The quote is likely referencing large in-person groups. I would argue HN is absolutely _not_ a group in any meaningful sense. We are a bunch of individuals sharing individual thoughts asynchronously. We don't act in unison. 4chan, on the other hand...

Using the combined tone of a group of singers as a counterexample seems like quite a stretch. Again -- the original quote: "... the total psyche emerging from the group is below the level of the individual psyche." He talks specifically about the emerging psyche, not some arbitrary emergent property of a group.

Can you name one organization that became MORE ethical / smarter / nicer the larger it got?