The Mikhaila Peterson Podcast - Top Advertising Exec on the Tricks and Psychology of Good Marketing ｜ Rory Sutherland

00:00:00.000 How do luxury companies get to the point that those products are so valuable?

00:00:05.640 It intrigues me, actually, because there are two kind of mindsets in the world,

00:00:11.800 which is if anything's very good, it should be made abundant and everybody should.

00:00:15.800 The French tend to have a mindset that anything that's any good has to be unbelievably scarce.

00:00:21.080 There will always be some very rich people who wish to practice costly singling.

00:00:25.960 What are your thoughts on the ethics of marketing? 0.89

00:00:28.980 There's a kind of game which apparently happens in luxury goods stores where you get extremely attractive women to actually be slightly rude to the customers. 0.99

00:00:36.780 And then the older, slightly less attractive women are so keen to make their point that they buy something really expensive.

00:00:43.980 That's funny.

00:00:44.980 It is just really, really interesting when you understand the extent to which, of course, human behavior is mediated by the imagined opinions of others.

00:00:56.440 Rory Sutherland, welcome to my podcast.

00:00:59.560 It's a pleasure. Thank you very much for inviting me on.

00:01:02.580 Thank you very much for taking the time to come on. I have so many questions about marketing for

00:01:06.860 you and psychology. I think this could be a very interesting conversation, hopefully.

00:01:12.600 I hope so. Yes, I think it's, to be honest, I think the fundamental observation that goes

00:01:19.300 through all my books, my writing is fundamentally quite banal of what is interesting to me is that

00:01:26.080 it comes as so much as a surprise to most people reading it. The idea that actually,

00:01:32.520 at some fundamental level, perception is reality, in that we behave in response to what we perceive

00:01:38.960 rather than what is factually or objectively accurate. And therefore, there are certain

00:01:46.160 aspects of problem solving in human behavior where some marketing-led approach is inescapable.

00:01:53.820 That seems to be basically self-evident, but it comes as a complete surprise to people in fields as diverse as economics or politics, who see it as their obvious duty to improve objective reality with complete disregard for how the actual change or the input is perceived, which seems to be fundamentally odd.

00:02:16.820 that yes this is true do you think there are personality traits that play into the role of

00:02:23.820 how good people are naturally at marketing well i think there's an interesting one which is there's

00:02:29.260 a fundamental distinction which is i don't think you're a very good marketer if you're highly

00:02:33.940 dogmatic uh if you insist on having a one size fits all uh dogma or um i suppose yeah you might

00:02:46.040 always call it a litany or religion that explains everything, and you're unhappy to consider

00:02:53.260 contextual variation in things, then you're not going to be a good marketer.

00:02:57.880 And it worries me to an extent that what our education system seems to do is it selects

00:03:03.820 some people who can win arguments rather than solve problems.

00:03:07.860 And it strikes me that the act of solving problems is fundamentally messier, more experimental,

00:03:13.820 more creative, and less certain than the toolkit you require to win an argument, which

00:03:22.340 is effectively construct an artificial model, win the argument for the model, and then walk

00:03:29.240 away satisfied, regardless of how applicable that solution might be in reality.

00:03:34.980 And so it does bother me a little bit, because it strikes me that we probably have a governmental

00:03:39.160 class than administrative class in business, which has been selected for its ability to

00:03:45.460 look coherent and to maintain logical consistency rather than the rather more important question of

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00:05:19.020 the comments enjoy the rest of this episode so do you think this is something somebody can be taught

00:05:25.620 in university like is going to get a marketing degree is that something people can do and then

00:05:30.880 be successful? Interesting question. I mean, some large part of it, I think, is if not innate,

00:05:41.220 and it may not be innate at all, but it is a kind of tacit scale in that it's not completely

00:05:48.400 teachable, that it requires, if you like, a refinement of instinct rather than what you

00:05:54.920 might call hard teaching.

00:05:58.160 It's one of those many, in fact, most of human behavior is actually driven by tacit

00:06:03.000 learned experience, which isn't necessarily explainable or teachable.

00:06:08.480 A great example is reversing an argument.

00:06:11.000 If you're reversing a semi into a narrow gate or opening, now, a lorry driver, a truck driver

00:06:17.440 is going to be better at that than the professor of engineering at Yale.

00:06:21.900 Yeah.

00:06:22.220 And that's because it's really much more a kind of learned instinctive skill.

00:06:27.320 In the words of someone at Clarkson's farm, I can't tell you how to do it.

00:06:31.780 You just have to know.

00:06:33.720 And I think a large part of marketing is probably tacit.

00:06:38.620 It involves, as I said, the refinement of certain instinctive qualities rather than

00:06:45.060 something.

00:06:45.500 And in fact, I would argue that people who insist on having a process and an absolutely

00:06:51.320 rigid procedure before they can start work on anything probably aren't very good marketers.

00:06:58.960 That's always the worry. If you ever have a problem and the first thing the person wants

00:07:05.260 to know are costs and timings, you're probably not cut out for this business.

00:07:11.640 Probably, this is connected to, it's not exclusively about creativity and other skills

00:07:19.200 like humor, you know, again, humor being, you know, something incredibly fantastic as

00:07:25.060 a skill.

00:07:26.360 Yeah.

00:07:27.600 It's connected to that, but there's a very interesting experiment in John Cleese's excellent

00:07:31.180 book, which is called Creativity, A Short and Cheerful Guy.

00:07:35.140 He advances some evidence that they take a group of architects who are highly prized

00:07:40.460 for their creativity and imagination, and they compare them to a group of architects

00:07:44.220 in their working methods, who would have been nominated by their peers anonymously as being

00:07:50.280 workaday, extraordinarily uncreative, generally uninteresting architects.

00:07:56.020 And one of the patterns in their working behavior, which completely bifurcated between the two

00:08:03.480 groups, was that the uncreative architect started work straight away.

00:08:08.020 And the creative architect kind of had a weird fallow period where, to put it one way,

00:08:13.520 They understood that the art of coming up with an idea was not something you can force.

00:08:19.420 And what they were doing in the sense was waiting to get lucky.

00:08:22.880 They were waiting for inspiration to strike, something of that kind.

00:08:27.660 Okay, that's interesting.

00:08:29.280 Because we have a world which is obsessed with kind of what you might call nominal productivity,

00:08:35.520 which kind of prizes being busy at all costs.

00:08:38.900 and one of the things that you know the great john lennon quote time spent doing nothing is

00:08:44.600 very rarely wasted and i think he knew whereof he spoke in the sense that some degree of

00:08:51.340 discretionary uninterrupted time is probably essential to any really significant kind of

00:08:57.880 mental progress now don't get me wrong in a four-day production line when you want to do

00:09:01.760 exactly the same thing time after time after time you can narrow it down to an optimal process

00:09:07.400 I don't think you can do that with any kind of creative act.

00:09:10.780 The best you can do is just increase the odds of getting lucky.

00:09:14.840 There's a great, great book on this, by the way, by Rick Rubin,

00:09:17.700 which is called The Creative Act, Aware of Being.

00:09:20.900 I was on Rick's podcast a few weeks ago

00:09:23.100 and was generally extremely enthused by reading his book beforehand.

00:09:29.080 And it's a very, very good take on, you know,

00:09:31.280 quite a lot of the behavior that I think is involved in creativity.

00:09:36.860 is, in a way, as I said, it's not only non-logical, it's sometimes paradoxical.

00:09:44.760 And by the way, there are lots of fields of activity that work this way.

00:09:48.360 In fact, I would argue that the majority of human decision-making has to work this way,

00:09:53.980 because what we consider to be science, where you have all the information you need to arrive

00:10:02.020 at a single right answer, where the relations between the different variables are all set

00:10:09.580 in stone, and where the laws cannot change, that's a very, very narrow subset of problem

00:10:17.400 solving.

00:10:18.800 There are special cases, okay, we know the relationship between air pressure, the boiling

00:10:22.780 point of water, and the amount of energy required to heat water to boiling point.

00:10:27.520 And so you can provide an exact calculation there, partly because all the data is commensurable.

00:10:35.800 You know the relationship between all the data.

00:10:38.300 It's exact, and it's eternal.

00:10:43.540 Anyway, as far as we know, there's a Newtonian component of the world where the laws seem to be pretty much written in stone.

00:10:51.620 It's real-world problems, nothing of that kind.

00:10:54.540 And yet what we tend to do is we pretend they are.

00:10:58.000 And Hayek used to talk about scientism, which is the use of methodologies and patterns of

00:11:04.860 thought derived from the hard and physical sciences, and then their application for reasons

00:11:11.040 of credibility or indeed winning an argument to fields in which they're entirely inappropriate.

00:11:16.980 And I think that's an interesting point, because an awful lot of human effort nowadays seems

00:11:21.460 to be dedicated to making things look scientific, even though that probably isn't the habit

00:11:27.860 of thought you need to solve the problem in the first place.

00:11:32.680 Yes, that's very true.

00:11:34.200 I think the concept of scientism is interesting because there are certain words which always

00:11:39.440 bother me because there's a vocabulary problem in that the opposite of rational is irrational,

00:11:44.480 which is automatically assumed to be a term of appropriate.

00:11:49.100 You are being completely irrational, i.e. stupid or foolish.

00:11:54.080 So there isn't really a proper term for hyper-rational, for example.

00:11:59.240 There isn't really a term of criticism that applies to things that look rational but really aren't.

00:12:05.620 And there isn't really a term of criticism for things, well, I mean, Hayek used scientism, but then what's the noun you create from that?

00:12:12.940 Scientist-dick is the adjective, I guess.

00:12:15.540 What are you if you practice that?

00:12:17.180 scientist-ist. I don't know. It's a very useful term, but it never took off.

00:12:23.740 And that really is the appearance of looking scientific in effectively solving problems which

00:12:32.460 don't really submit to the same conditions in which you can practice the scientific method.

00:12:38.460 Medicine is kind of interesting because it's, is it a science or is it a craft? Well, it's kind of

00:12:44.220 a mixture. Yeah. Okay. That's fascinating. Uh, you talked a little bit about luck. So I have,

00:12:52.460 I've got a bit of experience with marketing and we're building an app, which I'd told you about

00:12:56.760 offline, uh, Peterson Academy for, for online courses. And I realized, I think a couple of

00:13:03.240 years ago that I couldn't sit cause I'm pretty work oriented. So I like to sit down and solve

00:13:07.280 problems. And I realized for developing something new, I did have to kind of wait. And sometimes

00:13:13.320 I'd wake up in the middle of the night and go, oh, here's the idea finally. But there was no point

00:13:17.300 in sitting down and forcing it because it just didn't work. I just had to wait. And sometimes

00:13:21.980 it would take months and I'd be like, oh, I'll figure it out. Something will click eventually

00:13:25.020 and I'll figure it out. So I get what you're saying about waiting. But you mentioned luck.

