Learning Lessons from My Daughter

The importance of stopping the scroll to pause for reflection. It's time to take The Sniff Test.

“Daddy, why are the Americans cutting healthcare and free school lunches?”

That’s not a normal Saturday morning conversation, but I am delighted my daughter is questioning what she sees on TikTok. Two-fifths of under 30s get news from the site, most of which is curated by influencers.

I stumble through an answer about politics as the art of the possible. Deep down there is a gnawing question. How does a 870 page law get distilled into two talking points, and why?

TikTok Fodder

The Dividend Café provides a succinct summary of Trump’s One Big Beautiful Bill. There are five main thrusts. By far the biggest is to extend the tax cuts passed during Trump’s first term. Without this, 62% of taxpayers would be facing higher payments with a consequent chilling impact on economic growth.

The bill also delivers campaign promises about the tax treatment of tips and overtime, makes it more attractive for businesses to invest, reduces spending growth and removes the debt ceiling. No mention of free school meals. The debt ceiling debate is an annual pantomime about whether Congress will allow the government to keep spending. They always do and we don’t need the theatre.

The healthcare question falls under reducing spending growth. The chart shows estimates of how much the US will spend on Medicaid over the next decade before and after the OBBB. A decade from now the reduction might be more than $150 billion.

That’s a lot of money. Divide it by the cost of treating one person and it looks like many people will be denied healthcare. That makes for a great headline. It’s more than enough fuel for a TikTok video.

The administration claims a lot of those people are illegal, duplicates, or already dead. Spending on Medicaid and the Affordable Care Act (Obamacare) is $200 billion more today than forecast four years ago. To some, it’s running out of control.

Yet Medicaid is joint federal and state insurance for low-income people. It doesn’t take long to find a sympathetic family that feels threatened by a loss of healthcare. That’s an even better video.

Today’s Mad Men

Every bill that passes parliament is contentious. Redistribution takes from one group and gives to another. There is always a winner and a loser. At first, the loser is the person paying. After eight decades of welfare, not spending creates a large group of losers as well. It gets ever harder for government to cut back.

Social media magnifies this. Every bill can be dissected to find a nugget with which to make a political point. Medicaid is often tied to the provision of free school lunches. Some states provide meals for all students once a quarter of families in a school district are on Medicaid.

The OBBB raises this requirement to over half. The kids on Medicaid can still get free meals, but the better off will not. States hate it because it’s more work to figure out who qualifies. Psychologists worry about stigmatising poor children.

There is an immense political effort required to pass legislation. US senators and congressmen hold out for favourable deals for their electoral base. These holdouts extract a high price when the numbers of Democrats and Republicans are almost even. Every bill has provisions stuffed into it that supporters of the bill don’t like. This is the “pork-filled” politics that Elon Musk rages about.

On the one hand we have governments trying to pass big bills covering lots of topics, because there is insufficient political capital to keep passing smaller bills. On the other, we have commentators fine-slicing bills into component parts to make attention-grabbing videos. That’s a recipe for discontent.

Personal stories and appeals to emotion have always been part of politics. They matter in business and are a good way to win arguments at home. No one wants to appear cruel.

The video reels of social media influencers are just the latest in a long line of ways to tug on our heart strings. Susceptibility is what makes us human. Influencers are arch capitalists, who push collectivist memes for money because 62% of those aged 18-29 hold a favourable view of socialism.

Influencers are today’s Mad Men.

The Advertising Economy

In Chapter 24 of the General Theory, Keynes said:

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” John Maynard Keynes

Keynes is warning that subliminal ideas govern practice. We absorb mental models over the course of our lives and even erratic behaviour can be explained by the selective channelling of intellectual fashions.

In 1974, Kahneman and Tversky published a paper in Science showing how people departed from the rational behaviour assumed in economics. Thereafter, Richard Thaler among others imported psychological findings into economic models. Kahneman’s contribution was recognised by the 2002 Nobel for economic sciences. Thaler was to have much greater influence.

We’ve looked at the practical limits of nudge theory before. There is a deeper objection to its purpose. If politics, economics and business are about persuading people to behave in a certain way, who determines that way? Who nudges the nudgers?

Today we live in an advertising economy. For everything we watch, read or buy there is a follow-on action.

The most successful companies are those that capture and hold our attention. Google is the world’s largest advertising agency. The politicians winning elections use the same playbook.

Thaler teamed up with Cass Sunstein for the 2008 book Nudge. By then their theories had been widely adopted. Tony Blair is credited with bringing the idea into British government. His constant attention to the polls did not shape his politics. He was checking whether we were doing his bidding, or whether we needed another nudge.

The beauty of nudge is that it can be anywhere and everywhere and still be unnoticed. Our instinct is to respond to emotional prompts. You might as well tell the dog not to bark as try to stop humans empathising. Meanwhile, government created a rod for its own back by being everywhere.

Patriotic Millionaires

All propaganda works in two ways. It identifies individuals with a cause and dehumanises those who oppose it. We identify with individuals and ignore the faceless masses.

If you want to generate sympathy for migrants you do not show film of hundreds of them running up a beach. You print a photo of a drowned boy washed up on that beach. The substance of the message may be the same, but it is the form that determines its resonance.

When we stop and reflect, the substance of the message becomes more important. Social media works to keep us from reflecting, because there is always another image to grab our attention. The prize goes to the one we share. Even that is temporary.

In the UK, the government is responsible for almost half of the economy. It’s over a third in the US. When it becomes this big, government is the faceless crowd. No one cares about the mass of people paying taxes. Everyone cares about individuals who suffer if they don’t pay more.

The MP Liam Byrne took to social media this week to justify a 2% wealth tax. You may remember the “I’m afraid there’s no money” note at the end of the last Labour government. Byrne wrote it. Today he thinks the answer is talking about Patriotic Millionaires prepared to pay more. The shaming of the unpatriotic cannot be far behind. Names will scroll over video of hungry children and homeless families. A goldmine for influencers. You heard it here first.

Government is seen as big and powerful, controlling our darker urges and protecting the little guy. To plead poverty or powerlessness makes no sense. We despise politicians who tell us they cannot, as Rachel Reeves found out. The government always can, which is why it cannot get away with cutting healthcare or free school meals.

Seeking Unity

The OBBB is about stopping taxes rising for most Americans. Rich people pay more tax and hence benefit the most. It was a godsend for Trump’s opponents that Bezos rented Venice while the bill was being debated. He’s a pantomime villain representing the rich.

Government is about making hard choices. At least it was supposed to be. Nowadays it is more about how far you can kick the can down the road. Adopt that strategy and you have no choice but to backtrack on every cut in spending and every service closure. Social media holds a magnifying glass to any perceived act of cruelty.

The only way to resist is with a grand plan. The only way this works is with a greater sense of common purpose. Genuine unity, not arm-twisting patriotic millionaires, or red MAGA hats. The One Big Beautiful Bill is presented as a grand solution to long-term problems. In a country divided, it’s just more pork-barrelled politics to be picked apart at the seams.

How do we create unity? Slowly, and by asking questions about the media we scroll. I am delighted to know young people prepared to do this.