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April 14th 2014 print

Peter Smith

Dear Lord, From ‘The Experts’ Save Us

A little knowledge is a dangerous thing in itself, but an overdose of arrogance makes it infinitely more so. Doubt that? Just lend an ear to the oracular pronouncements on global climate by those whose greatest skill is not comprehension but a talent for hogging the microphone

snake oilQuadrant Online contributor Steven Kates passionately set down the dichotomy between those who create and those so riven by envy that they would bring it all down. True enough, but how did we get to this point? It is hard to be definitive but, leaving aside the fanatics, I think so-called experts have played a part in warping the minds and feeding the prejudices of those who in normal course would have relied on their common sense to guide them.

Unfortunately these days experts abound and are vocal. The common man and woman are intimidated lest they commit a faux pas by disagreeing with the received wisdom of experts. Take evolutionary theory. How many children, now adults, have been exposed to that diagram showing man emerging by serendipity through numbers of incarnations from his ape-like ancestors? Now don’t get me wrong. Evolution seems beyond much question except, perhaps, to religious nuts who think the Earth is 6000 years’ old. But, but … evolution based on sheer chance; on random mutations and natural selection? It simply doesn’t pass the sniff test. Only very clever people could believe it in that form without there being much more compelling evidence.

Climate change is the latest tablet of stone. Tell us again, experts, why the warming between about 1975 and, say, 2005 was attributed absolutely to man-made CO2 when it warmed by nearly as much between 1910 and 1940? And why did it cool between 1940 and 1975, when CO2 was rising, and why has the global temperature remained broadly constant since around 2000? I don’t get it.

Those who engage in purely academic debate can remain aloof. Those who want to turn our economic life upside down because of their theories have a duty to get down and dirty on our terms and explain (and re-explain) their case ad nauseam.

Many economists have a theory. They, too, have turned economic life upside down; literally so. The theory, originating with Keynes, is that spending money creates wealth. That’s curious. You might say, with your powers of common sense, ‘it has never worked for me.’ Put that aside and follow the theory and see where it leads.

It leads first to a cure for unemployment. The evidence is in. Unsurprisingly, spending money doesn’t cure unemployment. It makes matters worse. If you think that this will change the minds of the relevant experts like, for example, Paul Krugman, George Stiglitz or John Quiggin, you would be very much mistaken. They are steadfast in their misconception.

Where else does the theory lead? Because the poor ‘spend’ more of their income than the rich, it leads to a view that a greater equality of income will boost spending and therefore, of course, economic growth. This (expert view) has permeated the consciousness of the media of whatever political leaning and the minds of many men and women who otherwise exhibit common sense.

It also goes without saying that reducing income and wealth inequality has become the latest signature cause of the left in whatever country you choose. It has nothing to recommend it at all. It is a load of old cobblers. Yet it persists.

Drug dealers and other assorted criminals and hangers-on and cronies aside, the rich get rich because they add value. They transform resources worth a dollar into a product which sells for two. If they converted a dollar into say 80 cents they would not become rich and society as a whole would become poorer. The more they add value and become personally rich, the more society becomes richer as a result. It doesn’t stop there.

Having made their wealth, the rich only spend a relatively small proportion of it. That is good not bad. The balance of their wealth is used directly or indirectly via financially markets to finance other wealth creation ventures. The rich and the rich-to-be are the outward sign of our present unparalleled prosperity and the source of our future increased prosperity. They are to be lauded even if not all of them are nice people with hyper-tuned social consciences and as beloved of the left  as Warren Buffett and Bill Gates.

Experts might do less damage if they were modest by recognising that many of the certainties of yesteryears are the myths of today. That’s worth a laugh. Look at the economists who have taken to the global-warming scare, people like Ross Garnaut and Nicholas Stern. Modesty doesn’t seem to figure too highly in their demeanours. They’ve become absolutely certain of a particular scientific view without any personal expertise in the science. They have married this certainty with an adamant ‘expert’ economics view that a market-based mechanism is much the best way to reduce CO2 emissions.

But the logistics and practicalities of applying, managing, controlling and policing a market-based mechanism to curb CO2 emissions on a global scale would be overwhelming. Forget it! It simply won’t work. Just sniff it and see.

Experts need a dose of modesty and common sense to avoid becoming idiot savants and leading us up the garden path and perhaps, in some cases, down the road to perdition.

 

Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics