Speaking of the trust problem

I reviewed Kevin Vallier’s Trust in a Polarized Age.

Vallier is saying that we are constrained to living among people with divergent values, and in that setting the most feasible libertarian society is one which sometimes bends libertarian principles to the popular democratic will.

This struck me as an argument for what Tyler Cowen calls “state-capacity libertarianism.” In a pluralistic society, many people will have expectations for state interventions. It is better to have state intervention well-executed. Government failure will only lead people to cede more power to government in the hope of seeing improvement.

Two FITs candidates discuss the trust problem

Martin Gurri and Yuval Levin face off. Getting the last word, Levin writes,

And as Martin has shown better than anyone, social media and related technologies have powerfully undermined our capacity for self-restraint too. They encourage fast, short, unconsidered reactions and counter-reactions, and the pleasure we derive from these sours us on the habits of discipline.

In order to become “elites who can stand straight in the digital storm,” as Martin beautifully puts it, our leaders would need to hone the capacity for restraint despite all of these pressures. And the rest of our society would too. In the hands of restrained users, the benefits of social media would surely outweigh the costs. In the hands of restrained citizens, the tools of radical transparency could serve democracy rather than scorch it. In the hands of restrained elites, our institutions would be much easier to trust.

Both Gurri and Levin stress the need for better behavior on part of would-be elites and ordinary citizens. And both realize that this is easier said than done. Both would make my list of FITs, so the fact that this about the best they can come up with shows that the problem of restoring trust and authority is quite a challenge.

ZMP in today’s economy

Tyler Cowen coined the phrase zero marginal product workers, or ZMP, to describe the uneven impact of the 2008 financial crisis on highly-educated and less-educated workers. I think we need to consider ZMP much more broadly.

1. As I wrote at the time, the Garrett Jones worker (Jones memorably tweeted that most of us do not produce widgets but instead build organizational capital) has no measurable marginal product. You cannot compute the MRP for accountants, marketing strategists, and project managers, but corporations need them.

One of my oldest catch-phrases is “Price discrimination explains everything.” That is because most businesses have very high overhead costs relative to variable costs. This is most obviously true with Internet-based businesses. But it is also true of movie theaters (when that was a business), hospitals, air transport, and more.

2. A growing share of the work force is engaged in what we might call the ZMP sector: non-profits, government bureaucracy, health care administration, and corporate departments of political posturing–including much of HR these days.

3. The gap between the college-educated and the less-educated is arguably due to differential treatment by government programs and billionaire philanthropists. We create a well-paying job for a college-educated ZMP in the “sustainability office” of a government agency or industry trade group. Then that sustainability office destroys a less-educated worker’s high-paying job related to fossil fuels and tells the resulting ZMP to find employment installing solar panels.

We need to think about the real world of ZMP, not the imaginary world of neoclassical equilibrium.

Fantasy Intellectual Teams

Epistemology is social. We decide what to believe by deciding who to believe. When we believe the wrong people, bad things happen. On race relations, for example, the wrong people have tremendous influence in academia, and this has spilled out into schools of education, corporate human resource departments, and elsewhere. I think that some (much?) of the loss of trust in news media and other important institutions is due to a general suspicion that the wrong people have achieved high status within those institutions. Therefore, I think that the problem of intellectual status inversion is worth trying to solve. Not by politicians, but by replacing academic credentialism and cronyism with a more rigorous process for evaluating intellectual quality.

I need to emphasize again that I do not want to put FITs in positions of political power. My thinking is that the political garden grows in cultural soil. Because of intellectual status inversion, that soil is only suitable for growing ugly weeds. If we can raise the status of intellectuals that really deserve our admiration and lower the status of those who don’t, then I think that the soil will be more hospitable to better plants.

Here is the idea for a game of FITs. You are the owner of a FIT. You compete with other owners to draft the best fantasy team of intellectuals. A team consists of the following positions. The number in parentheses is the number of each position that will be on your team.

(p) podcaster and/or blogger (2)
(b) from the world of business (1)
(e) academic economist (4)
(o) academic other than economist (4)
(t) think tank person
(c) regular columnist for newspaper or magazine (can be an online magazine)
(u) utility (5)

A total of 18 players on your team. All players must be currently alive. You can’t pick Hayek.

To be eligible as an academic economist or other academic the player has to have tenure.

