The Destructive Effect of Emotions on Economic Models

Economic models work within the normal operating levels of human emotions with most people being within the 80% - 90% normal emotional stability. Those people who are less rational, living in a state of panic or exuberance, are not significant enough to significantly influence the emotional swings of larger populations.

Figure 1: Emotional Normal Population Distribution

So we have 80%-90% of the economic population operating rationally and generating wealth within good and poor cycles.

Figure 2: Emotionally Normal GDP Growth Curve

Under normal emotional conditions most economic models work as the behaviour is rational.

When the rational distribution of the population’s emotions is altered, their economic nature alters. What was their normal status no longer exists. A different emotional status now exists. This is frequently mirrored in the problematic history of Government policy changes not achieving what was planned. This is because the implementation may adequately change a population’s attitude to eliminate their original emotional status and create a new emotional status and a different socio-economic outcome arises to what was anticipated.

Figure 3: Cessation of an Emotionally Stable Population

As a population takes an emotional excursion we immediately see that the population has a diminished rationality.

Figure 4: Exuberant Emotional Excursion of Population

Figure 5: Panic Emotional Excursion of Population

It becomes chronically difficult to work with populations that shift outside the bounds of normal behaviour. Existing models falter and the prediction of behaviour becomes very short term and unreliable.

Societies should not be departing from their normal emotional range, but they do, generating unusual stresses. A deeper understanding of how contributing societies interrelate, what their triggers are and how they react would help to prop up modern socio-economic models.

The Fundamental Reasons Economic Models Fail

The traditional use of large groups of people in economics has arisen because the use of individuals is impractical and small groups appear erratic. The practice of using large groups has proven flawed. The use of large group works for a limited scope of stress, however outside these limits the change in the nature of the groups will cause them to fail.  Using this allegation most economic models in this field are thus flawed when shifting into the chaotic outside parameters.

A society is made up of many subsocieties, each with an individual identity, and therefore a different set of values and with a different mix of triggers.

What has been determined is that each society has two identities, one normal Omega, passive condition, and one Alpha under stress. These identities have similar, if not identical values where the main difference between Alpha and Omega status is the ranking of the core values.

A nation, in a time of relative calm will have a good level of cohesion with a minor level of dispute. The same nation under duress would trigger reactions in it’s subsocieties that would then adopt Alpha values that may well conflict and pull apart a previously amicable relationship.

It is very difficult to understand relationships of groups within a society particularly when those groups react differently to different stresses. It is easier seeing this as changing identity where all societies have a dual identities. Thus there is an essential need for further planning and deeper understanding of the makeup of dual identities. The danger lies in excluding the situational dichotomy of groups, in national planning. This will mean economic models will fail when the economy shifts outside the normal parameters and stresses start changing the foundation of all models, the group.

Thus it is imperative to use economic models that allow for the subsociety Alpha/Omega dynamics that would otherwise look irrational.

Delamination is a phenomenon that has been with mankind since prehistory. Whilst Delamination is mostly a detrimental issue, there are some very positive aspects where a break away occurs enabling multiple societies to grow on their own and excel without burdens of other societies slowing them down.

It is seen as detrimental when resources are divided and contested, frequently being allocated according to power rather than optimal use. Where the contestation is based on economic competition it remains healthy. When allocation is based on power, through greed, it becomes a negative imposition on the growth of economies.

It shares dynamics linked to cohesion but it is as an important factor as the separation gives freedom for evolving identities and greater diversity reducing stagnation, shuffling the mix and the formation of new interactions. The detrimental aspect is the loss of interaction and a segregation that becomes suppressive with reduced productivity and increased poverty.

Delamination occurs throughout a multitude of planes and is arises from many differences from racial to religious, from economic to geographic. It occurs in all societies.

The understanding I have is that the delamination needs attending to, monitoring and shepherding, constantly allowing separation where a country benefits and either easing differences or forcing bonding where the greater society is to benefit.

As the field of “Economics” is the best measure available to measure social behaviour the aspect of “Social Delamination” shows how this field has failed in the past and continues to fail society so long as emotions are the main consideration of politics, with increasing use of micro controls. It is occurring more often as a failure to correctly implement Economic theory rather than the theory being at fault.

The study of the Building Industry is indicative of the danger of the multiplier effect in both a positive and negative connotation. It highlights the narrowness of the band where models work.

The Economy is in a state of flux and instability that is a mix of social uncertainty, changing status being multiplied through industries such as finance and the building industries that in turn feed back into the effect.

This is avoidable by taking the Alpha and Omega identities into current models and wealth linked back to the property industry.

Social Group Identity Dualism

Over the past two years I have tried to build more than 12 economic models for Social Delamination, and notably failed. Some failed immediately but the remainder failed only on testing. What has stood out is that the very issue, causing Delamination, that I am trying to isolate, is the same issue negating existing models. I tried modifying many other good economic models, however they too failed for the same reason.

"We are dealing with situationally driven morphing of social groups".

I experimented tried comparing single issues such as Religion and Race. Christians behave differently to Muslims but even if they are dominant values and identities I found that secondary identities are powerful enough to generate a stronger group from conjoined identities. Black Christians react differently to White Christians. Identifying core values is important but so is the identifying the next tier of values. The core is the foci of identity.

When identities were viewed in order of preference they very often were changed in ranking when the society was stressed. When destressed they formed another series of rankings with different levels of importance.

A “Black Christian Zulu Male South African” has become a “Male Black South African Zulu” as priorities have changed. A loose but powerful example of different groups with the same people but different periods.

However most groups react to crises differently when in different settings. Thus it is necessary to understand each group and their intergroup dynamics.

