Trust

The latest on trust of the media, via thinkprogress.

From their post:

The Harris results reflect the findings of a Harvard University study conducted last year, which found “nearly two-thirds of Americans do not trust campaign coverage by the news media.” A few other recent surveys offer some explanation for the public’s distrust:

– Two thirds of Americans – 67% – believe traditional journalism is out of touch with what Americans want from their news.

– The harshest indictments of the press come from the growing segment that relies on the internet as its main source for news. The internet news audience is particularly likely to criticize news organizations for their lack of empathy, their failure to “stand up for America,” and political bias.

– Democrats, Republicans and independents have decreased confidence in the accuracy of media reports on the war.

Imagine – people not trusting the media! I notice that, as well as being the least-trusted, “the press” has the least uncertainty. It’s quite possible that this is because it has the greatest exposure: not everyone listens to the radio or uses the internet. Television, not so sure (I don’t own one).

Television and Radio are interesting ones, for trust: given the might of Clear Channel and the rightness (political-wing-wise) of talk-back radio, is this such a good thing? Same for Television news. If this is Fox News and CNN viewers, we’re dead.

Methodologically, according to Businesswire, the numbers are “… the results of a nationwide Harris Poll of 2,302 U.S. adults surveyed online between January 15 and 22, 2008.” Now there are nationwide surveys and then there are nationally representative surveys.

Harris’ responses were as follows (click for larger version):

I can’t say that I’m a fan of the web-use question: that is so far from how the average web/news person actually gathers “news” from the internet that it isn’t funny.

Getting back to survey methodology. According to the company itself,

Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Which is quite responsible of them.

The missing pieces of information (for me): what were the levels of trust/distrust conditional upon use? I.e. if you’re a Rarely/Never kind of user, should your trust/mistrust be jumbled in with the Often/Occasionally people? While it is, of course, entirely likeky that one rarely or never uses a medium because of mistrust (part of my non-tv-ownership, but only part; my mistrust also of newspapers is, of course, no secret), low use also makes one a poor judge – even ignoring the response bias of a non-user.

Odds are that, given you’re here at this blog, you probably don’t see yourself represented in this survey at all. Which is a shame.

Stagflation

So, of all the posts I’ve ever made, this one is by far the most popular:

It routinely is the most popular post on any given day for the last month or more, and the fourth-highest ever (after one on the Phillips Curve, one on Minimum Efficient scale and my About Me page).

Well, and as the blog Big Picture detailed yesterday, the likes of the Wall Street Journal seem to catching on to the idea (my post was December 1st of last year – it was hardly the first time I’d thought about or mentioned it, nor was I anything like close to being the first to raise the issue).

A simultaneous rise in unemployment and inflation poses a dilemma for Fed Chairman Ben Bernanke. When the Fed wants to fight unemployment, it lowers interest rates. When it wants to damp inflation, it raises them. It’s impossible to do both at the same time.

Yes, it has taken this long for this basic fact of macroeconomics – one that we teach in Eco 1 (and that I’ve made a point of explaining in each of my last three semesters to date) – to start making the rounds amongst the grown-ups.

Should you ever be given pause to wonder how nobody saw this coming (and let us hope that you don’t) – some people just have a real blind spot for the trucks that hit them, I guess.

Self interest is almost always everything

Via the International Herald Tribune, but turning out to be in the New York Times, was this odd piece:

When Self-Interest Isn’t Everything

Traditional economic models assume that people are self-interested in the narrow sense. If “homo economicus” — the stereotypical rational actor in these models — finds a wallet on the sidewalk, he keeps the cash inside. He doesn’t leave tips after dining in restaurants that he will never visit again. And he would never vote in a presidential election, much less make an anonymous donation of money or time to a presidential campaign.

The author is Robert H. Frank, an economist at the Johnson School of Management at Cornell University. According to his bio, he’s written a Principles of Economics book – so why is he writing as though the last couple of decades of Behavioural Economics never existed? Exempli gratia:

In growing numbers, people peel away from their private rat race to devote energy to collective goals. The free-rider problem ceases to inhibit them, not only because they now assign less value to private consumption, but also because they find satisfaction in the very act of contributing to the common good. Activities viewed as costs by self-interest models are thus seen as benefits instead.

