When to distrust elites

Whom should we trust: elites or the people? I’m in two minds here.

On the one hand, on the issues of immigration and Brexit, I’m with the elites.

But in other respects, I’m on the side of the people. I’ve repeatedly argued for worker democracy against managerialism, and have consistently pointed out the shortcomings of professional fund managers. And I’ve pointed out that popular opinion – as measured by ratios (pdf) of consumer spending to asset prices – can do a better job of forecasting future economic conditions than professional forecasters can manage.

So, am I just confused?

No. There’s a logic to my position which is lacking in extreme pro- or anti-elitism. To see it, remember that crowds are wise only under specific conditions. These are:

 - Beliefs are uncorrelated, so there’s no herding or information cascades.

 - There’s a diversity of belief, with people drawing on their personal and perhaps tacit knowledge of local circumstances.

 - People have incentives to get the decision right.

I side with the people when these conditions are in place. This is true of the ability of consumption-wealth ratios to predict future economic conditions. This works because each individual decides his spending according to personal circumstances: is my job safe? Will I get a decent bonus? Do I have good prospects? And so on. And everyone has an incentive to get the decision right: spending too little means unnecessarily depriving yourself whilst spending too much means uncomfortable retrenchment later. Granted, it’s possible for spending decisions to be influenced by peer pressure. But I suspect this mechanism is often not powerful enough to offset the strength of the other conditions.

I suspect too that these conditions would often facilitate worker democracy. Each worker has local specific information about how the firm might increase efficiency, and has skin the game (job-specific human capital) that incentivizes him to express a good opinion.

However, in the case of Brexit, these conditions are absent. Voters’ beliefs are correlated, by virtue of being unduly influenced by the shit media (including the BBC) as well as by cognitive biases. There’s little local, fragmentary knowledge to be aggregated: not many voters were swayed by their personal experiences of dealing with the EU. And they didn’t have skin in the game: many older voters believed, sadly correctly, that the costs of Brexit would be borne by others.

Herein lies the paradox. Although there exist good criteria for adjudicating when we should trust the people and when the elites, I seem to be the only one who applies these criteria. Instead, popular opinion distrusts elites when they should be believed – for example on Brexit – and yet believes them when they should be distrusted: there’s insufficient demand for worker democracy, and far too much trust still placed in fund managers.

What we’re seeing, therefore, in today’s populism is the exact opposite of what intelligent, evidence-based class war should be.

Comments

[doe]

The elites were wrong about things they said would happen in the short term which we can see right now (that there would be a recession, house prices would fall, there would be a punishment budget, shares would fall - things they are on the record as saying would be happening right now).

Were the people wrong to distrust what a bunch of bankers, economic forecasters, businesspeople and politicians told them?

[Matt Moore]

It's strains credulity for you to dismiss non-elite views with reference to cognitive biases, as if the elites have different brain structures from the rest of us.

Aren't you always stressing that leaders aren't that great, just lucky or not?

Your criteria for good decision making are great. We just need to make sure that most decisions are taken under such conditions, which means less state intervention (except transfer payments) and more individual autonomy. Starting with leaving the EU.

[Patrick Kirk]

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/02/mildly-against-brexit.html

Before the Brexit vote, your position was that Brexit wouldn't matter that much but you opposed it because it would be bad for immigrants. Do you not think it even remotely possible that people who feel their identity is threatened by immigration might have voted on the exact same basis as you but on the other side?

[VinceReeves]

Problem here is the assumption that those who voted Remain are also pro-immigration. But the numbers don't support this. For example the recent Yougov poll on Amber Rudd's proposal on listing foreign workers shows that only 26% of the public oppose this, compared with the 48% who backed Remain.

https://yougov.co.uk/news/2016/10/06/public-backs-plans-make-companies-say-how-many-for/

Given that not all of that 26% will be Remain voters, I think it is possible that up to half of Remain voters, or perhaps even more, are anti-immigration.

Or, to put it more simply, anti-immigration sentiment is much stronger than anti-EU sentiment.