Some players are eligible at multiple positions. You can treat Tyler as eligible to play t, e, p, or c. You can treat anyone as eligible to play u, including Tyler and others who are eligible at other positions.

I am not eligible to be on anyone’s team. I will be judging the teams.

Note that I don’t have a position for “tweeter.” Perhaps there are some good players on Twitter, but they are as rare as Korean baseball players who can make it in the major leagues in the U.S. Of course, you are welcome to draft a player at the u position based on tweets if that’s what you want to do. Same with politicians.

I do not yet have a formal scoring system. My goal in the short run is to get a better idea of what my criteria are for judging intellectuals. As of now, I would say that I value players who monitor their thought process, admit when they have been wrong, steelman other points of view, and show some humility. Good players are judicious about challenging conventional wisdom; they pick their heterodox points of view carefully. I am inclined to give low ratings to narrow specialists, unless they ask big questions that are of pressing interest to those outside of their narrow field. The “small ball” that is good to play if you want tenure does not help you in FITs.

The scoring criteria problem is not going to be easy. Sometimes when faced with a problem like that, it helps to invert it. What would constitute a bad score? Straw-manning; refusal to acknowledge any strong points of the other side or weak spots in your preferred theory; carelessly tossing around epithets, like “market fundamentalist” or “neoliberalism” or “cultural Marxism” that nobody uses to describe themselves; predictably speaking in just one of the Three Languages of Politics.

If some of you want to play, maybe we can hold a draft before the baseball season starts. If you have any questions about the rules, or you have questions about which positions certain players are eligible for, feel free to put them in the comments. I have over 50 FITs candidates, based on names people have left in the comments plus people I thought of off the top of my head. Feel free to suggest more.

Grumpy on GME

John Cochrane and Owen Lamont discuss the GameStop situation. “You do not have a robust, liquid market.” In a liquid market, any investor (or group of investors) faces a very elastic demand curve if he wants to sell and a very elastic supply curve if he wants to buy. Cochrane and Lamont offer several possible reasons for the inelastic supply in this case, but they do not push any one explanation in particular. Their understanding is incomplete, but I trust it more than others.

Martin Gurri watch

1. Aaron Sibarium writes,

provided elites maintained their monopoly on the presses, they could maintain a monopoly on the narrative. That’s part of what made “his realm, his religion” a viable settlement after the Thirty Years’ War. Because princes had print and peasants didn’t have iPhones, the former retained some degree of epistemic dominance over the latter—more than would be possible today.

He argues that modern technology has the effect of creating outlets for more points of view while making us feel more threatened by other points of view. Something has to give.

2. Daniel Bessner and Amber A’Lee Frost write,

As became clear once QAnon-ers entered the Capitol, they had no genuine strategy and no genuine program, instead relying on a millenarian faith that Trump would deliver them from the rule of elite pedophiles, heal the sick, comfort the poor, and establish a New Jerusalem.

A classic revolt of the public, then. But the rest of the article gets even more interesting. Read the following excerpt, and in your mind substitute anti-racism for QAnon:

Q makes people feel good. We don’t mean merely that it makes them “feel good” by delivering the dopamine jolts that come from the embrace of a community, the thrill of discovery, the satisfaction of enlightenment, and the comfort of a worldview that brings hope, though QAnon does provide all of that. What we mean is that it makes them feel “Good,” as in righteous, heroic, noble, and benevolent. So why would a QAnon-er stop believing, especially given that a return to a pre-Q worldview likely invites back all the pre-Q fear, confusion, and feelings of powerlessness that engendered an individual’s turn to QAnon in the first place, only this time there’s the added pain of shame and the shattering of one’s self-image as a wise and virtuous person.

3. Martin got his chance on cable TV.

Finally, it was my turn. My host introduced me and read a quotation from the City Journal piece, but he did it so aggressively and vociferously that, even though I had written them, the words terrified me.

“MARTIN GURRI, WHAT DO YOU THINK?”

I cleared my throat. “Well, you have to understand, the concept of post-journalism was actually developed by a brilliant media scholar called Andrey Mir –“

“THANK YOU AND GOODBYE, MARTIN GURRI. THAT’S ALL THE TIME YOU GET.”

I have never been invited to Cable TV, but I have been invited to very minor talk radio programs, with similar results.

EMH and GameStop

A reader emails,

It seems to me that even if markets are only semi-efficient, then the trading curbs imposed by Robinhood and other firms should not have had an adverse impact on GME’s share price.

