This is What Epistocracy Looks Like

Most academics know some version of the critique of elite rule, administrative power, and centralized regulation by experts. Hannah Arendt called bureaucracy the “rule of No Man;” Michel Foucault described the overlap of legislative power, knowledge-production, and the apparatus of discipline and control; Iris Marion Young defended simple street activism against the demand that political participation meet elaborate standards of reasonableness in the name of pluralism and in so doing laid the groundwork for current theories of agonistic democracy like Chantal Mouffe; Roberto Unger suggested that we ought to embrace democratic destabilization, experimentalism, and a radical institutional creativity belied by the supposed necessity of expert judgments; Anthony Giddens and Ulrich Beck have diagnosed the relationship between risk-aversion and governmental responsibility for emergency management as a modern form of legitimacy that both generates hazards and takes responsibility for managing them. Other criticisms came from conservative circles: Friedrich Hayek, Michael Oakeshott, and even Antonin Scalia.

Phillip Tetlock’s work on expertise is very illuminating here: in some fields, the avowed experts’ predictions actually are no better (and sometimes worse!) than a coin flip. That’s why David Estlund criticized the epistocratic tendency to ignore the systematic biases that underwrite invidious comparisons between evaluations of competence and incompetence in his book Democratic Authority.

And yet, some matters of expertise are unavoidable. David Estlund called these “primary bads”: war, famine, economic collapse, political collapse, epidemic, and genocide. In some cases, increased participation decreases the risk of such catastrophes: literacy and universal suffrage decrease the risk of famine, for instance. ”No famine has ever taken place in the history of the world in a functioning democracy,” Amartya Sen wrote in Development as Freedom, because democratic governments ”have to win elections and face public criticism, and have strong incentive to undertake measures to avert famines and other catastrophes.” Yet democracies still go to war and face economic crises (if not yet collapse) and the temptation is always there to imagine a system that will decrease the likelhood of such events.

The standard line is that democracies must keep experts “on tap, but not on top.” But consider a common example that Steven Maloney and I articulated in our paper “Foresight, Epistemic Reliability and the Systematic Underestimation of Risk:”

all citizens are affected by the Federal Reserve funds target rate (the rate that banks charge each other for overnight loans to cover capital reserve requirements) as it ultimately determines the availability of credit and thus the balance between economic growth, inflation, and unemployment. Most experts agree that the range of viable options for this rate is limited. Further, they agree that direct or representative democratic control of the rate would encourage non-optimal outcomes, including price bubbles that could lead to economic collapse. As a result, decisions on the target rate, which affect every citizen, are nonetheless denied to the public. Some citizens thus argue that the Federal Reserve ought then to be abolished as illegitimate. [These] citizens charge that members of the Federal Reserve Board, who are drawn from the management of a few investment banks, allow systematic biases for their home institutions to color their decisions… [I]t makes (1) findings of fact (2) in an exclusive and closed manner that (3) have coercive effects on citizens because (4) democratic decision-making would lead to cataclysmic primary bads….

Now, it is amusing to point to the financial crisis of 2008 and argue that the Federal Reserve failed to prevent economic collapse. But though the crisis was and remains severe, the Federal Reserve actually played a major and undemocratic role in preventing a true collapse. David Runciman’s recent piece in the London Review of Books makes a similar point:

When democracies are in serious trouble, elections always come at the wrong time. Maynard Keynes, the posthumous guru of the current crisis, made this point in the aftermath of the First World War, and again in the early 1930s. When something really momentous is at stake, the last thing you need is democratic politicians trawling for votes. Keynes readily accepted that democracies were far better at renewing themselves than the supposedly more efficient dictatorships. He just wished they wouldn’t try to do it when they were struggling to stop the world descending into chaos.

