The Death of Occam’s Razor – 16/01/2022

Jan 16, 2022


Happy Sunday to all and I hope you are well. Before I move on to the intended and promised “Meat” of the article today (can you say that in Veganuary?), I just wanted to note some of the events of this week. Not the Westminster events which have seen the markets price in a 66% probability of us losing Boris Johnson this year (I’m not so sure – he’s got alligator blood as they say in the poker world – can’t get rid of him) – the enquiry will roll on, and I’ll be surprised if every other MP in the other parties is totally blameless too, so perhaps there will be fireworks to come on that front; but the events that we will have to consider going forwards will be the topping of 7% inflation in the US, although the bond markets haven’t taken it too badly yet – seems that they are still not believing the Fed will do what they said they will, and for good reason – they have form for not doing this going back some years. But this time is different, I hear you say – and it is, a bit – they do at least need to try this time – but will they go through with it? Odds against, in my view.

Anyway – you can tell I am champing at the bit; when I had some positive feedback after our live video on Sundays at 10am (shared on Piotr Rusinek’s timeline, my timeline, LinkedIn, and also YouTube for Hammered and also Property Sisters, both well worth subscribing to) – I was in no doubt that this article had to be the main focus for this week. So, with no further ado, I present to you “The Death of Occam’s Razor”:

It is, as you might have hoped, a multi-level point. The pedant in me, who I lose the inner battle to on most days, will tell you that Occam’s Razor is actually not what most people think it is. For those who are fans or have at least watched the panel show “QI” with Steven Fry, the answer that sets off the annoying and embarrassing noise as the “obvious” answer which is actually incorrect, is that the simple explanation is the answer. It certainly is what I understood as the characterisation for many years – and I do want to get into this as well.

However, what it truly means is that things should not be over-complicated – officially, “entities should not be multiplied beyond necessity” – and so this first and correct characterisation is on the wane in a big way, in today’s world. For a start – the current UK government! Ever since the emergence of the Austrian school of economics, Milton Friedman’s rise to fame and the subsequent development of the whole monetarist school of economics – and, in the UK, the rise of the Thatcher government of the 1980’s, there has been a trend. That trend has been for government to shrink, based on the ideology and also the belief that the market can sort out so many of the problems that there are, that government really needs to take a limited role and rely on the “invisible hand” as characterised by Adam Smith in the 1700s.

This, of course, is all fine (well, there are drawbacks – e.g. those that are left behind and “market failure” in general) in peacetime, where there are still tensions, ups and downs, but when you go onto the war footing in a big way (not really talking about a smaller, distant conflict with the might of the USA behind you, or in front of you), just as we did during the pandemic, finally the value of big government is remembered again. And boy, is big government back with a bang.

It’s taken a few political parties around the world by storm. The UK is no exception – if the Conservative party support big government, what room is there for Labour? Very challenging. This isn’t an ideological shift for the whole party of course, and the all-powerful 1922 committee very much do NOT support this move. Hence, should Johnson go, and Truss be instilled as the “small state saviour” – you know what this will mean – austerity. A poorly guided policy at the best of times…….with many critiques from all over the political spectrum – and it won’t be pretty if that’s the way we do go.

It isn’t to say small state can’t work. It is also, often, mistaken that all government contributions (i.e. tax) are wasted (the libertarian viewpoint, the extreme Friedman case). This is also ideological rather than factual. Often, economists will look to Scandinavia as a model for great outcomes for its citizens in these conversations – and it is understandable. Draw a line through Norway (despite the fact that the UK has had as many chances as Norway to do what Norway has done, as has any major industrialised economy) because of their oil-based strategic advantage, and concentrate on the others for a moment – often bemoaned for high taxes, but Sweden’s basic rate is 32% (without as generous a personal allowance as in the UK, granted) and higher rate is 52%, which, when you put the national insurance in, is not grossly dissimilar to our highest rates. (VAT is higher too – 25% – but soon our corporation tax will be higher than theirs).

