Speaker 1: Pushkin. Welcome back to Risky Business, a show about making
Speaker 1: better decisions. I'm Maria Kanakova.
Speaker 2: And I'm Nate Silver. Earlier this week, you've heard us
Speaker 2: talk about hopefully you're listening every episode, Yes, right, listeners.
Speaker 1: If not, what are you doing with your life?
Speaker 2: What are you doing with you You heard us talk
Speaker 2: about Las Vegas and the kind of literal casino economy.
Speaker 2: We want to be a little bit more figurative about
Speaker 2: that today, the casinofication of the American economy of frankly,
Speaker 2: everyday life in lots of ways.
Speaker 1: Yeah. So there was an op ed in The New
Speaker 1: York Times on October twenty sixth from Kyla Scanlon that
Speaker 1: talked about kind of this casino economy and what does
Speaker 1: she mean by that? We have gamification of almost I
Speaker 1: mean gamification has been something we've talked about before, but
Speaker 1: casinoification specifically is that we are fueling speculation, we're fueling
Speaker 1: risk taking, and we're kind of placing bets on a
Speaker 1: lot of things, and you know, we're betting that this
Speaker 1: all works out well for the US. Except instead of
Speaker 1: gambling with your own money, you're gambling with the United States,
Speaker 1: with US currency, with the way that the US is
Speaker 1: perceived abroad with you know, how our economy is going
Speaker 1: to do, and we're you know, you're seeing the government
Speaker 1: placing these big bets and we don't actually know, Nate,
Speaker 1: whether they're smart gamblers or not, right, We don't know
Speaker 1: what went into that, whether they are people who are
Speaker 1: like advantage players where like, oh, you know, there are
Speaker 1: some edges here that we can exploit, or whether they're
Speaker 1: just djens who are like I like to take risk
Speaker 1: and I hope it works out. I'm betting it all
Speaker 1: on black Come on, baby, US go service. I was.
Speaker 2: I was checking my invidias dot and my Bitcoin and
Speaker 2: the DraftKings bets I have for the midday night game.
Speaker 2: And yeah, yeah, that's at a little distracted by by
Speaker 2: all these you know, on the poly market price. You
Speaker 2: can't see a bdega without seeing a count sheep or
Speaker 2: poly market billboard in the New York City area anymore. So,
Speaker 2: this is all around us. I enjoy some of it,
Speaker 2: in profit from some of it, but like, I can
Speaker 2: imagine how it becomes overwhelming to a more normy American.
Speaker 1: Oh, absolutely, And I think that there are two different
Speaker 1: spheres here, right, there's the like rise of prediction markets,
Speaker 1: the fact that Trump himself is getting into the prediction
Speaker 1: market business, you know, crypto, and the fact that Trump
Speaker 1: himself got into crypto, like the actual gamifications. But then
Speaker 1: there are also things like we're going to you know,
Speaker 1: have the government invest in like invest in Nvidia and
Speaker 1: do all these different things. Try to play a game
Speaker 1: of chicken with tariffs to see like who's going to
Speaker 1: blink first? Right, who's going to swerve first? Are we
Speaker 1: going to end up in a trade war? Are we
Speaker 1: going to end up with better concessions for the United States.
Speaker 1: We're seeing it at every single level of society, and
Speaker 1: I think that higher level is people are focused on
Speaker 1: the lower level. They're like, oh, you know, you know
Speaker 1: Calshian prediction markets, and they're getting into like sports betting
Speaker 1: and all this stuff. This is terrible, but maybe they
Speaker 1: should actually be looking more at that higher level, which
Speaker 1: is saying, well, okay, but we're also you know, pouring
Speaker 1: us government money into meme coins, and we're also trying
Speaker 1: to see like can we levy one hundred percent tariffs
Speaker 1: on some countries and have them still want to do
Speaker 1: business with us? Like what can I get away with basically,
Speaker 1: and so that that might be even though it's harder
Speaker 1: to pinpoint and it's harder to make a nice headline
Speaker 1: about that, those might be some of the more worrisome
Speaker 1: elements of.
Speaker 2: Yeah, and look, in some ways, I'd like to see
Speaker 2: the American government be a little bit more market driven
Speaker 2: in some things. I mean, the government isn't paying a
Speaker 2: lot of people in market rate salaries. That's a big problem.
Speaker 2: And like, you know, there were debates years ago about
Speaker 2: like should Americans be allowed to invest their social Security savings.
Speaker 2: I'm not sure that they shouldn't. It's probably not a
Speaker 2: popular position among progressives, right, But like, but you also
Speaker 2: face things like if all these risks become correlated, right
Speaker 2: then in the United States, felt then social scurityholders would
Speaker 2: bear more geopolitical risk. I mean, look, I mean there
Speaker 2: are a few dimensions, right. One is like exhaustion of
Speaker 2: like you feel like every decision that you make you're
Speaker 2: battling some algorithm or there's some way to optimize. And
Speaker 2: I guess if you're have high agency and our experience
Speaker 2: and have money and don't have to worry about as
Speaker 2: much of this stuff, right, then maybe it leads to opportunities,
Speaker 2: but where it feels like everything is game of everything
Speaker 2: is complicated, right, I mean we haven't had Natlsha Shull
Speaker 2: on the show. She's an anthropologist who wrote Addiction by Design,
Speaker 2: which is about similar.
