- About why people don’t believe, or understand, that the economy has gotten better;
- Conspiracy theorists who think the government is simply faking the data about an improving economy;
- How ‘tech bros’ like Elon Musk are given to reflexive contrarianism and are as susceptible to conspiracy thinking as any red-hatted Trump fan.
Items from July 3, July 4, and July 6:
Paul Krugman, NY Times, 3 Jul 2023: Can Biden Change the Economic Narrative?
Back in the 1970s, Arthur Okun, an economist who had been a policy adviser to Lyndon Johnson, suggested a quick-and-dirty way to assess the nation’s economic condition: the “misery index,” the sum of inflation and unemployment. It was and is a crude, easily criticized measure. The measurable economic harm from unemployment, for instance, is much higher than that from inflation. Yet the index has historically done a quite good job of predicting overall economic sentiment.
So it seems worth noting that the misery index — which soared along with inflation during 2021 and the first half of 2022 — has plunged over the past year. It is now all the way back to its level when President Biden took office.
This remarkable turnaround raises several questions. First, is it real? (Yes.) Second, will ordinary Americans notice? (They already have.) Third, will they give Biden credit? (That’s a lot less clear.)
The key seems to be this:
But are people noticing this improvement? Traditional measures of economic sentiment have become problematic in recent years: Ask people how the economy is doing, and their response is strongly affected both by partisanship and, I believe, by the narratives conveyed by the news media. That is, what people say about the economy is, all too often, what they think they’re supposed to say.
That is, adherence to the party line. Republicans will never grant credit to any Democrat for anything. (Not even world peace or the end to world hunger, I suspect.) Tribalism.
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One way to dismiss good economic news is to imagine that the government is simply faking the data. Everything is a conspiracy!
Paul Krugman, NY Times (subscriber-only newsletter), 4 Jul 2023: Biden Versus the Bad News Bros
What Richard Hofstadter called the paranoid style in American politics is no longer a fringe phenomenon: Bizarre conspiracy theories are now mainstream on the American right. And one manifestation of this paranoia is the persistent dismissal of positive economic data as fake when a Democrat occupies the White House.
During the Obama years there was a large faction of “inflation truthers,” who insisted that deficit spending and monetary expansion must surely be causing runaway inflation, and that if official numbers failed to match that prediction it was only because the government was cooking the books.
With inflation falling rapidly over the past year, we’ve seen some resurgence of inflation trutherism. But the more notable development has been the emergence of what we might call recession truthers — a significant faction that seems frustrated by the Biden economy’s refusal, at least so far, to enter the recession they have repeatedly predicted or insisted is already underway.
The key difference between the older ones and the current ones:
The former group tended to be old-school reactionaries still pining for a return to the gold standard. The new group is dominated by tech bros, billionaires who imagine themselves focused on the future rather than the golden past, more likely to be crypto cultists than gold bugs.
Such as Elon Musk.
But first, let’s ask how we know that the recession truthers are wrong.
It’s not as if governments never fake economic data; authoritarian regimes do it all the time, and if America eventually turns authoritarian — a disturbingly likely event — it could happen here, too.
For now, however, America’s statistical agencies remain highly professional. They’re staffed and to a large extent led by civil servants who care a lot about their reputations for integrity. We can be pretty sure that if political appointees were cooking the books we’d be hearing about it from multiple whistle-blowers.
Beyond that, while official data is still the best way to track the U.S. economy — no private organization can currently match the resources and expertise of the Bureau of Labor Statistics or the Bureau of Economic Analysis — there are, in fact, many independent sources of evidence on the economic state of the nation. And they all more or less confirm what the official data says.
Charts and graphs follow. Krugman is more wonky in his online newsletter than in his published opinion columns. (The conclusion here is a lead-in to the third piece, below.)