1. I do not believe that financial markets are efficient. When GameStop stock goes up or down by double-digit percentages on days when there is no news about the underlying business, then either you have to concede that the market is not efficient or else concede that the Efficient Markets Hypothesis is just word salad without meaningful implications.

2. A stock market in which any particular trader or group of traders can manipulate the price is not a good market either in theory or in practice.

3. I meant what I said about the Wall Street riot being more significant than the Capitol Hill riot. I don’t watch television, which is why the Capitol Hill riot did not make a big impression on me. If you were around a TV during the O.J. Simpson chase, you will probably never forget it. But in the grand scheme of things it was not important. That’s my view of the Capitol Hill riot–compelling TV, minor event.

But as of right now, the stock market looks ridiculous. There is an economic theory, most clearly articulated by James Tobin, that when a firm’s share value rises that is a signal that it should expand. That theory implies that GameStop should be undertaking a massive expansion of its business. Nobody believes that.

How journalism responded to the Internet

Martin Gurri writes

The amount of information in the world was, for practical purposes, infinite. As supply vastly outstripped demand, the news now chased the reader, rather than the other way around. Today, nobody under 85 would look for news in a newspaper. Under such circumstances, what commodity could be offered for sale?

During the 2016 presidential campaign, the Times stumbled onto a possible answer. It entailed a wrenching pivot from a journalism of fact to a “post-journalism” of opinion—a term coined, in his book of that title, by media scholar Andrey Mir. Rather than news, the paper began to sell what was, in effect, a creed, an agenda, to a congregation of like-minded souls.

Some early reader nominations for FITs

One commenter suggested Eric Weinstein. Another suggested John McWhorter. Another suggested Tanner Greer. All good suggestions, and you seem to get the point of the game, even though I haven’t posted a broader description.

Another commenter points to a list of important intellectuals. I think importance is one criterion–I scorn many high-status economists for doing what I call “playing small ball.” But importance is not a sufficient condition for belonging on a FIT.

Another commenter said that he would not want Scott Alexander running the world. Neither would Scott Alexander. The worst intellectuals to put in charge of things are the ones who think that they should be in charge of things. The dream of FITs is to generate a better prestige hierarchy of intellectuals, not to find intellectuals to put in charge of the dominance hierarchy of government.*

Back to your suggestions. Eric is a particularly interesting case. If Scott Alexander models carefulness, Eric models fearlessness. Fearlessness means not being afraid of conventional wisdom or of anyone else based on their status. Carefulness is intellectual carefulness, which means giving the strongest consideration to other points of view.**

The very idea of Fantasy Intellectual Teams owes a lot to Eric. It was listening to Eric that led me to focus on the problem that I term intellectual status inversion. But one concern that I have with Eric is that he is inclined to make it seem as if the problem comes from the evil intentions of groups of individuals, and I am instead inclined to think of it as a problem that emerged out of three well-intentioned changes in higher education:

1. Expansion, driven by the GI bill and the post-Sputnik increase in government support.

2. Opening opportunities to women.

3. The attempt to give African-Americans proportionate representation.

In principle, all of these could have been handled without harm to intellectual culture. But I believe that indirectly and unintentionally they produced intellectual status inversion. I will have to spell out my argument in future posts. I predict that no matter how carefully I make the argument, these posts will be cancel-bait. I expect to be accused of being anti-democratic, misogynist, and racist.

Finally, I should mention that I recently joined Clubhouse, an invitation-only, audio-only, Iphone-only (no Android or PC version yet) social media app, and the first time I was invited onto a “stage” it was by Eric. He was leading a conversation about how economics needs to change. I don’t recall much of what I said (I stressed my points of agreement with him). I ducked out pretty early (I hope I was not too rude) to take a call from the grandkids in Boston.

A friend of mine describes Clubhouse as a sort of Anarchic Talk Radio. Users form rooms in which to hold conversations. In a way, it reminds me of the chat rooms in America OnLine around 1993, except that on AOL you used text chat and on Clubhouse you use voice. It seems that what the founders have in mind are rooms with many listeners and a few speakers. I myself prefer a seminar format, with about 10 people, with equal status–no distinction between speakers and audience. You could use Clubhouse that way, but for now I think that the talk radio format is dominant. I give it a less than 50 percent chance of appealing to me (AOL didn’t).

