Wednesday 28 February 2018

Looking for your keys under the lightning: social science in turbulent times


It is time to come out. I am writing a book. When I tell this to senior academics, they wish me "Good luck," and their eyes gain a mysterious, troubled look. Writing books is not what economists do.

Here is a self-justifying sketch of the relationship between social science and its historical setting.

Think of the possible states of society as a multi-dimensional space, each dimension corresponding to a variable: the growth rate, inequality, the price of corn, the prevalence of opiate addiction and so on. Different societies or parts of society – Kansas and New York, Denmark and Greece, or South London and North Oxford – are at different points in the space.

Nearby societies are at different points in a many-dimensional space

Some exogenous variables are like the weather: they change naturally, but we cannot change them. Others are policy variables, in the broadest sense that they can be affected by collective human choices. The optimal value of the policy variables depends in on the value of the exogenous variables. Social science involves working out how our welfare depends on the policy and exogenous variables.

At settled times in history, society appears static. Expected changes in the exogenous variables are small, and welfare appears high, suggesting that policy variables are about right. In this state, social science involves looking nearby in the social space – probably within the convex hull formed by different existing parts of our society. This gives us lots of data.

Economists talk about "looking for your keys under the street light". The idea is that your keys, if you have lost them, are no more likely to be lying under the street light than elsewhere; but it makes sense to look under the street light, rather than in the dark where you won't see them anyway.

In settled times, we look under the street light. Prestigious social science involves careful empirical work, leveraging the available data to recommend incremental policy changes. Think of Esther Duflo and the economist as an engineer, or, as Keynes once wistfully suggested, a modest profession like dentistry.
Social science in settled times: looking for small changes within the convex hull* of what is known
[* the shape shown is not quite convex, but eh.]

Other times in history are times of turbulence, of fast change and widespread dissatisfaction with the status quo. Expected changes in exogenous variables are large, or social welfare appears low, suggesting that we need large changes in policy variables.

In turbulent times, we need to explore remote points in the policy space, beyond the convex hull of what is known. Social science involves bold steps of imagination and deep theoretical examination of current and possible structures. Think of Marx and what Joan Robinson called his intellectual "seven-league boots", striding forward over trivial details. Or think of the public choice movement of the 1970s, which looked at the foundations of political constitutions. In fact, we need to "look for our keys under the lightning" – flashes of insight which illuminate the whole landscape and point to big possible changes.


Social science in turbulent times: looking for keys under the lightning.

Today we are living in turbulent times. The economy is changing fast as the centre of the world moves East. Politics, driven by voter dissatisfaction, is just as fast-moving and less predictable.

Of course, it is arrogant to assume that you can produce a bolt of intellectual lightning! But if the premium is on lightning, then it may be worth trying.

This is why I am ignoring my senior colleagues' troubled looks, and writing a book.

Sunday 25 February 2018

Hello Daaaave...

From my previous post on new media:
Those politicians that grasp this new reality – Leftists like Corbyn, nationalists like Trump, centrists like Macron – win elections. Those that don’t, don’t.
Let's stay on this topic. I got an email from Brandon Lewis yesterday. Brandon Lewis is the new broom at Central Office, part of his remit being to bring social media pizzazz to match Momentum.
Dear David,
What's up, Brandon?
With your support, we’re shaping the future of Britain. But Labour want to stop our progress.
Oh dear! That sounds generically bad.
That’s why the Prime Minister wrote to you, David.

And so it goes on. I'm not saying it was necessarily written by a smart-suited young person in marketing. It seems that way, but who knows? Maybe Brandon – or as I call him, the B-Dogg – penned and sent it himself, with all the friendly personal touches.

So anyway, current wisdom runs that we can keep Theresa May, because she's still a bit ahead in the polls.

The last time Theresa May was ahead in the polls
That'll probably be fine!


Saturday 24 February 2018

The fake news hysteria and the Intellectual Dark Web


Two writers, from Left and Right, make contrarian, optimistic arguments about the effect of the internet on public debate:
Both make interesting points, but their optimism is unwarranted.

What is really going on?

Lower costs

The internet has dramatically reduced the cost of publishing. The market for news and opinion has gone from an oligopoly to a classical free market, with many sellers and many buyers. What before required industrial-scale machinery and a nationwide distribution network can be done by anyone with a Facebook account.

By standard economic theory, that should be good for consumers, providing more variety at lower cost. Mr Murray and Professor Milanovic both broadly take this line. But long ago, Joseph Schumpeter argued that monopoly could be better for innovation than free markets. A monopolist would expect to reap all the dividends from investing in new techniques; in a free market, other sellers could and would steal your new ideas.

