Of Beer, Kosher, and Minorities

Nassim Nicholas Taleb, in this essay, is making a nifty, insightful, but, at least sometimes, fundamentally logically flawed argument.

The argument is that a highly motivated minority often wins out over the indifferent majority because, while offending the indifferent majority produces little or no reaction, appeasing that highly motivated minority generates profits.  This works as long as there is no possibility of product differentiation at a reasonably small cost.

I’ve often written about the logic of craft beer market in the past and that logic provides a counterpoint to Taleb’s argument.  In Taleb’s argument, the manufacturer is motivated to produce a product that fits the taste of a small minority for everyone because the cost differential is small and the rest of the population does not care much, while the small minority does.  But the key assumption is that everyone is charged the same price for the good.  This is not the case for many goods:  the manufacturer produces a “special” product for a small market, with a significant markup.  While producing that special product may cost more, this is more than made up by the markup that the small minority is willing to pay.  So you have craft brew labels each of which caters to a small minority that is willing to pay a lot more for what they want.  Markets segment.  The “intolerant minorities” do not dictate the rest of the market:  they just form their own gated neighborhoods and do not necessarily dictate the rest of the market.

Where Taleb’s argument does apply, I think, is to what I’d been calling the Bud Light market.  People who do not fall into the craft brew markets for any set of reasons, whether their unwillingness to pay for beer, lack of well-defined taste, or too particular tastes, etc. wind up gravitating towards the beer that is not too bad and cheap–something with a “universal” taste, only if the taste is cheap enough.  It is pointless for the beer manufacturer to try to match the taste of this group, because there is no well-defined taste that is representative of Bud Light drinkers:  a “mean” might be definable, but the variance is too high for the mean to be useful as a source of guidance.  It is this market where a small minority with a particular taste–provided that they are not willing to pay extra for their own brand, for whatever reason, can dominate (modeling this takes some effort–but the reason really is that, if you can dominate a “cheap beer” market with your own taste, why crave for an expensive beer?)

This has implications beyond just economics, to the realm of society and politics.  In most countries, majorities, or at least, large pluralities, are made of non-elites whose views are not clearly crystalized–for the same reason why Bud Light remains and probably will remain the best selling beer even as the craft brew markets grow collectively.  They are “tolerant” enough, that they don’t care that much for odd and weird views, as long as they come cheap and are not, conditionally speaking, too unacceptable.  (with emphasis on the word “conditionally.”)  In countries like Lebanon and Syria, particular sects with well-defined “tastes,” like the Druze and the Maronites (and historically, the Shi’a), form their own, often insular, communities that often operate collectively as a tribe.  Much less so with the Sunnis, who, often, simply comprise “everyone else.”  Much the same thing took place in countries like Yugoslavia, as its component regions were falling apart.  One might say the same is true with the working class whites and Trump in this year’s election.  Trump is not necessarily “representative” of the working class white voters, and most likely, it is obvious enough even to the working class supporters of Trump themselves.   They do so, ironically, not necessarily because they are overtly racist (as many among the craft brew drinkers, eh, liberals, would contend) but because they are more “tolerant”–they don’t especially mind the racism of Trump and his allies (whether this reflects some weaker version of racism on their part, who knows?  probably true, but possibly not huge.)  From their perspective, that Trump and his supporters drink the same beer as they do is more relevant, while the elites turned their backs on them and are drinking some other beer.  This is not just symbolic–because the beer in this case represents the policy goals, broadly defined, produced by the government.  At least Trump promises to keep Bud Light flowing, even if its taste might be altered to somewhat strange taste, while the craft brew drinkers would careless demand elimination of Bud Light (i.e. cheap brew) altogether.

This should cause everyone to think a bit about “multiculturalism.”  There is no such thing as the “working class whites'” viewpoint.  There are many viewpoints in that group, for it is too diverse, consisting of the many and varied peoples who don’t drink craft brew.  But treating them as a single group does enable dictatorship of an intolerant minority over that lot.  Avoiding this, however, requires a more careful examination that goes behind a single mean to represent a subset of population.

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