixty percent of respondents were worried that they could not cover medical bills in case of a serious illness (Source).

Party Loyalty

Some people make voting easy. They vote for each candidate from one of the two dominant political parties. Researching the electoral platform and record of each candidate can be time consuming. Also, many voters do not pay a lot of attention to politics until a few months before an election, so this strategy is practical. Mike Rosen was a conservative radio talk show host in Denver until 2016. His experience working in Washington helped him understand that party politics drove the legislative machinery. Party cohesion, power and connections gets legislation passed. Party affiliation is more important that the merits of individual candidates. Because of that, he endorsed a voting strategy of “party over person.” Having to choose between two dominant parties makes prediction much easier. Each party constructs a brand from a platform of policies meant to strengthen attachment with current members and to attract newcomers.

Attachment

As social creatures, we instinctively seek attachment. Branding is a marketing strategy that promotes attachment between consumers and products or voters and political parties. The Republican Party brands itself as the party of low taxes and low regulations. It promotes larger military spending, which helps support local communities in the southern states where Republican support is strong. The Democratic Party stresses equality and fairness for all. They promote programs which assist lower income families in urban areas where housing and other monthly costs are relatively high. Both branding strategies rely on predictions of the future. Elect our candidates and the future will be better, each party says.

Religion

Religious conviction relies heavily on predictions of the future. The Christian religion evolved from its Jewish roots but stressed individual salvation in contrast to the Messianic culture of the Jewish people that predicted a group salvation. Religious and political affiliation manifests the human desire for attachment. It is understandable that one or both dominant parties would incorporate religious sentiments into their brand.

In the mid-19th century, the Democratic Party promoted expansion of the country into the western lands occupied by Indians and held by Mexico. Expansion of land was necessary for the expansion of slavery, a cornerstone concept championed by the party. The party justified expansion under the banner of Manifest Destiny, an idea that the U.S. had a divinely ordained mission to spread Christian and republican government throughout the continent (Source).

In the past several decades, the Republican Party has absorbed a diverse group of Christian conservatives and evangelicals into the fold. The party has endorsed policies that outlaw abortion and same sex marriages, supported exemption from laws that conflict with one’s religious beliefs, and the rights of religious schools.

Postdiction

The past, particularly the ancient past, is almost as hidden from us as the future. We sample our present circumstances and often invent origin stories to explain the present. We speculate on the creation and composition of the cosmos, the formation of our world, the Earth, and how what is came to be. These speculations are like predictions but they come after the fact. Perhaps we should call them postdictions.

Organized religions promote an attachment to certain origin stories, claiming a divine authority and imprimatur on the opinions, values and interests of that religion’s congregation of believers. There are many religions and religious sects but only two political parties to absorb those congregations.

History

We are a politically divided country because the framers of the Constitution glued two different countries and cultures, north and south, together. Historians note the many dichotomies and contradictions of those founding documents. Thomas Jefferson penned the words “all men are created equal” in the Declaration of Independence, but owned 200 slaves. Article IV, Section 2, Clause 3 of the Constitution itself contained a fugitive slave clause, recognizing and treating human beings as property like domesticated animals (Source). That same declaration grounded government in “the consent of the governed,” but excluded women, blacks, Indians and poor white men.

Although the founders valued liberty and private property, many states allowed the imprisonment of debtors. Governments protected creditor rights above the property rights of farmers. Creditors were usually from urban areas. Debtors, mostly farmers, were from rural areas. From the beginnings of our country, there was a propensity for voters to sort themselves into two interest groups, rural and urban. Because we have a “winner-take-all” election system, this naturally leads to the formation of two political parties. A proportional representation system of elections gives formal recognition to marginalized communities. In our country, minority interests must work within either the Republican or Democratic parties.

Errors

Our actions today represent our predictions of the future, but our predictions aren’t always accurate. How do we cope with the errors of our conclusions? That’s something I want to take a look at next week, and I hope to see you then.

//////////////////

Photo by Maria Lupan on Unsplash

A crystal ball outside on the ground. Inside the ball is the reflection of a lake and trees

Different Predictions

Leave a comment

July 19, 2026

By Stephen Stofka

In last week’s post, I ended with a promise to explore our political polarization. We are divided not only by values and ideologies, but by population density. Some of us prefer less density and less regulation. Those who live in a small town may have a limited choice of dining, shopping, health care and entertainment. There may be only one movie theater with one screen. In rural areas, the land doesn’t sit there as a space for human homes, businesses and institutions. The land works. It provides food for human or animal consumption. It provides trees, minerals and other resources. Its mountain peaks reach into the skies to collect water from the clouds, channeling water down the slopes to the valleys below. In these areas, the human community is a part of the land. People live with the land.

The U.S. Census Bureau has long distinguished rural and urban areas by population density. Recently, they have included outlying areas with low population density whose economies are tied to a nearby metro area. The distinguishing characteristic is that 25% of residents commute to a metro area for work (Source).