Matthew Yglesias discussed the implications of the Federal Reserve for Progressives early last year:

No public institution can or should be truly independent of the political process. The Supreme Court is an independent branch of government, and rightly so. But its decisions are subject to hot political debate, and the nomination of judges to sit on the high court is considered an important presidential power. This, too, is as it should be. The assumption that monetary policy is too important to hold central bankers accountable through the political process should have come to an end along with the illusory great moderation.

Perhaps he is right; but perhaps politicizing the Fed will have the same de-legitimizing impact that politicizing the Court has had, which could be dangerous for an institution whose only power is its capacity to make credible counter-cyclical commitments.

Too often, we have the tendency to reduce these questions into a battle between “democrats” and “elitists.” But there are few serious radical democrats who advocate the dissolution of the administrative state, let alone the liberal rights that restrict majoritarian rule.

Objections to elite status and epistemic privilege more often reflect a kind of partianship about which experts to respect, as a proxy for in-group solidarity. It is difficult not to reduce matters of scientific expertise and superstition to in-group/out-group tribalism: after all, as much as I respect the opposition to intelligent design in public schooling, there is little reason to believe it has important implications for biology curricula, and it also has massive public support in many school districts. A pure democracy would allow the people to set their own standards.

We all fear some out-group, whether it be the white supremacists’ fear of non-white incursions, or the secularists’ fear of theological domination. Many people without a college degree resent the wage premium and social status associated with it; many people with a college degree resent the democratic power of the uneducated and the pandering they receive by politicians and media. Regardless of education, there is the sense of irreconcilable differences. Many people believe that we do not inhabit the same world, even as our disputes over how to constitute our shared world erupt over a very narrow band of possible policies.

Who among us is not an elitist or a vanguardist in some sense? We all think we’re right and that we could run things better than the status quo. Even my fellow fallibilists think we’ve got a recipe for institutional humility that would enhance outcomes!

When Money Itself Comes to Represent Nothing: Baudrillard or Austrian Economist?

(This post is especially for my friends who are reading William Gaddis’s The Recognitions right now.)

Post-structuralist trickster or stuffy monetarist? You guess:

If modernity is characterized by loss of the sense of the real, this fact is connected to what has happened to money in the twentieth century. Everything threatens to become unreal once money ceases to be real. […] That fact is ultimately to be traced to the biggest counterfeiter of them all–the government and its printing presses. Hyperinflation occurs when a government starts printing all the money it wants…. Inflation is that moment when as a result of government action the distinction between real money and fake money begins to dissolve. […] Money is one of the primary measures of value in any society, perhaps the primary one… As such, money is the central source of stability, continuity, and coherence in any community.

Source below the fold: Continue reading When Money Itself Comes to Represent Nothing: Baudrillard or Austrian Economist?

The Will-Be/Ought Gap: Marking Ideas to Market and Moral Realism

(What follows are some reflections on two related problems. One is Robin Hanson’s discussion of prediction markets to counteract status quo bias, and the other is my friend Leigh Johnson’s meditation on strong moral relativism. Because of length, I have cut my extended reflections on Dr. J’s “strong relativism” for a post tomorrow.)

If there’s one thing I know, it’s that I might be wrong. In fact, for a great number of my beliefs, I am more likely wrong than right! In general, the problem is identifying false beliefs. Most of the time, my fallibility is not a big problem. If I’m not as handsome as I’d like to think, it won’t matter much because my wife will help to maintain my illusions. If I’m not as smart as I pretend, well, I’m more likely to be ignored than corrected, so I can go to my grave believing myself misunderstood rather than dim. But these are the easy questions. In this blog, in my scholarship, and in my teaching, I frequently make claims that have nothing to do with myself. My arguments are about the world, and if I’m wrong, and someone relies on my information, I suspect that they are made worse by having listened to me. But am I more likely to be wrong than my colleagues? Less likely? Just how wrong am I likely to be? Should any of this matter to my employer, George Washington University?

