The Short-Term Benefits of Cults of Personalities Are Not Worth It.
A cult of personality arises when a government or other group creates an idealized, heroic image of a person. The person is glorified through propaganda, to the point where their wrong-doings are explained away or do not matter to a large group of people (the cult). The person being glorified is not necessarily in on the scheme, and the glorification can be retroactive, as happened for example in the case of Karl Marx, who was not popular while alive and opposed the glorification of individuals.
Cults of personality have appeared in a broad range of cultures over time. Examples include Hugo Chavez, Mao Zedong, Atatürk, and Hitler. Even the prophets Jesus, Mohammed, and the Dalai Lama are cults around the personality. Ben Graham and Bill Ackman are notable investors who have a cult around them.
A heroic Putin riding a horse bare-chested.
Many Cults of Personality Achieve Positive Goals
In the 1920s and 30s, Atatürk freed Turkey from its Sultan and foreign colonizers and built a modern, prosperous Turkish state – with a secular government where women were allowed to vote and get elected. Hitler rebuilt a war-torn Germany with less hunger and an auto industry that is still strong today. Ben Graham got investors to focus more on pricing securities and less on gambling. Bill Ackman was able to get a lot of attention for the fact that Herbalife engages in unethical business practices.
Sometimes, especially when (re)building a nation, a cult around a leader can appear useful. Cults can help end infighting and rally a group behind a common cause. In such cases, the common belief in a personality can help a people. For example, if most people believe that Donald Trump will “Make America Great Again”, then this can have the self-fulfilling effect of increased economic optimism and investment at a time when people are suffering from low economic growth and low investment. A cult of personality can help coordination.
Why Cults of Personality Are Bad in the Long Term
Cults of personality can outlive their usefulness, often with disastrous consequences. After a personality dies, ideas that were important at the time become irrelevant or even counterproductive, but the cult of personality cannot adjust to the new reality in a healthy way. The message of the personality tends to get corrupted over time, as is evident by what is done in the name of Mohammed or Jesus. Message corruption can also happen in less than a century, as is the case with Mao Zedong. Today’s China is far removed from communism, but because Mao is still a cult figure, China has to pretend to be communist. Atatürk is an example where the message has not been corrupted. Although many Turkish homes and restaurants feature a picture of Atatürk, no one knows what Atatürk would have done today and he does not inspire any specific policy.
Another drawback to the cult-of-personality path to prosperity is that the personality’s ideas do not get sufficient or sincere scrutiny. Germans who critiqued Hitler too much would become outcasts or be physically attacked, not because of the law but because of the cult around Hitler. Warning of the risks for Germans as a result of Hitler’s policies was discouraged by the cult, who could not see past the leader to inspect his policy.
The dogma around Vladimir Putin today and Silvio Berlusconi previously is that “there is no alternative”, which then became self-fulfilling. Even if these leaders fulfilled an important role at some point in the development of their country, today they have outlived their usefulness and the countries are left with a political vacuum.
Where Are Cults Forming Today?
In the short run, a cult of personality can offer real benefits, such as high-level coordination. But in the long run, cults around a personality are harmful to the societies where they arise. This raises the question, which cults exist today that we should be aware of?
Recent leaders who have developed a cult around them
Putin was mentioned earlier, because he is glorified in song (One like Putin) and in Russian media, where he made an appearance riding a horse bare-chested. Many Russians believe there is no alternative to Putin, or that the alternative is chaos.
In China there is Xi Jin Ping, whose Xi-thought was recently added to the Chinese constitution and who got rid of term limits.
Another recent two are Obama and Trump. Obama because he did little wrong in the eyes of many liberals while he was forsaking their values. He bombed seven countries, continued the torture of detainees, expelled more illegal immigrants than any other U.S. president, and expanded and institutionalized both mass surveillance and extrajudicial murder. Note that these are both foreign and domestic policies. Still, he is being hailed by liberals because he legalized gay marriage and achieved healthcare reform, accomplishments which supposedly offset his other crimes. It takes a cult of personality for people to hold the liberal values for which Obama was elected and also respect the shell of a man that was left after eight years.
Obama set the stage for Trump, a man who claimed he could shoot someone on Fifth Avenue and still win the election. Trump was right in that it didn’t matter much what he does, because the cult around him would give a generous interpretation to his actions. When Trump escalates tensions on trade and religious matters, he is perceived as making America greater and safer, although no evidence actually supports this view. When Trump reduces tensions, he is a peace maker. Much like the cult around Obama, which collectively dislikes Trump for the personality he is, the cult around Trump does not look critically at the actions of the center personality. This contrasts with how the public viewed Bush, who was significantly criticized for his handling of the aftermath of the 9/11 attacks and his decisions to go to war.
In Investing Too, I Spy Cults
Although Ben Graham’s work was a breath of fresh air at the time, many of today’s investors are still focused on the Graham method of value investing. One ought to think that Graham’s teachings are already priced into the market, given that many investors follow the Graham method. What made Graham outperform other market participants was that he had a novel method. The cult around Graham is now mainstream among investors, who cannot possibly have an edge in aggregate.
Then there is Warren Buffett, a.k.a. the Oracle of Omaha. There is no doubt that Buffett has an outstanding track record as an investor. Buffett
was also famous for shunning airliners, vowing he would never, ever invest in airliners. Today, he owns large stakes in the four major U.S. airliners. If the good man, who is in his late 80s, had died just a few years ago, he would not have bought them and he would have kept his promise of staying away from airliners. The cult of personality around Buffett would still have shunned airliners today.
What cults of personality do you see forming today? Let us know in the comment section!