The answer, I believe, is that technology billionaires are especially susceptible to the belief that they’re uniquely brilliant, able to instantly master any subject, from Covid to the war in Ukraine. They could afford to hire experts to brief them on world affairs, but that would only work if they were willing to listen when the experts told them things they didn’t want to hear. So what happens instead, all too often, is that they go down the rabbit hole: Their belief in their own genius makes them highly gullible, easy marks for grifters claiming that the experts are all wrong.
What you need to know, then, is that the economic data isn’t fake. A recession might eventually happen, but it isn’t happening now. And the wealthy men claiming to know better are actually less well-informed than, say, the average reader of The New York Times — because they don’t know what they don’t know, and nobody is in a position to enlighten them.
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The third item.
Paul Krugman, NY Times, 6 Jul 2023: The Rich Are Crazier Than You and Me
Examples of Robert F. Kennedy Jr. and Ron DeSantis. But why is this?, Krugman wonders.
So what does all this tell us about the role of technology billionaires in modern American political life? The other day I wrote about how a number of tech bros have become recession and inflation truthers, insisting that the improving economic news is fake. (I neglected to mention Dorsey’s 2021 declaration that hyperinflation was “happening.” How’s that going?) What the Silicon Valley Kennedy boomlet shows is that this is actually part of a broader phenomenon.
What seems to attract some technology types to R.F.K. Jr. is his contrarianism — his disregard for conventional wisdom and expert opinion. So before I get into the tech-bro specific aspects of this weird political moment, let me say a few things about being contrarian.
Here is what fascinates me about all these items. It’s that what is real is revealed by evidence and data, but what people believe is more the result of psychology — aspects of human nature and its biases and heuristics that evolved in the ancestral environment, that prioritize tribal thinking and the assumption that “everything happens for a reason,” and that work at scales inapplicable to the modern world.
One sad but true fact of life is that most of the time conventional wisdom and expert opinion are right; yet there can be big personal and social payoffs to finding the places where they’re wrong. The trick to achieving these payoffs is to balance on the knife edge between excessive skepticism of unorthodoxy and excessive credulity.
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[R]eflexive contrarianism is, as the economist Adam Ozimek puts it, a “brain rotting drug.” Those who succumb to that drug “lose the ability to judge others they consider contrarian, become unable to tell good evidence from bad, a total unanchoring of belief that leads them to cling to low quality contrarian fads.”Tech bros appear to be especially susceptible to brain-rotting contrarianism. As I wrote in my newsletter, their financial success all too often convinces them that they’re uniquely brilliant, able to instantly master any subject, without any need to consult people who’ve actually worked hard to understand the issues. And in many cases they became wealthy by defying conventional wisdom, which predisposes them to believe that such defiance is justified across the board.
Add to this the fact that great wealth makes it all too easy to surround yourself with people who tell you what you want to hear, validating your belief in your own brilliance — a sort of intellectual version of the emperor’s new clothes.
Even tech bros live in a bubble, with other tech bros.
It’s been noted before — probably by Shermer or Pinker or one of those guys — that being an expert in one field doesn’t make you qualified to have opinions in other fields. That’s why many experts are less generally-well-informed than many dilettantes (which is what I aspire to be).
Let me add a personal speculation. It may seem odd to see men of vast wealth and influence buying into conspiracy theories about elites running the world. Aren’t they the elites? But I suspect that famous, wealthy men may be especially frustrated by their inability to control events, or even stop people from ridiculing them on the internet. So rather than accepting that the world is a complicated place nobody can control, they’re susceptible to the idea that there are secret cabals out to get them.
Krugman then recalls Henry Ford, who became a “rabid, conspiracy-theorizing antisemite.” Then concludes,
In any case, what we’re seeing now is something remarkable. Arguably, the craziest faction in U.S. politics right now isn’t red-hatted blue-collar guys in diners, it’s technology billionaires living in huge mansions and flying around on private jets. At one level it’s quite funny. Unfortunately, however, these people have enough money to do serious damage.