Speaker 1: Really interesting book.
Speaker 2: Yeah, between literally slot machine design and like social media
Speaker 2: apps continue with scroll the complete absorption that you're in constantly, right, yeah, can.
Speaker 1: I want to take a step back with that because
Speaker 1: this is some of the most fundamental work in twentieth
Speaker 1: century psychology, and I just want to give people a
Speaker 1: little bit of a refresher if it's been like a
Speaker 1: little while since they're psych one oh one. Everyone kind
Speaker 1: of has heard about Pavlov's dogs, Right. If I bring
Speaker 1: food to a dog and it gets used to kind
Speaker 1: of the food, it salivates because it knows it's about
Speaker 1: to eat, right, And if you ring a bell every
Speaker 1: time before you bring the food, now the dog learns
Speaker 1: to associate the bell with the food. Now we take
Speaker 1: away the food food, and the dog hears a bell
Speaker 1: and the dog salavates. That's called associated learning. Now, what
Speaker 1: Pavla found was then you can extinguish it. Right if
Speaker 1: after a while you keep bringing the bell and no
Speaker 1: food comes, Eventually the response will be extinguished and the
Speaker 1: dog will stop salivating. Now fast forward to be of Skinner,
Speaker 1: who kind of took behaviorism to the next level and
Speaker 1: realized that basically the single best way to get rats,
Speaker 1: guinea pigs, humans to do what you want them to
Speaker 1: do is not just through reinforcement learning, which is, you know,
Speaker 1: you reinforce a behavior that you want with something positive,
Speaker 1: but through a cycle of intermittent reinforcement. So regular reinforcement learning,
Speaker 1: you press a button and you get a pellet, or
Speaker 1: you get a coin that you can use for a
Speaker 1: slot machine or whatever. It is, like, I don't know
Speaker 1: if we're talking about a human or a guinea pig,
Speaker 1: but if sometimes when you press the button you get
Speaker 1: a pellet, sometimes you don't, Sometimes you get two pellets,
Speaker 1: you know, sometimes you don't. Then all of a sudden,
Speaker 1: there is nothing you can do to get that rat
Speaker 1: to step away from pressing the button. If that pellet
Speaker 1: is compelling enough, it will just keep pressing because that
Speaker 1: intermittent cycle of reinforcement is something that is just inherently appealing. Right,
Speaker 1: It's that gamble, Right, Oh, maybe I won't get anything,
Speaker 1: but maybe I'll get a lot, and maybe I'll get
Speaker 1: more than I ever got before. Maybe I'll get like
Speaker 1: an extra sweet, amazing treat. And that is how animals
Speaker 1: including humans learn the best, but also how they start
Speaker 1: engaging in compulsive behaviors. And all of a sudden, you
Speaker 1: see you know, rats, guinea pigs, humans who are just
Speaker 1: pressing that pressing that button over and over. So now
Speaker 1: we're seeing how powerful that psychology is and what happens
Speaker 1: when you take the guardrails off of it, and when
Speaker 1: you start seeing the US government engaging in that sort
Speaker 1: of behavior.
Speaker 2: I mean, look at slot machines, like, there are a
Speaker 2: couple of things you can learn from st machines in
Speaker 2: terms of reinforcing behavior that can be compulsive.
Speaker 1: Right.
Speaker 2: Number one is this combination of small and big rewards. Right,
Speaker 2: if you play a slot, then you spend for five
Speaker 2: dollars and no, there's a churn, ch changing, and you
Speaker 2: win three dollars back, right, or ten dollars back or
Speaker 2: two dollars back or something right, And then you have
Speaker 2: the occasional big jackpot where it attendant comes and pays
Speaker 2: you and it creates a big scene.
Speaker 1: Right.
Speaker 2: That combination seems to be pretty powerful, right, But The
Speaker 2: other thing these machines do. They have complicated game modes
Speaker 2: where you feel like you almost win, like, oh, if
Speaker 2: you get five reels all turned in the same direction right,
Speaker 2: then you trigger some bonus mode in a buffalo stampede
Speaker 2: or a wolf howl or whatever else. They all have
Speaker 2: like animal themes or the prices right or weel afford it.
Speaker 1: I see the buffalo one everywhere, so I'm assuming that's
Speaker 1: a high margin one for casinos. I have no idea.
Speaker 1: I know that different machines have different you know, different
Speaker 1: value for casinos, but the buffalo ones everywhere please continue.
Speaker 2: But yeah, you feel like, oh, man, if I just
Speaker 2: got this one more real to turn, I would trigger
Speaker 2: stampede mode and make lots of money. And so they
Speaker 2: show you. You're kind of like they dramatize your near
Speaker 2: misses if you're like, oh, I came so close last
Speaker 2: time that like, how could I give up on this case? Yeah,
Speaker 2: all these when you and by the way, you don't
Speaker 2: know the payouts for slot machines are not posted anywhere
Speaker 2: easily viewable by anybody. Right.
