Factfulness by Hans Rosling (A Synopsis)

The following is a synopsis of Factfulness by Hans Rosling. It’s a great read on the Ten Reasons We are Wrong About Everything and Why Things are Not as Bad as We Think

Introduction: Why I Love the Circus

Hans Rosling was a physician, academic and public speaker. Together with his son, Ola Rosling and his daughter in law Anna Rosling Ronnlund, he founded the Gap Minder Foundation in 2005 to fight ignorance and encourage what he calls a more factful approach to life. Although this book, like his TED Talks, was written in his voice it is a collaboration between the three of them.

Although he pursued a career in medicine and became a leading academic, Rosling’s true passion as a child was the circus. He loved everything about it and was convinced he would one day live his dream and run off to become a performer. His parents had other ideas; they wanted him to enjoy the first-rate education they didn’t have and so he studied medicine instead.

When studying medicine, he discovered he could stick his hands down his throat further than anyone else. For a short time, he dreamed once again of joining the circus as a sword swallower. Because swords were in short supply, he decided to start with a fishing rod, but found it impossible. It was only later, when treating an actual sword swallower, that he learned the reason why he had failed.

The throat, he was told, is flat and can only take flat objects. To his delight he discovered he could actually do it and, later in life when he began giving talks, he often used it as a finale to his act.

He talks about sword swallowing for a reason. It’s one of those ideas which inspire people to think differently, to question perceptions and, as such, to accomplish the seemingly impossible. This is a key feature of the book.

Another is the continual need to test yourself and question your assumptions. To illustrate he lists 13 questions:

  1. How many girls finish primary school in low income countries around the world?
  2. Where does the majority of the world’s population live: low income, middle income or high-income countries?
  3. In the last 20 years, the number of people living in extreme poverty has increased or halved?
  4. What is the life expectancy of the world today?
  5. There are 2bn children aged 0 to 15 years old. How many will there be in the year 2100 according to the UN?
  6. The UN predicts that, by 2100, the world’s population will have increased by 2bn. Why is this: more younger people or more older people?
  7. How has the number of deaths from natural disasters changed over the last 100 years?
  8. There are 7bn people in the world. Where do they live: mostly in Europe, Africa, Asia or America?
  9. How many of the world’s one-year old children today have been vaccinated?
  10. 30-year-old men have spent ten years in school on average. How many years have women of the same age spent?
  11. In the 1990s tigers, giant pandas and black rhinos were all listed as endangered. How many are listed as more critically endangered than they were then?
  12. How many people in the world have access to some electricity?
  13. Over the next 100 years will the average temperature get warmer, stay the same or get colder?

He sets these tests to people around the world and the majority get them wrong. Our perception of the world is far removed from the reality. His aim in the book is to give people the tools to think in a factful manner, to challenge perceptions and understand the world more completely.

Chapter 1: The Gap Instinct

Our world view is often distorted thanks to the tendency to divide everything into two extremes with a space or a gap in between. For example, we often view the world through the perspectives of distinct groups such as ‘rich versus poor’, ‘us versus them’ or ‘developed and developing countries’.

This is simple and makes it easy to develop a view of the world, but he believes it’s wrong.

To demonstrate his point, he looks at our tendency to divide the global population into developing and developed countries. Those in developed worlds have better access to healthcare, live longer lives and have better access to electricity, while those in the developing world do not. However, the data shows that most people have access to all these things.

In reality, most countries fall into a gap between the perceived developed and developing worlds, with many moving towards the group of developed countries. As such, this divisive world view makes no sense.

Instead, he introduces four categories which can provide us with a better view of the world. These are:

Level 1: Earning less than $2 per day.

Level 2: Earning between $2 and $8 per day.

Level 3: Living off$8 to $32 per day.

Level 4: Bringing in more than $32 each day.

It doesn’t matter where you live in the world; people in each group tend to have a similar quality of life. Those in Level 1 suffer from poor nutrition, live hand to mouth and rely on walking to get where they need to go. In Level 2 people are better off; they can feed themselves have better access to electricity and education but they are not secure. At any time, an emergency could see them slip back to Level 1. At the top is Level 4 in which people can afford a car and an annual holiday.

This produces a more accurate view of the world, one which divides people by quality of life rather than simply where they are living. Even so, the traditional gap-based view of the world prevails.

To combat this, he cites a number of warning signs which can encourage us to slip into the gap-based world view.  

  • Comparing averages between two situations. We forget about the overlap which creates the illusion of a gap.
  • Comparing extremes: For example, thinking of the poorest versus the richest is wrong because most people are in neither extreme.
  • View from above: People in higher income levels look down on lower levels without any idea of the conditions in those levels. If you’re in Level 4, you might think of people in levels 2 and 3 as being poor when in fact they have a much better quality of life than you might think.

The reality of life is that there is no gap. Most people exist in the middle where the gap is supposed to be. Thinking about people in two groups distorts our view of the world. To form a fact-based world view, we have to recognise that many of our perceptions are filtered through mass media which loves to focus on examples which are extraordinary or extreme.

“There is no gap between the West and the rest, between developed and developing, between rich and poor,” Rosling writes. “And we should all stop using the simple pairs of categories that suggest there is.”

Chapter 2: The Negativity Instinct

“The world is getting worse”. It’s a view that we hear often and which, according to polls, most people share. However, it is also wrong. In truth, the world is getting better. We simply don’t notice when it does.

Most humans pay attention to the bad rather than good. As such, they believe the world is only getting worse.

There is some truth in this. The environment is deteriorating and terrorism is higher than it was 30 years ago. Even so, the state of the world is generally improving. However, according to Rosling, these improvements go unnoticed because they aren’t reported and we look back at the past through rose tinted spectacles.

Instead, minor setbacks receive greater coverage. If you look at the news, you’ll be forgiven for assuming that the world is set on a downward trend. However, the facts tell another story.

In the 1800s most people in the world were at income Level One. Extreme poverty was the norm for most people in the world. Today, only 9% of the world is still at level one. Life expectancy has improved from 31 years in the 1800s to over 70 years today. Slavery has been abolished, child mortality is down; plane crashes, hunger and deaths in battles have decreased. Access to electricity, water and health have improved.

Even so, the negative world view persists.

This view is caused by three things: mis remembering the past, selective reporting and the feeling that it would be insensitive to say things are getting better when they are still bad for many people.

When people start living better lives, they can forget how bad things were. They romanticise their youth.

Most reporting is negative. Good news is not news and neither are gradual improvements. A successful flight receives no coverage, but a crash will be splashed across all media outlets.

Rosling suggests three ways to control this negativity instinct.

  • Remember that ‘bad’ and ‘better’ are not mutually exclusive. Things can be bad but they can also be better than they were before. Saying things are better should not be confused with believing everything is fine.
  • Expect bad news. If we recognise that news is likely to disproportionately highlight negatives, we can be better prepared for it. Factfulness is remembering that most of the news which reaches us is bad news and there are plenty of positive developments in the world which do not make headlines. More news does not necessarily mean things are getting worse. It could equally mean that we are getting better at monitoring this suffering, which in turn will make it easier to alleviate it.
  • Avoid romanticising the past. Life was not as good as we think it was, if we present history as it was, we can realise that life, in general, is getting better.

Chapter 3: The Straight-Line Theory

Life does not always work in a straight line, but our thinking does. In this chapter Rosling examines our tendency to assume a certain trend will continue along a straight line in perpetuity. Reality is very different but our straight-line instinct stops us seeing life as it truly is.

He talks about an Ebola outbreak in Liberia. Like most people, he assumed the number of cases would continue in a straight line with each person infecting, on average, another person. As such it would be relatively easy to predict and control as most other outbreaks of disease are. However, he came across a WHO report which said the number of infections was doubling with each case. Every person infected two more people on average before dying.

This spurred him into action. He discusses an old Indian legend. Krishna is challenged by the King to a game of Chess and asked to name his prize if he wins. Krishna asks for one grain of rice to be placed on the first square with the number doubling with each square.

The King agrees assuming it will increase in a straight line. However, it takes him a little while to realise that, by the time it gets to the 60th square, he would have to find more rice than the entire country could produce.

Many people assume the world’s population is increasing. If nothing is done it will reach unsustainable levels meaning something drastic must happen to stop this tend getting any worse. However, UN data shows the rate of population increase is slowing. As living conditions improve, the number of children per family is falling. Instead, growth can be controlled by combatting extreme poverty.

Rosling uses the example of a child. In their first few years, babies and toddlers grow rapidly. If you were to extrapolate that growth for the future, ten-year olds would be much taller than they are. Of course, we know that doesn’t happen because we are all familiar with how the rate of growth slows over time.

When faced with unfamiliar situations, we assume a pattern will continue in a straight line. Instead, he suggests we should remember that graphs move in many strange shapes, but straight lines are rare. For example, the relationship between primary education and vaccination is an S curve; between income levels in a country and traffic deaths is a hump and the relation between income levels and number of babies per women is a slide.

We can only understand the progression of a phenomenon by understanding the shape of its curve. Assuming we know what will happen leads to erroneous assumptions and false conclusions which will in turn lead to ineffective solutions.

To control the straight-line instinct, we must remember that curves come in many forms and we will only be able to predict it when we understand the shape of its curve.

Chapter 4: The Fear Instinct

“Critical thinking is always difficult,” writes Rosling, “but it’s almost impossible when we are scared. There’s no room for facts when our minds are occupied by fear.”

This is why the ‘fear instinct’ can be so destructive. When people are afraid, their ability to tell fact from fiction falls off dramatically. Factfulness demands that we control our fear.

Never before has the image of a dangerous world been broadcast more widely and more effectively than it is today. We are frightened of almost everything, but the truth of the matter is that the world has never been safer or less violent.

Rosling starts the chapter by looking back to an old story from his days as a junior doctor. It was 1975 and news came in of a plane crash. The survivors were being rushed to his hospital; senior staff were at lunch which would leave just him and a nurse to handle the situation.

It would be his first emergency and, in his panic, he confused one of the survivors for a Russian pilot and became convinced Russia was attacking Sweden. He mistook a colour cartridge for blood and was narrowly stopped from shredding through a G suit worth thousands of dollars.

Fear stopped him from seeing the situation for what it was. Our minds have an attention filter which decides what reaches it. This is the useful. The word contains vast amounts of information and we have to filter it to avoid overload. However, what gets through tends to be the unusual or scary.

This is why newspapers are full of events which are frightening. However, the more of the unusual we see, the more we become convinced the unusual is actually the norm. Our fear instinct has been baked into our minds by millennia of evolution. Fear kept our ancestors alive, but even though many of these dangers have gone, the perception remains.

The dangers are more real for people in Level 1 and 2 income categories because they are more likely to suffer threats. For example, they might be more likely to be bitten by a snake which might make them jump if they see a funny shaped stick. However, for people in higher income levels, being bitten by a snake is much less likely. Even if they were to be bitten, they have access to good healthcare.

For them, the fear of the snake does more harm than good. Newspapers know these fears are hardwired into our brains so they use it to grab our attention. The same fears which kept our ancestors alive are keeping journalists employed today.

This GOES East satellite image taken Tuesday, Sept. 11, 2018, at 10:30 a.m. EDT, and provided by NOAA shows Hurricane Florence in the Atlantic Ocean as it threatens the U.S. East Coast, including Florida, Georgia, South and North Carolina. Millions of Americans are preparing for what could be one of the most catastrophic hurricanes to hit the Eastern Seaboard in decades. Mandatory evacuations begin at noon Tuesday, for parts of the Carolinas and Virginia (NOAA via AP)

The number of deaths from natural disasters has fallen as countries develop better healthcare and infrastructure. Organisations, such as the WHO and UN, help victims in these situations but people in Level 4 aren’t aware of their success because the media reports it as the most serious disaster in history.

It is important to look at things with a fact-based approach to make better use of resources. For example, the 2015 earthquake in Nepal which killed 9,000 people attracted global attention, but diarrhoea from contaminated water kills 9,000 children each year but receives very little attention in comparison.

2015 was the safest year in aviation history but this fact was not reported. The number of deaths from battle has fallen and so has the threat of nuclear war. All these good pieces of news slip under the radar.  

Following the Tsunami in 2011, 1,600 people died escaping Fukushima while nobody died from what they were running away from. Fear of chemicals such as DDT leads to deaths which could have been treated by DDT. The fear of an invisible substance leads to more harm than the substances itself.

Terrorism causes fewer deaths than alcohol but receives far more publicity.

Fear is a terrible guide for understanding the world. We pay attention to things we are afraid of but ignore things which can do us harm. Factfulness is knowing how to tell the difference between actual risks and perceived risks.

Chapter 5: The Size Instinct

From immigration to the number of deaths in hospitals, we consistently overestimate size. In this chapter, Rosling shows how this leads to a distorted view of reality and warps decision making.

He starts by going back to his time as a young doctor in Mozambique in the 80s when it was the world’s poorest country. One in 20 children died. He argued with a friend about the standard of treatment at the hospital. He felt they needed to provide better care outside of the hospital, but his friend believed he should concentrate on improving care within the hospital.

He decided to look at the number of children who died in the hospital compared to those who died outside. To his surprise he found that, while deaths were comparatively low inside the hospital, over 3,900 people died in the community. He therefore decided to go out into the community to provide better care to people who couldn’t get to the hospital.

When looking at a single number in isolation, it is easy to give it too much importance. For example, when he saw he was saving 95% of the children who came to the hospital it was easy to assume he was doing a great job. However, when he compared it to those who were outside the hospital, he realised he had to do more.

Journalists always give us numbers and exaggerate their importance. It leads to solutions which do not help. At the hospital, people would have assumed increasing the number of beds would reduce deaths but, with more information at their disposal, they realised the best path was to improve the levels of care and education within the community.

To avoid the trap of the size instinct, he recommends using the tools of comparison and division.

For example, two million children died before the age of one in 2016. This seems high until you compare it with 1950s number when 14.4 million children died before their first birthday. Infant deaths are falling, but you wouldn’t know this if you only looked at the first figure.

A Swedish hunter killed by a bear received more coverage than a woman killed by her husband. The first incident was a freak event; but it received far more coverage than the second which is a far more common and serious risk. Rather than being concerned by domestic violence, the media became obsessed with an event which is unlikely to happen again for many years.

Another example comes from the Swine flu epidemic which killed 31 people in 2 weeks. However, 63,000 people died from TB in the same period, but it received no coverage.

The lesson is that we tend to over state the unusual and ignore issues which are far more common. It distorts our world view and leads us to make poor decisions. Factfulness is understanding that just because something is more widely reported, doesn’t make it more common.

Chapter 6: The Generalisation Rule

As humans, we love to categorise and generalise everything. While this can help us to simplify our view of the world, it can also lead to distortions. Attributing one characteristic to an entire group based on one unusual example leads to serious misconceptions and can have quite serious consequences.

As he writes, the generalisation instinct “can make us mistakenly group together things, or people, or countries that are actually very different. It can make us assume everything or everyone in one category is similar. And, maybe most unfortunate of all, it can make us jump to conclusions about a whole category based on a few, or even just one, unusual example.”

For example, he begins the chapter by talking about his experiences working in the Congo when he was presented with a less than appetising dessert made from lava. To avoid eating it, he tried to convince them that it was against Swedish custom to eat lava.

Generalisations, he says, are mind blockers. They create a distorted view of reality and often lead people to miss important opportunities. For example, after polling financial experts, he says, he found that they assumed most children in the world were not vaccinated before the age of one. In fact, the vast majority are. For that to happen, countries need a lot of infrastructure, which is also the same kind of infrastructure which is required for factories and other forms of enterprise.

Statistically Valid Things

The belief persisted because these financial experts believed the images of extreme poverty presented about some countries in the media. As such, these experts were potentially missing out on investment and business opportunities because they believed these countries were more deprived than they were.

To combat the generalisation instinct, he suggests travelling. This helps you to get out into the world and gain first-hand experience of cultures as they actually exist, rather than the way they are portrayed in the press.

As with other chapters, questioning is vital. You should always question the different categories you are given. Look for similarities across and within groups; remember to be suspicious of generalisations and to be aware when you are generalising one particular group from another.

Many people generalise African countries but they are not all at the same level of development. This has enormous consequences. The Ebola epidemic in Liberia affected tourism in Kenya even though the two countries are thousands of miles apart.

Majority is an extremely blunt concept. It can be anything between 51% and 99%; which does not produce a realistic picture of any situation.

Examples give a poor picture. Many people around the world suffer from chemophobia, the fear of chemicals, when in reality most are beneficial.

Folders Icon with variations of colors

Assuming you are normal can lead to you generalising others and failing to understand the reasons behind their actions. What is normal to you is not necessarily normal to other people.

Factfulness is recognising what categories are used and keeping in mind that these categories can be misleading. While humans categorise and generalise everything, this can lead to stereotypes which can lead to poor solutions. By travelling and questioning assumptions, you can combat the problems caused by the generalisation instinct.  

He also focuses on what he calls the 80/20 rule. We should always look at items which take up more than 80% of the total. Looking at the world’s energy sources, for example, you might feel they seem equally important, but only three generate more than 80% of the world’s energy.

Divide it by a total to get a clearer idea of the situation. If you look at the total emissions produced by each country, it might seem that China and India produce more Co2 emissions than Germany and the USA, but if you divide it by the population, you’ll see that USA and Germany produce more emissions per head than either China or India. A single number does not provide a clear picture of any situation.

Chapter 7: The Destiny Instinct

When Rosling gave a presentation to a group of capitalists and wealthy individuals about the opportunities of emerging markets in Asia and Africa he was surprised by their reaction.

At the end of the talk he was approached by what he describes as a ‘grey haired’ man who told him, in no uncertain terms, that there was no chance that African countries would ever make it. Despite all the positive data about economic progress he’d seen in the presentation, this man believed there was something about African society which meant they were destined to be poor.

This is an example of the destiny instinct and its roots go back to the earliest history of man. As humans, we often assume that a nation, group or culture’s destiny is determined by general characteristic which we believe it shares. For example, white Europeans are destined to be developed and wealthy while black Africans will always be poor.

This attitude persists even in the face of contradictory data. Not only do people believe it to be true, but they assume there is nothing that individuals in this culture can do to change things. Destiny, as they say, is all.

The instinct stems from evolution when people lived in small groups and didn’t travel very far. It was safer to assume things would stay the same as they wouldn’t need to constantly evaluate the surroundings. It’s also a great way to unite a group.

However, today’s societies are constantly changing. These changes occur gradually which gives the perception that things are staying the same. As such, gender equality is perceived to have remained unchanged around the world, but in reality, things have largely improved.

There is also an idea that Africa is destined to remain poor. However, most African countries have reduced their infant mortality rates faster than Sweden did. Asian countries have moved into the category of developed nations and many countries have escaped extreme poverty.

It was also assumed that the number of babies a woman has would depend on her religion. Religious women were more likely to have babies than those with no religion. However, careful analysis of data shows that the number of babies depends not on religion but income levels.

Other examples include the rise of support for women’s rights and liberal ideas in Sweden. Concepts which might have been far from the mainstream in the past are now commonly accepted.

To control the destiny instinct, you should recognise that:

  • Slow change does not mean no change at all.
  • Be ready to update your knowledge. Knowledge is never constant in the social sciences.
  • Collect examples of cultural change.

Factfulness is the art of recognising that many things appear to be static just because change is happening more gradually. Groups are not defined by their innate characteristics and, just because something has been true once, it doesn’t mean it is set in stone for the future. Like many of the other attitudes discussed in this book, the destiny instinct is hard coded into our evolution, but while it might once have been helpful for our ancestors, it is holding us back today.

Chapter 8: The Single Perspective Instinct

We live in a world in which many people have strong opinions. However, when these opinions are set into a single world view, we can become blind to any information which contradicts us. This is the problem of the single perspective instinct and it can make it very difficult to understand reality.

“Being always in favour of or always against any particular idea makes you blind to information that doesn’t fit your perspective,” writes Rosling. “This is usually a bad approach if you like to understand reality.” 

The single perspective instinct can be alluring. It is the preference for simple explanations and simple solutions to the world’s problems, but life is somewhat more complicated. This single cause and solution view creates a completely warped view of the world.

There are two main reasons why we do this: professional and political bias. Professionals will always see the world from the perspective of their own expertise. A hammer will see everything as a nail and will probably adopt the same approach. Even experts in their field can be wrong.

A poll of women’s rights activists found that only 8% realised that 30-year-old women have spent only one year less in school on average than men. They were so intent on seeing the situation as bad that they ignored the progress their own efforts have brought about.

He warns against relying the media to form a world view. It’s like forming an impression of a person just from his or her feet. The foot is far from the most attractive part of the body, so it doesn’t give you a fair representation of the rest of the person.

In the same way, the media tends to present the worst of the world; the disasters, the catastrophes and the crime. If you form your world view based on media reports, you’ll imagine the situation is much worse than it actually is.

Campaigners often paint the world as getting worse, but they are not aware that progress happening. If they ditched the attitude that things are only getting worse, they could garner more support for their cause.

People love the idea of being able to point to a single cause and single solution. For example, many use numbers to illustrate all sorts of issues, but they do not always represent the best solution. They do not help you to understand the reality behind them.

He recalls a conversation with the Prime Minister of Mozambique who said he believed the economy was making progress. Rosling argued that the data did not show this, but the Prime Minister replied that he did not solely rely on numbers to measure progress. He’d look at the shoes people wore and construction projects taking place. If the shoes were old, it meant that people didn’t have money to replace them. If construction projects were overgrown with grass, it suggested there wasn’t enough money being invested.

There is never a single explanation to any situation. It limits your imagination. Factfulness is realising the limitations of this perspective and finding ways to view situations from a wider range of viewpoints. This will help people to develop a more accurate understanding of the world they live in and to challenge their own world views. 

Chapter 9: The Blame Instinct

We live in a culture which loves to apportion blame. This instinct assigns a clear cause to an event and finds someone who was at fault.

It’s a comforting approach. When things go wrong it is nice to think it’s because of bad people with bad intentions, but that seldom tells the entire story. We attach a lot of importance to individual groups or people, but it also stops us from understanding the world.

Once we find someone to blame, we stop looking for the actual cause of the problem and focus on punishing the person we think is at fault. The result is that we’re unable to prevent it from happening again.

For example, we might want to blame a plane crash on a pilot who falls asleep, but this does not stop another pilot from falling asleep in the future. Instead we should be looking at why the pilot fell asleep in order to stop it from happening again.

Hand in hand with the blame instinct comes the tendency to credit someone for an achievement even if the reality is more complicated. Someone has to take the blame or be given the credit. We love to point fingers if it confirms our belief

Even Rosling himself is not immune. When UNICEF hired him to investigate a company given a contract for malaria drugs, he became convinced that the company was acting improperly. Even before he finished his investigation, he started pointing fingers. In reality, the company was honest but simply had an innovative business model.

The same principle is at work when looking at the number of immigrants killed trying to cross the sea into Europe. It is common to blame the smugglers who traffic these people across the sea in small craft which are routinely dangerously overloaded. In reality, though, the problem is Europe’s immigration policies which state that an airline which brings illegal immigrants into the country will have to pay for their repatriation.

Airlines will not be able to tell if someone is truly an illegal immigrant in the few minutes they have before they board a flight, so they will ban anyone who doesn’t have a Visa. This means that refugees who have a right to enter Europe under the Geneva Convention cannot do so by any legitimate means. They are forced into the hands of the smugglers thanks to official European policy.

Any boats which bring refugees by sea are confiscated by the authorities which is why smugglers turn to cheap dinghies because they cannot afford to lose a larger boat.

On the other hand, we can also be in a rush to give credit to a single person or law. China’s low birth rate is accredited to Mao’s single child policy, but rates had started to fall before the law came into force. Instead the decline was down to institutions and technology that were in place.   

Factfulness is the ability to recognise when someone is being scapegoated and to understand that this stops people creating viable solutions for the future. It is easy to look for a clear solution when something bad happens, but it stops us developing a fact-based view of the world and coming up with a solution which actually works.

Chapter 10: The Urgency Instinct

Rosling’s tenth and final instinct is one which can bring all the others to the fore: the tendency to take urgent action to solve a problem. While this might have served us well in the past, it can cause us to make rash decisions based on incomplete information.

Doctors running for the surgery

The urgency instinct is embedded in our evolution, and in times gone by, it has served us very well. For example, if you think there is a lion in the grass you don’t want to spend time analysing your options; you simply need to start running. It’s always the safest option.

It can also be useful today. If you’re driving and someone slams on the brakes, you’ll have to take drastic action to avoid a crash. However, in today’s modern world, it can often create problems.

While Rosling was a doctor in Mozambique, a disease broke out that paralysed patients within minutes and sometimes caused blindness. He wasn’t certain that it was infectious, but the Mayor didn’t wait to find out. He ordered the military to set up roadblocks to prevent busses reaching the city. To get around these roadblocks, women asked fishermen to take them to the city by sea. It was a dangerous journey and many of these boats were overloaded. They capsized and causes the deaths of women and children.

After some research they discovered the root cause was eating processed Cassava. So, while the Mayor believed his prompt action was the safest approach, it actually caused a number of deaths which should have been avoided.

Alarm clock on laptop concept for business deadline, schedule and urgency

The principal of ‘now or never’, causes people to conjure a worst-case scenario. It kills the ability to think things through and encourages bad decision making. This is why salespeople come up with limited time offers. They are giving you a deadline and introducing a sense of urgency into your decision making in the hope you’ll be rushed into making a purchase.

To compel people to taking action, activists will often try to trigger the urgency instinct. They will stress how urgent a problem is and paint a worst-case scenario of what will happen if you don’t do something now. However, Rosling believes this is counterproductive.

Fear and exaggerated data can numb people to the risks campaigners are warning about which can lead to complacency and inaction.

For example, most countries say they are committed to fighting a climate change but aren’t tracking their progress. It begs the question: how can they truly fight climate change if they are not tracking their progress?

Rosling tells us that the world faces five serious risks: global pandemic, financial collapse, world war, climate change and extreme poverty. The first two have happened before while the second two are happening now.

They need to be approached with cool heads and data analysis rather than sparking fear and urgency. It’s about crying wolf. It can lead to these risks being ignored despite the dreadful consequences. We must worry about the right thing.

The idea of factfulness is to remember that things might not be as urgent as they seem. If you’re afraid and under pressure to act quickly, you are likely to make bad decisions. We must take a breath, take action based on data and be very wary of fortune tellers who insist they know what’s going to happen. Although the world’s problems need to be solved it is not always a good idea to take urgent or drastic measures.

Chapter 11: Factfulness in Practice

The final chapter brings everything together and demonstrates how all the lessons explained so far can be put to practical use. We see each of the ten instincts on show and how factfulness can lead to truly positive real-world solutions.

To demonstrate, Rosling takes us to a remote village in the DRC. He had travelled there to investigate a disease which was caused by eating unprocessed Cassava. The villagers believed he was collecting their blood to sell it and they were angry.

All the instincts discussed in this book were on display. The sharp needles and blood had triggered the fear instinct. The generalisation instinct made them categorise him as a plundering white man. Blame instinct caused them to assume he had malicious intent and the urgency instinct convinced them they had to act immediately, in this case by threatening him with machetes.

Things might have worked out very badly for both him and his translator if it hadn’t been for an old woman who successfully calmed the crowd down and explained that he was trying to help them. Although she was illiterate, she was bringing all the core principles of factfulness to bear in a very dangerous situation. As such, she managed to save both their lives.

In the same way we can bring it to our daily lives, in business, education and journalism and communities. Children should be taught to adopt a fact-based approach to life which will help them to develop a better view of the world and create better solutions. Children should be taught to be curious, to hold two different ideas at the same time. They should be willing to alter their opinions with new facts. This will protect them from ignorance.

Having a typo in your CV can keep you from getting a top job. However, people who make policies are placing a billion people in the wrong continent. Businesses have distorted world views and fail to understand that markets are growing in Africa and Asia. Being an American company is no longer a privilege which will automatically attract employees and customers. If investors relinquish their preconceptions about Africa, they may realise that it contains some of the best business opportunities in the world.

With a more factful attitude, journalists may become aware of their dramatic world views and present something more accurate and useful. However, it is a bit of a stretch to expect them to truly embrace all the principles of factfulness and start reporting the mundane alongside the unusual. The onus is on people to learn how to consume news in a more factful manner.

If you are ignorant at the global level there’s a good chance you’ll also be ignorant at the local level within your own community, company or organisation. They are all using erroneous data to manage their businesses and prepare for disasters.

Leaders in companies, cities, countries and organisations should carry out fact-based surveys to uncover ignorance within their organisations. Only by doing so can they develop a more accurate and realistic world view. Factfulness can be put into practice in all our daily lives, at home at work and in our communities.

Key takeaways from Steve Jobs’ life based on Walter Isaacson’s biography

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

Location Really Does Matter For Entrepreneurs:

You need to be in the right place at the right time. Being exposed to many ideas, variables, and potential inputs for accidental discoveries is better than living in a risk averse environment. In High School, Jobs took an electronics class which would have been less likely in most other cities in the US or Canada. Steve Jobs was fortunate to be raised in Silicon Valley, and because of that location it is less of a mystery as to why Jobs is who he was. Defense contracts in Silicon Valley during the 1950s shaped the history of the valley, military investment was used to build cameras to fly over the USSR, for example. Military companies were on the cutting edge, and made living in Silicon Valley interesting. In the 1930s, Dave Packard moved into Silicon Valley, and his garage was the core of the creation of Hewlett Packard. In the 1960s, HP had 9,000 employees, and it was where all engineers wanted to work. Jobs was ambitious enough at a young age to phone Dave Packard and ask for some parts. That’s how he got a summer job there. Moore’s Law emerged in Silicon Valley, Intel was able to develop the first micro processor. Financial backing was made easier to acquire where rich New Yorker’s retired to…By having the chip technology that could be cost measured for projections, Jobs and Gates would use this metric to revolutionize the technological world.


Childhood Shapes Your Thinking:

Jobs was never interested in cars, but he wanted to hang out with his dad, who emphasized the importance of building quality products, and loved souping up cars. The interior of a product is equally important as the exterior for Paul Jobs (Steve’s Father). Eichler Homes were great designs, with a simple capability that was common in Silicon Valley. Paul also taught that you should know more than the person you bargain with. Paul Jobs could not successfully get into real-estate because he was unwilling to sell, and be like-able. By his teens, Jobs realized he was smarter than his parents.  Steve Jobs was willful, and his parents would go to great lengths to feed Jobs every whim by deferring to his needs. Steve Jobs got into a fight with his dad for smoking marijuana, but by his senior year, Jobs was looking into sleep deprivation, LSD, and other drugs.

Jobs was fascinated by the need for perfection in technology. Later on in the 1980s, he argued that even if you can’t see something, it should be done well. Jobs wanted to ensure that the Macintosh mother board was beautiful, so he had members of his team sign the circuit board. Steve Jobs became more interested in electronics than in car engineering, in particular the laser technology his father was working at Spectra Physics.


Go Get What You Want, If You Have The Courage:

The 9100A was the first desktop computer, it was a huge computer that Jobs saw in the Explorers Club he participated in. Jobs created a frequency counter as part of the club, but he needed a special part so he phoned the home of the CEO of HP, and spoke with Hewlett directly over the phone for over 20 minutes. This conversation got Jobs a summer position at HP. Jobs had pushed his way into the factory. Steve Jobs hung out with the engineers mostly, but he worked in the electronic components section of HP.

Steve Jobs walked into the lobby of Atari in sandals, and demanded that he work as one of the first 50 people for Atari at $5 an hour. Jobs was very intelligent, and excited about technology. Nolan Bushnell used the power of his personality to build Atari, and Steve Jobs learned about this skill in part from Bushnell. Steve was a prickly person, and he had horrible body odor. Steve Jobs was brash, and, at Atari, told many of his co-workers that they were “dumb shits.” Atari didn’t mind his horrible BO because Jobs was agressive, smart, and worked hard. However, Jobs was put on the night-shift at Atari so that no-one had to deal with him during regular work hours.


Education Is For Conformists:

Steve Jobs was not interested in memorizing information but being stimulated. He was sent home repeatedly. Jobs began to excel when he was incentivised by his game-changing teacher Imogen Hill “Teddy” who bribed Jobs into doing Math problems in exchange for lollipops. She further invested in Jobs with cameras and other toys. Steve Jobs was able to convince another kid to give him her Hawaii shirt for a school photo, he knew how to convince others to do things for him early on. Steve Jobs was put forward by one grade for his brilliance. He was not a straight-edged student however.

Assume That You Will Die Young:

Jobs believed that he was going to die young. He worked extremely hard because he was certain that he would be dead at an early age.

The Cream Soda Computer:

Wozniak was able to build a calculator that displayed binary code while drinking cream soda extensively in 1973. Wozniak’s great strength was that he was emotionally and socially inexperienced, was a high school geek who cared more about computers. Wozniak knew more electronics than Steve Jobs, and Jobs was more mature, so they met in the middle. Wozniak and Jobs both listened to Bob Dylan. Dylan’s words struck chords of creative thinking for Woz and Jobs. They bootlegged many Bob Dylan concerts. They even worked as entertainers in Silicon Valley dressing up as clowns to perform for kids.


Go To India:

Steve Jobs went to India to expand his meditation skills. Jobs sought spiritual calm but he could not get into his own inner calm in Silicon Valley. He spent 7 months in India being mentored in meditation. Jobs found a spiritual leader in Silicon Valley in Los Altos. Steve Jobs would do meditations, they learned how to tune out distractions. His friends noticed that Jobs became self-important. Steve Jobs also engaged in primal screaming which helped to resolve his childhood pain. Jobs appreciated intuitive spirituality, he wanted to grow in that way. You need to avoid getting stuck in thought patterns that are really just chemical patterns in your brain. By age 30, many people cannot escape their own grooves. You need to be able to throw yourselves out, according to Jobs. Artists go and hibernate somewhere. To be truly innovative over time, you need to think outside of the box, and escape yourself.


Pranking People Requires Creative Thinking:

Steve Jobs and Wozniak produced a banner with a hug hand flipping the middle finger to all the seniors as the graduating classes marched past during a High School pep rally. This got Steve Jobs suspended. Steve Jobs was interested in pranking his classmates, and even put a small explosive under one of his teacher’s desk. Their most effective prank had been to scramble TV frequencies with a remote control. Wozniak and Jobs would hide in the bushes while university students were watching television.

On cue, the TV would be scrambled with a small device Woz had built, and one of the students would get up to fix it. Wozniak played around so that the student would be compelled to hold an awkward position in order to keep clear the TV signal. Wozniak’s device was highly effective in manipulating people.


Starting A Company Is Very Difficult:

If you’re not passionate about what you are doing, then you will give up. So in order to succeed you need to be passionate, and hardworking. It turns out that Woz and Jobs were not trying to build a company at first but were in fact trying to build a computer that they wanted. They had not gone to business school, and they didn’t even know what the Wall Street Journal was. They wanted to just go build a computer so that they and their friends could use it.

Meet A Brilliant & Noble Engineer:

Jobs was fortunate to meet Steve Wozniak who believed in engineering as the highest, and most noble activity. ‘Woz’ did not believe in marketing, and did not aspire to be in the lime light. Their meeting was truly fortunate. Wozniak’s father taught his son how to build circuits at an early age. His father also taught ‘Woz’ to never lie, accept in the service of a good practical joke. Wozniak had an easier time making eye contact with a circuit than a girl, built a transistor to allow 6 kids to communicate with eachother, read about new computers in his spare time, and focused on designing circuits. Wozniak was socially shut out in high school. Wozniak worked on designing computers with half the number of chips the company had designed in his blue prints. Jobs had inferior tech-skills but had other advantages like charisma and persuasiveness.


Meetups Bring Insanely Great Ideas Together:

The Homebrew Computer Club did not conform to the Hewlett Packard mold, or the hierarchical business structures of the UK, Japan or Germany. In Silicon Valley, USA, there were study groups who were building up computers for creative meetups. These were basically self-fulfillment movements in the California area of Silicon Valley where everyone was sharing ideas, and everybody was gaining from that exchange. For most people, computers were ominous, government machines that would destroy life values. By the mid-1970s, computing was no longer a bureaucratic control mechanism but rather a liberating one.

The Altair computer was available in 1975 from MITS, and Bill Gates started building BASIC which would become the first software product from his company Microsoft. Jobs and Wozniak bought the Altair as well in order to learn how it worked.

Borrowing ideas was the way that Wozniak developed the Apple I. He started to sketch out the idea of the Apple I from 1975 to 1976. Since the Intel 80 was so expensive, Wozniak bought a bunch of microchips that were not Intel compatible. This incompatibility would subsequently not allow Apple computers to work with other software products without some modifications. Wozniak built on the shoulders of previous processor chips, and he wrote the code by hand. When he had built the prototype, and the letters were displayed on the screen correctly, there was great excitement. It could not have happened in New York, London, or a small city in France. Innovation is geographically situated because you need to meet the right people, and be at the right place for this kind of success.


Knowing What You Wanted To Do Earlier On Is Not Great For Entrepreneurs:

Steve Jobs wanted to go to Reed College because Stanford students already knew what they wanted to do. Reed College had a high dropout rate, and they tuned in, turned on, and dropped out. At Reed, Jobs did a lot of drugs, and he still swears by the importance of taking LSD. Steve Jobs refused to go to Reed classes that he was assigned, and focused on taking classes he was interested in, as well as breaking the rules. Steve Jobs decided that using his parents college funding which his parents had saved was unfair so, and he dropped out, but he didn’t want to leave Reed. Remarkably Reed allowed Steve to stay, and he audited classes. Steve Jobs learned about typography, and he found it fascinating. Jobs rejected the lack of idealistic vision in the 1980s, and he believed in the importance of the counter-culture movements of the 1970s.


Steve Jobs Excluded Relevant Information Where Necessary: 

Wozniak was at HP but would come by to play the new Atari games because Jobs was working at Atari. In the 1975, Bushnell asked Jobs to design a single player game which required that bricks fall towards the paddle when struck by the ball, instead of having a computer or a simple wall to compete with. The head of Atari knew that Jobs could not build such a computer programme but he knew that Jobs would likely enlist the help of Steve Wozniak. There was a bonus offered for every chip used below 50. Jobs told Wozniak that this project needed to be completed within 4 days, he then said that they would split the payment. Wozniak was so enthusiastic that he worked hard to get it done on time. The deadline was a false one as Jobs wanted to go apple picking that weekend.

In addition, Jobs did split the payment for the project but he failed to mention the bonus for the number of chips below 50. There were 45 chips so Jobs received 100% of the bonus that Wozniak did not know about. 10 years later on the history of Atari, it was revealed the Jobs was given a bonus and Wozniak was shocked. This program was the basis of the final product which was wildly successful as an arcade game. Wozniak states, “I’m not going to judge Steve’s morality. Apple wouldn’t be where it was without Jobs manipulative nature.”


Have Discipline Over Body & Mind:

Steve Jobs got into a disciplined fasting by eating just apples. He believed that minimalism led to great rewards when encountering complexity, and that experience is relative. Vegetarianism, acid, rock music, and the enlightenment campus seeking culture at Reed College was a laboratory for Steve Jobs’ development. Steve Jobs had extremely terrible BO in college because he did not believe in using any chemicals or deodorants. At Reed, Robert Freidland was able to mesmerize him. Jobs learnt from Freidland about charisma, and the art of persuasion. Friedland was a LSD drug dealer, and was sentenced to two years in prison in 1972. When he was released, Friedland ran for student president at Reed College. Freidland had met the Maharaji in India, and Jobs learned about how a state of enlightenment could be attained through practiced mediation. Steve Jobs had an ability to stare people deep into the eyes. Freidland taught Steve Jobs how to initiate the reality distortion field by bending the situation to his will. Freidland was dictatorial, and wanted to be the centre of attention, and a real salesman. Jobs said LSD helped him to understand the connection with human history, and the absence of the need for profit. Steve Jobs was hardly interested in presenting himself in a proper way throughout the early years of Apple Computer Inc.

Picking A Name Is As Simple As Picking Apples:

Steve Jobs was on a fruitarian diet and he picked apples at the One Brand Farm which was a hippy commune. Apple Computer was a smart choice as a name because it was friendly, and simple. It was counter-culture, and nothing could be more American. Apples and Computers don’t go together so it got people thinking.

Crime Does Pay!!!???: 

If you own an Apple product then you are complicit in supporting crime, kinda but not really… However, we forget that sometimes rules have to be broken in order to innovate. Read the following and see if you agree that we might never have heard of Apple Computers without an illegal gadget called The Blue Box…..

Steve Jobs and Wozniak Created Through Illegal Activity

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Crime Does Pay? Paul Jobs (Steve’s adopted father) made extra money by souping up cars without telling the IRS, and this was duly noted by Steve. When it came to borrowing, Steve Jobs didn’t mind using his high school’s money to buy parts from a major company. After-all, to Steve, hus school had a lot of money. By 1971, Steve Wozniak had read in Esquire about hackers, and ‘phone-freakers’ who had invented a way to cheat phone companies. Woz read the article to Jobs over the phone from college. The so-called Blue Box was invented by a guy named Captain Crunch. It was interesting because the device mimicked the dial tones necessary to connect long-distance calls thereby allowing calls to be made for free. Jobs and Wozniak went to work reading the Bell System Technological Journal produced by AT&T in order to mimic Captain Crunch’s long-distance tones mimicking device. Of course, this was all illegal.

After much research and work, the two Steves created their Blue-Box device which allowed them to call the Pope, Australia, and elsewhere free of charge. Jobs always felt that stealing long-distance calls was fair when a company like Bell was involved. Although it was illegal, Jobs believed they could sell these devices, and they did manage to sell over 100 of them. Jobs did all the pitching of the Blue Box to random people in the Palo Alto area. It was their first real entrepreneurial endeavour. In an illegal market like telephone hacking, however, there were risks. In one encounter, Jobs and Wozniak were robbed of one of these devices by a crazed man who held Jobs and Woz up at gun-point. By doing something illegal, Steve Jobs and Wozniak gained confidence that they could put a product into production. The Blue Box gave them a taste of the combination of engineering and vision. The lesson is that it turns out that crime does pay when the work is the forerunner of something like Apple.

Sharing Ideas Is Fine Up To A Point:

The Homebrew Computer Club (a collection of computer enthusiasts) believed that their ideas should be shared, exchanged, and disseminated. It was coordinated by people who believed that like-minded nerds should all share information for free. They believed that there should be no commerce at the Homebrew Computer Club. Wozniak supported that view, he wanted the Apple I to be shared for free with other people at the Homebrew meetings. Others disagreed. Bill Gates wrote a letter to the Homebrew Computer Club saying the opposite; that they should stop stealing the programming that he and his partners had created.

The letter argued “Who can afford to do their professional work if everyone is stealing it?” Steve Jobs agreed with Bill Gates about sharing ideas. Jobs convinced Wozniak to follow a closed approach, and to sell computers rather than sharing them. Jobs asked that Woz stop sharing the schematics information regarding the Apple I with others, for that reason. Jobs decided to sell these computers by buying 50 panels for circuitry. The closed system had major benefits in his later career. Starting in 1999, Apple created iMovie, FinalCut Pro, iDvd, iPhoto, GarageBand, (most importantly) iTunes, and the iTunes Store. The personal computer was morphing into a lifestyle hub, and only Apple was positioned to create a full (CLOSED) experience where the product was simple, and enjoyable. Therefore, sharing is great up to a certain point.


Most Good Ideas Have To Be Forced Down People’s Throats:

Wozniak did not want to go into business, but Jobs convinced Woz to join Apple. But first, Wozniak decided that he would do the ethical thing by telling Hewlett Parckard about his Apple I product which he had constructed based on his experience and training at HP. Wozniak presented the Apple I to executives at HP, but they did not think a personal computer made any sense. During one Homebrew Computer Club gathering, Jobs showed the Apple I and after his presentation he asked how much people would pay for the Apple I. The room was silent, no one was interested in buying the Apple I. That is, no one but Paul Terrell who owned an electronics store called The Byte Shop. Even Atari was pitched by Jobs, but they thought Jobs was a clown.

Apple’s first order was for a total of 50 computers from Terrell for $500 each. It took until 1981 for IBM which had dominated the mainframe computers industry to enter the personal computer market while Apple dominated as the fastest growing company in the history of the world at that time, and had already been in the process of developing both Lisa, and the Macintosh.

Another example is that Xerox PARC researchers had invented the Graphical User Interface (GUI) which was visual point and click system that would replace the black screen coding required to operate a computer previously. The only problem is that the Xerox management did not want to explore this personal computer technology. The management at Xerox did not understand the vision of these researchers at Xerox PARC and could not see a P&L statement that justified the time and energy to make the leap from photo-copying to personal computers. Steve Jobs would later explain that the Xerox management were “copy-heads.”

Adele Goldberg showed Jobs the Xerox GUI, but she was angry that Xerox was allowing Jobs to see ‘everything.’ She understood that Xerox had “grabbed defeat from the jaws of success” according to Jobs, by giving him access to their R&D work in exchange for shares in Apple. Without Jobs’ visit to Xerox PARC, the Macintosh, and Lisa would not have had the GUI, and Bill Gates might not have subsequently revolutionized computers with Windows.

Run Your Company Out Of Your Parents House In Order To Appear Like a Real Company:

In order to fulfill their first order from Mr. Terrell’s electronics store, Jobs ran Apple out of his parents house. This was complicated by the fact that Jobs’ father would frequently insist that he rightfully watch the end of Sunday football instead of letting Steve program computer chips on the family tv screen. Things were awkward; they even had a company phone number which was diverting calls to Steve’s mother who acted as secretary…

A curious brand marker has been the much vaunted Apple logo. Interestingly, the original logo of Apple was a ridiculous picture of Newton and a quote from Wordsworth (as seen on the left side of your screen). For the Terrell batch, Jobs and Wozniak marked up the price of the computer from production to $666.66 for every Apple I sold. Steve Jobs claimed that he was a private consultant at Atari in order to improve his start-up’s credibility. The original Apple I was displayed at a computer fair. Wozniak was the best circuit engineer, but the Sal 20 was better looking. Apple I looked like it was not created by serious people. That is when Jobs realized he needed to build a fully packaged computer, and he was no longer aiming for hobbyists but for the people who wanted to use a computer which would be ready to run out of the box.

Jobs and Wozniak agreed to start their own computer company with $3,000. Wozniak was excited to start a company with Steve Jobs. Apple started with $1,300 of working capital. Wozniak wanted to use his Apple work at HP, but Jobs insisted that the work should be  controlled within Apple, and not given to HP. Steve Jobs’ idea was to have control over the computer, and Jobs created tools so that no one but Apple employees could open their computers. Wozniak refused to leave HP, and Jobs forced Wozniak to give up HP by calling Woz’s family and friends. Jobs actively cried a lot over the phone to Woz’s family in order to convince Wozniak to quit his day job. The only way to get Wozniak onboard was if he could stay at the bottom of the organizational chart at Apple from 1977 onwards. That was not a problem for Jobs.


Mike Markkula’s Marketing Theory Is Built Around Three Ideas:

First, you need to connect with your customers, and understand their needs and aspirations. You need to understand their needs better than any other company. Second, you need to focus, and eliminate any activities that do not help to achieve your goal. Third, is to impute. You need to make sure that your brand is respected, because people form their opinion of you based on the signals that you convey. You might have the best product but if you present them in a slip-shot manner you will not get what you want. Steve Jobs would always impute the desires of his customers. He cares about the packaging, and cared about setting the tone for how customers perceived the product.

MacKenna’s Advertising Style Worked: The Apple logo was developed as a multi-colour symbol. The brochure read “Simplicity Is the Ultimate Sophistication.” Apple’s display area in computer fairs was always very impressive. There were only 3 Apple IIs that were finished for the computer fair in 1977, but they stacked up Apple II boxes to suggest they had more. Steve Jobs and Wozniak were forced to dress up, and they were trained on how to act by Markkula.


Don’t Worry About A Business Plan Until You Need Investment In A Serious Venture: 

Mike Markkula entered Apple because Jobs needed money to get the Apple II built. They needed to build inventory, and they needed to develop a marketing strategy, and distribution in order to build a business plan. Markkula worked in computer chips, and was excellent at finance, and price measures, Markkula was very successful already. When Markkula showed up he had a convertible. He wrote a business plan that centred on guesstimates of how many people would own a computer in their home. Markkula wanted Apple to balance check books, and keep receipts. The spirit of Markkula’s prediction was true.

Markkula co-signed a bank loan of $250,000. They owned 25% of the stock, and Apple was incorporated on April 1, 1976. He believed that Apple was at a start of an industry. Apple Computer was growing at an incredibly fast rate. The numbers were mind-blowing: from 2,500 Apple IIs sold in 1977, 8,000 were sold in 1978, and up to 35,000 in 1979. Remember there was no market for personal computers before! The company earned $47 million in revenues in fiscal year 1979, making Steve Jobs a millionaire on paper (he owned $7 million worth of private stock). Markkula believed that Apple would go public within 2 years, it went public on December 12, 1980 at $10 per share making over 300 people millionaires. Several VCs cashed out reaping billions in long-term capital gains. Through Markkula, Jobs learnt about marketing and sales. Importantly, Markkula did not want to start a company just to get rich.


Your Product Needs To Be A Full Simple Package:

Jobs went in to pitch Atari for support for Apple II which had colour, a power source, and keyboards. It was rejected partly because Jobs went to the meeting without shoes. Another company, building the Commodore decided that it would be cheaper to build their own machine. The Commodore Pet came out 9 months later which sucked according to Jobs. Jobs was willing to sell to Commodore but Wozniak felt that this was a bad move. They designed a simple case for the Apple II which would set Apple apart from other machines. The VisiCalc also allowed Apple II to breakinto in the Financial market. Jobs wanted light molded plastic, and offered a consultant $1,500 to produce the design. The Apple II had the advantage of not requiring a fan, or multiple jacks. Jobs wanted a closed system, a computer that was difficult to pry open. Conversely, Wozniak wanted to give hackers the chance to plug in, but Jobs did not want that option.

