“If everybody is thinking alike, then somebody isn’t thinking.”
- General George S. Patton.
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On 17 April 1961, a brigade of 1,400 Cuban exiles with the support of the United States Navy, the US Air Force and the CIA, invaded the swampy coast of Cuba at the Bay of Pigs. Their goal was to overthrow Castro. But nothing went as planned. Four ships were supposed to supply them with ammunition and supplies, but not one of them arrived. Two of them were sunk by the Cuban Air Force and the other two fled.
On the second day, the brigade was completely surrounded by 20,000 Cuban soldiers. By the third day, almost all of the insurgents that hadn’t been killed were captured and led off to prison camps.
In his book ‘Groupthink: psychological studies of policy decisions and fiascos’, the psychologist Irving L. Janis writes that the Bay of Pigs plan “ranks among the worst fiascos ever perpetrated by a responsible government… all the major assumptions supporting the plan were so completely wrong that the venture began to founder at the outset and failed in its earliest stages”.
How did such a disaster happen? There was no doubt about the technical qualifications of President Kennedy’s policy team that dreamt up the plan. Dean Rusk, Secretary of State, had been recruited by the President himself from acting head of the Rockefeller Foundation. Robert McNamara, the Secretary of Defence, was an expert statistician who had worked his way up the presidency of the Ford Motor Company. The President’s brother, Bobby, the Attorney General, was one of the most influential members of the team. McGeorge Bundy, Arthur Schlesinger, Jr. and Richard Goodwin, were Harvard men of impeccable reputation.
Janis points to six major miscalculations made by the President’s team. The first was that the invasion would never be traced back to the US government. The second was that the Cuban air force could be knocked out completely before the invasion began. The third was that the 1,400 men would be willing to carry out the invasion without any help from US ground troops. The fourth was that Castro’s army was too weak to counter the insurgents. The fifth was that the invasion would trigger support by the Cuban underground and set off armed uprisings that would topple Castro himself (sound familiar?). The sixth was that if the brigade did fail in its primary objective, the men could retreat to the mountains and reinforce anti-Castro guerrilla units. Each assumption was proven wrong.
Groupthink is the means by which humans make their worst mistakes. Because when power is concentrated among a small group their mistakes are bigger and more costly. When power is diffused across the population no one bad decision can lead to disaster.
Janis also identifies the traits common to all groupthink. The group’s discussions are often limited to a handful of alternatives – there is insufficient choice. The group fails to survey the objectives of the task and the values implied by the favoured plan. The group fails to re-examine the consensus choice in the context of risks and drawbacks never initially considered. And the group neglects courses of action initially considered unsatisfactory. They spend almost no time discussing whether they have overlooked anything. And members of the group make little or no attempt to obtain information from outside experts. Members of the group also disregard information from outside the group. And they spend little or no time considering how the chosen policy might be hindered by bureaucratic inertia, thrown off course by political opponents or derailed by accidents. So they don’t make contingency plans that could help them cope with any setbacks.
Beating groupthink boils down to some common sense principles. Nobody is perfect, for example – easy to say, but difficult for a robust group, confident in its own ability, to accept in practice. And the decisions made by groups can be particularly imperfect. The more cohesive the group, the more resistant it becomes to external criticism.
In addition to the Bay of Pigs fiasco, Janis studied in depth four other American policy disasters: Pearl Harbour; Truman’s invasion of North Korea; Johnson’s escalation of the Vietnam War, and Nixon’s cover-up of the Watergate scandal. He found that groupthink played a critical role in every one.
We submit that the Biden administration’s decision to impose financial sanctions on Russia after its February 2022 invasion of Ukraine – call it ‘theft of sovereign assets’ if you prefer – will turn out to be one of the most damaging self-inflicted wounds in the history of North American geopolitics and global economics. We are talking literally ‘end of empire’ stuff here. At the stroke of a pen it caused all non-aligned countries to question their commitment to US Treasury assets and to the US dollar itself. “If the US can treat a nuclear power so casually, what could it do to us ?” And when your national debt – which requires the goodwill of foreigners to be serviced – is running at over $34 trillion, you simply can’t afford to treat your sovereign creditors with such casual disregard. If you want to know why gold is currently rallying in every currency including the US dollar, look no further.
But then, examples of (Big State, socialistic) groupthink have been thick on the ground globally these past four years. A mysterious and seemingly revolutionary and unaccountable consensus with no popular mandate has arisen over multiple issues: an allegedly dangerous ‘pandemic’; ‘safe and effective’ ‘vaccines’ which require hideous censorship and curtailment of civil liberties to be coerced upon the population at large; draconian countermeasures against the (unsettled) science of presumed anthropogenic climate change; the determination to drive through policies relating to ‘Net Zero’ – again, with no popular mandate.. The term ‘groupthink’ itself would be overly generous to describe these doleful trends, in that it implies constructive mental activity of any kind. In any event, one thing in particular can defeat the forces of groupthink and that thing is truth. The Brownstone Institute:
“No one wants to find oneself in an information war. But when it happens, over the long term, history shows that there is an undisputed champion: the truth. Four years ago, a major war began as nearly all governments in the world built a bonfire for science, wisdom born of experience, limits on power, human rationality, free speech, rights, and liberties generally.