00:13:30.880 Is there any way to increase that or kind of hone those skills?

00:13:36.700 Yeah, I think there are patterns of behavior you can adopt and there are mindsets you can adopt.

00:13:43.320 which is almost the act of distracting yourself or listening to the unconscious voice.

00:13:50.560 I mean, a very boring one, which is commonly advanced, is the overnight test.

00:13:57.760 You know, if you think about something, you sleep on it, and the following morning,

00:14:02.600 you know, maybe you have a further bout of inspiration,

00:14:05.960 or maybe you realize the idea was kind of dumb all along.

00:14:09.000 there are interesting patterns of decision making

00:14:13.520 the one I'm very fond of mentioned by Herodotus

00:14:15.920 is that the ancient Persians

00:14:17.520 when they had to debate any matter of import

00:14:20.240 they debated it twice

00:14:22.060 once when sober and once when drunk

00:14:24.820 and it was only when they agreed in both states

00:14:28.060 that they actually adopted the action

00:14:31.100 so if it didn't appeal to them when drunk

00:14:33.760 and in other words

00:14:35.020 if it didn't in a sense have an emotional appeal to them

00:14:37.840 and it also

00:14:40.740 so it had to meet two tests

00:14:43.160 in the same way I suppose the jury

00:14:45.180 system is interesting

00:14:46.420 in Anglo-Saxon law

00:14:49.280 in that you have to convince

00:14:51.540 not only legal experts

00:14:53.360 that there is a case to answer

00:14:54.900 but you have to convince

00:14:56.600 a representative body of people

00:14:59.120 that what you're saying is just

00:15:01.240 fundamentally believable and indeed reasonable

00:15:03.420 but I had a friend who was on

00:15:05.300 jury where the person was in

00:15:07.060 strictly legal terms, guilty of the crime for which they were charged. But the jury agreed

00:15:12.720 that given the provocation, their behavior was entirely understandable, and they basically let

00:15:17.220 them off. That's not supposed to work like that. But it's similar to that Persian question, where

00:15:22.920 you look at the same thing in two different modes, contact settings, or whatever.

00:15:29.400 And by the way, it's a great disadvantage which creativity suffers from. So I always make the

00:15:35.520 point that there is in any kind of institutional setting, there's this asymmetry where creative

00:15:42.260 people have to present their ideas to rational people for approval, but it doesn't really

00:15:46.900 happen the other way around.

00:15:48.900 You don't get a bunch of accounts on the scaling.

00:15:50.680 Well, we've come to the conclusion that it's 3.7 million, but before we actually make that

00:15:55.580 decision or write the check, we're going to share ideas with some really wacky people

00:15:59.640 to see if they've got an alternative idea.

00:16:01.340 You don't get engineers going, well, we want to make the train faster.

00:16:05.700 What about you?

00:16:06.500 What would you do?

00:16:08.000 Okay.

00:16:08.300 Yeah.

00:16:09.220 Because within any kind of rational, self-contained model of the world, it's effectively self-sustaining.

00:16:17.900 Whereas creativity isn't self-sustaining.

00:16:20.140 You've always got to win some battle somewhere else before you're allowed to act.

00:16:25.160 And it seems to me that that asymmetry is kind of problematic.

00:16:27.900 I mean, if you want to get really deep in this, I don't know whether you or indeed your dad have ever met Ian McGilchrist, the author of The Master and His Emistry.

00:16:37.160 Oh, yeah. Yeah, definitely.

00:16:38.440 that that's if you like the vastly more philosophical and neuroscientific um take

00:16:45.940 on what i'm saying that there's a natural balance between effectively left hemisphere right hemisphere

00:16:53.020 modes of seeing the world in which in many many settings probably because of the need to win

00:16:59.980 arguments by the way that's one reason the left hemisphere view of the world artificially is

00:17:06.900 allowed to predominate.

00:17:09.420 Huh.

00:17:10.180 That would be Medjilkrist's take on it.

00:17:13.100 Yeah, that's definitely true.

00:17:14.500 I'd also argue that there's a fundamental problem with good ideas, which is that they're

00:17:19.680 often late to the party, in that what appears rational and consistent has an instantaneous

00:17:29.640 appeal. Whereas the better idea, first of all, takes time to be accepted, but also takes time

00:17:37.320 to be generated in many cases. I mean, there are cases in point where I was given a brief

00:17:44.260 in the advertising world, but being candid, if this happens, I failed completely. And then six

00:17:50.660 months later, inspiration struck. I go, oh God, why the hell didn't I think of that then?

00:17:56.040 But the simple fact is I didn't, because there's a kind of probabilistic.

00:18:00.900 I'll tell you a little story, which I shared with Rick Rubin as well, which was, I've got

00:18:04.920 a friend who runs a business called Assure.io, which I jokingly call Air B2B, because it's

00:18:10.620 effectively home rental for homes where people intend to work.

00:18:16.340 So every home you rent will be kitted out with two retina screens, two very good desks,

00:18:21.320 two ergonomic chairs, an espresso machine, and it'll have shit-hot Wi-Fi and probably electric

00:18:26.840 car charging, okay? That's cool. It's going to be for a particular application.

00:18:33.720 And I said, look, I can't think of anything that will help you advertise your product,

00:18:37.560 but if I get lucky, I'll let you know, okay? And about six months after I was aware of this

00:18:43.160 business, I was staying in a hotel room with my wife, and it was actually my wife's observation,

00:18:47.320 not mine well she said why is it which is a brilliant brilliant piece of observation which

00:18:53.280 had never occurred why is it that hotels have this sexist idea that only one party in the room

00:19:01.080 will want to use a desk okay yeah so there's this fundamental sexism in hotel rooms which is

00:19:07.500 there's a chap signing million dollar checks sitting at the kind of napoleonic scale desk

00:19:12.620 Whereas, meanwhile, his lady wife is in the bathroom kind of powdering her face or putting

00:19:19.540 on a polka dot bow, because it's about the 1950s conception of what a partnership is

00:19:26.020 like.

00:19:27.020 Funnily enough, there's a reason my wife noticed this, because I think I was hogging 1.00

00:19:30.220 the desk, and she was forced to sprawl on some totally inappropriate item of furniture

00:19:36.620 while trying to tie it, and I said, thank you, because you've just solved the problem

00:19:41.460 for sure.

00:19:43.260 And the basic question is, which is a very good question, how can hotel rooms have two

00:19:47.080 wash basins and only one desk?

00:19:49.700 I mean, you spend a hell of a lot longer typing than you do cleaning your teeth, but for some

00:19:54.920 weird reason, they've decided that two wash basins are absolutely essential, okay?

00:20:01.420 But one desk is absolutely fine.

00:20:03.460 That's an interesting observation.

00:20:06.460 In many cases, you've just got to wait to get lucky.

00:20:10.360 The reason is often, I think, there are several reasons.

00:20:13.260 Some ideas arise through a very difficult form of observation, which is the dog that

00:20:20.740 doesn't bark in the night.

00:20:22.720 In other words, you have to notice the absence.

00:20:24.940 You must know the Sherlock Holmes story.

00:20:26.860 I hope you were versed in the...

00:20:29.860 What Holmes notices is that the theft of a racehorse is probably an inside job because

00:20:35.600 the dog didn't bark.

00:20:37.300 Now that is, if you like, not a data point

00:20:39.900 It's actually the absence of an expected data point

00:20:43.380 Which is harder to notice

00:20:45.160 Often, by the way, ideas that generate interesting things

00:20:53.380 Arrive anecdotally

00:20:54.820 They're surprisingly tangential or irrelevant

00:20:57.320 The inspiration you get is, in a sense

00:21:01.480 Is not something that arises when you're actively looking for it

00:21:05.500 And it's almost, in some ways, creative ideas are almost the act of distracting yourself.

00:21:11.020 I do have a kind of favorite thing, which is that I noticed that you're more likely to have an idea or an inspiration when you're in a liminal point.

00:21:22.340 So in other words, if you go from doing one thing to another, just to make that point, Archimedes didn't have the idea sitting in the bar, as is commonly believed.

00:21:32.660 He had the idea when he got into the bar

00:21:35.480 And you know

00:21:37.760 One of the things I quite like

00:21:39.560 About working from home

00:21:40.580 Is that

00:21:42.160 When you have 10 minutes to spare

00:21:45.140 At home you go and put the dishwasher on

00:21:47.360 You do something entirely different

00:21:49.000 And weirdly

00:21:50.980 It's at the moment when you flip

00:21:52.700 From one mode of activity to another

00:21:54.960 That inspiration is more likely

00:21:57.260 To strike I think

00:21:58.300 So you know I think there are tools

00:22:00.880 I think you can improve the odds

00:22:02.540 I think you can, to borrow a kind of Nassim Taleb phrase, you can increase your surface area exposure to possible upside optionality.

00:22:11.700 I think you can do that, but you can't necessarily force it.

00:22:16.580 Okay, I like that.

00:22:17.740 I feel like I've noticed the same thing.

00:22:21.100 In my life, I have a number of different projects going on, and I need a number of different projects because if I only have one, I'm bored, and it just tortures me.

00:22:29.360 So I have way too many things going on so I can work on one and say, OK, I'm done.

00:22:34.020 I'm tapped out here and move on to the other one and then move on to the other one.

00:22:38.020 Is there like for people who are inclined to go into marketing, do you think there's an optimal number of projects they could work on at the same time so they'd be switching tasks?

00:22:48.380 It's interesting because one of the reasons for the existence of, for example, the advertising agency as an entity is that there's a certain sort of person who would find it painful to work on one thing all the time.

00:23:02.480 So there's a certain kind of mindset which thrives on variety, which an agency provides, which working in-house may not.

00:23:09.600 Generally, I'd say working in marketing in-house will provide you with a hell of a lot more variety than becoming an actuary or something.

00:23:15.260 I would recommend it for people

00:23:18.520 Of a particular mindset

00:23:19.760 If you can cope with and thrive on

00:23:22.080 And even relish a certain degree of messiness

00:23:24.520 If you're obsessed

00:23:25.780 If you're obsessed with

00:23:27.620 Having a universal framework

00:23:30.040 Which answers all questions

00:23:31.520 Go to become an economist

00:23:33.240 Or something dangerous like that instead

00:23:35.240 But if you actually are happy

00:23:37.740 With the fact that

00:23:39.340 Correct answers

00:23:41.780 Are scale and context dependent

00:23:43.620 and that psychology is a deeply perverse thing where the opposite of a good idea can be another

00:23:50.220 good idea. If you're comfortable with that kind of thing, then I'd highly recommend it. What

00:23:55.040 worries me a little bit is now, I've spent 30 years in advertising. I think advertising is

00:24:01.700 actually probably a bit more important than people think, and it's highly entertaining and

00:24:05.880 very enjoyable. What started to worry me is what's significant about an advertising agency,

00:24:12.420 in some extent marketing as well in general, is there are very, very few modes of employment

00:24:19.580 in which this type of thinking is encouraged, rewarded, or tolerated?

