A well-known economist and emerging markets expert, Jerome Booth started forming his ideas for Have We All Gone Mad? in finance with concerns for leaders’ rationality when faced with groupthink movements. Here, he explains why he wanted to write the book and outlines some of the key points it covers.
What made you want to write this book?
My ideas on the connections between the various contemporary problems and uncertainties I write about in Have We All Gone Mad? were not in any existing book I could find.
I started forming these ideas in finance, thinking about predictable patterns in group behaviour driven by collective irrationality. Not only do investors and asset allocators make necessary shortcuts in their thinking, but they are informed by particular world views. These may be useful for a while, but then suddenly not.
More recently, in my role as chairman of a number of charities in the UK, I came to appreciate that moral reasoning and mental stress were replacing rationality and tolerance in decision-making.
You mention that ‘the purpose of this book is to help us learn quicker how best to cope with new communications technology and avoid losing time’. Why are we failing to cope with new technology?
We have Stone-Age brains and are much less rational than we suppose. We create theories and stories to help reduce uncertainty in our thoughts, but only after we have reached our conclusions. Counter-intuitively, perhaps, elite groups in society are more prone to groupthink than others because they are better at justifying their beliefs. Mass groupthink has been with us as long as human society, but new communications technology has changed our social networks and preferences, reshaped our moral boundaries and led to mental stress and intolerance. Understanding this better can help us adjust and cope more quickly.
How exactly does groupthink erode liberalism and reason and how could that lead into a decline into non-democratic politics?
Mass groupthink has coincided with an attack on the scientific method (and the scepticism on which it is based), and its replacement by pre-Enlightenment moral reasoning. Experiments can only disprove hypotheses, not provide certain truth, yet certain truth is what we crave. If we now all have our ‘own truth’, there can be no single objective reality. This has led to greater irrationality and hence confusion and intolerance in public life.
Democratic decline can happen when trust in our leaders’ competence, social capital and legitimacy is eroded. Using fear as an instrument of government policy to nudge behaviour can lead to short-term policy wins at the cost of a reduction in social capital. This is happening whilst big tech companies are also trying to make our behaviour more predictable. There are those who believe the most important political problem is who should be leader, and those who think that the more important question is how to hold power to account. Only the latter priority can protect liberal democracy.
What can business leaders take away from your book?
Two things. Firstly, they can learn how and why recent economic events and crises have occurred. Secondly, they can better appreciate how poor decision-making occurs and how to prevent it. The signs of mass groupthink are not overly difficult to identify and remedy. Indeed, this very vulnerability helps explain why successful mass groupthink is so effective at stopping criticism and debate, its moral defences seemingly impenetrable.
“With refreshingly clear-sighted analysis, Jerome Booth spells out how political, financial and social groupthink has damaged Britain – and, crucially, how we can tackle it. Highly recommended.”Liam Halligan, Daily Telegraph
“Most of the worst political decisions of recent years were made when all the mainstream politicians thought the same thing and no one challenged them. Jerome Booth wisely analyses why this situation happens so often and what can be done about it. Every politician and every decision-maker should read this book.”Lord Frost, former Cabinet Office minister
Have We All Gone Mad is available now online and in store.
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