Wednesday, September 24, 2008

Where Intellects Get Their Intuition

Hayek disliked intellectuals, because he said they often applied intuition in a very sloppy way. Their education and articulate writing was applied using superficial reasoning, and so they were lightweights. For example, in his day, it was socialism vs. capitalism, and most intellectuals favored socialism because the simple idea that 'planning' is better than 'not planning'. There superficial application of this idea led them to a bad opinion.

I was watching Bloggingheads, and political pundits/operatives Mark Schmitt and Byron York both admit they don't know much about what is going on in this crisis, but highlight the reference 'Liar's Poker' by Michael Lewis as informing their intuition.

Michael Lewis is a good writer, in that he has a lot of good similes, allusions to Greek literature, and is funny. But his understanding of finance is pretty thin (he worked on wall street for all of three years). He basically argues that finance is filled with a bunch of smart but thoughtless, deceitful men, who rise to the top the way elephant seals take over a harem of cows. This is true to some degree, and it is very appealing picture to bring these people down in such a way, because it's always popular to say prominent people in field X really know nothing and are overpaid or overrespected. Unless one can highlight a key flawed assumption in the field, and what the better assumption should be, this is really shoddy commentary. But this is a 'top shelf' reference for understanding finance to a political pundit because it is a book they can understand, it talks mainly about motives and human frailties. It's as if your opinion of the electorate was based on episodes from 'All in the Family'--fun stuff, but a caricature, and and so fundamentally more wrong than the idiot being caricatured (eg, not all Republicans are bigots like Archie Bunker).

This is why I turn the channel whenever the talking heads start commenting on Fed policy, it's like listening to a celebrity's opinion on the Iraq War.


Anonymous said...

Archie Bunker was a Reagan Democrat-type (though he preceeded the term). Union, but to the right on the cold war and many other issues.

Anonymous said...

lewis got the spiel. 3 years is 1,094 days more than you need, to learn the spiel on the street. finance is easy. old people lending to young people. var schmar, fractals schmactals are just for entertainment.