“Most of life since those days has been about the coverup. That has involved strange denials, redactions, data burns, communication deletes, limited hangouts, sock puppets, switchboarding between cutouts, favor call-ins, and every clever trick in the art of war to confound, confuse, and conspire – all in the interest of keeping the public in the dark.
“The good guys in this struggle only have one source of power: the ability to speak truth. It so happens that this method, while it certainly invites the slings and arrows of outrageous fortune, is the most powerful one of all. That’s because truth is infinitely reproducible. It needs only to find ears to hear to contribute mightily toward ending the corruption and restoring what we’ve lost.”
We recently cited Dr. Iain McGilchrist, author of ‘The Master and his Emissary’, a fascinating and extensive essay on the ‘split brain’ problem. Perhaps the apparent triumph of the left hemisphere is another manifestation of groupthink in all but name ?
“The left hemisphere never doubts that it is right. It is never wrong and never at fault; someone else is always to blame.. I believe it is the left hemispheric view of the world intellectually and morally bankrupt as it is that has resulted in what has been called The Meta Crisis: not just the odd crisis here and there but the despoliation of the natural world; the decline of species on a colossal scale.. the destruction of the way of life of indigenous people; the fragmentation and polarization of a once civilized society with escalating not diminishing resentments on all sides; an escalating not diminishing gap between rich and poor; a surge in mental illness, not the promised increase in happiness; a proliferation of laws but a rise in crime; the abandonment of civil discourse; a betrayal of standards in our major institutions – Government, the BBC, the police, our hospitals, schools and universities, once rightly admired all over the world – which have all become vastly overweighted with bureaucracy, inflexible and obsessed with enforcement of a world view that is in flat contradiction to reality and isn’t their job to enforce, and the looming menace of totalitarian control through AI..”
It has long been acknowledged that all successful investing ultimately involves a degree of contrarianism – not succumbing to groupthink, in other words. The consensus currently believes in a benign future for interest rates and for inflation. The financial markets remain strikingly complacent with regard to the outlook for growth stocks already trading on giddy multiples (and for most ‘green’ investments despite in many cases their sheer economic absurdity). Needless to say we shun the herd. We see merit in defensive value, in uncorrelated assets, and in the monetary metals, gold and silver, along with sensibly priced producers of the same. The consensus may well be that the petrodollar will last. We shall see.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
“If everybody is thinking alike, then somebody isn’t thinking.”
Get your Free
financial review
On 17 April 1961, a brigade of 1,400 Cuban exiles with the support of the United States Navy, the US Air Force and the CIA, invaded the swampy coast of Cuba at the Bay of Pigs. Their goal was to overthrow Castro. But nothing went as planned. Four ships were supposed to supply them with ammunition and supplies, but not one of them arrived. Two of them were sunk by the Cuban Air Force and the other two fled.
On the second day, the brigade was completely surrounded by 20,000 Cuban soldiers. By the third day, almost all of the insurgents that hadn’t been killed were captured and led off to prison camps.
In his book ‘Groupthink: psychological studies of policy decisions and fiascos’, the psychologist Irving L. Janis writes that the Bay of Pigs plan “ranks among the worst fiascos ever perpetrated by a responsible government… all the major assumptions supporting the plan were so completely wrong that the venture began to founder at the outset and failed in its earliest stages”.
How did such a disaster happen? There was no doubt about the technical qualifications of President Kennedy’s policy team that dreamt up the plan. Dean Rusk, Secretary of State, had been recruited by the President himself from acting head of the Rockefeller Foundation. Robert McNamara, the Secretary of Defence, was an expert statistician who had worked his way up the presidency of the Ford Motor Company. The President’s brother, Bobby, the Attorney General, was one of the most influential members of the team. McGeorge Bundy, Arthur Schlesinger, Jr. and Richard Goodwin, were Harvard men of impeccable reputation.
Janis points to six major miscalculations made by the President’s team. The first was that the invasion would never be traced back to the US government. The second was that the Cuban air force could be knocked out completely before the invasion began. The third was that the 1,400 men would be willing to carry out the invasion without any help from US ground troops. The fourth was that Castro’s army was too weak to counter the insurgents. The fifth was that the invasion would trigger support by the Cuban underground and set off armed uprisings that would topple Castro himself (sound familiar?). The sixth was that if the brigade did fail in its primary objective, the men could retreat to the mountains and reinforce anti-Castro guerrilla units. Each assumption was proven wrong.
Groupthink is the means by which humans make their worst mistakes. Because when power is concentrated among a small group their mistakes are bigger and more costly. When power is diffused across the population no one bad decision can lead to disaster.
