One of the most exciting macro trends driving the world today is the incredible dissemination of information and knowledge through the internet. We are all more interconnected than we’ve ever been. And we have access to people, information and knowledge like never before. It’s an extremely exciting time to be alive. But this change isn’t easy for everyone to accept because it’s causing an infiltration into areas where almost anyone can now become an “expert” on something if they really put in the time and effort to digest the information available. I see it in my business every day – people are making independent and smarter portfolio management decisions. They might not be “experts” in the same sense that many financial market practitioners are, but they can obtain enough knowledge about finance to make very smart decisions that circumvent the need for an “expert” opinion.
This is happening in many fields though. I do tons of things around the house, my car or in everyday life that would have required an “expert” opinion before the days of Google. Now I am an “expert” in many things that might have previously required years of schooling or outsourcing. It’s amazing. But it’s also a form of creative destruction. And some of the people who are being destructed by this are none too happy.
I bring this up because of a post by economist Chris House about physicists and their increasing desire to opine on economic matters. House is very critical of people like Mark Buchanan (who, for the sake of full disclosure, I think is totally brilliant and a wonderful contribution to finance/economic thinking). The field of economics is being infiltrated by non-economists just like most other fields are. But economics is particularly interesting because economics can have such a vast impact on all of our lives through our understandings of the world we live in and the way economics is intertwined with public policy. So, one could argue that economics is being criticized and infiltrated on a grander or more important scale than some other fields. And this is a good thing.
I personally think House is being too quick to dismiss the opinions of smart people into his field. But more importantly, I think he’s missing one of the main reasons why this is happening to economics – BECAUSE ECONOMISTS HAVE FAILED TO PROVIDE THE WORLD WITH A RATIONAL AND REALISTIC FRAMEWORK FOR THINKING ABOUT THE MONETARY ECONOMY. There are big problems in the global economy today and thus far economists do not even appear to have provided a basic framework for even understanding the monetary world in which we reside. Worse, the divide in this field appears to be purely political with totally different understandings of the world based on one’s political preference. I think that objective realists like Buchanan look at this and see a gaping flaw in the way this is all being done. And I think he’s right.
In my view, the infiltration of economics by non-economists is not only inevitable but something we should embrace. There are a lot of smart people out there whose areas of expertise overlap with economics to some degree and if they can move the discussion in a more positive and productive direction then I say we should embrace this and not push it away. I know many economists would probably prefer to keep their political cliques well protected from this infiltration, but the reality is that the field of economics is too important to be dominated purely by political theorists often masquerading as objective realists.