Economist Friedrich Hayek explained in 1945 why centrally controlled "command economies" were doomed to waste, inefficiency, and collapse: Insufficient knowledge. He won a Nobel Prize. But it turns out he was righter than he knew.Turns out, it's not just what they don't know that's the problem.
In his "The Use of Knowledge In Society," Hayek explained that information about supply and demand, scarcity and abundance, wants and needs exists in no single place in any economy. The economy is simply too large and complicated for such information to be gathered together.
Any economic planner who attempts to do so will wind up hopelessly uninformed and behind the times, reacting to economic changes in a clumsy, too-late fashion and then being forced to react again to fix the problems that the previous mistakes created, leading to new problems, and so on.
Like Ronald Reagan said, "It's what they know that ain't so."
Today I read an interesting piece by Lane Wallace in The Atlantic, The Bias of Veteran Journalists. In that piece Lane noted that she was disturbed when she recognized her fellow journalists were asking questions that indicated that they'd already chosen a story line and only asked questions that would further that story line. I recommend you read the whole piece.
But what jumped out at me was this:
In his new book, How We Decide, Jonah Lehrer cites a research study done by U.C. Berkeley professor Philip Tetlock. Tetlock questioned 284 people who made their living "commenting or offering advice on political and economic trends," asking them to make predictions about future events. Over the course of the study, Tetlock collected quantitative data on over 82,000 predictions, as well as information from follow-up interviews with the subjects about the thought processes they'd used to come to those predictions.It's not just pundits. It's the people that Thomas Sowell characterizes as "The Anointed" who gravitate into government to save us poor rubes from ourselves.
His findings were surprising. Most of Tetlock's questions about the future events were put in the form of specific, multiple choice questions, with three possible answers. But for all their expertise, the pundits' predictions turned out to be correct less than 33% of the time. Which meant, as Lehrer puts it, that a "dart-throwing chimp" would have had a higher rate of success. Tetlock also found that the least accurate predictions were made by the most famous experts in the group.
Why was that? According to Lehrer,The central error diagnosed by Tetlock was the sin of certainty, which led the 'experts' to impose a top-down solution on their decision-making processes ... When pundits were convinced that they were right, they ignored any brain areas that implied they might be wrong.Tetlock himself, Lehrer says, concluded that "The dominant danger [for pundits] remains hubris, the vice of closed-mindedness, of dismissing dissonant possibilities too quickly."
Apply Tetlock's observations, for example, to the Anthropogenic Global Warming Intelligentsia. Or the gun control organizations that constantly predict "Wild-West shootouts" and blood in the streets after each incremental repeal of gun control.
"Dart-throwing chimps" indeed.