00:24:25.320 Okay.

00:24:26.080 So I'm just joking.

00:24:26.940 You said that the great thing about working in an advertising agency is the one job where

00:24:30.560 you can make a daft suggestion and still get promoted.

00:24:34.680 Because something that's interesting, eccentric, counterintuitive, or odd is prized in that

00:24:42.260 atmosphere and encouraged and rewarded in a way that it's often punished anywhere else.

00:24:47.900 In many other forms of employment, you'd be seen as fundamentally whimsical and not a safe

00:24:52.660 pair of hands. Now, to echo McGilchrist, what worries me, I know him quite well, actually,

00:25:00.480 he's a great guy, and he's actually interestingly quite interested in advertising for this reason,

00:25:05.540 in that there are worryingly few areas of activity

00:25:09.800 where that kind of creative thought

00:25:12.200 is properly rewarded or encouraged, I think.

00:25:16.080 Because in many ways, you know,

00:25:18.420 any good creative person will have some very strange attributes.

00:25:23.160 They don't really have a sense of proportion

00:25:24.540 because they know that inspiration is just as likely

00:25:27.540 to come from something trivial as something big.

00:25:30.340 You know, noticing the two words sound similar, okay,

00:25:33.860 which is seemingly irrelevant, can be a breakthrough in that kind of problem solving.

00:25:41.400 And it does worry me that, if you like, that politics doesn't really have a creative department,

00:25:47.120 that actually a sensible, healthy organization would encourage a degree of what you might call

00:25:56.260 at least creative dissent from the mainstream narrative.

00:25:59.480 And I jokingly said, look, if I'd been in charge of an investment bank in 2007, I would

00:26:09.240 have been fired long beforehand as an appalling person to run an investment bank.

00:26:13.640 But the one thing I would have done is I would have been immune from the financial crisis,

00:26:17.880 because in my outer office, I would have employed three Marxists or Austrian school economists,

00:26:24.080 anybody who effectively had a counterpoint to what was an over-dominant kind of narrative

00:26:30.280 of effectively a self-confirming narrative of how the economy works.

00:26:37.940 And so, you know, I think there is a, you know, there's a natural kind of perversity.

00:26:43.000 There's a lack of sense of proportion in creative people.

00:26:46.000 There's kind of whimsicality.

00:26:47.640 There's a reluctance to get started.

00:26:49.980 All those things, I think, are a virtue in a creative setting.

00:26:52.940 but that's not a great career move in most forms of employment.

00:26:57.880 Yeah, this is definitely true.

00:27:00.720 I think I was probably just fortunate choosing.

00:27:04.700 I had like a normal job that was very rational

00:27:09.680 and then I kind of did the creative things on the side

00:27:12.600 until they grew enough to overtake, which I'm happy about.

00:27:17.360 I'm grateful for.

00:27:18.320 I have a question that's completely unrelated to what we were talking about.

00:27:21.180 I've always wondered, how do luxury companies get to the point, like, say, Hermes, for example, how do they get to the point that those products are so valuable?

00:27:34.420 Are they all doing something similar?

00:27:37.640 I mean, there are rules you can't break.

00:27:40.020 I mean, one of the things which, of course, is interesting is that many of them are privately owned.

00:27:44.880 there's a very interesting thing which is that i think there are two there are two kind of

00:27:52.460 mindsets in the world which is the anglo-saxon one which you find in north america which is if

00:27:57.620 anything's very good it should be made abundant and everybody should have it which is why the

00:28:02.400 united states produced coke okay you know as i'll say all the cokes are the same and all the

00:28:08.300 cokes are good and the president of the united states can't get a better coke than the bum on

00:28:13.200 the corner of the street, okay?

00:28:15.940 And for a long time, particularly, now, the French tend to have a mindset that anything

00:28:19.820 that's any good has to be unbelievably scarce, okay?

00:28:23.500 Ah, okay.

00:28:25.060 One of the things that both, you know, snobby French bastards, combined with a privately

00:28:30.820 owned company, have an advantage is that they resist the temptation to overproduce.

00:28:39.180 now it also helps if you've been doing it for 100 years if you have an extraordinary

00:28:45.120 heritage and authenticity it also requires remarkable creative talent over long periods

00:28:50.760 i'm not suggesting easy but it is a kind of fascinating fact that of the most valuable

00:28:55.600 companies in the world and certainly the ones that are most profitable in terms of margins

00:29:00.980 if you discount one or two pharmaceutical firms and apple the rest of them tend to be luxury

00:29:06.840 goods businesses now it's also not a bad business to be in in one respect okay uh in that whatever

00:29:15.440 happens in the world economy and this applies by the way even under communism okay whatever happens

00:29:20.560 politically there will always be some very rich people who wish to practice costly singling

00:29:26.400 you also have the advantage you also have costly singling right it's a concept from biology

00:29:33.320 originally from an Israeli biologist called Amot Zahavi to explain things like the peacock's tail,

00:29:39.760 which is that effectively a costly signal is one which is a reliable indicator of fitness

00:29:47.640 because you couldn't afford to carry this decorative baggage around on your back

00:29:52.760 if you weren't a pretty fit peacock to begin with.

00:29:55.820 Elks antlers are another example.

00:29:57.880 In other words, they're things that actually grow.

00:29:59.820 So the guy to read here is a brilliant econaturalist called Robert H. Frank, who's written a book

00:30:06.640 called The Darwin Economy.

00:30:07.760 But a large part of human consumption is actually positional.

00:30:12.140 It's not really about utility at all.

00:30:14.400 It's about your relative position and status.

00:30:18.140 And of course, certain things demonstrate status very reliably because certain things

00:30:26.240 demonstrate wealth very well, because unless you were rich, you couldn't afford to do them.

00:30:31.060 And certainly, you might argue that sporting ability is a form of costly signal because

00:30:35.440 it's a reliable indicator of your fitness.

00:30:39.880 And so that's as distinct from cheap talk, which is merely an unsubstantiated claim.

00:30:46.460 A costly signal is kind of a proof point.

00:30:49.000 We use this kind of mechanism all the time.

00:30:51.400 I guarantee, for example, that you have never left a FedEx or UPS envelope unopened on your

00:30:58.800 desk for three days, okay?

00:31:01.120 Because your inference is someone spent $20 to send me something, therefore, I can infer

00:31:06.640 from that that it's something of reasonable importance, okay?

00:31:12.340 You know, when you send out a wedding invitation, you don't do it by email.

00:31:16.380 You know, there are all these kind of ways in which we signal through discretionary effort,

00:31:20.160 discretionary expenditure, discretionary attention to detail, you know, discretionary

00:31:25.320 perfectionism, you know, that things that are difficult to do just carry more information

00:31:30.280 or freight than things that are easy to do.

00:31:33.400 Yes.

00:31:34.060 So to some extent, good manners is really the display of discretionary effort, you know.

00:31:41.400 And so costly signaling is something which, you know, exists in the animal world, and

00:31:47.620 Which exists in flowers, interestingly, in the sense that bees tend to be more attracted

00:31:53.980 to plants with larger flowers on the grounds that you wouldn't bother spending all that

00:31:59.780 money advertising your wares if you didn't have quite a lot of nectar.

00:32:04.660 Because if you did false advertising, where you had very big petals but no nectar, you

00:32:09.300 wouldn't get any repeat business.

00:32:11.440 And so your investment in flowers, in petals, would not be repaid.

00:32:16.360 And so hummingbirds certainly, I think, use this as an inference point, which is the more

00:32:20.720 you spend on advertising, in this case, pebbles, the more likely it is you have something worthwhile.

00:32:27.400 And so that's another form of reliable, costly signal.

00:32:30.900 But luxury goods really cater for people's positional urges.

00:32:37.220 And one of the things are those bags are not only rare and expensive, by the way, if you

00:32:42.360 want to buy a kelly bag they won't even sell you one until you've established your bona fides with

00:32:48.500 the luxury goods retailer by buying a whole load of other products which can't be reselled at a

00:32:53.620 profit so if you try and just go in and buy one i think there's an incident with oprah where she

00:33:01.240 complained about sort of racist treatment um from a luxury goods bag store in switzerland okay

00:33:08.640 i'm not sure it was actually because i mean uh any person working in one of those uh stores would

00:33:16.080 learn fairly quickly i would have thought not to discriminate by race because there are very very

00:33:20.880 rich people of all ethnicities you know whatever you think there are there are undoubtedly forms

00:33:25.760 of ethnic inequality and wealth at the aggregate level but there are very very rich people in all

00:33:31.740 ethnic groups and i suspect what that was was genuinely something like that going on which is

00:33:38.440 you make the product difficult to buy.

00:33:42.600 There's a kind of game which apparently happens 0.99

00:33:44.800 in luxury goods stores where you get extremely attractive women 1.00

00:33:47.820 to actually be slightly rude to the customers, 1.00

00:33:51.100 and then the older, slightly less attractive women 1.00

00:33:53.940 are so keen to make their point that they buy something 0.96

00:33:57.680 really expensive in a kind of pretty woman kind of gesture.

00:34:02.160 You know, you've dissed me to now humiliate you bizarrely.

00:34:06.460 I'm going to buy half the content of this stuff.

00:34:09.200 Wow.

00:34:10.340 This is the kind of weird gamership.

00:34:12.500 This is why I always say marketing, the opposite of a good idea can be another good idea,

00:34:17.120 because in many fields, really good friendly customer service is a great thing to recommend.

00:34:22.580 In other fields, weirdly, it pays to be bizarrely disdainful and disrespectful and target audience.

00:34:30.540 So this is why it's so fascinating, because context changes perception.

00:34:36.240 I mean, effectively, our behavior is driven by our feelings,

00:34:40.300 our feelings are driven by our perception,

00:34:42.760 and our perception is driven by context.

00:34:46.200 And so if you change the context in which someone sees the same thing,

00:34:50.800 they perceive it and emotionally respond completely differently.

00:34:55.480 Now, I'll give you a lovely example of this, which I only learned today,

00:34:58.180 which is there was a Dominican and a Jesuit

00:35:00.880 who both wanted to know the answer to the question,

00:35:04.340 secretly hoping it would be yes. Can I smoke when I'm praying? And the Dominican comes back

00:35:11.820 and says, I asked my abbot or whoever it was, okay, can I smoke when I'm praying? And he said,

00:35:17.800 no. He said, oh, mine's fine with it, the Jesuit replied. He said, what did you ask? I said, can I

00:35:23.760 smoke when I'm praying? I was told no. He said, you asked the wrong question. He said, you should

00:35:28.400 have asked the question, can I pray when I'm smoking? He's fine with that. So that's an example

00:35:33.940 of how contextual reframing completely changes, okay, our response.

00:35:40.260 That's funny.