In dense urban areas, people live on the land. The human community dominates the land. Grass and trees serve as a spiritual refuge for humans, and a habitat for birds and small mammals. Land is space for human designs of concrete, asphalt and lumber. People who live there appreciate the availability of choices in most areas of their lives. They tolerate the regulatory environment needed to manage the frictions between neighbors. They are accustomed to a diversity of cultures and religious traditions.

In the small east Texas town where my mother grew up, there were churches of a variety of Protestant sects. In less than a mile on the main street of the town, there was a Methodist, Baptist, Christ the King and Presbyterian Church. That’s all the variety that people needed in that community. Those who attended an Anglican or Catholic church could drive almost an hour to Dallas on Sunday morning. My mother could not remember meeting a Jewish or Muslim person until she moved to New York City after World War 2.

Different Outlooks

The residents of rural and urban areas have different sensibilities and outlooks on life. They may share values and ideologies, but they place a different emphasis on those values when they vote. In rural towns, change is slow and the residents are suspicious of new developments. In many rural towns, there aren’t enough job or educational opportunities for young people. Many move to urban areas, where they must become accustomed to a faster pace of life. They try on new ideas, music, and other diversions. They become part of social groups that may seem alien to their parents. They question the choices and morals of the political leaders their parents voted for. A recent study by Pew Research shows that younger voters under 30 vote more heavily for Democratic Presidential candidates. Those over 60 favor Republican candidates (Source).

Density Signpost

Several studies in the past twenty years have found that population density is a significant factor predicting party affiliation. It’s not a direct cause of course, but it represents important differences in economic and social circumstances between urban and rural environments. After reading several papers on this topic, I’ll rely on a paper by Trevor Brown and Suzanne Mettler (2024) (Source). The paper is openly available and the authors reference a lot of other papers on the topic. Brown and Mettler note that, until 2000, there was not such a clear partisan divide between rural and urban voters. Here’s a chart from their paper to show the wide divergence in voting patterns in the past two decades.

The chart shows the percentage of voters, urban and rural, who voted for the Republican Presidential candidate. In the year 1996, there was only a 3% difference between urban and rural voters. In the 2020 Presidential election, that difference had grown to 21%. What happened?

Multiple Causes

There are several causes that account for the behavior of an airplane in flight, and human beings are a lot more complicated than airplanes. Different authors have highlighted a number of causes. Those in areas of higher population density are more educated. Not smarter. Just more educated. They work at jobs that require more education, or a degree becomes a filtering mechanism in a competitive job market. Job growth in rural areas has been stagnant. Those in urban areas have higher incomes but have higher housing and living costs. As already discussed, there is a greater variety of religious institutions, and less social pressure to embrace any religion.

Brown and Mettler pointed to some studies that stressed rural “consciousness, identity, or values,” but that didn’t explain the urban-rural divergence in political sentiment of the past three decades. Some authors cited the resentment that rural voters might have for urban voters who impose their priorities on everyone. However, this is not a recent development. In the 1960s, voters in rural upstate New York voted Republican. Voters in the urban area that included New York City voted Democratic. For decades, Colorado voters in the Front Range east of the Continental Divide have voted Democrat, while those in the western part of the state and on the eastern plains voted Republican. Perhaps readers will have similar experiences of longstanding urban-rural divides in other states.

A Shift in Outlook

Many election analysts have struggled to explain the change in voter sentiments before and after an election. Just prior to the 2016 election, Gallup asked voters for their assessment of the economy. 81% of Republican voters thought the economy was getting worse. Soon after Trump won the election, only 44% of Republican voters felt the same way. Among Democrats there was a similar shift, although not as extreme (Source, McCarthy & Jones, 2016). In the weekly Gallup surveys over the following weeks, Republican confidence improved while Democrat’s outlook declined. A similar shift happened before and after the 2024 election. Some analysts have termed the phenomenon partisan perceptual bias. A better term might be partisan prediction bias.

We Predict

We are creatures who must survive on our ability to predict. Unlike a cat, we do not have fast reflexes. To navigate our world, we must predict the motion of others. We get more comfortable driving a car as we learn to make many predictions in a short period of time. Secondly, we are social animals. To survive, we must learn to read the feelings and intentions of others to anticipate how they will act.

Vote Forecasting

Writing in the Public Opinion Quarterly, Andreas Graefe (2014) noted that asking people to predict an election winner was very accurate. She analyzed vote forecasting surveys from 1932 to 2012 and found that the majority of respondents correctly predicted the outcome 89% of the time (Source).

Notice that these forecasting surveys are different from voter intention surveys that ask people who they intend to vote for. These kinds of polls are probably the most reported on. For these kinds of polls, analysts must apply several statistical techniques to align the characteristics of their polling samples more closely with the characteristics of all voters in an electoral region. Sometimes they simply do not make the correct adjustments. Surveys prior to the 2016 election accurately predicted that Hillary Clinton would win the national popular vote. However, the national popular vote does not determine the winner of the Electoral College vote. Analysts misweighted the survey samples in several swing states, which delivered the winning electoral votes to Donald Trump (Source).

