Isegoria

Richard Hanania recently decided to argue that everyone is wrong, and the media is actually good and honest. Bryan Caplan agrees that Hanania zeroes in on the right question — “Compared to what?” — and answers, the mainstream media is awful compared to silence:

The problem isn’t limited to race, gender, and sexual orientation, where Richard agrees that the media is crazy. The problem isn’t specific factual errors, either. The central problem is that the mainstream media’s standard operating standard is to use selective presentation to spread absurd views about practically everything that matters.

Nor is this a recent failing! Mainstream media has been deplorable for as long as I can remember. Let me list some of its chief sins against the Big Picture.

Endlessly complaining about alleged social problems. Poverty, the environment, racism, Covid, Ukraine, terrorism, immigration, education, drugs, Elon… Even if all of the coverage were true, the media is still — per Huemer — aggressively promoting the absurd view that life is on balance terrible and reliably getting worse.

Painting government intervention as the obvious solution to social problems. Often the media openly asks loaded questions to this effect, like “Why isn’t the government doing more about this?!” with an exasperated tone. The rest of the time, they rely on heavy-handed insinuation, like “The people of Flint, Michigan feel like they’ve been forgotten.” Forgotten by who? Government Our Savior, of course. Mainstream media barely considers whether past government policies have worked, or how much they cost, or whether they have important downsides.

Spreading innumeracy. The media endlessly shows grotesque stories about ultra-rare problems like terrorism, plane crashes, police murdering innocents, school shootings, toddlers dying of Covid, and the like. They show almost nothing about statistically common problems like car crashes or death by old age. The media doesn’t just spread paranoia; it spreads inverted paranoia.

Promoting Social Desirability Bias. The media standardly talks as if stuff that superficially sounds good is reliably good, and stuff that superficially sounds bad is reliably bad. As a result, they foment hostility to good stuff that sounds bad, and engender support for bad stuff that sounds good. If a firm downsizes due to technological change, what are the odds that the media chides, “This is how progress works! Tractors put a lot of farmers out of work, too, you know”? If the government cuts spending, what are the odds that the media muses, “We could interview the visible losers, but that’s hardly fair unless we interview the invisible winners. Which we can’t do, so let’s just move on.”
Whipping up support for the latest crusade. Like me, Hanania wasn’t happy with the media’s Covid coverage. But I say the problem goes way back. Just in my living memory, the media has promoted mass hysterias about Islamist Iran (“the hostage crisis”), the War on Drugs, “Free Kuwait,” the War on Terror, the Iraq War, the 2008 financial crisis, Covid, Black Lives Matter, and now the Ukraine War. The mere fact that they keep these topics in the news for months or years, with almost no skeptical or apathetic voices, is a thinly-veiled declaration that “These are the most important problems on Earth – and we should all enthusiastically be on the bandwagon to solve them.” Yet in hindsight, the problems the media deems important are highly arbitrary, and the bandwagon usually turns out to be a major problem in itself.

An old joke talks about being “mugged by reality.” When mainstream media speaks, it is reality that gets mugged. Truly, mainstream media is the great Mugger of Reality. Even when its individual stories are rock solid, it promotes a deeply false Big Picture of the world. And unless you have the intellectual steel to constantly remind yourself, “This is a horribly misleading perspective,” consuming media tends to make you believe this deeply false Big Picture.

Last January, Scott Alexander — along with amateur statisticians Sam Marks and Eric Neyman — solicited predictions from 508 people:

Contest participants assigned percentage chances to 71 yes-or-no questions, like “Will Russia invade Ukraine?” or “Will the Dow end the year above 35000?”

[…]

Are some people really “superforecasters” who do better than everyone else? Is there a “wisdom of crowds”? Does the Efficient Markets Hypothesis mean that prediction markets should beat individuals? Armed with 508 people’s predictions, can we do math to them until we know more about the future (probabilistically, of course) than any ordinary mortal?