No – “self-interest models” merely improve and are adapted. “Rationality models” (keeping the lexicon) used to assume a great many things were irrational, because they didn’t fit the model. Then Economists began to realise that, in a market with voluntary exchange, every choice is rational to the person making it. From compulsive gamblers to heroin users, they actions make well-enough sense to them. If we want to get beneath them, improve their information and stop them from making bad decision rationally, we must find out what is rational, what incentives are at work.

This is no different. Collective engagement in a social activity (even something so nasty as government-by-politics) does not defy self-interest. It exemplifies (a) the growth of self-interest to individuals, citizens, consumers, etc., and (b) the betterment of our understanding of self-interest. Some of us, at least. Frank seems to content to use terms like “traditional” when he should be using “old” or “no longer used” or something.

Case in point:

…what about the millions of others who make small cash donations? The elderly South Carolina woman who sent her chosen candidate a money order for $3.01 surely did not expect to be appointed ambassador to the Court of St. James next January. And what about the volunteers who staff phone banks from home, or who perform other tasks that offer little opportunity for social interaction?

When viewed through the lens of traditional self-interest models, such behavior is equivalent to the impossible geological phenomenon of rivers flowing uphill. It often seems to entail a yearning to participate in something larger than oneself and is by no means limited to the political domain. Fans of sports teams, for example, often seem oblivious to the standard cost-benefit calculations, as do the followers of certain rock bands.

Yes – this is why the lens of traditional self-interest models were bloody well put away in a draw with all the other old and hopelessly out-dated lenses of other models. Never to be used again except by columnists for the New York Times, apparently (I since I hope to God he’s not teaching this to his students).

Why, one wonders, might small-donor people participate in an election? Because it is in their bloody self-interest. They aren’t oblivious to cost-benefit calculations. They believe that the value to them (as to society) of a given candidate getting the Presidency (or not getting the Presidency, say) is so great that even their small contribution to that end is cost-effective to them.

Alternatively no, they don’t. They’re like sports-fans. They understand, as they must, that they are just the fans. Meaning that they are participating in the romance of their team, or their candidate. Which is no less self-interested, no less rational, than someone reading a book.

When Robert Franks sees a woman reading a romance novel on the train, does he call her irrational for not reading something of higher merit? No, because the woman is engaging in an activity that gives her utility greater than her opportunity cost (reading another book, spending the money on another activity). It’s basic economics. Really basic.

The one interesting thing in the article was this, which was actually taken from a book in 1982, Shifting Involvements by Albert Hirschmann.

Although social movements often command substantial allegiance for many years, at some point their supporters’ commitment begins to falter. One reason for this, perhaps, is that the bar that defines morally praiseworthy behavior shifts with context: when growing numbers of people actively dedicate themselves to the pursuit of civic virtue, it becomes harder to earn moral approval by volunteering. When some discouraged volunteers abandon the social movement to resume pursuing private accumulation, remaining adherents feel increasing pressure to do likewise. And at that point the cycle is set to repeat.

From an informal survey of 20th-century American social movements, Mr. Hirschman concluded that these cycles have an average duration of about 20 years.

This is interesting not in this instance but, rather, relative to the increasing participation and interest in “living green”. See how well you match the phenomenon discussed by Hirschmann to, say, this one:

U.S. suburbs start to watch their carbon

“In the American suburbs, people are suddenly literate in the language of carbon emissions and carbon footprints,” he said. “I’m hearing it in most mainstream places.”

…

If the United States is ever to reduce its carbon emissions, suburbanites – that is, roughly half of all Americans, said William Frey, a demographer at the Brookings Institution – are going to have to play a big role. And lately, they are trying.

Since 2005, the mayors of hundreds of suburban communities across America have pledged to meet or even beat the emissions goals set by the Kyoto Protocol, a treaty to reduce greenhouse emissions.