00:35:42.020 I didn't think, I mean, I know now that you've said it,

00:35:46.320 but there's definitely a pattern between American brands

00:35:49.120 and mass marketing and European brands

00:35:53.020 and very niche marketing making products difficult to buy.

00:35:56.860 That is definitely a European thing.

00:35:58.460 It's interesting that American luxury brands like Toomey, for example,

00:36:02.480 pretend not to be American in a funny kind of way, in some cases.

00:36:06.460 Is that an American brand?

00:36:08.260 I didn't know that.

00:36:09.520 I assumed that was Italian or something.

00:36:11.880 Yeah, it's actually American.

00:36:14.400 But there's a general pattern where the French,

00:36:17.020 in anything, foodstuffs, whatever,

00:36:19.960 they believe that scarcity and quality,

00:36:21.940 wine obviously, are basically intimately connected.

00:36:26.300 Whereas the Americans have much more of a Fordist mentality,

00:36:29.280 which is, if this is any good, we should produce loads of it.

00:36:32.480 That's partly the difference of having a market

00:36:34.180 of 350 million people, you know, and so on.

00:36:37.340 But the clever thing, of course, about being a luxury goods maker

00:36:39.480 is whatever the economy does, there will always be

00:36:41.960 absurdly rich people who will want these markers.

00:36:48.300 Now, there's going to be, there's a lot of talk.

00:36:51.220 I don't know if you're a fan of Succession.

00:36:53.760 I love that show.

00:36:56.460 The dialogue is just beautiful.

00:36:58.180 Loved it.

00:36:59.140 Now, I've acknowledged Ashley Sturz.

00:37:01.200 as you've probably guessed from just looking at me,

00:37:03.580 but apparently there's a lot of kind of Max Mara and stuff like that

00:37:06.800 that's worn by a kind of billionaire class which wants to signal quiet wealth

00:37:11.700 and those kind of cashmere zip neck things that Logan Roy used to wear

00:37:17.600 and all that stuff.

00:37:19.340 And so you do need multiple brands depending on what the person is trying to do.

00:37:23.300 I made a very mischievous comment the other day when I said,

00:37:25.840 actually, I said all these brands like Prada, okay, and Max Mara,

00:37:31.200 I said, they're not really luxury brands because their taste, you know, which suggests that you still care what other people think.

00:37:38.980 I said, the only real luxury brand to me is just Versace, where you just go, I'm minty, I don't care who knows it.

00:37:46.940 And there's an element to me which says that are you genuinely really, really rich and successful if you're still agonizing about other people's appreciation of your own taste?

00:37:56.220 or is there actually a certain freedom

00:37:59.340 that comes with vulgarity

00:38:00.780 I always think everybody would have

00:38:03.560 a hot tub deep down

00:38:05.300 wouldn't they 0.88

00:38:05.900 the only obstacle to having a hot tub 1.00

00:38:09.200 is middle class angst about

00:38:11.240 taste and discernment

00:38:13.500 and all that

00:38:14.840 actually being middle class is a massive disadvantage

00:38:17.200 because of course you're massively worried about what other people

00:38:19.540 think of you

00:38:20.140 which I suppose both very posh people

00:38:23.220 and working class people

00:38:24.580 are far freer to pursue their own enjoyment

00:38:27.360 without endless concern for the opinion of others.

00:38:31.500 Hmm.

00:38:32.460 Everybody wants a hotel, you know.

00:38:35.280 They should.

00:38:37.040 Yeah.

00:38:38.680 It intrigues me, actually, because, you know, the obstacles.

00:38:43.980 One of the things, I always say that marketing often makes a mistake.

00:38:47.280 It asks, how can we persuade people to do this?

00:38:49.520 And I go, don't you know, before you start doing that,

00:38:51.900 look at what are the obstacles to doing it.

00:38:54.580 and see if you can remove any of them.

00:38:58.440 And it strikes me that the removal of negatives

00:39:01.020 is actually probably more potent in terms of behavioural change

00:39:04.540 than heaping on kind of claims of positives.

00:39:09.380 It's right, you know, there are really interesting things

00:39:11.500 that emerge when you look at it backwards.

00:39:13.720 So every time I meet Coke, I always make this point

00:39:16.900 that Coke has this utter, which I mean the drink, okay,

00:39:20.540 Coke has this utterly magical property,

00:39:22.800 which is you can ask for it absolutely everywhere

00:39:27.300 without it seeming weird.

00:39:29.900 And if they haven't got it, it's their fault, not yours.

00:39:33.760 Okay.

00:39:34.220 Now, when you think about how rare that is,

00:39:35.940 that's kind of true of water just about.

00:39:39.460 Okay.

00:39:40.360 But you can go to a Michel Star restaurant,

00:39:42.400 you can ask for a Diet Coke,

00:39:43.580 you can go to a beach shack in Barbados,

00:39:45.820 you can ask for a Diet Coke,

00:39:47.520 you can go to an African shantytown

00:39:49.260 and they've got Diet Coke.

00:39:50.820 And if you ask for it, by the way,

00:39:51.980 there's no possible kind of opprobrium or embarrassment that, you know,

00:39:55.680 comes across you for it.

00:39:57.540 Now, you know, if you went to a Michelin star restaurant

00:39:59.720 and asked for a Dr. Pepper, which is, you know, not all that, right?

00:40:05.020 The whole thing is going to be fraught with embarrassment, awkwardness,

00:40:09.180 you know, low expectations, and so on.

00:40:12.600 It is just really, really interesting when you understand

00:40:15.420 that the extent to which, of course, human behavior is mediated

00:40:19.180 by the imagined opinions of others.

00:40:21.980 There's a great quote from, I think, a paper of Lincoln, where he made the point, which was also made, by the way, by the same, who was the guy?

00:40:30.320 You'll know the guy who performed that extraordinary experiment where people pretended to be prisoners and pretended to be torture.

00:40:36.060 Stanford? Stanford experiment?

00:40:38.180 Yeah. The same academic who did that experiment also did an experiment with his own pupils, where he just told them to go on the subway and ask people to give up their seat.

00:40:48.700 with no visible disability.

00:40:51.980 And the point of the experiment was not to see

00:40:53.880 how many people gave up their seat.

00:40:55.520 It was the fact that the majority of students came back

00:40:58.540 and just said, I'm sorry, I'm quitting now.

00:41:00.780 I can't stand this anymore.

00:41:02.560 That the act of asking someone for their seat on the subway

00:41:05.080 was just so socially embarrassing, transgressive and weird

00:41:09.160 that they experienced something not other like pain.

00:41:11.480 And Abraham Lincoln's point was, I think,

00:41:14.100 slightly more sort of probably different.

00:41:17.260 A 19th century take on this was if you were asked to walk around your town wearing your

00:41:23.760 wife's bonnet, you know, without being able to explain that it was for a bet or a charity

00:41:29.820 or something like that, you would experience just extraordinary pain.

00:41:35.720 I suppose it's kind of interesting because what these social norms do, and I was talking

00:41:41.600 to David Sloan Wilson that day, who's an evolutionary biologist, is, of course, when

00:41:47.240 When you establish social norms and conventions of that kind, it changes the nature of evolution

00:41:54.380 so that it doesn't only happen at the individual level.

00:41:57.400 It's not just a matter of individual selection.

00:41:59.940 It becomes a matter of group selection, because our behavior innately has become conditioned

00:42:07.060 by group dynamics, not by individual self-interest.

00:42:10.480 I think he's a great component, and by the way, half my Darwinist friends are going to

00:42:20.640 disown me at this point. But David's a kind of fan of multi-level selection, where he

00:42:25.360 believes that selection effectively takes place at concentric different levels of both

00:42:30.800 the individual and then the family, and then the wider group. And there's a kind of level

00:42:37.280 of cultural selection i don't know why that's interesting i don't know why darwinists hate

00:42:43.100 the suggestion that darwinism might work in multiple ways but they uh the gene-centered

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00:44:06.140 rest of this episode. What are your thoughts on the ethics of marketing? The more I learn

00:44:14.460 about marketing, the more I realize, well, okay, for instance, this is what happened to my family

00:44:20.720 in the last couple of weeks. Dad put out his new book and then a couple of weeks ago, it turns out

00:44:27.440 one of the quotes on the book that was a very positive quote was written by someone who had

00:44:34.100 written this incredibly negative review and the book, like it was just a toxic review.

00:44:40.340 And the book publisher had taken two half sentences, melded them together and put her

00:44:47.480 name on his book. Obviously she wasn't happy about that. We had no idea that was going on.

00:44:53.720 And when we approached the publisher, they said, oh, we do that for everyone.

00:44:58.660 It's just the norm.

00:45:00.560 No, I mean, there was a famous case of a London play where the cast effectively just played

00:45:06.840 for the audience, were playing for applause all the time.

00:45:11.200 And it was apparently an absolutely horrible play because the cast were just basically

00:45:14.800 applause hungry.

00:45:16.720 And someone wrote an absolutely damning review, which basically described it as one long curtain

00:45:22.560 call.

00:45:23.720 And two weeks later, above the theatre, one long-term call was posted along the billboard

00:45:30.740 marquee.

00:45:31.820 Now, I'm definitely right, OK?

00:45:33.260 I mean, it is absolutely possible to market unethically.

00:45:38.600 It's perfectly possible, I think, to market unethically without being aware you're doing

00:45:42.060 so.

00:45:42.820 I do hope that things like behavioural science make it easier to spot dark patterns, as you

00:45:48.920 might call it.

00:45:50.060 And that's an extraordinary trick.

00:45:51.940 I can't believe they do that for everyone because it seems to me to risk reputational embarrassment of the public.

00:45:58.060 Well, it certainly did in this case.

00:46:00.800 It didn't go well at all.

00:46:01.920 It was all over the news everywhere.

00:46:03.340 And we're like, we didn't ask for like fake reviews, but apparently it's normal.

00:46:10.500 It's like, that's lying.

00:46:12.740 No, no, no.

00:46:13.220 It's certainly grotesque misrepresentation.

00:46:15.820 I mean, you know, totally, totally artificial selection of data.

00:46:20.400 I mean, to some extent, of course, all advertising is, to some extent, a distortion of an already distorted reality, in the sense that advertising comes from the Latin anim advertere, which is to direct someone's attention to.

00:46:34.600 And what you generally do is you direct the attention of the viewer or the audience to that aspect of the product in which it has a comparative advantage over its competitors.

00:46:50.400 And by a peculiar quality of psychology, whereas logically we should pay attention to what's important, actually the process works in reverse.

00:46:59.260 We think important what attracts our attention.

00:47:03.500 That certainly explains the news cycle, OK, because you have this awful problem, I think, in the news cycle where effectively news generates its own news.

00:47:12.420 Now, you know, if you take it to the case, I do not condone the kiss of the Spanish F.A. head at all.

00:47:21.080 I think it was an atrocious act.

00:47:23.440 OK, right.

00:47:25.000 So I'm not condoning the guy.