Speaker 1: By the way, a really good illustration of this without
Speaker 1: getting into kind of the innards of a slot machine
Speaker 1: is if you've ever kind of seen a game show,
Speaker 1: which I'm sure everyone has, where they spin the wheel, right,
Speaker 1: and there's always like the huge prize is always in
Speaker 1: between like tiny prizes. Yeah, exactly, and you see kind
Speaker 1: of that drama of like the needle almost going to
Speaker 1: the huge prize and then not, and it almost never doesn't.
Speaker 1: I don't know, Like I assume that it's not rigged,
Speaker 1: but if you ever do that at a carnival, don't,
Speaker 1: by the way, because then it is rigged.
Speaker 2: Yeah. I don't know what the regulations are on like
Speaker 2: onslop mission, but like in general, the reporting different. A
Speaker 2: book suggest that like the computer within milliseconds microseconds determines
Speaker 2: what the payout is, it's according to a fix schedule,
Speaker 2: and if you don't abide by that schedule, then you
Speaker 2: get in a great deal of trouble with the gaming board, right.
Speaker 2: I don't think they're regularly as much how they represent
Speaker 2: that outcome to you and so like, so you are
Speaker 2: manipulating people not only with the payout schedule, which has
Speaker 2: been optimized by MT engineers to figure out what gets
Speaker 2: people to be most compulsive, right, but also the way
Speaker 2: in which a given result is shown can also contribute
Speaker 2: to anxiety. Excitement, yes, the feeling of just having missed
Speaker 2: out on an amazing, life changing jackpot.
Speaker 1: The visual is so important. The visual is so important.
Speaker 1: That's why I gave the example of the game show
Speaker 1: right where you spin the wheel, because when you see
Speaker 1: like cherry, cherry cherry, and then like it's almost a
Speaker 1: cherry and that it just like misses by a half, right,
Speaker 1: and you're like, oh damn.
Speaker 2: Now there's something that's moving from the analog to the
Speaker 2: so like a lot of uh, most of the tennis
Speaker 2: tournaments now now use electronic eye judges, line judges. Right,
Speaker 2: So go to the US that's good, right, Well, it
Speaker 2: depends on how accurate. But you'll go to the US
Speaker 2: Open and Hawkeye I think it's called, will show one
Speaker 2: of the ball is in or out right, and then
Speaker 2: they'll show the replay and the replay is computer generated.
Speaker 2: I'm like, that's not a fucking replay, right, it's not.
Speaker 2: Actually you can't verify when the computer was right or wrong,
Speaker 2: and it's very close called by showing the computer's input.
Speaker 1: No, that's that's actually it's really annoying. Yep.
Speaker 2: But like feeling like you never kind of were able
Speaker 2: to like touch grass and get something real. I think
Speaker 2: is a feeling that's a little bit a little bit
Speaker 2: frustrated too, for sure, something that's and I guess people
Speaker 2: are verifiable are used to that. I mean us kind
Speaker 2: of gets into the seging we taped earlier and we
Speaker 2: had earlier this week about like the feeling of constantly
Speaker 2: being manipulated by the algorithm. You know, there has been,
Speaker 2: for example, a big increase in like fast food revenues
Speaker 2: per order per customer in recent years. And part of
Speaker 2: this is that, like part of this is at like
Speaker 2: now people are ordering on kiosks most of the time,
Speaker 2: even at physical locations. So number one, number one, you
Speaker 2: were just stopping costs, right, Number two people you have
Speaker 2: all types of up cells. Oh here's an extra sex
Speaker 2: you can add for just forty nine cents. Right, I'm
Speaker 2: sure the margin is very high or whatever, and like
Speaker 2: and like just that constant fatigue from being you know,
Speaker 2: sometimes my little my partners, you're like, which you got
Speaker 2: like a simple restaurant, Yeah, tonight one of these it's
Speaker 2: like not corporate own. It's like, well it's actually this
Speaker 2: other place was like, yeah, I just don't want all
Speaker 2: the fucking option. I want to b plus plain of
Speaker 2: spaghetti without any fuss and without feeling like everything is
Speaker 2: being golden dying for me.
Speaker 1: You know, yeah, no, absolutely, And it's psychologically speaking, you know,
Speaker 1: once again we've were talking about kind of thin lines
Speaker 1: between a frustrating experience and one that actually works in
Speaker 1: terms of nudging the consumer to the type of behavior
Speaker 1: that you want. So, yeah, when you're at a Kidoska
Speaker 1: and you're like, oh, like, do you are you sure
Speaker 1: you don't want to, like, for fifty cents upgrade this
Speaker 1: to like an extra large right, which would normally cost
Speaker 1: this much more, but you get kind of you get
Speaker 1: an extra deal, and it's so interesting. So I flew
Speaker 1: to Vegas this past weekend and took a lift from
Speaker 1: the airport and got my little statement, you know, the
Speaker 1: little email that they send you and something I think
Speaker 1: my lift was, I don't remember, twenty five dollars something
Speaker 1: like that. And then I see the statement and it's
Speaker 1: like forty eight dollars plus a thirty percent discount for
Speaker 1: this and this and this, so that and so twenty
Speaker 1: five dollars. So they present the exact same amount in
Speaker 1: very different ways and all of a sudden, you're like, oh,
Speaker 1: I got a deal.
