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On a trip away from Lake Wobegon, Garrison Keillor took time to talk to us at tompeters.com. He and Erik had a great conversation about his latest book, A Christmas Blizzard, and many other topics, including a note from Julie Christie. We know you'll enjoy reading his Cool Friends interview. View our Archives for past interviews.

Comments

Tom,
Contrasting and comparing his viewpoint to that of Nassim Taleb would be quite interesting.

Posted by Randy Bosch at November 27, 2009 10:22 AM

'Twas ever thus - no surprises here.

Posted by Trevor Gay at November 27, 2009 1:48 PM

Hi Tom,

Interesting opinion...totally agree. I would say that, however, the dynamic range of pricing is definitely not symmetrical. That is, there IS a minimum based upon reproductive cost. So I would say the following regarding pricing:

Min = reproductive cost [sans subsidy business model]

Max = the sky's the limit!

...thanks!

Posted by Tom Berarducci at November 27, 2009 6:10 PM

Hey Tom!

I was just listening to the audio version of The Work Matters a couple of days ago. The word "cool" keeps popping up again and again.

Here's something unbelievably cool that goes along the lines of ReImagine.

The type of stuff you love:

http://www.businessmodelgeneration.com/

Enjoy and blog about it!

Martin

Posted by Martin Messier at November 28, 2009 5:08 AM

I had the occasion to mention this whole area as part of an event I did for BBC Radio 4's In Business programme yesterday and Tom's work was credited during the session and afterwards in the 1:1 interviews with Peter Day.

The In Business programme goes out on Radio 4 Thu 17th Dec at 20.30 GMT, repeated on 20th Dec at 21.30, then on the BBC World Service.

http://www.bbc.co.uk/programmes/b006s609

Very best

Peter Cook

Posted by Peter Cook at November 28, 2009 4:52 PM

Yes, Tom, most advanced psychology is beyond indispensable for every sort of relationship, professional and organizational, as well as personal. Aspects, addressed by you wisely, such as say “thanks,” offering apologies, and other tiny but profound well-meant gestures are cucial.

On ManagemenTv I saw an extremely interesting psychologist. He was also trained on Political Science. In the interview, as he was an affluent management adviser and coach, he said something extremely simple but which in my case I like to practice nearly always.

This physiologist said, that in dealing with great problems besieged by heightened emotions, he would not address the situation as a psychologist therapist but, ONLY, as prudent, tactful and always constructive DIPLOMAT. Without subtracting relevance to anything that has to with psychology, psychiatry, neurology and better yet neuroscience, we need an infinite amount of people who deal in kindness and in gratitude and in unimpeachably constructive mode.

Speaking on being an effective DIPLOMAT, I just remember that great American that is Professor Roger Fisher (Harvard University’s Negotiation Program) and his greatest experience in dealing with conflict management and the resolution of said conflict. As the mentioned psychologist, whose name I can’t remember, Prof. Fisher makes exactly the same case of being a great diplomat and statesperson.

Perhaps, just perhaps, the concurrence of applicable psychology with diplomacy is a matter that must be studied.

Nobel Laureate Dr. James Watson, one of the three in discovering and defining the structure of DNA, has said that in Century 21 psychology will be what Physics was and meant in Century 20. He is also addedd that one can “cope” with schizophrenia, bipolar ailment, Parkinson, Alzheimer and those psychopath who feel no remorse by making bad and ill and evil only and only if the set of genes for each illness (thoroughly genetic) are fixed through gene-therapy, chiefly the one that it will be available in the next one or two decades.

PS: Seasons Greetings To All And A Healthy And Fruitful 2010!

Posted by Andres Agostini (Andy) at November 28, 2009 8:28 PM

Thanks for letting us know about the mention of Tom on the In Business Programme, Peter!

Posted by Shelley Dolley at November 28, 2009 9:41 PM

The so-called "invisible hand" of markets is really just an aggregate of thousands of positive feedback loops between two human parties.

Thus, it's not surprising that psychology and sociology should play such a large role.

Markets tend towards extremes when the causes and effects in a particular feedback loop become interchangeable (e.g. stock prices stop being solely an effect of people deciding to buy but also start to become a cause for further purchasing).

Thanks for highlighting this idea that economics is not a science, per se. Too often we forget that much of what passes as investing is nothing more than speculation (i.e. gambling) with little social benefit.

Posted by Timothy Post at November 29, 2009 9:57 AM

Great comment, Timothy. Thank you. In fact, I was thinking along the same lines.