I can see – a bit – where Franks is coming from: understanding why people are participating now; why participation is meaningful to people now. But this isn’t the bloody 1980s. It isn’t at all difficult as a concept, though. People view participation as necessary now. After more than two decades of Gingrich revolution, Fox News, the Reagan bloody fantasy, wars, recessions, attacks on women, on migrants, on the poor, on the sick, on the elderly – people see a body politic (the United States) in desperate need of better stewardship. People are responding to their realisation that they have not lived up to their responsibility as citizens, lately.

Or, in the famous words of Mos Def:

Heard ‘em say it was all about the Benjamins
I don’t believe it now; didn’t believe it then

Soros, Davos and threats to the financial system

Five-minute-or-so interview with George Soros, hosted over at the Financial Times.

He’s talking Monolines (single-type instrument firms), the Fed, the banking system and the real economy going forward.

He also gives his take on the use of tax-payers money to deal with the problems (and the increased regulation required from using our money to underwrite others’ debt), and the relative position of the financial world in the US, UK and European economies (quite insightful).

Some basic mathematics for newspapers

Ah, the Sydney Morning Herald. I don’t suppose this story originated there – and their whaling story is carrying a Greenpeace advertisement, so I won’t assume much about editorial control going in.

Consider the story about the apparently so-called Santa Claus rally on Wall Street (honestly, does commodification pass as the sufficient condition for verisimilitude, these days? When did it breeze right by being a necessary one?). Leaving aside tripe such as

“Wall Street is awash with holiday cheer in this last full session of trading before the Christmas break,” said Joseph Hargett at Schaeffer’s Investment Research.

He said RIM was the latest tech group to deliver solid earnings, which eased concerns about a slump in profits.

Meanwhile news that a Singapore fund was eyeing a $US5 billion ($A5.84 billion) investment in Merrill Lynch “took the edge off credit crunch concerns for the financial sector”, according to Hargett.

None of which makes up for all the bad reports coming out – or does a USD5bn cash card for Merrill Lynch outweigh the short life and death of the SIV superfund?

What really did me in, though, was this one:

On the economic front, a report showed US consumers shook off a slump in housing and tight credit and boosted spending by a stronger-than-anticipated 1.1 per cent in November.

I had seen this – a (former) student, in fact, had emailed it to me on the day, asking whether it was not good news (I said no: consumer staples were driving it via appreciating prices). Here, though, is the full context that the SMH let run:

On the economic front, a report showed US consumers shook off a slump in housing and tight credit and boosted spending by a stronger-than-anticipated 1.1 per cent in November.

The Commerce Department report also showed that personal incomes rose 0.4 per cent, a notch weaker than forecast.

“Consumers have not stopped spending and as long as income keeps growing, the economy can stay out of recession,” said Joel Naroff, chief economist at Naroff Economic Advisors.

We’ve seen discussed, here and everywhere, the – accepted, surely – fact that the level of private dissavings is basically enormous. Then, if consumption expenditure can increase a further 1.1%, while incomes increase only 0.4% (and real incomes no doubt less), how does that let us stay out of a recession? At best it pushes one off down the road to grow bigger and meaner, to jump us later in 2008.

Retail dot co dot uk

Retail is something on which I harp(ed) often. Specifically, throughout the semester. My students must think I’m the most miserable bastard they’ve ever come across.

But. Like interest rates vs. inflation, I’ve found the English (or rather, the English media) to be more sincere and open about risks in the economy. The Big Picture, for example, routinely comes down on the scam of retail numbers, or that of housing sales (which he has been doing long before this piece popped up in the Wall Street Journal). Perhaps the Guardian is just staffed with miserable bastards like me. It would explain it.

Well. After exporting their sub-prime mess, it was inevitable that the retail mess would follow.

Britain’s retailers experienced tough trading conditions at the start of their crucial Christmas period and expect weak consumer demand to persist through the January sales, the CBI reported today.

In its monthly snapshot of the high street, the employers’ organisation said shops and stores had recorded their weakest sales growth in more than a year during the first two weeks of December.

While 42% of firms said business volumes were up on a year earlier, 33% said they were lower. The rounded balance of +8 percentage points was the weakest since November 2006 and the fourth successive month in which retailers had seen their sales expectations disappointed.