Janis also identifies the traits common to all groupthink. The group’s discussions are often limited to a handful of alternatives – there is insufficient choice. The group fails to survey the objectives of the task and the values implied by the favoured plan. The group fails to re-examine the consensus choice in the context of risks and drawbacks never initially considered. And the group neglects courses of action initially considered unsatisfactory. They spend almost no time discussing whether they have overlooked anything. And members of the group make little or no attempt to obtain information from outside experts. Members of the group also disregard information from outside the group. And they spend little or no time considering how the chosen policy might be hindered by bureaucratic inertia, thrown off course by political opponents or derailed by accidents. So they don’t make contingency plans that could help them cope with any setbacks.
Beating groupthink boils down to some common sense principles. Nobody is perfect, for example – easy to say, but difficult for a robust group, confident in its own ability, to accept in practice. And the decisions made by groups can be particularly imperfect. The more cohesive the group, the more resistant it becomes to external criticism.
In addition to the Bay of Pigs fiasco, Janis studied in depth four other American policy disasters: Pearl Harbour; Truman’s invasion of North Korea; Johnson’s escalation of the Vietnam War, and Nixon’s cover-up of the Watergate scandal. He found that groupthink played a critical role in every one.
We submit that the Biden administration’s decision to impose financial sanctions on Russia after its February 2022 invasion of Ukraine – call it ‘theft of sovereign assets’ if you prefer – will turn out to be one of the most damaging self-inflicted wounds in the history of North American geopolitics and global economics. We are talking literally ‘end of empire’ stuff here. At the stroke of a pen it caused all non-aligned countries to question their commitment to US Treasury assets and to the US dollar itself. “If the US can treat a nuclear power so casually, what could it do to us ?” And when your national debt – which requires the goodwill of foreigners to be serviced – is running at over $34 trillion, you simply can’t afford to treat your sovereign creditors with such casual disregard. If you want to know why gold is currently rallying in every currency including the US dollar, look no further.
But then, examples of (Big State, socialistic) groupthink have been thick on the ground globally these past four years. A mysterious and seemingly revolutionary and unaccountable consensus with no popular mandate has arisen over multiple issues: an allegedly dangerous ‘pandemic’; ‘safe and effective’ ‘vaccines’ which require hideous censorship and curtailment of civil liberties to be coerced upon the population at large; draconian countermeasures against the (unsettled) science of presumed anthropogenic climate change; the determination to drive through policies relating to ‘Net Zero’ – again, with no popular mandate.. The term ‘groupthink’ itself would be overly generous to describe these doleful trends, in that it implies constructive mental activity of any kind. In any event, one thing in particular can defeat the forces of groupthink and that thing is truth. The Brownstone Institute:
“No one wants to find oneself in an information war. But when it happens, over the long term, history shows that there is an undisputed champion: the truth. Four years ago, a major war began as nearly all governments in the world built a bonfire for science, wisdom born of experience, limits on power, human rationality, free speech, rights, and liberties generally.
“Most of life since those days has been about the coverup. That has involved strange denials, redactions, data burns, communication deletes, limited hangouts, sock puppets, switchboarding between cutouts, favor call-ins, and every clever trick in the art of war to confound, confuse, and conspire – all in the interest of keeping the public in the dark.
“The good guys in this struggle only have one source of power: the ability to speak truth. It so happens that this method, while it certainly invites the slings and arrows of outrageous fortune, is the most powerful one of all. That’s because truth is infinitely reproducible. It needs only to find ears to hear to contribute mightily toward ending the corruption and restoring what we’ve lost.”
We recently cited Dr. Iain McGilchrist, author of ‘The Master and his Emissary’, a fascinating and extensive essay on the ‘split brain’ problem. Perhaps the apparent triumph of the left hemisphere is another manifestation of groupthink in all but name ?
“The left hemisphere never doubts that it is right. It is never wrong and never at fault; someone else is always to blame.. I believe it is the left hemispheric view of the world intellectually and morally bankrupt as it is that has resulted in what has been called The Meta Crisis: not just the odd crisis here and there but the despoliation of the natural world; the decline of species on a colossal scale.. the destruction of the way of life of indigenous people; the fragmentation and polarization of a once civilized society with escalating not diminishing resentments on all sides; an escalating not diminishing gap between rich and poor; a surge in mental illness, not the promised increase in happiness; a proliferation of laws but a rise in crime; the abandonment of civil discourse; a betrayal of standards in our major institutions – Government, the BBC, the police, our hospitals, schools and universities, once rightly admired all over the world – which have all become vastly overweighted with bureaucracy, inflexible and obsessed with enforcement of a world view that is in flat contradiction to reality and isn’t their job to enforce, and the looming menace of totalitarian control through AI..”
It has long been acknowledged that all successful investing ultimately involves a degree of contrarianism – not succumbing to groupthink, in other words. The consensus currently believes in a benign future for interest rates and for inflation. The financial markets remain strikingly complacent with regard to the outlook for growth stocks already trading on giddy multiples (and for most ‘green’ investments despite in many cases their sheer economic absurdity). Needless to say we shun the herd. We see merit in defensive value, in uncorrelated assets, and in the monetary metals, gold and silver, along with sensibly priced producers of the same. The consensus may well be that the petrodollar will last. We shall see.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
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