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The People are Revolting

Summary:
Count de Monet – I come on the most urgent of business. It is said that the people are revolting!King Louis XVI – You said it, they stink on ice. History of the World, Part I (1981) I’m sorry, I couldn’t resist. But if the willingness of the French to rebel against indignities forced on them by the ruling class is historically predictable, even more so is the fervor with which nominally egalitarian-minded editorial boards like that of the New York Times will defend that class against all comers. Yesterday’s opinion piece from the Times was exactly this kind of tripe (h/t to packmember Mark Kahn). Read it and read it again, because we will see this narrative repeated a thousand times over the next 2-3 decades. Like any abstraction, this one stands in for any legitimate criticism

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The People are Revolting

Count de Monet – I come on the most urgent of business. It is said that the people are revolting!

King Louis XVI – You said it, they stink on ice.

History of the World, Part I (1981)

I’m sorry, I couldn’t resist.

But if the willingness of the French to rebel against indignities forced on them by the ruling class is historically predictable, even more so is the fervor with which nominally egalitarian-minded editorial boards like that of the New York Times will defend that class against all comers. Yesterday’s opinion piece from the Times was exactly this kind of tripe (h/t to packmember Mark Kahn). Read it and read it again, because we will see this narrative repeated a thousand times over the next 2-3 decades. Like any abstraction, this one stands in for any legitimate criticism of the outcome of a policy action.

What narrative am I talking about?

“It’s not that the policy was bad. People just misunderstood it, or it was presented the wrong way. Next time we will do it right and it will work.”

It is not just an emerging narrative that will increasingly have the power of the world’s most powerful missionaries behind it – our boldest politicians, popular scientists, authors, entertainers, media members and other luminaries. It is not just condescending. It is also a lie. And like many of the most powerful lies, in this case it exists and will thrive because its adherents believe it serves a Greater Truth: climate change is coming, climate change is real, and the consequences of inaction may be dire.

I believe this Greater Truth really is true. Incidentally, if you work in financial markets and haven’t read Jeremy Grantham’s mid-year note on the subject, I recommend it.

Oh, sure, I entertain some outside chance, like I would with any complex system like climate, that we’ve got it all wrong. It wouldn’t be the first time. But I don’t think it is possible to be a serious person and to deny the compelling evidence of a warming earth and human influence on it any longer. I know some of our readers disagree. Some have probably been waiting for us to be a voice to say that climate change and climate science are just more misleading narratives. Sorry. If that’s what you’re waiting for, you’d better find a comfortable chair.

It is also important, however, that the fact that climate change is real does not mean that climate change! is not also a meme.

How do we tell the difference between the two?

A claim of climate science will be falsifiable and will have stood up to attempts to do disprove it.

A claim of the climate change! meme will be non-falsifiable or will be a social science projection improperly conflated with hard science in order to achieve a desired policy end.

When someone tells you that climate science indicates that it is very likely that continuing to emit greenhouse gases at levels even dramatically below current quantities will result in an increase in mean temperatures, variability in weather and a general rise in sea levels, they are discussing climate science. When someone tells you that not joining this accord or signing that treaty, or not passing this policy or that policy, or not voting for this candidate or that candidate are anti-science, they are promoting the climate change! meme.

I believe it will become increasingly apparent that the predictions about and models for how humans will respond to both climate change and the policy agendas designed to combat it are divorced from the rigor of climate science in profound ways. I don’t think I’m going out on a limb to suggest that the reams of policy research behind the French gas tax probably didn’t accurately predict the ‘yellow vest’ variable. If a simple tax on fuel proves socio-politically problematic, how much more trouble will come from the more dramatic events and policy outcomes being proposed? For example, we do not – we cannot – grasp how an emerging and enormous Indian middle class will respond to being told that they’re going to have to wait a couple decades on widespread air conditioning. And anyone who says they have a robust model for the behavior of billions of other humans emerging from poverty upon being told, “I’m sorry, I know it was your turn to live a life of leisure, comfort, travel, beef and packaged consumer goods, but that’s just not going to happen now” is no scientist. It’s not just about policy responses, either. We simply cannot and are inherently ill-equipped to predict how people will respond to an incredibly complex set of climate change outputs that will manifest in changing prices for real estate, agricultural commodities and labor, even before we consider any explicit policy action.

There is a great deal more to write about this and what we should be doing instead than can be contained in a Brief. I DO think there’s a better solution than the Times’s “The People are Revolting” shtick. I plan to write more about this in the next few editions of the continuation of my little Bayesian series – Notes from the Road.

In the meantime, however, I have a question and a challenge: give some thought to your philosophies as investor and citizen. Think about your most passionate views which began as earnest, scientific, fact-based beliefs. Think about some of those beliefs which encountered resistance. How did you respond? Did you change the way you told the story about them? In doing so, did your beliefs slowly become abstractions of the real thing you believed in originally?

Maybe I’m projecting, but I don’t think so. I think this is common. It’s a well-worn path, but it doesn’t lead to truth. Navigating that road requires clear eyes to see the opinions we drape in fact for what they are. I am convinced that this is even more true for the great tests humanity faces from time to time.

Rusty Guinn
Executive Vice President of Asset Management, Salient. Rusty Guinn is the executive vice president of asset management at Salient. He oversees Salient’s retail and institutional asset management business, including investment teams, products, and strategy. Rusty shares his perspective and experience as an investor on the Epsilon Theory website.

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