Should be interesting. I’ve explained frequently to students that the UK and the US have similar, and similarly, wicked problems: massive levels of unsecured debt holding up a retail-heavy economy. The problem is how to ‘fix’ both public and private dissavings without bringing the walls down around our ears (this was a question on the final exam, in fact – few students did a good job with it, though).

Apparently the Bank of England is also ready for another go-around. Add that to yesterday’s enormous intervention by the European Central Bank and to the US’ now-negative real interest rates. I’d be interested to see, around next February or so, some numbers on the total cash pumped into the OECD economies – dollar-terms, but also relative. I’d like to see the percentage increases in the money supply during this period (it’s that Austrian thing again).

Conrad Black update

For the few among you who even care. Six 1/2 years.

Conrad Black was on Monday sentenced to 6½ years in a federal prison for his role in the multi-million dollar fraud at Hollinger International, the newspaper company he created and controlled.

Apropos my earlier questioning, concerning the differences between Conrad Black and Jeffrey Skilling:

… the crimes of Skilling and Lay could reasonably be supposed to have been undertaken in order to save the company (in an “I can win it back!” sense, sure, but nevertheless). Their fraud was massive, but their motives could have been more benign than we are given to believe. Not so with Conrad Black. He wasn’t covering up over-valued stocks, he was paying his wife and himself a tonne of money, throwing birthday parties for his wife, getting nice apartments, etc.. There was nothing benign about it.

There will probably be no problem with conviction, but this makes sentencing interesting – will Conrad Black get a lighter sentence than Jeffrey Skilling because he didn’t hurt as many people as badly? Should we draw parallels between attempted murder and manslaughter? As Sideshow Bob complained, they don’t give a Nobel Prize for attempted chemistry?

It turns out that, yes, the whiteness of one’s collar always pays off.

Judge St Eve said it was appropriate to use sentencing guidelines set in 2000, which were more lenient than current standards. She rejected prosecutors’ arguments that Lord Black should be considered a ringleader in the fraud, but added that she would also not consider the former chairman and chief executive of Hollinger a minor player.

…

In remarks before the ruling, Judge St Eve took a conservative estimate of the damage Lord Black’s fraud wreaked on Hollinger investors.

Prosecutors had urged the judge to find that Lord Black’s scheme resulted in $32m in losses for Hollinger. Instead, Judge St Eve ruled that the total damages were worth $6.1m.

So. Lightly off he gets (all things considered).

WGA update: the not-so-basic economics of industrial action

First: I love Alec Baldwin. That isn’t so related; it’s just worth putting “out there”.

He has written a piece for the Huffington Post, concerning the ongoing industrial action of the Writers’ Guild of America – for whom it is hard not to feel: hell, even the collective noun for their opponents (the Alliance of Motion Picture and Television Producers) sounds evil, and that’s not just because I’m a fan of Firefly, because so is ever other right-thinking individual.

To the article!

The entertainment business, movies, TV, music, is divided between buyers and sellers. The sellers are actors, musicians, directors writers and their agents. The buyers are the studios, the networks, the labels. Over the last fifteen years or more, the balance of power has shifted dramatically from the sellers to the buyers.

Once, powerful agencies made astronomical deals on behalf of their biggest clients. The rising tide that resulted lifted all boats. Major stars were paid large fees and their supporting castmates made enviable salaries, as well. In the 1990s, that began to change. Today, the biggest stars are still paid huge salaries, but other salaries have dropped significantly. Roles are cast at a fixed price and the producers find the actor who will work at that budgeted amount.

…

Some of the most prominent names in film and television switched sides. The end of the sellers’ market meant big name agents became producers, even executives, as the party was ending for many of their clients. Today, most agencies, one could argue, work for the buyers. Agents realize that their ten percent of their clients’ income comes from the studios and networks as a cushion shot. It is banked off of their clients, but it comes from the buyers. When I started in this business, agents went to war with the buyers on behalf of their clients over casting and money. Agents still fight for their clients to get a role, but the money discussion is brief. The buyers essentially fax over the deal and the artist says yea or nay.

The strike may go on for a variety of reasons. On one hand, the writers are cursed because they are right on most issues but they are awful negotiators. They got screwed in 1988 and expect the buyers to make up for that, like some kind of reparations. That will never happen. The time for making that situation right was 1988.