So this whole people-of-unreason following Brexit due to stirred up media anti-immigration sentiment schtick doesn't really correlate with the facts.

It is a belief system.

[Jim]

LOL. The people are to be trusted when they agree with me, but not when they don't. Animal Farm was written 70 years ago, the Left hasn't changed a jot.

[David]

@all
That has to be the worst bunch of comments that I have seen in a long while.... (outside of the twitter threads)
Down the rocky path we go...
David.

[daguix]

This is a smart and profound thought. Thank you. You should write a book based on this idea.

[Churm Rincewind]

I'm puzzled by the claim that the three cited requirements for crowds to be truly wise were uniquely absent during the Brexit debate.

Is the suggestion here that media influence and cognitive biases don't normally apply when other issues are under consideration? And that local, fragmentary, knowledge was especially lacking in the Brexit debate because voters don't have direct experience of dealing with the EU, presumably compared to (say) voters' experience of dealing directly with Nato/the Syrian conflict/fracking/economic policy/any other major issue. And I'm dumbfounded by the idea that British voters have no "skin in the game" when it comes to Brexit.

This all strikes me as dancing on the head of a pin.

[VinceReeves]

@Churm

Well, the funny thing here is that I do have extensive direct experience with dealing with the EU, as I was involved in drafting EU engine emissions legislation with the Commission.

And I voted Leave!

The EU is plainly not a wicked organisation, and the people I dealt with in the EU were good, reasonable people. However, it does suffer from the generic fallacy of contemporary Western thought - the belief that history has a purpose and destination, and once the course for that destination has been set, there can be no wavering.

This generates essentially impossible projects such as the Euro that cannot be abandoned even when they have demonstrably failed, as any such abandonment is freighted with the existential dread of the cancellation of the future, "going backwards" etc.

Much objection to Brexit is exactly this - the feeling that "progress" towards the inevitable has been sabotaged.

[Dave Hansell]

"Or, to put it more simply, anti-immigration sentiment is much stronger than anti-EU sentiment."

This argument as presented simply underscores the argument being made by the author of this blog.

At the same time it undermines the argument, put by many others, which complains that those amongst the 48% who voted to remain have got it wrong when they question the judgement of those who voted to leave.

The statement based on the yougov poll [which incidently neglects to provide any contextual information such as the phrasing of the question or questions asked or the size and make up of the sample to highlight just two relevant contextual elements] clearly implies that this response to the issue demonstrates that not only remain voters but also, more importantly, leave voters recognised prior [not subsequent] to the referendum vote that what is defined as an immigration 'problem' [as compared say to an opportunity] is and was NOT one which originates from membership of the EU.

This argument being made here implicitly acknowledges the fact that immigration levels into the UK are consistently over time higher from the rest of the world than from within the EU and that the majority of voters on either side recognise this.

This being the case any argument claiming that the vote to leave the EU was motivated by a desire to regain control of our borders falls apart. If the higher levels of immigration from outside the EU are accepted than leaving the EU in favour of 'joining the rest of the world' can only serve to increase the levels of immigration [unless there is an acceptance that the economy will suffer - more on that point in a moment] and underline the fact that control over borders to control immigration has no significant bearing on EU membership in comparison to relations with the rest of the world outside of EU membership.

If, however, the claim is going to be made that this represents a misinterpretation of the argument presented and that people who voted leave, as well as remain voters, did not and do not recognise or accept in any way the fact that most of the immigration seen as a 'problem' is not down to the EU than such a position and argument undermines any complaint about the calling into question of the judgement of those who voted to leave. If the argument is going to be put that even though the consistently over time higher immigration from the rest of the world outstrips that from the EU but the majority voted to leave motivated on the basis that the 'problem' of immigration was a result of EU membership than it is entirely reasonable to call into question the judgement and abilities of anyone who made such a decision based on a position contrary to the available facts.

If such an argument is going to be made than this merely underlines the blog authors point about the non-wisdom of crowds in certain contexts and the cascade effect etc.