I agree with this post. This being so, is there a greater probability of a kind of market manipulation, a kind of "narrative fallacy" as Nassim Nicholas Taleb might conclude where we "fit a story or pattern to a series of connected or disconnected facts" to suit our particular agenda? So, the fact is often ancillary to the story or product whether connected or disconnected. Is this marketing? Listening to T. Boone Pickens and Aubrey McClendon talk about the values of natural energy, I wonder if this has more to do with their vested interest and the manipulation of the green industry to their benefit. Is this marketing?

Psychology, in the form of marketing, whether Mayor Bloomberg's $100 million to sway the local "market," or T. Boone Pickens' many ads in various media to do the same in the national market, may or may not be advantageous. If the product is second fiddle to the promotion, anything can and has been sold. But I would assume that if the product is crap it will not last for an extended period of time. Unfortunately, such is not true for politicians. Like it or not, policy matters in economics in the form of legislation or even the possibility of such and in the presence of lobbyists in Washington. When the public option appears defeated, insurance stocks soar. The narrative of lobbyists prevails. Does this have anything to do with the product itself? I think not.

Yes, psychology is paramount in economics. It's not then about the best product or the best interest of the people necessarily, but about who can influence whom by producing the best ad--you know, kind of like elections. I guess I'm cool with that because it's the people's choice in politics or products ultimately. The choice is often influenced by manipulation. But this does not mean that there will not be consequences for our choices down the road. The housing debacle is proof of this. It's like this really successful estate broker I knew some ten years ago who marketed loans given by banks, backed by the government and touted as a great thing for those without homes and apparently jobs. She's worth multiple millions, the banks are now giving bonuses in billions, the government is broke, and the people are bankrupted. Economics which stemming from psychology or numbers can be quite detrimental as both tell stories that can be manipulated or fabricated.

Here is Taleb on psychology in The Black Swan:

"Humans will believe anything you say provided you do not exhibit the smallest shadow of difference; like animals, they can detect the smallest crack in your confidence before you express it. The trick is to be as smooth as possible in personal matters. It is much easier to signal self-confidence if you are exceedingly polite and friendly; you can control people without having to offend their sensitivity. The problem with business people…is that if you act like a loser they will treat you like a loser-you set the yardstick yourself. There is no absolute measure of good or bad. It is not what you are telling people, it is how you are saying it."

Psychology seems largely influenced by narratives. Narratives are powerful, but can be quite manipulative.

Posted by Judith Ellis at November 29, 2009 1:43 PM

Peter – I don't know if I listened to the program that you referenced here, but I listened to the first one, "Unlimited Company" in the wee hour of the morning. Thank you. It was well worth the 30 minute listen. Employee ownership outside of the stock options of executives, eh? How are the benefits extolled in this audio, beside shareholder value, even possible where the responsibility of the company is increasingly not localized? This is the irresponsibility that Keynes thought was a negative force. The community and engagement of the models presented in the video is refreshing. If Walmart, for example, created a trust or direct model, the workers would benefit tremendously. But this would not deal with the issues of the inequality of workers in developing countries. Is this not our concern?

Posted by Judith Ellis at November 29, 2009 1:57 PM

I make extra effort, in all my buying decisions, to confound economists and psychologists in equal measure....

Posted by PaulH at November 30, 2009 2:23 AM

I subscribed to Prechter's service after seeing it recommended in Barrons. He was predicting a rise in the market in the weeks before the crash of '87. After the crash he was predicting further declines. But the market went up.
Maybe he's changed methods.
John
Shakespeare's Debtor

Posted by Shakespeare's Debtor at December 2, 2009 1:24 AM

I agree that psychology and sociology drive both the market and economic views. Looking back over the last year there were many defensive companies including tobacco companies and household names whose share price dropped by in excess of 30%, yet the underlying economies of those companies did not change, and earnings growth continued on the same trajectory as it had for the past 10+ years.

So what could have caused this price drop, all things being equal? Simple. Psychology and sociology, negative feedback loops etc. This idea has been around for a while; remember that Benjamin Graham introduced us to Mr Market as far back as 1949.

Posted by Denis at December 2, 2009 6:37 AM

Economic models are just illusions and nothing else. Mathematics is devoid of feeling - different behavior under different circumstances, hence it can't factor in behavior which is a driving force behind everything. Cass Sunstein and Richard Thaler say "Humans, the two men argue in their book, Nudge: Improving Decisions About Health, Wealth, and Happiness, tend to be emotional, rash, and uninformed, and value the present more than the future. They're far from the rational creatures upon which so much economic policy is based."

Posted by Muhammad Saeed Babar at December 4, 2009 8:21 AM