Steve Jobs endorsed the view that less is more, and that God is in the details. Jobs embraced the Bauhaus style which rejected Sony’s approach of gun metal or black. The alternative was to create hi-tech products by packaging the products in beautiful, white, and simple casing. Apple customers understand the value of presenting their products out of the packaging. You design a ritual of unpacking a product. Jobs also felt that intuitive ideas need to be connected in computers

Jobs’ Management Style Was “Shit” from 1977 to 1985 Firing:

Steve Jobs loved to tell people that their work was shit, and would force his co-workers to pull all-nighters to finish applications. When Apple started to get going in 1978 – 1979, he would come into the office, and tell Wozniak’s engineering team that they were all shit. This further distanced the two as Wozniak felt that Jobs was abusive, and had changed. Jobs would cry easily, and he would put his feet in the toilet bowl in the middle of the day to wash them. For more stability, Michael Scott was brought into Apple Computer Inc as the president, Scott was fat, had ticks, and was highly wound.

Scott was argumentative, and Jobs clashed with him. Jobs produced conflict, and he was only 22 years old, but Apple was Jobs’ company, he did not want to relinquish control. Steve Jobs and Michael Scott fought about employee numbers. Steve Jobs wanted to be employee number 1, and Wozniak would be number 2. So Scott made Jobs’ badge number O but in reality Jobs’ pay role remained number 2. Scott was a pragmatist while Jobs was not. Steve Jobs started crying over a one year warrantee for the Apple II. At age 26, he had a successful company and the Apple II. In 1981, Jobs was kicked off the Lisa project and took over Macintosh so that he could make a contribution comparable to Wozniak.

Once at Macintosh, Jobs was considered to be a dreadful manager. Jef Raskin (who had headed the Macintosh team and disagrees with Jobs on most issues) said the following about Jobs:

  • a) Jobs missed most appointments;
  • b) Jobs acted without thinking and with bad judgment;
  • c) Jobs attacked any suggestion without thinking, claimed it is stupid and a waste of time only to turn around, if the idea was good, and propose the same idea as his own a week later;
  • d) Jobs would never give credit where it was due;
  • and e) Jobs would cry when conflicts erupted in board room meeting.

Michael Scott was fired as he became more and more erratic giving Jobs more power. In retrospect, the New York Times wrote: “by the early 80’s, Mr. Jobs was widely hated at Apple. Senior management had to endure his temper tantrums. He created resentment among employees by turning some into stars and insulting others, often reducing them to tears. Mr. Jobs himself would frequently cry after fights with fellow executives.”

A Startup Will Become Impersonal With Success:

Wozniak wanted Apple to be a family while Jobs wanted the company to grow quickly. Jobs felt that Wozniak had failed him because Woz appeared to be unfocused, and failed to get a ‘floating point’ BASIC finished for Apple II. The Apple II launched the personal computer industry. Wozniak had created the machine, and Jobs designed the exterior which was marketed more effectively. Steve Jobs wanted to spur a great advance in computers. This meant that the company had to hire more and more people, and Jobs became increasingly disrespectful towards slackers, and B Players within Apple. The point is you can’t really have a family environment in a startup that scales. And you need to scale in most competitive industries because the big players will try to destroy you at every turn. If you want to have a family like atmosphere then good luck you but expect to fail.

Apple III Was A Bastard Child Idea: 

Apple created a failed project, and it was not marketed well. The design that Jobs insisted on was not manageable for the circuits, and the Apple team all collectively made their contributions to the device so it was a gigantic mess. Steve Jobs insisted that there be no fan in the computer, as a result, the design did not allow the computer to cool properly, and it frequently overheated, the only way to prevent the chips from disconnecting with the mother board was to drop the computer onto the desk which customers were instructed to do whenever they phoned Apple; “Okay, just pick the computer up and drop it on the desk, that should knock the chips back into place.” The IBM PC crushed Apple III in sales. It was a disaster.

Being Abandoned = Ignoring Reality & Discrediting That Reality:

Steve Jobs had an illegitimate daughter that he didn’t bother to recognize as his at first. How’d that happen? In the mid-1970s, Jobs lived in a four bedroom house, and rented the place out to strippers. Chris-Ann Brennan lived with Jobs in separate rooms, apparently they lived as weirdos, and did acid. When Chris-Ann became pregnant with Steve’s child, he became disconnected from the situation, and did not deal with the pregnancy. He could be engaged and disengaged in minutes. Chris-Ann Brennan and Jobs had sex, but instead of taking responsibility, he engaged in character assassination against Brennan, and tried to prevent a paternity test in order to avoid dealing with the possibility of bringing a child into the world. He did not want to take responsibility, and he decided to believe in his own lies, according to Isaacson. Steve and Chris-Ann were 23 when they had their child, which was the same age as Jindal (Steve’s biological father) when he had Jobs. Jobs did not try to help Chris-Ann, and instead would ridicule her.

Walter Isaacson speculates that being abandoned by his biological parents led to this heartless/irrational behaviour, but it’s not entirely convincing and clear. Another classic example of ignoring reality would be when Jobs was diagnosed with cancer, but waited 9 months before pursuing surgery. Ignoring reality is how Jobs got through tough times.

Robert Friedland helped Chris-Ann Brennan have her baby girl but Steve Jobs helped name the child, and Jobs insisted in the name Lisa Nicole Brennan.  Finally, a year later, Jobs agreed to get a paternity tests where he was found 94.1% likely to be the father, and a Californian court forced Jobs to pay a monthly child support bill of $385. Despite the test, he claimed at Apple that there was a large probability that he wasn’t the father. He did this by using statistics improperly. Jobs claimed that 28% of the male population of the US could have been the father. When Chris-Ann heard what he said, she interpreted it as if Jobs was claiming that she had slept with 28% of the US male population.


Good Artists Borrow, Great Artists Steal:

The best way to predict the future is to invent it’ was one of Steve Jobs’ favourite sayings. Jobs was granted access to Xerox PARC which was established in the 1970s as an R&D digital spawning ground in Silicon Valley for Xerox. One of its products was the Xerox Alto which was a new computer interface that went beyond the BASIC systems like MS-DOS (ie. black screen + code commands), and in the process created a desktop that was called the Graphical User Interface (GUI) ie. everything on the screen was visually represented by icons. Meanwhile at Apple, Jef Raskin brought Bill Atkinson on board in the Macintosh division to develop a cheaper version of LISA but of course, Jobs wanted to get on the front of the wave, and “make a dent in the universe”. Jobs began to exert more influence on the Macintosh project which was Jef Raskin’s brainchild. Jobs hated Raskin because he was a professor/abstract thinker, and Raskin was obviously in control of the Macintosh project which Jobs saw as his own way forward.

In 1981, Jobs gave 100,000 Apples shares at $10 per share to Xerox in exchange for access to their Xeroc PARC. When Steve Jobs saw the demo of GUI he was amazed that Xerox had not commercialized these innovations: 1) the networking, 2) object oriented programming, 3) the mouse and GUI. With this one visit, Steve Jobs had found the way to connect users to the future with GUI, and a way to leapfrog over Raskin’s plans for Macintosh. Steve Jobs was proud of his stealing the great ideas from Xerox. What transpired was less a heist by Apple but a fumble by Xerox. Xerox was too focused on photocopies, and selling more machines. Ideas are important but execution and positioning is also crucial. Microsoft would subsequently ‘steal’ the GUI concept from Apple, but in reality, Bill Gates had also visited Xerox PARC.


The Bicycle Alternative to Macintosh nameSurround Yourself With “A Players”:

In the early 1980s, Jobs recruited people by dramatically unvailing the MacIntosh, and seeing how interviewees responded to the designs. He even unplugged an engineers computer named Andy Hurtsfeld (while he was coding), and forced him over to Macintosh from the Apple II team because Jobs recognized Hurtsfeld’s A Player status. You need to build your company with a collaborative hiring process where a candidate tours around the company meeting everyone that is relevant for hiring that candidate. Why? Because Jobs may not have always had A player ideas. For example, he wanted to call the MacIntosh the ‘bicyle’ because like an actual bike, the MacIntosh would help the human achieve objectives that were not possible on their own. The idea of the Apple Bicycle was shot down by wiser marketing minds. A Players hold you in check.

When Wozniak crashed his airplane in February 1981, he left Apple Computer. After the launch of MacIntosh in 1984, Scully merged the MacIntosh and Lisa teams with Jobs as their head. Jobs told the Lisa team that he was firing 25% of their team because they were B and C players. The management of the MacIntosh team would all gain top positions in the amalgamation. It was unfair, but Jobs latched on to a key management experience, that you had to be ruthless to produce an A Player lineup.

For Jobs, if you hire a B player you will cause of Bozo explosion. B players always want to hire people who are inferior to them. C players hire D players. So keep the best people in your team, and make sure that you keep the right people in your organisation. He believed that if you let any B players into your organization, they would attract other B players as well. A players love to work with other A players, by definition, they want to grow and be the best. That is what makes A Players valuable.


Reality Distortion Field:

This reality distortion field was empowering. Bud Tribble in the early 1980s said that “Steve has a reality distortion field. In his presence, reality is malleable. He can convince anyone of practically anything. […] The reality distortion field was a confounding melange of a charismatic rhetorical style, an indomitable will, and an eagerness to bend any fact to fit the purpose at hand.” It was self-fulfilling, you do the impossible because you would believe it. Jobs could deceive even himself which allowed him to con other people. Jobs used this tactic which helps to make irrational goals real. The rules didn’t apply to him. He was a liar, and the Reality Distortion Field is a creative way of saying that he was a liar. As a child, Jobs had been rebellious, and this plays into his special, abandoned, unique self. If you trust Jobs, he will make it happen.

That is the great part about the reality distortion field. If you pretend to be completely in control, people will believe you are, and will be empowered. Jobs was so passionate about Apple and NExT devices, and his force of personality allowed him to change peoples minds as a salesman. Steve Jobs was able to change reality by using charismatic rhetoric, and bend facts. The reality distortion field was never acutely apparent. Jobs was lying quite a lot during team meetings.

As a result, it was difficult to have a realistic deadline since bending facts has its downsides (Think wasteful factory decorations, missing product dates at NExT etc). Jobs did not like manuals, and told Gates in 1984 that they should not have any manuals, but Gates did not bother mentioning that they had an entire team working on manuals for Mac. Bill Gates was completely immune to Steve Jobs’ reality distortion field. When reality hit, Jobs had a difficult time dealing with it.


Be At The Nexus of Humanities and Technology:

Connecting arts with technology is powerful. Jobs practiced Buddhism & mediation. Simplicity is important for a company. And it is evident that Buddhism was instrumental in Jobs’ development of Apple. Keeping it simple is essential to producing a user-friendly product that even the parents of baby-boomers can use. In his senior year, Jobs loved King Lear, Plato, and Dylan Thomas. Steve Jobs took AP English in high school. Jobs worked in electronics, and learnt about literature. Jobs took an electronics class at high school with McCaulum.

At Reed, Jobs audited a typography class which Jobs later argued was responsible for the Mac having typeface or proportionately spaced fonts. Steve Jobs understood that creative people are disciplined but technology people think they are lazy, while technology people do not know how to communicate intuitively to people, and have created a secret language to exclude ordinary people. Steve Jobs bridges that gap beauty through his life’s work. Producing something artistic takes real discipline.


The Believe In A Closed System & Product Control:

The architectural structure and software had to be tightly linked according to Jobs. Functionality would be sacrificed if one were to allow for multiple software producers. While Microsoft could be used on any hardware, Jobs refused to have Apple computers fragmented by the work of partners who did not follow Apple’s rules. On the customer level, Jobs refused to allow users to alter the product, pitching the idea that Apple products were more user friendly (which they were). He did not want to give users control. The closed system is useful for the iPhone era but not from 1981 until the mid to late 1990s with IBM (Big Blue) and Microsoft working across platforms; Apple’s competitive advantage in the PC market eroded dramatically in the early to mid 1980s. By scaling with multiple hardware platforms such as IBM PCs, Dell, and Compaq, software developers had an open-source alternative to the closed Apple system. Bill Gates realised this closed system problem in the early 80s and exploited it. Jobs wanted end-to-end control so that software developers had to buy into the Apple system, however, critical mass was essential for that to work. In 1982, Jobs wanted the industry standard to be Apple software + hardware, he did not want sales cannibalization that comes with allowing other computers to use the Apple Operating System on their computers. But for developers, the labour required to work within Apple’s ecosystem was prohibitive compared to the gains made by working on an open-source PC world. As a result, in 1997, Jobs admitted that they had been overly proprietary, and thus failed to see how that was hurting their marketability from 1984-1997. In the 2000s, the closed system had the advantage as Apple become a premium/closed brand through carefully working with 3rd parties.


Market Research Is For Idiots:

For Steve Jobs, Apple was about producing what people did not know they wanted yet. To be innovative, meant producing what he believed was needed. He was not interested in group testing his products. He once asked, “Did Alexander Graham Bell create a focus group before inventing the telephone?” Customers are going to try to get a better, cheaper computer. Focus groups do not tell you what the customers actually need. Customers do not know what they want.


Macintosh As The 3rd Industry Standard:

Bill Gates’ Microsoft appeared in Hawaii for the software dating game. The Macintosh was the product that Bill Gates felt was revolutionary. The ideal relationship would be for Bill Gates to work exclusively with Apple but that was not Gates’ strategy. Gates wanted to be a competitor, and wrote software for the IBM. In 1982, 279,000 Apple II were sold compared to 240,00 IBM but in 1983 there were 420,000 Apple II versus 1.3 million IBMs and clones. IBM had taken 26% of the market, and IBM/Clones would take over half of the market which included other compatible PCs.

Motivate With The Big Picture:

Steve Jobs was not interested in profiting more than competitors, but in producing a better, more beautiful computer. Macintosh’s team was burned out in conflict, and demoralized but Jobs had moments of brilliance. To counteract the negatives of Jobs’ management style, he would illicit the big picture. In one meeting, the issue was with regard to the booting time/start time for a new computer which was over a minute long. Jobs explained that if you combined 1 million people’s boot times, it would add up to many many cumulative hours of waste. In dramatic terms, Jobs argued that reducing the booting time by a few seconds could save about 50 lifetimes in total.

‘Making a dent in the universe’ was the overarching idea behind Apple. In 1981, IBM released their own personal computer, and Apple was confident about their market position. The problem was that IBM was a more powerful company, and had real strengths in the corporate establishment, and brand recognition. The Big Blue vision was to crush Apple, and IBM was the perfect foil for the spiritual struggle of Apple. Jobs felt that once IBM gains in a market sector, they almost always stop innovating. For Jobs, IBM was a force of evil, later the enemy was Microsoft and then Goggle subsequently.


Unhealthy Competition Within A Company Can Be Corrosive:

Entrepreneurs do not always transition into effective managers. Steve Jobs had a pirate flag waving over his Macintosh office at Apple. The Lisa team was jealous of this renegade team, and stole their Macintosh pirate flag as a prank. The Macintosh members then found the secretary who was hiding the flag under her desk, and wrestled it from her. This bizarre corporate behaviour had a negative effect, it said that Jobs team was better than other ones, and it was divisive within the company.

Steve would not allow Apple II employees to visit the MacIntosh office. Jobs wanted people to know about Macintosh but he wanted everyone else at Apple to know that they sucked even though Apple II was generating the revenue for the company. Steve Jobs’ Macintosh team seemed to be trying to destroy Lisa because Jobs was kicked off the project.

The Lisa team did feel that the Macintosh was undercutting Lisa since people were going to wait until Macintosh was released before buying their next Apple product, as it was announced in 1983 that Macintosh was on the way. In the PR campaigns, Steve Jobs admitted that the Macintosh was better than Lisa, and within two years Lisa was too expensive, and would be obsolete. Within months of Lisa’s launch, Apple had to pin the companies hopes on Macintosh.


The Best & Most Innovative Products Don’t Always Win:

The Microsoft team members wanted to know everything about the OS operating system during their close partnership with Apple in 1983. Gates believed that GUI was the future, and he claimed that the Xerox Alto was the foundation of all personal computers so Jobs was stealing the idea anyway. By November 1983, Gates admitted that there were plans to create an Microsoft operating system to be launched on all IBMs and clones.

The product was called Windows. Steve Jobs was furious. Part of their partnership in 1982 onwards was that Microsoft would not develop any programs for IBM until a year after the MacIntosh launch in January 1983. Unfortunately, Apple did not launch the Macintosh until January, 1984 so Gates was within his rights to proceed with licensing to IBM. Gates came down to Apple, and Jobs assailed Gates “You’re ripping us off! We trusted you.” Bill Gates put it well, “We both had this neighbour named Xerox, and I broke into to house to steal the TV but found that you had already been there.” When Gates showed Jobs what he had developed for Windows, Jobs did not complain that it was stealing because he told Gates right to his face that Windows was a “piece of shit.” Jobs was almost crying about it, and went on a long walk in November 1983. Apple and Microsoft were now in serious conflict at this point. Windows was not launched until 1985 because it was not very good, but Microsoft made Windows better over time, and by 1995, it was dominant. Until the return of Jobs in 1997, there was a dark period of Microsoft dominance in the computer industry according to Jobs. The open system approach that Microsoft adopted by working with multiple hardware partners proved better because it allowed Microsoft to get on to multiple platforms for scalability. Meanwhile, other Apple developers began working with clones as well.


Eras Are Defined By Partnerships & Rivalry – Gates Versus Jobs Round 1:

Two high energy college drops ended up shaping the commercial PC market. Bill Gates created a program for scheduling classes, and a car counting program while in high school. Gates was skilled at being logical, practical, and analytical while Jobs was design friendly, and less disciplined. Gates was methodical in his business style. Bill Gates was humane but could not make eye contact. Gates was fascinated by Jobs’ mesmerizing persona but saw Jobs as rude and cruel. Jobs has always maintained that Gates should have dropped acid to open up his mind to creativity. The only thing Gates was open to was licensing Microsoft to Apple but not on an exclusive basis. Jobs long believed that Gates was not a creative person, and that Gates ripped off other people’s ideas or at least did not have original ideas. Meanwhile, Gates derisively called Macintosh “S.A.N.D.” ie. Steve’s Amazing New Device. Gates mentions that he did no like Jobs’ management style, as Steve had a tendency to call his own co-workers idiots on a regular basis.

The rivalry was also beyond the personal. In 1982, Apple’s sales were $1 billion, while Microsoft made $23 million. Jobs had an attitude with Gates that suggested Gates should be honoured to work Jobs, it was insulting. From Jobs’ perspective, Gates did not understand the elegance of the Macintosh. There were 14 people working on the Macintosh while Microsoft programmers created applications that had 20 people working on programs to Mac.  Their rivalry was deep and probably spurred innovation forward for that reason.


Genius Versus Shit-Head:

For Steve Jobs, you were either a genius or a shit-head/bozo. He sought absolute perfection, and he loved to define people according to this rubric. Steve Jobs tended to be high voltage and might actually say that an idea you proposed is ‘piece of shit idea’. But then he would turn around to propose your idea as his own a week later. Sometimes, he would then take your position in an argument, and agree with you just to mess you up. Jobs could not avoid impulsive opinions, his team at Macintosh were used to moderating his opinions, and not reacting to the extremes of either being a ‘piece of shit’ or ‘genius.’ At Macintosh in the 1981 – 1985 period, Atkinson taught his team to interpret “this is shit” to mean “how is this the best way?” when speaking with Jobs. Steve had a charismatic personality, and knew how to crush people psychologically. In addition, he had huge expectations with his Macintosh team, and it created a fear factor. If you demonstrated that you knew what you were talking about, Jobs would respect you. From 1981 onwards, employees were annually awarded for standing up to Steve Jobs. One marketing specialist stood up to Jobs twice because the marketing projections were unrealistic in 1981. She won the award having at one point threatened to stab Jobs in the heart.

 The Boardroom Showdown & Emotionality:

In May 1985, the boardroom meeting to demote Jobs from Macintosh was nasty. Jobs presented his case first saying that Scully did not care about computers but in response a manager retorted that Jobs had been behaving foolishly for over a year. Scully then presented his case to the board for demoting Jobs and stated that he (Scully) would either get his way or they would need a new CEO. Scully said that Jobs should be transitioned slowly out of the management role at Macintosh. Jobs felt betrayed by Scully. Steve Jobs was emotionally unstable, and even felt as though he should be able to repair his friendship with Scully. Meanwhile, Jobs would spend a lot of time plotting against Scully in light of his career crisis.

Advertising Does Matter:

The 1984 Ridley Scott advertisement entitled “1984” was a way of affirming a desired renegade style, and attached Apple Computers with the rebels, and hackers. Ironically, Apple was a controlled system. Jobs believed in total control. Initially, the 1984 Ad was not popular on the board at Apple. Markkula and Scully thought it was the worst commercial ever, and that they should not put it on during the Superbowl. They were proven wrong by the timelessness of that 1984 Ad. The next advertisement in 1985 was an ad focused on insulting business people by showing them that they were walking off a cliff as if to suggest that they were blindly following the IBM brand. When the commercial was featured at the 1985 Superbowl in January, there was little reaction, and in truth it was a blunder since it insulted the market it was trying to reach. Apple performed poorly in 1985, the ad is not the cause of the outcome but was a symptom of Apple’s situation in 1985; IBM was expanding immensely.

Frame Your Business Around War – Big Blue Versus Apple:

During the 1984 Apple shareholder meeting, Jobs set the stage for the epic conflict between IBM and Apple. The question Jobs asked at the 1984 conference was “Will Big Blue dominate the entire computer market? Will they control the entire information age? Was Geroge Orwell right?” These rhetorical questions helped inspire his company. Afterall, IBM did not have the vision to buy Xerox in the 1950s. Computer dealers fear IBM dominance on pricing. For Jobs, it was about Apple versus evil. Apple is the only hope against Big Blue. With that frame of mind, Apple could do anything. The MacIntosh was finally launched on “time” in January, 1984.


John Scully Hello WorldA Messy Company Can Still Work:

When Scully joined Apple, he was surprised at the disorder, and bickering between Jobs and the Lisa team over a) why Lisa was a failure, and b) why Macintosh had not been launched in 1983. Scully felt that Apple was ‘like a household where everyone were running to the beach when there was an earthquake only to discover a tsunami was approaching that forced them back into the house.’ (Isaacson Biography). Things weren’t great on the numbers side for Scully’s first year as CEO either. He had to announce at the 1984 shareholders meeting that 1983 was a bad year for Apple. It was. The competitors were entering the market with cheaper products that were not as user-friendly as Apple but still semi-useful machines. The Apple balance sheet still showed major growth but IBM had launched the PC, and there were many lower-priced clones on the market in 1981 onward which were harming Apple’s competitive advantage.

Steve Jobs Mike ScullyBut Macintosh was marketed as “the computer for the rest of us” and would refocus Apples efforts away from their core Apple II & LISA product offerings. Apples future was bright because there were 25 million information based users in offices across America, and their work had not changed much since the industrial revolution. The only desktop product people used was the phone until the personal computer. Apple hoped that their market share would expand with the unveiling of Macintosh….1984 would prove pivotal for Apples future (to be continued). Below is the balance sheet for the January 24th, 1984 Apple Shareholders meeting.  Apple was a chaotic start-up turned revolutionary full fledged company. It was a messy operation from the standpoint of senior management but generally Apple worked.

Apple RainbowThe Apple Computer, Inc Balance Sheet In 1983            

Current Assets 

Fiscal Year 1983

Cash and Investments


Receivables – Net






Total Current Assets


Net Fixed Assets


Other Assets


Total Assets


Current Liabilities


Long-Term Liabilities


Shareholders’ Equity


Total Liabilities & Equity



A Clean Factory Is Insanely Great But The Product Has To Sell:

Freemont, California was the location of Apples new automated factory overlooking the Ford manufacturing facility. Apple was more profitable in its early years of existence relative to Ford. Apple was indeed a miraculous company. Jobs spent time going over the machines in the new factory in 1984, at one point, he demanded that the Apple team repaint the machines for aesthetics. This repainting actually screwed up their machines, however, and corrections proved costly. The Apple factory had white walls, and beautiful machines. Jobs believed the factory was a way to establish a passion for Apple amongst employees. Jobs was influenced by the Japanese manufacturing which had a sense of team and discipline. Debby Coleman, a Stanford MBA, was the operations manager. By the end of 1984, the Macintosh’s performance in sales was very low. They had an expensive factory but a failed product.


Being Right Isn’t As Important As Winning

Renegades weren’t such a problem to Steve Jobs. In fact, he respected those who stood up to him if they knew what they were talking about on the Macintosh team. Often if they disagreed with Jobs, they realized that they could ignore Jobs’ commandments, and in so doing effectively spare Jobs the embarrassment of making a mistake or a bad judgement. One such incident involved the disk drive called Twiggy which was defective in the Lisa. The alternative would be a 3½ disk drive which was designed by Sony. The dirty Tokyo disk drive factory in Sony did not impress Jobs and he wanted to go with Alps disk drive which had made a clone of the Sony product. So Jobs decided to do a deal with Alps (a competing manufacturer), but Bob Belleville (behind Jobs’ back) decided to hire Sony in secret without Jobs’s approval.

Belleville hired Komoto who was tasked with building a disk drive for the MacIntosh from 1982-83, but Belleville did not want Jobs to know about this backup plan for the disk drive collaboration taking place at Alps, the Japanese company. Whenever Jobs came through the Macintosh office, Komoto was quickly escorted into a closet, or under a desk where he would have to hide for a few minutes at a time. In May 1983, the Alps team in Japan failed to deliver their disk drive, and asked for an additional 18 more months to work out the problems. It was a disaster as Mark Markkula grilled Jobs about what he was going to do about the lack of a disk drive with the MacIntosh launch potentially being pushed back to 1985? Bob Belleville saved Jobs by interjecting that Bob had a disk drive ready thanks to his secret work without Jobs’ approval. Jobs appreciated this renegade behaviour, and swallowed his pride. So we can infer that winning is more important than being right in management.

Bringing In An Outside Expert Can Be Costly:

Steve Jobs was too rough-edged to be Apple CEO so Markkula and Jobs went shopping for an alternative. They focused away from the tech sector to find a marketing genius. John Scully was an outsider who was an expert in management, and a consumer marketer who had a corporate polish. He invented the Pepsi Challenge campaign at Pepsi, and he was good at marketing, and advertising. Scully was struck by how poorly marketed computers were in the mid-1980s. Scully did not actually like computers because they seemed to be too much trouble, however Scully was enthusiastic about selling something more interesting than Pepsi Co.

Scully decided that Apple should work on the idea of ‘enriching their users lives’. Scully was good at generating PR, and excitement around Pepsi. The ability to generate a buzz about Pepsi would be replicated by Steve Jobs in the unveiling of new Apple products subsequently. Initially the two hit it off very well in their meetings about Scully joining Apple. They both admitted to be smitten with each-other over the big ideas surrounding computer technology. Jobs knew how to manipulate Scully’s insecurities to his advantage. Jobs and Scully seemed to understand each-other, and they had become friends, and emotional confidants. The problem was that most marketing people are paid posers, according to a former Apple manager. Scully actually did not care about computers but cared largely about marketing, and selling an idea to the public.

When Jobs showed Scully the Macintosh, he was more interested in Steve Jobs presentation skills than the computer itself. Scully claimed to share with Jobs goals but he was not 100% enamored with the product. Steve Jobs knew that Scully would be able to teach him the most, and Scully successfully sold Jobs the idea of his being appropriate for Apple. Jobs asked him famously: “do you want to go on the rest of your life selling sugar water, or do you want a chance to change the world.” Scully received $1,000,000 in salary, and a $1,000,000 signing bonus as the new CEO of Apple in April 1983.


The Original Macintosh Had Bad Sales:

During the planning for the release of Macintosh, the marketing costs needed to be factored into the price according to then CEO John Scully. Scully said $1,999 price was too low because the marketing budget required to spend more in order to sell Apple to the masses. As a result, they set the price to $2,499 for the Macintosh. Steve Jobs argues that this price was the reason that the Macintosh did not sell well in 1984. After the 2nd quarter of 1984, Macintosh started to slump in sales. It was slow, dazzling but not powerful enough. In addition, Macintosh had only 2 applications so there was a major software development gap. It was beautiful but Macintosh used a lot of memory. Lisa functioned on 1000K of Ram. Macintosh had 128K of Ram. There was lack of an internal hard-disk drive.

Jobs wanted to have a floppy disk drive. Macintosh did not have a fan so it over heated easily. When people became aware of flaws, reality hit. By the end of 1984, Jobs made a strange decision, he took unsold Lisa’s grafted on a Macintosh emulation program, and sold them as a new product. Jobs was producing something that wasn’t real, it sold well, and then it had to be discontinued within the company once the extra LISA’s were sold.

People attend the annual Apple Expo at the CNIT center at La Defense in Paris September 15. Apple p..The distribution system did not respond to demand effectively, and there was an inventory backlog which was unintended by Apple Inc. Macintosh very simply did not sell well enough for the production level of building a copy of the computer every 23 seconds. This would later help Jobs realise that a Just-In-Time inventory strategy would be better suited. This was Dell computer’s competitive advantage.

On balance, Jobs’ marketing from 77 to 85 was brilliant but there were some patchy points. Not everything that Apple did on a marketing level had been genius under Jobs’ influence in the 1977-1985 era. We always talk about the 1984 commercial but check out the worst Apple ad ever from 1985 which reads: “you corporate hacks are buying IBM computers without really thinking.”


Fall From Grace Through Management Incompetence:

Scully thought that Jobs was a perfectionist, while Scully didn’t care about products at all. Scully did not learn quickly in his new role but was instead focused on marketing and management rather than the products according to Steve Jobs’ recollection. In addition, Scully seemed to be clueless that Jobs was manipulating him with flattery, while Scully believed in keeping people happy and worrying about relationships.  Outside of Apple, the market responded negatively to Macintosh and by mid-84 into 85 a crisis was growing. By early 1985, the managers had told John Scully that he was supposed to run the company and be less eager to please Jobs. Also, Steve Jobs was told to stop criticizing other departments in Apple which was becoming difficult to stomach. Sales in the first quarter of 1985 were only 10% of their projections. Management changes were on the horizon.

Steve Jobs’ abuse of others increased through character assassinations and intense and direct criticism but this was also coupled with a quickly declining market share. Many middle managers rose up against Jobs. Noting the increased tension, Steve Jobs asked Scully if Jobs could create a Macintosh in a book-like format while also heading an “Apple Labs” project as a new R&D off-shoot of Apple Computers. From Scully’s perspective, if Jobs agreed to leave Macintosh, this solution would solve the management issues and get rid of Jobs’ presence at Apple’s head office. Jean-Louis Gassee would move in to take over the Macintosh only if he could avoid working under Jobs. The problem was that Jobs did not want to quit MacIntosh but wanted more responsibility by running both Macintosh and the new R&D project. Finally, Scully had a meeting with Mike Murray. By mid-1985, Apple executives started to blame Jobs for the miscalculated forecasting of Mac sales and resentment built up due to Job’s management style. Mike Murray, Jobs’ lieutenant in marketing, wrote a memo summarizing the problems that Apple had. Murray laid a lot of  blame on Steve Jobs which was a coup considering his closeness to Jobs. Murray pointed out that Jobs had a controlled power-base within the company which created a strategic alliance amongst high value employees. When Scully confronted Jobs, he said that it wasn’t going to work with Jobs’ approach at the Macintosh division. Jobs said that Scully did not spend enough time teaching Jobs as an excuse for the demotion that Scully was proposing ie start an R&D division outside of Apple. Jobs was erratic, he would reach out to Scully, and then lash-out at him behind his back. Jobs would phone one manager at 9pm to discuss Scully’s poor performance, and then he would phone Scully at 11pm to say that he loved working with Scully. The end of the line for Jobs was approaching quickly.


Being Vindictive Is Part Of Leadership:

In 1985, Jobs refused a $50,000 bonus for Macintosh engineers who went on vacation during the bonus awarding period. Andy Hurtzfeld quit because he didn’t like Macintosh’s team, or Jobs. Woz and Jobs were no longer friends. As an expression of that, Jobs also shot down Wozniak’s universal remote control company ‘Cloud 9’ by arguing that the design agency should not be allowed to work with 3rd party companies such a Woz’s. Steve Wozniak left Apple saying that the company was not being run properly for the past 5 years. Jobs was vindictive, and convinced himself that Woz’s remote control designs was a problem because it resembled other of Frog’s designs which were used to design Apple products. In 1999, Adobe refused to write programs for the iMac, so when the iPhone was released, Steve Jobs refused to allow flash on its products arguing that these products ate too much battery power, when in reality the core problem was that Adobe had screwed Apple in the past. In other words, being vindictive is part of business leadership as far as Steve Jobs is concerned.

Steve Jobs Rolling StonesRolling Stone PR Stunt:

Apple wanted to build a relationship with Rolling Stone magazine, and Steve Jobs pitched them to get on the cover but they rejected Jobs’ idea. In response, Jobs said that Rolling Stone was a piece of shit in the early 1980s to a Rolling Stone journalist, and that they needed to get a new audience of people who care about technology.


Finding Similarities Between Yourself & Your Business Partners May Not Be Good:

John Scully, and Steve Jobs were perfectionists, and they were self-deluded about each other. They had different values, and Scully did not learn quickly. Jobs managed to manipulate Scully into believing Scully was exceptional. Jobs was secretly astounded at Scully’s deference. Scully would never yell at employees, or treat them horribly as Jobs had. Jobs tried to find similarities between himself and Scully in order to justify choosing Scully as Apple’s CEO. Thinking in this way is a mistake.

Eras Are Defined By Partnerships & Rivalry – Gates Versus Jobs Round 2:

As Jobs stepped in the limelight again at MacWorld 1997, he announced a partnership with Bill Gates’ Microsoft stating that a zero-sum game (between Apple and Microsoft) was not the way forward. Gates had stolen the Graphical User Interface from MacIntosh which was borrowed from Xerox PARC, but had struck a deal with Scully to not release a GUI until after 1988. When Windows 2.0 was released, Apple sued them unsuccessfully for IP theft. By 1997, Gates refused to help Amelio create a Word processor. When Clinton began building an anti-trust case against Microsoft for their near monopoly (particularly their destruction of Netscape), and other unethical business practices, Jobs told a Justice department official to continue if only to allow Apple to develop an alternative.

Steve Jobs closed a simple deal with Gates with the agreement that Apple would stop suing Microsoft for stolen IP, while Microsoft would have a $150 million stake in Apple with non-voting shares, and produce Microsoft Office, and Microsoft Explorer for the Mac. At MacWorld 1997, this decision to work with Microsoft was very controversial, and there was a public relations gaffe that Jobs would later regret. When introducing Bill Gates at MacWorld, Jobs decided to have Bill Gates beamed into the auditorium via satellite. The only problem was that Bill Gates was put on a giant projector screen over looking the audience like a powerful overlord or Big Brother.

Force An Ultimatum To Get Control Of A Company:

The Friday executive meeting (in May 1985) was where Scully would confront Jobs about the attempted coup. Jobs said that “Scully was bad for Apple, and the wrong guy, you don’t know how to develop products. I wanted you to help me grow, and you have been ineffective in helping me.” Jobs said that he would run Apple better, so Scully polled the room with each person explaining who would be better for Apple. “It’s me or Steve. Vote.” Everyone supported Scully, and Jobs started to cry again. Jobs left Apple with his core MacIntosh staff. Scully was very upset about what happened. Scully’s wife confront Jobs in a parking lot and said that he had nothing behind his eyes other than a bottomless pit.

Targeting The Education Market Is Not Lucrative:

In September 1985, Steve Jobs announced to the Apple board that he would be focusing on a computer for the higher education market in a new company of his own. This was an outstandingly strange decision since it is not as lucrative as other areas, but he saw a market share for himself. Apple dominated the education market so Jobs took with him key people who would be useful for his goal. Their team would then have proprietary information about Apple’s future goals in the education sector. Jobs raided key employees in a somewhat vindictive manner. Even Markkula was offended at how ungentlemanly he was behaving. So Apple sued Steve Jobs for (a) secretly taking advantage Apple’s plans for the product, (b) secretly undermined Apple by getting new people, and (c) secretly being disloyal to Apple by using their information.

Never Tell The Allies Of Your Opposition That You’re Planning A Coup:

As the summer of 1985 approached and Jobs was transitioning out of his leadership role as the head of the Macintosh division, he begged Scully to reverse the boardroom decision. Scully refused and argued that Jobs had failed to get another Macintosh out to market. May 14th, Tuesday 1985, with a boardroom present Jobs was defiant and argued that it was alright to have Apple II and Macintosh developing two different disk drives. Jobs begged Scully again not to move him out of the role, and in-front of the board, Scully said no. The die was cast. Scully was planning on going to China to launch the opening of Apple to the Chinese computer market, so Jobs started to plan his coup around the Memorial weekend visit that Scully would be going on.  Jobs went around canvassing for the support needed to swing the board against Scully.

The board was largely with Scully. Jobs revealed his plans to Jean-Louis Gassee who was the guy that Scully was going to replace Jobs with. Naturally, Gassee told Scully who immediately cancelled his trip to China. Jobs refused to accept the reorganization of Apple with Jobs as a product visionary. Jobs did not want to play ball. Jobs was excluded from management reports. It was a personal and career disaster for Jobs.


How To Save A Dying Tech Company – Return To Your Successful Roots:

Jobs believed that killing the Macintosh clones was the way forward in 1997. He felt that licensing the Mac OS software to third party hardware producers was a mistake and that the largest battle was the software licensing problem for Apple. The problem was that by having a closed system, Apple had to manage its own software development. Microsoft dominated because they produced software that was cross-platform. The clones of Apple cannibalized Apples’ own computer sales even if these clones had to pay Apple software at $80 per sale. Jobs believed that hardware, and software should be integrated, and Jobs wanted to control the user experience from end to end. With this return to Apple’s roots, Jobs was setting a course for creating a closed, highly controlled user experience that had pros and cons.  


Avoid The Problem Of Focusing On The Small Battles & Not Seeing The Big Picture:

October 1988, the NeXT launch was an amazing event. After 3 years of consulting with universities across the country, Jobs was betting the company on new technology. Every minor detail was analysed and reworked as the release windows passed for the NeXT computer. In an effort to seek out the best quality technology, Jobs built a highly advanced product but NeXT did not have a floppy disk which was rare for the era. NeXT was risked on the lavish use of Steve Job’s finances to set up his company, and he targeted the higher education industry. The problem was that the features were great but the price of the product was $6,500. At the launch, the applause was scattered when Jobs announced the price tag, the academics were extremely disappointed at the launch event for NeXT because the machine was too expensive. Apparently, the education sector representatives of his NeXT launch were shocked at the cost given the feedback that NeXT had no doubt received. The price has to be low enough to scale the product into universities, other wise the sales pitch has to be extremely aggressive. This price shock was reflected in the sales.

Instead of focusing on price, Jobs’ team focused on features and other details…universities didn’t buy the product. Pricing a product is essential. Most of the features were trivial for the NeXT. In addition, there were too few people interested in building software for the NeXT, and the price was a massive deterrent. In addition, the NeXT was incompatible because few developers were designing the software needed to use the product. Jobs’ strategy was to target the workstations industry where Sun was dominant. It failed, and in 1991, NeXT stopped making hardware much like Jobs had given hardware up at Pixar. By the mid-1990s, NeXT was working in the Operating System market exclusively.


Gain Financial Control Against Your Business Partners:

Pixar needed to challenge Disney’s dominance in animation. Toy Story’s success was heavily associated with Disney which was frustrating to Jobs because Pixar created Toy Story. Jobs felt that Pixar was helping Disney roll out their movies and taking all of the credit for Toy Story. Pixar ran and created the movie, and Disney was the distributing channel. There was a need to go public with the Pixar considering that Toy Story was the top grossing film in 1995.

When Pixar was in trouble in 1988, Jobs needed to fire people which he did with a complete lack of empathy. The company was failing partly because their mass market animation hardware did not sell well. He gave these redundant employees a notice of two weeks, but this was retroactive from two weeks before the date of termination! Fast forward to 1995, Pixar was worth $39 per share on the first day of the IPO, Steve Jobs made $1.2 billion dollars in the initial IPO stage (a huge portion of its value). With the success of the IPO, Pixar wanted to assert a co-branding relationship with Disney, rather then being just a studio. Steve Jobs fought to make sure Pixar was every bit as valuable as Disney which later resulted in a Disney take over at a huge valuation.


Art Reflects Reality:

Jobs bought Pixar from Lucas films and became a majority stakeholder in 1986. Pixar was technology meeting art which was perfect for Jobs who wanted to live on the intersection of the humanities and technology. He looked into the finance, and strategy in the late 80s to familiarize himself more with the bean counting elements of business. Jobs spewed out all kinds of crazy and good ideas at Pixar meetings. He even tried to sell hardware, and software design via a digital animation product called Renderman but this did not sell well. In the early 1990s, John Lasseter came up with Toy Story. Originally, Woody was a nasty character (who acted like Steve Jobs) but finally they decided to change the story so that Woody was no longer a mean character, and the film was very successful after much difficulty with Disney. A Bug’s Life tells the story of an Ant with all kinds of crazy and good ideas, but he gets in trouble with the colony and he is then expelled from the colony. He goes out to find a solution to the colony’s grasshopper problem, and ends up saving the colony. It basically follows the same life pattern as Steve Jobs who was fired from Apple, only to triumphantly return.


Rivalry Of The Ants & Breaking With Disney:

Woody Allen’s Antz film was not a huge success but it was used to challenge the Disney production A Bug’s Life. Katzenberg (Dreamworks) wanted to copy Pixar’s Ant movie, and so Hollywood had two Ant movies being made in the same year. Katzenberg have a falling out with Disney in the mid-90s after being responsible for productions like Little Mermaid and Aladdin. Later Finding Nemo was the most popular DVD and sold $0.867 billion, and Pixar made $521 million with the showdown from Disney. Pixar was producing the films, and Disney was the distribution channel.


Build A Board That Cannot Operate Independently of the CEO:

During his transition into the leadership of Apple, Steve Jobs hired Larry Ellison, and other board members who were all loyal to Jobs. This would allow Jobs to take complete control over the company, and give him the breath of control needed to execute the long list of chances that were needed to fix Apple. Once the board was set, Steve Jobs become the CEO of Apple, and he took a salary of $1. The next step would be to rebuild the company. Instead of building Apple off of the divisions in a product line model used originally, with Jobs, there were to be no divisions with independent bottom-lines. Jobs wanted to have a cohesive structure so that he could directly control the company from the top down. He would be able to interact with smaller teams, who were in constant dialogue with each other rather than in painful competition against each other. Instead of a competitive bureaucratic structure where teams competed against eachother, Apple was now a heavily top-down organisation.

  Do Not Chase Profits, Chase Value:

By 1996, Apple had a 4% share of the market from a high of 16% in the late 1980s. Apple had expanded into every technology sector with a wide variety of products over the decade + that Jobs had been outcasted. John Scully did not think that high-tech could be sold to mass markets. According to Jobs, in the 1990s, Scully brought in corrupt people that wanted to make money only for themselves rather than create new ideas through Apple. Scully’s drive for profits at the cost of market share reduced Apple’s value. Apple’s decline was due to its inability to innovate in any area. The Macintosh hardly improved after Jobs had left. In one instance, Jobs was asked to autograph a late-1980s model of the Macintosh keyboard but first he insisted that the arrow keys be removed. Jobs hated the arrows on the keyboard and viewed it as an example of bad decision-making within Apple. Apple was almost sold to Sun and HP in 1996, Apple’s stock fell to $14 in 1996. In 1994, Gil Amelio became the CEO of Apple and wanted to integrate the Apple with Windows NT which would have corrupted Apple further. Amelio did not like Jobs much, and thought Jobs was trying the reality distortion field at every point of interaction.
tion. Amelio was probably right.


Do Not Force Other Businesses Into Your Closed System:

In 1983, Jobs loved Microsoft Excel so he made an offer to Gates. If Gates agreed to produce Excel exclusively for Apple for the first 2 years, then Jobs would shutdown his team working on BASIC, and license Gates’ BASIC. Gates accepted. This deal became a lever in future negotiations. When Jobs decided he wanted other companies to produce software for Apple, he exercised a clause in the contract with Gates so that Microsoft would not get an automatic bundling in every Macintosh sold. Instead of getting $10 per Application, per Macintosh sold, Microsoft would have to sell their products separately.

Gates knew that Jobs was good at playing fast and loose with the truth so he was not actually that upset because he then turned around, and started work on versions for IBM. Microsoft gave IBM priority, and Jobs’ decision to back out of the bundling deal was another major mistake by Jobs. When Gates and Jobs unveiled Excel, a reporter asked if Microsoft would be creating a version for IBM. Gates’ answer was “in time.” Jobs’ response was “Yes, in time, we’ll all be dead.”

apple boardHow To Save A Dying Tech Company – Fire The Board Or Resign:

In 1997, Apple was losing good people so Jobs pushed to give the best people a re-pricing of their stock options to ($13.29 per share) as Apple’s stocks were so low that they were nearly worthless. This was not considered good corporate practice. Having quality people was essential to ensure the success of the company. When the board said it would take 2 months to do a financial study, Jobs said he needed their absolute support now. His response was that he would not return on Monday if the board did not agree, Jobs needed to make thousands of decisions, and this was just one hurdle. Most of the board was happy to leave subsequently. Jobs said that the problem with Apples products was that they sucked.

Steve Jobs 1997 Insult ResponseMerge Your Venture With A Giant That You Can Take Over:

NeXT was failing and idea of being bought by Apple in 1996 was a tantalizing prospect for Steve Jobs. He wanted to get back into Apple while Larry Ellison of Oracle wanted to get more money by buying Apple outright. However, Jobs wanted the moral high ground by not making money in the process of transitioning back into Apple. In 1996, Steve Jobs negotiated with Gil Amelio the purchase starting with Apple Computer buying $12 per share for $500 million valuation of NeXT. Amelio countered with $10 per share for $400 million valuation of NeXT, and Jobs agreed as long as he received a payout in cash.

Jobs would hold 100 million in cash, and 35 million in Apple stock. Gil Amelio was not sure about giving Jobs entry into the board of Apple because of the history of 1977-85. You could say that Gil Amelio was caught in Jobs’ reality distortion field because later Amelio would realise that Jobs was positioning himself to destroy Amelio as CEO of Apple. Jobs’ return to Apple was fortuitous; if you can merge with a major company then you are effectively be hired by that company. Bill Gates said that Amelio was an idiot for bringing NeXT into Apple, and that Jobs was a salesman without an engineering understanding. An early example of the feathers that Jobs ruffled circa 1997…


How To Save A Dying Tech Company – Make Products Not Profit, Fundamentally:

Do not race to the bottom on prices. Get your user to have an emotional connection with the product. Amelio’s approach was to build a cheap product based on sketches of bolder ideas. Jobs believed in digging into the depth of what a product should do. You need to understand the essence of a product in order to get rid of the parts that are not fundamental. Can you get 1 part to do 4 times as much work? Design was not about surface but design is the fundamental soul of a human-made creation. A good design can be ruined by a bad factory production. Products should be pure and seamless. Do not let the engineers drive design. Apple worked the other way. Jobs found Jonathan Ive to produce the core designs at Apple going forward.

There is an Apple office that Ive’s runs which is built around models for future design to see where the products are heading, and to get a sense of the whole company on one desk. Apple has patented hundreds of devices. They built the modern Apple company around the assumption that design and product trump profits. Together Steve Jobs and Jonathan Ive produced the iMac, iPod, iPhone, iPad, PowerMac 5, iBook.



Skate Where The Puck’s Going, Not Where It’s Been:

“Skate where the pucks going, not where it’s been.” – Wayne Gretzky. Jobs believed that it was his goal to understand what the customer wants before they do. The iMac is about inspiring with a beautiful plastic blue, and it was translucent so that you could see into the machine. The casing would help to give all the components. The simplicity of the plastic shell had to be perfected, and they even studied jelly beans to see how it would be attractive. Some people at Apple wanted to conduct a study to see if the cost of the translucent casing would be justified by focus groups, Steve Jobs said no. iMac should sell for $1200, and produce an all in one consumer appliance. iMac did not include the floppy disk drive but it was ahead of its time. iMac was friendly so much so that there was a handle on the top of the iMac to actually pick it up. Jobs almost started crying because the iMac had a tray instead of a slot drive. May 1998 was the iMac launching. In 2001, iMac was changed to have a sunflower type design.


The Loser Now Will Be Soon To Win:

Jobs believed Amelio was a bozo. Gil Amelio did not actually present or sell himself particularly well, and he famously bombed on stage at MacWorld in 1996. That particular presentation was very poor and unplanned. Once back inside Apple, Jobs was too honest and spoke with one of the board members Willard who asked Jobs what he thought about Amelio. Jobs said that Amelio was not in the right job, and then added that Gil Amelio was the worst CEO ever. Famously, Gil Amelio had explained to a journalist that “Apple is like a ship, that ship is loaded with treasure, but there’s a hole in the ship. And my job is to get everyone to row in the same direction.” That lack of logic in this statement spoke to Amelio’s lack of efficiency as a leader.

Ellison tried to call for the drafting of Steve Jobs as CEO of Apple. When Amelio confronted Jobs about the possible takeover, Jobs denied any of it but refused to declare that he was not positioning himself for a takeover. Jobs loved to dish out flattery with Amelio, meanwhile Jobs was busy turning the board against Amelio, and Apple’s dire situation financially. People were leaving Apple, and thinking of leaving Apple which is never good when your people are an important asset. Amelio was fired because he was incompetent, but once Jobs was offered the CEO job, Steve Jobs moved into the interim CEO because he was still running Pixar. After years in the wilderness, Jobs was back at the top of Apple. The first thing he did there was to commit a subtle by significant vindictive act: Jobs hated the Newton personal assistant because you needed a stylus and also because the Newton was one major innovation of John Scully’s. Scully was the man who kicked Jobs out of Apple in 1985. Jobs cancelled the Newton.


