This is a great response to Hanania's article, but it omits the most crucial question of all: Why is the media so intent on warping the public's perception of the Big Picture?
The implication from Caplan that the media is promoting a warped Big Picture because of either a nefarious agenda or incompetence is simply untrue. The media is merely operating in a free market and responding to demand incentives. The public's demand for warped Big Picture thinking, then, is the issue here, not the media itself.
This situation is similar to the War on Drugs. The U.S. government believed for decades that the key to winning this war was to attack the supply - arrest drug dealers, shore up border security, and work with international authorities on drug smuggling and production operations. The supply, however, was never the root driver of the problem, and for every supplier eliminated, another three, like a hydra, would take its place to continue to meet demand. In this case, demand drives supply, not the other way around.
Likewise, the American public's demand for "Warped Big Picture" viewpoints drives the supply of news coverage provided by the media. The American public, then, is to blame. If the media were truly pushing endless complaints, rampant innumeracy, and warped Big Picture thinking to a public who didn't want it, then alternative media sources would simply replace the old media.
The sustained power of the media today despite the warped Big Picture narratives they provide is proof of either (1) massive market inefficiencies, or (2) strong demand for the Warped Big Picture worldview.
The claim that the media industry is inefficient doesn't hold any water in light of the low barriers to entry introduced by the rise of alternative news and social media, so there must be strong public demand for the Warped Big Picture.
Why do so many people continue to believe the media is at fault here? Because we are terrible at recognizing at our own biases, and specifically our negativity bias. Our propensity to seek out and consume endlessly the most negative news available is universal, and yet is rarely recognized on an individual basis.
Until we focus on the demand, i.e., ourselves, and recognize and refrain from our psychological need to consume negativity, we'll never fix the Warped Big Picture issue that so many incorrectly attribute to the work of a nefarious media monolith. As with so many other issues, the problem (and the solution) is not to be found in a nefarious "other", but instead can be found by looking ourselves in the mirror and recognizing our own role in pathologically consuming negative media.