In Freakonomics we poke fun at “experts” — folks who go around speaking with great authority about topics they don’t actually know that much about.
I can be criticized for a lot of things since Freakonomics came out, but one thing that I have been pretty good at is not masquerading as an expert on topics I know little about. For instance, although I have views on the financial crisis, I’ve more or less kept them to myself, instead using the Freakonomics blog as a vehicle for publicizing the views of people who know more than I do about the issues, even if I don’t necessarily agree with everything they are saying.
Every once in a while, though, I let someone get me going on topics I have no business talking about.
A recent interview with Steve Paulson on NPR is a good example. Somehow he got me talking about the housing bubble and the stimulus package. I wouldn’t actually encourage you to listen to it, but if you want to be a witness to my descent into expertdom, it is available online. My segment starts about 30 minutes into the show. Other guests on the show include Paul Krugman, who has a very different view of stimulus than I have.
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I personally do not agree with the bailout – what ever happened to being responsible for your actions? I think what should have been done is the re-evaluating of homes to a lower price and banks taking a huge profit cut to refinance mortgages. Also, all of the subprime mortgage contracts should be revised or thrown out. I know the world in general would suffer for quite some time, but at least that way, people would be able to afford their homes (for the most part) and banks could still stay afloat. Of course, this is my simplistic one-sided view without considering other points. I hate giving money to a bunch of banks who obviously don’t know have good, viable business planning skills…
btw, I should mention, I am no expert so my opinion should be taken lightly…
The term expert is subjective, it is relative. A student may be an expert when surrounded by a group of people who know nothing about the student’s field of study, but not so much when surrounded by researchers and professors from the same field.
I have come the conclusion that most people who claim to know don’t usually know and that the whole notion that there is someone/something out there (a non-supernatural figure) with a pulse of the world is baseless. That has led me to lose confidence in that someone/something.
Why is nobody talking about the real reason this all happened – the fact that too many people couldn’t pay their mortgage? Maybe they weren’t being paid enough for their skills. Maybe they didn’t have enough financial education about what they could and couldn’t afford. Maybe they didn’t have enough education in general. I realize that our standards of lending for the last 10 years have a lot to do with the housing bubble but the question remains of why were there enough people in this sub-prime condition to effect the housing market so much??
Wow, you folk must be independently wealthy to be voting with your “opinions” that you’d prefer the economy to continue to Spiral into a DEEP DEPRESSION, and put millions of workers out of jobs, along with Killing a lot of small businessmen, and their families. Is this just a great buying opportunity to you folk?
Typically in a recession we try lowering interest rates. That hasn’t worked. Keynesian policy at this point is all we’ve got. The Chicago school has got Nothing to Offer.
Keynesian policy, when the economy is near full employment, is bad policy. That’s not now.
One only needs to go back to Friedman’s famous 1953 Essay on Positive Economics to see that his observations then are more true than ever today:
” Self-proclaimed “experts” speak with many voices and can hardly all be regarded as disinterested; in any event, on questions that matter so much, “expert” opinion could hardly be accepted solely on faith even if the “experts” were nearly unanimous and clearly disinterested. The conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained. Laymen and experts alike are inevitably tempted to shape positive conclusions to fit strongly held normative preconceptions and to reject positive conclusions if their normative implications – or what are said to be their normative implications – are unpalatable.”
I’ve often found that the people who know the most are those who know enough to know what they don’t know. I applaud you’re acknowledgement of the “expert problem”.