The Internet Is Made For Music:

Napster, Limewire, and other music file sharing websites allowed the illegal downloading of music on a massive scale, and a precipitous decline in sales of traditional distribution platforms for music which began dropping by 9% in 1998. The executives at the music companies were desperate to agree on a common standard for copy-right protection. If the music industry could agree to the coding of music across the industry, they might be able to get a head of the Peer-to-Peers. Sony and Universal came up with Press-Play. EMI had their own system alternative, each had a subscription based system where you would rent the music, and the two competing solutions would not license each other’s songs. The interfaces were clunky, and the services were terrible, the record companies did not get how to solve the problem. Warner/Sony wanted to close a deal with Jobs, largely because Warner/Sony did not know what to do. Steve Jobs was opposed to the theft of creative products even though he bootlegged Bob Dylan in the 1970s. If people copied Apple software, there would be no incentive for new music other than from the passion of musicians.

Creative companies never get started, and it’s wrong to steal, and it hurts your own character according to Jobs. iTunes was the alternative to the brain-dead services, iTunes was the legal alternative to P2P where everyone wins: a) users would no longer steal, b) record companies generate revenue, c) artists get paid, and d) Apple disrupts the music industry. Steve Jobs had a tough pitch with record companies because of the pricing model, but he used the fact that Apple was still only 5% of the computer market to convince them that such a deal was not have a major impact oo their bottomline. So if iTunes was destructive, it would not be quite so too damaging. Apple was a closed system, and so these Record companies could use Apple as means of controlling the MP3s.

Record companies got $0.77 of the $0.99. People wanted to own music, not rent, or subscribe to it. The subscription model did not make as much sense. Record companies had made a lot of money by having artists produce two or three good songs with 10 fillers, the iTunes store would allow users to select only the songs they liked, further upsetting Record companies. Steve Jobs’ response was that piracy had already deconstructed the album. He closed deals across the music industry which was astounding. Jobs bridged the gap between technology and art.


Brand Yourself Differently:

Think Different – the new slogan was not perfectly grammatical if you think about what you are trying to say: it is most appropriately think differently. Steve Jobs explained that Apple’s future in 1997 was to think differently. The craziness of Apple’s customer base was that they had a sense of creativity and uniqueness that others did not. Steve Jobs argued that Apple was distinctive as a brand, and they formulated a brand image campaign to celebrate what creative people could do with their Apple computers. The Think Different campaign was about reminding themselves about who they were. Here’s to the crazy ones, who think differently. Their television commercial was historic, as well as the posters for Think Different. Jobs believed in the renegade brand that people would choose because it made them feel proud and exclusive.


Create Complimentary Product Offerings Without a Lead Loss Generator:

Sales of the iPod would drive sales of the iMac, and vice versa. They got a triple bang for the buck in advertising by invigorating the Apple, Mac, and iPod. Steve Jobs completely dominated the market for music players by putting all of his advertising spending on the Mac into the iPod. So the iPod advertised more aggressively at about 100 times more spend, than the closest competitor. The beautiful iPod cost $399, some people said that iPod stood for “idiots price our devices.” The iPod was about intersection between technology & arts, software & music. 


Don’t Be Afraid To Cannibalize Yourself Because If You Don’t Others Will:

When iTunes was released, Microsoft managers realized that they needed to create direct user value with an end to end service. Gates felt like an idiot once again, and Microsoft wanted to move forward although it was caught flat footed by Apple. So Microsoft tried to copy iTunes. When Apple created the compatible iPod, and iTunes systems for other PCs it meant that PC users would not have to buy Macs to use the iPod. Steve Jobs did not want to put iTunes on the PC. The cannibalization of not selling Macs was out weighed by the potential iPod sales. Once iPods went PC, Apple was on its way to be extremely extremely lucrative. Jobs said that iTunes for Windows was the best application for PCs ever. When Microsoft came up with Zune, it was obvious that they did not care about the music or the product. Steve Jobs believed that an iPhone might cannibalize sales for Mac, but it would not deter Jobs. When the inventor of the Walkman tried to compete against Apple, they were held back by cannibalization because Sony had a music department etc etc. In 2004, the iPod Mini was the next innovation which helped eliminated the portable music player competitions. Apple’s market share in the portable music player industry went from 35% to 75% in 18 months. The iPod Shuffle also helped grow it further because people like to be surprised. Jobs decided that they should get rid of the screen, you don’t need to navigate all you needed was to skip over the songs you heard.


Focus On What People Really Want…1,000 Songs:

 Jobs could not include the first CD burners in the iMac because he hated trays. The mark of an innovative company is that it knows how to leapfrog when it finds itself behind in the development of new innovation. Napster exploded in growth, the number of blank CDs sales also increased massively in 1999, and Jobs worked hard to catch-up. Steve Jobs wanted to make music management easy. You can latterly drag, and burn a CD. Jobs bought a company called SoundJam, and instead of an interface to see your songs, Jobs wanted a simple search box. In 2001, iTunes was free to all Mac users. The next step was to create a portable player which was the simple interface. Getting all the record companies alongside iTunes would be the complicated part. By the fall of 2000, Apple was working towards this goal.

Fidel and Rubenstein clashed over the iPod because Fidel was charismatic, and wanted to claim control, and he had already been shopping around other companies to pitch his idea of a portable software based device which later became the iPod. They found small company to help them with the Mp3 technology. Steve Jobs wanted white on everything for the iPod, the purity of the white headphones became iconic. Steve Jobs pushed the idea of their iconic advertising. Apple’s whole history was making the software, and hardware together so the iPod made strategic sense. Gates said it was great, too bad it was only for Macs… By 2007 iPod was half of Apple’s revenues.


Steve Jobs Said that Google’s ‘Don’t Be Evil Mantra’ Is *Bullshit*:

Android’s touch screen features was clearly stolen from the iPhone. They had a grid app list much like the iPhone. The swipe to open, pinch to expand, these were all Apple ideas that Google was implementing. Google was engaged in grand theft as far as Steve Jobs was concerned. Jobs went to Google, and shouted at everyone there. Jobs wanted Android to stop stealing their ideas. The open source code approach was valuable because Google was able to sell their platform to multiple mobile phone providers where Apple had more control. Nonetheless the Apple App market is much larger than the Google one to this day.

Get Yourself Into The Cloud & A Castle:

Apple’s MobileMe was a failure because it did not sync data. It was expensive but iCloud was the future. This was not a new idea. In 1997, Steve Jobs explained that at NeXT he had all of his data on the server. The idea is that you won’t have to back up your computer by downloading into the iCloud. All you stuff is on the server, Jobs was talking about this idea as early as 1997. The concept that everything would work simply has been applied to cloud computing. Microsoft said that CloudPower would allow individuals to access their content wherever they are but this opens up the door to licensing agreements etc. In a final twists, the Apple Campus is under construction and will be completed in 2015. It is similar to Google HQ. Copied?


Don’t Fear Changes In Industry & Anticipate Competitive Market Disruption:

The digital camera industry was destroyed by cellphones, and Steve Jobs knew that in order to stay ahead of the wave, they would have to cover the cellphone market as well. The iPhone was born out of a concern that Nokia et al would eat Apple’s lunch by creating mobile photos that could easily play music, just as Nokia et al had crushed Kodak. Motorola was a stupid company to Jobs because the Rokr was a joke. Jobs realized that the iPod wheel was not going to dial phone numbers. Jobs was working on the iPad with the touch screen system before the birth of the iPhone. The ability to process multiple touch items was Steve Jobs’ ideas. They wanted to transfer the track pad to the computer screen. Ive never made a demonstration with other people because he know Jobs would shoot it down. The tablet development was put on hold, and shifted to the iPhone screen. Jobs split the multi touch track pads and wheel based iPhone plans. The case could not be opened, and Apple made sure that people could not access the iPhone. The iPhone was three products bundled into one: 1) internet interface, 2) mobile phone, and 3) touch controls. The iPhone was a massively successful product even though it was the most expensive phone in the world $500. Ballmer said the iPhone sucked because business people want a keyboard. Apple sold 90 million phones within months.


Create An Inventory Management System & Build Stores That Work:

Everything you do incorrectly is in order to get it right. If something isn’t right you can’t fix it later. Steve Jobs wanted to control the customer experience, which included the experience of creating wood, stone, steel, and glass an Apple store. Mega chains were where the salesman did not care about Apple because other products were available. Jobs was impressed by the Gap store business, and Jobs hired Drexler from Gap to build a prototype of the store. Tim Cook, reduced key suppliers from 120 to 24, forced many to move closed to Apple’s plants. He helped save Apple a great deal of money. Apple stores were strategically placed in Covent Garden London, or in New York. Sales are quickly tabulated using Oracle technology every 4 minutes so that they have a lean manufacturing production line, and the building of products can respond to market demand quickly.


Converge Old Devices Into 1 New Device:

Is there room for something in the middle of the iPhone and PC, Jobs asked in 2010? The iPad allows people to bring technologies together. The iPad was not sold as well as the iPhone. The name iPad was ridiculed as a women’s hygiene product. Gates still believed that it’s a nice reader but didn’t like the iPad. Further divergence in views suggests that Gates believed in a stylus while Jobs said we already have 10 stylus’. There were 800 emails in Steve Jobs’ inbox. The iPad had the limitation that it was for consumers but does not facilitate creation. The iPad arguably mutes the user turning you back into a passive observer. The question about iPad was whether it should be closed. Google’s Android was an open platform that could be used openly. The iPad was the clearest test of the closed-system model versus the open-system model. In the end, iPad was the most successful consumer product launch in history with 1 million sold in the first month. Jobs was in the process of changing the print industry, he closed deals like he did with the music industry. Apple would take a 30% take of the subscriptions sold, and Apple would have all of their purchase information which they would use later on. The problem was the publishing industry did not want the subscription base to be controlled by Apple since Apple would then change the prices. Steve Jobs believed that the paper textbook was going to be a industry ripe for digital destruction, and created digital versions of the products. The Chinese employees are paid $2.00 per day. It takes 5 days, and 3500 hands to produce 1 iPad in Foxconn China.

Do Not Ignore Medical Diagnoses:

When Jobs was diagnosed with cancer, he did not rush to have surgery to remove the tumour found in his pancreas. Instead, he tried to see if other treatments would work. Why was he hesitant? Partly because he had difficulty with the idea of opening up his body. He went under herbal remedies and psychic treatments as a result of his quibbling. As a response to his psychological concerns, Steve Jobs tried to cure himself in strange ways: reality is unforgiving. Once again, he was able to filter out the world, and ignore stuff that he does not want to confront. Jobs had been rewarded for willing things away, but in July 2004, the cancer had spread. Finally, he underwent surgery in 2004 but a less radical surgery.

The cancer had spread into the liver. Had doctors operated 9 months earlier they would have possibly arrested it. When he had a liver transplant in 2009 by going to another state and by having a multiple listing, the liver Jobs received was the product of a car accident that killed a 25 year old. Steve Jobs lied about his condition throughout the last years of his life by calling it a hormone imbalance. The privacy rights of the CEO had to be weighed, but Jobs also embodied his company more than most CEOs so the impact of negative news regarding his health could have an impact on the stock.

Make Peace With Your Old Enemies:

Microsoft had stolen the interface developed by Apple with multiple clip windows etc. IN 1997 Jobs announced that the only way forward was to make a deal with Bill Gates and Microsoft. In 2007, Bill Gates and Steve Jobs got together to talk about technology. It is an EPIC discussion.

Follow Your Heart:

there is no reason to not follow your heart, and gain meaning because you will be dead one day. Don’t live someone else’s dream. Stay hungry, stay foolish. The Stanford University commencement address is considered one of the greatest commencement ever made.Jobs did not believe that people should be materialistic but should seek to be valuable.

Steve Jobs Was A Brilliant Jerk

From the creator of Going Clear, Steve Jobs: The Man In The Machine is about the now infamous career flaws of one of the most successfull entrepreneurs in American history. It looks like a good rehashing of memories from 2012 when everyone you knew + your grandma read the Isaacson’s biography.  I’m certain Kutcher and the script writers of the disappointing Jobs film are going to have a front row seat as they didn’t actually read the Isaacson biography….’cause that film sucked badly.

Steve Jobs:
  • a) abandoned his own daughter and girlfriend,
  • b) cheated Wozniak out of a bonus at Atari,
  • c) verbally assaulted the LISA team and created intense competition between teams,
  • d) screamed at Macintosh developers regularly,
  • e) cried like a baby when the iMac CD tray was a tray not a slot,
  • f) fired employees with retroactive consequences to their salary,
  • g) parked his car in the handicap spot,
  • h) sped down the highway regularly,
  • i) discovered his Syrian father (who also abandoned him) was the owner of the restaurant chain he frequented regularly but never came by to say “hi”,
  • j) tried to instigate a coup against foolish management and lost…
  • k) cried whenever someone disagreed with him,
  • l) attacked creative ideas for being idiotic then within a week apprioriated them as his own,
  • m) called his co-workers idiots and bozos whenever they fell short of his goals,
  • n) his colleagues had to hide a disc drive developer in the Macintosh supply closet (whenever Jobs visited) in order to prevent Jobs from discovering a parallel disc drive solution was being built which ultimately saved Jobs from disaster as his solution failed,
  • o) he refused to donate to any charity ever,
  • p) built and painted an expensive factory at NExT meanwhile the product completely bombed,
  • q) refused to give shares to one of his earliest Apple colleagues even though the guy put in many hours into the project and begged Jobs for a small part of the equity,
  • r) made his step-mom answer early customer service calls to Apple without pay (laugh out loud)….
  • s) took the tv away from his step-dad who wanted to watch football in order to program Apple’s……
  • t) declared war on IBM as a means of galvanising his company,
  • u) claimed Microsoft was stealing Apple’s ideas when both actually stole from Xerox PARC,
  • v) tried to destroy Adobe and any organisation that expected fair treatment…

This list is not exhaustive & what can we learn from this list, right?

This is an analysis based on Steve Jobs by Walter Isaacson and other sources of research. Enjoy.

Running a Company from the Financial Perspective | Accounting Analysis

Accrual Accounting versus Cash Accounting

Accrual basis = immediate recognition.

Cash basis = when the case is received.

Before we dive into earnings management as a subtopic within business analysis and valuation, it is helpful to understand the difference between Accrual and Cash Accounting. The cash basis is only available for use for companies has no more than $5 million sales per year.

The accrual basis is used by larger companies because matching revenue and expenses in the same reporting period so that the true profitability of an organization can be discerned.

Cashflows are harder to manipulate. The big difference between the two is when the transactions are recorded.

Cash basis: Revenue is recorded when cash is received from customers, and expenses are recorded when cash is paid to suppliers and employees.

Accrual basis: Revenue is recorded when earned and expenses are recorded when consumed.

Revenue recognition is delayed under the cash basis until customer payments arrive at the company. Similarly, recognition of expenses are paid under the cash basis until such time as supplier invoices are paid.

Revenue recognition: a company sells $10K of green widgets to a customer in March which pays the invoice in April. Under the cash basis, the seller recognizes the sale in April, when the cash is received. Under the accrual basis, the seller recognizes the sale in March, when it issues the invoice.

Expenses recognition: a company buys $500 of office supplies in May, which it pays for in June. Under the cash basis, the buyer recognizes the purchase in June, when it pays the bill. Under accrual basis, the buyer recognizes the purchase in May, when it receives the supplier’s invoice.

Creating Cookie Jars: by deferring revenue that was genuinely earned or by taking additional expense by taking on excessive reserves for bad debts (we’ll explore this in a future post)

Debt Covenants: Keeping ratios within certain ranges. Debt/Equity. Lender have a capped upside. So lenders like covenants; What if you are ear to violating your covenant? Then you might adjust the bonus threshold.

Opacity of the Firm: capital markets & stakeholders. Competitive consideration: opaque firms will use the argument that they can’t divulge financial statement performance to the same degree as other firms because of their competitors.

You have to sit in awe of the most in genius management invention of all: Plausible Deniability


How to adjust financial statements for distortions?

How firms communicate with financial statements and how regulations and managerial discretion affect statements for distortions. There are several steps to Accounting Analysis:

Step 1: Identify Principal Accounting Policies:

Key policies and estimates used to measure risks and critical factors for success must be identified. IFRS require firms to identity critical accounting estimates. For example banks issue credit risk and interest rate risk. For airlines, depreciation is important because their biggest asset are the planes themselves. Therefore, for airlines, depreciation is a critical accounting policy. It is also where the accounting manipulation can occur.

Step 2: Assess Accounting Flexibility

Accounting information is less likely to yield insights about a firm’s economics if managers have a high degree of flexibility in choosing policies and estimates. If the firm is using GAAP accounting; there is limited flexibility for example look at how restrictive R&D and Marketing cost are under GAAP. How much of the flexibility has management already used? For other areas under GAAP, there is a lot of flexibility for example credit risk. Is the company being aggressive or conservative? A firm that is conservative now has the potential to be aggressive.

Step 3: Evaluate Accounting Strategy

Flexibility in accounting choices allows managers to strategically communicate economic information or hide true performance. How has their accounting differed from competitors? Are the accounting strategies changing regularly; think of CGIs accounting policy changes in the last decade. Does the firm have realistic assumptions in the past.

Issues to consider include:

  • Norms for accounting policies with industry peers
  • Incentives for managers to manage earnings
  • Changes in policies and estimates and the rationale for doing so
  • Whether transactions are structured to achieve certain accounting objectives.

Step 4: Evaluate the Quality of Disclosure

Managers have considerable discretion in disclosing certain accounting information. Is the firm providing adequate information about their strategy and explain the economics of its operations? Are those accounting policies justified adequately? Is the firm providing equally helpful disclosures in bad times? Firms that are more transparent are potentially far less likely to conduct earnings management.

Issues to consider include:

  • Whether disclosures seem adequate;
  • Adequacy of notes to the financial statements
  • Whether the management report section sufficiently explains and is consistent with current performance
  • Whether accounting standards restrict the appropriate measurement of key measures of success

Step 5: Identify Potential Red Flags

Unexplained transactions that boost profits. Here are a few examples.

  • Unusual increase in inventory or A/R in relation to sales
  • Increases in the gap between net profit and cash flows or tax profit
  • Use of R&D partnerships, SPEs or the sale of receivables to finance operations
  • Increasing Gap between Net Income and Cash Flow from Operations: firm may be fiddling with accruals.
  • Unexpected large asset write-offs (suddenly just write something off)
  • Large year-end adjustments
  • Qualified audit opinions or auditor changes
  • Related-party transactions (Valeant and Philidor)

Maybe we should list MORE!!!!…..

Red Flags in Accounting used for Earnings Management by (some) CEOs and CFOs Today

Note that Earnings Management is not illegal in some cases, in fact, it’s a strategy used by many companies believe it or not. Just like a Prime Minister who announces a snap election, a CEO can engage in earnings management (the manipulation of Financial Statements) behind a wall garden that only he or she and their team is privy to…..The following at POSSIBLE red flags, it’s hard to tell in reality, but here are things to look for with publicly traded companies:

Income smoothing: Companies love steady trends in profits, rather than wild changes in profits  No kidding! Income smoothing techniques (i.e. declaring high provisions or maybe deferring income recognition in good time) led to lower wild changed in reported earnings. Items to look out for is a pattern of reporting unusual losses in good operating years and unusual gains in bad ones.

Achieving forecasts: Is there a pattern of always meeting analysts’ earnings forecasts, an absence of profit warnings, or interim financial statements consistently out of line with year-end statements? Is a company making changes in accounting policies that revise profits upwards in years when underlying earnings have fallen, and vice-versa? Could be a redflag!

Profit enhancement: Current year earnings are boosted to enhance the short-term perception of performance which is what shareholders and analysts crave!

Accounting-based contracts: When accounting-based contracts are in place such as loan covenants, any accounting policy that triggers a shortcoming can circumvent the debt covenants….

Gap between earnings and Cash flows: Is there a large gap between earnings and cash flows? Is that gap increasing? If so there may be poor accruals.

Reported income and taxable income: Is reported income vastly different from taxable income, with no explanation or disclosure? That’s a problem.

Ratios: Do obsolescence analyses reveal old inventories or receivables, declining gross margins but increasing net margins, inventories/receivables increasing more than sales, or more leverage ratios?

Unusual financial statement trends: What is the relationship between revenue and (earnings per share) EPS growth? Is there a weird pattern of year-end transactions? What is the timing and recognition of exceptional items? What is the relationship between provisions for bad accounts and profits? It’s within a CEOs discretion due to asymetric information.

Accounting policies: Have there been recent changes in accounting policies, such as off-balance sheet financing, revenue recognition or expense capitalization? Furthermore, have the nature, purpose and effect of any changes been adequately explained?

Incentives for management: Are there incentives for managers to boost short-term profit to increase compensation (i.e. bonuses based on EPS and share option plans).

Audit qualifications: Are any auditors’ adjustments outlined in an audit report significant?

Related party transactions: Are these material and to what extent are directors affected

Manipulation of Reserves: Has there been under-provisioning in poor years, over-provisioning in good year, a manipulation of reserves, aggressive capitalization of costs, overly optimistic asset lives, accelerating expenses and increased write-downs in good years, and exceptional gains timed to offset exceptional losses?

Revenue recognition: Has there been a premature recording of revenues, recognizing sales prior to physical movement of goods, recognizing service revenue from service contracts prior to service being performed, upfront recognition of sales that should be spread over multiple periods, percentage of completion estimates out of line with industry norms?

Transaction timing: On the revenue side, have deliveries been sped up near the year end? On the cost side, have discretionary expenditures, such as maintenance and R&D, been delayed to future periods?

Regulated industries: Is there a pattern of engaging in accounting practices whose principal purpose is to influence regulatory decisions (i.e. lowering reported profits where the perception of excessive profits could prompt unfavorable regulatory action)?

Internal accounting: In a multi-division company there may be incentives to shift profits to divisions (or subsidiaries in relatively low tax jurisdictions) to reduce the overall tax burden.

Commercial pressures: In the anticipation of mergers, takeover bids or IPOs, there could be pressure to create a favorable perception by, for example, lowering credit standards to temporarily boost sales OR pumping up the value of the company at the risk of harming long-term customer relationships.

Other: When a company has foreign operations and is re-translating overseas subsidiaries’ results, a functional currency is determined for each entity. However, has the company taken advantage of ambiguous situations or facts, manipulating the selection to generate favorable currency gains or minimize currency losses? Has a company allocated joint costs among long-term contracts to create the appearance that no contract has produced losses, thereby avoiding an immediate loss provision?

The existence of these potential red flags do not indicate anything wrong per se, but should lead a prudent analyst to undertake diligent investigations to see if they are justified by company-specific factors. If distortions do exist, an analyst should, to the extent possible, undo the distortions to better evaluate a company’s financial performance within a historical and competitive context.

Step 6: Undo Accounting Distortions

  • Taxable income
  • Cash flow statement information
  • Management Guidance: no one is forcing management guidance, except management themselves.  What MG is specifically, is when a C-suite manager provides insight into the company to investors or analysts. If you are close to the target. I’d like to get that bump rather have a small loss. You want to cross the Threshold of Zero.

Elon Musk: Leaked Email in August 2016

So if you Tweet the kind of things that provoke strong reactions, that are basically the standard musings I might have made as teenager, you probably have no problem manipulating financial analysts! Expectation management is a tactic that Musk and other CEOs will leverage when the short-term performance for what is a long-term Bezos-style play (Tesla) . Elon Musk (graduated of Queen’s University in Kingston, Canada and whose mother is a Saskatchewanian) is of course a bat-shit crazy badass. In August of 2016, he was saying his Tesla Q4 expenditure will be huge, in the run up to new production line, so he’s providing a small negative estimate of profitability to his own employees and then intentionally leaking the email to the press to get the word out to financial analysts. Leaks in politics = leaks in business.

Here’s the full text that Bloomberg has published:

I thought it was important to write you a note directly to let you know how critical this quarter is. The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production. Once we get to Q4, Model 3 capital expenditures force us into a negative position until Model 3 reaches full production. That won’t be until late next year.

We are on the razor’s edge of achieving a good Q3, but it requires building and delivering every car we possibly can, while simultaneously trimming any cost that isn’t critical, at least for the next 4.5 weeks. Right now, we are tracking to be a few percentage points negative on cash flow and GAAP profitability, but this is a small number, so I’m confident that we can rally hard and push the results into positive territory. It would be awesome to throw a pie in the face of all the naysayers on Wall Street who keep insisting that Tesla will always be a money-loser!

Even more important, we will need to raise additional cash in Q4 to complete the Model 3 vehicle factory and the Gigafactory. The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not “Tesla Loses Money Again”, but rather “Tesla Defies All Expectations and Achieves Profitability”. That would be amazing!

Thanks for all your effort. Looking forward to celebrating with you,


“Gap in profitability” So he can’t miss this target badly. In the end, he sold a large build up of environmental credits: so that they could hit Tesla’s target thus satisfying the analysts who wanted to short the stock.

  • Dead giveaways that this is for analysts? Um, technical language that his employees without financial training might not dig.
  • Also, just being a total douche communicator because he probably doesn’t like analysts.


Research & Development GAAP versus IFRS

As a side note: Under IFRS, R&D is significantly more complex. Under US GAAP you will have your R&D costs expense as they are incurred.  Under IFRS, research costs are expense but IFRS has broad-based guidance which require companies to capitalize development expenditures, for internal costs, when certain criteria is met. In IFRS, intangible assets are capitalized and amortized under IFRS but expense under US GAAP. Therefore, this difference means that for IFRS; you need to distinguish research activities with development activities.

Research costs are costs created to plan an investigation or undertake research with the aim of gainin new scientific or technical knowledge. Example, search activities for alternatives for concrete rail ties.

Development costs are incurred in the application of the research findings or knowledge to plan or design for the production of new or substantially improved products before the start of commercial production. Example, testing a new smart phone OS to replace the current OS.

Under IFRS, here was when you would start to capitalize development phase of a project. When it is technically feasible to complete the intangible asset so that it will be available for sale. Its intention to complete the intangible asset and use it is another trigger.

Nintendo Business Strategy Analysis for 2017 and Beyond

The following is an analysis of Nintendo’s strategic position in the marketplace. What we’re looking at here is analyzing how they performed in the past, what are the strategic challenges? What is the challenges of their industries, because they are in several industries actually if you think about it, and how can they improve the performance? So hopefully, you enjoy.



As I said, it’s a strategic analysis of the consoles and handheld devices industry with Nintendo and where it fits within that. So it’s a hardware dedicated video game platform that we’re interested in understanding. That means we’re not interested in necessarily at the core of the software, which is where Nintendo actually does really well and they sell quite a lot of licensing etc. around their products and characters. It’s not the core focus, it will be on consoles. So just give an introduction, the team here, this is the team that we had and their names are below. I’ve just kind of made everyone anonymous. Because I thought it was more appropriate to do so.

Anyway, so here we go, let’s talk about the first thing. Let’s get a bit of a business overview here. So there’s a $4.6 billion worldwide market for hardware and games and software and this industry is very competitive and it requires a lot of intensive research and development. So that’s just the general gist of the industry, so how does Nintendo fit into this? What is Nintendo, first of all? Well, if you remember maybe as a kid, at least I did on Christmas day, getting a Super Nintendo was probably the best Christmas present I ever got. It was I think 1992 and I was pretty excited about it. I didn’t really know what it was to a certain extent. Well, that’s not entirely true. I did know what it was because a buddy down the road, he had the original Nintendo system and we used to play Mario together.


Anyway, so what makes Nintendo interesting is their core value proposition. What is it about Nintendo that makes them so strong in the marketplace? And I think there’s three or four, in a sense, core areas where they dominate, and its one is the plug-and-play. So here, much like Apple, it’s a user-friendly computer interface that you can use here and Nintendo allows young children to play video games interchangeably without any technical skill whatsoever. So you can swap in games easily done, and that was quite a significant initiative in the early ’80s. You also have this element of characters and trust. So you’ve got Mario, who’s basically a Disney-like Mickey Mouse and at the same time, you have parents who know that the video game content is tightly curated by Nintendo and it’s well-put-together. Everyone loves Nintendo products for this reason, right? And you also have this integrated closed sys, so like Apple or even we use in this sentence here, Amazon’s Kindle line of e-readers, Nintendo really needs to have cooperation from a whole ecosystem of publishers because it’s a closed system. They’re very controlling of the content that’s made and of course, this is the big revolution we’ll talk about later in terms of timing. They basically disrupted the arcade industry and video computer…computer games industries in the ’80s.

In terms of business units, we know Nintendo’s quite complex. It’s got quite a few subsidiaries and it really thrives on locking customers into their closed system through the appeal of flagship characters and obviously, we can think of Super Mario Brothers as that leading experience and software that everyone wanted to play. But we wanted to focus in on the console hardware itself because that is an area where we can parse and avoid talking about the App Store and Android stores in great depth which complicates our analysis quite a bit. So in essence, were treating Nintendo here as a manufacturer and in fact, they’re on the 8th generation of consoles at this point.

I think it’s important now to talk about the value chain that exists for Nintendo. So you’ve got this idea of a pretty well-established industry now. It’s about 25-30 years…35 years old actually. And it’s gone through quite a bit of change but there’s still some fundamentals. So you have publishers, they’re the people who are responsible for financing and managing the marketing titles. They’re very much a part of getting game developers to produce good content, and then launching it on various console platforms. So you can think, of course we’re talking about Sega historically, Sony, Xbox and Nintendo. Then you’ve got the actual developers, really a critical piece obviously, the people who actually create the games. Sometimes that’s third party, but sometimes Nintendo itself creates games in-house. But no matter what, you still have to have third-party developers to really give the ecosystem as it were, right? The array of potential games you can play. You want to give it the widest breadth as possible.

And then you’ve got at the core of it, what we care about here, is the console makers themselves and that’s Nintendo’s story directly. Certainly, consoles actually are a loss leader to a certain extent. That’s kind of built into the model and there’s a lot of in-house research and development that is undertaken to make the consoles effective and innovative, so you can think of when Wii came out there was a lot of R&D that must have been at play in order to make that major leap that they did in 2006. So you also have distributors, so those are obviously kind of connected to publishers in that they sell and get the video game software, part two and the consoles, to the various marketplaces. And of course, you’ve got your retailers, so you’ve got the classics, the major players like Walmart, but you also have these small boutique electronic stores like E&C Games on Spadina in Toronto, Canada. You know, these are enthusiasts who love Nintendo.


So you can actually see here then that… I’m just going to bring my cursor out, 1.87% is where they are and the industry is .84%. So the industry is unattractive but they actually are doing competitively well in an industry that is very unattractive. Still an unattractive industry, but they have a competitive advantage in an underperforming industry, interesting enough. You’ve got a 10%, so just giving a little more color to that, I don’t think it’s really worth getting into the nuance here. And again as I was saying, a return on sales is way more important than ROA. You could read that on your own time.

So looking at this in a more visual format, I’ve got this piston chart. You’ve got the industry average here… Sorry I can’t get this cursor out of the way. Maybe I’ll just remove the cursor. And then you’ve got industry average and you can see that Nintendo has a competitive advantage. If we look at just 2015 data… If you look at the ROS globally again, it’s 5% and then the industry is underperforming at -4.2% of less of the actual average there and you can see Nintendo has a disadvantage in the global economy but actually an advantage in the industry. A bit nuanced here, but basically the message is: “Stay out of consoles. Don’t go… If you’re going to start a new business, don’t try to build a plug-and-play console system for television sets”, that’s pretty much the message here.

But the console generation pressures is why arguably this is all happening. So the technology change makes every manufacturer of this hardware wary and probably weary as well because you have to basically start a new… Build a new console roughly every 2.5 to 5 years, and you’ve seen that. You’ve got your PS1, PS2, PS3, PS4, so clearly they have to generate new platforms regularly to stay relevant. And the ROS piston chart here, again just giving a little more flavor to this, it’s much like Macintosh’s 1984 situation with the Macintosh. What I mean by that is actually, the original Macintosh which was released in 1984 was actually not very successful. It wasn’t very powerful as a computer and as a result, of a lot of software developers really didn’t line up to build on the Apple Macintosh platform. Now, as a result, Apple struggled greatly. They even got rid of Steve Jobs, one of the founders of Apple in 1985 because of the struggles the company was under. So if you’re going to make a closed system, you better make sure your product is very very good. This is why consoles are just so unattractive if you’re unsuccessful in your product. Of course, Nintendo’s in this business because, you know, secretly if you can create a really great console and get lots of buy-in from software developers, you’re in the money as it were.


Expanding a bit on this, Michael Porter’s five forces are probably one of the most critical tools for analyzing any business, so we will just go through it really quickly here. Buyer power is medium… Sorry. As a Power of Suppliers’ medium, Buyers Power’s medium, Threat of Substitutes medium, Rivalry is high and Threats of Entry are low.

Let’s go through this quickly. So there’s a high dependency on outside manufacturers that produce key components or simple products. You also have the sort of everyone wants to work for the big three if you’re going to be producing software products or hardware, sorry. Again sorry, confusing… We’re working on the hardware suppliers issue here so the cables, the actual plastic casing and all this has to be accounted for, so they don’t necessarily have that much to pop supplier power, but another supplier would be the game developers themselves. So you might actually have a game that launches exclusively on the Wii U as is the case with Bayonetta 2. Here clearly they don’t have that much as a supplier power. They’re giving it up, they’re saying, “Nintendo you’re so great, we want to work with you”, so the relationship isn’t, you know, like Nintendo completely owns the suppliers that they work with. They can affect Nintendo’s success, and as I said earlier if they don’t want to play, if they don’t want to cooperate with you and build games for your platform, you’re in serious trouble.

On the buyer’s level, so buyer power, consumers are constantly looking for the next console, so they can kind of mess around with your goals, but at the same time they’re really loyal. A lot of people love Nintendo consoles, so it’s a bit of a mixed conversation here and sales of consoles are really all about the video games that are launched which are extremely popular. In fact, I remember when the Nintendo 64 came out, I was really excited about Goldeneye because that was an amazing game that my cousin had bought and was playing on his Nintendo 64, so I had to get a Nintendo 64 for that reason.

Threats of substitute is another key idea. Here it’s a… just to make sure you understand it, the threat to go do something else with your money, your time. So there’s obviously lots of substitutes now, particularly with smartphones and computers which we’ll talk about a bit. And then there’s the development of portal system,s which is good because you know, Gameboy and Nintendo DS actually really do well in this space, but there is always that threat. There’s so many other places and areas of activity that you can apply for entertainment and so as part of this, Nintendo’s responded by trying to create “a home entertainment centre” around their product.

Rivalry is really interesting. I mean, you can recall perhaps there was Sega company which eventually was disband. Basically, they in the 1990s were really competitive against Nintendo and really critical of Nintendo’s Super Nintendo and the Sega Genesis advertisements were really aggressive and even to this day, you can see a lot of game theory between the different players. So Sony and Xbox, they’ll try to time the release of their latest console in line with what their competitor is going to do. So it’s kind of a prisoner’s dilemma situation if you’re familiar with that theory.

And then you’ve got the Threats of Entry, it’s really not that high. People don’t want to go create consoles, particularly because of the fact that it is so difficult to do but an important point at the very bottom that I wanted to highlight is that entry is possible. In fact, that’s what Sony and Microsoft did in the ’90s. Of course, entry is possible when you’re a huge successful business already, when you look at Microsoft in particular and Sony as well. And I also want to point out at the bottom there, I don’t know if you can see that flashing thing there, okay.

So value creation, those three: the supplier, buyers, and substitutes. That’s the places, those are the ideas, factors that inhibit or allow for the creation of value. So and then if you look at the value capture side of things it’s the rivalry and entry that is really critical. So clearly the value capture area is a bit weak in this particular industry because of the intense rivalry when they’re competing to steal literally, take away customers or hopefully have customers buy both platforms or, you know, multiple platforms.


So I think we need to dive a little deeper on Nintendo’s brand identity and so again, I’ve already emphasized it’s about beloved characters, child-friendly and plug-and-play components, but I wanna understand what they did recently that’s quite fascinating. They’ve kind of moved to broad differentiated and again, we have to give a little background around what Michael Porter talks about here. If you can see at the bottom here you have four quadrants, so you’ve got on the left, you got broad and narrow and at the top, you’ve got low cost and differentiated. These are different businesses or positions that you could take as a business, so you could see that the arcades were narrow and low-cost. So they were only focused on, you could only literally play one game on an arcade machine and it was relatively low cost. It’s not like customers had to buy an arcade to play it. No, you actually had arcades, literally the places where you could play these games and for the longest time, I’d say Nintendo was quite narrow and differentiated. When we see differentiated, we mean premium so more expensive, exudes premium characteristics like distinctiveness whereas low-cost is not as distinctive so, clearly they are… They were for the longest time narrowly differentiated and then 2006 they said, “Why don’t we include…expand our market”, “Let’s go after adults”, “Let’s go after seniors”, “Let’s try to have fun with that” and that’s exactly what they did.

So customer segments is really important, I think. As you can understand, with the introduction of the Wii, Nintendo was really targeting on non-gamers quite a bit and if you look on the right I’ve got a quote here from Miyamoto, the creator of Mario and other major successful characters from Nintendo, was basically saying, “We’re trying to make it from machine that everyone, parents can love” this is what the brand is. And I think earlier on, I think in the business overview section I had sort of the value propositions of Nintendo, and here I’m saying that we’ve actually added one.

So you’ve got the plug-and-play closed system, beloved characters, child-friendliness but then you also have the non-gamers casual gamer segment. That’s what Nintendo said, “We’re going to take over in 2006 with the Wii” and they were very very successful in doing so. And again, their philosophy is it’s a toy. They are very much a playful company in that sense and the Wii contributed to the idea of who they are rather than detracting from it. They actually made a lot of sense for them, so you’ve got…and this is a really tough market. You have to have, you know, strategic issues here.


So there are a lot of strategic issues that they have to deal with and I’ve mentioned it earlier. As mentioned, you know, this decision of the short life cycles of their platform. So you have a lot of other issues as well like excess and industry…inventory. So for example of your console’s really unsuccessful and you produce a million versions of this device and only half a million are actually sold, then you’re in serious trouble and you have too much inventory, and as we’ll discuss later, there’s a resource intensive console life cycle again, so you’re constantly propping up and preventing the industry from going into decline through releasing a new console or literally distracting yourself which is what they did with the Wii. And that was really a critical move, by the way. So the traditional gaming to new neo-gaming, this is kind of how they managed to keep themselves propped up, and you can read a little more on this on the bottom. I’m not gonna go through this in detail.

They have some obvious strategic challenges. You’ve got cannibalization I’ll just mention, where you have handheld devices and then now Nintendo is considering working a lot more with other platforms like smartphones, very similar to what Apple had to do with iTunes for the PC, and of course as I mentioned again and again, the closed system disadvantages, I should say closed by the way. Nintendo is a premium game developer with exclusive hardware and so if you people don’t buy into it then you really suffer and there’s a nice little quote at then end there just to round this whole section up.


Industry trends, so Nintendo started multiple S-curves and I think it’s quite interesting just to see how they might have been…they might be about to be toppled by smartphone but it’s not totally clear what the future holds.

So here’s the story, you’ve got way back in 1980, you’ve got the PC revolution and arcades, the market is growing. And then the home entertainment games industry kind of explodes with Atari and Nintendo. Atari goes bankrupt pretty quickly but Mario Brothers and the Nintendo system is very successful and throughout the ’90s in 1995, you have a Nintendo 64 and you’ve got a lot of success. So that should be shifted over this thing here, probably should be over here but what… No worries. So you’ve got multi-dimensional games, 3D games, and then take a look at this. Basically they jump their own curve, their S-curve and bring in and reposition Nintendo radically with the Wii and that’s sort of been the curve they’re going on, and now we have… We are seeing further hybrids. Nintendo’s bringing out its own hybrid called Nintendo Switch, but smartphones are clearly disrupting them and this is in a very short period of time here, this is 2006 and 2007. So things are changing fast.

An interesting sort of look at what the consoles did. You had Nintendo, you had Super Nintendo, Nintendo 64, GameCube, the Wii, and the Wii U, you can clearly see the stock prices impacted by the success and innovativeness of a console. So clearly Nintendo’s Super Nintendo was I remember when I got it at Christmas like I mentioned earlier, it was a pretty big deal for me, and then Wii was also quite revolutionary because it was saying, “Let’s have casual gaming rather than hardcore gaming as the true value proposition of Nintendo.”

And I think the big challenge now is to understand, is this actually a glide path to history? Are the consoles as an industry in complete decline? And I think actually the answer is no, I think there’s still space here. But principally, I think also that the space is portable. People want to have the portability that a Nintendo DS or Gameboy allowed. Given that everyone is so used to smartphones now, the smartphone culture which has emerged in effect since 2007 since the release of the iPhone has been shaped by this drive towards portability. And actually, if you look at the performance of the consoles historically, Gameboy is actually one of the most well received consoles and Nintendo DS as well. So more so, than even the PlayStation Sony, the original CD-based PlayStation and PlayStation 2 was quite successful. So there’s a story here that people… The customers do like handheld devices and Nintendo needs to respond to that.

So now we want to look at sustainability. What is Nintendo going to need to do in the next couple years in order to remain relevant and grow as a business? Is it sustainable? Should they just abandon hardware, get rid of consoles and just focus on licensing their various characters? That’s a very legitimate question to ask, it’s a really legitimate question to ask because if you look at that industry as we already looked, at it’s not that great.


So we applied the VRIO approach here, so we’re asking the question is this valuable company? Obviously, they’re valuable. It’s a great manufacturer, well-known IP. Do they have the resources and capabilities? Yes, they’ve got the resources and capabilities, and is it easy to imitate them? No, it’s not easy to imitate Nintendo. They’ve got such a great reputation and style. I mean, I can imagine people could, it’s not that unbelievable to imagine but when it comes to the console, I don’t see that many big opportunities in the space. Although you could argue that with the Raspberry Pi anyone can build the console pretty quickly and do something cool with it. So I mean, I expect maybe the console industry to actually be disrupted independently of the software components, eroding of smartphones, eroding Nintendo’s profitability, but you also have the are they organized question? So is the firm organized? Nintendo is organized to succeed. I mean, they have had difficulties with CEOs not knowing where to go, being incredibly dependent on the success of consoles, the console that they launched, so those are also major issues but generally I think they’ve they focused on hardware which is has been a risk, but that’s their true identity. It’s a combination of software and hardware like an Apple. So, and as you can see with Apple, if you get things right the sky’s the limit in terms of profit.

Sustainability through innovation. So I just want to walk through these ideas about what Nintendo’s doing. They’re an industry where it’s a Red Queen industry, in a sense that you have to be running full speed at all times just to stay in place in the console industry because all these competitors, there they’re coming up with great new consoles to compete against you. And so I created sort of this quadrant system here. You’ve got on the vertical axis, you’ve got the real world to virtual and then to the left is ultra violent and the right as child-friendly. Clearly, Nintendo occupies that right side, the child-friendly side with Super Mario Maker and Pokemon Go which is augmented reality. So I can expect in the near future maybe they’ll do Mario Kart outdoors. I think that’d be hilarious, people running around in parks playing Mario Kart. And the competitors on the other side, there they’re just dominating in Halo, Battlefield, really graphic intensive games, high-resolution graphics.

So an interesting thought will be where do they go with this augmented reality? Do you think you can imagine people running around pretending to shoot each other? Probably not a good idea. But anyway… And then just to emphasize this is Mario’s Super Mario Run which is now available on Apple devices, so smartphones obviously. Big deal because for the longest time Nintendo refused to work with Apple’s platform, predominantly because of the terms and conditions and the commission that Apple gets for every company that has software on their platforms.

So I guess just to close off on this section, sustainability through new console adoption is critical. You need to get everyone on board and as I’m saying here, in order to succeed in 2016 everyone needs to switch to Nintendo Switch, and why I think Nintendo Switch is exciting because they are taking into account the revenue realities that, yes, Gameboy and Nintendo DS were the most successful Nintendo platforms. So if they’re the most successful Nintendo platforms then maybe we should make our console portable. That’s exactly what they’ve done here, so you’ve got plug-and-play, a closed system, as usual, beloved characters, child-friendly, casual gamer plus the new core proposition has to…core value proposition has to also take into account portability. So clearly, they’re making some great strides in the right direction. Of course, it all depends on execution. It depends on the execution for Mario Run, it depends on the execution for Nintendo Switch games, are the games any good? That has yet to be seen yet, so no judgment either way but that’s going to be critical. The actual customer experience has to be first and foremost.


Finally, I just want to talk about strategic options. You’ve got the sort of, you know, general launching more hybrids, which is what they’re doing with the Switch, continue with the idea of the home entertainment center with the Wii Karaoke you can see here, you know, there’s potential areas that they could work on. They certainly have also done some work on past glories and they could look into virtual reality like everyone else is trying to do, just to introduce some additional value to a really challenging industry with consoles. So one framework that I’ve applied here is Roger Martin’s five questions framework. And we’ve positioned this as two options, so you’ve got remain as a game, toy company, or become a technology expert. This is sort of a throwaway thought about what Nintendo could do. And I think they generally seem to be doing the right things as you might have noticed with the sustainability section, they seem to be kind of doing exactly what we’re talking about.

But this section just all popped up at once. There’s a lot of words here but the questions you have to ask for any strategic decision is what are your aspirations as a company? What do you want to achieve? If you want to remain a toy then you want to be the preferred toy to play at all time and you want to make sure that Mario is marketed even to the level of theme park ride and create situations where you play Mario as a toy and he’s a fun character. If your aspiration is to be a technology expert, Nintendo would have to go and extend its expertise into retail channels and probably go build some Nintendo stores in every urban center and have intense video game parties or what not.

Where do you… Where we play? Which is important, but what areas does our company need to play to win? So with the option one, remain a toy, the current profit profitable niches and then also a family in senior homes and casual settings. Same thing with the option to how do we win? This is kind of a key question, the character awareness, creation of new characters, expand the fun to other dimensions.

Option two, if you want to be a technology expert, you’d want to specialize in stores and promote Nintendo expertise, become the industry technology champion for high-resolution graphics, which is not what they’re doing as you know. What capability do they need to make this happen? They need to attract more technology and creative talent, acquire more Miyamoto-style talent, you know, the creator of Mario. If they want to be a technology expert they should hire retailer management from existing tech examples, IE, you know, hire someone from Apple Store who runs the logistics around that and get some experts actually in those stores like the Apple Genius Bar. Get some Nintendo geniuses.

Finally, management systems. What management systems do they need to succeed? In option one, if you want to remain a toy company you want to have that horizontal diversification to create different plat…different areas of your marketing and that includes a theme park, for example. We’ll throw that idea out there because Nintendo is so similar to Disney, it’s kind of shocking. And finally option two for technology experts, what would you do with the management system? What management systems do you need? You need that vertical integration within the value chain, so actually try to absorb the publishers and developers a bit more. Don’t try to diversify, so don’t go into theme parks or cruise ships or whatever you want to do with your loved characters. Stay within your niche and focus on the technology, and own the value chain, thereby making it more difficult to imitate.

So, in conclusion, that’s the whole presentation. Thank you very much for listening to this. If you have any comments or questions, awesome. Please leave them below the video. If you liked this video please subscribe to Professor Nerdster and thank you very much for your time.



1.Nintendo Annual Report 2016. (2016, April). Retrieved November 30th, 2016, from

2.Shah, Nick. MBA Fellows Project: The Video Game Industry, And Industry Analysis from a VC Perspective. Tuck, Dartmouth. Center of Digital Strategies. (2005). Retrieved November 30th, 2016, from The Videohttp://digitalstrategies.tuck.dartmouth.edu/digital/assets/images/05_shah.pdf

3.Microsoft X-Box’s Gamble. Tuck, Dartmouth. Center of Digital Strategies. (2002). Retrieved November 28th, 2016, from http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case-studies/pdf/6-0011.pdf

4.Krishnan, Vijai. Gaming: Corporate Strategy in a Multi-Screen World. (April, 2013). Retrieved November 28th, 2016, from http://digitalstrategies.tuck.dartmouth.edu/digital/assets/images/Krishnan.pdf

5.Business Case: Nintendo’s disruptive strategy: implications for the video game industry. Harvard Business Review, 2008.

6.Game Industry Magazine. (2016, April). Retrieved November 30th, 2016, from http://www.gamesindustry.biz/articles/2014-09-08-the-end-of-the-console-era-as-we-know-it

7.Nintendo President Challenge. Fortune. (2016). Retrieved December 8th, 2016, from: http://fortune.com/2015/09/16/nintendo-president-challenges/

8.Pokémon Go. Fortune. (2016). Retrieved December 8th, 2016, from: http://fortune.com/2016/07/18/pokemon-go-may-force-nintendo-to-change-its-long-term-business-strategy/

9.List of Best Selling Game Consoles. (2015). Retrieved December 8th, 2016, from https://en.wikipedia.org/wiki/List_of_best-selling_game_consoles

10.Extensive Industry Analysis Interview with Erika Szobu: Youtube Personality (https://www.youtube.com/user/erikaszabo) at A&C Games on Spadina Ave, December 12th, 2016

Soviet Union to Russia: Understanding what Russia wants through an Academic Lens

Communism, Post-communism & Nationalism

The following are in depth research notes on Communism, Nationalism and Russia from the perspective of both Eastern and Western academic thinkers.

Politics, history, psychology are complicated. When the Soviet Union collapsed, the territorial maps were redrawn. Many Russian nationals become minority citizens of new countries that were formed. The following is an analysis of that story. It’s implications for nationalism studies today and in the future. And in some ways an answer to what Putin wants.


Facts & Figures                                                                                                       

List of previous questions:

Was the resurgence of nationalism in eastern Europe in the 1980s a cause or consequence of communist failure?

What role does nationalism play in post-communist states?