00:47:27.380 He obviously must be a very unpleasant guy because the only person who defends him is his own mum.

00:47:32.000 But equally, at the same time, I don't think it warrants the column inches that it's currently getting.

00:47:40.240 You know, there's a war in Ukraine and we're talking about, you know, please frame your video to determine.

00:47:46.380 You know, also important, by the way, because there's an interesting question there, which is the only person you can really determine and judge that act is the woman herself.

00:47:55.960 OK, because there are relationships and contexts in which that is an acceptable thing to do and cultures instead.

00:48:02.680 It's a bit weird, actually.

00:48:03.920 I don't know how North Americans are reacting to this, because it's more normal to kiss

00:48:08.300 on the lips, people with whom you're not romantically engaged, in North America, apparently, than

00:48:14.080 it is in Europe.

00:48:15.760 Oh, my gosh.

00:48:16.700 I can't imagine.

00:48:18.120 Most extraordinarily, okay, Ronald Reagan kissed the Queen Mother on the lips, okay,

00:48:24.500 when they met.

00:48:25.640 And she was absolutely horrified, because no one had done that since her late husband.

00:48:29.820 But to a Californian of that era, Reagan, who I venerate,

00:48:33.600 so I'm not having a dig, you know, okay?

00:48:37.440 But to a Californian of that era, that wasn't that weird a thing to do.

00:48:39.900 I don't know.

00:48:40.960 So there's a whole cultural aspect to it.

00:48:43.140 There's also a relational aspect to it.

00:48:46.480 And so the only person who can really speak meaningfully about that act

00:48:51.400 is the person to whom it was done, because to everybody else,

00:48:55.760 We're really just bringing our own prejudices to the party.

00:49:00.520 So it's quite interesting in that respect,

00:49:02.680 but it certainly doesn't warrant the press attention it's been getting.

00:49:05.820 You know, it's absurd, okay?

00:49:07.540 And so you have this thing where we deem important

00:49:10.620 those things which attract our attention.

00:49:14.860 You know, in other words, it's something that works backwards in a way,

00:49:18.840 you know, that we don't actually pay attention to what's important.

00:49:21.940 We're just as likely to deem important.

00:49:23.460 There's a great line in Citizen Kane where Kane says, make the headline big enough and

00:49:28.120 I'll make the story big enough.

00:49:31.600 And actually, by the way, most media bias works that way.

00:49:35.440 It doesn't work.

00:49:36.860 People who are trying to call out media bias always talk about the opinion that is attached

00:49:42.540 to a story.

00:49:43.960 But the greater part of media bias is actually the prominence that's attached to the story.

00:49:48.580 Now, to put it another way

00:49:52.220 I think if you'd had

00:49:53.780 Three newspapers in collusion

00:49:55.640 You could have buried Watergate

00:49:57.660 You could have reported on Watergate

00:50:00.460 Put it on page five

00:50:01.840 And everyone would have gone, yeah, they're all at it

00:50:03.860 Whatever

00:50:04.280 So the greater part

00:50:08.260 Of media bias manifests itself

00:50:09.900 In what is

00:50:11.680 Given prominence

00:50:13.340 Not in what opinion is attached to

00:50:15.780 The reporting of events

00:50:17.220 And, you know, I see obvious cases where, you know, there is extraordinary selectivity in which stories to pursue and which to downplay

00:50:28.280 That's for sure

00:50:30.520 You know, there are large, you know, if you're a middle-aged old bloke like me, there are a large number of stories where you just get, I don't really get this

00:50:39.280 You know, I don't understand, you know, why is this even a story, you know

00:50:44.780 But it is interesting because obviously – now, this is interesting because there's one way of looking at this, which is it distorts perception, okay?

00:50:56.380 Because by making someone look at something differently, they appraise it differently, like the Jesuit priest, okay?

00:51:03.200 Yeah, it's absolutely fine to pray while you're smoking, okay?

00:51:06.440 And they arrive at a different judgment.

00:51:08.380 But then if you accept that there isn't a single objective right answer

00:51:14.200 to the question of which air fryer should I buy, okay?

00:51:20.240 By the way, one of the most extreme cases of this was I nearly bought a Tesla

00:51:24.400 because it had dog mode, okay?

00:51:28.020 So dog mode is where you can leave your dog and stop pet or activists

00:51:31.760 smashing your car windows on the assumption that you're in a car

00:51:36.020 in a car park in Scottsdale, Arizona.

00:51:37.860 When you approach the car, the screen displays a big picture of a dog and says, I'm comfortable

00:51:43.480 at a temperature of 70 degrees Fahrenheit, my owner will be back soon, to stop activists

00:51:49.480 smashing your car window.

00:51:51.060 Because they assume that if the engine isn't running, in the early days of electric cars,

00:51:55.620 people wouldn't have clocked the fact that the air conditioning could work while the

00:51:59.300 car was silent.

00:52:01.340 Now, what was weird is I'm always born a Tesla for that reason alone, and I don't even have

00:52:04.440 a dog.

00:52:04.900 here's here's the counterpoint to this which i think is interesting okay now i only discovered

00:52:13.940 this concept a few weeks ago while reading about bernard de mandeville who is the world's most

00:52:18.900 interesting and mischievous economist from i think the early 18th century and he wrote a thing called

00:52:24.840 the fable of the bees which suggested that effectively private vices amalgamated to public

00:52:31.040 goods, that it was actually extravagant self, even a precursor of Adam Smith in some ways,

00:52:37.360 and was an influence on later economics, because he understood that individual self-interest

00:52:43.720 could transmogrify into a collective benefit, effectively.

00:52:50.760 There's this concept called Mandevillian intelligence, which is that the ambrogate of lots of different

00:52:56.360 silly people, actually adds up to something intelligent.

00:53:02.120 Okay?

00:53:03.120 I mean, democracy is a kind of Mandevillian intelligence that some forms of foolishness

00:53:09.760 cancel out, but if you have lots of different people buying a thing for different reasons,

00:53:15.600 at the level of the marketplace, you end up with much better products than if everybody

00:53:21.740 bought a car according to a formula of fuel economy multiplied by maximum speed divided

00:53:29.020 by cost or whatever, if you had a single rational way of buying cars, cars would actually be awful

00:53:35.500 because they'd all be optimized for four or five dimensions and they'd end up being

00:53:39.660 really ugly or really dangerous or something else. Because the things we weren't optimizing for

00:53:45.340 would effectively get neglected. The fact that people all choose to buy cars for a different

00:53:50.300 panoply of totally nutty, you know, Americans are kind of keen on the number of cup holders,

00:53:57.600 aren't you? You're Canadian. I'm sorry. I'll park that one. But North Americans seem to be

00:54:03.620 much more interested than Europeans in the number of cup holders and so on.

00:54:07.720 That's funny.

00:54:08.840 But when you amalgamate all those different preferences, you arrive at a market which

00:54:14.080 has a kind of collective intelligence, kind of aggregate intelligence, Mandevillian intelligence.

00:54:19.400 Now, what worries me, oddly, is new internet-enabled markets where we all choose the same way.

00:54:27.600 And I talk about, my concern is I have a really major concern with property websites.

00:54:32.760 Because everybody goes, place, number of bedrooms, price, high, low, and then they search, right?

00:54:40.660 Yeah.

00:54:40.780 Now, because everybody's actually effectively doing elimination by attribute in the same order,

00:54:47.960 OK, this is going to lead to absolute absurdities in the property market, which it does, by

00:54:53.580 the way, because apparently you can't sell a house for £850,000, OK, because people

00:54:59.800 are either searching £800,000 and up or £900,000 and down, and they won't find you till too

00:55:05.760 late, or the £900,000 people think you're a bit too cheap and the £800,000 people think

00:55:10.680 you're a bit too expensive.

00:55:11.820 So you don't have a price demand curve.

00:55:13.240 You have a kind of price demand ziggurat in the housing market.

00:55:15.960 But also, architectural quality is ludicrously under-priority.

00:55:23.300 Yes.

00:55:25.380 Right?

00:55:25.920 Because you end up with a choice of six houses and you buy the least ugly one.

00:55:30.100 Right?

00:55:31.200 Now, my argument is, now, there are two websites in the UK.

00:55:34.020 There's themodernhouse.net.

00:55:36.080 There's also Inigo.

00:55:38.140 Inigo sells kind of classically beautiful homes, you know, from Victorian, Georgian,

00:55:43.260 et cetera.

00:55:44.160 And the modern house is obviously, as it says, the modern house.

00:55:47.300 There's also, by the way, a website in North America called Right on the Market, which

00:55:51.260 simply lists Frank Lloyd Wright homes, which are for sale.

00:55:53.920 Oh, that's cool.

00:55:55.540 Woof.

00:55:56.220 Yeah.

00:55:56.900 Now, the interesting thing there is that it's a different approach to the state.

00:56:03.200 What it's doing is it's directing attention to aesthetics rather than location, price,

00:56:09.740 square footage.

00:56:11.420 And it strikes me that those websites are a very necessary corrective, because if we

00:56:16.600 all choose in the same way, the market will become stupid and houses will become uglier.

00:56:22.060 Yes.

00:56:22.640 And so now, if you have the modernhouse.net, there is a greater incentive to actually build

00:56:28.800 a fantastic modern piece of architecture, because you actually know you might be able

00:56:33.000 to sell it.

00:56:34.100 Whereas if you go to right move, I don't know what the Canadian equivalent is, moose.com

00:56:39.460 or whatever.

00:56:40.440 But if you go to the Canadian equivalent, then effectively, the equivalent of right move,

00:56:49.480 nobody's going to find the likelihood that someone who loves modern architecture

00:56:53.720 finds a modern house. As I jokingly said, imagine if we brought a lot that way. If we said,

00:56:59.960 I want something six feet by three and mostly blue with a bit of green, portrait, not landscape,

00:57:06.520 and I wanted it to feature two cows and a goat, okay?

00:57:10.300 And then your art dealer came out and said,

00:57:12.140 I've got these three, okay?

00:57:13.980 Well, in that world, Picassos would be really cheap, right?

00:57:19.720 Because nobody would ever find them

00:57:21.260 because nobody's going in and saying, 0.99

00:57:22.940 you haven't got a lot of prostitutes in Avignon,

00:57:25.020 have you, where they're kind of wearing African bars?

00:57:28.600 No one's ever going to ask for that, okay?

00:57:32.160 So the danger is that the unasked-for component of the product

00:57:36.520 becomes ludicrously devalued and deprioritized, whereas a few fairly arbitrary criteria then

00:57:44.120 dominated the decision. There's another argument I'll make, which is an interesting one. Now,

00:57:49.000 bear in mind, I'm giving pro-marketing and advertising answers. I also have some anti ones.

