George Soros is probably now best known as the subject of crazy conspiracy theories emerging from the recesses of the internet into the thinking of populist politicians and their supporters throughout the world. Unfortunately for Mr Soros, he ticks all the boxes for the conspiracists: he is Jewish, an ultra-rich financier and an exceedingly generous supporter of the Democrats in the USA. To the conspiracists he is one of the mysterious cabal who control the world.

He is also a great proponent of the thinking of my favourite philosopher, Sir Karl Popper, whose work ‘’The Open Society and its Enemies’ (Volumes I and II) challenged philosophies which undermined the idea of democracy and so sought to limit the freedom of the people.

Since 1979, inspired by Karl Popper’s ‘Open Society’, Soros has channelled his philanthropic giving through the ‘Open Society Foundations’, which work in over 120 countries around the world. So far he has given over $32 billion to “support individuals and organizations across the globe fighting for freedom of expression, accountable government, and societies that promote justice and equality.”

But he was also one of those who predicted the financial crash of 2008 – and made a lot of money out of it by ‘shorting’ various over-priced listed companies – the banks. In fact, over many years, a large proportion of his wealth has come from correctly predicting when financial bubbles were about to burst.

In 2009 he explained his theory of market bubbles:

    “Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend. A boom-bust process is set in motion when a trend and a misconception positively reinforce each other. The process is liable to be tested by negative feedback along the way. If the trend is strong enough to survive the test, both the trend and the misconception will be further reinforced. Eventually, market expectations become so far removed from reality that people are forced to recognize that a misconception is involved. A twilight period ensues during which doubts grow, and more people lose faith, but the prevailing trend is sustained by inertia….Eventually a point is reached when the trend is reversed; it then becomes self-reinforcing in the opposite direction.”

Bubbles are usually based on real trends. The dot-com crash in 2000 (which he actually got wrong) followed the realisation that the internet could be used for commercial activity rather than just as a messaging network. There was then a terrific increase in the valuation of the companies which had found out how to make money out of it. The investors in those companies saw the growth and assumed that values would go ever upwards. They didn’t. The 2008 financial crash was based on actual increases in the cost of housing and so the need for ever-increasing borrowing to fund those purchases - and consequent increases in the market values of the banks. Because so much investment was tied up in the system, few dared to think the unthinkable - bank crashes.

Soros subsequently developed his explanation of bubbles into the concept of “fertile fallacies”: 

    “...if a piece of knowledge has proved useful we are liable to over-exploit it and extend it to areas where it no longer applies, so that it becomes a fallacy.”

So then, a fertile fallacy arises when there is a useful idea that has positive outcomes but is then taken too far. But this doesn’t only happen in stock-markets. It happens elsewhere in life, including in politics. Education policy is a good example. We start with the idea that education is a good thing and so, obviously, more education must be even better. Blair’s government came into power on the mantra ‘Education, Education, Education’. The theory was that we should have 50% of the population educated to degree level – something I never quite understood. But, it was said, education was a way to overcome inequality in its various forms - poor education often correlates with poor employment opportunities and so poor life prospects. As a consequence, more money was put into education and pressure was applied to the schools to up their game. The Tories have since adopted the idea that education is a vitally important in reducing inequality. But it is actually an example of a fertile fallacy. As Professor Sam Freed wrote recently:

    “Politicians, from all parties, love the idea that education is the answer to inequality. It’s intuitively plausible, appeals to those who see personal merit and hard work as the primary cause for differences in wealth, and avoids having to talk about the real problems. But ... states can only meaningfully reduce inequality by providing substantial financial support to those who need it. … It is ludicrous to expect schools to salvage a situation in which children are going hungry and cold in overcrowded, dilapidated housing.”

Better education certainly has benefits. But to rely on it as a major instrument of social change is unrealistic. It is an example of a fertile fallacy in action.

But we can also argue that the excesses of the ‘woke’ agenda are based on Mr Soros’s ‘fertile fallacy’. Bear with me on this. Woke sensibilities start with a fairly normal wish not to be gratuitously insulting; to be polite. We already had laws against various forms of actual discrimination or the stirring up of hatred on the ground of race, sex etc. This though has now been taken to extremes.

The idea of cultural appropriation is a good example. It means that a sombrero sold to a tourist in Mexico cannot be worn by him: apparently it would mean that he was pretending to be a Mexican and so would have appropriated Mexican culture. Now the idea that the culture of any country is the same wherever you go is at least ignorant, if not racist. And then to say that the tourist has appropriated (i.e. stolen), presumably, a ‘generic’ version of that culture is quite ludicrous.

We have in fact benefited from ‘appropriating’ each others culture, whether language, art, inventions, cuisine or ways of living since the dawn of time. Otherwise it would mean that the British could not use the theory of relativity (Einstein - German and then Swiss) or accept that the earth revolves around the sun (Galileo) and other nationalities could not use the insights provided by evolution (Darwin). To say that appropriation is now somehow a form of racial hatred is to adopt a form of racial or ethnic purity which hardly has encouraging antecedents - that fertile fallacy again!

An American elementary school struggling to boost low test scores is paying $250,000 to an organization called ‘Woke Kindergarten’. The children are predominantly from low-income families. Two-thirds of them are English learners and more than 80% are Hispanic/Latino. Based on the theory that white supremacy, racism and oppression are major barriers to learning, Woke Kindergarten puts on courses to train teachers to confront and remove those barriers.

Two years into the three year programme, achievement at the school has actually fallen. Less than 4% of students are now proficient in arithmetic (formerly 8%) and just under 12% in English (formerly 16%). A similar school has run a numeracy intervention program that has led to a more than 50% proficiency rate, up from 15%.

Now clearly, incorporating lessons from history about oppression is a valid thing to do, but equally clearly, for it to displace the role of evidence-based literacy and numeracy interventions is foolishness. Its promotion is based on the fallacy that critical race theory is the answer to all of life’s problems.

And don’t get me started on the trans debate. The existing legislation was based on our wish to enable the avoidance of embarrassment for those making such a major change. It amounts to a deeming of a gender change for legal purposes, subject to various significant conditions. This though has led to the assertion that we can all be who and what we like and that no-one else should be able to challenge us. The absurd extension of the original idea is that people are not merely deemed to be their new ‘gender’, but have somehow actually changed their sex: a physical impossibility.

So then, ‘woke’ in its various forms is based on politeness, but an ever-expanding concept of ‘politeness’. And to sustain it there is the need for ‘correct thinking’ about our past and present. And it is a form of politeness which is enforced in a far from polite manner on the internet by people determined not to allow any form of revisionist thought. Just like various repressive governments. I sincerely hope therefore that it will, like most market bubbles, finally burst.

I think I need a cup of tea!

10 February 2024

Paul Buckingham