Gut Prediction

Asking voters how each of them will vote takes a lot of statistical tweaks to achieve an adequate level of accuracy. Asking voters for their gut predictions of the winner turns out to be quite accurate without those tweaks. When researchers ask people for their opinion on the economy, I think what many people respond with a prediction. Those predictions are based on our perception of our personal circumstances, local and national conditions. We filter those perceptions by ideology, values, and our previous experience. What pops out is a binary prediction of a likely winner from each of the two dominant political parties, not an assessment of the broad economy.

Why do people make such different predictions? Next week I want to look more closely at the components of our prediction process. And with that, I hope to see you next week.

///////////////////

Photo by Brad Switzer on Unsplash

Notes:

Brown, T. E., & Mettler, S. (2024). Sequential Polarization: The Development of the Rural-Urban Political Divide, 1976–2020. Perspectives on Politics, 22(3), 630–658. https://doi:10.1017/S1537592723002918  

Graefe, A. (2014). Accuracy of vote expectation surveys in forecasting elections. Public Opinion Quarterly, 78(S1), 204–232. https://doi.org/10.1093/poq/nfu008  

McCarthy, J., & Jones, J. M. (2016, November 15). U.S. economic confidence surges after election. Gallup. https://news.gallup.com/poll/197474/economic-confidence-surges-election.aspx

The Ethosphere

Leave a comment

July 12, 2026

By Stephen Stofka

Last week I wrote about the ethosphere with a promise to expand on that this week. There are four interlocking areas that consistently affect our daily lives: economics, sociology, politics and the law. Each is interconnected by a system of ethics. Economics, sociology and politics concern the flow and distribution of power. The law is the rules by which those flows occur. Politics is the struggle over who gets to write the laws. Sociology is about the people who are affected by the distributions of power. Economics is the study of resources and their flows. Resources include capital, land and labor. Each of the other three areas governs the owners of resources and the flows.

A college student with an emphasis in either one of these four areas could probably design an interdisciplinary program that uses theories from one course of study to understand issues and events in other areas. For instance, a good understanding of the regulation of industrial pollution explores each of these areas.

Election Decisions

Many election issues are best understood if we look at each of these aspects. Let’s say there is an affordable housing issue on the ballot. We may not have the time or energy to do as much homework on the issue as we would like. Prompting an LLM like ChatGPT or Claude with these four aspects of the problem can help us. Here’s a prompt I put in ChatGPT: what are the economic, political, sociological and legal aspects of an election issue like rezoning for more affordable housing?

The two page response from ChatGPT began with: Each discipline asks different questions, uses different methods, and emphasizes different values. It went on to list the positives, negatives and unknowns from each of these four perspectives. Finally, it listed the central concern from each discipline. Sociologists are concerned about the effect on communities and social groups. Economists ask whether a policy will improve efficiency and affordability in the local housing market. A political scientist will ask who makes the policy decisions and ongoing administrative rules. A lawyer might be concerned with a ballot initiative’s compatibility with the state constitution. You might say that this is too much information, but it’s rare that we consider all aspects of an issue. Usually, there are one to three factors that are important enough to help us make a decision. The AI program is a reminder list.

Distributing the Gains from Productivity

If we have grown up with a set of rules, we may think that there is something natural about those rules, that there is some underlying principle. However, if there were clear and consistent principles of the distribution of profits, for example, our courts would not be busy. Let’s consider tools that increase worker productivity. The owner of a small construction company buys a tool that will help an employee become more productive. With the tool, the employee can do 25% more work in the same period of time. Who gets to keep the profit from the additional productivity? The employee, the employer, or a split of some sort?

The Constraints of the Market

If the employer paid for the tool then the employer decides, but that decision is subject to constraints. If the labor market is competitive, the employee may capture the majority of the gain in productivity. If a tool pays for itself in a month or two, it is likely that other employers will buy such a tool, then offer higher wages or benefits to an employee.

If there are a lot of companies competing for business, then a business might pass on the productivity gains to the consumer in lower prices. If a company is trying to expand, it might offer more return to investors or partners. In each of these cases, the distribution of the productivity gains responds to market conditions.

Human Capital

In the first example, the employer bought the tool. In this second example, the employee buys the productivity enhancing tool. The most common example is some educational training beyond high school. According to the Bureau of Labor Statistics, the median weekly earnings for an employee with a bachelor’s degree was $1530 in 2024, $600 more than the median for workers with only a high school degree (Source).

What is an employee’s total investment in that four year degree? Economists at the New York branch of the Federal Reserve estimated the total cost, including the opportunity cost, at $180,000 per year (Source). That total included $30,000 in direct costs per year, and governments contributed student aid of about $15,000 per year. An employee has invested a whopping $720,000 in that four year degree, more than most people invest in their home. That same study estimated a 12% annual return on investment.