00:57:55.240 I think the housing market will be much more effective if all real estate agents

00:57:59.240 listed negatives, by the way. Because if it were mandatory that any major negatives were listed,

00:58:05.640 people like me, who didn't care about certain negatives, will be able to find a bargain by

00:58:11.000 finding a house next to a pub. To 90% of people, the house being next to a pub is a source of

00:58:16.120 disturbance. To me, that's a positive boom. Now, the ability to actually navigate the housing

00:58:23.160 market where you look for things which are devalued by other people, but are irrelevant to

00:58:27.960 you would be an additional efficiency in the housing market, but instead, real estate agents

00:58:32.940 just list the positives.

00:58:35.740 One exception, Roy Brooks in the 1960s and 70s, who wrote incredibly rude, patronizing

00:58:43.040 reviews of the property he had to sell and then put them in the Sunday Times.

00:58:47.020 It was a complete, you can research him, brothel in Pimlico is a collection of his

00:58:54.380 various property advertisements, which are all a list of negatives, effectively.

00:58:59.740 Very, very interesting advertising approach, by the way.

00:59:02.660 But actually, there's another interesting thing which we never mention, which is that

00:59:08.420 competitive capitalism, through serving a load of disparate needs, completely without

00:59:16.300 anyone intending it, creates a form of resilience that you don't get in a control economy.

00:59:24.380 So it prevents, if you like, if a whole industry is optimised around certain things, it acquires vulnerabilities, dependencies, you know, because it's over-optimised for efficiency and therefore under-optimised.

00:59:38.380 Now, the very fact that, you know, this is, OK, this is a mischievous suggestion, so bear with me, OK.

00:59:43.540 But if doctors were allowed to choose their own surgical masks, OK, we wouldn't have had a mask shortage, right?

00:59:51.120 Surgical masks are bought by bureaucrats 0.88

00:59:53.840 who have some sort of flaming stupid bureaucratic SN254 stand and bring.

01:00:01.460 And they're all bought from the same place.

01:00:03.360 And it turned out there was a shortage of the machines,

01:00:06.160 not of the masks, but of the machines that could staple the elastic mask.

01:00:11.360 Now, the interesting thing is, if masks had been a fashion item

01:00:15.460 and some people had gone around with their Cathkinson floral masks

01:00:19.200 and other people that had a Louis Vuitton mask, okay?

01:00:23.120 Now, the mask industry as a whole would be less efficient most of the time,

01:00:28.060 but it would also be a lot more resilient because you'd end up

01:00:31.820 with multiple suppliers effectively serving disparate consumer needs,

01:00:36.780 which as an unintended byproduct of that activity actually creates

01:00:41.900 a kind of resilience and ability to adaptability within the market.

01:00:47.680 Anything that's traded as a commodity becomes shit, basically.

01:00:53.280 It just becomes a race to the bottom on a kind of price quality scale.

01:00:56.660 We meet the lowest possible definition of quality at the lowest possible price.

01:01:05.160 And I don't know what it's like in Canada, but milk was kind of traded this way.

01:01:08.440 Now, the problem is that when you're traded as a quantity, there's no incentive to incentivize

01:01:12.880 because you don't have a brand to which superior quality draws customers.

01:01:19.640 And so the feedback mechanism between quality of experience

01:01:22.820 and repeat purchase doesn't exist.

01:01:25.120 This is why the Soviet Union had this huge problem

01:01:27.260 because why would you make any good bread?

01:01:30.160 Because the only thing you had to bear was the cost of making better bread.

01:01:34.660 There was no material reward in terms of people choosing your bread

01:01:38.780 over somebody else's.

01:01:39.760 And without brands as effectively the unit of selection of product purchase, actually

01:01:48.000 capitalism doesn't really work very well.

01:01:51.580 You don't actually get much innovation.

01:01:55.220 I think we overlooked that.

01:01:56.940 I think we overlooked the central role.

01:01:59.200 And what was interesting in the Soviet Union is they thought brands were unmarxist and

01:02:03.040 tried to do without them.

01:02:04.560 But they eventually were forced to make factories stamp their identity on the river.

01:02:09.760 Because otherwise, if rivets were all bundled together in a central repository, everybody had an incentive to make as many rivets as possible at as shitty a level of quality as they could get away with.

01:02:22.840 Yeah.

01:02:23.920 So without that fundamental mechanism as a unit of selection on which consumer choice and experience operates, you really don't really have an economy.

01:02:35.180 something you said reminded me of dating apps so you were talking about the housing market and how

01:02:41.900 people plug in a certain number of values yeah so is that that's happening the same way right

01:02:47.580 because it's very difficult to judge something like you can kind of judge it but it's hard to

01:02:52.520 judge intelligence uh humor if it's just six feet and up you're over undoubtedly overweighting

01:03:01.140 appearance aren't you yeah i mean you're you're also overweighting static appearance by the way

01:03:08.240 because there are people who are attractive but by dint of the way they move yeah as much as how

01:03:13.220 they look okay uh my wife my wife is very i find my wife extremely attractive she's at least

01:03:18.900 photogenic person i mean it was impossible to take a still photo because you're always like

01:03:25.100 You know, if I were only presented with still photographing, I think I would have been married for kind of 34 years.

01:03:36.160 No.

01:03:38.000 So undoubtedly, yeah, it's not a, it doesn't really practice sort of Vandervillian intelligence,

01:03:43.920 where people have different opportunities to assess your various virtues.

01:03:48.580 And so messy, in some senses, messy decision-making interfaces or processes seem to lead to better collective outcomes over time than decision-making that seems to be neat.

01:04:07.680 Because, of course, the tragic thing is that when you're looking for a house using that standard place, price, number of bedrooms, et cetera, you're completely unaware of the things you haven't seen.

01:04:22.300 And what's also interesting about it is talking to real estate agents or real estate agents, they'll say that everybody comes to the list of criteria.

01:04:31.500 And they know to discount those criteria because the majority of people end up buying a house which meets few or none, in some cases, of the initial criteria they stipulated because they fall in love with the house for completely different reasons.

01:04:49.680 And the practice of house buying should be recursive.

01:04:52.620 It shouldn't be a kind of decision-making funnel.

01:04:55.540 and i think it's one of those dangerous things which seems rational while you're doing it

01:05:00.800 because this stupid element is kept it is effectively hidden from you yeah definitely

01:05:08.160 okay and in dating and dating and dating i think it's highly i think dating apps are highly

01:05:14.340 problematic as a choice architecture question yeah and it's the way they're designed really

01:05:20.160 well i got married in 1989 so as one other person said to me they said they also got

01:05:27.180 married before dating apps existed and they said i feel like i caught the nurse helicopter i was

01:05:32.500 i got okay yeah well i i think it i think it really gives like more psychopathic people an

01:05:40.440 area to thrive which is just terrifying interesting yeah my dad's figured the same

01:05:46.420 thing because you get these, you know, extroverted, narcissistic, attractive people on there and they

01:05:52.220 get all the attention. And the people who are maybe slightly less attractive, but more attractive

01:05:57.420 in other ways, like humorous, smart, they get less attention. So I don't know how they even

01:06:02.360 manage dating apps. But I mean, one of the important things is acknowledging that marketing

01:06:09.120 can be undoubtedly pernicious, misleading, that there are dark patterns,

01:06:14.980 should I think one thing behavioural science can do,

01:06:19.820 and one thing marketers should do, by the way, is call it out,

01:06:23.760 because it isn't in the interest of a reputable brand,

01:06:27.340 but people to actually discredit.

01:06:31.140 Now, an example of this, okay, is that the whole business

01:06:35.780 of online subscription to publications is such a dark pattern, what Richard Thaler calls

01:06:41.860 a sludge affair, where it's very easy to sign up to the introductory offer.

01:06:47.060 It's very easy for them to suddenly upgrade you to the £9.99 a month full fee for the

01:06:53.820 subscription.

01:06:54.960 That's all very easy.

01:06:55.980 But when it comes to cancelling, you've got a phone-up blasted phone line, the number

01:07:00.540 for which is actually very deep on the site.

01:07:02.800 Now, what those people are doing when they do that is they are discrediting and destroying

01:07:09.320 the whole business of subscription as a mode by which people might pay for media.

01:07:14.460 Yep.

01:07:15.840 Because essentially, I go, to be honest, I wouldn't mind paying $4 a month for this,

01:07:22.240 and I'd pay $4 a month in perpetuity, provided I knew I could cancel on a whim.

01:07:27.960 And what these dark patterns have done, I think, is they've actually destroyed the whole

01:07:32.380 Yep

01:07:33.080 Charging mechanism

01:07:34.660 You know

01:07:35.720 I think, you know, it's

01:07:39.660 You know, and the fact that this isn't called out

01:07:42.260 And there isn't some sort of kite mark

01:07:44.120 For cancellation

01:07:45.080 That's a, you know, a promissory method

01:07:48.100 That can

01:07:49.160 And I think there's legislation going through

01:07:51.420 One, I think it might be the European Parliament

01:07:54.000 Which basically says that

01:07:55.520 Cancelling a subscription must be as easy as

01:07:58.180 Instigating it

01:07:59.280 Good

01:07:59.840 and i think there's also an issue which is that um uh it's incredibly difficult to cancel a

01:08:08.480 recurring credit card payment uh by calling your credit card off now this is an interesting one

01:08:14.560 because i think what what you notice is they're quite eager for people to subscribe by credit

01:08:18.760 card because yeah if you subscribe through a kind of bank standing order you can just go to

01:08:23.380 your online bank account and cancel okay yeah it's incredibly difficult to do the same thing

01:08:29.480 using a credit card.

01:08:33.580 I would favor legislation where recurring payments on your credit card bill appear at

01:08:38.900 the top and listed separately, and where there's a three-click mode of cancelling any of them.

01:08:47.420 The reason I'm saying that is not because I'm a massive consumer champion, it's because

01:08:53.440 I think that capitalism, when it discredits itself, harms far more people than it benefits.

01:08:59.200 That's a toxic externality, really, from the practice.

01:09:04.100 Yeah, I completely agree.

01:09:06.260 I think that's so rampant now.

01:09:08.380 There's distrust in everything now, the news, mainstream media.

01:09:13.440 I mean, I certainly don't trust very many marketing ads I see online that are somebody's review or somebody's quote.

01:09:22.720 I'm like, that's probably just manufactured.

01:09:25.440 It's really not good for everyone.

01:09:29.200 Where I'll defend this is working with pretty reputable brands

01:09:32.960 over the last 32 years, I've never been in the room

01:09:36.820 where someone suggests something where I go, yuck.

01:09:40.900 More important, perhaps, I've never been in the room

01:09:44.420 when someone suggests doing something where my mum would have gone, yuck.

01:09:47.920 Or my wife, who's a clergywoman, would go, no, no, that's kind of horrible.

01:09:53.820 I have heard stories, there was a case, no, no, it'll be client,

01:09:57.440 nothing to do with me, where someone pointed out that if you change the date at which bank

01:10:04.240 charges were levied, you could drive more people into an overdraft, their overdraft limit,

01:10:14.480 and therefore fine. Wow. Yeah. Okay. That's crooked.