The investment in public services means that the highest taxpayers don’t “pay twice” e.g. education, private healthcare, not as often as they do in the UK – and overall, the tax burden is likely therefore lower, or comparable (although their capital gains rate is 30% compared to our 20%, although 28% for property of course). Interestingly, and very rarely spoken about, is the way in which resources are allocated for healthcare and education in Scandinavia – healthcare is funded from the tax take, but often provided by the private sector and paid for by the state funds. There is, like the UK, some railing against private healthcare provision – less than 10% of the hospitals are private, but half of the private hospitals in Sweden are not-for-profit.

This is big state, BUT utilising the power of the market. Politically unpopular – but look at the Finnish system on schooling, and their teaching and the quality. Finnish teachers all have masters degrees, and only 10% of applicants get a job. Around 5.5% of GDP goes on education in the UK, compared to about 6.5% in Finland – a difference, and a difference of about 20% – but the results are far, far more than 20% better. The best investment we could make – brain infrastructure rather than travel infrastructure (although that is also an excellent investment). So – big state or heavier tax is not the only fruit here – it is WHAT it is being used for that is the issue (and I know some will be reading this screaming “£37bn on track and trace!” and I hear you!).

The problem is really mischaracterisation of the problems that exist, and, of course, bias and the lens in which you look at these issues. Do you really want to solve them? Or are biases etc. getting in the way.

Whichever way you look at it, however, currently, throughout the world, big government is yesterday’s small government. And we can’t be surprised, because of the pandemic. Some governments will of course come out with flying colours. Economically, the UK government has actually managed things very well (note – I am not including allocation of funds such as T+T here, but strategic policy around taxation in general, furlough, etc.). Not flawless – but actually, very good. And of course their backsides have been saved by a decent vaccine rollout.

So, that’s stage one of Occam’s razor in serious danger; on life support; if not dead. Now to the disambiguation part – “the simplest answer is usually the answer”….and here we really go!

In many ways, this feels like an extension of the long-standing, justified phrase that “common sense isn’t so common”. We live in such a noisy world – there are “answers” for everything, as long as it has already happened. Predictions are much harder – and very few, if any, are held to account for what they actually predict. I enjoyed filming my predictions for 2022 with the Property Sisters on their YouTube channel (2 mentions this week!) – Ruth Hobbs did a great job of holding me to account for predictions that I’d made last year as well; some of which were good calls, some of which were incorrect. Extremely fair, but refreshing to be called back and also a good exercise to project myself backwards 12 months and remember how I was feeling at the beginning of what looked like a tough year last year.

Indeed, the truth itself has become somewhat secondary. The popularisation of the phrase “alternative facts” was, I’m sure, initially a tongue-in-cheek effort before it was popularised when defending just quite how many people were at President Trump’s inauguration. Post-truth became a thing, just like that, in 2017. And this was before the pandemic.

Now, I’ve nailed my colours to the mast relatively straightforwardly in recent months (and all the way through) on the Covid situation. The UK is quite a long way ahead of the rest of the world on Omicron (as it was with Delta, generally) – and things have panned out largely as expected/forecast at the beginning of December. The number in mechanical ventilation beds is going down, stubbornly, even in the face of many more hospital admissions (and many more deaths, sadly, but Omicron has not yet had the months it needs to “crowd out” Delta, if indeed it is going to manage to do that).

The sceptics have, finally, got their “common cold”/”flu” equivalent – which, in itself, was not silly by definition. This is a coronavirus after all – so the common cold reference was always arguably more relevant than one to the influenza virus. It should also be remembered that the UK “dry tinder” i.e. those who were likely to pass from one cause or another, but ended up dying with Covid/from Covid (and yes, I understand the distinction), did pass in 2020 and early 2021, due to the prevalence of the current strain and also the inability of the vaccines to be effective in time, unfortunately.

Zooming out reveals little of surprise. In April 2020 there were plenty of intelligent commentators who said:
i) This will go on until there is a vaccine
ii) Covid-19 is likely with us forever as a “new pathogen”
iii) The pandemic will likely last into 2022
iv) The pandemic only becomes endemic when we get to herd immunity, whatever that means
v) there are thousands of different permutations and combinations available to tackle all of this – they vary in cost (in £££) and in cost (to society – non-££££ although possibly able to be expressed in ££££, but likely only after the event) and also in effectiveness.