Federal and state governments have contributed about $60,000 total in aid over a four year period. Where did the student aid come from?General taxes. Is this charity for college students? Not so. Over a 40 year working career, an employee with a four year degree pays back the initial public investment with higher taxes. In 2009, researchers at the RAND organization estimated a worker with a four year degree contributes about $160,000 (in 2002 dollars) more in payroll taxes over a lifetime than a worker with a high school degree (Source). In 2024 dollars, that’s $284,000, almost five times the initial investment using government taxes.

Students are Capitalists

Most students do not think of themselves as capitalists. Like the employer who bought the tool, a student makes an investment in their own human capital and this affects their future earnings on average. The principle of distribution seems to be that whoever invests the capital, whether it is money, or a combination of one’s labor and money, gets to keep the majority of any additional profits from the increased productivity.

The Economic Policy Institute compiled federal productivity data since 1948 and calculated that workers have captured 60% of labor productivity gains in higher compensation (Source). What is not visible is the relative shares of investment by employees and employers.

The Distribution of the Gains From Invention

When an employee or group of employees invents a new product or process, current law holds that the product or process belongs to the employee(s). Here’s the text of an opinion in Banks v Unisys (2000): “The general rule is that an individual owns the patent rights to the subject matter of which he is an inventor, even though he conceived it or reduced it to practice in the course of his employment. There are two exceptions to this rule: first, an employer owns an employee’s invention if the employee is a party to an express contract to that effect; second, where an employee is hired to invent something or solve a particular problem, the property of the invention related to this effort may belong to the employer” (Source). Naturally, businesses work hard to draw up ironclad employment agreements to secure those intellectual property (IP) rights. The default legal principle may be that the creator owns the patent rights but a patent is a form a long term capital. A business survives by securing that capital. Legal principle is simply an obstacle to be overcome.

AI Competes with Human Capital

If an employer buys a tool for an employee, the tool is portable. Another employee can use it. A college education is regarded as human capital, but it is capital that is non-transferable. The development of Artificial Intelligence (AI) has fundamentally altered this aspect of human capital. ChatGPT, Claude, and other AI machines have been trained on the writing of millions of people. AI agents reduce knowledge to a series of connections between words, then compute the probability of those connections. They do not always understand context, but they don’t call in sick, take holidays or want healthcare insurance. AI may not replace the human brain’s ability to synthesize knowledge into new paradigms but it can replicate a lot of the work that people depend on for their livelihood.

The Constraints of Democratic Government  

Conventional economic models treat government mandates like minimum wage, sick and overtime policies and safety regulation as outside the market. Those who favor laissez-faire economics want to minimize those kinds of policies. Why? Government policies usually do not respond to changing market conditions. Secondly, they create incentives for businesses to avoid those additional costs by hiring people “off the books,” or treating them as subcontractors even though the workers perform their duties under the direction of the employer.

In a democracy, however, politicians are very much a part of the market. They must appeal to voters. They must compete for political donations. They must align with other politicians to get anything done. To exclude them is to ignore a vital component of the marketplace. Politicians get elected by promising to fix problems. Fixes come in two varieties: repair and restore. Populist Presidents like Reagan and Trump chose the restore option. They appealed to voters by promising to undo some of the policy fixes of past decades. Other politicians like Bernie Sanders promise to implement existing solutions on a broader scale, like Medicare-for-all, or solutions that have been tried in other countries.

The Weaknesses of the Price System

The price system cannot manage large imbalances of supply and demand. During the Gilded Age in the late 1800s and in the first decades of the 20th century, eastern cities were crowded with an influx of European immigrants. There was a plentiful supply of workers willing to work for low wages to survive and gain a foothold in their new country. Jacob Riis documented the appalling housing conditions in New York City at that time (Source). The free market system encouraged landlords to offer the least living space for the most money that the new immigrants could afford. In many businesses, human labor was an indistinguishable commodity. Business owners maximized their profits by offering low wages and few worker protections. Tragedies like the Triangle Shirtwaist Factory fire in 1911 alerted the general public to the inhumane working conditions that many people endured (Source). These events aroused a public demand for reform and regulation that marked the Progressive Era from 1900-1929 (Source).

The Demand for Regulation

The more dense an urban area, the greater the desire for regulations. In a densely populated area, people make choices that have an impact on their neighbors. Freedom of choice is limited by our neighbors’ freedom of choice. Land, drinking water and proper sanitation are, by their nature, limited resources. The free marketplace and the price system cannot manage naturally limited resources. Those who want to minimize the number of regulations they have to live with should move to a less crowded area. Many people do. Over time, that migration has created two sets of voters: those with a preference for less density and less regulation, and those whose tolerance of their neighbors and greater regulation is balanced by the advantages of an urban area.

I hope to see you next week when I explore that polarization.

/////////////////////

Photo by BoliviaInteligente on Unsplash

Effective Governments

Leave a comment

July 5, 2026

By Stephen Stofka

Last week I wrote about the system of rent control  in New York City as one of the many ways in which government interferes with a utopian model of laissez-faire economics. I had written that post earlier in the week and was surprised when the Rent Guidelines Board (RGB) voted to pass Mayor Mamdani’s proposal to freeze rents on rent stabilized units in the city for the next two years. This policy was similar to the old system of rent regulation known popularly as rent control. This week I want to look at several ways that government controls the price of essential commodities and services.