Not that this matters in terms of the argument about judgement in this case because that issue has been put to bed by the argument made that an apparent majority of both remainers and leavers see no problem arising from any roll out of employers in all sectors being required to submit to Central Government authority lists of employees who are immigrants.

As an aside here, which underlines the argument about a lack of judgement on the part of those taking such a position, the argument that this is no different from employers being asked to compile lists of employees from different groups - gender, ethnicity, sexuality etc - is, to put it bluntly, sufficient evidence of a lack of application of cognitive ability. Such group identity data has THE SPECIFIC methodological purpose of trying to ensure fair and reasonable employment policy which seeks to minimise overt and covert, direct and indirect biases in favour or against specific groups.

The purpose of any roll out of a requirement of ALL employers across ALL employment sectors to provide lists of employees who are either immigrants or 'non British' has been very clearly laid out as being with the intention of replacing them and using them as a bargaining chip in negotiations with the EU. If there exists anyone who claims that they are unable or unwilling to recognise that compiling both sets of data have totally opposite purposes than they have no leg to stand on when their judgement and cognitive abilities are accurately and correctly called into question.

The key matter which supports the accuracy of the lack of judgement accusation here is, that with the Government having made it crystal clear what the purpose of such a list will be, the total lack of recognition of the practical impact of even suggesting never mind carrying out such a policy. It matters not what type of employment one is talking about here. Even in low skilled work never mind in jobs such as Doctoring, social care, what's left of manufacturing, technical work etc etc motivation and a training course on the part of those considered 'British' is insufficient. Experience as well as knowledge and expertise is also vital if effectiveness and efficiency is to occur. Experience cannot be taught in a classroom or training environment, it requires time.

And in a scenario where it has been made clear that those who are immigrants or non British who are employed are going to be replaced at some point it takes a special kind of stupidity to convince oneself that those in this position will hang around waiting to be pushed rather than seeking to seek alternative employment outside of these islands. It takes an even higher level of stupidity to firmly believe that even if a certain proportion stick it out - a highly dubious scenario given existing knowledge of human behaviour - that their roles can be adequately filled from a queue waiting at the bus stop.

The idea that this idea will not cause problems, both for the wider economy and for individuals who will be affected in many varied and practical ways is clear evidence that the people of Gotham do exist. As is the notion that just because there has not been any serious adverse impact on the economy in the three months since the vote to leave that there is nothing to worry about. We are still in the EU. Nothing has changed. Nor will it until the leaving process is completed.

One does not need to understand quantum mechanics to work this stuff out. That there seemingly exist sections of the population who voted either way who apparently cannot work this out and who cry foul and moan when this is pointed out in Janet and John terms is deeply worrying. As is the victimhood claim that everyone who points this out - all 16 plus million - do not contain any working class people who have been affected by forty years of globalised de-industrialisation and are a homogenous 16 million strong group of metropolitan elites.

[David]

@Dave Hansell...
Thank you Dave....... that's much better!
David.

[Bob]

Why not support domestic focus and a Job Guarantee Chris? Then we just put the borders down again once the EU puts the same thing in place.

[VinceReeves]

@Dave Hansell,

Yes, anyone who voted Leave in the belief that it would automatically curtail immigration was exercising poor judgement. But so was anyone who voted Remain in the belief that it was an inherently pro-immigration stance. In fact, it was the anti-immigration Remain voters who were probably exercising the best judgement, in purely instrumental (not moral) terms.

The vote on leaving or remaining in the EU was precisely that. It was not a referendum on immigration policy. It has subsequently been interpreted as the latter, of course, but it is the elite who are now doing that!

The context of the Yougov survey is here, btw: https://yougov.co.uk/opi/surveys/results#/survey/cba48800-8ada-11e6-9434-005056901c24

[TowerBridge]

Thanks Dave

Question for VinceReaves - how is UK gvnt thought different from what you describe as Western Fallacy (and thus justifying your decision to leave)?

My thinking is, that as the UK government was a major driver in EU policy and acts, it won't be any different.

[VinceReeves]

@TowerBridge

Well the UK, as yet, doesn't seem to have a quasi-utopian eschatological vision in the way that the EU does - i.e. ever closer union.