For news production on the internet, this argument applies in spades. Newspapers always competed for the scoop and knew their rivals would follow the story up the next day. (In the jargon, news is non-excludable.) The internet has exacerbated this: an article which took weeks of gumshoeing to produce can be copied in a second – even if not literally copied and pasted, its ideas can be taken. The traditional press is right to grumble that Google News and Facebook are killing its business model.

The result is that analysis, which anyone with a brain can produce, proliferates, but actual reporting, which costs time and money, withers. And so, instead of scoops, we get front page news about cold weather snaps. The extreme version of this is the Daily Express in the UK, which has given up reporting as too costly, and fills its headlines with press releases about heart disease drugs.

Unfortunately, modern democracies need the information gathered by reporters much more than they need analyses from social scientists and pundits.

The end of the consensus

The old media firms were not neutral actors. To get political news, the journalist asked his pals in the government for a juicy story. In return, they expected favourable coverage. Different organs allied with different political tribes, but when the elite as a whole agreed on some view, challenges to that view went unheard.

This was the old-style social construction of reality. It was certainly problematic. On the other hand, a consensus, even a biased one, provides society with the evidence base it needs to make collective decisions, and common ground as the basis for constructive debate.

Clickbait

That has all gone. The Sun can no longer swing elections with its headlines. A paper publishes a fishy story about Jeremy Corbyn meeting a Czechoslovak spy – his rebuttal, on Youtube, gets a million views in a day. 

Those politicians that grasp this new reality – Leftists like Corbyn, nationalists like Trump, centrists like Macron – win elections. Those that don’t, don’t.

Back in the day

 Is this the democratic ideal realised? Nope: you can also get a million hits by reporting fake news on Trump’s gorilla channel. News has another quality: it is an experience good. What we buy are “stories”. We cannot find out for ourselves which stories are real. The market failure this would normally cause used to be mitigated by a journalistic outlet’s reputation. Broadsheet newspapers were biased, but they left the really garbage stories to the tabloids.

In a market with a million outlets, all copying each other, this partial solution no longer works. As a result, we are drowning in clickbait.

What solves public goods problems?

The actors in this new reality will not be thoughtful bloggers like Branko Milanovic. They will be states. States can control the flow of information within their borders. They have the resources to produce fake news, real news and everything in between. They can step in and solve the public good problem. And they have the incentive to do so, because states need to produce consensus supporting their actions.

Professor Milanovic occludes this point by describing Al-Jazeera, Russia Today etc. as “foreigners” as against the “Anglo-American” media. But this misses a distinction: Russia Today is directly an organ of the Russian state. The New York Times is not.

Similarly, the fragmentation of the internet into national borders is not a reactionary backlash against the new open world. It is part of the same process. It is the obvious next step.

What is there to celebrate here? Yes, now the West knows what it feels like. But when Radio Free Europe broadcast into the Soviet Bloc, it was passing on the truth – at least some truth – from liberal democracies to dissident citizens in some thoroughly nasty dictatorships. When RT broadcasts to us, it gives us lies and conspiracy theories.

Western hegemony was often exercised brutally. Many liberals and progressives, sensing its end, mistakenly infer that the rising powers – Russia, China and their allies – will agree with their values better. This wishful thinking will deserve the nasty surprise it gets.

Hobbits and hooligans

Douglas Murray celebrates the availability of new ideas that challenge the consensus. I agree: I’m glad to read Jonathan Haidt or Nicholas Christakis or Sam Harris.

We now have a free market in theories. Whereas before we all had to buy the one theory, we now can pick the one we like best. Will the best theory win?

The political theorist Jason Brennan describes three kinds of citizens. There are hobbits, who like comfort and don’t want to be made to think; hooligans, who gather evidence to support their preconceptions; and vulcans, rational thinkers like Spock in Star Trek, who make ideal citizens because they inform themselves impartially. Evidence from public opinion research provides the kicker: basically, Vulcans don’t exist. There are only hobbits and hooligans. Jason Brennan is skeptical about democracy.

Jordan Peterson seems like a good guy, and who is to disagree with rules in his book like “Stand up straight with your shoulders back”? Whether that is intellectually ground-breaking work, I am less sure. It sounds an awful lot like Make Your Bed (author Admiral William H McRaven, US Navy, retd). In general, there is a market right now for sensible, Victorian advice. What Professor Peterson does seem to have is great charisma as a lecturer.

Intellectual progress requires more than the existence of competing views. Those views must meet in reasoned debate, and the better argument must win. The blogosphere, or Intellectual Dark Web or whatever, has not yet proved its ability to generate this kind of progress. I hope it does. Meanwhile, it is certainly nice to find intellectual allies, and the internet can provide that for all of us.