Opposite tribes same playbook

“Opposites are complementary.” - Niels Bohr

In investing as in life, labels are useful in small measure but potentially fatal if abused. Many labels are no more than marketing slogans, or some are pejoratives designed to diminish the other side. More importantly, labels are simplifications. They create neat black and white categories whereas reality is messy and full of grey.

Investing examples will always come first for me. There is no magic line between "defensive" and "growth" companies, yet people often talk about them as if they were clean, distinct categories.

I have been thinking a lot about some labels recently. Increasingly, I find myself looking at supposed opposites that seem, beneath the surface, remarkably similar. Most of these examples come from our public discourse.

So-called opposites are starting with strikingly similar worldviews, use similar tactics and present their arguments in a similar way. Here the labels the labels obfuscate the similar underlying logic.

Far left, far right

To start with, far left and far right are poor labels. They are caricatures of positions that sit towards the extremes of political debate. To keep us on track, I will define “far left” as seeking radical economic and social equality through extensive intervention in existing institutions. The “far right” seeks to restore or defend a perceived national, cultural or ethnic order against external or internal threats.

Whilst they gather in different places, venues and have different safe spaces, there are many similarities in how their storytelling works.

1. They both identify in-groups and out-groups.

2. In both worldviews the "system" is rigged

3. Good, ordinary people are victims.

4. Powerful interests are manipulating what you see. (develop own media ecosystem)

5. Complex problems have daringly simple explanations. (conspiracies)

Studies in the US and Netherlands found conspiracy beliefs (i.e. an unseen hand manipulating events) rose towards both political extremes, with belief in simple political solutions forming part of the relationship. Separate research found stronger political emotions and greater acceptance of insulting out-groups at both extremes. This perhaps explains why we often see more combative language from fringe movements.

Both extremes highlight the differences between "them" and "us". For those on the far left, it is the intolerant majority maintaining power against women, minorities and the poor. For those on the far right, it is ordinary native hard-working people being displaced by organised minorities, immigrants or distant elites.

The point is not that the two sides want the same outcomes. They clearly do not. The similarity lies in their worldview and tactics: a struggle between victims and oppressors, claims of hidden manipulation, and the promise that taking power away from "them" will finally liberate "us".

The people or the experts?

Populists say: let the people decide, we don't need experts.

Technocrats say: let the experts decide, the people can't handle it.

These sound like opposite ideas. Political scientist Daniele Caramani argues they share an important assumption: both imagine there is a single identifiable "general interest" that can be discovered and implemented.

What is often missing is the possibility that both have a role. In an investment organisation, I would not want an actuary deciding the pension fund’s ultimate purpose nor a Pension Trustee calculating longevity tables. Expertise and legitimacy solve different problems.

The technocrat versus populist argument assumes there must be a choice between voters and experts. Yet most successful institutions rely on both. Experts provide information, judgement and technical skill. Citizens provide consent, accountability and direction.

Once again, the apparent opposites share a similar instinct: bypass the messy process of balancing competing interests. As an aside, it would be great if politics took on both more expertise and more opportunities for citizens to exercise power. (Citizens' assemblies is a topic for another day.)

The new elite

Anti-establishment movements promise to remove entrenched elites.

And then, almost inevitably, they develop elites of their own.

Animal Farm illustrates the pattern perfectly. After the animals overthrow the tyrannical farmer, the pigs gradually begin behaving in much the same way as the regime they replaced.

Robert Michels studied socialist parties committed to equality and concluded that even organisations specifically created to overthrow concentrated power develop hierarchies.

Leaders accumulate information, access and organisational advantages that others lack. He called this the "iron law of oligarchy". Whilst it clearly does not deserve the status of a law, most of us can think of examples where informal hierarchies naturally emerge. The lesson there is that revolutions can remove one form of privilege, but they cannot eliminate the mechanisms that create privilege. Power, information and influence tend to concentrate.

An excellent example is social media. The promise was to remove editors, broadcasters and gatekeepers. Instead of powerful institutions determining what people saw, an open marketplace of ideas would allow everyone to participate equally.

Yet platforms developed their own forms of power. They write the rules, determine what content remains online and, through algorithms, shape what billions see. Legal scholars have described these platforms as functioning as private governors of online speech.

Tax cutters versus spenders

Finally, it is remarkable that over the last quarter century, mainstream parties have often presented themselves as either champions of lower taxes or champions of higher public spending.

At first glance these seem like fundamentally different positions. On closer inspection, however, both often rely on the same mechanism: borrowing.

Tax cuts are rarely fully matched by reductions in spending. Spending increases are rarely fully matched by higher taxation. The gap is financed by generations to come.

The evidence is straightforward. Public debt has risen substantially across much of the developed world despite governments of different political persuasions taking power.

Deficits have frequently persisted through both expansions and recessions, suggesting that many political systems find it easier to borrow than to force today's voters to bear the full cost of today's promises.

The same tendency appears elsewhere. Demographic pressures are deferred rather than addressed. Weak investment slowly erodes the potential of an economy and labour shortages are managed through short-term fixes rather than long-term reforms.

The “big disagreement” is therefore smaller than it first appears. Both tax-cutters and big spenders can end up offering present gains while pushing costs into the future.

So what?

• Labels feel useful but often hide common underlying frameworks.

• Political extremes divide the world using very similar stories of hidden power and manipulation, offering attractive simple explanations.

• Populists and technocrats both overplay the value of expertise or legitimacy masking the value that both play in making good democratic decisions.

• Revolutions frequently replace one elite with another rather than eliminating elites altogether. New forms of power emerge when old ones are dismantled.

• When examining any debate, look beyond the stated position and ask whether the underlying worldview, incentives and methods are more similar than they first appear.

Next week's blog will be "Citizen's Assemblies". As always get the blog delivered directly to your inbox on Home | Deciders | for mental fitness | change your mind.