New kinds of problems, Part II
Speaking about forecasts, the Ruble is trading higher than before the sanctions.
This example was unfortunately an easy one when looking at energy markets and import/export but it serves as a great example for why it’s a non starter to use ‘new insight’ as a defense when something turns out to be wrong, while calling it hindsight when a past decision is criticized. If someone can name an example of new knowledge that instantly becomes consensus, I’m all ears. Structurally, when a prediction by a mainstream pundit is correct it’s ’merit’, but when it’s wrong it’s (often) dubbed ‘force majeure’. Unfortunately, this is too gameable and allows for too much moral hazard, which, in my opinion, is largely responsible for the overall loss of trust. I don’t really want to judge here, but I would simply like to track which expert claimed or predicted what and how it was reviewed by a misinformation team, so we can find out as a society ‘what good looks like’.
Luckily, we can lean on the Good Judgment best practices to hold people in important positions accountable. And as a sidenote, I think that it is somewhat of a ‘purity’ trait of trading that hindsight can only be used to hone strategies in the present, but there is never the luxury to hide behind mistakes and ‘bad luck’ leading to certain outcomes.
It should be noted that a potential implementation of on-chain fact-checking is also very beneficial for current mainstream journalists, as it can prove their quality, measuring it against other sources of information, and thereby help them regain their trust. Their viewership has dwindled, undermining their role in the public misinformation debate. I can only assume they would like it back.
A reminder of the straight-up lack of accountability of the legacy media, though obviously just one example out of very many, is this article about crypto in De Standaard from a few months ago. The journalist calls Bitcoin inventor Satoshi Nakamoto ‘Satomi’ and misunderstands or misrepresents the fact that blockchain technology is trustless by definition and no trust in Satoshi is needed as whoever they are gave control of the protocol away to the community over a decade ago. He then ends with ‘if the technology still doesn’t work properly after 15 years, perhaps it’s time to drop the idea’ - while the Ethereum network occasionally transacts more value than the Visa network on a daily basis. How this was published is a mystery to me. Yes, this is cherry-picking for the sake of my article, but 1) I can pick a lot more cherries and 2) surely this shouldn’t be acceptable?
That’s the guy’s tenure. I don’t see why one would play devil’s advocate to defend the errors in this article, or build the case that other articles in the same newspaper about other subjects by other journalists wouldn’t potentially be equally at risk to be riddled with errors. Let’s just start measuring it. It will feel like the obvious move in hindsight(…). Unreliable articles like these are a huge problem in my opinion. If you can’t know for sure whether to trust all the content, most of the reliability is gone. It’s not ‘just crypto’. This is exactly what Gell-Mann Amnesia is. You turn the page and forgot what you read. Maybe it’s also like this in the Economics, Politics and Science sections. Don’t trust, verify.
So let’s just get it over with and create a system where I can 1) rate this article and indicate that this journalist is not a topical subject matter expert, 2) rate the (lack of) fact-checking, and 3) where I can be rated based on whether my review was correct or not. Real skin in the game.
A scoring system could strengthen the way that journalism can claim back its important but fragile role in our democratic society. Perhaps a system in line with how other platforms try to embody a way of rewarding trustworthy 'users' and penalizing inadequacy.
Everyone likely has a different individual idea on what that scoring system should be, based on personal experiences. For example, one could think of 'likes' which often is a reflection of popularity. Or votes (like IMDB) which also is largely biased by big numbers, i.e. popularity. I’d be more in favour of a system like AirBNB or Uber, in which 5 stars, a perfect maximum score, means everything is okay, so it can be used in a binary way. (Good information/prediction, not good information/prediction, unknown at the moment). So not like Yelp where 5 stars would imply the establishment is the epiphany of dining, and the discussion becomes one about taste or ideology.
I do not claim to know what an information quality / expertise / reputation scoring system should or could exactly look like without it rendering itself useless due to being a popularity vote once again, but I imagine that there's a very decent chance of it being possible to improve the current ways of working by implementing some limitations that make it costly to ‘spam’, and implement a cap on the significance of the number of ratings, once a certain threshold is reached, as long as the rating remains sustained. There are obviously still many gameable elements, like ‘how wrong’ something is, whether it is a fact or a prediction that is wrong, grey language, etcetera. And of course, how a system prevents reviewers from spamming the ratings.
The fact-checkers, on their side, whether automated or not, would have to be specific about what they decided to flag or censor, why they chose to do so and based on what, and could even add a rating on how certain they were in their actions, their level of conviction. The are allowed to censor, but the burden of proof lies on them. More transparency and review on the fact-checker’s side seems like the easiest to implement improvement, mobilizing the crowd to rate the news source the trickiest.
A system like this would naturally have to be opt-in and voluntary, and needs to co-exist with the current system, but it could end up saying a lot about those who choose to partake and those who don’t. It is not meant to replace the current system, which also has many good aspects, but rather compete with it, so that overall quality of both improves and merges in to one again. It’s merely the beginning of a thought experiment, but can lead to a historical archive that is censorship-resistant, without a single point-of-failure, of which everyone can obtain a copy if they wish to do so. Much of the characteristics of a blockchain. Keep the past intact so we repeat less of our seemingly cyclical mistakes in the future.
Truth and reliability of information are important for everyone, and it would be great to open-source it so that everyone who wants to can help play a role in improving and safeguarding it. Truth also changes from culture to culture and from generation to generation, so it would be wise to perhaps find a more durable solution to tackle this problem than basically ‘I am now in charge and this is currently the contemporary and my politically tainted version of the truth, which may or may not have some perverse incentives baked into it’.
As time goes by, reliability and quality will improve drastically, as people feel increasingly engaged with their role to keep the community healthy and clean from misinformation. The current proposed solutions, largely consisting of censorship and cancel-culture, but not of self-review, are clearly not cutting it, and never will. We are going to need both sides.
Most initial versions of a community-based rating system will unfortunately be gameable in some kind of a way, I am aware of that, and there are many issues that were not addressed in this blog. But building one is worth striving for. Because the current system can also be gamed, albeit in different ways, by a more select group of people, with less accountability, while the narrative is controlled by those who can, potentially, game it. It is pretty easy to see that quality can and should be increased across the board, regardless of where one stands in this debate, and I look forward to the Big Brains of Web3 and Silicon Valley to play an increasingly active role in this important long-term project.
A new system would bring increased oversight and accessibility. And yes, it would also bring new problems. That’s what progress looks like. New kinds of problems.
Next posts will be shorter form: are we getting a short-squeeze or continuation down in the markets? I’m (a little bit) long right now. Is the housing bubble going to pop? The first signs are there. And how about Sam Bankman-Fried’s announcement to donate between 100 million and 1 billion to the Democrats in the next Presidential elections in the US??