Speaker 2: It was supposed to.
Speaker 1: Be forty eight dollars, but really I got it for
Speaker 1: twenty five dollars. It wasn't supposed to be forty eight dollars.
Speaker 1: They just make that shit up so that you don't
Speaker 1: feel like you're being taken advantage of. And but that
Speaker 1: works with fast food, that works with everything door dash.
Speaker 1: So when you know, I order from delivery apps and
Speaker 1: you get that sort of thing all the way all
Speaker 1: the time where you're like, oh, get a credit, like
Speaker 1: do you want to double dash? Do you want to
Speaker 1: add this from another store while you know with no
Speaker 1: delivery fee? Right? Do you want some ice cream? You
Speaker 1: ordered Italian and this will pair well from Gelato, no
Speaker 1: extra delivery fee. Your dasher can stop buy and get Gelato.
Speaker 1: I wasn't planning to get Gelatto, but uh, you know,
Speaker 1: it does seem like a great deal because I don't
Speaker 1: have to pay two delivery fees. Maybe I will get
Speaker 1: Gelatto after all. Right, that kind of so the way
Speaker 1: that you present it can actually turn it from something
Speaker 1: that's either annoying or really cool. And there are when
Speaker 1: it comes to consumers, When it comes to advertising. They
Speaker 1: are very strict regulartions on this, but that's not true
Speaker 1: across every industry, and that's certainly not true when it
Speaker 1: comes to kind of the US government because it's the
Speaker 1: one that's supposed to be regulating. So there are few
Speaker 1: things other than the Constitution that regulate what it can
Speaker 1: do when it comes to kind of gamifying different experiences.
Speaker 2: And now and then you can like actually get an
Speaker 2: offer that's like actually pretty good. These typically happen in
Speaker 2: times and places when the environment can be a little
Speaker 2: bit recessionary, right, Like, so, Maria, I am going to
Speaker 2: be out with you playing the napt in Vegas this week.
Speaker 2: There's also various poker tournaments in December. It's a good
Speaker 2: month for poker. The World Chairs of Poker is offering
Speaker 2: a twenty five thousand dollars bonus if you were eligible
Speaker 2: because you cash the main event or had enough cashes
Speaker 2: in the summer World Chairs of Poker and the s
Speaker 2: Bahamas event they have right if you catch their main event.
Speaker 1: There By the way, the main event in the Bahamas
Speaker 1: is twenty five thousand dollars, so it's.
Speaker 2: A serious event. However, if you cash, you basically get
Speaker 2: your buy in back for free and like fifteen percent,
Speaker 2: twenty five thousand maybe premium, you know, a fe little
Speaker 2: bit for a skilled premium if I'm being generous with myself, right,
Speaker 2: Like that's actually worth real money, you know. But the
Speaker 2: reason why is because like they're trying to get people
Speaker 2: there and out compete these other tournaments. They actually are,
Speaker 2: they're actually really spending real marketing budget. And you, if
Speaker 2: you want to participate in that, have the optimist consumer
Speaker 2: to benefit from that. Right, That's usually not true. Usually
Speaker 2: you're being squeezed on the margin and every nickel that
Speaker 2: you think you save is coming out of your pocket
Speaker 2: at some other point in time. I mean you see
Speaker 2: it in politics too, or like for years Democrats in
Speaker 2: particular would send all these emails Nancy Pelosi says it's
Speaker 2: urgent and us contribute today this fucking fund, right and
Speaker 2: like and people get fed up with that, and like,
Speaker 2: we have this problem in myopia. When of you design algorithms,
Speaker 2: we're like, an algorithm can often tell you what, given
Speaker 2: current conditions in the short term, will maximize revenues.
Speaker 1: Right.
Speaker 2: They do not adjust enough for consumer fatigue, They do
Speaker 2: not just enough for like the long term balance sheet
Speaker 2: of the consumer. Right, they do not just enough. For
Speaker 2: like with political messages, a message that was once fresh
Speaker 2: can become stale. Right, being the fourth or fifth iteration
Speaker 2: of Obama is not the same as the first version
Speaker 2: of Obama or whatever else. Right, And yeah, I think
Speaker 2: I'm talking to guys just who like makes films, Like, yeah,
Speaker 2: I don't use this algorithm shit for like making picking
Speaker 2: films at all, Right, we just make films that are
Speaker 2: derivative and and and a lot of algorithms they become
Speaker 2: inferior out of sample. And like also, you know, with
Speaker 2: with AI, I mean I assume within could happen now, right,
Speaker 2: I assume that with some of the services, you'll say, okay,
Speaker 2: here's you know, here's an ad from the gap or whatever, right,
Speaker 2: And here's how you would look in this nice new
Speaker 2: T shirt from the Gap.
