All the people tell me so, but what do all the people know?

This past Sunday, the Boston Globe had a book review for James Surowiecki’s “The Wisdom of Crowds.” This new book explains why the collective intuition of the masses is often much better than so-called “expert” opinion:

[There are] four characteristics of wise crowds: ''diversity of opinion (each person should have some private information, even if it's just an eccentric interpretation of the known facts); independence (people's opinions are not determined by the opinions of those around them); decentralization (people are able to specialize and draw on local knowledge); and aggregation (there's some mechanism for turning private judgments into a collective decision)."

I can imagine that this concept must horrify the liberal elite who consider most of America as“flyover country” full of Bible readers and Nascar Dads. Even James Lileks (in this Bleat praising Ronald Reagan) once succumbed to sophomoric hauteur:

“The people have spoken, the idiots,” I wrote in my journal after he [Reagan] was elected in 1980.

Lileks was so much older then, he’s younger than that now. The masses are not asses, and this post on Political Wire warmed my heart:

Despite months of plummeting approval ratings and recent polls that show Sen. John Kerry ahead, political futures traders are still predicting President Bush will win re-election. Futures sold through the Iowa Electronic Markets allow politics buffs to bet on election outcomes, and the markets have proven surprisingly accurate in recent years.

In the Iowa Electronic Markets, Bush current trades at 0.55 to Kerry's 0.45 on the dollar. At Tradesports.com, the futures have a similar spread.

The difference between these markets and your standard polls is that, with the former, people are betting their own money on the outcome. At the latest update, the Iowa Electronic Market is still showing a 55-45 Bush-Kerry split. Listen to the people.