The Cutting Edge of Occam’s Razor

Originally written in 2023.

“If we understand the mechanisms and motives of the group mind, it is now possible to control and regiment the masses according to our will without their knowing it In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”

-Edward Bernays, “The Father of Public Relations”

Modern capitalist societies are incredibly complex. The number of variables and actors that participate in every facet of society is enormous, and quite possibly too large for anyone, or anything to truly calculate. Actuaries sometimes try, at least in their realm of risk management; a job that requires passing multiple difficult exams, along with an analytical, math-heavy background – to approximate this complexity. This complexity only increases with the march of progress, globalization and outsourcing, meaning that most products an individual interacts with likely came from another nation, or possibly even another continent. Given the ubiquity of this complexity, it’s only natural that individuals might want to reason on how particular things came to be, or why certain things are happening in the world around them. The problem arises in the fact that there’s no particular one reason for anything happening – their fruit could be more expensive because gas prices in Thailand, where the fruit is shipped from are spiking; or maybe the retailer is just trying to increase their margins. Or both, or a myriad of other factors. To remedy how exhausting all of that is, most people tend to use Occam’s Razor.

Occam’s Razor is a philosophical razor, a heuristic or problem-solving principle that involves finding the most basic explanation for things. It’s also known as the principle of parsimony. Unfortunately, the complexity of modern societies often doesn’t quite allow for proper use of such a basic tool. The most stunning examples of this tend to be political in nature, like this article about President Biden being to blame for rising gas prices. Or this almost-satirical op-ed from the think-tank the American Enterprise Institute, also cutting into President Biden’s anti-fossil fuel policy positions. However, even though President Biden is clearly not pro-fossil fuel, it stands to reason that perhaps, in this massively interconnected world, one person and one person’s administration is not solely to blame for high gas prices.

President Biden inherited a country in the midst of a global pandemic, right after OPEC and allied producers, OPEC+, massively cut oil production. Occam’s Razor here, too, would imply that supply and demand is responsible for oil prices. But that’s not necessarily true. Speculation on crude oil futures also drives prices, this Guardian article excellently summarizes. Factors that control oil prices don’t end there, either. Russia, one of the largest oil exporters in the world, has been in a protracted conflict with Ukraine for a good portion of President Biden’s tenure as President. Nor were price controls strictly a coronavirus measure – OPEC+ continues to institute price controls for the sake of profit.

The point to be made here is this – President Biden is no friend of fossil fuels, but it only stands to reason that he only has so much control over their prices. To solely blame him for something as multivariate as oil prices is a poor use of Occam’s razor, albeit a common one.

Similar arguments could be made for current housing prices, or inflation in general. While individuals are quick to blame the current administration or the Federal Reserve for inflation, it’s important to note that things are never that abstract. This deification of single entities as the cause or solution to a problem or set of problems is not constructive. Here, Joseph E. Stiglitz, Nobel Laureate in Economics demonstrates in a 94 page piece the strong tie between inflation and supply-side issues, naming the coronavirus pandemic and Russia’s invasion of Ukraine. In contrast, here, President Biden’s economic policy shoulders the blame on the most popular news network in the United States. One wonders if there isn’t some intentional piece to it all.

While referencing a particular cable news network is low-hanging fruit, most individuals can likely think of a recent instance they might have experienced with this overuse of Occam’s razor, even benignly. It’s also important to note that Occam’s razor is not randomly used – these entities are singled out because they absolutely do have some measure of power over these phenomena, and should not be thought of as helpless actors as a policy. Thinking outside of the box is paramount, as well – while these systems are profound and ubiquitous at this point, there wasn’t always crude oil future trading, for example.

Individuals must take extra care to account for the true power one entity has over any particular situation, and try to take as many variables as possible into consideration when determining their stance. It’s not always easy to see the forest for the trees, but it certainly makes things better.

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