There are many ways to evaluate these questions, but I’d like to start by discussing three, all from economists. The first is what Brad DeLong calls “Marking One’s Beliefs to Market,” and it seems like a useful personal exercise for an academic, whether economist or not:

Back on March 3, 2000 I marked my beliefs to market: took a look back at the ten most important things I had believed in the 1990s, and tried to assess how accurate my beliefs had been.

Shouldn’t we all do this, not just every decade but every year, or even more frequently, whenever facts come in? In the academy, especially after you’ve been granted tenure, it’s easy to drift along without ever testing your beliefs against anything other than your students, who are cowed by grade anxieties and a general respect for authority, and your research cohort, who will more often be motivated by social norms of mutual aid and assistance than by the desire to hold your feet to the fire. That said, I hold all kinds of beliefs, including the belief that my beliefs ought to track the truth. The problem is figuring out how to test them.

For example, I believe that coercion can be justified by deliberative institutions. Our commitment to democracy can sometime be rooted in our commitments to equality, but sometimes we also cite the superior information-gathering of democratic institutions, or the stability such regimes bring. We might argue that disgust with government policies is more cheaply expressed through voting and protesting than it is through revolution, so the state is more likely to know what people want if they have a chance to vote. Most contemporary democratic theorists hold some version of this view, and the disputes among us tend to focus on whether democracy as a whole is more of a reason or a religion. Diana Mutz recently proposed a “middle-range” alternative:

I advocate abandoning tests of deliberative theory per se and instead developing “middle-range” theories that are each important, specifiable, and falsifiable parts of deliberative democratic theory. By replacing vaguely defined entities with more concrete, circumscribed concepts, and by requiring empirically and theoretically grounded hypotheses about specific relationships between those concepts, researchers may come to understand which elements of the deliberative experience are crucial to particular valued outcomes.

Because deliberative democracy as a whole is a kind of moving target, we need to reduce the slogans to mechanism and concepts that are testable. In a forthcoming article on epistemic justifications for democracy, my coauthor Steve Maloney and I consider the proposition that in light of public ignorance and public choice problems, an independent Federal Reserve system is the best for managing financial crises. This is a potentially testable hypothesis, for instance using comparative studies, and we tentatively side with it, though there are some interesting counter-examples, like the Reserve Bank of New Zealand (pdf) whose governor can be removed, but only for performance failures.

Enter Bryan Caplan, who argues that we academics ought to be more Bayesian, i.e. that we ought to frame our beliefs both in terms of their testable claims and their weighted probability. This is an economist’s version of the “middle-range” solution proposed by Mutz:

It is striking, then, to realize that academic economists are not Bayesians.  And they’re proud of it!

This is clearest for theorists.  Their epistemology is simple: Either something has been (a) proven with certainty, or (b) no one knows – and no intellectually respectable person will say more.  If no one has proven that Comparative Advantage still holds with imperfect competition, transportation costs, and indivisibilities, only an ignoramus would jump the gun and recommend free trade in a world with these characteristics.

Empirical economists’ deviation from Bayesianism is more subtle.  Their epistemology is rooted in classical statistics.  The respectable researcher comes to the data an agnostic, and leaves believing “whatever the data say.”  When there’s no data that meets their standards, they mimic the theorists’ snobby agnosticism.  If you mention “common sense,” they’ll scoff.  If you remind them that even classical statistics assumes that you can trust the data – and the scholars who study it – they harumph.

Rather than divide our beliefs into certitudes and unknowns, we might follow Caplan in trying to evaluate the likelihood of some unknowns, or to weight inadequate evidence rather than discounting it entirely. For instance, in our discussion of epistemic reliability vis-a-vis the Federal Reserve, we also briefly address possible counterarguments, focusing on the ways that skeptics tend to attribute conspiratorial intent to the reserve system.  Fed skepticism is a widely held view because it has recently been popularized by the libertarian Ron Paul, while our own position is considered elitist by many democratic theorists and has even been challenged by some contrarian economists. Given our tentativeness, perhaps we ought not to have published in the face of such a political controversy, or perhaps we ought to have reported that our findings were only 61% likely.