Speaker 1: Right.
Speaker 2: Maybe it's probably a little flattering to your dimensions and
Speaker 2: whatever else. But like people are gonna begin to feel
Speaker 2: correctly very manipulated, and that makes lead to like, you know,
Speaker 2: I mean, even with Trump, right, I would argue there
Speaker 2: is some degree a boy who cried wolf syndrome with Trump,
Speaker 2: where like everything is seen as an outrage and therefore
Speaker 2: the things that actually are outrages, which there are many
Speaker 2: outrages in my opinion as the American citizen, Right, people
Speaker 2: are just so fucking sick of the message and they
Speaker 2: and they tune out and they lose their serotonin response
Speaker 2: and whatever else, right, And yeah, it's pretty pretty bad.
Speaker 1: And we'll be back right after this.
Speaker 2: Do you have any tips for help people navigate the stuff, Maria.
Speaker 1: Oh Man, Yeah, well, you know, try to uh oh,
Speaker 1: try to get out of it a little bit. Like
Speaker 1: people need to like just take a step back and
Speaker 1: try to reclaim We haven't talked about this at all
Speaker 1: on the episode, but like reclaim some semblance of their attention, right,
Speaker 1: like get off social media, stop like reacting to things
Speaker 1: all the time, and try to like just try to
Speaker 1: I know, I know, and just try to take a
Speaker 1: step back and get some perspective. What I try to
Speaker 1: help people through their decision making and they're about to
Speaker 1: make kind of a big purchase, a big decision or whatever.
Speaker 1: It is something I often do, as I say, okay,
Speaker 1: before you look at anything, before you buy anything, before
Speaker 1: you kind of do anything like that, why don't you
Speaker 1: take a pen and paper and write down, like what
Speaker 1: are the most important things to you, right, Like what
Speaker 1: are you looking for? What is in this particular decision,
Speaker 1: Like what are you optimizing for? What do you care
Speaker 1: a little bit less about how much are you willing
Speaker 1: to kind of spend and give yourself kind of answer
Speaker 1: those questions and give yourself firm limits, because then you
Speaker 1: think a little bit less susceptible to those nudges that
Speaker 1: happen to behavior in the moment, because in the moment,
Speaker 1: it's really hard to make good decisions, especially if you're tired. Right,
Speaker 1: this is like poker, This is like trying to play
Speaker 1: well at the poker table. Think through all of these
Speaker 1: scenarios ahead of time, because in the moment when it
Speaker 1: comes up, if you haven't thought through, you're going to
Speaker 1: tilt and you're going to make a poor decision because
Speaker 1: you don't actually know how to react in the moment.
Speaker 1: And so I think taking that time and taking those
Speaker 1: steps back can be really really important for just solid
Speaker 1: decision making, especially as we acknowledge that our attention is
Speaker 1: limited and we are getting tired.
Speaker 2: The other thing I'd add is that like people make
Speaker 2: this mistake of spending the most time on the most
Speaker 2: marginalis instead of the most place takes decisions right where
Speaker 2: it's like, okay, I can optimize this or that by
Speaker 2: picking the six different versions of uber or lyft take
Speaker 2: me to the airport, right, and one's a little bit
Speaker 2: more expensive, and once they're a little sooner, it's like,
Speaker 2: if it's like reasonably close, just pick one and don't
Speaker 2: worry about it, because the mental effort of worrying about
Speaker 2: it outweighs the marginal gain that's within some margin of
Speaker 2: uncertainty anyway, right, equilibrium, Often you're indifferent between different options.
Speaker 2: I mean, likewise, like if there is something that like,
Speaker 2: you know, don't buy a bundle of things that aren't
Speaker 2: interesting to you personally, right. You know, if you're paying
Speaker 2: some extra fee when you check in a hotel for
Speaker 2: a bigger room and you're planning on having a crazy
Speaker 2: twenty four hours in Vegas and being in your room
Speaker 2: just to sleep, but probably is not a good piece
Speaker 2: of advice for you. Whereas for me, if I'm spending
Speaker 2: hours working, which I often do, then it might be
Speaker 2: worth the upgrade. It's kind of common sense stuff, and like,
Speaker 2: you know, even things like airline frequent flyer moules like
Speaker 2: the average person probably have a lot of airline optimizers
Speaker 2: in the risky business audience, right, But like there's a
Speaker 2: cost to all this. Some people think it's fun to
Speaker 2: maximize this kind of thing, but like you just have
Speaker 2: to simplify some decisions.
Speaker 1: So I think that it's it's really interesting, but everything
Speaker 1: we've been talking about on a consumer level actually plays
Speaker 1: out on the government level as well, and on how
Speaker 1: Trump is trying to kind of play right and take
Speaker 1: these take these risks and play these games of chicken.
