What Richard Hofstadter called the paranoid style in American politics is no longer a fringe phenomenon: Bizarre conspiracy theories are now mainstream on the American right. And one manifestation of this paranoia is the persistent dismissal of positive economic data as fake when a Democrat occupies the White House.

During the Obama years there was a large faction of “inflation truthers,” who insisted that deficit spending and monetary expansion must surely be causing runaway inflation, and that if official numbers failed to match that prediction it was only because the government was cooking the books.

With inflation falling rapidly over the past year, we’ve seen some resurgence of inflation trutherism. But the more notable development has been the emergence of what we might call recession truthers — a significant faction that seems frustrated by the Biden economy’s refusal, at least so far, to enter the recession they have repeatedly predicted or insisted is already underway.

Now, there are some sociological differences between the old inflation truthers and the new recession truthers. The former group tended to be old-school reactionaries still pining for a return to the gold standard. The new group is dominated by tech bros, billionaires who imagine themselves focused on the future rather than the golden past, more likely to be crypto cultists than gold bugs.

Indeed, the most prominent recession truther right now is none other than Elon Musk:

But the new truthers are, if anything, even sillier than the old truthers.

You might have expected technology billionaires to be well-informed about the world — someone like Musk could, if he chose, easily maintain a large research department for his personal edification. (The annual budget for the whole Bureau of Labor Statistics is less than $700 million.) Yet they are often, in practice, easy marks for grifters and con men. I’ll talk later about why.

But first, let’s ask how we know that the recession truthers are wrong.

It’s not as if governments never fake economic data; authoritarian regimes do it all the time, and if America eventually turns authoritarian — a disturbingly likely event — it could happen here, too.

For now, however, America’s statistical agencies remain highly professional. They’re staffed and to a large extent led by civil servants who care a lot about their reputations for integrity. We can be pretty sure that if political appointees were cooking the books we’d be hearing about it from multiple whistle-blowers.

Beyond that, while official data is still the best way to track the U.S. economy — no private organization can currently match the resources and expertise of the Bureau of Labor Statistics or the Bureau of Economic Analysis — there are, in fact, many independent sources of evidence on the economic state of the nation. And they all more or less confirm what the official data says.

Consider, for example, the National Federation of Independent Business’s survey of small businesses, which still shows that many of them intend to expand their workforces.

Or consider surveys of purchasing managers, which are often used as early warning indicators of economic change. These surveys look a bit less favorable than either the official data or small-business indicators, but still aren’t signaling anything that looks like a recession.

Claims for unemployment insurance — which represent data collected by states, not the federal government — also point to a still-solid labor market.

Oh, and since inflation trutherism is, as I said, also experiencing something of a revival, it’s probably worth noting that private surveys confirm official reports of rapidly declining inflation as well.

According to common inflation definitions, U.S. inflation generally peaked earlier and is now lower than the rest of the G7.

When looking at core harmonized inflation on a 12-month basis, which strips out the energy and grocery costs most pinched by the war, U.S. inflation is still below other G7 countries, including Japan. In fact, both Germany and the UK saw higher core harmonized inflation in April than the U.S.’s peak.

while there were common pandemic experiences across advanced G7 countries, there was a great deal of variation in experiences, too. The CEA’s series also reveals that both headline and core U.S. inflation is growing more slowly compared to other G7 countries.

So why do we see tech bros indulging in conspiracy theories, often citing random Twitter accounts to justify their views?

The answer, I believe, is that technology billionaires are especially susceptible to the belief that they’re uniquely brilliant, able to instantly master any subject, from Covid to the war in Ukraine. They could afford to hire experts to brief them on world affairs, but that would only work if they were willing to listen when the experts told them things they didn’t want to hear. So what happens instead, all too often, is that they go down the rabbit hole: Their belief in their own genius makes them highly gullible, easy marks for grifters claiming that the experts are all wrong.