That doesn't mean it won't evolve one, of course.

My own view of the future of both the UK and the EU isn't very optimistic, to be honest. I think the EU is rotting from within, and if/when it collapses the results will be extremely violent.

On the other hand, I think that Brexit may turn out to be no more than The Dignity of Dying In Your Own Home.

[David Hugh-Jones]

Would it be fair to say that you support local democracy, and consumer sovereignty, but not national-level democracy? Or do you think representative democracy injects enough expertise into the injects enough expertise into the political process?

[Dave Hansell]

"Well the UK, as yet, doesn't seem to have a quasi-utopian eschatological vision in the way that the EU does - i.e. ever closer union."

Lets consider that a moment.

The UK is in fact a single market consisting of at least two States and other smaller entities in close union operating under a single set of institutions. As such it is the original single market superstate.

The logic of the argument regarding the need to be out of the EU superstate is also pertinent to the constituent nations and entities within the geographical boundaries of the iBritish Isles. There are many people on these islands who take the same view that the UK single market superstate also represents a "quasi-utopian eschatological vision.

Their democratic wishes are as valid as anyone else's.

Their have been heavy hints and promises from many who voted leave that this now gives us the opportunity to tackle our own decaying from the inside feudal like arrangements - such as a written constitution, elected upper chamber and head of state and a fit for purpose voting system. From much of the rhetoric which has and continues to be spouted on this matter one had expected those who were seemingly chomping at the bit to take control of our decision making processes would have hit the ground running.

At present that landscape is so full of tumbleweed that I've had to book an appointment with specsavers to get my eyes and ears checked out as I've seen and heard diddly squat on that score from any quarter.

[VinceReeves]

@Dave Hansell

I've got no disagreement with any of that. If the UK doesn't show any ability to reform itself, then it will go the same way as the EU. In fact, I don't think the UK is all that long for this world either. Also, the USA is currently in the process of disintegration, which is a large part of the reason why Trump has had such a good run.

Although the original single market superstate was the United Provinces (which became the Dutch Republic.)

[Henry Carey]

What about trade policy? Some elites understand what is going on - read Ha Joon Chang. The UK is becoming a non-industrial low income economy because of its overvalued currency, and anti-industrial policies (capital is shifted into dead end sectors such as housing, starved to domestic manufacturers) and the zero tariff policy combined with foreign mercantilism guarantees that no new manufacturing will develop in the UK. The British people are right in their belief that the economic experts are know-nothings or are completely corrupt. US political scientist Dr. Charles Ferguson has widely and thoroughly documented the extent of corruption in academic economics. Watch his documentary Inside Job, or read his article in the Chronicle of Higher Education: http://www.chronicle.com/article/Larry-Summersthe/124790/

Western elites are the most foolish elite on the planet - not more evil than the elite in the mercantilist Eurasian economies; ours are distinctive in their foolishness, naivete and incompetence. They are guaranteeing with their policies that their own futures, and definitely the futures of their children will be bleak - the drawers of water and hackers of wood for foreign industrial powers.

[Bonnemort]

"But in other respects, I’m on the side of the people"

I'm on the side of the people as long as they're structurally economically disadvantaged by a huge oversupply of labour.

As Tolstoy put it "I sit on a man's back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means - except by getting off his back."

[Bonnemort]

Henry Carey - well at least we're fixing the overvalued sterling problem.

On our foolish elites - I imagine the elites think they can always up sticks and go elsewhere if it goes pearshaped. Many of the wealthiest have dual citizenship or the right to reside in other countries.

As for mercantilism - Eamonn Fingleton's been banging on about this for ages.

http://www.fingleton.net/extract-from-in-the-jaws-of-the-dragon/

[john]

"And I’ve pointed out that popular opinion – as measured by ratios (pdf) of consumer spending to asset prices – can do a better job of forecasting future economic conditions than professional forecasters can manage."

Searching to the extent possible without annoying brain pain, the 2001 paper does not appear to actually express the ratio.