The Federal Reserve is an independent government agency that indirectly sets interest rates for all credit in the United States. This includes mortgages on homes, car loans, and credit cards. Higher interest rates increase business costs and businesses raise retail prices to their customers. Or do they? This is a debate among economists. The Fed raises interest rates to curb inflation, or the change in prices, not fan the inflationary flames. The theory is that higher interest rates will curb the use of credit, and push business costs higher. Interest is a factor of production that competes with other factors of production, namely labor. A reduction in the use of credit should lead to a lower demand for goods and services, prompting businesses to slow down their hiring and wage increases. That model fits the new car market where demand responds to price changes. That is not the case for goods and services that we buy each week.

Consumers pay higher monthly charges for rent, utilities, and food. Higher interest costs increase costs for landlords, leading to higher rents. Grocery stores pay for their food inventory with short term credit so higher interest rates put upward pressure on their costs and consumer prices. Farmers depend on credit so higher interest rates increase commodity prices, reduce farmers’ profits, or both. Electrical utilities finance all their capital improvements so higher interest rates increase utility bills each month. Unlike the market for cars, demand for these essential goods is inelastic, meaning that demand is rather insensitive to price changes.

Production costs and prices for new cars are affected, but demand for new cars does respond to price changes so this provides a counterbalancing effect, reducing the price increases. However, since people hold onto their vehicles longer, this reduces the number of used cars available for sale. Because the price of used cars is less than new cars, the demand for used cars increases. Both supply and demand factors increase the prices for used cars.

In setting interest rate policy, the Federal Reserve pays closer attention to a measure they call the Core CPI, the Consumer Price Index without volatile food and energy costs. They do this to gain a sense of underlying inflation trends. Here is a chart from the Bureau of Labor Statistics comparing different CPI measures as of May 2026 (Source).

Rising gas prices after the U.S. and Israel attacked Iran produced a spike in gasoline costs which accounted for most of the huge increase in energy costs. The Fed’s target inflation rate is 2%,  below either the All Item CPI (red), or the Core CPI measure (lime). Because of that, the members of the Fed’s interest rate setting committee, the FOMC, will lean toward a policy of rising or at least steady interest rates. This will put further pressure on consumer sentiments,  reducing the number of consumers who can qualify for home mortgages and car loans, even as higher gas prices effectively tax consumers.

Consider a small business whose employees make service calls. Plumbing, electrical, HVAC and home repair businesses typically consume a lot of gasoline. In addition, they frequently use a short term line of credit to carry their accounts receivable. Higher interest rates and higher gas prices are squeezing these kinds of companies from both directions. The same for farmers and ranchers who use a lot of gas and short term credit.

Interest rate policy affects all businesses and consumers but especially redistributes wealth among different businesses and consumers just as effectively as a policy of rent regulation does in New York City. Donald Trump’s decision to be led by the nose into Israel’s long running feud with Iran sparked a sharp rise in the price of gasoline. This effectively redistributed wealth from the working class, the blue collar trades, and rural folks to the weapons manufacturers and bankers who profit from war and a higher deficit. It’s an especially cruel blow to rural folks who voted for Trump. His comment that he doesn’t think about the effect of the war on the finances of everyday folks was an indication of the contempt he holds for working people (Source).

The government subsidizes a lot of perishable foods, influencing the pricing and availability of milk and dairy products, fruits and vegetables, meat, poultry, eggs and seafood. It does this largely through subsidies for animal feed, disaster assistance, crop insurance, and USDA purchases of food for public nutrition programs. A person who favors a policy of minimal government interference in markets may not realize that the price of their eggs is influenced by government programs which help to lower consumer prices.

The most government subsidies are channeled to commodity crops like corn, wheat and soybeans. Fruit and vegetable farmers complain that they receive far less subsidies for their crops than the growers of these crops. The subsidies for corn used to produce high fructose corn syrup have led to a sharp rise in obesity and higher healthcare costs (Source). Lower prices for fruits and vegetables would lead to greater consumption and might reduce the obesity epidemic. Subsidies for one type of food producer, the growers of commodity crops, redistributes wealth from tomato farmers in California to corn farmers in Iowa.

SNAP benefits, known as food stamps, provide food assistance to low income households (Source). Those who favor a reduced role for government may be accused of lacking compassion for others, particularly children. They argue that such programs are not the role of the federal government. Let the states create, administer and fund such charity programs. However, those states with the highest percentage of low income families don’t have the resources to fund such programs. One in five households in New Mexico, for example, qualifies for SNAP benefits  (Source). The national average is one in eight households. This is the irony of need. Those with the greatest need have the fewest resources. How a society handles these resource contradictions are central to its character.

Economists of the late 19th century forced a separation between the disciplines of economics, sociology and political science in order to understand economic principles better. Stanley Jevons, Alfred Marshall, and Francis Edgeworth were some of the leaders of this movement away from the complicated socio-political analysis of economics of Marx, David Ricardo and the Ricardian Socialists of the mid-19th century. The social, political, economical and ethical aspects of our daily lives are bound together in what I will call an ethosphere, the how of engaging with others in a society. Studying just one aspect in isolation leads to faulty conclusions.