What you need to know, then, is that the economic data isn’t fake. A recession might eventually happen, but it isn’t happening now. And the wealthy men claiming to know better are actually less well-informed than, say, the average reader of The New York Times — because they don’t know what they don’t know, and nobody is in a position to enlighten them.

By Paul Krugman.

The Myth of the Secret Genius

By Brian Klass.

If he’s super rich, he must be a super genius.

That conclusion is a cognitive mistake many continue to make when they encounter a seemingly incongruous state of affairs, such as Elon Musk, the world’s richest man, behaving like an irrational idiot. And yet, behave like an idiot he does, day after day, a public jester who can buy the world’s most expensive jewels or light $44 billion on fire, but hasn’t yet found a shop to sell him self-awareness or common sense.

Elon Musk is part of a small class of extremely rich people who are rich partly because they’re effective at making others think they’re Secret Geniuses.

Other alleged Secret Geniuses are constantly in the news these days: Elizabeth Holmes of Theranos (heading to prison); Sam Bankman-Fried of FTX (probably heading to prison); Adam Neumann of WeWork (who produced a spectacular financial collapse); and Mark Zuckerberg of Meta (who has, so far, poured $30 billion into a metaverse that looks like a PlayStation 2 game from 2001).

Likewise, whenever Donald Trump did something extremely stupid, his supporters would often claim that people simply didn’t understand his “four dimensional chess” game. Just wait until he checkmates you! The election forecasts must be wrong, because they didn’t understand that his Twitter outbursts were secretly winning over swing voters. But it was all a mirage. (The simplest explanation was the correct one: he just wasn’t that smart and he had no self-discipline because he was a narcissist).

But those who doubt The Secret Geniuses, or express skepticism about their methods or their madness, must simply not be smart enough to see the bigger picture. If you question the Secret Geniuses, then all you’re doing is exposing yourself as one of the stupid proles, someone unable or unwilling to Think Big.

Talent, in the way that it is often defined within Western society at least, is, like height, normally distributed. That creates a mismatch. Someone who is marginally smarter than you could become 100,000 times richer, rather than marginally richer. (It’s also clearly the case that people vastly less smart than you could become substantially richer. See: Trump, Donald, and especially, Trump, Donald Jr.).

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This is the world of what are sometimes called “fat tails,” where the bulk can be found at the extreme. In the sea of poor people, a few grotesquely rich people bob on the top while millions drown in misery.

A recent research study, involving a collaboration between physicists who model complex systems and an economist, however, has revealed why billionaires are so often mediocre people masquerading as geniuses. Using computer modelling, they developed a fake society in which there is a realistic distribution of talent among competing agents in the simulation. They then applied some pretty simple rules for their model: talent helps, but luck also plays a role.

Then, they tried to see what would happen if they ran and re-ran the simulation over and over.

What did they find? The most talented people in society almost never became extremely rich. As they put it, “the most successful individuals are not the most talented ones and, on the other hand, the most talented individuals are not the most successful ones.”

Why? The answer is simple. If you’ve got a society of, say, 8 billion people, there are literally billions of humans who are in the middle distribution of talent, the largest area of the Bell curve. That means that in a world that is partly defined by random chance, or luck, the odds that someone from the middle levels of talent will end up as the richest person in the society are extremely high.

What happens when you have an overconfident narcissist with a lot of power and even more money? The answer has a parallel with authoritarian regimes. A few months ago, I wrote an article for The Atlantic, explaining “The Dictator Trap,” in which authoritarian leaders miscalculate because they purge anyone who disagrees with them. Over time, the yes men survive, while those who tell hard truths get weeded out.

A similar dynamic exists for narcissistic billionaires like Elon Musk. Nobody seems to have told him that some of his ideas for Twitter reform could work, but they’d work much better if there was a strategic rollout, if he didn’t alienate his key users and his advertisers, and if they were more than the tweeted out whims of his overconfident brain.

Why is he falling into that trap? Because people that criticize Elon Musk with hard truths get fired by Elon Musk.