SOURCES: Ronald Suny, Valery Tishkov, Jemery Smith, George Schopflin, Ernest Gellner, Stephen White, Alexander Motyl

Case Examples: USSR (Poland, Latvia, Chechnya, Russia) or (secondary) Yugoslavia (Croatia, Serbian, Bosnia-Herzogovina, Kosovo, Slovenia, Montenegro)

  • Ronald Grigor Suny, The Soviet experiment : Russia, the USSR, and the successor states (Oxford, Oxford University Press, 1998), Chapter 12.
  • Jeremy Smith, The Fall of Soviet Communism (London, Palgrave, 2005), pp.16-20, 73-79.
  • Brubaker, Rogers, 1994. “Nationahood and the National Question in the Soviet Union and Post-Soviet Eurasia: An Institutionalist Account”, Theory of Society, vol 23, no. 1, pp. 47-48.
  • George Schöpflin, ‘Power, Ethnicity and Politics in Yugoslavia’, chap 23 in Nations, Identity, Power (London, Hurst, 2000).
  • Tishkov, Valery Ethnicity, Nationalism and Conflict in and after the Soviet Union: the Mind Aflame London: SAGE, 1997. Ch. 2
  • Alexander J. Motyl, Sovietology, rationality, nationality: coming to grips with nationalism in the USSR (New York, Columbia University Press, 1990).
  • Ronald Grigor Suny The revenge of the past: nationalism, revolution, and the collapse of the Soviet Union (Stanford, Stanford University Press, 1993).
  • George Schöpflin, ‘Nationhood, Communism and State Legitimation’ and ‘Power, Ethnicity and Politics in Jugoslavia’, chap 12 in Nations, Identity, Power (London, Hurst, 2000).
  • Stephen White, Communism and its Collapse (2001).
  • *Henry E. Hale, The Foundations of Ethnic Politics: separatism of states and nations in Eurasia and the world
  • *Philip G. Roeder, Where Nation-States come from: institutional changes in the age of nationalism


  • Defining, Background, Foundations (Detailed Background)

What are the debates regarding the collapse of the USSR in 1991?

The first point is to ask whether the post-1991 nation-states of the former USSR were already defined as national quasi-states (to use Roeder’s term) within the USSR. Generally the answer is: YES.

Less clear is why YES. It seems to me there are in principle three major explanations:

  1. The national explanation – a sense of national identity had been created which was important. One can then argue whether this was a Soviet invention or not.
  2. The statist explanation – the individual republics had institutions and interests which gained an advantage over other institutions and interests. (Roeder, 2008)
  3. The International Relationship (IR) explanation – the international community would only accept sovereignty for state-like entities. 

Counter-factual of the USSR: why did it breakdown into nation-states? Why not into a multicultural/national power.

Thesis: primordial nationalism is only important when USSR prospects of collapse are high: the resources are utilized to reorganize political power when the USSR’s centre collapses.

International self-determination recognition used the primordialist approach so as to avoid precedent setting for any political movement.

Nationalism Studies was Re-invigorated with the Breakup of the Soviet Union (1991)

  • The Soviet Union was divided into territorially defined republics so had an ethnic colouration – ethnic nationalism defined the breakup of the Soviet Union.

USSR COLLAPSE: HISTORICAL NARRATIVE                                                  

The Soviet Union‘s collapse into independent nations began early in 1985.

After years of Soviet military buildup at the expense of domestic development, economic growth was at a standstill.

Failed attempts at reform, a stagnant economy, and war in Afghanistan led to a general feeling of discontent, especially in the Baltic republics and Eastern Europe.

Greater political and social freedoms, instituted by the last Soviet leader, Mikhail Gorbachev, created an atmosphere of open criticism of the Moscow regime.

Gorbachev ushered in the process that would lead to the dismantling of the Soviet administrative command economy through his programs of glasnost (political openness), uskoreniye (speed-up of economic development) and perestroika (political and economic restructuring) announced in 1986.

Gorbachev doesn’t want to intervene in the affairs of others.

Additionally, the costs of superpower status—the military, space program, and subsidies to client states—were out of proportion to the Soviet economy. The new wave of industrialization based upon information technology had left the Soviet Union desperate for Western technology and credits in order to counter its increasing backwardness.

Unintended Consequences: Gorbachev’s efforts to streamline the Communist system offered promise, but ultimately proved uncontrollable and resulted in a cascade of events that eventually concluded with the dissolution of the Soviet Union. Initially intended as tools to bolster the Soviet economy, the policies of perestroika and glasnost soon led to unintended consequences.

In all, the very positive view of Soviet life, which had long been presented to the public by the official media, was being rapidly dismantled, and the negative aspects of life in the Soviet Union were brought into the spotlight[5]. This undermined the faith of the public in the Soviet system and eroded the Communist Party’s social power base, threatening the identity and integrity of the Soviet Union itself.

The dramatic drop of the price of oil in 1985 and 1986, and consequent lack of foreign exchange reserves in following years to purchase grain profoundly influenced actions of the Soviet leadership.[1]

POLITICAL: Several Soviet Socialist Republics began resisting central control, and increasing democratization led to a weakening of the central government.

Gradually, each of the Warsaw Pact nations saw their communist governments fall to popular elections and, in the case of Romania, a violent uprising. By 1991 the communist governments of Bulgaria, Czechoslovakia, East Germany, Hungary, Poland and Romania, all of which had been imposed after World War II, were brought down as revolution swept Eastern Europe.

The USSR’s trade gap progressively emptied the coffers of the union, leading to eventual bankruptcy.

The Soviet Union finally collapsed in 1991 when Boris Yeltsin seized power in the aftermath of a failed coup that had attempted to topple reform-minded Gorbachev.

To break Gorbachev’s opposition, Yeltsin decided to disband the USSR in accordance with the Treaty of the Union of 1922 and thereby remove Gorbachev and the Soviet government from power. The step was also enthusiastically supported by the governments of Ukraine and Belarus, which were parties of the Treaty of 1922 along with Russia.

But by using structural reforms to widen opportunities for leaders and popular movements in the union republics to gain influence, Gorbachev also made it possible for nationalist, orthodox communist, and populist forces to oppose his attempts to liberalize and revitalize Soviet communism. Although some of the new movements aspired to replace the Soviet system altogether with a liberal democratic one, others demanded independence for the national republics. Still others insisted on the restoration of the old Soviet ways. Ultimately, Gorbachev could not forge a compromise among these forces and the consequence was the collapse of the Soviet Union.

If the causes are above why did nation-state solution emerge WHY NOT multi-nationalism?

Two competing approaches to the causality of USSR collapse:

Answer MUST be conscious of TIMING: (PRE) = pre-collapse (POST) = post-collapse

(A) On the one hand, there are those, like (Motyl, 1990), who argue communism was inevitably doomed as a container, freezer or prison house of nations, a repression of nationalism and that nationalism brought communism to the brink in 1980s. This paper argues that nationalism was a preexisting and competing ideology throughout Soviet Union history.

(B) Nationalism was a weak, insignificant phenomenon, like (Tishkov, 1997), adding it was the benefactor of a chess-game miscalculation by political agents, pragmatic decision-making. Nationalism needs to be stoked up by the leadership. Looks at socially engineered states such as Ukraine, the Baltics + Caucasus. Capitalism + agency defeated Communism. (cause) Nationalism is the benefactor. (consequence)

(C) Self-determination was used to bring the USSR together, it was also used to tear the USSR apart. International factors must be explored.

Answer MUST be conscious of TIMING: (PRE) = pre-collapse (POST) = post-collapse

Whether there was a nation narrative before or during the USSR, it only matters after! SO what? (A) doesn’t matter until the collapse is eminent.

  • Communism as inevitably doomed, repressive/non-acccomodative & Nationalism caused the collapse: the law of declining Empires applies, a natural reaction against Russification.



Nationalism was the key benefactor of collapse: but was it the cause?

Causality            On Collapse                              Nationalism

Tishkov, 1997    top-down (elite-error)             not-inevitable      engineered

Suny, 93,98       nationalism instrumental         not-inevitable      engineered/primordial

Motyl, 1990       repressive commies                 inevitable           primordial

Martin, 2001      affirmative action empire        not-inevitable      primordial

Gellner, 1983      wrong address repressive     unknown            modernity/engineered?


  • Western Academic Perspective: “Standard view of break-up of Communism and nationalism: National aspirations suppressed. Nations denied their autonomy by the might of the centralizing force of Moscow and the Party. The Communists tried to create homo sovieticus.
  • Marxist-Leninism’s Ideological Competition: They were scared that nationalism would compete with Marxist-Leninism as an ideology. Lenin etc had witnessed lots of unrest in the Empire in the 1880s as the Tsar attempts to Russifying.


  • Soviet Man: Soviet went back-and-forth on the idea of creating a monolithic new nation. Stalin, in particular, attempted to create “Soviet Man” through co-ordinated education, language, history; learning Russian was a means of social advancement. HOMO SOVIETICUS: Russian education language, history, means of advancement, territorial integrity, cultural distinctions: republics given more autonomy.
  • Stalin crushes nationalism > changes the alphabets.
  • BUT republics always keep their territorial integrity, have their cultural institutions, and non-Russians promoted to power. Tokenistic – people dancing in cheesy national costumes – but significant.
  • Never a Soviet passport (unlike Yugoslavia) Soviet Union never overtly calling for Russian nationalism….“The center never attempted to homogenize the multinational country and create a single nation-state. There was a Soviet people but no Soviet nation. No-one was permitted to choose ‘Soviet’ as their passport nationality.” (Suny, 1993)
  • Nationalism Under Cloak: Stalin was Georgian but power was Russian: Even if it wasn’t perfectly repressive, the Soviet Union actually masks nationalism under the cloak of communism: it failed (perhaps inevitably) and so nationalism becomes the logical successor…..
  • In the post-Communist world, there were both nationalist ethnic groups that preceded the Soviet Union such as the Baltic states – acquired in 1945 – while others were constructed, mutated and altered – the Central Asian states – during the 70 years of the communist post-nationalist experiment.

How did the USSR handle the nationalist question?


  • Czarist Russia was only threatened against Polish but not much else was significant. Czarist Russia in 1880s attempted to Russify their empire. (Breuilly)
  • Germans supported Polish and Ukrainians against Russian hegemony.
  • Russian Revolution of 1905: was a reaction against Russification provoking a confused response. The frustration of the Russian Revolution of 1905 typifies the national fact which the socialists learned could not be rejected outright. In that particularly confused affair, it was both a socialist and a nationalist revolution that had failed. Only through pragmatic compromise – against mutual anti-imperialism – could a new political system emerge in 1917.
  • From the inception of Bolshevik Revolution, pragmatic decision-making accommodated self-determination as a means to “recruit ethnic support for the revolution, [but] not to provide a model for governing of a multiethnic state.”[1]
  • Lenin Prevailed and 1922 the USSR based on Ethno-Territorial: Russia Belurasi, Urkain Azerbajan and Georgia 6 Republics. It stuck to the nation principle than anyother state.
  • Stalin had 15 non-Russia republics in the 1930s. There were 17 national regions the Republic had a constitutional right for succession under the 1936 constitution. There was elaborate ethnography which was linked to educational entitlement. There was titular nationalities employment in Ukrainian an Affirmative Action system. Ukrainians rose in the Russian government. Nikita Kruschev was Ukrainian for example. (Breuilly)
  • Affirmative Action Empire: The Soviet Union “was the world’s first Affirmative Action Empire.” (1, (Martin, 2001)) It was the multiethnic state’s character that forced a confrontation “with the rising tide of nationalism and respond by systematically promoting the national consciouseness of its ethnic minorities and establishing for them many of the characteristic institutional forms of the nation-state.”
  • Nationalist in Form, Socialist in Content: Stalin in the mid-1920s accepted the special Central Committee conference on nationalities policy, (Martin, 2001), Stalin believed in ‘Nationalist in form, socialist in content’ ((Martin, 2001) Stalin treated them as real nations.
  • Ideological Goal of Communism: was to redirect the postal error of nationalism through homogenization and steady process of integration. This is most apparent under Stalin who “extended the state’s power over all aspects of public and social life, the Soviet leadership no longer was willing to tolerate the autonomy of art and culture that it had allowed in the 1920s. (Smith, 2005) Artists were to be mobilized as ‘engineers of the soul,’ in Stalin’s words, to become on more tool in the construction of socialism.”[2] What emerged was a de facto empire under the guise of communism. (Suny, 1993)
  • Nations to be Frozen: Assimilation what not viable in the short-term but the Bolshevki’s believed “national consciousness was an unavoidable historic phase that all peoples must pass through on the war to internationalism.” (5, (Martin, 2001)) nationalism is NOT ephemeral as this paper has demonstrated. But it is wrong to assume it is forever. If primordialism can show that it existed before modernization then it is a long-term reality, if modernization theory is correct, it may be a shorterm step on the way to internationalism[3].
  • BUT the KEY INSTITUTIONS were the centralized planning, army and secret police.

After the Stalisnist period: Corruption and nomenkaltura officially specifying who is allowed to have control in the system. Secession was made punishable by death. THIS IS ARGUABLY about totalitarianism. Appeal to Russian language and history in the 1941. There was a fixity. Signs of decline was very clear by the 1980s. There was shift to bilingualism in USSR. There was no Russia communist party: only none Russians had a communist party only the non-Russian republics had their own communist system. There was corrupt kinship in the republic areas THEREFORE THIS lays the groundwork for nation-states. (Breuilly)

Gellner’s Wrong Address Thesis:

  • (Gellner, 1983) In typical Gellnerian fashion, he amusingly suggests the Wrong Address Theory that in the competition for the hearts and minds of the polity, the Marxist message “intended for classes…by some terrible postal error was delivered to nations”[4]. In other words, cultural conceptions have more appeal than the proletarian conception of identity.[5]
  • This (A) argument argues that there was significant cultural factors such as language, symbols and traditions inherent in the ethno-nations before the USSR. The question is are they important? NOT UNTIL the Collapse is imminent says argument (B).


This Sleeping Beauty, Prison House or Freezer description of the Soviet Union has many supporters, particularly in the capitalist academia (inevitability of collapse)

  • For the primordialists: Nation academics: the freezer metaphor makes sense.


Bolshevik’s SAVED the APPARATUS of RUSSIAN EMPIRE, Just as Yeltsin SAVED the Russians from DISINTEGRATION, totalitarian Putin Regime:


“Nationalism, then, may be, and clearly often is, a potent weapon of regionally or ethnically based politicians who aspire to material largesse or political power. But nationalist behaviour is not just means to, and the nationalist ideal is not just a rationalization of, non-nationalist goals: the ideal can be an end in itself and can be the most rational means for pursuing that end. That is to say, nationalist behaviour may also be the rational response of bona fide nationalists – individuals with a sincere and strong belief in the nationalists ideal – to opportunities to pursue their goals.” (Motyl, 1990).

(Brubaker, 1994)

  • Brubaker said: “Those policies…were intended to do two things:

(1st): to harness, contain, channel, and control the potentially disruptive political expression of nationality by creating national-territorial administrative structures and by cultivating, co-opting and (when they threatened to geto out of line) repressing national elites;

(2nd): to drain nationality of its content even while legitimating it as a form, and thereby to promote the long-term withering away of nationality as a vital component of social life.” (Brubaker, 1994, pg 49)

Tishkov says Brubaker wrong:

1) overestimated the existing political architecture, (including strategy for promoting the slow death of nationalities. {1940s (withering away of nationalitity) versus the 1980s (they realized they couldn’t do away with these things).

Brubaker also makes the common mistake of 2) overlooking the roles of momentum, improvised reactive actors, a search for immediate responses for challenges (political opportunism) and power dispositions in the Soviet State. TISHKOV sees manipulation from the centre as a game of chess. And “constant struggles for power in the Kremlin” (36,Tishkov, 1997).

1) Nationalism as a cause of Communist failure: (Breuilly says no way)

  • Nationalism trumps Communism: explains conflict between China and Russia.
  • ‘Primordial’ explanation – the Soviet Union ‘froze’ the nationalisms, especially under Stalin, and they re-emerged after the collapse
  • Strong significance on national identities before the existence of the Soviet Union (ie. before the Bolshevik Revolution)
  • Ronald Suny: ideas of nationality are deeply embedded in nations’ understandings of their pasts
  • Jeremy Smith: the Soviet system used repression and ‘Russification’ to put a lid on nationalist movements… re-emerged once Gorbachev’s glasnost policies took effect (ie. emphasis on blaming Gorbachev)
  • Ethnic and territorial loyalties that were present in the former Soviet republics
  • Soviet Union as a ‘prison house of nationalities’ based on the repression of national identities that ‘burst out’ – a key factor in the collapse of the Soviet Union. 


  • Nationalism was not a strong influence until after the Bolshevik Revolution and Lenin’s ‘national policy’ that defined the republics and autonomous regions within the new Soviet Union
  • The ‘national’ question was not significant in late Tsarist Russia in the late 19th century and early 20th
  • Majority of the republics were not ethnically homogenous – multi-ethnic composition for many years before the Soviet’s ‘national’ policies based along ethnic lines were introduced.
  • For most of the Soviet period, the nationality policies were successful in integrating people (Jeremy Smith, 2005)


  • (A) Primordial nations re-emerge. Those who think nations as natural. The Soviet Union was a create FREEZER they had recognition but no political power BUT as the freezer breaks down, the nations re-emerge, there is mutation.

(Tishkov, 1997) TISHKOV’s CHARACTURE of (A) Arguments

  • USSR as an “empire-type polity whose history was marked by territorial expansion, colonial methods of rule and the cultural assimilation of ethnic groups by more dominant language and cultures”
  • Crimes of mass deportation: and repressions, annexation and liguidation of sovereign state entities, destruction of environment, undermined ethnic groups.
  • USSR language policy: the Russian-language policy through its international Communist ideology, suppressing attempts to establish political cultural autonomy for ethnic minorities unless these attempts were sanctioned by central or perepheral elite.
  • Communist ‘bureaucracy strictly regulated the daily lives of the citizenry, violating their rights and freedoms and ignoring the interests connected with ethnic culture and values.

Top-down social engineering/undervaluing nationalism’s contribution (Tishkov’s, 1997) critique against (A) basically: Western theorists are over deterministic, Soviet Union was NOT, according to Tishkov, the last empire of the late 20th century,

(A) Scholars emphasize the inevitability of national emergence because of the USSR’s repressiveness. BUT (Tishkov, 1997) does not think it was inevitable. Western tautology: the law of collapsing Empires.

  • Nationalism as socially engineered, weak & benefactor: Collapse was not inevitable (Tishkov et al): Agential, Accommodative, manipulation: Riding the Tiger, Marxists ideology, pragmatic decision-making, post-communist signposts turn to nationalism:

Answer MUST be conscious of TIMING: (PRE) = pre-collapse (POST) = post-collapse

  • But the “ancient hatreds” – primordial, deep-freeze – thesis hardly explains what happened in 1989-91.”
  • (B) Instrumental nations are invented: quick-thinking politicians in non-Russia areas and concluded that if they were to acquire power they found nationalism as the basis.
  • (D) Reforms weaken the centre> crystallisations of power elsewhere. There have been very few cases that go for seccession from the centre and end up with war and the centre winning. A lot of the outcomes are unintended. Gorbachev’s political reforms had the effect of unintended consequences.
  • (E) Democratization weakens elite power> need for popular mobilization and external support. The claim for national independence and nation-self-determination particularly if it is framed in democratic terms. Breuilly saw what happened at the CENTRE of the USSR. What happened at the centre, reduced the capacity of the elite to prevent revolt: public unrest.
  • 1970s the centre couldn’t distribute as much. Economic system was inefficient. Regional barons 9party bosses gave them more and more power. Dissolution of USSR there was a running off with the family silk: once regional leaders say that authority was undermined: they switched to nationalist to preserve leadership. (it occurs again and again) there are still Nursultan Abishuly Nazarbayev in Kazakstan. NATIONALISM is INCIDENTAL. Break up of USSR allows regional bosses to take over with nationalism as the new ideology.
  • CRUCIAL THING IS THE CENTRE VERUS PERIPHERY; Why were the leaders happy to enjoy. Why did they stop going along with the essential Moscow line? Steal the family silver. (Slezkine, 1994)
  • Nations exist because we say they exist. So this is about politics.
  • 1st School of Thought: (A) Totalitarian at the Top Managing everything. (A) Then the politicians and public groups are constraints against (B): BUT (b) is what really matters
  • 2nd School of Thought: (B) is reacting against society, Russian public was very active in the Soviet Union: there is no sociological data to back these claims…. USSR looks like a monolith but it wasn’t.

(Connor, 1984)

What is the relationship between nationalism and communism?

(Walker Conner, 1984): ethnonationalism.

National Question in Marxist-Leninist Theory and Strategy: 1984: Princeton University

Conner reaches four broad conclusions:

  • That communist endorsement of the right of national self-determination, including the right of secession, was instrumental in the success of the Soviet, Yugoslave, Chinese and Vietnamese revolutions;
  • That the prescriptions laid down by Marx and Lenin for post-revolutionary nation-building and national integration are too disjointed and contradictory to form a coherent strategy; Walker points out the abrupt and sharp changes in policies such as language, education, culture, personnel recruitment and regional investment: COUNTER-argument: his examples are deviations from Marxist-Leninest orthodoxy rather than symptoms of doctrinal contradictions. Some incoherence’s could also be viewed as pragmatism.
  • That communist regime have regularly deviated from the few clear guidelines that Marx and Lenin did lay down; reincorporating secessionists, geerymandering of national boundaries, deportation of nationalities from their ethnic homelands, curtailin national language education and national self-expression THIS is natural for antipathy with ‘survivals of the past, a commitment to rapid economic modernization and a vested interest in attracting majority support.
  • That nationalism is a continuing and growing problem throughout the communist world: this is less convincingly demonstrated in a variety of cases.

CONCLUSION: Marxism-Leninism is flawed for a failure to recognize that nationalism is a ‘permanently operating factor’ in modern history.

Jeremy R. Arael: “From this perspective not only Marxism-Leninism but the many the rtheories that post a negative correlation between ethn-centricism and socioeconomic modernization are also ‘fallacious’. In fact, however, the pertinet data are considerably more ambiguous than Conner implies. While he introduces a useful corrective to an already widely questioned bit of conventional wisdom, he almost certainly overstates his case. Switzerland, after all, is not entirely a produce of wishful thinking, and even Yugoslavia may turn out to be more than a passing illusion – even if its surivival owes little, if anything, to Marxist-Leninist theory.” JeremeyR. Arael.

(Slezkine, 1994)

The USSR as a Communal Apartment, or How a Socialist State Promotes Ethnic Particularism: Title: USSR & Ethnic Particularism

  • Bolshevik’s news that the national was powerful.
  • The Great Transformation of 1928-1932 turned into the most extravagant celebration of ethnic diversity that any state had financed. It accepted ethno-territorialities nationalities. THERE was the Great Retreat in the mid-1930s where Stalin changed the alphabet (for example).
  • “…explanation that class was secondary to ethnicity and that support of nationalism in general (and not just Russian natonalism or ‘national liberation’ abroad was a sacred principle of Marxism-Leninism.
  • Stalin said that the “Finnish nation exists objectively, to not recognize it is ridiculous: they will force us to if we don’t.”
  • Soviet nationality policy: allows for the coexisted of 1) republican statehood and 2) passport nationality. 1) the former assumed that territorial states made nations, 2) primordial nations might be entitled to their own states.
  • (Slezkine, 1994) “USSR was an apartment where different rooms housed nationalitities: but the tenants of those rooms barricaded their doors and started using the windows, while the befuddled residents of the enormous hall and kitchen stood in the centre wondering: should we recover our property? Knock down the walls? Cut off the gas?” Russians decided to let GO.


Nationalism was one of the important elements in the State-structures. But these collapses could only come about once the Communists withdrew from Satellite states. (Breuilly)

  • Instrumentalist nation academics: saw the Soveit System was collapsing, Russia lacked the will to preserve USSR. There was a need for a new basis of ideological power.


(Tishkov, 1997) -> political manuveuring, top-down nation-building, collapse not-inevitable, (some) nationalisms were engineered to manage SU politics:

  • Political Agency: Taking a hard agency approach, Tishkov argues that it was political agency at various junctions that explains the sporadic nationalist policy changes and that the collapse of the Soviet Union could have been avoided with proper distribution of graft to the political elite[6] of those 15 union republics accommodated into the USSR by 1956.
    • 1917: Marxist ideology’s success was only possible through pragmatic manipulation of some preexisting ethno-nationalist movements in the Russian Empire.
  • Nationalism was WEAK or unimportant until the 1980s: His emphasis on agency, private motivations of actors detracts from the contribution nationalism made prior to, during the early, middle and the post-Communist stages of this complicated historical narrative.
  • NATIONALISM was used against bourgeois movements.

LONGTERM goal of Soviet Union was to ‘demystify and discard nationalism.

  • Incoherent Contradictory M/L Policies: the subsequent contradictory nationalist policy of socialist federalism, retrenchment of dominant ethie (Russian) and social engineering under Stalin was a complicated bi-product of political agents responding to continued pragmatic concerns.
    • Central Assian: large block of Islam > Salin fears this > constructed separate republics in the Caucasus.
    • Marxist revolution was international but only in the Russian Empire did it occur: minority nationalities were given their republics to help in the revolution…

Social Engineering:

  • a) Unitary control was not a viable option and socialist federalism would territorialize ethnicity creating further identities and ethnic distortions.[7] The problem with any form of federalism is that it both garners necessary support from elite leadership of the satellite republics but hinders unitary integration to the dominant ethnie. (Tishkov, 1997)
    • 1st the Inventory of ethno-nations: Social Engineering “meant inventing nations where necessary.” (30, Tishkov) Tishkov believes in the census of 1897 there were 146 languages an dialects in the country.
    • Lenin said that the state proclaimed the right of self-determination for ‘formerly oppressed nations’
    • b) Federalism Produces Ethnic Particularism: therefore is not a supporter of federalist systems since they “promote ethnic particularism.”[8]
    • Long-Term v Short-Term Goals: Long-term goals of communism called for unity “within a single state”[9] but short-term political expediency called for Lenin’s socialist federalism and state driven ethnography.[10] (Tishkov, 1997)
    • Improvised Nationalism Policy: argues that “the ethnic policy of the Soviet Union was designed on an improvised basis partly to meet the serious challenges issuing from the regions and ethnic peripheries of the Russian empire, and partly to meet doctrinal aspirations.”[11] (Tishkov, 1997)

Territorialized Nationalism: When USSR broke up there was long existing territorial boundaries: these territorial republics were ethnically mixed: ethnography in USSR legitimized these groups.

  • The post-Communist consequence, for Tishkov, was that territorially entrenched republics under the USSR were then transformed into nation-states by their political elite. This leads Tishkov to conclude that the USSR created those nations rejecting the prison house or freezer description of the Soviet Union by western academics who see the collapse of communism as inevitable, particularly (Motyl, 1990).[12]

(Alter, 1985)

  • Russian Nation as New: Russian nation in an ethnic sense was introduced to public discourse rather recently as a logical ingredient of what official propaganda and academic language had labeled ‘the building of Soviet nations.
  • Stalin never really denied that nations existed.
  • Stalin Russian Appeal: mobilized the “glory of Russia’, its deep historical roots’, its mystical soul’ as part of popular mobilization during World War II.
  • Later it began to reflect social changes within the Soviet Union, especially in the demographic patterns and growing social mobility of non-Russian nationalist.
  • New Russian nationalists: clothed their hegemonic motives with emotional rhetoric about the impending extinction of the Russian people and the degradation of their traditions and culture (Tishkov, 1997)


  • Two hand approach:
    • “pursued a harsh policy of repression and hyper-centralized power;
    • they carried out a policy of ethno-national state-building, accompanied by support for prestigious institutions and elites as a means to preserve the integrity of the state and exercise totalitarian rule.” (39, Tishkov).

Tishkov doesn’t believe in the triumph of nations. “It is rather a small layer of political and intellectual elites who set themselves up as the representatives of the nation and formulate national demands, with little or no pressure from or consulation with the mass of the people, in order to fulfil their own agendas.

a Tishkov is about political agency, individual actors affecting the consequences of nationalist movements, they didn’t have to TURN TO NATIONALISM: it wasn’t inevitable: it was easiest…


  • As Gorbachev attempted to reform the centre, opening up first the economy and then the political sphere, disparate groups – including those claiming to represent national interests – started to assert themselves.
  • -> Soviet Union -> Collapse nationalist states. The Baltic’s had a recent historical memory, therefore were first to secede from the USSR. Historically, each part of the USSR’s collapse has a unique particularistic narrative: we CANNOT claim that it was all a socially engineered and that nationalism were weak IF existed. Tishkov’s belief that nations were meaningless instruments of state actors is grossly misleading.
  • The Baltic nations had a historical memory before 1945, therefore were first to secede from the USSR. (<-Tishkov says they were socially engineered)
  • (POST) The Poles would have trouble believing their historical nationalism was a socially engineered project from Moscow. As we’ve seen, the USSR had to managed nationalisms from the beginning and would not have gained control of the Russian Empire without the consent and support of this competing ideology.

(Breuilly, Lecture) The Nationalist Resurgence and the Collapse of Communism

  • The Gorbachev era and reforms > instability> non-Russian republics as power arena. Gorbachev came to power much earlier than the USSR usually allows. Gorbachev wanted USSR to remain competitive against the West. He wanted to great levels of competition: economic reforms failed. Political participations in local and federal election. There was a turn against established elites. There was a shifting conflict into the republics.
  • Non-intervention policy > impact on the Warsaw Pact state> collapse late 1989-ealy 1990> variations > state/nationhood combination. Gorbachev sees the unraveling. Yugoslavia multi-party, The Berlin Wall falls in November, Czech, Romania December Ceausescu executed.
  • There was major dissident: their platforms were anti-communist BUT they saw the genuine national. The state structures were important. It was a statist system. The Soviet Union withdrew their incompetent regimes. Breuilly will not focus on non-USSR regimes.

(Breuilly, Lecture) The politics of collapse supports Tishkov

(1) Unintended Outcomes: the accidental collapse argument: USSR The non-Russia republics> the range of aims. Independence often an unintended outcome> key was Russia action.

  • Russia was less willing to concede independence. Republican structures meant that all of these keen Baltic states and EuraAsia were given independence. We should not confuse outcomes with preferences. (Breuilly, Lecture) We cannot say that having independence was not the necessarily desired outcomes. The more rapid independence. Just as the key to the Warsaw states: the key to the none-Russia republics.
  • There was the failure of the August 1991 coup in Boris Yeltsin. Russia had decided they didn’t want the burden. The Russian action triggered the outcomes elsewhere. Although nationalism was important, it wasn’t the cause. There was major dissident: their platforms were anti-communist BUT they saw the genuine national. The state structures were important. It was a statist system. The Soviet Union withdrew their incompetent regimes. (Breuilly, Lecture) will not focus on non-USSR regimes.
  • Liberalization can lead to self-destruction very easily…..



  1. Simplistic top down approach: excludes the cultural approach that would argue that nationalism was a more significant force beyond its political instrumentalism and that social engineering did not create the post-Communist states in every case or by itself. Underlying Tishkov’s emphasis on the Soviet political agents is his neglect of the nation and ethnic group existence beyond the “construct[ed] realities that could correspond to political myths and intellectual exercises.”[13]
  2. Secondly, there is a more nuanced reality to the post-Communist nation-state formation. It would be misleading to argue that these preexisting ethno-nationalist movements were not influenced by the Soviet Union – nationalist formations particularly in the Central Asian cases were greatly influences by the USSR – but they were not created solely by top down engineering. Tishkov undervalues the fact that the USSR was a diverse multi-ethnic and multi-national political society at its inception. Multilingual groups existed regardless of subsequent Soviet social engineering that had been legally entrenched in the political structure.
  3. CULTURAL FACTOR: top down approach to nationalism underplays significant cultural factors such as language, symbols and traditions inherent in the ethno-nations before the USSR. Tishkov is not completely wrong since each part of the USSR’s collapse has a unique particularistic narrative; one cannot claim that it was all a socially engineered, but it is partially true since the Soviet Union did shape the subsequent nation-states through political decisions of its leadership as Tishkov suggests. Smith’s critique: “Tishkov’s account of nationalism is deficient. In identifying elites as both the inventors and propagators of nationalism, he perhaps goes too far in dismissing the ‘nation’ as a meaningless category in academic discourse; however false its foundations, however much it is a tool of political elites, natiaonlism cab e a powerful mobilizing force and the issue of the connection between elite scheming and mass mobilisaions is inadequately dealt with.” (1545, Smith).
  4. Value-Laden Tishkov: NOTE THAT RUSSIAN ACADEMICS are more likely to claim that the Russians created the Baltics, Poland, Ukraine etc: because they were under the Russian Empire, then Soviet Union.


Causality debate: Nationalism was not the chief cause of the collapse but one of the primary beneficiaries of that collapse.

2) Nationalism as a consequence of Communist failure:

  • ‘Instrumental’ explanation – nations and nationalisms were invented in response to the collapse of the Soviet Union
  • John Breuilly: instrumental nations were invented through the collapse of the Soviet Union and the failure of the Communist regime – the republics responded to the collapse with the need to form new political institutions and adopt a new ideology to replace Communism (lecture).
  • the non-Russian republics didn’t necessarily want independence – often an unintended outcome (Breuilly)
  • The structural conditions facing the Soviet Union – deteriorating economic situation, geopolitical weakening at end of Cold War – were the principal causes of the collapse of the Soviet Union, not because of nationalism.
  • Gorbachev’s political and economic reforms weakened the Soviet centre and allowed the republics more political and economic control over resources
  • Ronald Suny: as economic decline accelerated, people reacted by adopting only other form of personal identity open to them – of the nation.
  • Instrumental approach places emphasis on the impacts of Gorbachev’s reform policies in the late 1980s as a key explanation for the invention of the former Soviet nations – especially Jeremy Smith – blames nationalist resurgence on Gorbachev and that his reforms in the 1980s provoked violence and downfall of Soviet system
  • Alexander Motyl: Role of republican elites who led anti-Soviet oppositional discourse – powerful in their own republics… also several were imprisoned during the 1960s under Brezhnev and later released in the 1980s. Gorbachev actually reinforced oppositional elites by legitimizing their opposition to the central state – through ‘perestroika’, ie. official liberalization policy.



  • why was the only ‘alternative’ identity nationalism? (critique of Suny)
  • why did these movements take on a ‘national’ character and not another type of opposition?
  • Motyl: importance of language and culture to non-Russian republics – role of symbols, memories and postwar independence (ie. brief periods of independence of most republics in the 1920s following the Russian Revolution)
  • downplays ethnic ties and kinships – prominent in republics, especially elite groups were ethnically based.

  • 3 BIG CASES & Belarus

What role does nationalism play in post-Communist states?

THESIS: Important to point out differences because whatever we try to say generally about communism and nationalism is only going to be right in some cases. Diversity proves a point: communism had not succeeded in homogenizing.


Engineered                  Primordial

Ukraine                       Ukraine






*ROMANIA: Katherine Verdery (see: “Nationalism and National Sentiment in Post-socialist Romania”, Slavic Review, 52:2, Summer 1993).

  • (Verdery, 1993) socialism couldn’t expunge national consciousness created in the 19thC
  • leaders of Communist parties held power in environment where all other organizational entities had been dissolved – nation was a natural option once the centre had collapsed
  • Shortage-alleviating strategies were common: when there’s a shortage of hair dye, only the Hungarians get serviced..
  • Post-communists: blaming minorities for the country’s ills rather themselves, externalizing blame
  • Sociological: “Most East Europeans are used to thinking in secure moral dichotomies between black and white, good and evil.” US vs THEM and “Social Schizophrenia” of communism has to be replaced by “other ‘others’”
  • Soviet Union was the first state in history to be formed of political units based on nationalism. (Suny, 1998)


  • USSR post-collapse are frustrated that the Baltic states claimed independence because the Russian imperialists feel that they engineered those states…..
  • Post-Communism: Role of Russia as successor of Soviet empire; new states in the Caucasus and the Balkans since the 1990s; on-going ethnic conflicts and independence movements in post-Communist states (eg. South Ossetia-Georgia, Kosovo) – legacy.
  • Remaining Communist Political Elite.



South Caucasus comprises:

Georgia (including disputed, partially recognized Abkhazia and South Ossetia)

Armenia Restoration of independence

Azerbaijan (including disputed Nagorno-Karabakh Republic)


*BALTICS: (most keen) quick to seceessed but the Russians were depriveldged. There is questions about this ethno-nationalist. EU gives these groups the rights.




All had historical memories of independence. Not socially engineered.


*UKRAINE: Divided between social engineering and pre-existing nationalism: linguistic distinction. Civic national perspective rather than an ethnic.


*BELARUS (Central Asian Republics) stay close there. They don’t have the nationalist sentiments.

Close connection with Russia. Russia was less willing to give up.

DON’T confuse outcomes with preferences in the case of Belarus. This was a process of Unintended outcomes: can’t read back from the final outcome to the role of nationalism.


*RUSSIA: “The dog that didn’t bark” : imperial nationality is not interested. There were specific features: land based empire. There was a civic nationalism volunteristic. Ideas of restoring the USSR model, expanding power to the disapora, protector of Russian abroad. This was prevented by the August 1991 coup: Boris Yeltsin decides that Russia no longer wanted the burden. Crucial fact is the policy act in Moscow. Not the Renaissance in Putin: there is been only ONE CHECHNYIA. People though Russian nationalism would be violent. But that hasn’t happened there is amore important issues.

Warsaw Pact Cases: Czech/Slovaks (only nationalism), nationalism wasn’t key here: it was state power capitalism issues.

Yugoslavia serves to demonstrate the importance of political resources as a foil to USSR. Relationship between the agency of actors: Milosevic -> Serbian nation territory not willing to give up control.

A LITTLE primordial a LITTLE modernist:

*Henry E. Hale, The Foundations of Ethnic Politics: separatism of states and nations in Eurasia and the world

(Hale, 2008)

  • “Uncertainty Reduction’: naturally to support something that everyone can agree on within a new polity: ie. national objectives. It gives people a map: it wasn’t an emotional primordial approach but it wasn’t of interests (modernists) but it was about having a signpost.
  • Secessionist republics tore on global superpower apart and plunged Tito’s Yugoslavia into homocidal chaos BUT WHY?
  • While Lithuania spearheaded secession from SU in 1990, neighboring Belarus remained loyal to the idea of integration.
  • While Slovenia and Croatia seized the chance, Montenegro+Serb remained
  • (Hale, 2000) wonders a) why some ethnic groups fight for secession, b) why some ethnic groups fight for multi-national states to find that secession = affluent ethinc group + autonomous already + least assimilated.

Despite implicating ethnicity in everything from civil war to economic failure, researchers seldom consult psychological research when addressing the most basic question: What is ethnicity? The result is a radical scholarly divide generating contradictory recommendations for solving ethnic conflict. Research into how the human brain actually works demands a revision of existing schools of thought. At its foundation, ethnic identity is a cognitive uncertainty-reduction device with special capacity to exacerbate, but not cause, collective action problems. This produces a new general theory of ethnic conflict that can improve both understanding and practice. A deep study of separatism in the USSR and CIS demonstrates the theory’s potential, mobilizing evidence from elite interviews, three local languages, and mass surveys. The outcome is a significant reinterpretation of nationalism’s role in the USSR’s breakup, which turns out to have been a far more contingent event than commonly recognized. International relations in the CIS are similarly cast in new light.

*Philip G. (Roeder, 2007) Where Nation-States come from: institutional changes in the age of nationalism

  • “Institutional advantage” (Roeder, 2007) There was a map to negotiate a position. There was a constant playing on the national to achieve power. The federalist system PRODUCES quasi-national states. The republics each have one foot out the door already: they have the institutional advantage. It wasn’t just a matter of cognition. Roeder: stresses the institutional. There was a constant political negotiation with eachother.

COMBINE These two books see why that institutions of Republican entities would come to dominate post-Soviet politics. So Breuilly and Primordialists have a middle ground here.

To date, the world can lay claim to little more than 190 sovereign independent entities recognized as nation-states, while by some estimates there may be up to eight hundred more nation-state projects underway and seven to eight thousand potential projects. Why do a few such endeavors come to fruition while most fail? Standard explanations have pointed to national awakenings, nationalist mobilizations, economic efficiency, military prowess, or intervention by the great powers.Where Nation-States Come Fromprovides a compelling alternative account, one that incorporates an in-depth examination of the Russian Empire, the Soviet Union, and their successor states. Philip Roeder argues that almost all successful nation-state projects have been associated with a particular political institution prior to independence: the segment-state, a jurisdiction defined by both human and territorial boundaries. Independence represents an administrative upgrade of a segment-state. Before independence, segmental institutions shape politics on the periphery of an existing sovereign state. Leaders of segment-states are thus better positioned than other proponents of nation-state endeavors to forge locally hegemonic national identities. Before independence, segmental institutions also shape the politics between the periphery and center of existing states. Leaders of segment-states are hence also more able to challenge the status quo and to induce the leaders of the existing state to concede independence. Roeder clarifies the mechanisms that link such institutions to outcomes, and demonstrates that these relationships have prevailed around the world through most of the age of nationalism.

  • International Causality


  • (Hutchinson, Revision2) “What is the role of international factors: the buildup of post 1989 territorial split up into ethnic categories: what might be the factors that explain the survival of these entities. Was it the international communities desire to keep the patchwork. The reluctance of accepting the sovereign states. They are more likely to support territoriality in the Ukraine: it’s the role of international recognition.”


Reform enabled crystallization of the centres in the regions. They never wanted a war of secession. If the centre resists it: the centre usually win those wars.

  • WESTERNERS love self-determination framed on democratic claims so those elites are central.
  • 1) Seeking ‘States” to recognize > Warsaw Pact, non-sovereign republics.
  • 2) The problem with other claims. Once one claim is recognized there is a fear of creating a doctrine of succession rights. The way around this is to say that these states aren’t new at all. With Poland there is some difficulty in recognition. The same reasoning in the Republics in Yugoslavia. A federalist system was half-way into secessionist movements. There have been problems in Bosnia Herzegovina. In the case of Kosovo: was part of the republic of Serbia. Russia has the difficulty of Chechnya didn’t fit the same structure as other non-Russia republics for Federal System transition self-determination.
  • 3) Specific features> e.g. The creation of German was ingenious, German-German simply create lander in East Germany and allow those landers to vote into West Germany, German decision to recognize of Croatia changed Yugoslavia, émigré influence, the EU and Baltic states. Germany recognized Croatia 1st which destroyed Yugoslavia. The EU has played a crucial role.
  • You could argue federalist system was a natural movement to self-determination: Bosnia/Croatian and Serbian and Kosovo: clear cut case but was part of Serbia.

EMERGENCY KNOWLEDGE: Self-determination:













State as unitary actor > narratives and “games” States act. Diplomatic: Britain this, France does this; it is very rational choice theory. There is a narrative history OR sometimes descriptive of game theoretical.

International “anarchy”: SUPRA-state authority does not exist. With these simple assumptions you can go on to other things.

State interests/preferences > State powers (how to measure) >

State reason (best use of power to realize interests)

The state wants to impose power. The state has interests and preferences. The state has powers. Some states are more powerful than others. The economy, stability, support by the subjects. Quality of leadership is more difficult to measure. ONCE a state has rationally gauged its powers, you have already defined the uses of SUCH TERMS. The term is Ends or the methods.

Order out of anarchy > diplomacy and war > international order

As plural, conflictual and consensual (in the sense that states recognize that they all have same reasoning capacities: this should produce stability)


Non-state actors: not states that have power: international corporations, religious groups, illicit organizations, there is a question of international organizations.

International norms: not simply self-interested actors: liberal democratic states behave rather differently. These leads to international society.



The state as sovereign > indivisible power with nothing above or below > a modern world? Sovereignty: key assumption: it is an indivisible source of power, backed up on the means of violence. There is no comparable authority is above or below. THIS is a new framework BUT also doesn’t exist in parts of the world today.

The state as territorial > indivisible power with nothing beyond > modern?

The notion of a sharply defined state territory is arguably a product of modern history.

The distinction between state-society and state-state relations > reflected in distinctions between academic disciplines

Externally the state enters into discussions with other states.

Mirrored in nation/nation-state distinction

Nation (sovereignty) and Nation-state (state)

HISTORICAL JUSTIFICATIONS I                                                                                

THE STORY OF WESTPHALIA: treaty of Westphalia 1648. A European wide settlement of the disputes in Question:

  • Formal equality of states: recognized the actual power of larger states.
  • Rejection of any authority above that of the state: Holy Roman Empire or Papacy.
  • State consent as the basis of legal obligation: treaties and diplomacy
  • Territorial integrity: supported the territorial integrity of the sates making the agreement.


Non-intervention in the domestic affairs of other recognized states (1555 Peace of Augsburg: ‘Cuius regio, eius religio’(`in your kingdom, your religion’)

The treaty of Westphalia recognized Lutheranism, Catholic,

The religion of the people did not switch to the religion of the new prince.

Complications: three recognized religions, guarantors, non-territorial “states”(Holy Roman Empire) involved


HISTORICAL JUSTIFICATIONS II                                                                               

AFTER WESTPHALIA French hegemony was given up officially. They then developed the balance of power ideal.

European diplomacy > Utrecht > balance of power > dynastic policy as fitting the IR model > but arguably a source of disorder

Dynastic wars, calculation, deliberate removal of passion, Frederick the Great anti-Machiavellian but he is Machiavellian, Paul Schroeder: the consequence of all of this is great deal of instability egotistically; lack of an overarching norms was a product of that time.

New state formation: 18/19thcenturies American Revolution + British North America, Greece, Bulgaria, 1878 Treaty: it was certain nations accepting intervention or non-intervention.

New state formation: after 1918: there is a new source of international legitimacy: the state as a territorial bound unit in the 1884-85 Berlin Conference decides where the African territories are defined. National self-determination Woodrow Wilson was used to legitimate Hapsburg Empire. Unlike before, there was the establishment of international organizations. There was new order of nation states. There were a number of bilateral minorities where people had to sign and respect.

New state formation: after 1945 decolonization, the UN

New state formation: after 1989: there was an attempt to square the legal order of sovereign state. Along with this shift to creating a series of states that were explicitly recognized, there was a whole set of political theory which sustains these states.

Political theory, international law and the sovereign state


THE MODEL OF THE STATE                                                                                       

  1. Normative not descriptive > stateless zones and

Empires > adjustments to IR model

It’s arguable that the concept of the normative. Are these states aspiring or do they actually establish this. Much of the world is still stateless and empires and there are adjustments to the IR model.

  1. The internal problem of sovereignty: state as divided, not unitary > possible answer: “switching interests” They cannot be called unitary, there are different interests. Can someone understand German foreign policy if we don’t understand the shift of political democracy to authoritarian regime. These can be constantly switched: its external interest will change.
  1. The external problem of “sovereignty”> transnational economic and ideological power relationships. When one state

THE IR RESPONSE: THE NEED FOR MODELS The world is complicated. At least this simplifies matters: this model works.

  • What alternatives are on offer?




SOVEREIGNTY AS NECESSITY: John Locke, Hobbes necessary political power of the state, social contract

SOCIAL CONTRACT: sovereignty is based on a social contract that people have.

EQUALITY AND DEMOCRACY: this implies that they are democratic and equal

INSTITUTIONAL SOLUTIONS – elected institutions and so forth. This adds to the impersonal nature of the modern state.


LEGITIMATE STATES AND INTERNATONAL RECOGNITION – this increases the notion of legitimate states. Once you have the idea of a world of states: you have legitimacy based on sovereignty THEN HOW DO YOU Conceptualize popular sovereignty.




The concept of self-determination: Kant It is about some actor that has rational moral autonomy of the human being. He talks about collectivized and nationalized.

Collectivizing the concept: Herder, Fichte

Identifying the nation > before the people can choose it is necessary to choose the people

How do you identify the nation: before people can choose you need to find the people WHERE IS the right is exercised. How elections turn out is the question of the boundaries: it seems to be who exercises the democratic process.

The conceptual tension between “popular” and “national” sovereignty: how are the majority and minority constructed. The collectivity is no just the people it is the nation according to the academics. The idea of national self-determination can then conflict with popular sovereignty within a state.




Who are the “people”?

Who is the “nation”?

States equal nations: sovereignty and non- intervention > separation/union as rare > no region has a “right” to self-determination. UN says that nations = state. This makes separation/union are rare. This implies the rarity of the dominant groups blocking out the notion of changes through state boundaries.

States do not equal nations > the right of separation/union > justifiable intervention > territorial change as potentially frequent

Nations are very distinct from a given state. It can be used to justify intervention to support such rights. There is not just a tension between popular sovereignty.




Before the 19thcentury: qualifying Westphalia > dynastic sovereignty

18/19thcentury: justifying new states > revolution > unjust rule > identity

The right of revolution on unjust rule. They are based on just rule based on the identity of the people. BUT this is an ambiguous term. The declaration if 1789: Citizens & the Nation. Is it the collective cultural French nation applied here?

Post-1918: justifying new states > Wilson’s Fourteen Points: he talks about national self-determination: is it to be used on democratic consent? There might be territorially difficulty. The rules were only applied to the LOSERS but many thought that the rules were not APPLIED to the winners in the Middle East. Tere were problematic issues of drawing boundaries: this was tremendously difficult. Turkish in habitants in Greece etc. The new danger of self-determination becomes a national purifying act.

CONSTANT AMBIVALENCE > justice (religious, political etc.) > democracy > identity

National self-determination as new power ideology

The dangers of “new state formation”


Post-1945: justifying new states > anti-colonialism UN 1960 Resolution: Declaration on the Granting of Independence to Colonial Countries and Peoples confines right of self-determination: “. In respect of a territory which is geographically separate and is distinct ethnically and/or culturally from the country administering it.”

USSR & US were anti-colonial. They also so that ethno-national identity was highly problematic. UNITED STATES would have been geographically BUT not ethnically or culturally distinct to the nation administrating it. Under that resolution.

Post-1989: justifying new states

State renunciation (Russia 1991) > federal units as “quasi-states”

The 1960 Resolution doesn’t really work. The quasi states of the USSR: the Baltic States had been independent. The problem can even be applied in the case of Yugoslavia. At least to parts of the Yugoslavia before it broke up.

Federal units annexed East Germany: Lander before merging with the Western German portions.

Blurring “state”, “popular” and “national”

Erecting barriers against separation and union: the real problem is when there is no state: Croatia and Serbian, Bosnia and Kosovo. Russia and Chechnya. The view of the state is a NORMATIVE VIEW. It is not what they actually are; it’s what they should be.