However, there are still pools of those who will not vaccinate. Djokovic fans, for one. Those who believe everything they read on Facebook, whether it be QAnon, BlueAnon, or any other flavour of alternative fact. And those who still believe they have unanswered questions – although the net is tightening because those questions, in the round, can generally be answered at this point. It just depends how much you want it.

I understand and sympathise with those who believe the pharma companies are “bad actors” here. An accusation a lot harder to level against AstraZeneca than Pfizer. However, Pfizer and Moderna are the ones with the revolutionary technology here; AZ is the modified chimpanzee common cold adenovirus. You can’t possibly argue that the Sackler family and Purdue pharma, just as one example, weren’t a very typical example of what can happen, at its worst, when you mix the profit motive and the healthcare industry (if you feel you can, then Dopesick is worth a watch on Hulu/Disney+, just as a starter for some real research).

However, we’ve quite literally got the eyes of the world on this. Only so many can be compromised by owning Pfizer stock/be on the payroll. The vast majority are not. Only so many can be caught by groupthink, or confirmation bias (there’s limited/no reason for that to apply to one side and not the other, anyway). The misquoted Harvard study (that “says” that only 1% of adverse side effects are reported to VAERS, the vaccine adverse effects reporting system) certainly cannot and should not be extended to deaths (the number in the study is actually between 1 and 13% of events are not reported, and bearing in mind reports include a sore arm – I didn’t report my sore arm from the one jab to the yellow card system and I’m sure lots didn’t bother either) – again, a few minutes to actually read the extract from the report itself to get the necessary information.

From experience and talking to people closer to the situation, and those who are qualified in one of the relevant fields, the reason why they are silent is because they are getting on with actually trying to sort it out. There’s no evidence that deaths are under-reported and their causes are not explained. This touches on the recent sharing around cardiac events in elite athletes – which has been poorly explained in the main, thus far – and indeed, the first reactions to these events has effectively poured petrol on the fire.

There’s a significant problem here. “Trust the science” has become an abused phrase. Science, in truth, welcomes dissenting voices and questions – which the pro-vaxx side has not, necessarily. Instead it has treated many of the questions as an annoyance, which is not the scientific method. People are bound to disagree and will continue to disagree – if you looked at the traditional Eastern and Western approaches to medicine, you’d find significant differences. You’d also find better health outcomes in both in different fields – i.e. both have merits, and both have drawbacks. That is science. However, there is a far bigger problem that many of the skeptics face. They point to times in the past where a “conspiracy theory” has ended up being proven, or been close to the events that have actually occurred. They don’t, however, in the main, like the bit of science which says that the burden of proof required to overturn the status quo is very high indeed – which is a key feature of science – think “beyond reasonable doubt” to give an analogy.

This, of course, is necessary. We have to contend, in the post-truth world, with outright lies. This has, sadly, been a feature of many podcasts featuring “truthers” – there is something endearing about the Joe Rogan approach who tries to answer questions in real-time on the podcast, via professor google, but of course, there are multiple issues with that. And once the millions of listeners have seen or heard the podcast, a very small percentage of them are going to do the follow-up work to establish the truth (or not). Rogan this week found out that myocarditis and pericarditis are side-effects of both the Covid-19 infection, and the vaccines – and that the best report shows that myocarditis/pericarditis are about 7 times more likely, and also more likely to be severe, after the infection than compared to the vaccine. Both are very rare – but likely to be exacerbated in those who put their bodies under extreme pressure (i.e. elite athletes).

This is unfortunate, and annoying, although Rogan has recently had guests that reflect his own bias and the fact he had “made his mind up” on Covid. A dangerous place to be, and not the scientific method. “When the facts change, I change my mind Sir. What do you do?” is the relevant quote here. The data would not be overly hard to crunch anyway – we had nearly a year/over a year with Covid-19 circulating in the world without vaccines, so we also have a potential control group (although it might be that certain variants caused more severe myocarditis than others, of course) – the point is, the real work can be done. But too many are still not interested in the facts.