Some economists and pundits treat the government as an actor outside the marketplace because it has taxation and police powers that other members of society lack. A corporation has unique features and powers as well. We don’t treat corporations as alien to the marketplace. The question is not whether government should take an active role in this ethosphere. It can’t help but take an active role. The question is the type of role it takes, not how active it should be. An effective government creates programs of redistribution to solidify political support among the various factions of a society. These programs increase a government’s capacity, build its legitimacy among its citizens, reduce the frictions that lead to civil war and help a government survive.

Next week I hope to explore the four components of the ethosphere. Hope to see you then.

///////////////////

Photo by Ayush Kumar on Unsplash

A person blurred by obscure glass

Market Distortions

Leave a comment

June 28, 2026

By Stephen Stofka

Last week I wrote about different types of authority, and whether authority without responsibility is legitimate. From last week: “Through its legislative authority and police power, a government controls the terms of contracts between private parties. It grants licenses to individuals and companies to conduct business. It sets rules that contracts must follow. Those contracts govern the distribution of wealth within a society. Does a government have an accompanying responsibility to ameliorate the economic outcomes from those contracts?”

A utopian economic model popular with some libertarian economists is laissez-faire economics. In this model, government has a limited role in commerce, but what are those limits? The term acts as a signaling device between pundits rather than a precise economic doctrine. Economists prefer to discuss the balance between market failures and government failures. Market failures occur when market participants don’t pay for a benefit or inadvertently cause harm. Pollution is a frequently used example. Let’s turn to government failures.

In his seminal work The Wealth of Nations, Adam Smith argued that governments provide essential institutions for commerce. These include defense, a court system to adjudicate contracts and protect property, provision of public works, a system of weights and measures, a reliable money to conduct business, and the granting of patents and copyrights. Smith supported public education, a controversial idea in the late 18th century. He thought it would improve the labor pool and civic life. He thought there should be few regulations and few, if any, programs of redistribution  to people or businesses. He was very critical of grants of monopolies, which stifled competition and retarded commercial improvement.

Governments inherit a legacy of past arrangements, property rights and commercial licenses that were doled out by a king or some other royalty after a conquest. The island of Manhattan in New York City is some of the priciest real estate in the world. During the reign of England’s King Charles II, the English navy seized the island from the Dutch in 1664. The king granted the land to his brother, the Duke of York (Source). A common practice was to subdivide the land and sell it for money, or to secure key political allies. Our economic system is built on a legacy of colonial conquest and monarchical power and privileges.

A company may owe part of its fortune to its ownership of a key parcel of land in a harbor port like New York City. That ownership is based directly or indirectly on a conquest and land grant. These past arrangements have created economic advantages for some private parties who leveraged those assets over decades, then sold them to other private parties. Those advantages may have seemed right and fair several centuries ago, but standards of fairness change with the passing of generations, and each generation must deal with the legacy of those past arrangements.

Governments protect the transfer of property rights down through the generations to maintain a stable and predictable economic and legal system, the backbone of a flourishing society. Long lived governments like the City of New York inherited an authority of several centuries. They have an accompanying responsibility to rectify the unequal outcomes that have arisen from those ancient arrangements. Denying that responsibility diminishes their authority in the eyes of those they govern.

Naturally, those that benefit from those advantages fight to keep those benefits. They believe their wealth was entirely deserved and promote ideologies that champion the virtues of accumulated wealth. Descendants inherit the authority over the assets but reject any responsibility for the circumstances under which those assets were accumulated. Our legal system accommodates the inheritors of wealth because the rules were written by the inheritors.

When governments try to correct those inequalities of income and circumstance, they often make a mess of it. Frederich Hayek (1899 – 1992), a Nobel Prize winning economist, pointed out that market prices carry a lot of information that coordinates production and distribution. Government redistribution schemes distort that information system. To achieve their goals, governments can not access enough information to make prudent decisions. Inevitably, they distort the private marketplace and investment decisions. It’s a matter of opinion whether corrective redistribution programs do more good than harm to the people they are designed to help.

Prices in a market system provide both information and benefits that we take for granted. Let’s consider a textbook example of rent regulation in New York City. 1.6 million people live on the island of Manhattan in an area of 22 square miles. That’s a density of 73,000 people per square mile (Source), more than four times the density of Greater Tokyo. Brooklyn has 38,000 residents per square mile. Naturally, there is a strong demand for housing and this puts upward pressure on prices and rents. For many working families, housing costs can consume 50% of income, far above the 30% recommended threshold. I grew up in the city and left in my 20s because living costs were too high.

For over a hundred years, there has been some form of rent regulation in the city. Under the old systems, known collectively as rent control and phased out in 1969, rents were often frozen. Landlords skimped on building maintenance and tenants were reluctant to push too hard for repairs or improvements in case the landlord used that as a reason to do upgrades which terminated the apartment’s status as a rent controlled unit.