The studios have a different problem. They are owned by huge, creativity-deadening corporations and operated by lawyers and marketing executives who lord over the worst creative decline I have witnessed in a long time, particularly in films.

In television, companies like GE view properties like NBC the way realtors view square footage. GE does not care what is on NBC. So long as the programming is relatively inoffensive, they want to earn as much per square foot as they can. In the current strike, the writers expect the buyers to have a soul. The buyers, who cannot count a real filmmaker or television programmer among them, view a soul as an impediment to business.

Working backwards – and, full disclosure-wise-speaking, I do not own a TV in either town of my living – I find the line “the worst creative decline I have witnessed in a long time” speaks “to” something I cannot define easily. For a start, Joss Whedon and Stargate notwithstanding, nothing thoroughly intelligent has really been on since MASH and Astroboy; more specifically, though, what I see, now, is hand-wringing at the idea of ever-more reality shows making it on air, TV absent writers. That’s the yardstick? No bloody wonder TV drives me spare. We have writing still, meanwhile “news” is already a field for which Glenn Beck and Bill O’Reilly qualify.

Apropos which – writers being employees/form-writers, rather than artistic content-providers – the New York Times’ article concerning advertising was almost good (it was lazy, and utterly incomplete, but not a bad start).

Alec Baldwin is wrong, however, in his description of the industrial organisation of TV and film, “The sellers are actors, musicians, directors writers and their agents. The buyers are the studios, the networks, the labels.” It is not a market with buyers and sellers: it is an example (at the moment a very complex example) of a Principal-Agent model. Specifically: Agents (this is going to get weird), actors, etc. are not Sellers, per se. Content-providers (including actors) are Principals; Agents and Collective Representation Organisations (guilds, unions) are Agents.

Agents are Agents, rather than sellers, or Principals, because they aren’t selling anything: they are facilitating the selling of skilled labour, on behalf of the suppliers of that skilled labour. Why? Because actors know how to act: they are not versed in studio/corporate crap. Same for writers, musicians. When you see your doctor, they are your agent: you do not know how much medical care to purchase; your doctor, as your agent, advises you. You trust them, because they have information that you do not. Structurally (from blessed Wikipedia):

What’s the problem? The Agent often has incentives that differ systematically from those of Principal: this is the Principal-Agent problem. If one’s dentist tells them they need a root canal, maybe they do: maybe, though, they simply have a problem, for which a root canal is lucrative over-kill. When one is trying (and, here, failing) to successfully bargain collectively for a new system of profit-sharing, the Agents (agents, unions, guilds) may benefit from strike where the Principals do not.

This makes the problem quite complex: how does the Principal even figure this out? The Agent exists precisely because the Principal does not have this sort of information (and, remember, it isn’t as though every writer out there is – or has the time to become – properly informed about this issue). However, consider these as options for the Agent, as it appears negotiations are failing:

1. Concede. Pursue a Maximin/second-best/least-worst outcome for the Principal. Risk, as a result, losing membership amongst a newly-dis-enfranchised Sellers/Principals, or
2. Fight. Pursue instead, possibly a Pyrrhic victory, possibly a Forster-esque honourable defeat, possibly outright victory – but almost certainly a risky strategy that is more likely than not to leave the Principal with negative net utility. This time, however you will have put up a fight, and be more likely to keep your members.

During a strike, with incomes lost and the future at its least certain, we are inclined to rely more heavily upon our Agents; in fact, it is the time at which we should examine them the most closely (let me also point out that I am a staunchly unionist-leaning Australian. Don’t assume any of this means that I am against unions. Or dentists or doctors. Incentives are the way they are, though, and that’s that). Even Alec Baldwin says

In the current strike, the writers expect the buyers to have a soul. The buyers, who cannot count a real filmmaker or television programmer among them, view a soul as an impediment to business.

By conflating Principals and Agents a sellers, collectively, he makes the naive assumption that the Agents are any different to the Buyers.