IR view of state as norm rather than reality



it means that irredentism there is an issue of normative language is producing the world of fixed nation-states: it reifies them. SO

Arguments for secession: positive/negative; rights/identity. Seeks the political and democratic argument. If a clear majority wants to succeed. It is what they have decided. This is the positive argument.

The negative argument: it is what others have decided about that state. If the inhabitants are subject to violence. The second would focus on the particular inhabitants of a territory.

Arguments against secession: arbitrary, creating and intensifying conflict, recipe for instability

The opponents would say that such a right would cause much trouble. The opponents say that giving such countenance: it may bring about ethnic groups genocide to prevent such independence from ever occurring. The international response would be problematic.

Once a region has a right of succession: what if a region within a region. There is always a minority within a minority: this will produce a further set of justice: it may also create non-functionally small states in the world.

From collective to individual rights: arguments for intervention > arguments against

The current record of intervention is not an encouraging. The states will use self-interest, which wouldn’t have anything to do with human rights. They are trying to get rid of sovereignty as a whole. Removing the ideas of the state as hard units. This is moving towards notions of autonomy. This is a way to create national recognition while not challenging state sovereignty.

From self-determination to autonomy > end of sovereignty argument? > Norms or “real”?

It is often language in which arrangements will be legitimized. This is all misleading fiction. This actually justifies the current state control. SOME MIGHT say that the IR model doesn’t apply well and is an over simplification.

From norms to “realism”: can we build in a sovereign state. Modern state has been very good at resisting on sovereignty. An irrational actor

Bangladesh is the only real example. Is secessionism is some kind of breakdown. There was a break down and leads to disputes; It is a question of whether we confuse a final claim versus the BARGANING that goes to avoiding that claim. The interwar years: it was realistic to making ethnic language. BUT it became illegimate to make that kind of language. It had to be put in civic terms. People now frame arguments in multiculturalism.


The changing languages of norms and “realism”>

Is the sovereign nation-state still a “realistic” power unit or an acceptable normative concept?

The language is implicated in the vary process itself.

Recent relevant publications

On the continuing importance of imperial states:

John Darwin, After Tamer lane: the global history of empire (2007); Herfried Münkler, Empires: the logic of world domination from Ancient Rome to the United States (2007)

On secessionism in contemporary Europe see the books by Hale and Roeder listed in last slide of my communism and nationalism lecture

As general reader: John Baylis, et.al (eds), The Globalization of World Politics: an introduction to international relations(4thed., 2008)

(Elie Kedourie, 1960/93) Nationalism


  • Before Immanuel Kant (1724-1804) our knowledge was based on sensations and the memory of sensations. As a result you could argue that people were the prisoners of their sensations. Therefore, liberty and other virtues were difficult to prove.
  • Kant showed a way out of this predicament. He argued that morality and knowledge are separate things. The first is the outcome of obedience to a universal law which is to be found within ourselves, not in the world of appearances that is at the base of the second. Man is free if he obeys the laws of morality which he finds within himself and not in the external world. Only when the will of man is moved by such an inward law can it be really free, and only then can there be talk of good and evil, of morality and justice.
  • This inward law is denoted by Kant as the categorical imperative. This was a new and revolutionary formula because it was totally independent of nature and of external command. For Kant the natural world could not be the source of moral value, neither the will of God. Good will = free will = autonomous will.
  • Kant’s doctrine makes the individual the very centre, the sovereign of the universe. This however has consequences for the believe in the existence of God. Due to Kant’s theory God is reduced to an assumption which man makes in asserting his moral freedom. Man is no longer the creature of God, but the creation occurs the other way around.[14]
  • The logic of his doctrine was carried further for example by the theologian Friedrich Schleiermacher (1768-1834) for whom religion was only the spontaneous expression of the free will. Everything must contribute to the self-determining activity of the autonomous individual. Religion functioned as the perpetual quest for perfection, a perfect way of self-cultivation.
  • Kant’s doctrine influenced not only theology it also had consequences for politics. Autonomy becomes the essential end of politics. A good man is an autonomous man, and for him to realize his autonomy, he must be free. Self-determination thus becomes the supreme political good. In other words, the idea of self-determination could from now on be seen as the highest moral and political good. Kant did attempt to discuss politics in terms of his ethical doctrine, for example in his treatise on Perpetual Peace (1794).[15]
  • Kant’s ethical teachings expressed and propagated a new attitude to political and social questions. Several habits and attitudes were encouraged and fostered by the doctrine. They helped to make self-determination a dynamic doctrine.
  • According to Kedourie, Nationalism found the great source of its vitality in the doctrine of self-determination. Both the French Revolution and this Revolution of Ideas constituted nationalism.

James (Mayhall, 1999) “Nationalism & International Society”

+The Domestication of National Self-Determination

-new sense of international legitimacy post 1918: equating popular sovereignty with end of Europe’s dynastic empires (later anti-colonialism)

-groups who political self-determination heightened after 1918, view taming of national self-determination as betrayal

-thus, these “new” self-proclaimed national groups challenge the state

-this indeterminacy is because boundaries of collective are not given by nature

-though existentially this is may not true (J.S. Mil) – nation as a group whose identity is forged by particular interpretation of its own history

-when it is acknowledged that there is no external objective criteria to distinguish between legitimate and illegitimate collectives, turn to an open test of public opinion to solicit the wishes of individuals in respect to their collective identity (this was strategy of Versailles Conference)

+Weakness of establishing self-determination by plebiscite

  1. Assumes collective identity already exists
  2. Discounts agenda (whoever controls the questions of the plebiscite usually can manipulate the outcome.

+At first, these weaknesses not acknowledged by liberals after WWI; but soon became obvious when redrawing the map of Europe, in respects to three situations:

  1. Problem of minorities: scrambled throughout Europe (virtually impossible to assign a territory that wouldn’t exclude at least some nationals)
  2. Question of territory: previously this was decided by conquest, which now was seen as politically incorrect, but then how do we determine which states are legitimate?
  3. State integrity v. security : winning powers willing to use plebiscite to determine new states, but did not want to apply it to their own territories (e.g. British not willing to settle Irish question by plebiscite)

-Kashmir dispute is a contemporary example:

-formula of partition allowed rulers to choose India or Pakistan, Hindu rulers at the time chose India, despite overwhelming majority of Muslims

-after uprising which led to a de facto partition of the state, India willing to conduct plebiscite – thus presuming that Pakistan was not in position to determine outcome – yet since it was clear vote would not favor Indians, it was never actually honored.

-this example shows when using a plebiscite it is impossible to prevent intrusion of political and strategic interests of the major powers.

+From the League to the United Nations

-trouble with redrawing European map based on language of self-determination was that it created political problem of minorities and substituted national determination for the idea of an act of self-determination (Wilson aware of potential for tyranny)

-protection of national minorities under League proved ineffective

-thus UN charter anxious to play down cultural nationalism to obtain cooperation between states that was already collectively guaranteed.

+The Conventional Interpretation

-even after 1945, whenever nation came into conflict with state; it was the people who had to move (e.g. 10 million Germans uprooted after WWII, mass population transfers following Indian partition)

-refugee became typical in 20th century

-concept applied to removal of European powers from overseas territories

-post-colonial tests of public opinion to settle disputes over self-determination ruled out by regional organizations established in newly independent African and Asian states

-revision of artificial boundaries created by Europeans no longer central to many African political agendas following independence

-national self-determination is ironic: conquered world by legitimizing state; yet also attempts to freeze political map by bringing an end to territorial division of the world.

-national movements are mostly unsuccessful in overthrowing conventional interpretation of self determination

-what challenge doe nationalism pose for contemporary international order, and under what circumstances is it likely to be successful?

+Two Challenges:

-conventional interpretation (anti-colonial) of national self-determination is clearly a compromise

-thus remains vulnerable to those who feel underrepresented

-main challenges are irredentism and main rationalist challenge with secession

-irredentism: any territorial claim made by one sovereign national state to land with another

-supported by historical/ethnic claims (e.g. Argentina claim to Falkland Islands, Moroccan claim to Mauritania, Spanish to Gibraltar)

-claims to land is combined with appeals to popular sentiment

-claims by national core to peripheral lands, used by government as a means of mobilization and to secure popular support

secession: successful secession is very rare, but term also applies to unsuccessful separatist rebellions against the state

-any attempt by a national minority to exercise its right to self-determination by breaking away to join another state or establish independent state of its own

-secession depends on group sentiment and loyalty; form of mass politics organized from below rather than above

-seems likely that irredentist claims (except where supported by powerful secessionist sentiment) will be defeated when submitted for legal arbitration.. thus many not constitute a permanent threat to international order

-secession is a more standing challenge (based on ‘rationalist’ world in which self-determination is seen as a basic human right)

+The Preconditions for national success:

-territorial revision is rare, thus so are the circumstances that are conducive to it

-8,000 identifiable separate cultures, yet only 159 independent states.

-the three great waves of state creation associated with collapse of empires

-but no more empires to collapse (at least formal..)

+Three circumstances where secession has potential

  1. Regional patronage : if two superpowers reluctant to support secession and a stalemate occurs – opportunity for region power (with its own interest) to assist the national movement. (e.g. creation of Bangladesh – Americans supported Pakistan, Soviets – Indian; India ultimately able to intervene and support secession)
  2. Superpower competition: ideological rivalry between US and Soviets led them to encourage ethnic separatism in order to weaken the other side or gain a tactical advantage; also used to obtain leverage in global diplomacy (e.g. American support of Kurdish rebellion in Iraq not motivated by American desire for an independent Kurdistan, but to weaken Iraq internally for their Iranian allies)
  3. Constitutional Separatism: possibility of secessionist demands being peacefully accommodated for ; only examples are Norway secession from Sweden in 1905 and Irish Free State from UK in 1921 – neither power willing to preserve unity by forcefully suppressing the demands for separation and did not want a civil war; also structural restraints – in each historical sense of identity predating nationalist era and generally accepted, contending parties led by liberal nationalists shared belief in parliamentary system.

-since 1960s, western countries seen ethnic revival (Basque movement, IRA, Quebec)

-though separation will continue to be resisted, Mayhall contends that if the demands persists it might become easier to accommodate in industrial societies.

8) Why did territorial rather than ethnic nationalism triumph after 1945: collapse of the USSR?

(Hutchinson, Revision2)

  • You can’t say that territorial won. You have both in the USSR. Ethnic nationalism in the USSR was obvious. Was territory the core focus or was it the nature of the people so that you have to redraw the territory of the people: African boundaries?
  • When USSR broke up there was long existing territorial boundaries: these territorial republics were ethnically mixed. The argument was that the driver of anti-USSR sentiment was ethnic: it was ethnic antagonism was the explosive. You look at the caucuses: Azerbaijan, Armenian, and Georgia.


  • The definition of triumph: you could argue about yes it emerges as a territorial block: you would have to know about the USSR or cases: you don’t need to know all of them: just know two or 3 specific cases>>>\


  • Why is the question being posed in these terms: after Empire what emerges in the world. You get a proliferation of nation state formation. The proliferation of nation-state after 1945: so when the Q asks why: what factors does one look to: the role of empire: it leaves open the idea of whether these collapses have occurred because of internal pressures. Metropolitan state -> you can argue that you have to look at the reasons for the way the empire produced movements of resistance. Its possible that the empire collapsed from military exhaustion, military defeat and there was no nationalist movements around.


  • YOU Might want to think about the TIME: which era will YOUR ANSWER FOCUS ON PRIMARILY?


(A) (B) (C)


  • Gellner’s incisive Wrong Address Theory was not predicting the collapse of communism.
  • nationalism wasn’t exactly suppressed under Communism (taking from Katherine Verdery). It was always there. In fact, communism nurtured national consciousness, it exacerbated ethnic tensions, and it laid the seeds for strongly nationalist citizens to emerge in many places.
  • Communism attempted to blanket over nationalisms (Sleeping Beauty/Prison House.Freezer effect of communism) but pragmatic communist political leadership requires mobilization via the peoples ethnicity THERE Was something there before communism arrived: nationalism was present and reorganized.
  • The post-Communist states were territorially designed by the Soviet Union therefore the SU did have a significant influence on nationalism. BUT Tishkov overemphasizes the top down explanatory model of agents of control.
  • No Russian communist party, no Soviet passport. NOT all republics wanted sucession. Baltics different. Collapse somewhat of an accident. But the cause was not nationalism.
  • COMMUNISM is a powerful centralizing political doctrine that competed viably against nationalism but could not overcome the simple appeal of the doctrine of nationalism.
  • Fear of demographic Russian decline
  • Counter-factually, nationalist territories would have emerged regardless of communism in the Czarist Russia along bourgeois nationalist lines.
    WHY was Yugoslavian ethnic violence so high after communism’s failure? Because these were longstanding grievances where as the grievances of the Russian empire were centred against a highly dominant Russian ethnie.
  • Linguistic unification as a primary but not necessary contingency still



  1. Nationalism was given force by the way in which communism disintegrated. See Tishkov: elites within the Republics: before they had had power, but not privilege. By declaring themselves nationalist and playing the popular politics game, they could now have both.
  2. Nationalism NOT the cause of the break-up of Communism, but a secondary. Symptomatic. Gorbachev’s reforms, his acquiescence, the economic situation, and the spillover effects of other revolutions all more important.
  3. More nationalism a consequence of break-up, inc exclusive kind. Discrimination – eg against gypsies – as leaders and peoples seek to take advantage of new order.
  4. Verdery argues that the nation was a default setting after communism. I agree with this point.
  5. Federal states do reiefy nationalist groups: they are subcontainers in the state that serve dual contradictory purposes: protect/empower cultural groups + manage cultural group (superficial forms of nationalism). The dominant ethnie attempts to Russify the populations.
  6. The post-Communist states were territorially designed by the Soviet Union therefore the SU did have a significant influence on nationalism. BUT Tishkov overemphasizes the top down explanatory model of agents of control.
  7. Russians felt they were shouldering the burden of the EMPIRE>
  8. (F) CAUSALITY: USSR forgets the war, economic collapsed,



EU entrance: needed to pretend to be civic nationalism: USSR Russian dominance is very obvious.

Yugoslavia has a lack of resources -> too small to survive.  

  • Counter-factual of the USSR: why did it breakdown into nation-states? Why not into a multicultural/national power.
  • Your Thesis: primordial nationalism is only important when USSR prospects of collapse are high: the resources are utilized to reorganize political power when the USSR’s centre collapses.
  • International self-determination recognition used primordialist approach so as to avoid precedent setting for any political movement.
  • IT IS THE STRUCTURE at the CENTRE reduced the will to hold power in the regions.
  • Answer MUST be conscious of TIMING: (PRE) = pre-collapse (POST) = post-collapse
  • Whether there was a nation narrative before or during the USSR, it only matters after! SO what? (A) doesn’t matter until the collapse is eminent.
  • Nationalism was an outcome of the republican system of government: Breuilly.


The more things change the more they stay the same: POWER POLITICS

Russian Empire > Bolshevik Revolution >

[1] (Martin, 2001), Terry. The Affirmative Action Empire: Nations and Nationalism in the Soviet Union, 1923- 1939. London: Cornell University Press, 2001, pp 2.

[2] Suny, Ronald Grigor. The Revenge of the Past: Nationalism, Revolution, and the Collapse of the Soviet Union. (Standford, Stnaford University Press, 1993), pp. 259.

[3] The Affirmative Action Empire: Nations and Nationalism in the Soviet Union, 1923 -1939, by Terry (Martin, 2001).

[4] Gellner, Ernest. Nations and Nationalism. Oxford: Blackwell, 1983, pp. 129.

[5] Although Gellner may not have believe in the inevitability of the collapse of the Soviet Union, his description of the relationship between communism and nationalism seems to have gained further confirmation from that collapse.

[6] Tishkov, p. 294

[7] Tishkov, pp. 31.

[8] Smith, Jeremy. Review work(s): Ethnicity, Nationalism and Conflict in and after the Soviet Union: The Mind Aflame by Valery Tishkov. Europe-Asia Studies, Vol. 49, No. 8 (Dec., 1997), pp. 1544.

[9] Tishkov, Valery. Ethnicity, Nationalism and Conflict in and after the Soviet Union: the Mind Aflame. London: SAGE, 1997, Chapter 2, pp. 30.

[10] Ibid, pp. 30.

[11] Ibid, pp. 30.

[12] Motyl Alexander J. Sovietology, rationality, nationality: coming to groups with nationalism in the USSR (New York, Columbia University Press, 1990), pp. 47.

[13] Tishkov, pp. 30.

[14] If the categorical imperative imposes on us the duty to promote the highest good, then it is necessary to assume the existence of God, a perfect being, since an imperfect being could not be the source of the highest good. Therefore it is morally necessary to assume the existence of God. Kedourie, Nationalism, p. 17.

[15] In this work he sets out the conditions for a stable, peaceful international order. The civil constitution of every state should be republican, because for Kant a republican state was one were the laws could be the expression of the autonomous will of the citizens. Only in such a situation could peace be guaranteed.

Synopsis of Capital in the 21st Century by Thomas Piketty

Slides from Capital in the 21st Century, Thomas Piketty

Piketty’s Thesis: Thomas Piketty’s thesis is that the rate of capital returns is greater than the rate of economic growth in developed countries. The message is clear “forget about income/salary inequality, take a look at wealth inequality!” Wealth is getting collected and retained at a faster rate than economic growth is occurring in the overall economy. This assertion is a much more sophisticated argument than the classic “the rich are getting richer.” Private wealth is increasingly concentrating in the hands of ‘the few’ which is troubling since it’s doing so at a faster rate than the rate of new wealth creation. It’s also troubling (if it’s true) that ‘the few’ are just lucky & riding compound interest into a promising future instead of creating true value through their own productivity. This trend has been tracked over the last 250 years and with increasing accuracy since developed countries have implemented income tax. Piketty’s challenge is to address the issue that wealth concentration will grow relative to economic growth in the future without any significant policy changes.

Therein Lays the Controversy: Piketty’s solution is to create a progressive global wealth tax (i.e. a tax that targets all accumulated equity rather than in the income tax and cash). His argument pushed him into global super-stardom in 2014. From The Economist to the Wall Street Journal, Piketty’s data based argument was an important turning point in thinking about taxation policy and wealth distribution.

Editorial Input: Of course, everyone is getting richer: just ask your great great grandparents if they ever skyped with their parents 10 km away, instantly for <$0.01 per minute. Your great grand parents lived on average 25 years less than your parents etc etc. Even those below the poverty line today are more wealthy than some of middle class from the 20th century (Um: kinda, depends how you measure wealth). As a species, we are rich relative to our ancestors. And of course, remember that money is a PROXY for VALUE, it doesn’t track a bunch of valuable things like, you know, love and happiness for example. What’s novel about Piketty is he’s saying that wealth (the measurable part) is growing faster than that economic benefits (the measurable part) of new technology, productivity etc. What to do about it requires more thought, multi-variate testing and anticipated the unintended consequences of public policy.

Capital in the 21st Century / Le capital au 21e siècle

The book is in four parts;

  • Part 1: Income and Capital
  • Part 2: The dynamics of the capital/income ratio
  • Part 3: The structure of inequalities
  • Part 4: Regulating capital in the 21st century

Income and Capital: The Database

The World top incomes database: Piketty has collected data about income tax because it is available since it’s creation; starting in 1913, the US brought in Income Tax (hence the thought that world war was the motivator is not correct); Canada in 1917, UK in 1915, France 1915. Taxation is excellent for gathering information about citizens in a positive sense, to better empower them and to use that revenue to improve the infrastructure of society; AND to allow citizens to understand how money is shaping their life. It focused people to consider their finances. Income tax also is the basis of Piketty’s data set!!

Income Going to the Top 10% (what this graph below shows)

The theory that Income Inequality should decline over time has been proven false in the US. In the past 30 years, the share going to the top has moved to almost 50% of all income. Remember income is all cashflows of an individual. There is a trend towards 50% of the income going to the top 10% today in 2014. So the problem is that the CEOs are getting paid really well but we don’t see extra benefits of their effort in the business; or at least it is difficult to measure. It is difficult to understand how a top manager is able to generate a $10 million income both for and against productivity gains from that individual. It doesn’t mean that CEO isn’t worth every penny and more, it’s just we can’t measure that value well…..

The key for Piketty is that income is, in fact, over-rated. He believes that income inequality is not as interesting or important as is wealth inequality.

Wealth distribution is more important long-run. The total value of capital and real-estate assets has increased since in the 1960s as you can see below. The inequality in property is very serious. This doesn’t necessarily have to lead to an inequality as a whole. But this graph does represent job income inequality. It dropped as income tax was applied and is creeping back up.



Three Central Points of Capital in the 21st Century:

  1. The return of a patrimonial (or wealth-based) society in the Old World (Europe, Japan): Wealth-income ratios seem to be returning to very high levels in low growth countries. Intuition is that a slow-growth society, wealth accumulated in the past can naturally become very important in the future. In the very long run, this can be relevant for the entire world. Population growth in Europe and Japan is low.
  2. The future of wealth concentration: with high r-g during the 21st century (r= net-of-tax rate of return, g=growth rate), then wealth inequality might reach or surpass 19th century oligarchic levels; conversely, suitable institutions can allow to democratize wealth. Wealth inequality tends to concentrate better and that we should have more transparency and have more diffusion of wealth.
  3. Inequality in America: is the New World developing a new inequality model that is based upon extreme labour income inequality more than upon wealth inequality? Is it more merit-based, or can it become the worst of all worlds?

Point 1: The return of a wealth-based society

The ratio of wealth and capital concentration was supposed to a constant, at least that’s what economics textbooks advocate. However in the data, it is not a constant.

The Beta of private capital. Beta being the level of inequality. Here we can see that over time the level of private capital has grown over time in rich countries from 1970 to 2010. The database is a combination of data which includes real-estate prices and is a bit messy.

Public Debt versus Private Wealth

The rise of wealth in Europe on the private side has grown, but look at the public capital. Many doom sayers are abound stating that public debt is a fast approach train wreck. For example, the balance sheet of Italy would show that they have more debt than they have equity. The rise of public debt is significant as an issue in public discourse. However, this concern about public debt to GDP has to be squared against the private wealth that is left by the babyboomer generation etc. In reality, we own our lives as private citizens. The private wealth of Europeans and North Americans towers over the public debt accumulated by our respective governments. So…….




Imagine a market with 100 people in it. If we think about capital as a pile of apples, it might be illustrative. As individuals we have stock piles of apples. The top 10 each have 15 apples (7 apples are hiding in their trousers), the next 45 have 5 apples and the other 55 people have 1 apple. The issue is that over time, top 10 are getting more apples per year at a faster rate than the 45 people with 5 apples and the other folks with having 1 apple each, and getting a sliver more per year. Wealth is concentrating privately and the government isn’t able to do much about that with out new ways to track wealth. In the long run, if you have a lower growth rate, the total stock of wealth accumulated in the past can naturally be very important giving the top 10 the ability to advance their progeny in ways that the 45 middle class and 55 lower class folks can’t.

Piketty says the following:

  • “Will the rise of capital income – ratio Beta also lead to a rise of the capital share alpha in national income?
  • If the capital stock equals Beta = 6 years of income and the average return to capital is equal to r = 5% per yea, then the share of capital income (rent, dividends, interest, profits, etc) in the national income equality alpha = r x Beta = 30%
  • Technically, whether a rise in Beta also leads to a rise in capital share alpha = r Beta depends on the elasticity of substitution <a) between capital K and labour L in the production function Y = F(K,L)
  • Intuition: <a) measures the extent to which workers can be replaced by machines (e.g. Amazon’s robots)
  • Standard assumption: Cobb-Douglas production function (<a)= 1) = as the stock Beta goes Up, the return r goes down exactly in the same proportions, so that alpha = r x Beta remains unchanged, like by magic = a stable world where the capital = labour split is entirely set by technology
  • But if alpha > 1, then the return to capital r goes down falls less than the volume of capital Beta goes up, so that the product alpha = r x Beta goes up.
  • Exactly what happening since the 1970s-80s; both the ration Beta and the capital share alpha have increased.”

Point 2: The future of wealth concentration


In practice, we have extreme wealth concentration occurring. The direction of national wealth is declining. There was no decline in wealth concentration With income tax, the progressive taxation in France, land was only 5% of the wealth in the 1910s. So what are the forces that explain the wealth concentration?











r being bigger than g means that wealth will get amplified over time without intervention.


r and g are moving further. r is larger than g. The growth rate is slow than the rate of return. The industrial revolution increased the growth rate but the rate of return increased as well. So that suggests that inequality has gone down in the 20th century but it’s growing again. The gap between r and g did not change that much before World War 1. 

We should be concerned about the concentration of wealth over time! – Piketty















Solutions: Piketty’s Want Equal Access to Skills!

You want the most number of people getting access to the information and skills they need to succeed and thrive. It’s the diffusion of equality. The university system, practical education systems that need to improved. You need to reconcile efficiency with access to universities. Inequality to a point can be good for growth and innovation but if inequality gets too extreme it is not good for growth. Inequality before World War I was not helpful according to Professor Piketty. Certainly levels of inequality are just and good, but at a certain point that inequality is counter-productive. Europe had a higher level of inequality Pre-World War 1 than the US.

Solutions: Understanding the Mathematics of Equality

Piketty doesn’t really like Genie Co-Efficient. However, looking at the numbers is more powerful. He believes that thinking about wealth around percentages is better. And by the way, Globalization is a positive sum game, Piketty.

Theoretical Deduction is an Insufficient Basis for Policy Development

Piketty started by collecting data. He wasn’t starting with a hypothesis specifically. He wanted to take his theories of inequality and explore if they were valid based on data collected from >30 countries. Data is better than ideological frameworks. 

Transparency and Sanctions

You cannot ask politely for banks to provide more transparency if their clients are benefiting from opacity. Opacity facilitates wealth protection. Steeply progressive tax systems didn’t seem possible until governments brought in the income tax in the 1910s. So Piketty is suggesting a wealth tax is gonna happen, expect it. Sometimes the governments do not have a plan for how to use the funds but with a wealth tax perhaps paying down the government’s public debts is a possible area to fix, thereby lowering interest payments on the declining public debt and liberating that wealth to energize government funding…or something. More research required.

!!It’s All About the Wealth Tax!!

Niall Ferguson The Square and the Tower

Niall Ferguson “The Square and the Tower”

There is the Square and the Tower; both are networks. The tower is the intellectual elite and the square is the general public in this metaphor. Ferguson’s findings are that there is a continuum of hierarchical structures as well as social networks. History repeats itself in many ways with the social media of today. Hierarchically organized family prevail, but then social networks are empowered to challenge the hierarchical order within each era.

We do in fact flip between the Org Chart of a company and the Network of Family in our own lives, according Niall Ferguson.

Think about Google as a crawler of the internet network that looks at the credibility of website: starting with sites such as BBC.co.uk and flows outwardly from there. History is hierarchical in the hands of government. History is typically written by the victors. So it should be looked at through the diaries of the leaders of the past and how they leveraged networks to achieve their ends (Nazism and Communism in particular).

Niall Ferguson had to become a Network Scientist to Write this Book: it’s anthropology, engineering, interdisciplinary. But networks inherently are around the idea that birds of a feather flock together: we congregate into clusters. We drink the cool-aid.

Social Media Today

List of social network enablers ie. the technology that crazy uncles have used throughout history:

GuttenburgPrintingPress, CarolusNewspaper, NiepcePhotography, MacconiRadio, FarnsworthTelevision, Silicon ValleySocial Media

Global Community is Not Great:

Luther was wrong to believe that if everyone had a copy of the Bible, everything would be amazing according to Ferguson. The network is not a happy community; they start to polarize. Martin Luther -> social networks. Luther thought that we would get the priesthood of citizens. We don’t get a happy network, we get a viral tumult of ideas, according to Niall Ferguson. The polarization in the US; its Conservatives and Liberals is partly a function of networks.

  1. The point is that technology is not that big of a leap; Martin Luther certainly was an innovative thinker. But we wouldn’t know it if he didn’t have a printing press.
  2. Facebook is a Smaller World Phenomenon: things spread more rapidly: the reformation spreads faster than in the renaissance, for example;
  3. Things Go Viral: is about the structure of the network. The network is as important as the meme.
    Witch crazes spread virally, equally crazy ideas go viral. To deny there are witches = you are a witch would be an example of social pathology then and now. A cognitive error that is shareworthy (like it or not).
  4. Networks never sleep: they are complex system. Networks are bad at defense: the KGB penetrated the UK government in the 60s for example.
  5. Networks are not equal: there are few nodes that are equal. We can graph who knew who, it would be some of you are better connected than others.
  6. The Nazi and Bolshevik Parties should be studied to see ‘how were those networks structured.’ We need to understand Fascism and Communism from a networked perspective, according to Ferguson.
  7. The Power has moved from Washington to Silicon Valley> the Chinese have figured out how to extend it’s position; they can monitor and respond and has extensive collective behaviour: how do you align with a social credit score.

We need a new Guide for Totalitarianism:

China believe the world is going well ahead: there are constraints. They have the largest bourgeoisie in history in China: they can’t alter the needs of bourgeois: you desire property rights; and it can be arbitraged but Ferguson is going to watch for the Bourgeois revolution in China but so is Xi JinPing!

The Importance of Counter-Factual:

Counter-Factual should be explicit in history. The Hillary Clinton presidency would have meant gridlock and angry Alt right reactionaries, calls for impeachment and a Trump TV Network….

Populists don’t last long: it doesn’t deliver benefits to core supporters. And the president will fail to deliver according to Ferguson. Populism -> is not dead in Europe. Muslim’s will be 20% of Europe in the mid-21st century. Ferguson implies that there will be cultural conflicts as a result….

Attacking conspiracy theorists as a credible Historian is very difficult. Again, Ferguson is worried about his street credibility. The power of the Freemasons is smaller because it shows that they didn’t manage to prevent certain events from occurring. If you can’t have private conferences then you are not intellectually free, according to Ferguson.

The social mobility at the bottom of the pyramid. Basic Income is not a patch. The distribution of the medicaid is not going to work according to Ferguson. Distribution of spending is inefficient where as UBI might work.

China’s economic expansion: The US and China could still go to war. The Chinese don’t really care about a trade war. One Welt and one Asia. Chinese Welt-Politik is a reality, according to Ferguson.

US is susceptible to a cyber-attack: it’s a known fact: how large of a disruption could that be? Preparations must be made, according to Ferguson.

Ferguson on Trump and Advertising, FacePalm!

  • Ferguson is wrong on Trump and he knows it. But he must protect his credibility amongst fellow academics (close-minded for sure). Facebook and Twitter are what caused Trump to win? The single causal variable? The leading variable even? Doubtful! Facebook was a variable but to be true data scientist, we have query this assertion. Why? Because the +75,000 votes across the many counties that Trump won in the swing states were spread out and you have to assume that all 75,000 changed from Hilary to Trump because of something their crazy (Russian) uncle wrote on their feed that inspired critical few to Trump’s camp. Hindsight is a revisionist’s dream: we tend to think things were inevitable AFTER an election when before they were uncertain…because they were, folks. Predicting the future is extremely difficult.
  • Ferguson claims that Trump would never have won without Facebook sharing and advertising? This is a totally clueless claim, from someone who probably hasn’t advertised on Facebook, because the power of Facebook advertising to shift opinion is overstated….earned media is perhaps a term Ferguson is not familiar with at all. Absent Twitter, Trump would have not had the reach for sure but Twitter exists, alas. Absent Facebook ads, I’m more dubious….because Facebook is highly overrated as a platform.
  • Facebook is not the cat’s meow solution for advertising effectively, it’s an improvement but not a gold standard in 2016 or ’18. For example, if you see an ad on Facebook for Coca-Cola BUT you were thinking of buying a Coca-Cola before you see that ad; how do we really know the ad caused the Coca-Cola purchase that you make after seeing the ad? We don’t. Same if you didn’t want a Coca-Cola, saw the ad and then went and bought a Coca-Cola, the ad may have changed your mind subconsciously or consciously or maybe something else happened between the ad exposure and the decision to buy Coca-Cola! We can’t know either way without direct access to your brain at the point of purchase. If we could know it, the person who invented that technology would be a billionaire in very short order**.
  • The same problem applies with an ad for Trump or Brexit, Facebook facilitates echo-chambers where people are already interested in Trump or Coca-Cola or Brexit. It doesn’t mean Facebook shaped that interest; it only means that Facebook is trying to generate revenue off of advertisers who don’t know which people will convert but will spend the money to get awareness at least as a baseline. Facebook is trying to convince social scientists that their platform is amazing because it captures data better than a billboard BECAUSE it is in Facebook’s interest to claim it is the cat’s meow.  Human beings consistently screw up your marketing experiment by having agency/choice. If you believe an ad can switch opinion in the subset of the population that was voting for Hillary but saw the ad and switched to Trump then you should make that rather nuanced case. It’s a rather narrow pool of people effected which also implies THEY, the Russians (a country with the GDP of a tiny country indeed), KNEW the exact 75K people in question which is incredible. I guess you could say a larger pool was targeted and only 75K mattered in the end, fine but how could you believe that it was on the basis of an ad on Facebook alone? There were surely other factors that are inputted into a voter’s decision, therefore, you have then accept that other factors impacted the 75K which invalidates your central claim that Russia won the election.
  • What’s interesting about Ferguson is that over the course of the book tour, every interviewer wants his thoughts on Trump. In fact, I would go so far as to say that Ferguson is disingenuous because he is evidently preoccupied with what other people think of him and his klout amongst academics would be damaged if he said anything positive about Trump’s ability to tap into the Square. And most people are emotional rather than rational in political matters because they are passionate without a post-ideological framework…another billion dollar value technology yet to be invented. Academia is so partisan that people aren’t intellectually free to explore counter-arguments in some sense. In these interviews, Ferguson goes for “Trump is the devil, now let’s get drinks in the history department!” Of course, even anything I write here could be misconstrued. I’m a political scientist, trying to maintain objectivity and independence. Oh, and I am not an American citizen so I have no say.
  • **Zuckerberg is a billionaire because eye balls are valuable in and of themselves. Advertising does work BUT only in exceptional cases. All you need is 1 person out of 1000 to get an Return on your Investment in some situations. There are definitely examples of direct marketing where you see a product on Facebook and then order it immediately in the moment, but that’s very very rare 0.01% of the time. Despite the rarity, advertisers spend billions on platforms like Facebook because there are many eyeballs visiting that site ie. brand awareness is mixed in with direct marketing. And Facebook wants you to believe they are the signal and not the noise.

Why People Vote The Way They Do

Models of Voting Behavior:

If you don’t know about these models you’re screwed!
• Research on voting behavior focused on political orientation or social background characteristics.
• Academics seemed to focus on these two models: developed in the US and widely used. They came to be seen as competing models. 2nd model was a critic of the 1st model.
• EACH SCHOOLS characterization of the other school’s models striped away the other model.

1) The Columbia School Model: Sociological Model by Godey

• First major study based on modern methods (Ohio) – US Presidential Election 1940. You see what percentage voted NDP, Liberal: they went out to interview people systematically. America was in upstate New York for them. Compared to Eerie Ohio and Amera, NY.
• What was interesting was how the voters made up their minds. They went back to interview people on 7 different occasions. The 7th interview was after the election. They tracked people. How did people change over the course of the campaign? How do people choose a president?
• There was little literature on surveys: you have to formulate expectations: you have to ask the correct questions.
• The OBJECTIVE – try to understand how people would make up their mind during a campaign.
• The ANALOGIES – What process would you liken voting to? How to choose a life mate? (Social network). Columbia School came up with Purchase decisions as the method for making a voting choice:
• They likened these parties to market products: advertising = promotional campaign to buy product. Voters = Consumers.
• Interested in the psychology of choice. How did advertising by parties affect people’s voting choice?
• There was a belief that the media could have massive effects.
• That’s why scientistis studied a small communities: they would have the same influence, same media, and same radio stations.
However, they choose a really bad election: 1940 election was unfortunate because there was a war. FDR was running for his third term. You didn’t need the campaign to help you decide that Roosevelt was effective or not. Brand Loyalty was substantially high. THEREFORE THE campaign had minimal effects.
• Very few changed their votes. Few people were undecided. It was the staunch Democrats and staunch Republicans: if you were a Republican your vote would be crystallized. WHY was the effect only to reinforce?
• You have to take your core seriously. You need to remind them why they are Liberal or Conservative BUT you do need to reach out.
• WHAT happened was that Republicans paid attention to Republican ideas and Democrats paid attention only to Democratic ideas? Each systematically over-estimated their chances of winning.
• The undecided felt conflicted, this is called: cross-sectional pressures.
• They were disappointed with the results.
The Sociological Model of Voting
• Secondary Factors: Primary Factors:
Socio-Economic Status________________>
• Sex________________________>
Religious and Ethnic Group Affiliation___> VOTE
• Age________________________>
Regional and Urban Rural Differences____>

The Index of Political Predisposition (IPP): can use it to make predictions about how people will vote. Protestants are very likely to vote Republican. Catholics are very likely to vote Democratic.
• Model contends that voting is a group experience: people who work together, neighbors
• Opinion Leaders played a key role: it makes you think of people who are elite but opinion leaders were the most interested: the political junkies.
• Two step flow of communication: opinion leaders listen to media; opinion leaders talk to other people & pass on media messages. They talk to other people. The two-step flow of the hypothesis.

CRITICISMS of the Columbian School Model:

Cross-pressures are extremely important. The Index of Political Predisposing was a scale: very effective if you fell in the middle of the index about a certain issue.
This model says that politics doesn’t matter! where’s the politics in all of this? What about the issues? Leaders?
This model doesn’t take into account the personal interests and obfuscation on the part of parties.
• How can you explain that electoral outcome vary so much?
• Social background characteristics don’t change. Very few people change religion.
• Not enough change between elections to change the outcome of an election.
• The model is much too static.
• Why would religion have an impact? Social networks and teachings. The Priests used to tell people how they should vote.
• Religion may have nothing to do with Party choice and making some other factor. (Catholics traditionally poor, protestants rich)
• The Columbian Model doesn’t work that well in the Canada. Knowing their social background only gets you so far.
• The Index of Predisposition is only accurate 60% of the time.
• Cross-pressures are crucial: Is a sociological model the notion of cross pressures. They didn’t view social background characterizes as conclusive. Catholics in Western Canada. Strong sense of grievance against Ottawa. Your religious affiliation: Catholic Ukrainian but do they vote Liberal?
• Some people can’t resolve the dissonance and will not bother to vote.
• For others, it will depend on the campaign.
• If a campaign plays up region, region will trump religion, and so on. So now politics matters!!!
• Once you start talking about the leader and you can see the campaign is important.
• They didn’t see social categories as important themselves.
• Social background: you know who they will be. Social networks.
• Social interactions: maybe the party really isn’t speaking to you.
• Contact Breeds Consensus: Examples that are not in the readings: two ideas that were introduced in the 1940s was the notion of contact with other members of your group. Someone mentioned going to a place of worship. Going to mass every Sunday, you are much more likely to vote along certain lines.
• Religion can pass on political ideas.
• The Breakage Effect: If you are cross-pressured, one way to resolve it is through breakage effect. The dominant regionalism will take over: so if you live in a Republican territory you’ll breakage towards the Republicans.

2) The Michigan Model: Socio-Psychological Model of Voting

• Supposed to fix the socio-economic model. i.e the Columbian School Model.
• 1993 from PC 143 seats down to 2 seats. Why can voting vary dramatically in the short term?
• These are the core-elements of national politics: attitudes towards, parties, issues, candidates and leaders.
• A key to dynamics: new personalities new leadership Kim Campbell vs. Mulroney.
• What to do about the deficit 93 what to do about the surplus 00.
• The Michigan saw voting as a response to psychological forces. They describe the process as a funnel of causality. The access of the funnel.
• Voting response to psychological processes (see figure 10.2)
• They look at non-political, external & exogenous factors.
We don’t ignore social background characterizes but have major additions to the Columbian Model.
Party identification: a psychological identification in a political party.
• They look at the politicization of the parents.
• You don’t have to belong to the party but you have to have a sense that you think of yourself as. Its formed earlier in life.
• It’s not immutable but it’s a resistance to change: the Conscription Crisis 1917: change in party identification. The main change can occur in the intensity of party identification (marriage, cataclysmic events).
• Women are more likely to adopt their male’s party. Less likely that men suddenly follow women’s political leaning.
• Key long-term influence on vote choice (direct influence or indirect by shaping opinions on leaders, issues).
• This model didn’t look to socio-economic background because party ID was the main factor & represents the sum of all prior influences.
• There is a long-term inertia component.
• People will normally vote for their party identification.
• Campaign communications & interpersonal discussions.
• All of the factors here effect voter choice.
• Elections Canada is trying to make it easier to vote…. technology.
• The intensity of the party’s attachment.
• Party identification formed early in life. Direction of partisanship.
• Canadian party affiliation isn’t very strong because of the federal and provincial levels.
• Short-term forces: need sufficient time to tell. 2004 sponsorship scandal hits and people abandoned the Liberals. It induces people to defect for the short-term.
• The two biggest leadership or
• Normal vote is the vote you’d expect to see if everyone voted for their party.
• Eisenhower Democrats, Reagan Democrats existed.
• Strategic Voting: isn’t as wide spread. You need to be sophisticated: people often over inflate their party’s chances.

Criticism of the Michigan Model: Psychological Model of Voting
• Evaluation of the candidate: vote for the one they like, so what have you explained? Party ID is too close to voter choice.
• Need to flesh out the funnel of causality. If party id is so important, what shapes party ID?
• Very little scope for social context.
• More overlap between the Two Models: Columbian looked at social groups and system of interaction. Both believe people have long standing predispositions. Differ in how they characterize it.
• What shapes Party ID? Why do some people vote Liberals and why are non-partisans.

The Class Voting Paradox

There is no evidence of class voting in Canada.
• Less in Canada than in the US. UK has the highest amount. No class voting in Canada. Are class cleavages declining in Europe: are social cleavages less important? They are according to Tony Blair.
• Is there any class voting in the first place: NO THERE WAS no class voting in Canada, according to Gidengil.
• This is a paradox because the assumption is that in western post-industrial democracies people should divide along class lines. Why should this matter?
• Material interests should have an influence in our politics. “politics is about who get’s what”. Material interests should play a part. We expect material circumstance to play a role in voting. Vote for party concerns about the same things as you are!!!
• We expect economics to differ between parties: we see a difference between party
• Parties think about taxation; what role should parties have in job creation.
• We expect people’s material circumstance to play some role.
• People vote for the party they are concerned about.
• Alfred found very little evidence of class voting Canada. Some scholars question Method of Research. Classified NDP, Liberals as Left. PC and Social Credit on the Right.
• Critics: say that this was misguided, should’ve focused on NDP vote as a leftist vote along. Liberal and Cons are central parties…
• When the NDP is strong the Liberal Party tends to move to the left-> Jack Layton makes the Liberals move to the left.
• Regional expressions influence voting.
• In a country was deep linguistic divisions exist: You need a party that brokers power. We are always trying to find the broker party. To exploit the medium Canadian voters.
• PC. Liberal (Bobsy Twins of Bay street): obfuscation: Parties trying to mute class cleavages then why were other countries less fortunate.
• Manual workers only slightly more likely than non-manual to vote NDP. In 1990s manual workers more likely to vote Reform and Alliance.
• The issue of sovereignty: in Quebec overwhelms.

The Relationship between Occupational Status and Vote in 2006 (outside Quebec)

• Manual workers were much more likely to vote NDP. NDP twice as likely to vote for NDP than non-manual workers (2006) Conservative 40%, 33% NDP, 21% Liberal.
• Union non-union differences
• In 2006, manual workers voted 40% Conservative, 33% NDP, 21 Liberal. Non-manual works voted 44% Conservative, 33% Liberal, 17% NDP.
• First time class cleavage was evident in NDP voting, BUT more manual workers voted for Conservative party. Could argue that the Liberals had shifted to the left in 2006 election.
• Public-sector unions.
• Economic vote: do people look at secure jobs.
• Asking about job security because it didn’t work.
• Education: the meaning of education differs across the country. Quebec CEGEP:
• People in white collar more likely to say they’re middle class, even if they are in a low paying occupation.
• Hierarchy of graduation: Marxists think of social class in terms of fundamental discontinue (interest lifestyle, culture values). Stratification approach look at income and education.
• 2006 elections: Low Income NDP 23%, Libs 31%, Cons 44%
o Middle Income: 24% NDP, 27% Libs, 42% Cons
o High Income: 19% NDP, 33% Libs, 41% Cons
Education: no high school 57% likely to vote Cons, least likely to vote NDP 16%.
University educated people 35% Libs & Cons, 23% NDP.
• Own/control mean of production: control own labor power.
• Working Class = don’t control own layout power, which is blue and law level white
• New Middle Class = sell labout in return in return for a wage. But have a huge a control over own labour, autonomy (professors, knowledge intensive jobs, supervisors of labour process).
• High middle class = own means of production
Relation between occupational status and vote
• We would expect a triangular pattern, that vote share for NDP would increase from the top down. Actually more variation between the working-class itself than in high level mangers.
• Manual labour was highest NDP vote in 2006.
Unclear that there is an effective way to represent social class.

CRITICISM of Alfred’s party classification  doesn’t change much. Way he classified class voting.

• Agreement that not much class voting in Canada. When conditions are right maybe we’ll have class voting.
• Evolutionary model: different cleavages hold at different points in a country’s development.
• Canada is the richest undeveloped country: we produce primary goods. Our industrial development is stunted. We export semi-processed goods. If Canada was more fully industrialized we would have class voting.
• Response is that we are a postindustrial society. No working-class culture in Canada.
• If we want to find class voting: secondary factories in Ontario are likely followed by Quebec and BC. Most damaging element for the evolutionary model: highest levels of class voting in Ontario and Quebec Where is the highest

CLASS AND NDP voting in Ontario 2006

• Very weak relationship: the more lower class you are in Ontario you voted NDP.
• Low income 27% middle income 17% high income 16%
• University 23%, post 19%, high school 17%, no high school 12%
• Union household 26%, non-union 17%
• Very little support for the evolutionary model.
• Most class voting found in Saskatchewan.
• Potential for class voting that hasn’t been realized. We would expect there to be class differences.

Income and Attitudes toward Free Enterprise and the Welfare State (2006)

• Do more to reduce the gap between rich and poor.
• No significant difference on any findings “spend more on welfare” low 29%, middle class 22%, high 20% versus “when businesses make a lot of money, everyone benefits” low 35%, middle 34%, high 45%.
• Gaps are not very big: absolute levels of agreement or disagreement are not supportive of unrealized potential for class voting. High are more likely to oppose having private hospitals.
• Improving social programmers first priority
• Oppose having private hospitals
• People who don’t get ahead should not blame the system seems balanced between the groups: False Consciousness seems crazy
• There is more mingling of neighborhoods in Canada between different economic classes than in the US or the UK.

Stephane Dion did some research on private public actors
Only 12% of 28% said they thought of themselves as working class over a 6-year period (about 3%). To people, class is a meaningless abstraction.
Langford: 2 reasons for weakness of alternative value system in Canada:
1) Nature of Canadian unions.
2) NDP’s failure to articulate a more radical vision: not hardline socialist enough.
Union membership and vote in 2006
More likely to vote NDP if members (31 NDP, 30 LIB, 34 Conservative) non-union members (17 NDP, 32 Lib, 44 Cons).
• The Unions in Canada: have focused narrowly on business concerns, wages, etc not articulating a more radical critique of the radical system.
• Union members are more skeptical of profit principle, that those who don’t get ahead are to blame, oppose private hospitals, do more to reduce rich/poor gap. No large gaps on an issue.
• Langford critical of NDP for not being more explicitly socialist in its vision. NDP is still clearly on the left. So why doesn’t it do better with it’s natural clientele? NDP is not seen as managing the economy well, so people vote for their material interest by NOT voting for the NDP. Awareness issue (had 2 low key female leaders). In 1997, NDP not in news during campaign 1 of 3 nights, idea of hopeless cases get hopeless coverage.
• Particular parties have particular strengths.
• NDP couldn’t manage them out of a paper bag.
• Awareness issue (had 2 low hey family leaders) In 1997 not in news during campaign 1 of 3 nights.

Education and Knowledge about the NDP (2006)
• NDP are the best for improving the welfare programs: less education means that less likely you are to think that NDP is best for social welfare programs) Notion of issues ownership, the NDP have not had a much issue ownership.

The Religious Paradox

Why is the religious cleavage so strong? Catholics vote Liberal, Protestants vote PC & Liberal.
• Canada had electoral earthquake in 93: most devastating defeat ever for an incumbent party in a western democracy: PCs reduced to 2 seats.
• Began the fight for the Right: Reform renamed Alliance. PC and Alliance merged to form the New Conservative Party. Through all of this, religious affiliation has been associated with choice of party.
• In 2004, gap narrowed. More strimingly, Protestant more likely to vote Conservative than Catholics (2.5x). Gap of 26 points.
• How different is the new Conservative Party in terms of its support base from the Alliance? The more similar it is to the Alliance, the more limited its prospects for increase support.
• Non-Christians vote Liberal. They are most likely of all to be voting Liberal.
• Secular people are more likely to vote NDP, only more likely in 2004 than before. Divide vote equally between Lib, Cons, NDP.

In 2006: Religious Affiliation and Vote Choice in the 2006 Election.

Catholics didn’t vote Liberal this time around. In 2006 the division between Protestant and Catholic is minor in 2006. This traditional voting cleavage disappeared in 2006!!!
• Liberal dominance had rested on the strength on partisans who will vote Liberal through thick and thin.
• Liberals lost 13% of the Catholic vote and the Conservative Party gained.
• Religious cleavage: Protestants vote Conservative. The action now; protestant disproportionately Conservative.
• Fundamentalists: all vote Conservative 26 points from Liberals.