The Rent Stabilization program was created in 1969 and replaced the older rent control systems that had been in place for fifty years. There are more than two million rental units in the city and slightly less than half are rent regulated. Almost all of those units are under the new rent stabilization program. Unlike the older rent control program, annual rent increases occur without landlords having to apply to a government agency.

In a market system model, supply and demand regulate prices. In the Rent Stabilization program, a government agency called the Rent Guidelines Board sets a cap on these rent increases (see note below). The Board must review thousands of data points on the costs of providing housing to determine a reasonable percentage cap for rent increases (Source). In a market system, thousands or millions of people make choices that influence the price of the goods and services they buy.

Several economic studies have concluded that rent regulation reduces housing supply. An investor can’t simply buy an older building, move the old tenants out, demolish the building and build something new. Rent stabilized buildings have guaranteed lease renewal so it is very difficult to move the old tenants out. Rent regulations dampen investment in new housing. Even though new buildings are exempt from rent stabilization, policies can change and investors can not be assured that a newly constructed building will remain exempt (Source).

Rent stabilization reduces the turnover rate. Tenants remain in their rent stabilized units regardless of a change in their job location, income, or family size. This encourages mixed-income neighborhoods but the benefits of the program flow to high income families who don’t need the financial assistance. Critics say that housing vouchers would better target needy families.

Under a free market system, prices respond as people make choices to balance their income and needs. Given the cost of living in New York City, why don’t more people move to Clifton, New Jersey? The city has a population of 90,000, a density of only 8,000 per square mile and it’s a 35 minute drive from Manhattan. Housing prices are modest and the city gets a good rating at Livability.com. Why isn’t the free market system inducing more people to move from NYC to Clifton? The fact that prices and quality of living are not attracting more people indicates that the housing market has characteristics and constraints that place it outside of the free market model.

People buy more than square feet when they buy or rent a home. A home is an essential part of daily life and each family’s home package is unique. They purchase a housing package of resources that include job opportunities, schools, churches and other social institutions, transportation, shopping, green space, hobbies and entertainment, and networks of other people. A family may spend $3000 a month for housing in a city with adequate public transportation so that they do not have to spend $1000 a month on a car and gas to get to work, school and play activities. Another family spends $2000 a month for similar housing but has additional transportation costs that add $1000. Both housing packages cost the same.

When some pundits criticize rent regulation as government interference, it is important to keep in mind that, in those cities with rent regulation, the physical home is a small part of the entire housing package. One time when I visited my brother who lived in Manhattan, we went deep sea fishing during the day then attended a riverboat concert that night. We took public transportation and spent about $300 (2026 dollars) combined, including meals. That seems like a bargain but we need to add in the cost of apartment rent in Manhattan. Access to all the amenities that the city has to offer comprises the entire housing package and is capitalized into the cost of housing. That’s why rents and housing prices in New York City are so high.

Secondly, the free market model is a distortion of actual free market dynamics because most markets have frictions and ancillary benefits. When economists build their models, these frictions and benefits are assigned a Greek letter and added to the equation. Present day governments must negotiate a long history of entitlements and endowments that were themselves a distortion of the free market. With authority comes responsibility. When pundits complain about government distortions of the market, ask yourself if a government program is distorting the market more than the model itself. I hope to see you next week.

//////////////////

Photo by Kaleb Nimz on Unsplash

Note: On Thursday evening, June 25, the Rent Guidelines Board voted 7-1 to freeze rents on units with 1 and 2 year leases. This is the first time in the 56 year history of the rent stabilization program (Source).

Picture of a domed government building

Which Authority?

Leave a comment

June 21, 2026

By Stephen Stofka

Last week I looked at schisms in religious and political organizations. I ended with the speculation that many of our disagreements ultimately are about authority. I want to take a look at the various types of authority we recognize, and what characteristics they share. Secondly, what is the relationship between authority and responsibility?

Most cultures recognize a parental authority derived from the responsibility that a parent has for a child. Religious tradition claims that parental responsibility and authority come from God, not the state. However, states claimed a responsibility under the doctrine of parens patriae, a Greek term meaning “parent of the country.” Therefore, the state had a duty to protect anyone, particularly children, who could not protect themselves. In 1962, a seminal paper published by Kempe, M.D. et al (Source) identified a clinical condition of physical abuse in young children that the authors termed battered child syndrome. Doctors and hospitals became more likely to report suspected child abuse to local authorities, and legislatures passed laws mandating such reporting

On the other hand, many jurisdictions regarded the home as a private sphere. Police were reluctant to actively intervene in cases of suspected domestic violence (Source). Litigation and activism by women’s rights groups prompted legislatures to adopt laws that criminalized domestic violence, rather than treating it as a private family matter. As we can see, the spheres of authority are not clearly defined and clashes over authority are frequent in human societies.