Speaker 1: So that actually goes both ways. You know, as as
Speaker 1: citizens of the United States, we do have this reaction
Speaker 1: where he's trying to flood the zone and like get
Speaker 1: everyone to just not respond anymore because it is you know,
Speaker 1: it's just one thing after another after another. You get tired.
Speaker 1: But he's using very similar tactics, not on think, not
Speaker 1: on purpose, but when he's trying to kind of place
Speaker 1: all of these bets with the US economy on different
Speaker 1: activities like levying tariffs. And I mean this is the
Speaker 1: Taco effect, right, the fact that Trump will always chicken
Speaker 1: out at the end where he says, oh, I'm going
Speaker 1: to put one hundred percent tariffs on you I'm going
Speaker 1: to do this. I'm going to do that. And as
Speaker 1: a negotiating tactic, when you're trying to kind of take
Speaker 1: this calculated what you think is a calculated risk, because
Speaker 1: you're like, I'm never actually going to have to follow
Speaker 1: through on this, because I know that this person will
Speaker 1: back off first, right, I know that she will want
Speaker 1: to negotiate with me because they don't want to get
Speaker 1: into a trade war. I know that Canada will kind
Speaker 1: of do what I want because they don't want to
Speaker 1: get into a trade war, et cetera, et cetera, et cetera.
Speaker 1: It works until it doesn't, right, because what happens with
Speaker 1: other countries is exactly what's happening with a consumer, where
Speaker 1: like you've actually flooded the zone, right, and where you've
Speaker 1: done this so many times, and you've been erratic so
Speaker 1: many times, and you've made these threats so many times
Speaker 1: and then pulled them back that at some point, as
Speaker 1: a leader of a foreign country, might be you know what,
Speaker 1: screw this, Like I'm tired, right, We're not going to
Speaker 1: keep repeating this cycle, and I'm actually gonna, you know,
Speaker 1: stand my ground. So it has a very different effect,
Speaker 1: but it's the exact same sort of reinforcement mechanism that
Speaker 1: we're seeing on a domestic level, but you now see
Speaker 1: it abroad with very large economic circumstances where you kind
Speaker 1: of you keep taking those risks, and then eventually the
Speaker 1: risk calculus changes and you have to realize that what
Speaker 1: was a calculated risk is now just a pure gamble,
Speaker 1: probably a negative ev gamble. And unless you're a very
Speaker 1: very smart player, you often, especially when you're in it
Speaker 1: and you're so enamored and kind of in love with
Speaker 1: your own success, right, and you're almost like you're riding
Speaker 1: high because you think you've been successful at doing all
Speaker 1: of these things, can be very difficult to have an
Speaker 1: objective reality check and realize, hey, the risk has actually changed,
Speaker 1: the risk proposition has changed, I should change the way
Speaker 1: I'm betting.
Speaker 2: And look, when people feel like they've been manipulated for
Speaker 2: a long period of time, right, and and then the
Speaker 2: exit situation, they tend to I mean, you can probably
Speaker 2: tell me if I'm if there's some studies here like
Speaker 2: they rebel against that a lot, right, So like I
Speaker 2: am so fucking through with this. I mean again, I
Speaker 2: you know, I cover politics a lot, so I can't
Speaker 2: help but make like politics analogies.
Speaker 1: But like, well we're talking about politics now, so it's
Speaker 1: again you know, but.
Speaker 2: Like I feel like people might have felt with the
Speaker 2: you know a lot of people getting mad. I mean,
Speaker 2: the Democratic Party has it's rebounding slightly now, right, but
Speaker 2: has like lower voter registration numbers and lower party identification numbers,
Speaker 2: and it has in a couple of decades, right, it's
Speaker 2: toward toward a low point.
Speaker 1: You know.
Speaker 2: Part of it is like this is party, it's kind
Speaker 2: of supposed to be upstanding, irresponsible, but like they kind
Speaker 2: of fuck up some shit and they kind of like
Speaker 2: Tony that they fuck up some shit, and like, you know,
Speaker 2: if you like thought it was a bad idea, like
Speaker 2: I did to run Joe Biden again and felt like
Speaker 2: you were gas lit by the Democratic Party, which I
Speaker 2: also did, Right, then it's very easy to say, fuck
Speaker 2: these guys. They're wrong about immigration, they're wrong about trans rights,
Speaker 2: they're wrong about economics, they're wrong about everything, because like
Speaker 2: there's that reputational halo effect and then the rebellion effect.
Speaker 2: They're probably better terms for this, right, But like, you know,
Speaker 2: any relationship, and in a personal relationship, a business between
Speaker 2: two countries, Like resentment building up, you can tolerate a
Speaker 2: lot of it in the near tournament almost always comes
Speaker 2: out in the long term, and often the the rebellion
Speaker 2: afterward is worse than the Martians you would have lost
Speaker 2: in a piecemeal base in the short run.
Speaker 1: Yeah, and if you go even more globally, if we're
Speaker 1: talking about kind of some of these risks for US
Speaker 1: foreign policy, for alliances, for what the future of the
Speaker 1: world order looks like down behind, like, that's actually not
Speaker 1: very encouraging, right, because it's one of these things where
Speaker 1: you casino ify, you know, the US government, and it
Speaker 1: takes a long time for these effects to build up.