The invitation-only approach does two things. First, it allows the app to scale slowly as they figure out how best to execute it. Second, it creates a sense of exclusivity, the way Facebook started out as just Ivy League college students.

I was struck by the large number of African-Americans who are in Clubhouse. My friend says that the founders of Clubhouse decided to “seed” it with two groups that they think are culturally prominent in the U.S.: African-Americans and tech start-up nerds (my friend called them “techno-libertarians” but I think that term is anachronistic). That theory of cultural leadership sounds to me like real Bay-Area-think. My first impression is that it results in a culture that is so far to the left that it makes Twitter look like a MAGA hat.
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*In the history of our country as I understand it, the idea of putting intellectuals in charge of things originated with Progressive movement. It received a big boost under FDR, who claimed to have a “brains trust.” It was further glorified under the Kennedy Administration, until the “best and the brightest” got us Waist Deep in the Big Muddy. According to Helen Andrews, the TV show “West Wing” further glorifies power-seekers. (I have never seen the show.)

**You can be careful and fearless at the same time. Bryan Caplan’s The Case Against Education models both. He should be on the list, but is he a first-rounder? I value humility, and it is hard to put that word in the same sentence with “Bryan Caplan.” It would seem as though he runs the risk of becoming overly attached to a wrong idea. But he is very careful when he writes a book or makes a bet.

Wisdom of Robin Hanson

Robin Hanson interviewed by Brian Beckcom. Worth listening to the whole thing or reading the whole transcript. Some excerpts:

one of the most important things that happens to us is that we might get accused of violating a norm. And in that case, we want to be ready to defend ourselves to say that we aren’t violating a norm. And that’s overwhelmingly important. So important that your conscious mind is not really the president or king of your mind. It’s the press secretary. Its job is mainly to keep track of what you’re doing and always have a story about why what you’re doing was okay and not violating norms.

. . .we are quite ready to open to the idea that other people are making mistakes and other people are biased and other people have hidden motives. And that’s going to be the case in politics. Politics is obviously a scenario where we have conflicts. And so, the other side is going to be a plausible candidate to us of people who are falling for biases and mistakes and who have motives that they aren’t aware of because we’re happy to attribute the other side to their terrible mistakes and motives. Whereas for our side, we don’t think that needs to be invoked because we’re doing the reasonable thing and they’re doing the unreasonable thing.

He talks about the difference between elites, who have influence, and experts who have, well, expertise.

There’s a whole bunch of complicated things going into choosing elites, but basically they are two different games played by different rules that overlap. And so, one of the more interesting things is elites often try to hide the elite game they play and pretend to be experts or pretend to be something else. And, but often, you know, and in some sense, the Nobel prize winner shows you that, in fact, the elite game is the game most people would like to join if they could. Even Nobel prize winners say, “Too bad I’m only an expert. I’m not an elite. Because I want to go try to be one of these elites.”

Consider the pandemic.

Pandemic experts have had their standard story about what to do in a pandemic that goes back decades. And, you know, you can look on all their standard writings about, you know, what to do about travel bans or what to do about masks or what to do about quarantines and all those sorts of things. And they’ve had their standard story about what to do in a pandemic. And there was no particularly new information that showed up except as soon as we had a pandemic, all the experts, all the elites in the world suddenly decided, “That’s a subject to talk about.” The elites went wild talking to each other about pandemics and the elites decided that they did want masks and they did what quarantines and lockdowns, and they did want travel bans. And so, the elites declared that was the better thing. And they, the experts, caved immediately. As soon as the elites declared that that was better, the experts changed their mind about what the expert judgment was just like in 1984.

On how to control your biases:

Change your incentives. So, for example, one way to change your incentives about almost any topic is to make a bet about it. As soon as someone says to you, after something you said, “Do you want to bet,” your mental process immediately switches. You suddenly – well, from the moment you said it, it sounded clear and clean and believable and obvious even, and as soon as someone says “wanna bet,” you immediately start to wonder how you could be wrong.

. . .Have fewer opinions. And in each topic, ask yourself, “Do I need an opinion on this? Am I, you know, especially good at this?” And if you don’t need an opinion or you don’t have any special expertise compared to other people you could rely on, then don’t have an opinion on it.

And yes, of course, he is on the list for Fantasy Intellectual Teams (FITs).