I of X. Sense and Consequence - Economy
This entry was posted on 3/4/2008 9:12 AM and is filed under uncategorized.
2 March 2008
I of X. Sense and Consequence - Economy
There is an apalling absense of common sense today and the predicament is further acute when the absense is particular to our 'experts'. Unfortunately, our scientists and academics - the paragon of reason, intelligence, and research - are especially prey to this predicament. When it affects theory only, the general public is fairly unscathed and it is primarily our collective intelligence that must withstand the 'blow'. In the real world however, such an oversight comes with a magnitude of consequences, multiplied further when officials execute policies and actions with an effusive 'blindness'.
One of many examples comes from a recent article about the housing bubble (Robert J. Shiller, "How a Bubble Stayed Under the Radar," The New York Times, 2 March 2008). In his article, Shiller - a Yale professsor of economics and finance, by the way - explains the failure to recognize the housing bubble as the core to the current downward spiralling of the US and world financial markets. The crux of the problem is then, the failure to detect the housing bubble - a failure caused by 'information cascades' in which "people...rely on the judgment of others, and therein lies the problem" (ibid).
The 'information cascades' theory Shiller cites was defined by three economists in 1992 - Bikhchandani, Hirshleifer, and Welch - and is far from novel.
So it took three economists to come up with the theory that people act in groups? That we are social animals who act upon cues from others in our group? Come now, is this truly novel? Aristotle (b. 384 - d. 322 BC) knew this, wrote about this, and taught this back in the 4th century BC. One would think we would have caught on by now?
Gross oversight or lack of common sense or both?
Furthermore, in the 19th century, Nietzsche railed against a herd mentality that was too much infected into they psyche, mentalite, and actions of Western Europeans. (I have written on Nietzsche and this stance in many prior blogs.) According to Nietzsche, this herd mentality - insidious as a plague - was preventing 'greatness' in statesmen and furthering the onset of decadence and destruction.
Our leaders today would be well advised to learn from history and especially from our past intellectual greats. Nietzsche notwithstanding, our leaders would be better served by a turn to common sense. In the case of the housing bubble catastrophe, the plain simplicity of this sense could have prevented our current unfortunate state.
In the case of global consequences, the scale is all the greater when when scientists decide to act in the name of experimentation without thought to sense and consequence and worse, with an overwhelming absence of fundamentally critical information...