Speaker 1: But then the resentment is such that the backlash is
Speaker 1: much harder and undoes any economic games you might have
Speaker 1: picked up in the immediate term, and your long term
Speaker 1: economic future suddenly looks a lot bleaker. Now if we
Speaker 1: if we think that that's what's happening in the US
Speaker 1: government right now, we're not seeing some of these effects yet,
Speaker 1: but we will, and they're probably the backlash is going
Speaker 1: to be a lot worse than people imagine it's going
Speaker 1: to be.
Speaker 2: Yeah, you know, the other suspicions people have is that
Speaker 2: when you're gamifying things, that things are kind of subtly rigged,
Speaker 2: and yeahs and vansage right, which they usually are, which
Speaker 2: they often are usually are, Which is you know, all
Speaker 2: these heuristics are basically correct, right that usually if there's
Speaker 2: some complication then although some people might be able to
Speaker 2: take advantage of that complication even just being you know,
Speaker 2: price discrimination, being tiered into different regions. I mean it's
Speaker 2: if you go to Europe, you notice there's less tiering
Speaker 2: of different types of services. Right, you take business class
Speaker 2: in Europe and all this difference there's the middle seat
Speaker 2: is empty basically, and you board like slightly sooner. Right,
Speaker 2: there's less tiering in general, there's more kind of nominal equality.
Speaker 2: And whereas in the American economy there are so many
Speaker 2: hyper dimensions. And you notice it in New York City especially,
Speaker 2: Even people who are objectively really well off in New
Speaker 2: York are like, why can't I have an even nicer apartment?
Speaker 2: Or why can't a sushi place like cost four and
Speaker 2: fifty dollars ahead or whatever? Right, Like, you notice it
Speaker 2: a lot more. It probably works to make people like
Speaker 2: extremely competitive, right, But it is a certain equilibrium that
Speaker 2: creates cumulative fatigue and burnout and maybe maybe worse decision
Speaker 2: making in the long run. I mean, we've both been
Speaker 2: enough situations where like, you're playing poker terminal day, you
Speaker 2: have a lot of other life decisions, and you're optimizing
Speaker 2: some travel shit, and you're like, Oh, I'm just fucking
Speaker 2: sick and tired of this, right, I just like to
Speaker 2: sit down and have a nice, mildly over priced burger
Speaker 2: and not have to make all these fucking decisions anymore.
Speaker 1: Yep. And it's one thing if you're you and it's
Speaker 1: a burger and it's poker decisions. It's another thing if
Speaker 1: you're a government leader and you've just had this stuff
Speaker 1: kind of lobbied at you over and over and over.
Speaker 2: And we'll be right back after this break.
Speaker 1: By the way, as we talk about kind of the
Speaker 1: downstream effects, it's both on a personal resentment level, but
Speaker 1: it's also where like behavioral incentives will sometimes take a
Speaker 1: long time for the math to play out. So, for instance,
Speaker 1: with tariffs, you have kind of this situation where people
Speaker 1: are like, oh, well, you know, inflation isn't going up.
Speaker 1: It's not that bad, And it's because companies have the
Speaker 1: ability to shield consumers. For some there's some buffer, right,
Speaker 1: there's a period of time before it actually like we'll
Speaker 1: start hitting. And so it's incorrect to say, oh, there's
Speaker 1: no effect, no negative effect, just because you can't see
Speaker 1: it immediately. And so too, I would say it's incorrect
Speaker 1: to say that there's no kind of international order negative
Speaker 1: repercussions of some of this kind of gamifications just because
Speaker 1: we can't see all of them yet, because those are
Speaker 1: going to take a longer time to play out. And
Speaker 1: you have these institutions in place that have been in
Speaker 1: place for decades and they're designed to kind of be
Speaker 1: resilient and to be able to withstand a lot of pressure.
Speaker 1: But at some point, like if you keep if you
Speaker 1: keep hammering on it, like those cracks are going to
Speaker 1: start to appear, and we're going to see some of
Speaker 1: those effects, not now, but you know, in five years
Speaker 1: or whatnot. But the problem with gamification is that if
Speaker 1: you're the gambler who's making the risk now and you're
Speaker 1: getting it a reward, you don't particularly care if you're
Speaker 1: going to bring the house down five years from now,
Speaker 1: if you're not going to be there to get the backlash.
Speaker 2: Gim Pooker. We have like long term equilibriums called game
Speaker 2: theory optimal solutions or GTO, where like if everybody is
Speaker 2: optimizing their strategy, what results And GTL strategies actually are
Speaker 2: not supposed to be exploitive quote unquote, right, they're actually
Speaker 2: kind of defensive. They're like, we assume that everybody else
Speaker 2: is smart and playing optimally within the constraints of the
Speaker 2: rule set, right, and so therefore here's where we wind up.
