Scott Adams, author of Dilbert and self-proclaimed hypnotist, believes that persuasion is the dictating force in a world where facts don’t matter.
I largely believe he is right. However, I believe that psychology is what influences the short-term future. In the long term, the trend is dictated by facts and fundamentals.
We are talking about the trend at infinity, however. In reality, a lot of short-term psychologically driven decisions may change what fundamental forces apply in the long-term, thus altering the course of the long term trend.
Most decisions are short-term oriented, and hence are influenced heavily by persuasion. Take for example the four-year U.S. election cycle. Most of the time the policies proposed and made by politicians are for the perceived benefit within a four year span (thereby increasing their likelihood of re-election). Fundamentally, a lot of poor policies are made that will be harmful over the long term. Deficit spending is an obvious example, which is passing the buck of debt over the long-term, a fact that is concealed by the illusion of a booming economy in the short term.
Let’s take the current cryptocurrency craze to demonstrate how persuasion is dictating short-term prices:
Blockchain, the driving force behind BitCoin and other cryptocurrencies, have much better applications outside of currency. Fundamentally and factually speaking, cryptocurrencies are worthless because by definition of software, they cannot enforce scarcity — a necessary function of money. However, by inflating the importance of blockchain to obscure this fact, psychologically it is driving up the price of BitCoin and other cryptocurrencies in the short-term.
In the long-term, if people live long enough to see it, the trend will average towards what the facts and fundamentals dictate.
The subtitle of Scott Adams’ “Win Bigly” is “Persuasion in a world where facts don’t matter”. Facts still do matter in a persuasion driven world. It’s just that in today’s short-term oriented, self-serving culture, no one cares about them. I guess that what Scott Adams meant — facts don’t matter to people.
For anyone and anything relying purely on psychology and ignoring the fundamentals: win bigly now, lose bigly later.
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