We could do the same for masks – the memes still go around from “does a pair of underpants protect you from a fart” to “the size of the covid-19 virus is 600 times smaller than the fabric can protect you from on a surgical mask” (trying to encompass both ends of the spectrum there) – but very rarely do you hear any sensible conversation around the fact that transmission is often by attaching itself to water droplets, which WOULD be stopped by a mask. Or do you hear that masks are not particularly effective, but they are cheap and offer a minor inconvenience at best, and a 1% difference (certainly at points in the pandemic) has been worth having. Part of that is the binary world we live in – it MUST be right or wrong. Nor do you have any appreciation in the Western world that the south-east asians – the smartest people on the planet by overall IQ – have used masks for the past 20 years in which they have had to control a lot more airborne disease than the West has done. Are these people, 75% of the world’s population, stupid? Did they not have dissenting voices or the scientific method? Reach for the razor, folks, and it likely tells you the answer.

I saw a share this week that showed some of the smoke and mirrors trickery that goes on. Memes that convince you that you are in a small minority who are clever enough, good enough, bright enough, difficult enough to be asking the right questions – and that YOU are the educated ones, whereas everyone else is “asleep” or similar analogy. This is hogwash, when you think a bit more deeply about it. The best way to convince you to “go with me” is to heap undeserved praise on you – appealing to your ego, effectively.

All of this comes back to Occam’s razor (or the disambiguation) – what appears to be true is likely true. Tack the scientific method onto the end – the actual scientific method – to move away from the occam’s razor solution, we should require a high burden of proof in order to do so. The numbers are out there for this stuff, if you really do doubt or want to achieve that high burden of proof.

Back to our April 2020 conclusions, that the world has still not quite yet accepted in entirety. The razor was there for everyone to see. We’d had potential pandemics many times in the past 20 years. Those likely conclusions have all turned out pretty well. There’s something that is close to anchoring, that has happened where some people don’t want to admit there’s a new killer in the world, and something that means a few changes – in Covid-19. Many have just got on with their lives anyway, regardless of it. A few smart ones founded hand-sanitizer factories/companies or otherwise got involved in healthcare, understanding the likely long-term implications early doors. Some are still fighting it, pretending there’s no such thing, or similar. Understandable, but futile. Did you realise that the Spanish Flu pandemic was actually H1-N1 (variants of which have come to the surface over the 100 years since it first killed so many people, things like bird flu which is H5-N1 is simply a mutation?)

Some fairly basic research and learning from history has answered a huge number of the questions that the pandemic has posed. Common sense isn’t so common, so join me in resurrecting the razor, and toasting William of Ockham – the abductive heuristic needs to return, and needs to be the dominant way in which we approach society and its many problems – otherwise, you risk burning a lot of time and emotional energy on “the enemy without” which is the worse thing to come out of the pandemic, in my view – the “New World Order”. Aside from the New World Order being mooted/around for the past 77 years and counting, without too much of consequence that I have seen – we can simply refer to Ray Dalio here who characterises it as the “Changing World Order” – which, of course, it has always been. Occam’s razor tells us that. Keep the razor close until next week, folks, when I’ll be off my soapbox and back to property-related matters once more.

As a postscript, it isn’t as though the razor DOESN’T apply to property anyway. It definitely does. If you look at a situation which has any level of complexity, such as “Why does anyone sell a property/company for less than its true value” – heuristics and the razor are going to serve you well. It doesn’t mean don’t ask questions – of course you need to – but it does accept that you are likely to have to make a decision with less than the full information. You may also need to make this decision quickly. We make these decisions dozens of times a week on acquisitions or potential acquisitions – and this keeps us sane, solvent and has given us a degree of success. The same as that “helpful” property guru who can tell you all the secrets in that FREE e-book – the likelihood is they want you in their sales funnel to suck you towards that plughole of expensive, overpriced knowledge sharing which helps to pay the lease payments on their Ferrari. And with that dose of cynicism, until next week – peace out.