Governments at all levels claim a political authority, a right to make and enforce laws in its role as the parent of the country. Authority is not power but authority can be imposed by power. Monarchies and theocracies base their claims to authority on God, not the people. In a democracy, a government’s police power is based on the consent of the governed. In a multi-layered system like the United States, governments often clash over jurisdictional authority.

A central debate divides the electorate. Through its legislative authority and police power, a government controls the terms of contracts between private parties. It grants licenses to individuals and companies to conduct business. It sets rules that contracts must follow. Those contracts govern the distribution of wealth within a society. Does a government have an accompanying responsibility to ameliorate the economic outcomes from those contracts? Half of the population says yes, and advocate social programs that address inequalities of circumstances. Half of the electorate says no. The government may make the rules but has no responsibility for the outcomes. Question: is authority without responsibility legitimate?

Legal authority is derived from political authority, but is concerned with applying the law rather than making it. It is the least responsible branch of government in our country because many judges are unelected and are not held accountable to the public. Often there is not a clear distinction between applying the law and making law. Lawmakers often write laws using imprecise language so that they can reach a consensus. Judges must interpret such language, and are accused of making law when some people don’t like their interpretation.

However, even when a law or constitutional amendment is clearly worded, judges have been unable to resist a secret desire to write law through their interpretation. Let’s  call this an authority by implication, by implied meaning. Here’s an example. The 14th Amendment states “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” In the 1873 Slaughterhouse Cases, a 5-4 majority of the Supreme Court interpreted that language to create two sets of citizenships with distinct rights (Source). Citizens of the United States had one set of rights. Citizens of the State had a separate set of rights. Does the 14th Amendment state any such thing? No. Does that language imply that there are two separated sets of rights? Implied meanings are personal and quite arbitrary. Did the framers intend to give the judiciary both arbitrary power to draw their own implications and lifetime tenure? These are the essential characteristics of kingly power. After a seven year war of independence against the British King George, they decidedly did not grant such a power. The judiciary grabbed that power.

God is a convenient source for authority claims, because God can accommodate many different claims to truth. Clergy claim a religious authority based on sacred texts like the Bible, or Qur’an, or on some divine revelation. Why do church institutions feel the need to claim authority? Ultimately, they want to convince others to submit to their authority. The philosopher Fredrich Nietzsche (1844 – 1900) rejected claims by any institution that it had unquestionable authority over human thought, morality, or values. His targeted Christianity because of its influence over European morality, but his criticism extended to all religious, moral and political systems that claimed control of the human mind.

Clergy often link religious authority with moral authority, claiming that objective morality is impossible without God. Early Christian leaders like Augustine and Aquinas taught that all moral laws are derived from God. Of course, the classical Greeks would have disagreed, but Christian teaching has long rejected secular principles and virtues. More recently, the evangelist preacher Billy Graham preached that, without God, everything was permissible. Without God as a foundation for morality, actions cannot be judged right or wrong. Right actions are simply social and personal preferences. There is an obvious contradiction here. How can a subjective belief in God create a foundation for an objective morality? Religious believers are practiced at embracing contradictions. Never let a contradiction get in the way of a religious claim to truth.

Expert authority may be based on a practiced knowledge or it may be based on nothing more than the recognition of other practitioners in a certain field. For several thousand years, the theory of humors was the bedrock of the medical practice. First proposed by the Greek physician Hippocrates (c. 460 B.C.E. – c. 375 B.C.E.), the theory claimed that disease was an imbalance of four humors in the body. Bloodletting was a common practice to rebalance the humors. The theory was flexible and could be used to explain any outcome. If the patient got better after bloodletting, that demonstrated the truth of the theory. If the patient died, as in the case of President Washington, it was because the humors were too far out of balance. The effectiveness of bloodletting was not tested until around 1820, when it was shown that bloodletting was either ineffective or harmful for most diseases. How did experts get it wrong for two millennia? They relied on an authority based on tradition.

Many of our institutions depend on managerial authority, derived from the hierarchy in an institution. Examples include corporations, universities, and military organizations. A manager with little experience in a field may override the experience and knowledge of employees that he manages. The problem is particularly acute in the federal government. After a change of the executive, political appointees are put in charge of a large department based on their loyalty to the President or fundraising ability rather than knowledge critical to the successful operation of the department.

Linked to managerial authority is economic authority. Employers, lenders, and property owners control economic assets, investment and job opportunities. As a recent example, Iran’s control of the Strait of Hormuz, a key shipping lane, supported an economic authority that proved to be as powerful as the authority that the United States claimed as a military hegemon.

We can classify authority by its justification. There is an authority by force, which needs no justification. Might makes right, as the saying goes. Even those who use force to impose their authority often make some of the other justifications I have noted above because force is an expensive tool to implement a regime of command. Authority by consent enlists the cooperation of those subjected to that authority and requires fewer resources. Expertise, tradition, political, moral and religious justifications are often woven together in a packagethat helps defeat challenges to an institution’s authority. In our daily disputes, we can keep an eye out for these combinations of justifications to help us unravel competing claims. And, with that, I hope to see you next week.

/////////////////

Photo by Chad Stembridge on Unsplash