The Difference between Protestants and Catholics

• Why is there a difference. Can’t generalize with Jews, Muslims and Sikhs.
• People think of Catholics are more collectivist. Protestants are more hardworking.
• Values in understanding voting behavior. People’s values and normative beliefs in behaving.
• Issues like abortion, gay marriage!
• Liberals voters shifted on the left-right continuum.
• Scholars are embarrassed about this cleavage: there are archaic cleavages and poli-scientists are less interested in religion and would like to talk about social economic cleavages.
• Religion is the Eccentric Houseguest: (Irvine 1973)
• (1) See whether religious cleavage is a surrogate for another cleavage underneath.
• A) Ethnicity/Linguistic: Francophone Quebecers are less likely to be protestant than the ROC. FC less likely to vote Cons (historically). Maybe its an ethnic vote, not religious. Implication: Q vs ROC religious cleavage should disappear.
• 2006 ROC: C & L Catholics were Equal. For various historical reasons, the Catholics never vote Conservative, 88, 84, 06 (exceptions).
• B) Social Class: Protestant are haves, Catholics are have-nots. Haves vot Conservative, Have-nots vote left. In 2006, income & Conservative vote: high-income protestant less likely to vote Conservative than low income Protestants (47% to 55%). The Religious Vote is being masked by Social Class voting. Protestants have been more likely to be haves Catholics are have-nots. People in Canadian who are haves support the party that promotes tax cuts.

• Why is there a difference. Can’t generalize with Jews, Muslims and Sikhs.
• People think of Catholics are more collectivist. Protestants are more hardworking.
• Values in understanding voting behavior. People’s values and normative beliefs in behaving.
• Issues like abortion, gay marriage!
• Liberals voters shifted on the left-right continuum.
• Scholars are embarrassed about this cleavage: there are archaic cleavages and poli-scientists are less interested in religion and would like to talk about social economic cleavages.
• Religion is the Eccentric Houseguest: (Irvine 1973)
• (1) See whether religious cleavage is a surrogate for another cleavage underneath.
• A) Ethnicity/Linguistic: Francophone Quebecers are less likely to be protestant than the ROC. FC less likely to vote Cons (historically). Maybe its an ethnic vote, not religious. Implication: Q vs ROC religious cleavage should disappear.
• 2006 ROC: C & L Catholics were Equal. For various historical reasons, the Catholics never vote Conservative, 88, 84, 06 (exceptions).
• B) Social Class: Protestant are haves, Catholics are have-nots. Haves vot Conservative, Have-nots vote left. In 2006, income & Conservative vote: high-income protestant less likely to vote Conservative than low income Protestants (47% to 55%). The Religious Vote is being masked by Social Class voting. Protestants have been more likely to be haves Catholics are have-nots. People in Canadian who are haves support the party that promotes tax cuts.

Religious Affiliation, Income and the Conservative Vote in 2006 (outside Quebec):

• Low income: Catholics 37% Protests and
• Middle income:
• High income:
• Low income Catholics are the most likely to vote Liberal there isn’t a massive gap between middle and high Catholics. Low income Protestants will vote most in the Liberal Party.
• Not a religious vote but an ethnic vote: the religious cleavage should disappear. Religious affiliation and Vote Choice in the 2006 Election.
• Liberals Catholics outside of Quebec stills strong. The Catholics are split between Conservative and Liberals.
• Sovereignty trumps age, language, religion.

Religious Affiliation, Non-European Origin and the Vote in 2006:

• Liberal Catholics in Western Canada. People coming from northern Europe are protestant.
• Central Europe: Eastern Europe. Catholics.
• Newer group of likely to come from Latin American, Asia Eastern Europe = Catholic.
• Liberals were associated with opening up immigration.
• Official Multiculturalism: under the Liberals.
• Liberals helped get people immigrate.
• The older immigrant groups: would vote Conservative: Anglo-conformity: Assimilate into the Anglo-English Canadian encouraged them to vote Conservative.
• A much greater reluctance to accept accommodating French. Why can’t we be recognize the West as a founding peoples as well? They did all the hard work.

Religion Affiliation, Northern-European Origin and the Vote in 2006:
• Is there an urban rural voting is Conservative Party.
• Northern Europe: Conservative 55% protestant, Liberals 35% protestant, Liberals Catholic 35% and Cons 35% Catholic.
• Irvine declares success on the third try

Family Socialization Argument: the differences between voters choice could persist because of the family. It’s very likely that you’ll inherit their beliefs or at least their values. You probably have some religious teaching or lifestyles. Most people don’t change their religion. People tend to inherit their parents partisanship.
• People don’t mention religion BUT everyone seems to vote Conservatives and Liberals. I believe it is the breast milk of your mother dictates voting behaviour.
• This only works if your family is very politically involved, if people don’t care then argument doesn’t hold. Some parents don’t necessarily agree.
• Some people aren’t interested in politics: so people just vote on religious lines.
• Subconscious socialization.
• Irvine got it partly correct: it makes sense: but it seems that offspring misperceive parental partisanship. Sometimes the offspring get it wrong about their parents. What about parents who don’t have a political affiliation. This is so unreliable.
• Doubt about Canadian identity people change their vote and party id very easily in Canada. There is a lack of political discussion at the dinner table. How do they pass on their party identification.
Richard Johnston: 1970s: only 1/3 of Canadians inherit their parent’s partisanship.
• Intergenerational transmission doesn’t explain the religious cleavages.
• “I wonder…what about parents who realign party ID during life of children? Would child remember early age or later age? Early b/c formative years of life, when older want to form own opinions???”
• Irving found that the most successful in passing on their partisanship: Liberal parents transferring their partisanship to their kids.
• Many people forget who they voted for in the last election.
• Dick Johnston: given the process of intergenerational-transmission are weak, given the Liberal do a better hob, must be something ouside enforcing connection between being a Catholic and a Liberal: And the liberals pass on their partisanship better> Religious schooling itself, Catholics have their own school systems, expose to people who share similar beliefs.
• Johnston’s argued that there are influences in the larger Catholic community. There is an influence out side of the family.
• They’re disputes over religious schooling; another possibility is religious schooling itself: Catholics. Separate Schooling is Catholic: exposed to other schooling Catholic.
• There is a distinctive Catholic ethos that is spread.
• Private Schools are Protestant in Ontario.
• Johnston: the reproduction of Liberal Catholics has to be reinforced by larger full influence. Columbia: the two different used to describe the social behavior: there is a connection between social background and the breakage effect: voting is a group experience.

The THREE Dimensions of Religion Affecting Vote Choice:

• Belonging, Behaving Bad Believing
• 1) Belonging: your catholic, protestant you belong to that groups so you should just do it.
• 2) Behaving: the practice of faith, going to a place of worship means being exposed to religious teaching and co-religionists. More interaction more salient religion is to your life, more likely to divide along religion. Contact leads to consensus. You’re exposed to religious teachings: the more you’re interacting with your co-religious the more likely you’ll divide amongst religious lines. You behave: religion.
Personal importance of Religious and the Conservative Vote in 2006:
The difference between Protestants and Catholic vote is biggest for people who say religion is important (38 to 61), not important is hardly different.
Very important somewhat important not very important. Catholics less obsessive about religious importance.
The more salient religion is in your life.
Personal importance of Religion and the Liberal Vote in 2006:
• Very important: somewhat important: not very important.
• 3) Believing: accepting the major tenets of your faith. You have a religious understanding of the arguments and believe in your religion deeply. There is a distinctive Catholic ethos. You’d expect Catholics to oppose abortion. Catholic Church promotes social justice. Being supportive of unions, which fight for equal conditions. You favor narrowing the gap with the poor. Opposition for nuclear weapons. Social justice is about giving equal rights to people.

Religious Affiliation and Political Attitude 2006 ROC
• For 2006: on social justice: opposition to private hospitals: they only care little about welfare, and social gap. They want to cut defense spending.
• The more exposed you are to secular media; the media doesn’t cue religion. People who watch television.
• People who paid attention to the media will likely lose religious hardening.
• Catholics pay less attention to television is less likely to vote Liberal. Mainstreaming worked in 1988, 2006 (didn’t work). Catholics pay less attention more likely to vote conservative

REGIONALISM and Vote Choice

Canada has divided itself along regional lines: region has become more salient in voters choice: 1993 intensified regional voting. BLC (only in Quebec) and Reform (was Canada wide but western Canada).
• 1993 region is still important.
• Ontario west gap is 20 point difference. In 2000 only one western voter ¼ in other words Ontario was ½ to vote Liberal.
• New Conservative Party of Canada more successful that the CA>
• The Alliance won twice as many votes in the West than ¼ Ontario. Huge gaps between parties.
• As the Conservative support increased.
• 2006: Liberals lost ground everywhere: 2004 dominance in Atlantic and Ontario. 2006 Conservatives finished only 2 point behind in Ontario and Atlantic Canada.
• Western Liberals were in third place behind the NDP.
• Liberals lost a 14 points in Quebec. 5 points behind the Conservatives.
• The Strategist: said there was no point in Conservative in Quebec.
• Can the Conservative hold on to the Quebec?
• NDP isn’t very regionalized except little support in Quebec.

Regional Artifact Theory:

First Question: Are Regional Differences Real? Are they true? If they can’t be explained by differences in the social make-up of the regions?
• The “regional differences are really marked in other differences’: the racial makeup, the ethnic, urbanization of the region.
• 1) Regional Artifact Theory: says region only masks different social makeup. Religion, ethno-linguistic, racial, urban/rural, economic
• Example: Catholics are more likely to vote for the Liberals: more Catholics in Atlantic Canada then in Ontario. 1/5 are Catholic in Western Canada
• Ethno-linguistic divides.
• If the region: someone who has a given social characteristic shouldn’t change his or her vote in another region. So, if they are consistent throughout Canada then this isn’t regionalism? Why are people trying to explain away the regional divide. Academics are uncomfortable with it.
• What do we see when we see religious cleavages.
• Religious Affiliation and Vote Choice in 2006:
Catholics should vote the same way regardless of where they live. SO is NOT THE CASE. Catholics in Western Canada are less likely to vote Liberal: only 25% are voting liberals as Catholics. Ontario and Atlantic Canada
Protestant in Ontario and Atlantic Canada are most likely to vote Liberal than Catholics in the West.

Religious Affiliation and Vote Choice in 2006
• Atlantic Catholic Lib 43 Cons 25 NDP 28
• Ontario Catholic Lib 43, cons 35, ndp 12
• West Catholic Lib 25, cons 57, ndp 15

• At Liberal 35, Cons 49, NDP 15
• Ont: Lib 32, Cons 45, NDP 16
• West Lib 15, Cons 59, NDP 19

Politics is in a constant state of flux. Some people are anchored by social identities, so must understand this to under vote choice. Why is this useful? If you don’t understand behavior of voters you won’t win and election. Columbian model focuses on static factors, when politics is in flux.

Short term forces matter but social background and values play a role. Must understand inertia component.
• In every region, Catholics are more likely than Protestants to vote Liberal. But is this not a religious cleavage? Despite region, Catholics always more likely that Protestants to vote Liberal. Catholics are more likely to vote in the Liberal party. The Cleavage in Conservative voting: do 26 points in Atlantic Canada.

Ancestry and Vote Choice in 2006

Ontario/Northern European 2/3 vote Liberals lost votes to Conservative. In the West, 25% non-Europeans vote Libera. (in 2004, both were the same). Libs lost support of key non-European constituency.
Ontario/Non-European vote was strongly Liberal. BUT significant drop in West/Non European.

Rural/Urban and Vote Choice in 2006

At/Urban ndp 23, cons 32 lib 40
Ontario/Urban ndp 18, cons 37 lib 39
West/Urban ndp 22 cons 45 lib 21

At/Rural Lib 31 COnse 42 NDp 21
Ontario/Rural Lib 32 Cons 45, NDP 18
West/Rural Lib 10 Conserve 66 NDp 20

Big Gaps: 1997 Difference between Reform Voting: West and Ontario

1997 Difference between Liberal: West and Ontario
The Compositional Differences only explains 3.3 point in the gap (Reform and in Liberal 1.0 and compositional difference didn’t explain any difference in Atlantic Canada.)
1) Compositional differences: How much of a gap can we explain through social makeup of regions?
• Biggest difference in Reform gap voting between West and Ontario but only 3.3 points were explained. Gap between Liberal Ontario & West, 1.3 points, between Ontario and Atlantic Liberal vote, didn’t explain anything.
• Surprise by how little economic difference make a difference. Does lower income take into account lower cost of living? Is economic vote attached to provicial government instead, because strong provincial governet can extract more resources from the federal government, maybe personal vote more important in Atlantic Canada because known candidates.
• PEI highest turnout, Newfoundland has lowest turnout. Idea that people vote to balance out provincial and national governments. Also, provincial parties do nto mirror national parties.
• READ THE ARTICLE: surprise how little economic character makes a difference in Atlantic Canada. YOU’D THINK this would effect regional voting. Regional gaps: Atlantic Canada higher unemployment. Economic votes in Provincial Government. Personal vote has an influence in Canada.
• The role of partisanship in PEI.
• Region trumps religion
• Conclusion 2: Most of the differences between regions are real not artificial. It depends on where they are in the country.

What Explains this Difference If It Is Not Social Organization?

• REGIONAL GREAVANCE: Ontario is the most likely to brag about the benefits.
• West and Atlantic Canada are less likely to think their province is treated well. Explains why Liberals do poorly in the West.
• DISAFFECTIOIN with politics in general. Ready to believe that politicians would say anything to get elected. Desire to go back to the grass roots. The Prairies: populism: Canadian Political Thought: the relationship between the citizens: David Leacock wrote a book on populist thinking on the Prairies. It’s an anti-party sentiment: political parties are hierarchical institutions that prevent citizen participation. ANTI-Party parties.
• People are against politics in general. The NDp has been important to voice unhappiness on the way politics works.

PARTISAN CLIMATE: Part OF THE Liberals problem in Atlantic Canada and the West is the partisan climate: you need to have a solid core of partisans. How many partisans you’ll find in the region Another factor is the ideological climate: more partisan to the right.
• Do Liberals have more partisans given the value system, or do Conservatives have more support that’s what the partisan climate means.
The Partisan climate: Michigan School: party identification is the perfect distillation into a person’s history. Their social background influence. Party id is the perfect distillation of all these things.
• Why is the partisan climate in the West which is so anti-liberal? Historical grievances: when there are conflicts the interests of westerners get sacrificed.

Simplest Short-Cut of All: (Brendan O’Neil)

The similarity of themselves and the leader: The Western Liberal Leader John Turner: people will vote for the party lead by a westerner. All levels of sophistication.
• Regionalism: does someone’s partisanship change.
• Railroad Tariffs: Policy tariffs protected the railway tariff but it screwed the west. Western had to compete: had to pay higher costs to buy goods.
• The Western didn’t get 1930 Section 93: didn’t have jurisdiction. Peter Lougheed: the effects would not have been as devastating. NEP, CF 18 Winnipeg  to Quebec.
What do attitudes sociology on policy questions?
• If you ask people how they would characterize their opinions. Alberta will tend to say they are fiscally conservative. Less spending on welfare, individualism, let the market run freely as possible. Social conservatives in Alberta.
• West: economically conservative, socially conservative, less open to diversity. Reform, and Alliance seen as ethno-centric and xenophobic (little evidence: say what? As Jerome Black!), close to radical right-wing European parties that are anti-immigration.
• Westerners are stereotyped as less open to diversity: immigration, Reform xenophobia. The reform was not driven by anti-immigration. They were similar to Radical right-wing parties in Europe.
• Quebecers too have been called anti-immigrant: don’t accommodate to diversity; Quebec is much more collectivist. Quebecers are much more socially progressive.

Region and Social Conservatism 2006:
Should not do more for women: Ont 57, West 59, Atlantic 43,
Should be difficult to get an abortion
Oppose same-sex marriage
Tougher sentences for young offenders
Support death penalty
Should scrap gun registry

The Only Big ISSUE that the West and Ontario disagree on was the gun registry.

Stereotype that Atlantic Canada is the least conservative, Atlantic Canada aren’t into gun control.

Regional and Views about the State vs. The Market 2006

• When business makes money everyone benefits (Disagree)
• Increase welfare spending
• Oppose
• Check slides.
• Quebec is the least opposed to two-tier health care. Quebecers are tied of the actual system in Quebec. The media play up what’s wrong.

Regional and Attitude toward Minorities 2006

• Do less for Quebec Q 3, Al 38, Onto 37, West 45
• Do less for racial minorities: 23% West, At 12, Q, 9%
• Reduce immigration: stereotypes don’t hold, all open.
• The Gaps in opinion across province are modest. What does differ is the Salience of Different issues: (ex; people in Ontario don’t care about accommodating Quebec, but West is made about it).

The answer: the in the aggregate the salience of different issues views matter more about Quebec. Ontario doesn’t care as much about Quebec. 1997 job creation in Quebec voted liberal. West voted for the national unity question more because different issues.

• Women were more likely to vote on the left. Men were more likely to vote for the conservatives. This pattern: is becoming increasingly common in western democracies.
US GENDER GAP is substantial: 1980 when women were less likely to vote Reagan.
• Ingelhart: Development Theory: realignment process underway: In some countries women are to the left of men. In some countries women are to the right of men. This is changing. Different countries at different points of realignment.
• There is a process of gender re-alignment. Men and Women are shifting positions: in some countries there is still a traditional gender gap. In some countries, different countries there are no difference between women and men.
• Women moving the left of men:  Women and men: there theory focuses on women and changes in women’s lives.
Does Canada qualify as a case of gender realignment? When did this realignment occur?: to answer to that questions:

Evolution of Gender Gap in NDP vote, 1965-2006

• Before 1980 women less likely. 1965-3. 1979 -1. 1984 even. 1988, 1993: +2. Peak in 1997 at 6% higher. 2006 at 4%.
• Since 1997 significant gender gap in voting NDP.
• Gender realignment does seem to exist.
• Seems that modern gender gap emerged in 1997. US 1980. But must first look at other parties.
• She’s taken all the studies: when have women gone less likely NDP and then full out NDP?
• We have had a gender gap. On the other hand, in order to decide when this re-alignment began it dates back to the last ten years. The modern gender gap emerged here early and in the US.
The Evolution the Gender Gap in Liberal Vote Choice 1965-2006
• Women were more likely than men to vote Liberal from all that time dipping to 2 point 1997-06.
• Under the Liberals Trudeau’s sex appeal. Liberals aren’t really the centres left or right. Gender Gap: the emergence of the gender gap was much earlier.
• In 1997, the gender gap disappeared: the same year the gender gap opened up.

The Evolution of the Gender Gap in PC/Conservative Vote Choice 1965-2006
• Men were more likely that women in 1974.
• The Party did attract some women. Having a female leader in 1993.

1965: 2 1968: 2. 1974 -1. 79 – 4. 80 -8. 84 -3. 88 -5. 1993 +3. 97 +1. 2000 +2. 2004 -3. 2006 -5. Women leader seems to have helped attract more women’s votes. Joe Clark better with women.
• Wasn’t late 1990s to 2000 when the men left the PC and joined Alliance, so W Conservative voting should be higher?

Gender Gap in PC/Cons Vote Choice 1965-2006
• 1993: Reform -8. Pc 3. Bloc -1.
• 1997: Alliance -8. PC +1. Bloc 0.
• 2000: Alliance -10 PC 2. Bloc 2.
• 2004 Bloc 2.
• 2006 Bloc 2.
• Reform Party: women were much less likely then men to vote Reform. In 2000 as the Canadian Alliance.
• This is damaging to women and any theory that focuses on women and changes in women’s lives. This gender gap shows that men were more likely than women to move toward the right.
• Moving to the Bloc and Reform: were mobilizing people in those elections.
• More men than women moved to the right: other gender gap literature. The conceptual focus on women.
• The opening up of the gender gap gave women a lot of ammunition: it helped advance women into political parties. Women are no longer relegated that they have no chance of winning.
• People who study gender
• Women are less likely to have financial security: child bearing.
Gender and the Evolution of the NDP Vote, 1965-2006
• Women have shifted to the left in 1979. Since collapse in 1993, women more likely to move back.
• Why have men moved to the right?

Gender and Vote Choice Outside Quebec in 2006
• No difference Little gender gap Liberal Gap.
• Conservative: men 45.2% women 39.7%
• NDP 18.0 men// 23.3% women.
• Women are less knowledgeable then men.
• There are differences between women and men.
• Here are women here are men: it’s divisive. No one is just a women or a man.
• Losing support from the men in the Conservative party is possible  shifting women.
• Women voted the most for Conservative.

Gender and Vote Choice in Quebec in the 2006 Election
• In Quebec, people who are more likely to vote: they are more likely to vote for the Liberal party. The gap is narrowing; the older federalists work harder.
• The Gap in Bloc Support: 47 women 36% men
• Men voted 27% for Cons.
• Liberal 22% women/men 19%
• Women live longer so there are more older federal women than men.
• Gender gap emerged in 2004: why only a gap now? Possible temporary phenomenon due to sponsorship scandal. Could be a function of women’s political knowledge (lack therefore) that Men vote NDP more because Women just don’t know about the NDP: not well known in Quebec.
• Why is there a no gender gap for separatism? Big difference between women and men is the salience of healthcare.

How to explain these gender gaps:
1 AGE: the traditional gender gap why would women have traditionally voted to the right and explain why they have been shifting to the left.
2 Confinement to the Domestic Sphere: Women less likely in the workforce in the 60s. They didn’t witness discrimination. It was expected that in the 1980s the gender gap would close once workplace participation was equal (no 60% of Women in workforce). Having children makes women more Conservative (concerned with law and order).
• Confinement to the domestic sphere, women are more religious than men. Increased divorces women are individualist. Changes of women lives.
• Far more women who are single parent.
• In the 1970s: the second wave of feminist  this is when the transitional period takes off. Now the third wave: people are considering the promise of burdens for the future. In 2006: older women were less likely than younger women to vote Conservative. The Sense effect: for men: women don’t
• Women are more conservative  at youth and then become 30-40 move towards women’s view.
3 Greater Religiosity: Women more religious than Men. True today as well. Vote right because they attend church thus exposed to socially conservative values. The traditional gender gap was explained by gap, confinement to the domestic sphere: women’s greater religiosity. The gap argument. The gender gap and liberal voting. Women live longer than men.
4 People More Conservative as they Age: There are older conservative women than older conservative men: older people are more conservative.
• Now increasing instability of marriage means that more women are living alone in the world. Logical that feminist movement would be a catalyst.
• Married women with lots of ties to high status likely to NDO. Women with same sex social spheres vote left.
• When women marry they tend to become more conservative. Seems to be less likely to be fiscal and more to do with moral traditionalism. Effect holds even for common law: (so do W, once married and having own children, think abortion is bad when they previously supported it?)
• Why has the gender gap disappeared on the left.
• In 2006: women who were employed voted conservative. It either doesn’t make a difference or that the employed women vote more conservative. 60% of women are employed.
• Married Women are more likely to vote Conservative: 2006
• Gidengel: women who have diverse social networks: lot of same-sex ties: Married women have a lot ties to affluent society BUT this effect can be transcended if they interact with high networth women.
• When they marry women become more conservative; something about being married that brings women closer to the right. It’s not fiscal it’s with moral traditionalism: moral rules of action.
• On surveys: some people aren’t comfortable about telling a stranger about your sexuality.

• Women are more likely than men to have socially conservative marriage.
• Reder O’Neil: feminism is pulling women in one direction.
• Women are more secular than they used to be.
• In 2006, it’s very clear that the gender gap in conservative voting but for the fact that women are more conservative than men.
• Gender Gap in support of the alliance.
• The gender gap in conservative voting has been wider.
• The best explanation is that religiosity revolves around: mental illness you’ve got some kind of mental illness: I hate school this is going to ruin your future if you don’t get help.

Modern Gender Gap Gender and Views about Feminism and Gender-Related Issues 2006
• Inglehart attributes gap to gender shift, by hypothesize that it will be value shifts and structural changes.
• Structural: objectives different in Women & Men’s lives. Women more likely to need social safety net: feminization of poverty (this argument implies that, once equal income achieve, gender gap would disappear).
• more development issues: more likely to take a stronger stance. Value shifts are a consequence of cultural changes.
• The gender gap has disappeared in the social safety net. Women are more supportive.
• Women’s attendance in University. The Cultural argument: if women and men have different values way did the timing come off? Education asks women’s to act more autonomously. Education is an important factor.
• The welfare state: services for themselves. The other part of it: women are more likely to work in the public sector.
• They are more likely to be clients in the welfare state.
• The Liberals engaged in a policy deficit reorganization.
• Women should be more skeptical that the free enterprise: if you’re on the loosing end of the trickle-down effect.
• In 2006, Women who worked for the public sector were much more likely to vote for the NDP. Men in the public sector tended to vote Liberal.
• How would I explain men moving to the right: The threat of power in women. There has a reaction to this shift. Preference for the status quo.
• There could be a welfare state backlash: there was a close connection to contributions and benefits has been eroded. You saw women benefiting more: there is a backlash. They want to see how much you put in and take out.

Gender and Vote Choice in Quebec in the 2006 Election
• Briefing Reports;
• Gender Re-Alignment: used to of the right of men. It’s not 100 % clear the difference between men and women.
• That Gender Gap: men are more likely conservative. The gender gap has reversed overtime. No massive gaps.
• Women in the public sector are more to vote NDP than men.
• Low income women NOT more likely to vote NDP than others.
• Women are more likely to vote for the NDP but more Women voted conservative than NDP. Why are women voting Conservative?
• Society has become more secular: the number of women in the work force has doubled. Women are more religious than men are.
• Distinctive experience in the workforce. Feminist consciousness, questioning of traditional gender roles, more supportive of collective provision (need programs to help deal with family responsibilities if working).
• Entering the paid workforce is a radicalizing experience.

The Welfare State Dismantlement argument point to the feminization of a poverty.
• Women are less likely to have good pensions.
• Women are more likely to be clients of the welfare state. Women are more likely to use the welfare state, and to be employed by it.
• The 1993 deficit reduction and deficit elimination.
• The argument is half-right. Women who work for the public sector and more likely than women in the private sector to vote NDP.
• The Welfare State dismantles thesis doesn’t work: low-income women are not more likely to vote NDP.
• The gap has closed on the Canadian workforce. Why women would be more likely than men to vote for the NDP.
• Doesn’t work in Canada. Working Women are less likely to choose NDP more likely to vote Conservative:
• Structural and situational explanations in general do not work well to explain the gender gap.
• In statistical terms, control for these things and the gender gap gets bigger (should get smaller).
• To the extent that these explanations worked in 2006, they had contradictory effects. State employment pulled towards NDP, while religion pulled towards Conservatives. Structural Explanation help understand why the gap isn’t even wider.
• Men’s changing behavior.
• Nature of the welfare state has changed: less benefits.
• You’d expect men to be more attracted than women to the welfare state. Removal of the link between inputs and outputs in social services.
• The participation in the workforce by women has doubled.
• The traditional gender gap: women have become more unionized
• Women will move to the left after experiencing the work force. Women are in more low paying
• Employment: Women in Pink Collar jobs (sales, etc0 radicalizing effect. More supportive of collective provisions. You nee all sort of social services and programs, if you’re working and you have dependants.
• This all sounds possible, bit its not all that true in Canada. Because women were looking for pay in 2006, were less likely to choose NDP over the conservatives. Structural and situational theories do not explain the gender gap on the left.
• Gender Gap actually gets bigger.
• Public sector employment pulled women to the NDP BUT religiosity pulled women. So structural factors can’t explain the gender gap. Public sector employment pulls people to the left.
• At best the structural explanation helps us explain why there aren’t bigger gaps still. Structural and situational explanations do not work well to explain the gender gap.

Cultural Explanations
• Ingelhart: people who grew up in the 1930s and world war had to be concerned with their safety and security: material issues. Security needs were primary.
• Structural changes in society have been accompanied by shifts in cultural values, which have been accompanied by shifts in priorities.
• A) changes in cultural values and practices
• B) cultural values and practices increasingly influence people politically.
• Generations after the war grew up in security and prosperity and normative issues Post-materialist.
• Canada is an exemplary. What kind of cultural values matter in a way they didn’t.
• Women are more likely to go to university. Gidengel  her professor LSE said women should not be educated at the LSE
• Women may bang-up against a ceiling. Women are less ready to accept it.
• Women used to be more active on the ground in political parties.
• Mobilizing Effects of Feminism make Women lean more to the left: focused on reproductive choice (2000 election major issue), discrimination in the workforce, representation of women in elected office.
• 1980s women movement got more women elected. Let women run in winnable ridings.

Gender and Views about Feminism and Gender-Related Issues 2006
• Sympathetic: 60 women, 58 Men
• Should do more for Women: Women 48, 38 Men
• Favour equal candidates for political parties gender-wise: 23 Women, 12 Men
• Society Better if Women Stayed Home: Women 41, Men 35
• How do we explain that Women seem to have more traditional definition of gender roles? (bigger than regional differences often). Women part-time versus full-time, and both working and raising children so identify with homemaker role, and working not so great.
Socialized to think responsibility to care for kids. Want to work and enjoy independence, but not sufficient child-care facilities.
Gender and Views about moral traditionalism 2006 (thermometer scale)
Positively view homosexuals 60 w, 48 m
Oppose same sex marriage 29 w, 39 m (minority for both W & M)
Should be Difficult to get abortion 31 w, 31 m
• Representation of women in elected office. Why would it not drive a wag between women and men.
• Conceptual focus to men: Why have men being pushed to the right. Some men prefer gender relations today. And being active in the lives. There is a suggestion that some men will resent their gender roles. Men’s position into eh private sphere was challenged by feminism.
• There isn’t much evidence about a feminist backlash.
• Society would be better off if more women stayed home: women (43%) men (35%)
• Different types of feminism: Are we talking about liberal equality of opportunity or are we talking about affirmative action. Many men are welcoming the equality of opportunity, but there could be a backlash.

Gender and Views about free enterprise 2006
All Benefit when business rich 35 w, m 44
Blame self for not getting ahead 59 w, 66 m
Jobless should move to jobs 57 w, 66 m
Let private sector create jobs w 31, m 38
• Childhood socialization. The theoretical underpinnings called in a different voice. Maybe men and women have different reasoning.
• Carol Gilligan  Men when questioned about moral reasoning: rights of individuals involved. Women: the responsibilities and friendship.
• Men and women reason differently in moral methods. Women would be more skeptical of the free market institution. Readier to help the needy. Doesn’t this sound like the welfare dismantlement thesis. Gilligan isn’t crazy there is something to it.
• Women are more skeptical of free enterprise and the trickle-down theory. Women are less likely to get ahead.
The Welfare System: social welfare is the most important issue. Women are more willing to close the gap between rich and poor. There is a substantial degree of support.
• Social welfare hasn’t figured in as a key issue: health care is most important; for men it’s corruption.
• Men approached Free Trade as an Economic and Women were about social issues there was a 16 point gap shaped by the need to open markets. Women viewed the agreement about the strong social safety net. These differences could be explained with income gaps. Women were more skeptical of competition. Women want inclusiveness doesn’t like competition. Women were supportive of the welfare state.
• According to Gilligan: women see society as a web. The women see agrees ion as a failure of aggression.
• They are more concerned about violence and the use of force. Differences in adult roles.

Brenda O’Neil “Sugar and Spice” and childhood socialization: institution of family exerts powerful influence on people as a child. Media society, school reinforces role of women as self-sacrificing, caring. Points to childhood socialization. Institutions like motherhood and the family are so strong, they exert a powerful influence on use when we’re very young.
• Even women who choose not to have children are still socialized: like schools grade one, two three are teachers.

Gendered subcultures: difference between women and men they inhabit different political worlds. She’s on stronger grounds. Women tend to be more interested in grass roots community.
• There is a normative overtone with women: sugar and spice and all things nice.
• Women are anti-immigration than men.
• There is a timing issues: the Gilligan argument: nothing has changed women have been socialized into these roles: parents are trying to mitigate. The gender gaps still exist.
• Women need more autonomy to express their differences and that they are psychological dependent

Views about welfare system 2006
Social welfare most impt issue
Do more to reduce rich poor gap
Increase welfare
Increase social housing 48, 44

Views about healthcare
Most impt: 50, 32
Increase spending: 82, 71
Oopose private hospitals 48 42
Do not allow ppl to pay: 54 47

Taxes, corruption, health, envr: men chose tax, w chose healthcare
-1995 study by Gidengil free trade analysis: m view it as an economic issue, w as a social issue. More skeptical of market arguments, of virtues of competition (involves losers), more supportive of welfare state

Crime and Punishment 2006
tougher on young offenders 47, 51
want death penalty 33, 46
oppose gun control 30, 46
scrap gun registry 52, 65
more defense spending 37, 49
-w more opposed to use of force
-adult socialization: w have children, this socializes w and gives rise ot maternal thinking. More likely then to feel compassion for needy ppl, concerned w violence. So could explain in terms of diff in adult roles.

• Reading widely, discern the main lines of argument. Enter into a debate and build up and argument for why one side is more plausible. Where can we find this literature? (10-12pages). The twist at the end: relate it to the implications of the party in the region. Why does this really matter? Does it tell us something useful or insightful. The part that you draw out the implications should be the 2 pages. The focus of the paper is the critical synthesis of some body of literature. Do people vote on the same issues? Ideology: The role of the leader evaluation and voter choice. Certainly be going far beyond the reading: academic literature. MUST refer to literature. How many sources?
• Social cleavages in BC. Class politics BC is more salient.

Ideological Thinking in Canada? IS IT Possible?
• Do Canadians structure their thinking about politics in ideologically coherent ways? Why does it matter? Why should we care? What are the implications of a citizenry that does organize their thinking. With a polarized electorate then there won’t have parties that compete for the centre: moderate voters.
• Ideological/class cleavages might be good because would reduce language and regional cleavages  regional brokerage and that’s why we don’t ideological cleavages.
• If people do understand that politics is structured along ideological lines they can make more sense of politics and be more effective political actors. Think through individual issues: or alternatively, not think about issues because automatically filter through left/right ideology. Some people aren’t able to engage in the discourse because they don’t understand the right versus the left. People don’t understand other parties.
• Some people were trapped in an ideological past. Does the article say that people understood the right more than the left.
• The extent to which people understand these terms has influenced the left right scale. 7 point scales from leftwing to right wing. They were asked to place their ideal party. There were 13 items: powerful, honest, dishonest, good, bad, left wing, right wing. They wanted to build a median image of each of the political parties at the time.
• Some of the strange results; people didn’t want to answer the ideological discussion. Either people didn’t understand the term but they didn’t know how they could label the parties. They didn’t answer. Those who did answer, answered in ways that were puzzling: they placed their parties further to the right then did people who identified the Conservatives. NDP identifiers would place NDP more to the right. WOW!!???
• Every parties own identifiers placed their own identity right of centre. NDP was a little bit a little right of centre. Every party including the NDP being perceived as right wing was more important than being perceived as left wing. People simultaneously received it Right Wing: each party would receive most votes that see them as right wing and for the working class. It seemed that there was no left/right thinking.
• The problem was the people were consistent (not randomly answering). You saw parties going right wing and for the working class.
• How can we explain this pattern: what determines whether they are centre left or centre right. Some people will give warmer scores overall. Academics debate where to place the Liberal Party.
• People who are working class want to maximize and support
• The Author explained that these patterns didn’t understand the terminology. Provide survey researchers you can really pick that you are straining to answer questions. People are forced to produce the answer: people didn’t understand but they attached their understanding to be on the right. Right is positive. Left is satanic: it isn’t actually right (correct). “Right means: honest, principle, correct”.

Ron Lambert: argued that the low level of ideological thinning was a methodological artifact.
• Power powerful, honest, dishonest, dull and inspirit. You had thirteen bipolar scales. They had 13 different scales. A scale of 1 to 7. They were asked to make 65 judgments. We get people not thinking about what they are saying. If they’ve always had dull and exciting they are going to keep on getting the higher numbers in the party. Exciting: they stopped thinking and give the number they had been given. They made the cautious answer.
• Because the scales were simple to understand. People were reluctant to say, “I don’t know what right wing and left wing means”. They had all these scales and used to give right wing numbers. The other effects of having easily understood terms what do you do but you don’t understand.
• You can’t infer meaning. What would the strategy. Answer neutrally. Answer in the middle. So the safe response is in the centre. Problem of Reliability: people answer differently depending on day.
• Comparability: different people don’t anwer the same, on same scale. Some cluster, others use all numbers.

Lambert went on to the 1979 election: he concluded that there was evidence of left right thinking> there were sizable pockets of left right problem.
• What you really need was a question what does this term mean. Lambert was one of the principles of 1984. They tried to elicit was what does the term left and right mean to you? Then the affect of the terms: they looked at the attitudes about people’s self-placements: did they take positions on the left that you would expect people to take on the right? Did people use the terms consistent with their party’s identification.
• Lambert was impressed the majority of respondents responded quite sensibly. The over whelming majority.
• One journalist was pretty impressed: many people cite the argument more favorably. You glasses half empty. 60% of people said they used left right terms but only 40% of people provided definitions. The overwhelming majority of respondents who attempted to respond were not off the map but they weren’t eloquent.
• There is a personal vote: only 6% factor in the local member over and above these considerations.
• Only 40% were willing to give out a definitions: some people felt intimidated. Some of the definitions were merely half. Some of the definitions were merely leaders: if you were able to look at Stanfield.
• People’s positions on the right wing issues:  In 1984: data. Would you expect to find people more comfortable. Unite the Right there is more of a difference. In 1984: left-right tems on the election.
• There was a lot of uniting the right in 1997. People are less likely to read a newspaper. People rely on television coverage. Even on the basis. Civic education: people do understand in their own way.
• Does it matter why do people need this knowledge to be effective citizens. The problem it is harder to express needs and wants. “Reform” its RREEEFFFOORRRMMMMM
• Willingness to Rate Political parties and Self as Left, Right or Centre (percentage providing a rating)
• Self 54%
• Liberal 58%
• Alliance 52%
• PC 52%
• NDP 46%
• BLOC 38%
• ONLY HALF WERE able to place the Alliance.
• 2/5 people placed no party. ¼ placed all 5.

Number of Parties Rated:
• None 39%
• One 61%
• 67% Two parties
• Three 53%
• Four 45%
• Five 27%
Where people placed the Parties: NDP 69% anchoring the left, had the Alliance anchoring the Right. The PC was to put the Conservatives on the Right. People would anchor the Liberals in the Centre. The Bloc is between the NDP and the Liberals.
• What percentage of people factor in the right. Barely half the people will place the NDP. 46% of the people rate the NDP. Barely the 3rd of Canadian rated them on the left.
• .52, the fight for the right, how many people lace the conservatives on the right.
• Only 38% of people rate the Bloc on the left. There is evidence of left right thinking.
• Centrist Canadian Voters: only 56% place themselves in the Centre.
• Does this effect people’s choice of party.
• We are only looking at half the electorate: the Alliance attracted its natural constituency. The Alliance: only 14% of people were on the right. BUT they got 61% of that vote. The PC got more people from the centre than they did people on the right. There were more people on left.
• The Second Choice was the not the Alliance.

Left-Right Self-Placement and Vote Choice (outside Quebec) 2004.
• Conservatives like the Alliance before them. They did better than the Alliance in increasing the centre vote. Able to pick up a moderate centrist voters.
• The NDP did better in 2004: their share of the left vote did better on the right.
• The NDP double their vote form the Centre.  it could be the sponsorship scandal. The Liberals did better with voters on the right.
• Why aren’t the differences aren’t sharper: they don’t understand the terminology…Strategy voting: wanted to stop the Conservatives. Some one this may reflect. What’s the best way to defeat the Conservatives. There isn’t smooch strategy voting.
• People define themselves in different ways.

• The assignment: bear in mind: the bulk of the paper is synthesis of literature on the subject.
• Last Time: Ideology
Left-right self-placement and Vote Choice (outside Quebec) 2004
• Left-Right Self-Placement and Fiscal/Economic Priorities (2000)
• A quarter of people on the right thought we should be improving social welfare. Those we should be cutting taxes: So some people might be using left/right placements you have to wonder about some of the patterns.
Social issues Salience (2000): fighting crime is important: fight crime 48 L, 69 C, 74 R. Traditional family values 34 L, 47 C, 51 R. Environment 67 L, 55 C, 52 R.
• Is The Environment Policy: it’s not a left-right divide. People on the left and right: they differ on what they consider to be important.
• People on the Right are more likely to provide private hospitals.
• What are the criticisms about using the left right terms: some people see it as academic. Some people don’t think about ideology and focus on concrete solutions that pursued those people.
• There are more than just left-right ideology.
• There are two left right dimensions. What about people who aren’t political but want to be able to put themselves on the spectrum.
Ideology is a yard stick but the argument against using it as such is that the left right divide is too restrictive.
• The old left right dimension: market versus state. Old left and skeptical of free enterprise. The government should intervene.
• In Canada being on the left over the right has entailed opposition to closer ties with the US less continentalist: this reflects that hate of US weaker social safety net.
• New Left-Right: lifestyle, law and order, diversity, family values, sexual orientations. Right wings are more tradition, get tough on crime: put 10 year olds in jail!
• Fundamental beliefs and values: did they go together in ways that were consistent with the left-right distinction.
• We put people into categories: did people’s fundamental beliefs go together in coherent ways.
• Most people don’t posses true attitudes: some people answer randomly. You can’t predict attitudes: but different may put their attitudes together in different ways.
• These basic dimensions encapsulate people. These beliefs and values serve as a template.
• If a new issue comes a long they will evaluate the new leader on basic beliefs. So someone isn’t open to diverse lifestyles they are going to like a leader who stands for those things. When a new issue comes along those people react negatively to private hospitals. The represent something more enduring.
• There are certain beliefs that go together. They correlate highly. Canadians do have coherently structure. We made a distinction between basic outlooks and communal outlooks.

Communal Orientations: view Canada as different to the US.
• There are 3 orientations: IN Quebec: it was a no brainer:
• 1) The most important orientation views about sovereignty has influenced. VERY little else matters after the Bloc Quebecois.
• Reform broke through by advocating a tougher line on Quebec. Prior to 1993, they plot voters in a two-dimensional space. A lot of voters want to get tougher on Quebec and broke through on that fact.
• 1997 Reform’s position on Quebec was a handicap: Manning was a threat to national unity for their views about Quebec. “Get in the family or leave, Quebec!”
• The Alliance did distance itself on being too tough on Quebec in 2000.
• In 2004 and 2006, views about accommodating Quebec returned. People who want to stick it to Quebec, Conservatives are trying to build support for the Quebec section.
• People who wanted to be hard on Quebec  and voted Conservative.
2) People’s orientation on outgroups (aboriginals, racial minorities): don’t want accommodate other groups. Quebec was time bound, there was a positive view about accommodating racial minorities but its view of aboriginals. OKA crisis.
3) Continentalism Orientations: the Canada/US FTA dimension disappeared. In 2000, it was not a factor. Continentalism: was important in separating Conservative voters and non-Liberal/Non-NDP.
4) The Basic Outlook: was cynicism. Politicians lie and make promises they have no intention of keeping. The Reform served as a lightning rod for political disaffection. People are not as disaffected as they were ten years ago. Reform was able to tap into that outlet for anti-party sentiment: Social Credit legacy.
5) The protest vote in 2004-2006 split between the NDP and Conservatives. The NDP was not able to play it’s role that the cynicism party. The protest vote was the Bloc Quebecois over an above soveringyt and regional alienation. The populist sentiment in the Bloc Quebecois was important.

The two dimension are most important: free enterprise and moral tradition.
• People’s orientation to the profit system; does the money trickle down economics to the poor.
• Moral traditionalism, views about women’s place: family values. Both senses of beliefs went together within Quebec. The two dimensions comprise the dimensions between Quebec. There is potential in Quebec for these values but are overwhelmed by sovereignty.
• There is a link between issue positions: voters for each party can be lined up along a single dimension. They anchored
• The only one that was not distinctive was based on free-enterprise. Difference between Liberal voters: they were all towards the right there are only NDP voters on the left.
• The average position of voters for NDP and Reform. Liberals Bloc is between the Liberal and the NDP
• There was something to the idea that the Liberal and Conservative brokerage parties.
• The PC voters were just to right of Liberal voters. PC voters were much closer to the Liberals than they were to reform or alliance. That’s why the alliance was able to grow.
• The last piece of evidence: knowing people’s place on the left-right dimension: we found that it did. People’s fundamental beliefs to correspond to the left right dimensions.
Old and New LR dimension help explain vote choice: Level of coherent ideological thinking is higher than thought. See where people place simultaneously on these two dimensions. People twice as likely to be L on social (new dimension_ than old More polarized on new.
• I want to see where people place simultaneously between the spectrum
• The Bloc Quebecois doesn’t want to take health on the federal level. They regard health of provincial jurisdiction.

Economic Liberalism-Conservatism and Fiscal Priorities.
• The gradient is less steep than with self-placement.
• Old LE and policy attitudes: researcher placement does allow some degree of predictive capacity. Gradients are steeper.
• The only way to tell if there is causation rather than correlation is to talk to people about the way they think about politics.
• In Canada, there usually aren’t large difference in public opinion, which makes this type of research more difficult.
• New LR is harder to identify but researcher classify everyone, whereas self-placement only applies to half the people.
• Ideology mediates the connection between social background characteristics.

Party ID: much as people might identify with a religions, ethnic group.
• A salient social group is like being political.
• Parties stand for relatively stable ideals: religion is relatively stable.
• Party ID as a long-term component. Issues come and go, as do leader: Parties endure.
• There is a psychological attachment to a political party. This has implications on how you measure it. This depends on people’s self-identification. You have to ask people how they think of themselves. Their self-perception is central.
• The classic question has been asked until 1988. “Thinking federal politics do you think of yourself as a Liberal, Conservative or NDP or what.”
• If someone was a liberal how do you feel. Then you follow-up how strongly you feel. Do you fell closer to one of the political parties. There are people who say they leaners.
• Party identification was established in early childhood. Just like being a Catholic you grow up as thinking yourself as something that you grow into.
• Party ID can change but in the original model can include You move to Ottawa and become a Liberal.
• Marriage can affect party id: the women changes her partisanship. In Canada, people who are married are conservative. The relationship changes political views.
• Personal focuses can change party id.
• On the other hand, you can see whole sale change called realignment.
• Party id: As we grow older our party ties strengthen. We may grow-up feeling we are conservative.
• Which way does influence go? Are kids socialized into a person. Does the party have a socializing aspect. It molds people’s views.
• Party ID strengthens with time.
• Other things being equal, you’ll identify with the party will you be predisposed to vote Liberal. In a normal election most people will vote their party id.
• There is an indirect link, by effecting people position on the issues.
• There is an effect via, positions on the issues and evaluations of the leaders. If you identify the leader; you are more likely to identify with the leaders.
• Party identification serves as a screening function. They react through the filter of their party attachment. If you id with the incumbent party: you will evaluate economic performance. You may be more likely to support the government
• What’s that chances of winning they systematically over estimate their parties chance.
• People pay more attention to between about the party of their loyalty.
• People who were Reforms created the negative stories as okay.
• How do you affect people’s social background.
• In the Michigan Model: a persons vote in a given election is decided by a) long stand disposition to favor the party and b) the short-term forces of that particular election.
• The short-term focus: the issues, the presidential candidates, the local candidates, there are short-term forces that they deflect someone from their usual party vote. A Liberal Partisan in the 2006 election.
• A liberal identifier: they didn’t like the sponsorship. Or the Liberals vote for Chretienite. Catholics are Liberal voting in 2006 but still think of themselves as Liberals.
• If people vote along aligned there would be much explanation. A protestant church. If people always voted in the line with the party id, it would be a boring concept. It should help predict but it should predict too well.
• Party ID predicts votes too well: so do people have other ID
• THE KEY POINT ABOUT ID: even if they vote for another party they must retain their identification. Did those people who were Liberal partisan ALSO change their party id. Even if some defects do they retain their sense of being a liberal.
• The only change that was anticipated: was a change of intensity. The stronger party becomes: the more constaining the filter will be.
• Europe is not interested in party identification. BUT Canada is whishwashy about party id. It’s too close to voters choice. In western Europe people would prefer to use left rights.
• Would you expect that work in the US. Is this just an American theory.
• A Concept that only works in the US is a two-party system.
• The stronger the party id, the more likely people are to simply not vote when they are angry about an issue (sponsorship scandal).
• Catholics and non-european are more likely Liberal partisans. BUT there is nothing. Black vote is democrat.
• Strong regionalism don’t necessarily have
• The democratic party used to be able white southerners and then turned into the civil right party.
• We have brokerage parties that are trying to bridge people they are trying to exploit cleavages.

Institutional Arrangement in Canada: What about institutional arrangements? What doesn’t exist here? Presidential system is more polarizing. The Presidential System: the presidential candidate is a person apart from the party: people can vote from that candidate.
• In our system we vote for the local candidate, but if we vote for a candidate who is of another party we don’t feel good about. Eisenhower democratics.
• US primaries: people are required to label themselves Democrat or Republic. Americans have multiple of ballots: they may have to vote for a long list of positions. State treasurers…etc
• So if you’re trying to decide? The party label is a great short-cut. Part of the voting mechanism. You can vote a straight ticket.
• If you have multiple ballots and you might go down the list: you might know some person.
• Municipal Politics in Canada: we don’t have Bloc running in the provinces.
• Municipal elections are random and focus on different issues. Provinces elections is different that could help you to reinforce your sense of the parties.
• Something else in Canada, during the Trudeau years you don’t have term limitations.
• When you ask someone in the US why you support someone they’ll see the talk about the party.
• You ask people here about the Liberals they talk about Paul Martin.
TEXTBOOK Theory: The concept does not apply in Canada
• A similar conclusion has been reached in Europe. The doubts about party identification were led by Miesel. The 1965-1968 were modeled on the Michigan Studies. They posed the question in Canada. The party identification: is almost inapplicable in Canada.
1974, 1979, 1980 Canadian election studies: heavily influence by Michigan Model didn’t pay much attention to the social background.