After 2022 ended, Sam and Eric used a technique called log-loss scoring to grade everyone’s probability estimates. Lower scores are better. The details are hard to explain, but for our contest, guessing 50% for everything would give a score of 40.21, and complete omniscience would give a perfect score of 0.

[…]

As mentioned above: guessing 50% corresponds to a score of 40.2. This would have put you in the eleventh percentile (yes, 11% of participants did worse than chance).

Philip Tetlock and his team have identified “superforecasters” — people who seem to do surprisingly well at prediction tasks, again and again. Some of Tetlock’s picks kindly agreed to participate in this contest and let me test them. The median superforecaster outscored 84% of other participants.

The “wisdom of crowds” hypothesis says that averaging many ordinary people’s predictions produces a “smoothed-out” prediction at least as good as experts. That proved true here. An aggregate created by averaging all 508 participants’ guesses scored at the 84th percentile, equaling superforecaster performance.

There are fancy ways to adjust people’s predictions before aggregating them that outperformed simple averaging in the previous experiments. Eric tried one of these methods, and it scored at the 85th percentile, barely better than the simple average.

Crowds can beat smart people, but crowds of smart people do best of all. The aggregate of the 12 participating superforecasters scored at the 97th percentile.

Prediction markets did extraordinarily well during this competition, scoring at the 99.5th percentile — ie they beat 506 of the 508 participants, plus all other forms of aggregation. But this is an unfair comparison: our participants were only allowed to spend five minutes max researching each question, but we couldn’t control prediction market participants; they spent however long they wanted. That means prediction markets’ victory doesn’t necessarily mean they’re better than other aggregation methods — it might just mean that people who can do lots of research beat people who do less research.2 Next year’s contest will have some participants who do more research, and hopefully provide a fairer test.

The single best forecaster of our 508 participants got a score of 25.68. That doesn’t necessarily mean he’s smarter than aggregates and prediction markets. There were 508 entries, ie 508 lottery tickets to outperform the markets by coincidence. Most likely he won by a combination of skill and luck. Still, this is an outstanding performance, and must have taken extraordinary skill, regardless of how much luck was involved.

Davis Kedrosky explains how institutional reforms built the British Empire:

In 1300, few English institutions actively promoted economic growth. The vast majority of the rural population was composed of unfree peasants bonded either to feudal lords or plots of land. Urban artisans were organized in guilds that regulated who could enter trades like glassblowing, leatherwork, and blacksmithing.

The English state was in turmoil following a century of conflict between Parliament and the Crown, and though nominally strong, it was deficient in fiscal capacity and infrastructural power. The regime lacked both the will and the means to pursue national development aims: integrating domestic markets, acquiring foreign export zones, securing private property, and encouraging innovation, entrepreneurship, and investment. England resembled what has been called a “natural state,” in which violence between factions determined the character of governance. Institutions pushed the meager spoils of an impoverished land into the pockets of rentiers.

By 1800, all this had changed. Britain’s rural life was characterized by agrarian capitalism, in which tenant farmers rented land from landowners and employed free wage labor, incentivizing investment and experimentation with new crops and methods. The preceding two centuries had seen the waning of the guilds, which now served more as organizations for social networking. Elites that had mostly earned their income by collecting taxes were now engaging in commercial enterprises themselves.

The state was now better-financed than any before in history, thanks to an effective tax administration and the ability to contract a mountain of public debt at modest interest rates. This allowed Britain to fund the world’s strongest navy to defend its interests from New York to Calcutta. The British government also intervened frequently in economic life, from enclosure acts to estate bills, and had limited its absolutist and rentier tendencies through the establishment of a strong parliament and professional bureaucracy.

