Vbrosy — one word that sums up the Trump administration

A recent opinion piece by Chris Zappone summarizes the tactics by the Trump administration.

Reporter: Do you believe it was man-made or genetically modified?

Pompeo: The best experts so far seem to think it was man-made. I have no reason to disbelieve that at this point.

Reporter: Your office of the [director of national intelligence] says the scientific consensus was not “man-made” or genetically modified.

Pompeo: That’s right. I agree with that. Yeah. I’ve seen their analysis. I’ve seen the summary that you saw that was released publicly. I have no reason to doubt that this is accurate at this point.

‘Vbrosy’ is essentially a tactic to muddy the waters, to make constructive debate impossible. It is achieved by constant bombardment of various bits of information, of varying grades to truth, and of varying levels of sensationalism — to ultimately wear down the viewer. People have limited time and resources to consume news media. The more junk there is on the airwaves, the less time they have for “objective” news. This leads to confusion and subsequently frustration. Ultimately, the Trump administration wants to redirect such frustration to be vented towards China. And thus China has essentially become the new Mexico. We can see this play out in Pompeo’s interview.

Vbrosy has been aided by social media, where barriers of entry are low. Though seemingly democratizing media, it has also provided a platform to amplify disinformation (this is well documented in what is known as the “butterfly effect”).

To summarize, vbrosy creates:

1. Lower quality information (or disinformation)
2. Informational uncertainty (viewers not knowing what’s true or false)
3. Greater volume of “news flow”

This is extremely dangerous, leading to polarization and subsequently extremism.

Information Uncertainty leads to Polarization

I am not a political scientist, but I can explain this in a financial setting, and you can see why it also applies in a social / political setting.

…because in finance, there is also vbrosy. The difference here is that, if you’re caught doing vbrosy, you are charged with spreading false rumours. There might even be a libel suit.

When will politicians also be held accountable?

As we discussed, vbrosy generates lower quality information content and causes informational uncertainty.

When a stock has informational ambiguity, it causes a divergence of opinion. This is because different people are going the read and interpret the information differently. The greater the uncertainty, the more divergent the opinion.

Bitcoin, for instance, has very uncertain fundamentals and thus very divergent opinions. People fall into two camps: 1) it’ll shoot to the moon or 2) its worth nothing. Government bonds, on the other hand, have considerably higher certainty in future cashflows… this certainty means little disagreement on its value.

In other words, clarity of information leads to more informed (and moderate) views; whilst murky low quality information leads to polarization of views. What we’re seeing in the US is the latter, not the former.

You can read about uncertainty and divergence of opinion in Miller(1977).

Polarization leads to ‘bubbles’

In financial markets, when you have divergent opinions, it’s only the optimists that drive the price. This is largely due to short-sell constraints. Say you think Bitcoin is worth zero — and so you do not buy and sit out — hence your view is never really reflected in the price. It is only the optimistic players that are in the game, and thus the price is only reflective of their beliefs. And so the chain of events are:

1. Information uncertainty
2. Divergence of Opinions
3. Optimists drive price up (pessimists are priced out / cannot express their views)

Often this causes a bubble. (Bitcoin being one of them)

The property market is another example. The smartest bidder with the fairest valuation does not win an auction. It is won by the bidder with the unwavering belief in the highest valuation.

Politics is no different. When there’s polarization, it is always the extreme left or right (the loudest and the most bombastic) that end up driving the agenda. The moderates are simply “priced out”. Vbrosy leads to extremism.

Democracy only works when we have clarity of information — where voters can read and process unbiased information. When this assumption on information quality is breached, democracy not longer functions. Political debate becomes contaminated by toxic noise.

…there is a need for tactics to counter vbrosy. — Chris Zappone

So how do we tackle this?

For starters, we can learn a thing or two from financial market regulators. Politicians need to be held accountable for false and misleading rumors. There needs to be real consequences for spreading lies. It is criminal and undermining our democratic framework.