Damning part of their evidence came from their panel (re-interviewing people from previous election). Panel data is good because can track the same people, otherwise have to rely on peoples recall. Recall tends to be skewed towards current support. In those 3 elections, 40% of people changed party id. Switched from one to the other, or switched from ID to not id, or from not id to ID. Another 40% retained the same party id and vote choice. Among people who changed vote, party id traveled with them (not supposed to happen). 11% of the panel consisted of voters who changed their vote but kept their party id (as theory predicted).
-from 1984-88 14% kept id, changed vote. 1988-93: 17%. (odd, because with new parties you’d expect new party id).
-outcome of this is that stable party id with changing vote does not apply in Canada.
Harold Clark et al. ended up modifying the concept of party id.
-intensity, stability, flexibility: used this to classify everyone as a durable or flexible partisan.
-durable: fairly strong id, stable across time, and consistent id across federal and provincial levels. Most of them always voted for the same party. Strong, stable consistent.
-basically flexible partisans are everyone else: either unstable in attachment across time; inconsistent across levels (not the same party fed and prov, or 1 part fed and no party prov); weak partisan. Fail any one of 3 tests, flexible partisan. Flexible partisans are also those who indicated no party ID at a federal level (argued that there were ppl who were caught in the moment of transition between party ids). 63% of ppl flexible partisans. By 1988 and 1993, 75% were flexible. Flexible were more likely to change vote, more susceptible to short term forces.

Consistency; either a durable partisan or a flexible partisan: durable partisans have a very strong identification.
• Flexible partisans were either unstable across time or inconsistent across levels of government or they identified with one party provincially and no party provincially. People who were flexible and were moving with their way to changing they id.
• Durable partisans tend to have a standing position and flexible people are more likely to be interested. Think about the party id questions. For you usually think of yourself to federal party: NDP, Liberal and Conservative: why is it a poor question.

Party ID
Can we reformulate notion of partisanship to fit the case better? Durable partisan identify very/fairly strongly, stable party ID across time, same party at federal and provincial level. Flexible partisans were those who failed any of those criteria, or who replied none. The theory was that “none” were in transition from on party to another.
-what do we think of their reformulation?
-why not non-partisan category?
-federal/provincial parties are not the same. Strong criteria, hard to defend. Elections take place at different times, federally and provincially.
-theory that Canadians balance their votes by voting for a different party federally and provincially?
-issues dominating fed and provincial elections are not the same
-in a multi party system, common for people to feel warmly about more than one party, and feel negatively about only 1 party.
-parties themselves do not have strong ties between federal and provincial levels (Liberals are the least integrated). Not much movement from provincial to federal wings.
-parties with the same name do not stand for the same thing.
-BC has many split identifiers. 1978 prov, 1979 fed. 49% of PC identifiers were split. 18% identified at one level but not the other. Split identifier were no more likely to switch votes in a given pair of election than people with consistent partisanship. What mattered was not consistency, but intensity of feeling. (study)

Textbook theory of party ID in Canada:

  1. many Canadians have flexible ties. May not be saying anything more than the way they just voted.
  2. Party ID travels with the vote.
  3. Intergenerational transmission tends to be weak in Canada. Liberals somewhat of an exception (is this bc Liberal is most consistent party?).
  4. Study by Richard Johnston on intensity. (original idea is that ID grows stronger as ppl age). Over the typical life cycle from 18-75 the average gain in intensity was .33 on a 4 point scale. Very small. -Gidengil: classic Michigan concepting does have applicability in Canada, previous studies underestimate partisanship.
    1. many Canadians do lack meaningful attachment. Many do have a meaningful attachment. The non/weak partisans are up for grabs, the strong partisans must be mobilized.
    2. when party id backed up by something more meaningful, like sovereignty, tends to stick better.
    3. Clark et al. notion of flexible partisanship is a very powerful one. Argued that at aggregate level there was much stability, but this masked individual volatility. If volatility comes together, party system will implode.
    4. Gidengil thinks they overestimate party flexibility. Deeper problem relating to the way party ID is measured: “none” is not given as an option. “or what” is not something people want to choose. Many people name a party because they were encouraged to name a party. People name the party they will vote for. Party id made to appear more unstable than it is because none wasn’t an option.
      -Richard Johnston study: 1988 “none” added as an option. Proportion of “none” increased, # of party identifiers went down. Still didn’t know if party IDers were stablers. In 2004-2006 had a panel: why were these elections ideal?
      -same parties. (same leaders, though this is negative)
      -same issues to a certain extent (sponsorship scandal). If ppl remain liberal partisans despite voting for another party to punish liberals, then proof of party id.

Change in distribution of party ID 2004-2006
-very little change in other groups. Decrease in people who answered none from 2004 pre to post election. Liberals stayed the same. Cons went up, mostly from “none”s. why can aggregate distribution be misleading? Can be movement between parties that cancels each other out.
Number of times respondents repeated their 2004 campaign response
-only 2/3 of liberals repeat ID 3 times. NDP 55%. Cons 70%. Bloc 80%. Few people identifying with minor parties were likely to give the same answer. 1/3 of people repeatedly said they were non partisans.
-among very strong id, 84% kept same. Fairly strongly 64%. Not very strongly 45%.
-people who didn’t answer the same were as likely to say none as they were to say another party. Only 18% named another party. 75% only ever named one party or said none.
-half of people interviewed qualified as stable partisans. Same party id along all 4 waves. This is much stronger than Clark’s findings, reflective of the wording of the question. 18% of people switch at least once. ¼ gave no id at least once, but never switched. 9% always said none.
-if add these people up, there are 1/3 of people with no attachment to a party.

-where do people go when they switch parties? More go to none than to other parties. Tend to switch to adjacent parties on the left-right line.
-is party id traveling with vote? In Michigan conception, vote is a product of their interaction between party id and forces peculiar to a particular election. What is key is that they retain party id regardless of who they vote for.

Campaign party id versus reported vote
-close correlation between party id and reported vote, except in minor parties where ppl don’t vote as much as their id.

-people who didn’t vote not included.
-liberal identifiers least likely to vote for party, probably because of sponsorship and “team martin”. In 2006, 1/3 of liberal IDers didn’t vote liberal
-NDP often vote Lib, strategic vote.
-don’t want correspondence between vote and ID to be too close.
-if people ID with party of right and transfer allegiance, makes sense to add 2000 PC and Alliance figures together and get 2004 Cons figures.

-crucial test to judge if ID is meaningful is if it travels with the vote, or stays meaningful. About 15% in 2004/2006 retained party ID but changed vote, which is more than the 5% who changed ID and vote. 5% also changed ID, but voted the same.
-% liberals who voted against their party changed by 6 points.
-party id in Canada behaved the way it should in the face of a powerful short term force. Liberal partisans voted against their party but retained ID.

Party ID and Voting Behaviour (2006)
-leaners (people who have no id, but feel closer to one) closely vote for the one they named. Probably because no id and pushed to name a party
-85% of very strong id voted for party. 5% abstain. 10% other party.

Party ID and ratings of party and leader (2006)
-shouldn’t be too close.
-party id serves as a filter for people to judge party and leaders.

• Social Background, Partisanship, economy, non voting on age. It’s not just a cut and paste. You need to think through how it will play in the upcoming election.
• Need to have a draft of the project ahead of the presentation. You have a chance to make changes and to fill in gaps. Tell me what you’ve found. You need to tel Gidengil about information.

Do Canadians Vote with their Pocketbooks?
• The Economy and Economic Voting: the notion of economic voting sounds straight-forward and plausible. It’s the Economy, Stupid is the basic summation. If they are doing well they will vote for the incumbent government.
• People engage in a reward and punish calculus. Am I better off? IF the answer is NO, they vote the incumbent out of office.
• Election Day is Judgment Day and dole out rewards and meet out punishments.
• The Economic Voting Model has its’ roots in rational choice theory. Economic voting is actually very complex. The issues: what the parties are doing, how competent they will be. Take into account strategic considerations.
• Have to take into account of group loyalties, partisan loyalties. Basic beliefs and core values. It’s a very complicated.
• People are cognitive. They look for rational short-cuts, something that will enable you to make the correct decisions, without investing a lot of time and effort.
• Politics is not salient in people’s lives. Most ridings the vote is nile.

Problem 1) Economic Conditions and Vote Choice: the first assumption so the political universe shrinks down to one salient political object is the incumbent party.
• Voters believe that they have some responsibility for their own wellbeing.
• You may believe that you’ll do even better with a different party in power.
• The US focus, it’s a no brainer, if you are not happy with party in power: there is a two party option.
• In Canada, it’s not such an effective short-cut. If you’re unhappy with the incumbent. Who do you choose from?
• Focusing on the incumbent, makes sense, they can scrutinize the incumbent for the rational shortcut. But it goes so far to have to deal with other shortcuts.
• Some political parties own an issue they are good at dealing with issues or the NDP have the real liability of the fiscal irresponsibilities.
• Parties on the right as seen as very good with the economy. There is a problem when you focus on the incumbent parties.

Problem 2) The Model Assumes that People Vote Retrospectively: they vote on past economic performance. Retrospective judgments are more important about the past judgments.
• Retrospectively but short-term. And also media: influences the economy and when the economy isn’t important disappears. The economy the economy is still doing well. Media frame a negative focus.
• A voter ought to make a future oriented act certainly when sizing up the incumbent.
• Prospective evaluations you now have to decide which of the opposition parties you have to vote for. You have to ask will you be better off
• You care about the political business cycle; the incumbent parties will manipulate the fiscal and levers in the short term.
• When they announce the elections. The idea is that if people are voting retrospectively they will be easier to make sure that things are doing as well as they can right before the election.
• If voters are looking ahead they need to have the wit to realize that it is manipulation.
• There is retrospective and prospective voting.
• Another questions about who does retrospective and prospective analysis. Bankers vote retrospectively and workers prospectively
• Is this a rational shortcut. What kinds of policy was the government pursuing. The only way policies are judged is by the outcome. You assume that the government must be pursuing.
• Short-term benefiting from a high level of spending.
• What about the election focus. There is an assumption on material self-interest.
• They only vote materially: get higher or lower on economic voters.
• IF you are being told better government intervenes the least.
• A rational short-cut; it could be sheer luck. Maybe they got lucky. Maybe their policies have nothing to do with how the economy is going. May it would have been better: you may be helping the government for the bad luck for being in power when things are going badly.
• Which level of government holds them accountable. Economic voting would be weaker with multilevel government the burden on governments is heavier. Who should be punished who should be blamed.
• They are doing it in a context where there is a strong incentive to shift blame.
• We have done limited work on attributions of responsibility. If varies depending on the province.
• There are second level elections: European elections you don’t punish the incumbent but you send them a message in the sub-national elections.

Problem 3) Models assumes that voters are even handed. Voters are equally ready to reward or punish: this is simply not true. Just as likely to reward for good time and bad times. This is not true empirically that they are more inclined to reward.
• Due to the media: the economy is more salient when the economy is bad. Issue of bad economics  people are economically happy.
• Bad economic times are more photogenic. Makes for great television news. It’s a good photo times. Graphs, you could put up a graph and show unemployment has gone up. News values: it’s not the media; they want to maximize audience entertainment. News values that encourage values.
• Growth is less pronounced when the drop of growth is less visible.
• Other issues become salient when economy is doing well.
• People expect the government to manage the economy so why reward your government. You don’t need to reward them for something they are supposed to do. More fashionable and easier to hate all politicians than to say that you like them. “Old PEI saying ‘You don’t vote politicians in, you vote them out’.
• Clarke and Kornberg: the more positive state of the national economy. And it’s the governments fault to blame and praise.
• People expect the government to manage the economy, so why reward them for what they’re suppose to do?
• The Incumbents suffer when the economy is doing badly and don’t get rewarded.
• Al Gore should have won in 2000 but this didn’t happen. The economy was doing well.
• Reagan’s victory in 84’ isn’t true.
• The final assumption, the notion that people vote their pocketbooks. Consult your booket book, more money in your wallet four years ago.
• People often have sociotropic evaluations; they vote on the basis of egocentric voting. Some people vote on sociotropic voting.
• Do you find it puzzling that people vote more sociotropically then egocentric. They care about the economy as whole  more people who are maximizing their utilitiy. It’s people who are more likely to think about their collective good.
• People assume that they govern their own wellbeing while the government are more responsible for the rest of the population.
• Researchers have found it puzzling: they asking what have you done for the economy. We should love our neighbours but we shouldn’t love our neighbours more than ourselves. Some people find it odd that they are only responsible for macro-conditions.

Problem 4) assume that people vote their pocketbooks. Its most often socio-tropic voting (the economy as a whole) that we observe. Evaluations trump egocentric (pocketbook) evaluations. Many people care about the economy as a whole, more socio-tropic value democratic participation.
• Other problem with socio-tropic voting: it puts a heavy burden on voters. You know things aren’t going so well. To figure out how the national economy is going. The media won’t give you the information about yourself. Where as you know how the countries going overall.
• It might be impossible calculus: there are elements that people. The prices change overtime so they realize that things are changing.
• TV is cheap. There as a time when computers are low prices. I have a computer now and didn’t have one three years ago.
• We may underestimate the value of pocketbook voting: socio-tropic evaluations are shaped by egocentric voting. Am I doing better, and then they extrapolate for how the economy is actually doing.
• If you have a regression analysis and social tropic evaluation if egocentric evaluation and socio-tropic evaluation. You will underestimate the value of egocentric evaluations so we may be underestimating the effect of egocentric evaluation.
• How do you evaluate the future look at the past.
• Another thing to realize about economic voting is it tends to be contingent. Looking at a country across time, Clarke and Convert: economic evaluations don’t necessarily have political relevance: the only time it has impact is if it effects the government in power.

Harold Clark & Stewart: sociotropic evaluations shaped by egocentric valuations. Pocket book voting has been underestimated. Also egocentric voting is underestimated: if egocentric affects sociotropic and sociotropic affects vote choice, we will underestimate affect of egocentric voting.
• Idea is that peoples own circumstance will give them an idea on how the economy overall is doing.
• For Clakr and Stewart: economic voting are contingent of the context. Economic evaluations only have political relevance if they attribute responsibility to the incumbents.

There are two critical conditions for economic voting to occur:
• 1) Clarity: what happens in the federal system, who do you blame the federal government the provincial government. There clearer the conditions of economic voting the less clear the economic voting you will see. Economic voting will be more significant in coalition governments.
• Is it the presidents fault: is it the senate, is it the house? People are able to assign responsibility and blame.
• 2) Alternatives for decent: the alternative parties need to be a clear party alternative. You need an alternate class.
• What might cloud responsibility? Disasters that influence the economic downturn.
• If the party has been in power for only a few months the government was in power for too short of a time. Blais/Nadeau short-term election.
• 2004 Martin tried to distance itself from the government but he didn’t talk about the economic performance.
• The US economy and the Canadian economy. The Canada is subservient to the American economy. Our exports go to the US. The Canadian economy looses the economic controls and levers. NAFTA, the global economy and the less the government is more powerful.
• The Ideal political setting for economic voting is Unitary State or a highly centralized federal system with two parties. Canada has neither requirements. We also are heavily reliant on the US economy. All of these factors serve to weaken economic voting.
• When you have 5 parties in power in Quebec.
• The economic voting isn’t very strong in Canada. And yet Nadeau/Blais which suggests you can predict based on economic variable. So why can you have such discrepant results and random economic vote shares.
• What does the Nadeau/Blais: imply for economic campaigns. Can you compare economic voting.

Economic Voting:
• Economic voting is not strong in Canada when it comes to survey data. Do they think they are going to be better off then they were four years ago. You need to relate them to a study.
• Canada is reliant on the US economy.
• Blais/Nadeau suggests that economic conditions predict vote choice very well. They use a different method> there is a lot of debate. They used Election Outcome from 1953-1988.
• We ought to look at objective economic conditions: individual economic judgments the other approach to macro-economic conditions and relate that to the other part.
• The aggregate level approach is to focus on popularity look at popularity functions and people have taken Gall-up polls to rate the governing party to changing evaluations.
• Blais/Nadeau 1953-1988. They looked at real disposable income as probably the best reflection of individual wellbeing. They looked at inflation and unemployment.
• Only of the economic variables is statistically significant: Unemployment.
• 1 pt in unemployment rate compared to 5 years ago translated into 2 point drop in vote share.
• Unemployment and inflation effects voters the most. Unemployment and inflation get played up by the media. The measures are all relative, it’s not the absolute level of unemployment that matters what hurts is when there is a change. Government don’t have to pay as tough a price.
• It turns out that one of the economic variables: is statistically significant is unemployment. This model assumes that the national level. They found that an increase in 1 point in unemployment reduced the two point drop in vote share.
• One none economic variables: the provincial origin of the party leader: paying from Quebec has a 5% value. Boast it’s share of seats in Quebec.
• A vote shares rather than seat shares.
• They are able to correctly predict vote shares.
• Voters punish unnecessary elections. 2000 was election was designed to call an election.
• Campaigns could be charitable. Campaigns don’t matter.
• That model works very well from 1953-1988 it doesn’t work subsequently.
• NAFTA allowed them to pass the buck on employment. Globalization.
• The economy didn’t matter when the new era of 1993-2006 opens the politics system being so fragment.
• The model is covariant the causal link may not be helpful. You may find the causal element with people that are making the voting decision.
• Hard to imagine to find an underlying factor in flux in party voting shares and economic performance. There is something going on.
• Polls only move
• There is a monitorial model: citizens don’t need to pay attention when there is a run-up to an election.
• Another problem with these models: you specify these models: what period do you look at when your analyzing the voting. You can fit a model to the data points.
• You try to have a three year and then change the model to 2 year and the .5 years.
• Fitting a model to a few data points.
• There is one huge reason that they fall apart and that is they assume that it’s objective economic conditions. Perceptions matter. Perceptions mediate the economic decisions.
• Blais model should have shown that in 1997 the Liberals should have been rewarded but their vote share didn’t go up. But it wasn’t a winning issue. Voters have negative perceptions.
• 80%of people didn’t believe that the employment rate had gone down. Unemployment went down two points. Those negative perceptions limit the scope of their victory. Fitting a model through a certain points.
• Over 80% believe that employment had not gone down and 40% thought it had gone up. Chretien had promised more than they could deliver in 1993. They didn’t play up their performance for that reason.
• Perceptions hurt the liberals the probability was 8 point higher then they would be more likely to vote liberal. The impact of the liberal point share.
• They thought things would have been going up in the future.
• They were in a bind: after 1993.
• It had similar problems in the UK and got the outcome right. US predicted in 2000.

Election 1997 experience drives home three points:
• 1) economic perceptions matter and they don’t always agree. What is the unemployment level? Minimum wage can’t get the wage right. People just don’t care.
• 2) The economic is a valance issue: a valence issue is where everyone agrees on the goal: a healthy economy. There isn’t a policy position. A healthy economy: we’d be better economic managers. We are more competent to manage the economy. Parties don’t take opposing stands on the economy.
• It wasn’t us it was global forces, unions, NAFTA blah blah. What couldn’t about how much the economy is doing. Its how the parties frame economic performance. Who’s partisan claims are they going to claim. What the parties have to say and it depends on what they media intends.
• 3) Perceptions: the unemployment rate may be higher in one region than another. Their occupation and social class. People in a vulnerable positions and some people are going to be more injured. They think that they are an serious danger of losing their jobs.
• 4) The medias perception of the conservatives: sometime you think there is a completely different campaign going on.
• They are more likely to get dramatic images people lined up in the streets.
• 5) Partisanship: could effect perceptions: we have trouble reacting to events: an economic record is good enough for an incumbent. People who are in one party will think that they are doing a horrible job. We tend to see what fits into our party disposition. We see things more negatively.
• Those assessments mediate economic impacts.
• Blais/Nadeau assume that it is relative economic conditions. BUT in absolute conditions in 1997, the absolute level was still sufficiently high for the liberals.
• Retrospective time frames: Nadeau/Blais people are very myopic in terms of voting some of the voting took place. Voters look at a short time frame when they look backwards.
• We assume that economic perceptions have a direct effect. Clarke and Kornberg: the two issues: Canada US free-trade agreement. Voters were so negative about the GST they become increasingly negative about the negative on NAFTA. There could be indirect economic voting

Lessons from “It’s Unemployment, Stupid”
**What counts is not necessarily the state of the economy, but the way voters perceive the economy.
**Absolute conditions can matter (1997 unemployment dropped from 12-10, but 10 is still a huge number)
**Voters are fairly myopic when they look backwards, see only a short time frame.
**Clark and cornberg say can views on economy can affect vote indirectly by affecting views on the issues. Voters were so negative about the GST and became increasingly negative about NAFTA bc they perceived that the economy was getting worse.

Party Leaders:
• 1) Are Canadian elections leader-centred?
• 2) Are party leaders becoming more important to vote choice?
• Leaders are more important than anything. Leaders have become more and more important. So there has been a decline in party voting. The more important leaders are the less important.
• There has been little surprising analysis. It’s been assumed across western democracies. The studies: the Rise of Candidate Centred politics.
• Does the American phenomenon travel elsewhere.

1) Leaders are important. Leader matter more in Canada than in Sweden, Germany, Netherlands. Anglo American democracies  all have important place for leaders.
• This has been shown Clarke: Superstars of Canadian Politics.
• Mallory: he came up with idea in 1949: Mallory argues for a national theory: the party leader will stay in power as long as the leader is able to embody the nations mood.
• Leaders play a keep role.

2) the first full length book in voting: Diefenbaker Interlude. He chose the name of the book after the PM that dominated the country at the time.
• Governing from the Centre: the presidentialization of Canadian politics.
• In the 1970s there was some speculation about the presidentialization: this idea that we resembled a US president is not a new idea in Canada.
• PM is more powerful in Canada. The PR versus SMD. The electoral system.
• The Liberals and the PC have been characterized as brokerage parties they aren’t necessarily centrist parties but you don’t see a lot of conflict. If you don’t have ideological divisions. Voters fall back on the party leaders. Who looks like who will be the better manager.
• Brokerage politics makes flexible partisan ties. They don’t have strong party loyalties.
• The leader has to find a brokerage group. Mobilize the partisans and the non-partisan ties. The media plays the role: the spokespersons. The way the media covers things make leaders important.
• Leader provides a shortcut for voters: if citizens are rationally wrong. But they don’t want to understand the details of politics. Leadership is the rational short-cut.
• People can look at the leaders personality traits. Are you competent. Are you attractive. Social background characteristics. Female will do a good job of health, and family politics.
• Regional differences. Sex works.
• Religion doesn’t work: not visible.
• Women were more likely to support Kim Campbell.

MEDIA coverage: Matthew Mendelson.
• Matthew Mendelsohn looked at television news coverage there are two dominant frame the Horse race and the Leadership. Who’s gaining group winning ground. The horse race and the leadership race was used interchangeably. The question asked is usually who is going to win and why. It s quiet different to disentangle the leadership horserace. Mendelsohn says the horse race is a shortcut for the voters. Gaffes come to define wow the campaign is going. The media decides what qualifies as a gaffe.
• The leader frame and the horse race frame. The new campaign promise.
• The focus on what the leader has to say the focus is why are they doing this what is their motivation. Mendelsohn if the leader takes a day off then they the party doesn’t get covered.
• In 2000, Stockwell Day on Sunday.
• The other thing that plays a role is the televised leadership debates. The next 1979, 1984 one in French one in English.
• In the 1984 there was a women’s issue debates.
• How the leader does on the debate. A good example: Clarke in 2000 he saved his party from electoral extinction. Otherwise the alliance would have wiped-off the map. The leaders debates: John Turner 1981 Clarke and Charest 2000 and 1997; There was an issue of the timing of the debate.
• 1997: Chretien popularity gave a 5-point boast. Charest had 12 point popularity.
• 2004: probability of voting for party increased from 20-30 points depending on leader (for individual voters).
• Leader are important for vote choice Chretien popularity outside of Quebec Charest didn’t had positive prospects that is why there was hopes to Conservatives. He is not as popular in the province of Quebec.
• The probability increased from 20-30 if they liked the leader.
• On the other hand: leader evaluations didn’t have a big impact on electoral outcomes; in the individual level you have a massive effect. Leader are the deciding factors for leaders: leaders did not have the impact on election. In 2000, 2004 leadership didn’t help the leaders.
• Liking the leader only makes them more likely to support. We’re controlling for the party id. Leon average rating of the leaders: if the average rate of the leaders support can mean that the voters are effected by how they rate the party leaders. Zero to 1000 scale if the leader is remarkably more popular: Bouchard was very popular in Quebec Chretien was unpopular in Quebec
• Look at the presidential realization: have leaders become more important. Why would expect that they would become more influencial in voter choice over time.

• Leaders don’t matter as much about electoral outcomes.
• If one leader is no more popular than individual vote choice.
• The leader is a lot more popular than the others. Leaders have become more important in vote choice in Canada.
• Leaders are more important today in vote choice why are leaders.
• Leader respects the media: Paul Martin. The relationship between the journalists and the media.
• Media focus: gender bias: When Kim Campbell made errors it was an attack. She rubbed the media the wrong way. Kim Campbell: “policy isn’t important in elections.” Chretien said something to the same effect and got away with it.
• People just fall back on leaders. They may not know the candidate. You used to have ca
• It’s a matter of valence issues: who can manage this issue better.
• No party will endorse two-tier healthcare: trust us will do better

Partisan de-alignment: people are not attached to political parties. At least people are becoming increasingly detached from political parties, can no longer fall back on parties as a guide to vote. Do see a decline in leaners (those who indicate closeness to one party if pressed). People who identify very or fairly strongly if fairly constant.
• If you identify on the line of party loyalty. If fewer people can find a motivation for party voting. It’s debatable whether there is a party de-alignment.
• In Canada, Western Europe: you don’t see a decline who identify very strongly. You see the decline in the so-called leaners. The one thing that has changed is proportion of a residual sense. People who are confident which party is worthy.
• There is a relationship and party de-alignment and
• Patterns of media coverage, they are much more reliant on television. You begin to see the main source of politics is television. Changing patterns of media coverage: newspapers coverage has changed. No more decline since 2000. For leaders, much more fluctuation less decline in leader than in party evaluations (but began higher 1968 was Trudeau mania).
• Media centred politics: the rise of candidate centred politics. Canadian elections resemble Martin, Harper, Layton, Duceppe not the parties.
• Causal arrow changes because of the leader.
• Why leaders vary more? Because individuals vary more than parties do.
• Why party decrease? Inglehart’s post materialism (people care more about self-actualization and personal autonomy, and less interested in parties because they are seen as unnecessary intermediaries).

Trends in average leader rating and average party ratings, 1968 – 2006
• Leaders and Parties
• Turcott: there has been an erosion of party leaders in Canada.
• Both parties and leaders are less popular than they were. People have gone from feeling positively to feeling negatively (for party 10 pts on 0-100 scale).
• No more decline since 2000: Plateau in 2000-2006.
• 1968: Trudeau mania: more popular in that period. 1974 to 2006 is a drop of about four points for leaders.
• Leaders vary a lot more that’s why it fluctuates much more.
• Party doesn’t vary as much. Inglehart “Decline of Deference”: post-materialist ideas: maximizing autonomy people are less interested in political parties because they are intermediary.
• Most leaders suffer a decline in popularity overtime: Trudeau, Stanfield, Chretien. Regardless of how popular they are to begin with. The honeymoon is always over.
• Popular new leader gets a boost.
• Broadbent dropped and become more popular.
• Layton improve his ratings.
• Duceppe was unpopular in 1997: fallen heroes syndrome.
• Broadbent shows that a popular leader doesn’t help that NDP that much.

Clarke et al called this the Fallen Heroes Syndrome (up to 1988). Leader have become more important to individual vote choice, thus party is less of a factor. In fact, Party ratings have more effect on vote choice than leader ratings, probably because party label is all we know about candidates. Leaders and parties matter independently.
• Presidential Thesis (as it relates to elections and impact of leaders): Leaders are more important at the expense of the parties they lead. In fact, party ratings have a stronger vote choice that leader-ratings.
• Each has an effect independent of each-other: leaders impact on parties. Parties effect leader popularity as well.

Evaluate the impact of party leaders by performing what if counter-factual.
• What if leaders didn’t matter? How much would vote choice differ. We calculated the predictive probability. Leader evaluations has an effect.
• If we remove the impact of leaders: leaders clearly do have an impact of vote probabilities. In these simulations, net of how they rate the parties.
• Across the 8 elections, the average is about 8 points: the average probability changes by about 8 points. If leaders got more important, should see a steady increase across time. Can’t in this graph (not much higher now than in 1968).
• Asked them to rate the leaders but not the parties in 1984.
• The effect varies from election to election. The impact of party leaders was barely difference in 1980 and 1988. There hasn’t been an increase in party leaders.
• If leaders don’t matter and they are voting for the party to supporting the party.
• How many people would change their vote if leaders didn’t matter.
• If leaders wasn’t a factor: the impact is a little less than what we expected. Looking at what people were induced to change their vote.
• 6% of people would have voted differently had their opinions of leaders changed.
• Is it liking a leader that attracts them to the leader while negative evaluations may have a larger impact. Being a nice guy won’t drive you to the party as much as hating the leader will drive you away from a party.
• The final aspects: the bottom line: how much difference do leaders make to vote change. Unless one leader is more or less popular: for every person is attracted to a party you can have
• How much would the party vote change if the leaders didn’t matter. For the 8 elections the average impact was only 3 percentage points.
• In 1993, the impact of party vote shares is twice as large. If leaders hadn’t mattered in 1993: the liberal vote share would have dropped to 6 percent, Conservatives gain 4 points, NDP gain 2 points.
• 1993 leaders was really important. The party with the most popular leader would stand to loose the most. This usually means the wining party.
• Leadership mattered most to the losing parties: PC. If leaders didn’t matter Reform would have displaced the PCs and there would have been no merger.
• 1997, 2000 if leaders hadn’t mattered, Reform would’ve done better.
• It will be hard to argue with this data that leader have become more important, if anything the trend is downwards. Seems that as popularity of leaders decline, leaders matter less to outcomes. Therefore, the presidentialization thesis is difficult to argue.
• For leaders to become more important than the parties they lead. As popularity has declined they have mattered less.
• Leaders are important but they haven’t become more important in recent years.
• Leadership is a broader element: if you have a leader that has a charismatic nature it will attract better candidate.

CRITICISM of How Leaders Effect Parties:
• Controlling for party ratings and how they feel about party leaders are very closely aligned.
• Other problem is that the first television election in Canada was in 1957. Maybe if we could find there was a jump of impact of leaders before the period we are looking at. Only after 1968 had people began to name TV as most important sources of info  television personalizes coverage more that radio or newspapers.
• Attention to leaders can vary from year to year: we don’t know how coverage has changed and not changed.
• The attention paid to leaders has increased BUT much lower in Canada than it was in the US and France.
• People are voting for a local candidate in Canada and party label. Local candidates have a powerful effect about vote choice.
• Attention to leaders has increased but it’s nothing like in the US;.
• BUT there is a fluctuation: it varies: 1968 a lot of attention paid to the leaders. But sometime parties become more salient. Television coverage becomes more and more salient.
As attention to the media fluctuates
• Some leaders are assests for their party: in other cases the party will play up that party leaders. Some leaders are more visually more interesting more lively personalities.
• Presidentialization thesis.

Who Votes on the Basis of Leaders?
• The less informed, and the people with the least educated parties.
• They don’t have the cognitive skills and reading skills. May not have the resources to find out about the parties.
• Somehow people should be voting about the issues; that we should be weighing the party issues BUT politics is about shaking hands. Giving a mandate to a party: the party has won the election and the party now has a mandate BUT this isn’t true.
• Voting on the basis of leaders: it’s unsophisticated at best about the leaders and at worse somehow irrational.
• If the leader is going to be prime minister, they should be important in the decision making process. Elitist argument: it would be better for people who don’t know the issues don’t vote.
• Sophistications: who looks the best. If you can’t run a campaign if you dress funny. Preston Manning image change in 1997 might be important, here.
• Education doesn’t make much difference for whether they vote on leader evaluations. It’s important for people who really struggle.
• People now say that the Canadian people decided to vote in favour of Free Trade.
• At every education levels people factor in leader evaluations. There is research in Canada and the US. They have a good scheme of what a good president or what a good candidate should be.
• Amount of attention paid to leaders can vary from year to year (no studies comparing coverage across time). One study of newspapers found that more attention is paid to leaders, but amount of attention paid to leaders as opposed to party is lower than in both France and US.
• When you look at the prototype it reflects performance criteria. The sorts of traits are using has an influence.
• When voters in the US are asked: people in the University will make personal comments about the leader. People in University  are more about the personality of the leaders.
• Where education makes a difference is in the nature of the comments: the performance related characteristics.

Steven Brown: what do you like what do you dislike about each party leader. The key leadership attributes, dynamism, empathy, personal style, political skills.
• They found that the people who are more educated are concerned with task related elements. The notion of proto-types are relatively enduring.
• Some people have a fairly constant understanding of the leaders.
• Based on theories of social cognition: The studies that look at prime ministerial have a limited ability you can process the information. Human beings have limited capacity to process information we look for cognitive shortcuts. One reason that leaders are important in Canada is that the complexities of multiparty system. People are in more need of shortcuts.
• People can make inferences about leaders based on personal characteristics. Female leader is more compassionate. A leader that has skills in foreign policy will be better at dealing with that area.

Cutler: the leaders social background characteristics. People will support the leader if they are the same as them. If they are male they will not support the female. If the westerner runs the party then they will vote for that party.
• People vote for them.
• Cutler: it applied across the board that demographic similarity voted for the leaders party.
• The key characteristics are sex, language. Sex matters in 1993. Even though the nDP lost support massively. They did manage to bring women to the party. Conservatives attracted some female voters in Kim Campbell.
The two leader. Men liked Campbell much less than they liked Manning.
• Women were less resistant about negative messages in media culture.
• Cutler: religion didn’t work: Catholic leaders doesn’t make people more likely to vote for the party. Language is obvious: Man or Women
• Media doesn’t talk about the leaders religious supporters: Manning fundamentalist preachers, Stockwell religious. The media made a great play that Stockwell: Fundamental Day, religion is salient: dis-similarity of the religion.
• The Christian Fundamentalist don’t like him very much there.
• 1993: Brendan O’Neil, sex mattered in 1003 because the NDP & Conservative attracted new female voters despite massive electoral losses. Idea that Women more resistant than Men to negative messages about Kim and to positive messages about Manning.
• Exception in Cutler’s study was that religion didn’t work: why? Because language is obvious, gender is obvious, region is well-known, Religion not usually a factor in the media. (Both Manning and Day were fundamentalists, but only affected Day because Manning’s religion wasn’t well known.
• We look at the leaders versus parties: a 32 year span do leaders have more impact than they did in the past.

Do Campaign’s Matter?
• Campaigns don’t matter quite frankly until recently. Until recently, conventional wisdom was that they didn’t matter.
• Why? 1) Columbia Studies: they were 1940 studies. They were trying to understand the impact of campaign communications. They wanted to understand attitude change dynamics.
• Campaign propaganda: they started off with a consumer model. Companies were marketing their products. Campaign propaganda.
• Voters were likened to consumers: debating which car you want to get. SO you might weigh the benefits of one party and the other.
• Unfortunately it was the 1940: Roosevelt election. They didn’t need the campaign to make up their minds. Only about 8% changed over the campaign. Their mind over the campaign.
• Using the language of their consumer model: the major function of the campaign is to reinforce existing predispositions or reactivating.
• Or the campaign would crystallize the attitudes.
• The major function of the campaign was reinforcement. People paid attention to news about their party. That’s one reason campaigns don’t matter very much. There were not real findings that shook this decision.

Blais/Nadeau economic voting. These models show economic voting. If you can take one economic variable and one political variable: whether the leader is from Quebec. It seems you can predict outcomes: these models seem to predict elections. If you can find one economic variable and one leadership variable.
• Campaigns are important for democracy  people need to see things happen in democracy.
• If they don’t change the outcome.
• There is a strong tendency to compete: if the parties have equally strong campaigns.
• Economic voting models there is nothing automatic about these process. YOU need the campaign to form their evaluations vote choice.

Time of Vote Decision 2004 and 2006 CES: during a Campaign (38%/29%), On Election Day (14%/15%), Before Campaign (48%/56%).
-before campaign 2004 48% 2006 56%
-during campaign 2004 38% 2006 29%
-election day 2004 14% 2006 15%
Around 15% of ppl decide on election day, and this is consistent across time.
• Study showed that more than half of voters decided on how to vote.
• People decide on election DAY>
• Reactivation the Outcome: 1993 the progressive conservatives failed to reactivate party loyalties. They failed to reactivate the electoral coalition.
• Opportunity for new female candidates to forget yse to media, stuff, learn the ropes.
• Valance ISSUES: issues where everyone agrees on goals but each party has a very different management strategy to show its success.
• Incumbent party will try to shift blame on others.
• Position issues are when voters do take sides. Which policy proposal do they find more persuasive. Do they want $100 month or do they want a national daycare program?
• Help voters locate the parties on the issues: the campaign played an important role. Where does a campaign effect voters position on issues.

When is a campaign most likely to affect voters? On what kind of uses do campaign matter more?
• Same-sex had its people breaking down it’s support. If there is a territorial issue: GUN agriculture. Highly concentrated has a big impact on the issues.
• Two issues that are new and dramatic.
• Bloc says we want TWO TIER health: that would be new and dramatic. Then it becomes a rhetorical issue: Free trade election was almost a one-issue election. It was a rhetorical struggle. The opposition parties called Free Trade the Mulroney deal. “Deal is shady terminology”.
• The opposition parties tried to make it a social issue, lose of sovereignty. The Conservatives were about economic issue: anti-protectionist issue.
Another way that campaigns matter is through priming.
• Nadeau/Mendelssohn talked about priming in their religion reading. Priming occurs when voters change their mind. They weigh some other factor more heavily in their vote choice.

What is primed in a campaign?
• Leaders: media focus. Difficult to downplay leader in debates. As election day gets closer, leaders should get more important to vote choice, especially of those who pay attention to news.
• The extent to which leadership gets primed depends on the campaign.
• Are they going to give the most weight on party loyalty
• Leadership as a primary factor. The Party ID.
• As election day draws near you would se leadership play a more and more of a role. Precisely because of the personalized way people cover elections.
• The leadership depends on whether it gets primed.
Issues: parties has a strong incentive to prime issues. They want to give voters & parties loyalist a reason to vote for them. The extent to which issues get primed depends on the issue. It’s been a period of high unemployment.
1988 issues primed: free trade: exception.
1993, 1997: either classic valance issues or multi-issue agendas. Issues crowd each other out.
• Some issues are already salient with healthcare. There is much less scope for day to day issues. Of the three elections, the only one.
• In 1993, 1997 you either had classiv valence issues: and you had multi-issue agenda’s Your much less likely

Party ID:
• Priming people’s party loyalties. Some people are Liberal to the core, but even party loyalists will tire of voting for a party if it doesn’t remind them of why they are partisans 2000, 2004: Liberals ran a values-based campaign.
• The Liberal Values mobilized the partisan.
• Parties have a strong incentive to prime party ID> The typical election campaign generally de-primes party ID. If you think about the Michigan Model makes sense here> People vote for the party id unless short-term forces are sufficiently strong to change your vote. The more an issue/leader gets primed the less important party ID becomes to vote choice.
• It can effect their vote by getting them to see the leaders.
• Priming is a zero sum game: priming is media effect because they personalize coverage.
• Campaigns affect directly (make them change/make up their minds) or indirectly (affect basis on which they vote). Priming explains why People change their minds (election is REALLY about leadership, rather than other issues).
Campaigns don’t effect all people equally. Matters most for those who aren’t strong partisans. Some voters have seen their mind by direct attack and priming is indirect. What’s this election about? It may be leadership.
• This will work with people who aren’t strong partisans. Those people will be hard to persuade. There are others who don’t have a predisposition to support a party.
• Campaign matter most to people who will make up their mind during the campaign (seems obvious, but if we want to measure campaign effects we must look at the half of people who haven’t already made up their minds).
• If you look at everyone you’re going to see that half the people have made their mind up already.
• Campaigns aren’t going to affect all people equally. They affect non-partisan mostly. Young people are more likely to make up their mind in the campaign.
• Even people who decide on election day: campaign deciders are a little less interested in politics. A little less knowledgeable about what the parties are promising. Some of the people who decided before hand they decided they were interested.

Reported Vote by Time of Decision 2006:
Before Campaign
• Liberal 30%/26%
• Conservative 41%/41%
• NDP 15%/20%
• Bloc 13%/7%
• Greens 2%/7%
• First Two weeks of the Campaign
• Lasts Two Weeks of the Campaign
• Liberal (35%/26%)
• Bloc (11%/6%)
• Conservative (21%/31%)
• NDP 15%/22%
• Greens (4%/6%
Campaign Deciders: Vote Choice and Vote Intention 2006 CES
• Liberal intention

Evaluation of Debate Performance, 2000
• 44% Clark, 10% Chretien, Day 17%, 5% Duceppe.
• Interviewing data.
• Joe Clark’s winning debate performance in 2000 helped his party with a 4 point increase after the debate.
• Chretien ratings dropped 3 points and remained there. Chretien weak performance in the debate cost 2 percentage points and remained there.
• Important for Conservatives & NDP because they were facing electoral extinction.
• Relationship between standing in the polls and coverage. The party needs to do better than expect if a minor party wants to get coverage.
• Do telephone polls affect the way people vote? People do use poll results to decide how to vote, but surveys themselves shouldn’t impact vote decision. Problem is that people surveyed are more likely to vote because if the agree they are likely to be interests and by talking about the issues people deliberate and decide to vote.
• The campaign was not that consequential.

• Conventional wisdom until recently was that media a little effect. Initial academic thinking believed in massive effects of media (Lipman Lasweel: idea of a hypodermic injection of propaganda). To say there is a minimal effect of the media runs against our intuition.
• The massive effects thesis was destroyed by the Columbia School in Eerie.
• Columbia school found that media reinforced existing/reactivated and preferences and crystallization. Minimal effects attributed to selected exposure and interpreted news as favourable to their party even if it wasn’t. So the predisposition was stronger and reinforced existing preferences.
• There was some cases where we saw crystallization: people could preict the values and the media and the campaign crystallized their position.
• Selective exposure: people who were Republicans pay attention to Republic media. When they watch the news they saw favour in their party.
• Preaching to the converted
• There was a two step flow of communication. Opinion leaders every stratum of society. The people who are most partisan. These political junkies and then they talk to other people: water coolers.
• The Two Step Flow of Communication: does it still apply.
• The 1940 Columbia School left academic community with idea that media has minimal effects. Renewed attention in 1960s (TVs more widely available). Expectation of more media effects, disappointing results.
• Television is a different source of medium most accessible. Doesn’t require cognitive resources so there was an expectation that we begin to see more effects: IT DIDN’T HAPPEN.

The Limited Effects: Not-So-Minimal Effects Thesis: These researchers saw the power of the media on what to think and how to think about it.
• Agenda setting relates to priming: the media had taken a lot of emphasis on leadership. IF the media play up a particular issue: on the leader.
• Another indirect effect is framing: how the media frame a story can effect people’s views. Some parties seen as owning particular issues. Was Free Trade about social issue or an economic issue?: getting access to American markets…
• Agenda Setting and Priming are related. Priming occurs because of Agenda setting. There are more direct effects.
• Agenda setting occurs when media attention increases the important of that issue. It sets the election agenda. What’s the election all about?
• The amount of attention in the media was an issue primority.
• This agenda setting was a case of the media telling them what to think about. Which issues they should think about. Determining the salience of issues. The more coverage an issue receives the most important the issue.
• Why Agenda setting is important? The media might focus on issue ownership. Some parties own a particular issue. Parties that are Centre/Left on health, education. Parties of Right own economic, inflation, crime national security, foreign policy.
• Parties have enduring image of being good.
• Parties will try to play up the issues that will help them. They will play down the issues that will hurt them.
• Think of campaigns of competitions of control of the agenda. Parties try to set the agenda. They want the parties to focus on the issues that they are strong.
• Media is a critical player. It’s still the case that the parties are heavily reliant on the media to get their messages out.
• The Internet, Email Campaigns has provided with more direct communication with voters.
• Parties rely on television. The parties are reliant opn the media to get their messages out. That’s why agenda setting theories are really media theories.
• It’s not a competition between the parties and the media. The media aren’t neutral: They are FILTERS: The media mediate the flow of communication.
• The media pick and choose.
• The media has to worry about audience share and readership: they depend on advertising revenue. Advertisers will want to buy advertising time and space.
• The media will play up some stories and play down others. The criteria they use: it is a right wing and left wing bias.
• Media content is governed by news worthiness. You have to provide content that will attract viewers or readers. That means selecting stories that feature conflict.
• There can be a selection process at work. The media may decide to highly. Can hurt some parties. The media will not necessarily line uip with the agenda of the political parties.
• The final thing: agenda setting is a zero sum game. One issue gets played up the more airtime. T
• The New York Times: on ABC, CBS will fit on the NEW YORKTIMES> Mansbridge said that the CTV, and the Globe and Mail. If you transcribe the news on television. There is only so many stories of the news paper
• Why might you expect that agenda not very strong. A lot agenda setting tends to not be very strong.
• Those commercials that play up particular issues. In that sort of situation you see strong agenda setting.
• Media emphasize the gay-marriage issue.
• There are different media sources: There is a pro-liferation of media sources. Now there are multiple places for exposure to news.
• Stuart Soroka: did a dissertation and looked at the coverage of newspapers; the agenda was similar: if you looked at any period of time you might see a difference amounts of attention overtime the fluctuation was very similar no matter what the region of the country. But when health become more important it was more important everywhere. Some stories are sensational and therefore have much potential (gay-marriage, scandals). This didn’t hold, in 2000 health-care was already prominent but because more so.
• The news stories news cycle: you can go
• Maybe people have become more political consumers of the media;. The Biases in the media tend to be very subtle and when you do that it is amazing.
• People have to be paying attention. Some people don’t pay any attention to news. Stuart Soroka typology had a priori; Stuart said there were issues that were important there wasn’t much scope for agenda setting.
• Most evidence for agenda setting occurred with health. Spending on social programs become more important. Crime want’s very important there was limited agenda setting effects.
• Another factor there isn’t much issue coverage: ¼ of stories focus on issues. Polls, horserace, gaffes, leaders. The media is focus on the horse race. Framed by the leaders/horserace. “Why is the leader taking that position now? Who is he trying to appeal to??” Who is behind who is ahead. It’s the leaders. When the issues are covered why is the leader common to appeal to who is this supposed to appeal to.
• When you look at the way the media portray the issue they want to attract the votes. People who are paying attention there is proliferation of media sources. Different issues lend themselves to agenda setting effects.
• ¼ is type of all democracies in Canada.
• When we looked at press releases.

Media Coverage: Objective of the Parties:
1) Agenda setting we want the media to focus on the issue that they ‘own’.
2) They want to be visible. The voters are least likely to see the NDP would be their natural constituency.
3) They want to have positive coverage. Their coverage needs to be mostly positive.
• Parties that can’t form the government don’t get much coverage: NDP and PC got much less coverage. English Canada did emphasize the Bloc
• In Quebec these is a big visibility bonus. Martin promises a nationally funded day care program.
• A lot of people will only see the headlines: Just get the headlines: There is usually a story about each party. There are five stories and then a general story about how the parties are doing.
• The two leading Parties get a large share of the headlines.
• The most dramatic evidence: When we look at the order of presentation. NDP is last almost always. CHECK WebCT.
• It gives people a clear message. These are the also runs in the fourth event in the news.
• The order of presentation about the election.
• You see a pattern of negative news stories. The frontrunner get more coverage more prominent coverage but they get much more negative coverage.
• Does the tone coverage matter>

The Mendelsohn/Nadeau Reading: example of not-so limited effects. Gidengil says it’s a possible EXAM QUESTION: Include the article for Religion on mainstreaming Catholics who pay attention to the media. FOR THE EXAM. Why? Can do content analysis of media coverage day by day & link with changing voter choices (polls).
• The Mendelsohn/Nadeau reading “The Rise and Fall of Emerging Candidates” is a direct persuasive effect. One reason we see direct persuasive effect. When the change is made to interviewing people in the campaign. They did a content analysis of the media coverage: you can see how voters are voting. How they evaluate the leaders you can link up changes in the nature of media coverage and changes in issue salience.
• They document a phenomenon that was first observed in the US. It looked at Ross Perot. The Rise and Fall of Candidates.
• They looked to see it a pattern was held in Canada. 1st: The media really take to this person: then that person becomes a serious contender: Ross Perot: the Kim Campbell suddenly realize that they haven’t been critical and then go to the ultimate extreme.
• A lot of Kim Campbell but by the time the Conservatives were level at zero: Mulroney’s popular 10% unpopular (as popular as his shoe-size).
• The election campaign media become much more critical than Kim Campbell. The media focused less on the personality of Kim Campbell, but more on the partisan figure. “Elections aren’t for policy discussion”: It was seen as a gaff. It wasn’t seen as out of touch with the people.
The media: focused on Kim Campbell the partisan figure all the negative baggage. “Kim Kim your just like Him”.
• They were reminded about the Conservatives; GST and Constitutional Wrangling Charllotteton and FTA.
• As the coverage becomes more negative: evaluation of Kim becomes more negative. Nadeau and Mendelsohn are able to note the changing tones for Kim Campbell than the changes in Conservative voting intension. The Conservative voting intentions and the relationship of Kim Campbell and the changing tone of coverage.
• There are negative shocks: Voters are ensured to negative coverage;
• People are used to it and they come up with a negative shock methods.
The Ideas of Shocks: media has to be really negative to be really effective.
• They define as shocks when Kim Campbell attacks were more negative shock. Coverage has to be really negative than average  very low thresholds. 1/3 of the days qualify as shocks. You need to have a lower thresh-hold higher threshold according to Gidengil.
• If a leader was shown to stumbled. Negative story. The medias was doing that in every party. Not everyday counts as negative and positive coverage.
• The other aspect is that they use the same days news coverage. They use the late night news but people are covered in the afternoon: hard to believe that people are being influenced by the news they haven’t yet seen. The content analysis covers the late evening news and evening news analysis BUT people interviewed won’t have seen it yet.
• The shock idea was a good one but there is cumulative coverage: positive tonight, negative again, negative neutral it won’t have much impact on people. Negative could have an impact on people but the steady dripp drip drip of several consequative negative stories may lose the effect. Having consecutive either positive/negative coverage would make a difference.