01:10:18.480 Then someone, not a colleague of mine, but someone working in the same industry

01:10:22.800 was in a room where that was suggested. Now, in defense, I don't think it was implemented

01:10:27.440 But that was made as a kind of serious suggestion.

01:10:30.260 Now, that's seriously young.

01:10:32.960 It's very interesting because contrary to what economists think, I mean, economists have

01:10:38.760 kind of created a model of the economy which is kind of morally neutral and completely

01:10:45.300 a-human, OK?

01:10:48.320 In other words, they've reduced it to a kind of mathematical model of efficiency, which

01:10:52.180 all psychology has basically banished from economics.

01:10:55.660 and it's reduced to a kind of artificial Newtonian problem.

01:11:00.620 And as a result, they kind of bypassed questions like ethics

01:11:04.480 or indeed just perceived fairness, okay?

01:11:07.400 Very, very interesting.

01:11:08.920 Here's a very interesting thing, if you're interested in this.

01:11:11.640 There's a paper written in 1690 about John Locke,

01:11:14.680 which is called Venditio.

01:11:19.420 And it's on a question which used to absolutely bedevil kind of,

01:11:23.560 Actually, the church, okay, the notion of the just price.

01:11:29.860 And he makes a very interesting assertion, which is that to challenge what something is worth to you subjectively.

01:11:38.300 So he said, imagine you have a horse, okay, and the horse is really on the open market, only worth three or four pounds, but you're very fond of this horse.

01:11:49.300 So you'd be reluctant to part with it for less than five pounds.

01:11:53.160 It is perfectly ethical for you to demand five pounds for the horse, because that's the compensation that you would accept to hand over the horse.

01:12:03.500 If, however, someone is absolutely desperate for a horse, he doesn't really explain why, Locke, but let's assume they're desperate to visit a dying relative.

01:12:12.600 And they say, I'll pay you anything you like for your horse.

01:12:16.900 Ethically, you should charge them five pounds for the horse, because that's what you'd sell it for under other circumstances.

01:12:22.200 If, however, you take advantage of their perceived distress and ask them for £25, knowing that

01:12:30.260 that's what they would pay in extremists, that's unethical pricing.

01:12:36.740 And it's a very, very interesting distinction, because I think, as human beings, that's how

01:12:41.640 we see it.

01:12:43.940 Charging a reasonable amount of money for something when the person is effectively free

01:12:47.900 to take it or leave it, we regard as basically fair.

01:12:52.200 taking advantage of another's misfortune to profit.

01:12:55.420 Yeah.

01:12:56.260 Now, what's interesting is that Walmart, effectively,

01:12:59.700 I don't know if the people at Walmart read John Lott or not, okay,

01:13:03.640 but Walmart, very interestingly, when you have a hurricane

01:13:06.580 or when you have a massive snowfall,

01:13:08.900 they do not increase the prices of shovels.

01:13:12.120 Okay.

01:13:12.480 And they don't increase the prices of nails and bits of wood

01:13:15.400 that you bang on your window.

01:13:17.160 Instead, what they have is they have a hurricane prediction center,

01:13:20.300 which ships enormous quantities of snow shovels to the areas where they're required,

01:13:26.360 and they're then sold effectively at the just price.

01:13:30.900 OK, and Walmart knows what economists don't know, which is that if you gouge customers

01:13:37.260 and exploit their predicament, they're not your customers anymore, because we react to that as

01:13:45.060 humans, not as economists do by going, well, naturally, there's an imbalance in supply and

01:13:49.820 of barns, so I would expect to pay $50 for a plastic snow shovel.

01:13:56.840 That's how an economist would think was a perfectly reasonable solution to the problem.

01:14:00.320 Most non-economists don't think that's fair.

01:14:03.580 As Richard Thaler said about ski resort pricing, basically, if you gouge them at Christmas,

01:14:10.480 they don't come back in spring.

01:14:14.700 In the attempt to create this reductionist economics, a whole facet of things that basically

01:14:20.340 make us human and were probably essential in the evolutionary environment for actually

01:14:26.480 our functioning as a social species have been completely neglected.

01:14:31.420 Of course, the role of reputation is interesting too, because a very large part of economic

01:14:38.560 success is down to trust.

01:14:41.500 In other words, you know, do people trust you to fulfill your promises, okay?

01:14:46.740 And of course, economics, again, has frozen that out of the equation by assuming complete

01:14:51.440 trust, no information asymmetry, perfect information, okay?

01:14:56.000 And it achieves a kind of mathematical neatness at the price of making assumptions, which are

01:15:00.960 utterly ridiculous, and literally assuming conditions that never pertain in the real

01:15:06.900 world.

01:15:07.260 and that strikes me as a you know pretty given the influence of the discipline that strikes me

01:15:13.080 as a fairly horrific thing to do yeah because you only need your model to deviate from reality in

01:15:18.160 very small ways for the whole model to become worthless but we seem to have created a world

01:15:23.080 where people's attachment to their models of the world their allegiance to a particular way of

01:15:28.300 thinking um is somehow tied up with their identity which is a it's a terribly and you see it by the

01:15:35.400 on the right with neoliberal economics, you see it on the left with wokery, but the unwillingness

01:15:42.680 to actually, hey, to provide some degree of mental hospitality to ideas which might cause

01:15:51.240 you to revise your particular expectations or your belief set, strikes me as very, very weird

01:15:56.880 and comparatively a bit recent, really.

01:15:59.740 You know, I mean, it's an interesting question as to maybe there will always be aspects of this that have always been kind of bipartisan tendencies in politics, but it does seem to have got a bit worse.

01:16:11.160 I think it's gotten worse. Not that I have vast amounts of experience over vast periods of time, but that reminds me of the university system. Part of the reason we're doing this Peterson Academy project is because the university systems really bothered me morally with how much it's charging for a degree that doesn't necessarily lead you to a job you want.

01:16:35.140 And in the US, like I'm from Canada, and it's less insane there.

01:16:40.120 But in the US, it's astronomical.

01:16:41.280 I've got friends at Canadian universities.

01:16:43.840 Now, what's happened with particularly the Ivy League, OK?

01:16:47.000 Now, think of it like this, OK?

01:16:50.120 If you want to talk about luxury goods, as we talked earlier about Hermes and Louis Vuitton

01:16:54.820 and so forth, the greatest luxury goods manufacturers of the lot are the American Ivy League universities,

01:17:00.260 which maintains scarcity despite the fact that technology means that actually the teaching they

01:17:06.840 provide need no longer be scarce yeah they're really real estate businesses with a pedagogical

01:17:12.920 sideline but they also exploit the credible kind of path dependency in terms of the career paths

01:17:21.540 of people who want to go and work for Goldman Sachs or whatever I don't know why you want to

01:17:24.940 do that but people seem to want to do that okay now let me explain there's a really weird thing

01:17:29.660 that happens in the London property market, okay?

01:17:31.840 It's the most depressing thing you can do

01:17:34.640 is to be a very, very high-end kitchen fitter

01:17:37.660 in central London.

01:17:39.220 And the reason is you're brought in, okay,

01:17:43.080 to install a £120,000 kitchen

01:17:46.240 in a £5 million house, okay?

01:17:50.400 And the reason you're installing that kitchen

01:17:52.140 is to sell the house, right?

01:17:56.000 Because the house has to look immaculate

01:17:58.380 because the people looking around the house are probably Russian crooks

01:18:03.980 who've honey-cracked the local Dementia Couturebs

01:18:06.340 and selling them a bloody aluminium smelting works for £7.50.

01:18:11.160 They're a bunch of crooks probably, but they're demanding of perfection

01:18:14.540 and they just wouldn't buy a house if the kitchen was a bit banky.

01:18:19.200 Now, so you have to install a £120,000 kitchen to sell the house

01:18:23.740 to the Russian Ormond Gartney's mistress.

01:18:26.360 But here's the thing.

01:18:27.680 The second they buy the house, they rip the kitchen out

01:18:30.940 and replace it with one of their own.

01:18:33.520 Okay?

01:18:34.880 So apparently it's unbelievably depressing

01:18:37.200 because you have to install this kitchen

01:18:38.880 to an extraordinary level of anal perfection.

01:18:42.440 And then you know that six weeks later,

01:18:44.580 you'll be called in to trash the kitchen

01:18:46.660 and replace it with a slightly different one

01:18:49.140 because Luke Miller didn't actually like green or something, right?

01:18:53.660 Yeah.

01:18:53.820 Now, in some ways, there's an analogy there, which is the qualification you get in a university

01:19:02.400 very rarely translates into the actual job you do, obviously not through medicine, law

01:19:07.220 and a few other disciplines.

01:19:09.720 What you have to do is to jump through this prior hoop at enormous expense to prove your

01:19:16.360 employability and to make yourself saleable, even though four years in, Goldman Sachs don't

01:19:25.560 care what degree you've got.

01:19:26.840 I asked someone who wasn't Goldman Sachs or, you know, I asked someone, at what point in

01:19:32.340 your career, now they said, the value of my double first in maths from Cambridge, basically

01:19:37.080 in my employment, had a half-life, you know.

01:19:39.700 It probably never dips down to complete irrelevance.

01:19:42.740 It's something, you know, a bit like radioactive decay.

01:19:44.740 And they said, basically, five years into my job, everybody wanted to know what I'd

01:19:49.440 done, who I worked for, how I'd acquitted myself, and oh, yes, by the way, you've got

01:19:54.940 a degree.

01:19:55.940 Well, by the time you first get accepted, and this is where the path dependency comes

01:20:01.160 in, that degree is all they've got to go on.

01:20:04.980 So it's exactly like the kitchen.

01:20:07.020 It's done for display purposes, not for its long-term residual value.

01:20:14.960 Because what you've learned at university largely becomes irrelevant.

01:20:18.480 Within a very short time of you starting work, it becomes less and less relevant.

01:20:22.200 But it's necessary to make the sale, not to improve the house.

01:20:26.840 It strikes me that education has become a little bit like that, which is actually the

01:20:31.340 way it should.

01:20:32.740 We have at Ogilvy a program called The Pipe, which is specifically designed to be a non-graduate

01:20:38.860 recruitment program because we think that the obsession with graduate recruitment is

01:20:43.500 effectively at the collective level, spurring 50% of the population who may have very, very

01:20:49.780 great talents which just don't manifest themselves in academic ways.

01:20:54.400 But there are very, very bright people in advertising.

01:20:56.440 If you give them something theoretical to do, they'll lose interest immediately.

01:21:00.060 But if you give them a real-world problem, they manifest displays of genius.

01:21:06.820 There are certain people who just hate theoretical shit.

01:21:13.140 And those people are not very well treated by the academic proxy metric of your intellectual

01:21:21.000 capability.

