Free Market Institute Blog
Looking for Wisdom in All the Wrong Places
In our fast-paced and confusing world, it’s good to get some perspective, and it’s certainly tempting to look for wisdom from smart people.
Sometimes, though, that doesn’t work, when smart people give dumb advice, or shallow suggestions, particularly about economics.
Don’t get me wrong. Unqualified people also say all sorts of nonsense. Part of the modern age (let’s say, after 1900), is the rise of the mass man. As described by Spanish philosopher Jose Ortega de Gassett in 1932, this “mass” person prides himself on his ability to opine despite his lack of any real effort or genuine expertise. We no longer defer to what Gassett called “minorities” in our hyper democracy. Why? After all, we have the internet. Cervantes once wrote that “the road is better than the inn,” but many people are content with Motel 6. Many of us, Gassett claimed, are “mere buoys floating on the waves” who think they have “the right to impose and give force of law to notions born in the cafe.”
Perhaps he anticipated Starbucks?
But there are many brilliant people who utter nonsense as well, mostly because they are qualified in something quite different than what they are opining about.
Albert Einstein was certainly a masterful theoretical physicist, but when he suggested that “The economic anarchy of capitalist society as it exists today is…the real source of evil,” he was wrong, especially using “the” instead of “a.” Central planning is the opposite of anarchy, and a deep knowledge of both economics and history suggests a fair amount of evil and a larger amount of bureaucratic inefficiency emanates from powerful planners, while competitive anarchy makes all profits tenuous. It’s the anarchy of competition that doomed K-Mart and elevated Amazon, much to our benefit.
Warren Buffet is a legend of investing, but is bitcoin really “rat poison squared”? Like gold (which he also disdains), it doesn’t pay dividends, and unlike gold it’s an odd ephemeral example of subjective value. Nevertheless, as an insurance against the real rat poison of debauched currencies, both old gold and new bitcoin are hedges against monetary mischief we should consider.
Stephen Hawking’s A Brief History of Time is an oft-owned, seldom-read tome; after all, theoretical physics is abstraction squared. When he opined about economics, Hawking was easier to understand; unfortunately, he misunderstood basic economic fundamentals. He feared automation would cost jobs and increase income inequality. This may be true in the short run, but not at all in the long run. Of course, if anyone should understand time, it would be Hawking. Travel agents lost their jobs to Kayak. Buggy whip manufacturers were displaced by Ford, which is perhaps being displaced by Tesla, which….and so on. But this creative destruction is more than destruction: it’s creative. Smartphone makers may displace map makers, but the dynamism of capitalism has created modern prosperity. Hawking’s fear of a future where “…most people…end up miserably poor” unless massive wealth redistribution occurs might be possible if those who own the innovation are in bed with Beltway regulators. But in free markets? No. Venture capitalist Marc Andreesen suggested that someone buy Hawking an Economics 101 text. Of course it’s too late for that, since he died in 2018.
Why this mishmash of shallow thinking by deep thinkers?
First, economics is omnipresent; you experience it in your paycheck, in the grocery store, even passing by a homeless person. I may experience gravity every day, but I seldom opine about it. Each of us notices economics. Even Einstein had to pay his electric bill, which wasn’t that easy on his $6,000 salary at Princeton in 1932 (okay, adjusted for inflation, something like $55,000). But understanding the “dismal science” is also a little hard: smart people can “do hard,” of course, but they tend to, rightly, be more profound when they talk about something they know about, like theories of relativity, not the mysteries of spontaneous economic order.
Related to this, it’s rare for us non-geniuses to suggest wrong notions of physics or finance; we tend to stay in our lane. Though it’s true that some people doubt the moon landing or suggest that aliens made the pyramids, fewer people deny gravity or global warming. But it’s pretty commonplace to hear people issue definitive conclusions about economics, usually suggesting more regulation just about everywhere. Why? Because we see imperfection everywhere. And, the regulators are likely to be experts, and smart people do love experts, being experts themselves.
Finally, if you are famous, you are accustomed to having people listen to you. Ed Asner, the curmudgeonly news director in the Mary Tyler Moore Show, was an excellent actor, but his analysis of income inequality in the Youtube cartoon Tax The Rich: An Animated Fairy Tale is simplistic and misleading. Meryl Streep’s congressional testimony about Alar, which was a chemical growth regulator used by apple growers until it was banned, didn’t quite fit into her comparative advantage. A century ago, the famous muckraker Lincoln Steffens visited the USSR and claimed that he’d seen the future, and claimed “it works.” A towering intellect can lead to a Babel-esque tower of intellectual hubris.
Instead of taking our cues from famous people straying from what they are famous for, let’s dive deeper in our own analysis of topics and read more deeply from experts teaching from their particular expertise. You may not be an Einstein, but your understanding of what you really know just might be superior to the geniuses of the day.