[northshore]

How is an elite defined?

Relatively few seem to mistrust elite biologists, medical practitioners, physicists, tradespeople and other experts in their field per se.

The disdain appears focused towards politicians, economic forecasters, journalists, bankers (I am one) & captains of monopoly.

While the groups overlap, what determines the extent of scepticism. Perhaps it's as simple as (1) One group are more willing to acknowledge what they know and what they do not? (2) Another group generally directs the short/medium term nature of money and land?

Whatever my brexit opinion, such directed scepticism strikes me as quite rational if not entirely logical.

Not at all directed at Chris - but that the elite/expert meme woes seem most pronounced from one group is itself a reflection of their socially ruinous conditioning that got us here.

[Nanikore]

Who do you regard as 'experts'. Mainstream economists working in the BOJ and HM Treasury? Given their records before the Financial Crisis (they did take pressures building up to that event seriously) and the nonsensical and very gimmicky Treasury Brexit Forecasts, people were wise to be sceptical. When they say people would lose up to 4000 pounds per head, they were right to wonder how they got that figure. The real case for remain - which relates to economic, social and other aspects of security, was not really made.

[Andy S]

I'm trying to apply these rules to the situation in the US. Are the crowds wise if Trump wins? Difficult to tell.. I see no herding effect. The country is deeply divided. But most people (apart from Muslims and Latinos) don't have skin in the game "If Trump wins, what have I to lose personally"?

[Bonnemort]

I think we all have skin in the game if Hillary starts WW3. Her stated 'no-fly zone' in Syria means openly attacking Russian planes (there at the invitation of the Syrian government) and Syrian planes (an act of war on the Syrian state), rather than 'accidentally' hitting Syrian troops and destroying the cease-fire.

It's remarkable that for 50 years the US, at the height of its power, accepted Soviet hegemony over the whole of Central and Eastern Europe (because the risks of conflict were considered too great). Yet now, a much weaker Pentagon seems to be seriously considering running such risks in order to prevent Russian/Iranian hegemony - over Syria and Iran!

[leslie48]

I'm on the side of the people as long as they're structurally economically disadvantaged by a huge oversupply of labour."

What does this mean? Clacton on Sea a UKIP white working class seat has very few immigrants I suspect. Most multi- ethnic London working class seats voted Remain in massive numbers. The oversupply thesis does not apply in these contexts suggesting again that the shit press and distorted BBC was able to reach those who know least most. The Daily Express/Sun agenda swung it for some who easily swallowed the appalling propaganda.

[Bonnemort]

That's right, leslie48, the stupid proles don't know their own interests and are easily swayed by the press.

"Most multi- ethnic London working class seats voted Remain in massive numbers."

That's cos all the white working class voters were driven out years ago!

[Kaleberg]

Andy S: "But most people (apart from Muslims and Latinos) don't have skin in the game"

A lot of Americans are women. Really lots of them. There are even more women here than men. They have skin in the game with regards to health, job opportunities, child care and so on. You clearly haven't been following the Republican war on women here, but a lot of women have.

Trump is bad news for Roman Catholics. A lot of immigrants are Roman Catholic, and a lot of long time American Roman Catholics remember when they weren't white enough for Trump's people. The Klan wasn't just about n---rs. We've been having a religious war here too.

Bonnemort: Trump is much more likely to get us into a WW3 than Clinton. Clinton is relatively calm and cool headed unlike Trump who is hot headed and under the influence of all those male hormones.

[Jim]

"Clinton is relatively calm and cool headed unlike Trump who is hot headed and under the influence of all those male hormones."

Just turn that statement around into a criticism of a female candidate (admittedly not Clinton given her age) as being not suited to the job due to her monthly hormonal mood swings to see that it would be considered utterly unacceptable, one I doubt you would ever dream of even considering, let alone saying out loud.

Yet you do so about a man................

[Bonnemort]

Kaleberg - Clinton stated in the debate that she'd declare a no-fly zone in Syria. We've seen this script before, only this time it involves a shooting war with Russia.

[Bill Posters]

Always