01:21:22.000 By the way, the way I'd argue it is that academic ability is a one-way indicator.

01:21:28.440 If you're very good academically, you're probably quite bright.

01:21:32.700 If you're not very good academically, it does not mean you are not bright.

01:21:36.680 Now, just to give an analogy, which is a clear thing which everybody understands, chess

01:21:40.720 is like that.

01:21:42.200 If you're a really good chess player, in some respect, you're quite clever.

01:21:47.800 But it will be monstrously unfair to say that bad chess players are stupid.

01:21:52.980 My brother's an astrophysicist.

01:21:53.980 He's shit at chess.

01:21:54.980 He's not as shit as I am.

01:21:56.480 I do cryptic crosswords.

01:21:58.260 I do cryptic crosswords till the cows come out.

01:22:00.240 I just can't mentally, I just don't understand why you'd want to play.

01:22:05.880 I mean, I think of virtually anything I'd rather do.

01:22:11.700 But this is the interesting thing.

01:22:13.660 It's a one-way proxy measure which works in one direction

01:22:16.460 but doesn't really work in the other.

01:22:17.980 So discounting people who have poorer qualifications

01:22:21.740 is not necessarily a safe decision.

01:22:23.660 but then what happens is we offer these people a job

01:22:27.180 now we don't prevent people who've got a degree

01:22:29.700 from applying to the course, that would be silly

01:22:31.620 we just say that this is a mode of entry into Ogilvy

01:22:36.220 where you can go from there to being chief executive

01:22:38.380 if you're talented enough

01:22:39.500 we don't have any qualification barriers once you're employed

01:22:44.080 and so what happens is

01:22:47.260 we then offer occasionally a job to someone who has got a degree

01:22:50.780 and they say

01:22:53.320 I'm really uncomfortable

01:22:55.100 at accepting this

01:22:56.220 and you're saying

01:22:57.340 well it's

01:22:58.160 you know

01:22:58.580 it's an entry level job

01:23:00.280 in advertising

01:23:00.900 for God's sake

01:23:01.720 you know

01:23:02.280 they're Oxbridge graduates

01:23:03.400 who failed to get that

01:23:04.680 you know

01:23:05.180 what the hell

01:23:05.940 are you complaining

01:23:06.520 about

01:23:06.880 and they say

01:23:08.020 because

01:23:08.340 I've just spent

01:23:09.200 27,000 pounds

01:23:10.320 getting a degree

01:23:10.940 and if I then

01:23:11.620 go on to get a job

01:23:12.480 that doesn't require

01:23:13.340 a degree

01:23:13.820 I'll feel I've wasted

01:23:14.980 my money

01:23:15.420 yeah

01:23:15.900 I go

01:23:17.300 it's not supposed

01:23:18.160 to work like that

01:23:19.120 it should be

01:23:19.880 thanks to the three years

01:23:21.460 I spent at the

01:23:22.200 University of Blah, I was able to improve my thinking and cognitive styles and decision-making

01:23:27.260 ability to such an extent that I could impress the people at Overby who wanted to give me a job.

01:23:32.120 That's how it should be. But instead, I paid 27 grand for some parchment. And if the job I get

01:23:38.840 doesn't require the parchment, I've been done. That's education as a positional good. It's not

01:23:46.380 education as an absolute good. It's not human capital at all. It's just being used as a mechanism

01:23:52.420 for lazy sortition by the people who do the recruitment, who are probably the people who

01:23:57.720 have mostly to blame. Those people who go 2-1 and above, we only employ people from these five

01:24:04.040 universities. I mean, those are the people who are really to blame because they've made it possible

01:24:08.220 for, effectively, universities to profit from their lazy decision-making.

01:24:15.440 I didn't consider that.

01:24:17.300 My God, they profit.

01:24:18.540 I mean, if you want a bloody business that absolutely coins it,

01:24:22.540 an American university is the thing to add.

01:24:24.880 Yeah, I mean, Louis Vuitton can't even touch that.

01:24:28.460 Wild.

01:24:30.040 Well, that was interesting.

01:24:31.760 There's a Brian Kaplan book called The Case Against Education,

01:24:34.600 which is emphatically worth reading.

01:24:36.240 um uh there are a few other people who are um there's also an interesting thing which is that

01:24:43.240 it may be a misrepresentation by the complete meritocracy may be a mistake anyway because

01:24:47.820 you don't you don't go to university to be surrounded by a homogeneous group of similarly

01:24:53.860 nerdy people um so there are all sorts of there are all sorts of tough questions to be asked about

01:25:00.260 this. One suggestion, by the way, was that actually the top 20% of ivy places should

01:25:06.840 be allocated on pure meritocracy, and the other 80% should be by lot. Which is interesting.

01:25:18.120 But we're in danger of creating effectively an arms race. I think it's the guy who's the

01:25:25.080 philosopher at Harvard, who's called Michael Sandel, who describes many of his pupils as

01:25:32.640 wounded winners. In other words, they have actually succeeded, but the price they've

01:25:37.280 had to pay to get there has had some deleterious effects. And hyper-competition is bad, by the

01:25:43.260 way. Competition is good. Competition where, broadly speaking, the terms of success are

01:25:49.620 quite broad and where you can outwit the opposition through creative thinking.

01:25:56.200 That kind of competition is very healthy.

01:25:57.880 The kind of competition which is effectively the Hunger Games type of competition is actually

01:26:03.700 bad because actually the overall price paid is greater than the prize won.

01:26:09.800 If you include the people who fail alongside it, you ultimately say, look, we're actually

01:26:14.100 exacting a greater price than we are actually conferring a benefit.

01:26:17.860 And there's a very interesting guy called, I think, Fishbach, check his name.

01:26:21.980 He's a lawyer.

01:26:22.980 But he argues that the whole concept of equality of opportunity is wrong, and that what a society

01:26:28.420 should aspire to offer is diversity of opportunity.

01:26:33.180 In other words, what we've done to produce the illusion of fairness and meritocracy is

01:26:40.260 we have to apply the same criteria to everybody.

01:26:43.180 When you apply the same criteria to everybody, only some people can win, and it turns into

01:26:47.000 a kind of under-games death match.

01:26:49.240 If you say what we want is a society where lots of people can be successful in lots of

01:26:53.640 different ways, that's not a negative sum game.

01:26:59.300 It strikes me that that concept of broadening opportunity rather than actually fit.

01:27:04.940 The other thing is, you might argue, which is this wonderful talk about meritocracy and

01:27:09.800 equality of opportunity, equality of outcome.

01:27:14.860 All of that presumes a society which is hierarchical, because when the term meritocracy was coined

01:27:22.400 by Michael Young, late in Lord Young, he meant it as a criticism.

01:27:28.180 Oh.

01:27:29.180 So meritocracy is often used, particularly in North America, as a term of approbation.

01:27:34.540 It's a meritocracy.

01:27:35.860 Yeah.

01:27:36.860 Michael Young, who coined the word in England, used it as basically a warning that in many

01:27:44.360 ways it's worse being governed by people who think they deserve to be there, and believe

01:27:50.880 themselves possessed of superior ability to the people whom they govern, than it is being

01:27:56.180 governed by people who are kind of slightly random aristocracy, who can't help deny the

01:28:01.320 fact that they kind of lucked into the boat.

01:28:03.600 Oh, yeah.

01:28:04.860 I like that.

01:28:06.120 Keep it humble.

01:28:07.120 It's interesting.

01:28:08.120 Hmm.

01:28:09.120 Interesting.

01:28:10.120 India, you'll understand the value of monarchy, which is that, you know, there is a value

01:28:14.440 to the monarchy, which is precisely that the role is arbitrary.

01:28:18.940 Yeah.

01:28:20.060 And it is known to be arbitrary.

01:28:24.260 That's very true.

01:28:25.580 Yeah.

01:28:25.820 American politics is strange.

01:28:27.420 Even being here is strange.

01:28:30.160 It's very theatrical in a way that I haven't seen.

01:28:32.540 Where are you from the U.S.?

01:28:33.820 I'm in the U.S. now.

01:28:34.800 I'm actually in Scottsdale.

01:28:37.620 Oh, wonderful place.

01:28:38.900 Yeah.

01:28:39.240 Have you been to the Hotel Valley Home? Fantastic mid-century place.

01:28:43.320 I haven't.

01:28:44.360 I don't know. I go and stay there. It's the kind of place where the wrapped pack would engage it,

01:28:49.320 you know. But Scottsdale, the other place you must, which I've actually have been to,

01:28:54.280 have you been to the Desert Botanical Gardens?

01:28:56.360 No, not yet.

01:28:57.320 Right. Okay. You've got to book that visit. It's one of my favorite places in the whole world,

01:29:02.760 because bear in mind I'm British, okay? So the reason I love Phoenix, okay, is that if you're

01:29:08.920 British, a desert is magical. Because we live in a country where there's green shit all over the

01:29:13.960 place. All you've got to do is put some dirt out in the street and something goes green on it. So

01:29:19.640 having a hotel room window and having a cactus, a rock and some sand, is to me absolutely magical.

01:29:26.840 I adore the place. And the Botanical Gardens is a fantastic collection of cactus succulents.

01:29:33.880 And if you go... I'm really plugging this place. If you go at Sundack, you also get the hummingbirds

01:29:39.640 coming in to feed off various kind of agave plants or whatever. But it's one of the most enchanting

01:29:45.320 places on the planet. Really, really fabulous. Okay. I need to check that out.

01:29:50.040 And the other thing you're going to do is the Frank Lloyd Wright tour. So you've got the

01:29:54.520 Grady Gamage Auditorium. You've got a bunch of houses on the outskirts of Scottsdale, which are

01:30:00.360 which am I right? And then, of course, the other one is Taliesin West, which is Wright's.

01:30:05.960 He moved in the winter from Wisconsin, Taliesin, and actually started a kind of architectural

01:30:12.680 school basically outside Scottsdale called Taliesin West. But it's fantastic.

01:30:18.440 That's cool. I had no idea.

01:30:20.600 Rory Sutherland didn't expect me to be the key member of the Arizona Tourist Authority.

01:30:26.040 No, I didn't at all.

01:30:28.640 I'm a fan.

01:30:29.680 It's a bit hot right now, but it's either that or winter in darkness.

01:30:33.460 But it's dry heat.

01:30:34.480 That's what they say, yeah.

01:30:36.060 Don't worry, it's a dry heat.

01:30:37.200 It's 120, but it's dry.

01:30:39.360 Like, you liars.

01:30:41.260 Yeah.

01:30:44.260 Okay, Rory, thank you very much for coming on.

01:30:46.940 That was fascinating.

01:30:48.360 It's a pleasure, anytime.

01:30:49.900 That went way deeper than I was expecting.

01:30:56.040 Thank you.

The Mikhaila Peterson Podcast - October 24, 2023

Top Advertising Exec on the Tricks and Psychology of Good Marketing ｜ Rory Sutherland

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