Why Is Macro So Hard? Bias Against Emergence and Bias Against Understanding

Macro is hard because journalists (and many of the rest of us) overweight conscious action by individuals — decisions.

If we overweight something, we must underweight something else — and that’s emergence: the idea that some things happen through the interaction of all of us rather than through conscious planning.

Cold Spring Shops pointed me towards a couple of pieces and Stumbling and Mumbling that cover this well, in the context of Brexit and the rise of Boris Johnson. Not all of this is relevant here; I’ve emphasized the parts I like best.

I fear that we have here is another example of a bias against emergence. Political journalists especially focus upon conscious political actions to the neglect of emergent processes.  Brexit is a political choice whereas other, perhaps bigger, influences on real wages are the complex unintended products of millions of dispersed decisions. So Humphrys pays the former more attention.

…

Nor is it confined to journos. Leftists sometimes blame rising CEO pay on bosses’ greed, as if the rest of us would turn down pay rises, and under-estimate the extent to which it is the result of partly-emergent processes such as globalization (pdf), deunionization, agency failure or managerialist ideology.

In this respect, the BBC has what John Birt and Steve Richards called a “bias against understanding.” In downgrading the importance of emergence, it stops viewers and listeners from understanding social phenomena.

But this all leads to a disturbing conclusion:

If this bias merely led to ignorance, it wouldn’t be so bad. But it might have a more systematic effect. If we underweight emergence, we overweight the role of conscious individual agency. This causes us to exaggerate what politicians and business leaders can achieve if only they display strong leadership. And that, in turn, helps to sustain inequalities of income and power.

It gets better in the second piece:

The thing about complex emergent processes is that they are hard to understand – there’s a complexity brake – and even harder to forecast. This might explain why economists have generally failed to predict recessions in a timely manner.

This is why I say the BBC is guilty of an ideological bias. In not even considering the question of emergence, and instead pretending that markets are like people, it is assuming that complex social phenomena – not just markets but perhaps political behaviour too - are understandable and predictable.

This is no mere innocent error. If markets are like toddlers or teenagers, it’s possible to understand and predict their behaviour and so Very Serious People can claim to possess expertise and hence a legitimate right to power and influence in politics and business. If, however, they are instead complex processes they might not be predictable – except in the sense that we might know the probability distribution of possible outcomes – then those VSPs are in fact mere empty suits.

As Alasdair MacIntyre wrote:

Do we now possess that set of law-like generalizations governing social behaviour of the possession of which Diderot and Condorcet dreamed? Are our bureaucratic rulers thereby justified or not? It has been insufficiently remarked that how we ought to answer the question of the moral and political legitimacy of the characteristically dominant institutions of modernity turn on how we decide an issue in the philosophy of the social sciences. (After Virtue, p 87)

In unthinkingly denying the very possibility of complexity, the BBC is therefore helping to shore up the power and prestige of the ruling class. That’s a profoundly politically biased position.

I love that. And turning it on its head, it’s critical for the ruling class to assert that things can’t be emergent/complex.

My gosh … Trump may have had a huge insight when he remarked that healthcare policy was hard!

Cross-posted from SUU Macroblog, which is required reading for my macroeconomics classes.

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