Mark Koyama called the five centuries of institutional evolution the “long transition from a natural state to a liberal economic order.” The state capacity Britain built up during this early modern period went side by side with its emergence as a major commercial power and, within a few years, the first nation to endogenously achieve modern economic growth. Twenty-first-century economists increasingly deem institutions an “ultimate cause” of industrial development. The differences between North and South Korea, for example, are not the result of geographical disparities or long-standing cultural cleavages on either side of the 38th parallel. While it’s not exactly clear which kinds of institutions cause growth, it’s pretty obvious that some sorts inhibit it, if not stifle it altogether. The story of Britain’s rise to global power, then, is also the story of a 500-year-long transformation that saw institutional changes to law, property ownership, the organization of labor, and eventually the makeup of the British elite itself.

In his 1982 book The Rise and Decline of Nations, Mancur Olson argued that societies are engulfed in a perpetual struggle between producers and rent-seekers. The former invent and start businesses, increasing the national income; the latter try to profit off of the producers’ hard work by lobbying for special privileges like monopolies and tax farms. In contrast to Douglass North, who emphasized the importance of secure property rights for economic growth, Olson distinguished between good and bad forms. Bad property rights entitled a specific group to subsidies or protections that imposed costs on consumers and inhibited growth—like, say, a local monopoly on woolen cloth weaving allowing a guild to suppress machinery in favor of labor-intensive hand labor, lowering productivity and output.

Backed by its elite commercial and landed classes, the English and eventually British state came to favor the removal of the barriers to growth that had plagued most pre-modern economies. “Peace and easy taxes,” contra Smith, isn’t a sufficient condition for endogenous development, but its inverse—domestic chaos and rent-seeking—may be sufficient for its absence. But Britain’s real achievement was that its elite class, over time, began to align themselves with market liberalization. In France, by contrast, the nobility and king were constantly at odds, and the monarchy actually supported strong peasant tenures in opposition to large landowners. The pre-1914 Russian Empire would do the same thing.

Applying Olson’s framework to the seventeenth century, what we see is a decline of “rent-seeking distributional coalitions” like guilds, which helps to explain England’s “invention” of modern economic growth. “The success of the British experiment,” write the economists Joel Mokyr and John Nye,

was the result of the emergence of a progressive oligarchic regime that divided the surpluses generated by the new economy between the large landholders and the newly rising businessmen, and that tied both groups to a centralized government structure that promoted uniform rules and regulations at the expense of inefficient relics of an economic ancient regime.

Mokyr and Nye theorize that the state’s demand for revenues led it to strike a bargain with mercantile elites: if you pay taxes, you can use our ships and guns. This was the basis of a grand alliance between “Big Land” and “Big Commerce” who used the government as a broom to sweep away local interests. It manifested in projects like the Virginia Company, whose investors involved both the nobility and mercantile venture capitalists.

Parliament was the instrument for fulfilling the pact, issuing a raft of legislation altering local property rights to open up markets throughout the 1700s. Estate acts, for example, allowed landowners to improve, sell, and lease their plots. Statutory authorities permitted private organizations to set up turnpikes and canals, helping to unify the English market. This allowed firms to increase production, exploit economies of scale, and compete with local artisans. Enclosure acts, meanwhile, provided for the transformation of open-field farming communities, in which decisions were made at the village level, into fully private property.

The origins of this process, however, are deeper than Mokyr and Nye suggest. The development of a national state began soon after the Norman invasion of 1066. William the Conqueror replaced the Anglo-Saxon aristocracy with a Norman one, redistributing the country’s lands to his soldiers and generating a mostly uniform feudal society. The result was a precociously unified and homogenous polity—as opposed to France, which grew by absorbing linguistically distinct territories. English kings who were seeking to fund domestic or military projects called councils with individuals, usually the great barons of the nobility, whose cooperation and money they needed. With the waxing of the late medieval “commercial revolution,” they eventually included representatives of the ports, merchants, and Jewish financiers. Kings would make “contracts” with these factions—often customary restrictions on arbitrary taxation or the granting of other privileges—in exchange for resources. These councils later became Parliament.