Speaker 2: And it's kind of in some ways like a fair solution. Right,
Speaker 2: you're bluffing but not too much. You can be greedy
Speaker 2: but not too greedy, and if you debate from that,
Speaker 2: then you can be exploited. Yeah, you know, I mean
Speaker 2: how how customers feel when they're when they're disempowered in
Speaker 2: our relationship by you know, I don't know, but like
Speaker 2: all that algorithm, price discrimination, all that stuff is like,
Speaker 2: you know, I think contributes to people feeling like they're
Speaker 2: getting the short end of the deal, right, and that
Speaker 2: you know, there's a big debate over inflation. People have
Speaker 2: been spending down their paychecks more and more and more.
Speaker 2: She look at nervous about the crimea actually decrease people
Speaker 2: might save more if they're more nervous, right, but certainly
Speaker 2: in the kind of the boomears after COVID, and there
Speaker 2: are big debates about like how bad is inflation and
Speaker 2: if you look at kind of like how much people
Speaker 2: are spending per basket of goods, how the Bureau of
Speaker 2: Labor cists define it, Inflation was already pretty bad, but
Speaker 2: they're also spending more on shit they don't necessarily need
Speaker 2: sir manipulated into purchasing it. And you remember that the
Speaker 2: second time. I guess we're repeating ourselves, right. It's just
Speaker 2: like you know, I, you know, I probably wouldn't endorse
Speaker 2: everything in Kyla Scanlon's argument. I don't think she's guilty
Speaker 2: of this. I think sometimes progressives can be really fucking
Speaker 2: prudish about this stuff. But I directionally, I totally understand.
Speaker 1: The complaint, so do I, so do I, And she
Speaker 1: actually I want to find this original quote because I
Speaker 1: don't remember what it originally says. But she reminds us
Speaker 1: and she doesn't have the original quote either. She paraphrases
Speaker 1: what John Maynard Keynes, who is kind of one of
Speaker 1: the fathers of economic thought, you know, free market economics,
Speaker 1: et cetera. Et cetera. That he warned that markets can
Speaker 1: stay irrational longer than most people can stay solvent. And
Speaker 1: I think that that's a really kind of valid concern
Speaker 1: and one of the reasons why sometimes kind of the
Speaker 1: gamblers thinking doesn't actually work in the sense that, like
Speaker 1: things work until they don't, they go up until they don't,
Speaker 1: and you have to avoid risk of ruin in the meantime, right,
Speaker 1: you cannot go broke. That's why the Martin Gale strategy
Speaker 1: doesn't work for people when they're gambling. And by the way,
Speaker 1: that Martin Gale strategy, which we've talked about before, is
Speaker 1: you know, if you place ten dollars on a bet
Speaker 1: and you lose, the next time, you need to place
Speaker 1: twenty so that you can you know, get back your losses.
Speaker 1: So basically, if you double all the time, you just
Speaker 1: have to lose one. You just have to win once
Speaker 1: and you'll be fine. But what happens if you're you know,
Speaker 1: suddenly in the millions and you don't have that money,
Speaker 1: like you're fucked. You don't know how how long that's
Speaker 1: going to go. So, yeah, markets can stay irrational longer
Speaker 1: than most people can stay solvent. And I think that
Speaker 1: that's something that should be worrisome to us as we
Speaker 1: look at all of these behaviors, as we look at
Speaker 1: all of this increased pushing edges, risk taking, and see
Speaker 1: that it's coming on the part of you know, our
Speaker 1: commander in chief of the government, of the policies that
Speaker 1: are being undertaken, and the fact that you know, we
Speaker 1: have things that are actually kind of tied into highly
Speaker 1: speculative ventures and if you're betting on all of them
Speaker 1: to do well, you better hope that those are all
Speaker 1: plus e V bets and that the calculus hasn't shifted
Speaker 1: on you, which because of the way that you know,
Speaker 1: we've seen the reinforcements changing and the behavior is changing,
Speaker 1: and how kind of a ratic it's been. I think
Speaker 1: that both you and I have raised issues on why
Speaker 1: some of these bets may no longer be plus V
Speaker 1: and why that risk calculus may have changed. And after that, Nate,
Speaker 1: whether it's resent like you've been talking about, and like rebellion,
Speaker 1: whatever we choose to call it, that might be a
Speaker 1: bigger backlash than you bargained for. Let us know what
Speaker 1: you think of the show. Reach out to us at
Speaker 1: Risky Business, at Pushkin dot FM. Risky Business is hosted
Speaker 1: by me Maria Kanakova.
Speaker 2: And by me Nate Silver. The show was a Cool
Speaker 2: production of Pushing Industries and iHeartMedia. This episode was produced
Speaker 2: by Isaac Carter. Our associate producer is Sonya gerwit Lydia,
Speaker 2: Jean Kott and Daphne Chen are our editors, and our
Speaker 2: executive producer is Jacob Goldstein. Mixing by Sarah Bruger.
Speaker 1: If you like the show, please rate and review us
Speaker 1: so other people can find us too, But once again,
Speaker 1: only if you like us. We don't want those bad
Speaker 1: reviews out there. Thanks for tuning in.
Speaker 2: Ka