How do we conceptualize the impact of the media?
• The polls aren’t that important.
• The public private funding CTV gets a bit mushy. There is some limitation tot eh Mendoslon Nadea article. Stockwell Day was an example as the Rise and Fall coverage. Day is the new Trudeau. People love building someone and knocking them down. There is a conscious stepping back that occur
• NDP Leader Alexa McDonough: We tried to evaluate the leaders and valythe various leaders.
• The previous nights coverage. Both tracked evaluation on a zero to 100 scale. The mean of the media coverage We were trying to see when media become more positive. When coverage is negative evaluation are positve. And the then when the it’s positive coverage come more positive.
• There is a statisticatlly negative relationship. The more positive the coverage the more negative the ratings become.
• The tone of media coverage made the scale of coverage: evaluations were positive on average. His media coverage is almost always negative Maybe it was the coverage was Charest. Check WebCt graphs.
• Preston Manning Reform: he obliged: as statistically positive relationship and the tone of coverage. Here there is a strong relationship Canadian media coverage effecting medias evaluations. Something else could be driving this other than media coverage.
• The media simply reflected the people.
• Vote intentions moved before media coverage. Jean Charest: coverage of Charest become increasingly positive. After May 24, there was much more negative coverage, but evaluations continued to climb (rise and fall?) mixed evidence. There is a one or two day lag (between media and audience response). Positive coverage is driving up Charest. So much coverage: “But wait we give this guy an easy ride!”. The PC had lost their party status. The media was becoming much more negative in their coverage.
• Its mixed evidence. Jenkins article.
• Horror Stories: 1997 do we want another leader from Quebec. Bad ads desperation. Always get this: it didn’t make a difference.

• Limited Effects: Not-so-minimal Effects Models
• One last way that media can make a difference: helping voters learn. This is a way that campaign can matter in general. This helps voters locate parties.
• Campaigns are a time to catch-up for the average person: helps the voters learn where they stands.
Richard Jenkins: studies Reform in 1993 election. The campaign mattered because it allowed voters to locate Reform as a party that wanted to cutback to the Kensyian welfare state. Effect began to show in the 2nd week in the campaign.
• Change in Reform voting intentions as knowledge goes up (both up). Jenkins relates this to the amount of media coverage Reform receives, which spikes just before voting intentions do.
• A women thought that Reform was going to stand for a stronger social safety net. “Oh, yes…I support reform!”
• If you track people’s knowledge of reform you see people start to get it right. The effects showed up in the second week of the campaign.
• What the Reform is all about. You also see a change in voter intentions. Knowledge about Reform goes up. The key point in Jenkins is that he relates this to the media coverage and the coverage goes up before we see real changes. We seem more coverage and they understand. Vote intentions increase accordingly.
• Why study of media effects: why if we look at the electorate are we unlikely to see strong as a whole.
• No one spends the time to learn. No one has an incentive for politics. People just don’t pay attention.
• People contest to one party: people aren’t Blank Slates. Even when we see messages that strike us.
• Peoples social identities: People who were less disposed to accept the message: Fred Cutler: gender identity severed to innolate they may have very coherent ideas about politics.
• The two mediator model: the two mediators: 1) reception and 2) acceptance
• Harder to comprehend messages if you don’t have an existing knowledge. If we hear the NDP has a prescription drug plan. Reception is critical. Even if people received the messages they may not accept them.
• Resistance: people will resist analysis will resist by media messages. This is the model that Jenkins is trying to test. He needs to find someone’s likelihood of reform.
• People who think that deficit reduction. These are the sort of people who are most likely to support deficit cutting message.
• Some people who like the Reform message. People who are supposed to reject and you get predisposed not aware, neither pre-disposed or aware.
• It’s the people who are predisposed wand messages who are the most effected. The 25% increase for the people who are going to vote reform.
• People who pay enough attention and are predisposed are much more likely to change their vote.
• Among people who are aware it is only the people who are predisposed.
• Finally who are unaware; were not much effected.
• There is a second telling: that Jenkins. Reform is threat to national unity. People who support reform are ethnocentric. Immigration didn’t have an effect.
• When these Negative Views: who are the people most effected: the people who paid-attention. But did not like the fact that this would exacerbate the constitutional crisis. You see a trend away among the people who are aware.
• Interesting ly with low awareness they have began to catch-up on a lag. They aren’t paying attention. That’s the two mediator model.
• You have to pay enough attention to the news but you don’t have
• A co-linear relationship: people who are in the middle of attention and awareness but they aren’t so tuned into politics THEY WILL BE EFFECTED the most.
• Jenkins doesn’t mention that the intensity of media coverage,.
• There are other issues that don’t get attention at all.
• It’s not quite as simple as Jenkins model implies. People don’t pay attention people don’t have predispositions.
• Are these groups predispositioned equally or is there some other measure.
• He dichotomizies the various group. The Median for the sample establishing the dichotomy.

Knowledge Voting

• Knowledge how much people know about politics. A lot of people know a little and a few people know a lot. That conclusion is reached in the US.
• Information shortcuts for voting behaviour: The most basic think people could know: the names of key political plays. Who is the leader of the Liberal, NDP, Cons, Bloc.
• In 2006 people did much better than in 04.
Knowledge of Party leaders/Premiers 2004 and 2006
Lib 2006 84; 2004 83
Cons: 84, 60
Bloc 85; 79
NDP 75; 55
Provincial Premier 72;70
• You get 87/86 were able to name the leaders. 14% of people interviews didn’t know Stephan Harper’s name.
Knowledge of Political Figure: Federal Finance Minister: 2000
Federal Finance Minister (1997)
• 2004 General knowledge: Provincial premier 70%
• Primary responsibility for healthcare: 52%
2006 General Knowledge
Cut GST (Cons): 95%
Provincial Premier: 70%
Judge in sponsorship scandal: 70% (despite the election turning on the sponsorship scandal, and half the ppl getting multiple choice questions)
Gomery report cleared martin: 55%
British PM: 55%
Female Cabinet Minister: 32%
• Female cabinet minister who ran against Martin: 43%
• Prime Minister at time of CUFTA (Canada US Free Trade 55%).
• Cut GST (Conservative) 93%
• Provincial Premier 73%
• Judge in the sponsorship case 70%
• What didn’t the Gomery Report. Gomery Report cleared Martin 53%
• Female cabinet minister 33%
• Politics isn’t very salient in peoples lives. Does it matter? Feminist scholars are particularly critical of these questions because women score lower. If ask about things women need to know, then women will score better.
• People who are likely to vote, know more. People who know more are more likely to vote.
• We are likely to be understanding how little they know. The none-response issue: there is always drop off: it’s people who aren’t very interested.
• We over represent people who vote. People overestimate the number of voters. If people are not interested enough to stay on the phone 25. It’s a Canada wide sample. Interviewed for 25 minutes.
• We over represented young people:
• Do we have good spread? YES because it pairs with election statistics.
• Are the people who are voting do they know? Is this okay? What is the down side of the people vote. Is there is an educational process in voting?
• The distribution of knowledge is uneven. Certain groups of people have the most knowledge then you’ll have people who are less knowledgable.
• The enlightened choice will not occur with uneducated people their interests with the correct choice of party they have cast the wrong vote.
• Do people know what parties are saying. Can they link up party.
• People know GST very clearly.
The 1993 Federal Election: Support GST (Conservative) 63%
• Oppose GST (Liberal, NDP 52%
• Do away with NAFTA (Liberal and NDP) 53%
• Increase public works spending (Liberal) 47%
• Eliminate deficit in five years 45%
• Eliminate deficit in three years (reform) 42%
• Lucienne Bouchard grilled Kim Campbell about the deficit.
2000 Federal Election
• Bring in single tax rate under 100,000 (Alliance) 39%
• Bring in criminal biker law (Alliance and Bloc) 38%
• Bring in national prescription drug plan (NDP) 23%
• Bring in law to repay debt in 25 years (Conservative) 16%
2004 Election Knowledge of Party Position
• Drop gun registry (Conservative) 58%
• Increase military spending Conservatives) 56%
• Do away with the Federal Sales Tax on family essentialist (NDP 49%
• Spend 4 Billion dollars to reduce surgery wait-time 49%
• Spend 250 million AIDS in poor countries 41%
• Inheritance tax on estates over 1 million dollar (NDP (34%
Socio-Economic Status and General Political Knowledge (2006)
• Less than High School 2.1
• Completed High School 2.4
• Some post-secondary education.
• The single most important characteristics is the formal education; the more education people have the more they care about politics.
• There is a gender gap: it can’t be explained by education and income. There is a gender gap political knowledge. You can control for education.
• The ability to internalize the education.
• Disciplines; university education: those with an education in all fields not just Political science people. Everyone in University has an increased understanding of the politicians.
• There is a relationship between education and social networks. Social networks provide an opportunity will pick-up and education. So they will run into people with certain social politics. The people who talk about politics: you don’t want someone to have acquire a new education.
• Government becomes more salient over time. University government interaction.
• Basic literacy skills have an include. 25% of the pollution can’t read at a Grade 5 level. Education instills information and process.
• Another thing to do: it instills norms of civic duty. There is something about university education.
• The final Think: education is related to income. If you don’t have a lot of education you may not have a very high income you may lack the resources to participate. Taking a newspaper, having the daily newspaper fro some people the sheer cost of a newspaper may be too much.
• Also if your trying to make ends meet; you may not have the time and energy to pay attention politics: you don’t have time to learn.
• The other income effect: income gradient isn’t as steep.
• The other thing to do on income is how you preceive the system: then if the rich getting richer and the poorer getting poorer.
• So people who are affluent they have resources and cognitive skills.
• Income both have an effect.
• Formal schooling can help compensate for material disadvantage.
• It’s not just the people who are poorer.
• The Gender gap wasn’t big in 2006. It was a statistically significant gap. In western Europe. We keep see this difference.
• CEGEP women are no better informed than men who dropped highschool.
• Women with house hold incomes are not better than women in the
• Women with education and income don’t matter to women.
• Are you surprised for education gap.
• Women are more likely to graduate from university undergrad.
• Women are socialize to not like math but there is a claim.
• People are primed: political science communities. Psychological agency.
• It’s going to take more women elected in Canada. Women don’t’ care about female politician.
• Only 51% knew MacDonough. 14% knowledge gap about Sheila Copps gender.
• Stephan Harper is anti-feminist says Gidengil.

Knowledge Voting Analysis

-Cognitive misers, therefore people are rational in being poorly informed about politics.
-Aggregationist argument (Paige and Shapiro in the US). Core idea is the collective public opinion can accurately reflect the needs and wants of the citizenry even though many individual expressions of opinion are ill informed and inconsistent. Magic of aggregation.
-Low information rationality argument: gut reasoning. (poking in the US, Sniderman). People can make use of info shortcuts that enable them to reach the same choice that they would have made if they were fully informed. Therefore it is quite rational to be ignorant.

Aggregationist: when people don’t know the answer, they will tend to oblige interviewers with answers despite having non-attitudes. Answer more or less randomly, will express inconsistent opinions.
Shapiro finds a basis for optimism in this fact: randomness is a positive thing, because in the aggregate the random errors will cancel each other out. Draws on the condorcet jury theorem which shows that under certain conditions the quality of group conditions can be superior to the quality of the decisions of the individuals that comprise the group. Applied to questions of political choice, the theorem implies that every citizen has a better than 50/50 chance of getting right, thus probability that majority opinion will be right is virtually 100%. Right in this sense means “the decision they would have arrived at if they had been fully informed – enlightened choice.”
As long as probability of individual citizens getting it right is over 50%, the theory works.
-show that collective public opinion moves in predictable ways, thus is not random but meaningful. When intensions mount, support for military spending increases and reverse. Crime rate goes up, support for get –tough approach goes up. Etc.
-ensure that always better than 50/50 is by using info shortcuts. Truly random opinions will cancel themselves out, some people will be well-informed, and others will use info shortcuts.

what are some flaws in the aggregationist argument?

-easy to manipulate people by providing seemingly trustworthy shortcuts
-evidence is consistent with systematic biases in public opinion. Opinions of uninformed aren’t random, but products of systematic bias. Are conventional seeming answers actually the rational approach (like getting tough on terrorists when cars cause many more deaths)?
-even if people were well informed, they wouldn’t necessarily arrive at “progressive” conclusions. However, statistically, the impact of info is to move people to the left.
-problem: citizens aren’t just uninformed, they’re misinformed. People will overestimate the amount of crime, how much of the budget is used on welfare, etc. consequences are more serious than uninformed (random self canceling errors) because get systematic basies in collective public opinion.
-the only of the 4 items on which people seemed to be correctly informed was gap between rich and poor was growing. (crime, pollution, aboriginal, gap between rich and poor)
Misinformation and policy preferences
-misinformation doesn’t produce random policy preferences, errors don’t cancel. Many people would probably take diff positions on policy if they had the facts straight. Misinformed are more likely to want to cut welfare, cut aboriginal spending, do less to re-abilitate offenders etc.
-low income people are also misinformed about the gap between rich and poor
PROBLEM 1: can’t necessarily count on aggregate analysis to overcome shortfalls in information

Problem 2: assumes the information is evenly distributed across the population, don’t take into account uneven social distribution. Best informed are white, affluent, older males. This is important because collective expressions of public opinions are more likely to express the needs of this more informed group, and thus so will govt policy (to the extent that it relies on public opinion). Because people who are poorly informed have less than a 50/50 chance of getting it right.
-distribution of public opinion would look diff if people more informed. Study asking what if people who are uninformed were all well-informed as people who share the same social background characteristics. What if women in general were all well informed at the best of women sharing their characteristics?

Actual vs Informed Public Opinion

-some questions with only small differences between simulated & actual opinion. Better informed swing to the left. On some questions, it seems to work, but on others it is very different. 10 questions changed by more then 5pts. Av diff between actual & informed opinion was 10 pts.
-standard for informed opinion was rather low. (name 4 party leaders; correctly associate 4 policy positions with 4 parties)

(Social policy): average difference was 7.5 pts between actual and simulated. Informed opinion was not simply different, it was systematically different. More opposed to death penalty, less likely to be anti immigrant. Why does opinion move to be systematically more liberal? Don’t know. Most important result is for the death penalty because people change sides (actual opinion favours, informed opposes) shift from one side to the other is consequential. Last time parliament debate death penalty, the MPs collectively became less favourable to it as they debated. Maybe this is because education tends to make people more tolerant. (liberal moving opinion has also been observed in the US, UK, Australia).
-maybe more informed have a liberal bias because media has a liberal bias.

(Fiscal issues)
-doesn’t apply strongly to fiscal issues. Av diff is 4%
-vote choice doesn’t seem be be affected, though policy preference is. Maybe for vote choice there are so many possible reasons to vote that polic isn’t at the top (maybe uninformed simply vote for incumbent or party that might win. But this doesn’t work consistently).

Impact of social background on actual versus informed opinion

-if women were as well-informed as men, gender gaps would increase
-needs and wants of diff social groups are not the same, if consistently uninformed then they will be underrepresented.
-big change in pre-baby boomers because they were socialized in a more conservative time. This is a potential explanation. Older people probably disadvantaged on knowledge questions because they are more forgetful (answer on the tip of the tongue).

Aggregationist argument assumes impact of info is directionally neutral. More meaningful real opinion, but no connection between info and taking sides. Study of 1992 Charlottetown challenged idea that errors and random and self-cancelling. Found that info wasn’t directionally neutral. Well-informed voters voted diff and voted diff because they were well informed, controlling for education (more likely to vote yes). If people who are uninformed have diff rather than no opinions, there won’t be a self-cancelling effect.
-this is true of every relevant social group. Western Canadians most likely to vote yes, but informed divided 50/50 and uninformed were unlikely. Why? People who lack info fall back on stereotypes (stereotypes can be crude, but difficult to change).
-problem bc poorly informed responded differently because of the way they used shortcuts.

Low info rationality argument: people can make up for lack of info by using informational shortcuts.

Many sorts of info shortcuts have been suggested (best used sparingly):

  1. Party ID: if you identify with party, can take cues from party. Is this rational? No, because in brokerage policies parties change. Party ID serves as a running tally, and as long as party performingly acceptably they will keep their party ID, if not, they will defect. But this implies paying attention, so not a shortcut. If someone doesn’t know much about issue anyway, unlikely it will shift their vote choice. For Party ID to be a rational shortcut, need to have at least some info.
  2. Reward and Punish calculus: vote your pocketbook. Economic voting. Voter could simply be rewarding govt for good luck, or punishing for bad luck of being in power when economy doing badly. Can also create perverse incentives for govts to manipulate fiscal levers to get shortterm economic good times before elections.
  3. Feelings about salient groups: this is particularly relevant when forming an opinion about a particular policy. Target of this policy is people on welfare, how do I feel about ppl on welfare? The problem of relying on feelings is that they often rest on stereotypes, which are quite resistant to change.
  4. Take cues from agenda sectors or interveners: (ex: Brian Mulroney in CUFTA as an agenda setter) Intervener takes a position once policy is out on the agenda (ex: President of Women’s federation etc). Strategy in 1988 for Lib/NDP was “how do you feel about agenda setter?” to cue into negative feelings about Mulroney. Problem: if people don’t know enough about politics to vote, they won’t know enough to identify intervenor’s. (Trudeau speech saying not good for Quebec in 1992 caused overnight drop in support in ROC for the Charlottetown accord). Interveners only help people who know something, not people who know nothing. Blatant opposite of the theory  people who know nothing can’t use shortcuts. Must be aware to know something was said, who said it, what was said and use the cue.
    -visible cues aren’t really that available. Trudeau’s Maison Eggroll is an exception.
  5. Fred Cutler argument: Demographic similarity to party leader. Problem: can you assume on the basis of demographics that share same ideas. (this doesn’t mean that people don’t do it, even well-informed people do). People have more than one social identity, which pull us in diff directions. Other problem is that demographic characteristics assume some knowledge. Gender and region is usually known to people. Religion is unknown and unimportant.

-info shortcuts are about making the info you have go further. Popkin emphasized this: not panacea for people who know nothing, must have some info to understand & make use of cue.
-shortcuts were imported from cognitive psychologists (and they aren’t very optimistic about them. Using peripheral, not central processing in our brains, thus not paying much attention.) relying on rough rules of thumb that may let us down.
-using shortcuts is a matter of faith. How do you know if they worked? Not a conscious process, people don’t go validate their shortcuts.

-when people rely on shortcuts do they reach enlightened choices? Or, do feelings substitute for ideas? Feelings can only substitute for ideas if 2 people who are otherwise similar have diff levels of info & feel the same way.

-found that feelings matter when ppl make decisions, regardless of how well-informed people are. Effect of feelings about Quebec held across all info levels in 1992. In ROC, the more positively felt about Q, the more likely to vote yes. In Q, the more positive felt about Canada, the more likely to vote yes. How do you explain this? ROC more informed are aware that Q often treated as 2nd class in their own province, history. In Q, more informed recognize large changes in Canadian federal system.
-what differed according to info was how positively or negatively you felt.
-people who were well-informed factored in things other than feelings. Number of considerations.

Info shortcuts do not necessarily enable people lacking info to make the enlightened choice.

Who Abstains from Voting and Why? VOTER TURNOUT
Concern about declining voter turnout. 2004 hit historic low at 60.5% Between 1988 and 2004, turnout plummeted 14-15 pts. 1988 was average for postwar elections, not very high (75%). 2006 went up to 65%, but still 10 pts below the postwar average. (this is based on registered, not eligible, voters).

Does this matter? If people weren’t happy, they’d come vote, so it’s a vote of confidence. Other people see declining turnout as the proverbial canary.

Explanations for Voting Apathy

  1. Boring: the elections themselves are boring, not very competitive. People are more likely to vote when they think their vote will make a difference, ie, when the election is close. No big issues at stake.
    Positive: 1995 Referendum had 93% turnout, which is stunning, something was at stake and it was close.
    -data supports idea that less people don’t vote because they think it doesn’t matter when election is close.
    Maybe 2006 had more turnout than 2004 because Libs had an incumbent minority, so knew they could be beaten. In 2004 incumbent Lib majority, so didn’t seem like it was that close.
    -relationship between closeness of the race and turnout isn’t strong. 1988 landslide had higher turnout than later close elections
    -draws on rational choice argument: only worth voting when benefits outweigh expected costs. Probability that your vote will be decisive. It is irrational for most people to vote.
    -when leading parties are neck & neck, turnout on av is 3% higher. People think race is closer than it is because of party ID.
    Why isn’t relationship closer? Why vote? Pressure from within social networks. Duty. In 2006 49% of people said they voted because of duty, 30% to make a diff, 15% liked leader/candidate.
    Andre Blais study (to vote or not to vote): can divide electorate up, half will vote out of sense of duty. Others decide it ifs worth it.
    If it’s duty, why the decline? Decline of feeling of duty. Does this break down by age? In the past, haven’t been very big.
    -In 2006, maybe new electoral laws giving $1.75 were an incentive.
  2. Permanent Voter’s list: declining turnout is due to switching from enumeration to permanent voter’s list (until 1996 enumerators would come to the door, first used in 2000. List updated through info sharing between governments & elections Canada. Can add name up to and on the day of the election). Why would the switch make a difference? Having someone come to the door might encourage to vote, remind of duty. New system puts burden on individual, not government (gives message that state thinks voting is important enough to send people around to make sure that you’re on the list)
    -problem that voter decline preceded change in system.
    -young people more likely to be left off the list bc more mobile; low income move more often/less money-time
  3. Changing societies: Changing times, changing values, more access to info, less religious, more morally permissive, work lives have changes, egalitarian, open to diversity, less accepting of hierarchies.. greater expectation of being able to directly participate in decision making. Neil Nevitt says there’s been a decline of deference.
    -this matters to voting: how? People who attend church more often are more likely to vote, stronger sense of duty? Social networks? Greater sense of belonging to the community? Leaders of religious group may actively encourage to vote. This effect not strong recently.
    -more consequential is decline in party ID. Linked to changing values, stronger when people needed parties to make sense of politics. Now people are cognitively mobilized, educated, more access to info, no longer need parties. Secondly, these cognitively mobilized citizens are less deferential. Turn away from electoral politics towards more meaningful forms of engagement.
    -New forms of engagement do not substitute for voting, but complement it. Not clear why cognitive mobilization would discourage vote… just won’t rely on Party ID.
    -parties not longer as effective in getting voters out, relied on women.

• Voter turnout: voter turnout drops heavily 2004 reached the lowest point ever, 2006 is an upward growth in electoral growth.
• These elections:
• The switch from the permenant voters list: we were looking at the changing times changing values. Nevitt: Decline of Deference: declining religiousity: most religious people are the most likely to vote.
• You have Christian Democratic parties in Europe that mobilize these people.
The Decline of Partisanship> Russ Dalton cognitive mobilization: people are more intelligent: more access in education. The percentage of people who complete high-school the big change has been there.
• You have a populace that is better educated. There is so much more access. More and more people have access to information.
• People are no longer willing to differ to political parties. People are less partisan than they were and there not as interested in electoral politics.
• They want a more meaningful way of engaging in politics.
• It’s not clear why cognitive mobilization of voting. Boycotts: buying a good for ethical reasons.
• An increased education makes a huge difference: people who are more educated are going to sign a petition. They are the most likely to vote.
• There are more options for people to express themselves.
• Education has a positive effects on all projects. Why is it that education regardless of education faculty gets them interested in politics? People have the cognitive skills and politics is complicated. You need to have higher cognitive skills.
• Education makes people more tolerant of the messiness of democracy in action: majority can’t always have its’ way, it takes time, there is compromise.
• People who have formal schooling can understand democratic participation.
• People who are more educated: people are more likely to identify with a political parties: educated people do understand that there is a difference between political parties.
• Secondly, there is little evidence that party identification is declining. Strong partisans fluctuate but it has no consistent trend downwards.
The one thing that has changed is the percentage of people who are leaners. The leaners are none partisan. The percentage of people who are leaners has decreased: there are more people who no longer have strong leanings.
• The political disaffection: the democratic melaise. There is a new concern for engaging citizens in partisan politics.
• This is the most pessimistic interpretation. People are more cynical about politicians: politicians are self-interested, they are stupid, they loose confidence in their elected politicians. If you see politics as pointless and or corrupt: you are going to be less likely to go out and vote.
Trends in Perceive System Responsiveness % agreeing the government does not care what they think.
• Canadians had a lot to be disaffected about in politics. The sponsorship didn’t disaffect:
• The decline in voting they must be happy: they are happy and when they aren’t satisfied they will vote. When Canadians are satisfied they sit on their hands.
• For every person who sits out the election: the NDP protest vote and the Reform and Alliance vote.
• There is problem of timing: political disaffection is not related to turnout.
Perceptions of Dishonesty:
• Declining turnout is difficult to link with increased cynicism: socialization: in other words people have become less active BUT people who grow up become aware of politics in which politics was held at a low esteem: the inculcation of civic norms.
• The Turnout was down
• Trends in Turnout by Age Group: the oldest
• The 1960s Generation X, 1970 Generation Y.
• There was no decline for the probably boomers virtually no decline the decline is confined to post-generation x.
• Generation Y: there is a decrease in turnout. Education doesn’t make so much of a difference.
• 1970s dropout there has been no decline in turn out in university: The university students aren’t turning their back on politics
• There has been a drop in high-school.
• The gap between University and Dropouts was 50 points. Huge drops in the age groups of dropout, college, high-school.
• If it hadn’t been for University Students: education really mattered in turnout.
• Get people in school and get them adult ed course if they get the education.
• Unions have changed as well: healthcare workers, there unions.
• Younger people are less likely to vote: younger people are always less likely. People are drawn to American politics, television, video games, internet, the decline of social capital. There is a lifecycle effect:
• Social networks are stronger in rural Canada.
• People in rural areas are more likely to vote.
• None of this is uniquely Canadian.
• Young people are less likely to become partisan who is young. The more educated. There is a life cycle problem.
• The probability of voting increases in 20and 50. The sharpest increases 20 – 30 9 points 30-40 4 40-50 2 point. Plateau life cycle effect.
• We also found a period effect: can you identify as series of events: Yes since 1988 there is a period effect that accounts for about 3 point to 2000.
• The strongest effects are generational effects 20 points.
• Young people today were much less likely to vote then their parents were.
• Turnout in the youngest age group: ten points lower for those born in 1970 for those born in the 1960s.
• According tot our estimates if the probably boomers weren’t dying off and if the post genX would be 73% two points lower than the period between 1988 – 1945.
• Why has turn out been declining for those without a university education. Social background: people are getting married later (this doesn’t matter as much). All of these things delays the life cycle effect.
• Part of the lifecycle: people’s lives even allowing for that that only explains away 7 points of the 30 points gap. We have to look at orientations towards politics.
• Are these young people turned off. Or are they tunning out.
• Young people political disaffection: young people are less disaffected with politics than older people.
• It’s simply disengagement lack of interest: Youth are re-engaging people into politics: elections are little more interesting for people.
• Radio is becoming more important in politics.
• Young people are more likely to use the internet. This is 200 younger people are more likely to use the internet to get information.
• Very few people go online to get information about politics. Party website I very low. Internet would reengage it just haven’t reengage.
Lack of interest: lack of knowledge.
• The youngest age group: 2000 Chretien had led the Liberal party to three successive leaders.
• Joe Who6 percentage: Ralph Goodale: Martin Finance Minister.
• If it was a matter of general politics: younger people know less. That would not explain why the Stockwell Day was the leader for the Alliance.
• Paying down the debt didn’t resignate
• Some people see the wrong question: young people are informed about politics: ask about topics that engage younger Canadians.
• There isn’t much data: globalization: A survey in the summit in Quebec city only 50% of had heard of globalization. Only 53% had heard about the demonstrations against the world trade organization. Only 40% knew the summit was coming up.
• All three issues: awareness knowledge was lowest in the age group.
• Contact: people in the parties trying to appeal to the political parties; young people are the least likely to be contacted by the political parties.
• When you control for life cycle: the gap persists regardless. The mythical about a the family relationship. Young people are more mobile there is a payoff for a party that does go out.
• People who are contacted are more likely to vote. It
• If you take generationalize differences the gap in turn out the gap in the postgen and genX disappears the gap .
• There is a weaker sense of duty. It seems to be duty that people of the past vote.
• We don’t have a cross time data. Pre-baby boomers said they felt very guilty if they didn’t feel quality if they didn’t vote. What’s impaired their sense of duty. Women have a strong a stronger sense of duty.
• Younger women are always are more likely to vote than men.

Liberal Party Presentations:

• The third group: is non-partisan non-voters.
• Young Canadians are non-partisan.
• Local Candidates make the difference: we use YouTube, internet get a communication. There is amble room in constitutiency> by focusing on the local candidates we can reinvigorate the party.
• Liberal Partisans, Non-Partisans, and younger post-Genx have not bee involved in the political process.
Divided by the Issues: focus on the flexible partisans  and were going to focus on short-term issues.
• We have to realize that Canada is an expert on peacekeeping an employment.
• There are problems in Afghanistan: the poppy trade in Afghanistan: the poppy is the only substances that they are concerned about .
• The liberals were re-orient the liberal towards the 89% of Quebecers think that peacekeeping is the most important.
• Rona Ambrose was late for the opening conference: Harper cancelled eht EU Canada summit. The Harper government is not apply.
• Health Care: Canada will focus on it as a Canadian value: we are trying to make healthcare more accountable.
• The Conservative Elite there are older people
• Focus on Aboriginal: Kelowna, Women’s issues: is not an issue: Dion.
• If women are empower they will articulate the issue:
• Quebec is complicated: national unity issues: Quebec has been important to the Liberal Party.
• The Liberal’s have the hard federalisms. Harper is trying to get the soft nationalist position.
• Focusing on war, healthcare: and the identity of Canadian voters.
Bob Rae: Leadership
• The leader centric campaign: the party leader has major influence. It plays important: the leader is central to the party.
• There many other reasons.
• There are no major issues: Not Quebec sovereignty, the four other leaders: the leaders have always played a role in past elections.
• Leader “Biggest Short-cut of them all”: Kutler: the simplist short-cut of all: the people will take the short-cut of the party leader.
• Voting behaviour and the 1997 election. Canadian elections are shorterm: so that the leader will have a major impact.
• The issue is of priming.
• Through priming: the media can change the criteria of public issues:
• Having a leader centred campaign seems to be the most logical.
• His background Ottawa native: UofT
• Bob Rae is Anglican if he highlitghs thios will be a major challenge.
• A candidate must be from Quebec. NDP Bob Rae man!!! Flip Flop.
• He was an Ontario values: is threateneing.
• Based on Mendelsohn this popularity will drastically change.
Local Focus: Stratgery: local leaders are voice needed to reach non-voting electrate
• Priming him: need to utilize the media:
• Media: privately owne, rating concerned. Controversy, new issues, Mendelsohn/Nadeau rise and fall  myth building and destroying about new leader.
• There are a negative shocks: the focus is generally negative: the viewers get decensitives by the negativity. This is going to come into out .
• Economics doesn’t play a role so retrospective: checking the pocketbooks: leadership is a viable short cut. The short-cut lack of retrospective voting.
• There are several advantages: Liberals have partisans and ideologicial positioning.
• The Conservatives are centre right.
• Since we’ll be the primary opposition.
• We won’t make an effect to get news coverage; managing the negativety.
• The Web is user driven: Wikipedia
• YouTube could be used as a cost-effective tool for the local candidates.
• Door-to-door canvassing.
• NAFTA doesn’t effect people in a tangible way.
• Targetting the younger voters; the light success of the NDP in mobilizing the youth. Mobile democracy: liberals have a lot more supporters on the ground
• The grassroots: issues: how are we going to address things. In Atlantic Canada: leftist
• The French language debates: with be an advantage. Rae is going to crush Harper.
• In Quebec downplay his Anglican background.
• Ontario: NDP premiership: it wasn’t rae’s fault:
• Flip-Dlopping Income Trust: the rising oil prices: low inflation in Alberta:
• Alberta’s growth.
• Liberals environmental policy:
• You can’t have an environmental meeting to use the chair as an attack.
• Income Trust they promised they wouldn’t change rates.
• Fiscal issue: is going to be owned by Cons but we will have the income trsut to retort.
• We wait to attack them after they attack us first. There are too many other parties that will start that.
• Atlantic Canada is going to go Conservative;
• Economy isn’t going to the biggest issue.

Grassroots funding: local candidates
Local candidate
• Afghanistan: how the mission has changed. We are going to go back to our own policy.
• Political better to have a every area not real solution: opium iridaction.

Conservatives: Presentation.

• Religion is key.
• Catholics within the main stream are more likely to support the mainstream. Ridings that are determined to support the liberals. If more Catholics vote Conservative we will win more seats.
• We could try to focus media exposure on the mainstreaming effect.
• The Protestant Conservative connection was stronger. Need to try to prime party identification BUT this won’t happen on religion. Fundamentalist and Evangelical Christians. Churches refuse to be overtly politically active.
• To try to build a protestant conservatives party would alienate people.
• Ideology
• The applicability of partisanship in Canada. There is a very strong correlation between parties and vote choice. It effects
• Thirdly it filters the media for voters.
• Class voting isn’t directly related to voting behaviour in this country.
• Conservatives aren’t at a disadvantage in union. Labour workers and right leaning parties. Maybe your position doesn’t harm the vote for some reason.
• A traditional conservative policy is that we can legitimately look at welfare funding.
• You find this with unemployment insurance.
• The notion of removing big bureaucracies: taking thins back to the grassroots.
• Media effects:
• Coverage advantage: the most powerful effect in the media is primining. It will help to determined. Afghanistan is going to hurt us: so we want to beat them to the punch. We want to prime and focus on law and order issues on our terms.
• James mentions Ignatieff will learn about them. “Ignatieff being ridiculed: Hooray!!!” Party id is likely to deprimed. We learned from Jenkins.
• Issue voting is important.
Atlantic Canada
• Economic voting theory:
• Economy is more influence by economic factors in Atlantic Canada in other regions. The liberals promised to improve unemployment.

Paying the Price? Making Sense of the 2006 Canadian Election.

• Chretien was not kidding: that the Liberal Party is the most successfully in the western world.
• For the Liberals to lose in the 2000:  the Right would have to Re-Unite: short-term forces would have to be strongly against the Liberals.
• Both conditions were in Place: the Alliance and Reform had formed.
• A lot of Canadians were angry with the Liberal Party.
• What changed between 2004 and 2006.
• 1st, debunk conventional wisdom. The Liberals lost in 2004 because there was talk of change. If we look at seats there were lots of change 2006 99 to 126 in Conservatives.
• If we look at vote shares there was not wholesale change.
• Outside of Quebec the Liberals only dropped 4.4% points. 3.4% increae in the Conservatives.
• Focus on Canada outside of Quebec:
• Multi-Stage Explanatory Model:
Causal order  Social background,
underlying believers and values,
Party Identification,
Economic perspective,
Issue Opinions.
Leader evaluations, leads to vote choice.
• Fred Cutler: the Leader is from the West that’s all I need to know. I’m a catholic I’ll vote Liberal.
• Each of these factors has a direct effect. If you’re a moral traditionalist: you’re probably going to like Stephan Harper.
• To have this model catches total affects. We aren’t claming that everyone goes through these stages in this orders.
• The Media doesn’t fit into the model.
• We can have some counterfactuals: what if different variables. What if the sponsorship scandal didn’t matter for example.
• The model starts with social background characteristics. Social background characteristics aren’t very important in Canada.
• Conventional wisdom says that social background characteristics change too slowly to explain the index of predisposition.
• If people are rural residents they stay as rural.
• Gidengil doesn’t think that we can ignore social background: people may not change their religious but the salience of religion can change.
• Liberal dominance: hinged on the support of two groups: VM and Catholics: these groups helped to have a boast of 7 percentage points.
• The damage was done between 2000 and 2004. The visible minorities dropped Liberal votes by 14 points.
• Visible minority vote held in 2006. 56 percent in 2004 and 2006 and 70% in 2000.
• There is also a language issue too. In 2006, the support of the liberal minorities: people who were born outside of Canada continued to vote Liberal.
• The Catholic vote dropped between 2000 and 2004 6 percentage points and then 2004 and 2006 by 10 percentage points drop.
• Catholics were as likely to support Conservative as Liberal.
• In 2006, there was no difference between Catholics and Protestants.
• The big winner in the religion stakes was the Conservative votes: almost 2/3 of Christians voted Conservative. People who believe the bible in a literal sense.
• Don’t forget that Christian Fundamentalist in Canada are 19% of the population.
• Christian fundamentalist gave the Conservatives 5.5 percentage points. But only 2.2 percentage points lose for being to religion as the Conservative. Party.

Regional Divide

• Liberals lost 7 – 8 percentage points in all three regions.
• Can they be explained compositionally: Lack of appeal in the west cost them 7 points as Liberals.
• The Liberals were down 12 points.
• In 2000, Alliance rural voters voted conservative in 2006.
• Conservatives have much greater appeal in rural votes. Conservatives have growth at about 2.5 points.
• Tories also appeal to married voters. The votes of married Canadians boosted the vote share by Conservatives.
• Married voters weren’t such a huge factor.
• C – 38 Bill didn’t register on vote choice.
• Where is the new Conservative Party; Conservatives are much closer to the Alliance. The PC vote was very little effected by social background characteristics.
• Some Alliance voters went back to the NDP in 2004…
Two key differences
• Many more PC voters had the Liberals as their second choice. The two differences between the old Alliance support base appeals for northern european descent, no longer holds.
• The Alliance appealed much less to women than to men.
THE Alliance lack of appeal to women had worked.
• Gender had much less of an influence on Conservative vote choice. Gender was a bigger factor than in 2006. The conservatives really closed the gap.
• Just for the record; the gap cannot be explained by social characteristics Gap. Views about free enterprise and views of social conservatives explains the gap in NDP voting and the gap in Conservative voting.
• If the Conservatives had as much appeal to women as men their vote would have been higher.
• If the NDP hadn’t had such an appeal to women than men it would have had a 2.2 percentage points lower.
Union Vote: The Alliance: easily out polled the NDP in 2000
• The NDP was able to double the share of the 2004 union vote.
• In 2006 NDP and the Liberal were close.
• The big loser was the NDP, the NDP doesn’t have much appeal to private sector workers. It was the Liberals that were helped by public sector workers. The NDP lost votes in private sector voters and public sector votes went down.
Finally, a non-finding:
• READ THE 2004 Article: the biggest change was the Age Gradient. The younger people were the more likely to vote NDP.
• In 2004, the NDP did almost as well with the under 35 group
• It didn’t last in 2006. The NDP lagged behind the other two parties amongst young voters: this is because of the Green Voters: Green actracted 10 of the young vote.
• The Environment is beginning to matter in electoral outcomes.
Beliefs and Values
• Canadian Voters are not very ideologically motivated: Canadians views about free enterprise and views about traditional morality: starting with the left right dimension the probability of someone voting NDP and is skeptical of anti-enterprise is highly likely to vote NDP.
• Liberals do well with the ambivalent.
• In 2004, the views about free-enterprise
• It wasn’t a big boost: it gave the NDP about one and half boasts. Views about Canada US relations.
• In 2004, anti-Americanism. The most positive with US the more they think that the FTA was a good deal and
• On average Canadians views are positive. The Liberals shouldn’t play the Anti-Americanism card.
• The conservative vote share would be 4 points lower.
• The Liberals could have picked as much as three points.
• Gender roles and sexual orientation is important.
• The more conservative people’s views the more likely they will support the Conservatives.
• It cost them 4.5 points the gains on Canada US were lost by the perspective that the party is conservative.
• Cynicism: disaffection with politics had little impact on the Liberal vote share: despite the Sponsorship and the Culture of Entitlement. It certainly had an impact on people’s vote choice.
• People who were not going to vote Liberal were already disaffected. So they didn’t lose all that much.
• If you wanted to cast the protest vote: the NDP voting. The advent of the Reform and the Alliance became the party of protest.
• The Protest vote split between the Conservatives and the NDP.
• The protest vote went overwhelmingly to the NDP.
• Unfortunately for the NDP it didn’t make a difference to the vote share.
• The Reform and Alliance was populist. These two parties were always about returning decisions to people at the grassroots.
• The Conservatives attract voters that they are satisfied people who are frustrated in regional alienation will vote.
• The Conservative party has taken the mantel of regional alienation.
• Part of the problem with the Reform was that it was too extreme on the point of Quebec. Stockwell Day in 2000 was under-rated: he managed to distance the Alliance from the anti-Quebec sentiment.
• In 2004 and 2006, they did have an impact.
• People who didn’t want to take a tougher line: no impact on NDP voting.
• Views on accommodating Quebec didn’t have major impact on believes.
Party Identification: The Liberals Lose their ‘Head Start’
• The Liberals had four times as many partisans than the NDP in 2000.
• All the Liberals had to do is mobilize their partisans and do at least as well as the other parties among non-partisans. Get the Liberal vote out.
• Three things changed in 2004: The Liberal core was shrunken by 4 points.
• Second thin that changed” the new Conservative party had as many members as the Alliance and the old PC combined. There were as many conservative particasan as Liberal: the lost their head start in 2006.
• You can question whether people are really partisan>These people are identified by the party on the Right. We need to think about party families and not simply specific partisans.
• So you might think that the number of conservatives is correlated with the party vote not their actual loyalty: so it could change next election dramatically.
• 49 points higher that a Liberal would vote Liberal in 2006.
• The Third thing: non-partisan. The Conservatives managed to out poll the Liberals. On by just by 4 points. The Conservatives edged out the non-partisans by 15 points or percentage.
• Only 1 in 4 nonpartisans
Economic evaluations didn’t register.
• Hardly mattered in 2004: why didn’t economic considerations not matter: they matter much less when the incumbent party has a new leader. People didn’t know Paul Martin was the finance minister.
• In 2006 Canadians were ready to judge the Liberals performance. Close to half the people interviewed: judgements of people’s personal financial situation improved over the past year. The most important point; negative points to the extent of economic voting helped the Liberals in 2006. Socio-tropic evaluations trumped the egocentric evaluations. Retrospective evaluations were much more important than perspective evaluations.
• People are more likely to blame than to reward:
• Some people did reward the Liberals in 2006. The Liberals would have lost 3 points: the economy was doing well limited the defeat.
• The Sponsorship Scandal affected the Liberals by 6.5 in 2004. Despite all the revelations during the 2006 election the Sponsorship Scandal would not have mattered and they only paid a price of 3 points.
• Voters were just as angry. But their judgments of Martin were less harsh. They were less likely to think that Martin knew about the scandal. Fewer people thought he had done a very bad job. People had more confidence that he could prevent this from happening in the future.
• Did people think he was personally involved even if the Gomery cleared him of blame?
• 20% of people knew that the Gomery report had cleared him but thought he was involved anyway.
• The people who are really agree were Conservative partisans. They were partisans of the Liberal rivals.
• Another problem: who was involved in the sponsorship scandal. 70% thought it was just a few corrupt Liberals.
• People were angry but less harsh in their judgments. They blamed a few corrupt liberals.
• The final thing is non-partisans: non-partisans cared much more about healthcare than other issues. Healthcare is the first priority.
• More likely to say Health Care than corruption. The Liberals on healthcare then why did the Conservatives.
Issue Attitudes:
• Conservatives benefits from sponsorship scandal. Defense spending: only 12% favoured cuts: this helped the Conservatives.
• In 2004 the gun registry: helped the Conservatives; it didn’t have an impact on vote choice; the promise to cut the GST at 6% didn’t have influence. People weren’t impressed with the promised cut.
• Send parents one dollar per day per child.
• Close to 2/3 wanted public daycare.
• Corporate taxes few wanted to see the decrease taxes. The Reform, Alliance, Conservative promised tax cuts. It is not a winning election issue.
• In 2004, social spending helped the Liberals. The Conservatives were
• The Issue that helped the NDP was environmental spending. It does tap into the environmental issue seriously helped 2 point boost
• Gay Marriage: only 1% of people thought it was a big issue.
• Issues had little net effect.
The Conservatives and Liberals it turn out issues were into important.
• Liberals have an advantage on the issues if you remove the sponsorship scandal.
• Harper’s ratings were more negative.
• Dislike of Harper cost the Conservatives the more than dislike of Martin more.
• 60% Martin only cares about staying in power. Harper is just too extreme (52%)
• Just too Extreme? The Conservative Party and Leader have to counter the image that they are too extreme.
• 1 voter in 5 said that the Conservative party is just too extreme.
The Limits to Growth:
• The Conservatives fair very poorly in second choices.
• The electoral base us very similar to the Alliance base so if you appeal only rural, and western voters.
• The Gender Gap is widening. The Conservative partisans have a genuine party.
• Things don’t look too bad for the Liberals; they paid a lower price: The scandal will not be an aspect on vote choice in 2007 election.
• The Liberals are closer to the medium Canadian voters.
• Things look very good for the NDP but they have the problem of strategic voting. The NDP is also vulnerable to the Greens and NDP. The NDP is vulnerable.


American Express Case: The Story of AmEx Canada

American Express Case: the story of American Express Canada

Key Takeaways: Ivey MBA, Howard Grosfield CEO of Amex Canada Article

  • Total Service Experience: replace cards easily over night in the event of a lost card.

Recognize me: be valuable; engaged employees = engaged customers. Empower me: to pay the balance in full! Enable me: leverage technology integrate service provisions.

  • Luxury AMEX Card: differentiated from the Diner’s Club Card (Visa). AMEX has high fees, the rolling debt balance is very bad.
  • Amex is more expensive for merchants however Amex has better customers: wealthier customers. The merchant network is weaker (charge them a higher fee) but the customers are better.
  • Centurion Services: centurion members have access to professional assistance every minute of the day. It’s the Concierge: dedicated team of highly skilled professionals. Centurion webs: privileges platform.
  • Product Expansion
  • Branding / Positioning
  • Strategic Diversification
  • Distribution / Co – Branding
  • Product Innovation

1850 – Founded as express courier service

1891 – Launched travellers cheques

Don’t leave home without them

Early 1900’s – opened offices in Europe

1957 to 1978- green, gold, platinum card

1987 – launched Optima Card

1991 – Boston Fee Party

1999 – Exclusive arrangement with Costco

1999 – Launch of Centurion “Black Card”

Travellers Cheques Advertisements

1981 – acquired Shearson Rhodes

1984 – acquired Lehman Brothers Kuhn Loeb

1984 – acquired IDS

1988 – acquired EF Hutton

1991 – wrote off $300 million on Optima credit card launch

1992 – spun off First Data

1993 – spun off retail brokerage arm

1994 – spun off Lehman Brothers

2005 – spun off Ameriprise

Push to capitalize on brand / expand co branded cards beyond Costco – Starwood, Jet Blue, Delta

2008: GFC affected all credit card issuers, forced to tighten up credit – less impact on AMEX

2010: Paid $300 M for internet payments processor for consumers without bank accounts (Revolution Money became Serve)

2012: Launched BlueBird with Walmart – prepaid credit card as option as lower option to chequing accounts and debit cards

Cost pressures: Airline mergers forced Amex to open airport Amex lounges versus giving cardholder access to airline lounges

Attack on high end customers from Barclays and JP Morgan Chase – Chase now leads card penetration among $125K plus households

2015: Costco switched credit cards to VISA, 10% of Amex’s 112 million cards were Costco

Question about value of Amex brand – 23% of $1 trillion in spending from co branded cards

– “Partner” vs “Vendor”

  • 19 card options
  • Card Type: Personal vs Small Business
  • Card Benefits: Rewards, Concierge, Cash Back
  • Loyalty Programs: AeroplanPlus, Air Miles, SPG, Membership Rewards
  • Card Attractions: No Fee, First Year Waived, Welcome Bonus
  • Blue Sky Credit Cards
  • Response Time When Apply?

Card options

Drop in new customers in 2014 from 150K to 80K – half via referrals, others via traditional methods

Tested pop-up in a shipping container in shopping mall parking lots / in malls (take up eight parking spots) – local area marketing to drive traffic

Signed up more customers in two months than best Scotia branch in a year

Key is credibility of Scotia and single minded focus on customer acquisition – salespeople only in the pop up branch, videoconference customer to an advisor if needed

Now have nine pop up branches that shift location every 60 to 90 days

Now back to 150K; if 8K per popup = 160 weekly / 25 daily

Retail Asset Management – FinTech History

Innovation in Retail Asset Management: 1960 to 1980

  • Launch of Index Funds (Vanguard – 1975)
  • Acceleration of mutual fund sales in the US first true “star manager” in Peter Lynch / Fidelity.
  • 1980 – $8 billion est
  • 1985 -$15 billion est.
Sold Not Bought: Role of Salesperson Compensation:

Historically: One time commission paid by investors (up to 9%)

1987 – Launch of deferred sales charge and trailers paid out of management fee of 2.5%

Front end commission: 4% upfront plus trailing commission of .5%

Backend compensation: Nothing upfront

but 1% trailing commission

Power of salesperson led to “buying business”. Sales people fueled major change in the way Retail Asset Management started.

Banks start to focus on fund sales via branches

  • Growth of independent advisors – shift away from captive sales organizations (closed to open)
  • Focus on stealing customers from banks
  • Emphasis on US and global funds outside Canada to overcome home market bias
  • First ETFs launched in Canada (TIPs)

Growth in Canadian Mutual Fund Industry (billions)

1980 – $   8  est                1995 – $144

1985 – $ 15 est                  1996 – $211

1990 – $ 25 est                  1997 – $287

1991 – $ 50 est                  1998 – $335

1992 – $ 67                        1999 – $397

1993 – $115                       2000 – $433

1994 – $125                       2001 – $441

  • Interest rates on GICs and bonds
  • Boomer demographic / saving years
  • Scepticism about CPP
  • Market performance
  • Media coverage
  • Banks starting to focus on mutual funds (beginning with money market funds)
  • Industry innovation
  • Strategic Asset Allocation – STAR (Mackenzie funds only) and Keystone (include outside funds)
  • Clone funds to get around the foreign content limit within RRSPs (originally 20%, later increased to 30%, then eliminated)