While England and Europe have different structures both psychologically and ethnically, South Africa presents a simpler modern amalgamation of firmer individual identities that were in various states of conflict in recent history and holding together on a lick, spit and lots of prayer. They are very nationalistic but when there is stress it can come apart in a myriad of ways.

Each person and each group has two social identities. 

A nation needs to be set into groups according to the population’s own identities.

Core Foci are short term non-negotiable identity values. Where the group “core foci” is reflected in the defining of the secondary identity. 

Soft Core, Passive Identity – Omega Status

Soft Core is the looser individual national identity in a passive setting. We are South Africans. In times of dispute with our neigbouring countries whether it be foreign travel, war or soccer we strongly identify with our nationality. This is a strong goal to aim for to second our other identities to the national identities. We are South African, Black, White, English, Zulu but foremost South African. This is for a short time, and directly related to challenges and the remainder of the time we deal with the hard core of our own identities. 

Hard Core, Stressed Identity – Alpha Status

South African Hardcore is a reflection of the history of South Africa where groups are working better together but have to face the reality that the damage of discrimination will continue for a few more generations if not managed correctly by politicians.

Therefore it is necessary to locate core identity values with secondary values and pressure test them to see what they change into in a time of crisis.

Society undergoes changes, switching which groups are prioritised as happened to South Africa in ’92. The significant differences between white tribes became a smaller consideration when the Blacks took the reins. The black population, fairly divided, became more aware of their differences as the common cause had been achieved. As such they stressed bonds and groups parted ways, or reduced interaction.                            

So when core values do change the semi-Peripheral is influenced and influences other values and identities.

The incorporating of non-standard or foreign communities depends on their common values that they share with a host nation's values.

Notably self identity is that of a foreigner first, then from where that person originates. The identifying with a religion is a problem if it differs with the common religions, particularly if it is the core value and there is a desire to convert people, as happened with Christian colonization and more recent Muslim settlement with similar goals and resistance.

Can they assimilate well or, as are economic refugees in South Africa, subject to xenophobia when jobs and resources are short?

We can view South Africa as proudly “South African” but deeply divided by lack of trust on Racial grounds. The racial divide is also on political vs economic power.

 Identities

Religion: A freedom to express faith in the way they live and work.

Tribe / Nation: The ancestral extended  social group with strong roots

Age: Different age groups are raised in different environments and as they age their needs change.

Language: Communication is a quick way to discriminate and it is easier to work within the same language group.

Sexuality: Male, female, gay or lesbian face social separation by inclusion or exclusion.

Class: An old elitism hold over from hundreds of years is changing to wealth segregation where people prefer to be with familiar people.

Location: Where people grow up is a common identifying factor. 

Triggers

Financial Stress: Unemployment, relocation

Isolation: Freedom of movement and congregating.

Justice: Treatment by police balanced. Courts are quick and effective with equality.

Services: Water, energy, health, roads, transport, communication

Security: Safety for person, family and property

Opportunity: A system of education, support and work that will enable people to grow their families and communities.

Conclusion

We have a bipolar situation with each group where they switch from Omega, soft core common values to Alpha, hard core group values when under stress. The understanding of stress as a trigger is as important as knowing what each identity of all the groups are so we can understand where things will come apart when stressed in specific manners.

Money is not as important as Race, Religion but groups all need money or wealth to survive or grow. A shortage of wealth means that the societies have to compete for resources and the $ becomes the problem that raises stresses in interaction bonds. The stronger core bonds tighten and as interaction is reduced the soft core values are set aside.

It is very difficult to understand groups within a society but when those groups react differently to different stresses, changing identity, this needs further planning and deeper understanding of these identities. Not including the situational dichotomy of groups in planning will mean models will fail.

Failure of Multiculturalism as a Policy

This is a very deeply researched and structured theory. It has been implemented by social scientists and politicians in the very best of liberal societies over decades.

It has failed. It has failed very soundly and very seriously. It is difficult to measure as the failures are many and in different areas. It is difficult to peg performance in an evolving society where pegs are difficult to define but significantly below poor.

The problem has been that the theory was compiled by intellectuals with ideals and sold by politicians with agendas. In Europe it involved inclusions of cultures into the white domicile societies by imposing ideals onto the new imported cultures. Europe had its own morphing cluster of cultures through history and multicultural on their own terms derived by considerable trade and blood-letting.

Modern practice has been to incorporate new cultures into their own as an ideal driven program. These groups were each of only one culture but since they were no longer in their homelands they were incorporating aspects of culture from their new home. This incorporation determined that they were no longer the original culture but a totally new one formed with ties to both new and old cultures. The population of an immigrant culture and their density determines their emphasis on old culture and assimilation into their new home. Thus the soft core of the new home values are being challenged by their hard core old values before they have time to merge with the home core values and as such are likely to separate under duress where important values differ.

Africa is a massive mix of ethnicities, tribes, cities and cultures. Throw in various religions and a history of imperialism then we exclaim that we don’t understand why there are split loyalties, favouritism, conflict and genocide. Europeans in Africa defined boundaries set to the rivers and convenient geographic features that tribes settled around for existence so they were split into nations direct through tribes, previously strong tribes were diminished in representative voice to below that of tribes not split.

Imperialism is a short part of history in Africa, but an immense impact. South Africa stands alone in being around for 400-500 years under colonisation. Mozambique has been trading, with ports dating back hundreds of years but their penetration was limited. Imperialism encouraged race to be a core issue that was detrimental to the majority who would go on to successfully challenge this.

With significant strife existing the issue of core values are still not being addressed and there will continue to be stress and in times of hardship there will be further separation and strife. Forcing cultures together is inflammatory.