To end Political: as we learn more and more about which “leaders” in Congress and the Senate heard and knew about, say, illegal wire-tapping, extra-ordinary rendition, water-boarding, etc., it behoves us also to consider the Principal Agent problem of our time. This applies to Government and to Media (including the Huffington Post. Hell, including me).

Fox news and the law of unintended looking-like-a-complete-moron

Good thing I have a “media” tag, or this wouldn’t be appropriate. From Crooks and Liars, we find the following, latest, example of the speechlessly-stupid displays of …well, stupidity, from Fox News:

This was the best I could manage, on the fly, finding viewership counts for this programme. Even 1/4m is way too high to be acceptable for this sort of indescribable stupidity, though.

Full disclosure: I don’t like the Economist

… my favourite opinions of the rag itself having been penned over at the eXile (The Economist: The World’s Sleaziest Magazine):

Thanks to the English magazine’s clever rhetorical strategy, calibrating an effective mixture of aristocratic contempt, two-notches-smarter-than-Newsweek diction, and occasional anti-elitist populism to pander to its majority-American readership, readers trust The Economist. They – particularly American readers – trust it because they think it knows more than they do; this is its entire appeal. They even get a sick thrill being talked down to by a dirty old aristocratic prig.

For Americans in particular, accustomed to the lifeless, dumbed-down, least-common-denominator prose in their own media, reading The Economist is its own reward, giving them the sense not only that they’re smarter than the average Time subscriber, but that it even makes them vaguely decadent, in a literary-aristocratic sort of way. They become smarter by osmosis simply by being in the imagined drawing room of The Economist’s wit-slinging editorial offices.

In reality, The Economist is one of the most appallingly wrong and evil – as in responsible-for-millions-of-dead-people evil – organs in the world today.

Nice, eh? It’s actually a very well-put-together critique, focussing on the Economist’s various writings concerning Russia and, more specifically, Putin.

New kick in the nuts! The blog GlobaLab (I can’t stand people being cleverer than me) has a run-through (literally. Like, with a sword) of a story by the Economist, concerning a book about non-profits. Did you catch all that?

From the Economist:

Social entrepreneurship — the application of business principles and practises to solve social problems — is all the rage. The new sort of philanthropist who sees giving as a social investment wants to support social entrepreneurs in the same way that for-profit investors want to back ordinary (anti-social?) entrepreneurs. Judging by the number of courses in social entrepreneurship now taught at leading business schools, many an MBA student would rather work for a non-governmental organisation (NGO) than a traditional company.

Yet even as its popularity soars, sober observers of social entrepreneurship are starting to ask if it lives up to the hype. Where is the social-entrepreneurial equivalent of a for-profit start-up like Google or Microsoft or any other large global business? Where is the evidence of massive social change?

So far, so snotty. Rejoinder!

The Economist once again shows its contempt towards the NGO sector and its lack of understanding of its internal diversity. Kicking off with a series of scathing (and unreferenced) remarks about social enterprises, which seem to reduce the debate to a pathetic comparison between the successes of Google and those of the Grameen Bank (apples and oranges, anyone?), it then sings the praises of the 12 selected nonprofits for their excellent achievements (data, anyone?).

The fact that social enterprises and nonprofits might not actually be one and the same thing, or that being based (as the 12 selected organisations are) in the US as opposed to Bangladesh might offer considerable advantages to – for example – making the most of market forces does not seem to be a relevant piece of information for the illustrious weekly.

Excellent. Where would we be without the Economist to tell us how things are supposed to work?

I’ll leave the last word with the most entertaining: the Russians.

How did The Economist get to such a vile state?

The horrible answer is, it’s always been this vile. If you go back to The Economist’s beginnings in Victorian England, you’ll find, for example, the magazine’s brave stand on the Great Irish Famine, the English-led genocide that left up to two million Irish dead. When a cry went up to stop the famine, The Economist countered, “It is no man’s business to provide for another. If left to the natural law of distribution, those who deserve more would obtain it.”

And speaking of Hitlers, in the mid-1930s, The Economist even found time to praise you-know-who: “Herr Hitler is showing encouraging signs of statesmanship.” Yes, they really did write that.

The first and last example of genuine wit that The Economist ever produced.