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November 14, 2011

The Self-Attribution Fallacy -- Why Your Boss Is a Nut Case

Intelligence? Talent? No, the ultra-rich got to where they are through luck
and brutality.

By George Monbiot. Published in the Guardian 8th November 2011

If wealth was the inevitable result of hard work and enterprise, every woman
in Africa would be a millionaire. The claims that the ultra-rich 1% make for
themselves – that they are possessed of unique intelligence or creativity or
drive – are examples of the self-attribution fallacy. This means crediting
yourself with outcomes for which you weren’t responsible. Many of those
who are rich today got there because they were able to capture certain jobs.
This capture owes less to talent and intelligence than to a combination of the
ruthless exploitation of others and accidents of birth, as such jobs are taken
disproportionately by people born in certain places and into certain classes.

The findings of the psychologist Daniel Kahneman, winner of a Nobel
economics prize, are devastating to the beliefs that financial high-fliers
entertain about themselves(1). He discovered that their apparent success is
a cognitive illusion. For example, he studied the results achieved by 25
wealth advisers, across eight years. He found that the consistency of their
performance was zero. “The results resembled what you would expect from a
dice-rolling contest, not a game of skill.” Those who received the biggest
bonuses had simply got lucky.

Such results have been widely replicated. They show that traders and fund
managers across Wall Street receive their massive remuneration for doing
no better than would a chimpanzee flipping a coin. When Kahneman tried to
point this out they blanked him. “The illusion of skill … is deeply ingrained in
their culture.”(2)

So much for the financial sector and its super-educated analysts. As for
other kinds of business, you tell me. Is your boss possessed of judgement,
vision and management skills superior to those of anyone else in the firm, or
did he or she get there through bluff, bullshit and bullying?

In a study published by the journal Psychology, Crime and Law, Belinda Board
and Katarina Fritzon tested 39 senior managers and chief executives from
leading British businesses(3). They compared the results to the same tests
on patients at Broadmoor special hospital, where people who have been
convicted of serious crimes are incarcerated. On certain indicators of
psychopathy, the bosses’s scores either matched or exceeded those of the
patients. In fact on these criteria they beat even the subset of patients who
had been diagnosed with psychopathic personality disorders.

The psychopathic traits on which the bosses scored so highly, Board and
Fritzon point out, closely resemble the characteristics that companies look
for. Those who have these traits often possess great skill in flattering and
manipulating powerful people. Egocentricity, a strong sense of entitlement, a
readiness to exploit others and a lack of empathy and conscience are also
unlikely to damage their prospects in many corporations.

In their book Snakes in Suits, Paul Babiak and Robert Hare point out that as
the old corporate bureaucracies have been replaced by flexible, ever-
changing structures, and as team players are deemed less valuable than
competitive risk-takers, psychopathic traits are more likely to be selected
and rewarded(4). Reading their work, it seems to me that if you have
psychopathic tendencies and are born to a poor family you’re likely to go to
prison. If you have psychopathic tendencies and are born to a rich family you’
re likely to go to business school.

This is not to suggest that all executives are psychopaths. It is to suggest
that the economy has been rewarding the wrong skills. As the bosses have
shaken off the trade unions and captured both regulators and tax
authorities, the distinction between the productive and rentier upper
classes has broken down. CEOs now behave like dukes, extracting from
their financial estates sums out of all proportion to the work they do or the
value they generate, sums that sometimes exhaust the businesses they
parasitise. They are no more deserving of the share of wealth they’ve
captured than oil sheikhs.

The rest of us are invited, by governments and by fawning interviews in the
press, to subscribe to their myth of election: the belief that they are the
chosen ones, possessed of superhuman talents. The very rich are often
described as wealth creators. But they have preyed upon the earth’s natural
wealth and their workers’ labour and creativity, impoverishing both people
and planet. Now they have almost bankrupted us. The wealth creators of
neoliberal mythology are some of the most effective wealth destroyers the
world has ever seen.

What has happened over the past 30 years is the capture of the world’s
common treasury by a handful of people, assisted by neoliberal policies
which were first imposed on rich nations by Thatcher and Reagan. I am now
going to bombard you with figures. I’m sorry about that, but these numbers
need to be tattoed on our minds. Between 1947 and 1979, productivity in the
US rose by 119%, while the income of the bottom fifth of the population rose
by 122%. But between 1979 and 2009, productivity rose by 80% , while the
income of the bottom fifth fell by 4%(5). In roughly the same period, the
income of the top 1% rose by 270%(6).

In the UK, the money earned by the poorest tenth fell by 12% between 1999
and 2009, while the money made by the richest 10th rose by 37%(7). The Gini
coefficient, which measures income inequality, climbed in this country from
26 in 1979 to 40 in 2009(8).

In his book The Haves and the Have Nots, Branko Milanovic tries to discover
who was the richest person who has ever lived(9). Beginning with the
loaded Roman triumvir Marcus Crassus, he measures wealth according to
the quantity of his compatriots’ labour a rich man could buy. It appears that
the richest man to have lived in the past 2000 years is alive today. Carlos
Slim could buy the labour of 440,000 average Mexicans. This makes him 14
times as rich as Crassus, nine times as rich as Carnegie and four times as
rich as Rockefeller.

Until recently, we were mesmerised by the bosses’ self-attribution. Their
acolytes, in academia, the media, think tanks and government, created an
extensive infrastructure of junk economics and flattery to justify their
seizure of other people’s wealth. So immersed in this nonsense did we
become that we seldom challenged its veracity.

This is now changing. On Sunday evening I witnessed a remarkable thing: a
debate on the steps of St Paul’s Cathedral between Stuart Fraser, chairman
of the Corporation of the City of London, another official from the
Corporation, the turbulent priest Father William Taylor, John Christensen of
the Tax Justice Network and the people of Occupy London. It had something
of the flavour of the Putney debates of 1647. For the first time in decades –
and all credit to the Corporation officials for turning up – financial power was
obliged to answer directly to the people.

It felt like history being made. The undeserving rich are now in the frame,
and the rest of us want our money back.




3. Belinda Jane Board and Katarina Fritzon, March 2005. Disordered
Personalities at Work.
Psychology, Crime & Law, Vol. 11(1), pp. 17-32. DOI: 10.1080

4. Paul Babiak and Robert Hare, 2007. Sankes in Suits: when psychopaths go
to work. Harper, London.


6. The graph here shows the average income of the top 1% rising from just
over $400,000 in 1980 to $1,138,000 in 2008, measured in 2008 dollars. The
income of the bottom 90% flatlined during the same period. http:



9. Branko Milanovic, 2011. The Haves and the Have-Nots: a brief and
idiosyncratic history of global inequality. Basic Books, New York.