After all, if a vote were held today, I suspect that the majority of Americans could be persuaded that the Federal Reserve system is corrupt and needs to be replaced or audited extensively by Congress, and that’s not just me spitballing. You can take that prediction to the bank, because polling will back me up: in July only 39% of the public thought that the Fed was doing an Excellent or Good job. 13% decided not to register any opinion at all, indicating a large unacknowledged public ignorance problem hiding behind the 48% disapproval ratings. How can we expect people who don’t know the three branches of government to have a realistic opinion on appropriate money supply? This undermines one of the middle-range justifications for democracy: its capacity to supply the best possible epistemic grounds for public policy.

Caplan’s colleague Robin Hanson takes Bayeseanism a step further, by arguing that we ought to weight out own beliefs in terms of intensity in addition to probability, by using prediction markets. In other words, scholars and ordinary people ought to put their money where their mouths are. This would likely look something like Intrade, where contracts on future events are bought and sold. The price promises to tell us not just what people are thinking, but how strongly they think it. Despite some concerns about market manipulation, Hanson’s research appears correct: the presence of price manipulators (as in the markets for presidential primaries) appears to increase market capitalization and enhance the available-information-tracking of the predictions.

It’s not clear how to mark a belief like ours to market. Obviously, Steve and I would never sign on to a futures contract that merely tried to predict public opinion:of course citizens mistrust state financial institutions in times of financial criss. So we’d want some brand of specialized judgment from economists, but then our counter-party would worry about the sociology of economics departments, especially the prevalence of Milton Friedman-inspired monetarism. We’d be betting both on the ‘fact of the matter’ and on the biases of the discipline. The same thing could also be said of predictions about global warming. After the recent release of e-mails, it’s been suggested that the mainstream or consensus view has been suppressing both bad arguments by climate skeptics (that’s not really news, that’s good peer review) but also potentially paradigm-shifting arguments by climate-alarmists! So predictions about what climate scientists will say or sign on to are clearly predictions about what they think is palatable, and not what they think is most accurate, and so we’ve lost yet another potential condition (peer-reviewed articles published in top journals) for our futures contracts.

So here’s the question: how efficacious could such ideas and predictions markets be for philosophy?

A surprising number of my beliefs are not about the world as such: they are about texts and the history of ideas, specifically the history of philosophy. Testing most of my beliefs is as simple as checking an explanatory sentence of mine against a sentence written by Plato or Hegel. If they correspond, then I have been shown to be correct, if not, I’ve got some explaining to do. When I correct, or am corrected by, other philosophers in an academic setting, sometimes this is simply done by to directing attention to an article or book that appears to contradict the erroneous textual interpretation. Then they or I attempt to explain the discrepancy. This kind of erudition-comparison is common among those who understand the field of philosophy as inextricably linked to its own history. But I suspect that we’d like to be right about the world in addition to being right about Heidegger.

Another problem has to do with the testability of most of the matters under discussion. For instance, I find that I am unsure whether or not I am a brain in a vat. I’d like to think that I’m not, but I also grant that if I were, it is probable that the computer that controls my sensations would give me no indications of my situation. So the one belief that seems to be the most essential seems untestable: every day I wake up and look to the market for the value of that belief, and find that there is no market at all for it. How much should I charge for a futures contract on conclusive proof that I am not a brain in a vat, with the condition that there be definitive evidence by January 1, 2011? How should I rate this contract against one that predicts that we will discover that we are all being deceived by an evil demon, or already trapped in the afterlife or eternally recurrence? Mostly we would say to those who are willing to make bets about our envattedness that they are wasting their time and money: propositions about such matters are not testable. But we might also say that an obsession with falsification and obsessive speculation about solipsism will often lead to precisely this kind of time-wasting exercise, and is best avoided.