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The Conventional Wisdom, or Lack Thereof

March 3, 2010

“The conventional wisdom” is a phrase that has somewhat ironically taken a turn for the more sincere and genuine, especially given that John Kenneth Galbraith intended for the term to signify ideas most commonly accepted or most easily acceptable without regard for truth (and most often, are accepted in spite of their lacking validity). Of course, all things being equal, the more support a proposition has in terms of empirical observation, the more likely it is to be correct. However, our conventional wisdom is often based on common accounts of events rather than direct and empirical observation; our shared source itself may have been subject to some degree of bias or impermanence. The concept of “mesofacts” demonstrates that there need not have even been an error so much as a lack of continuous inquiry that may result in a disastrously incorrect bit of conventional wisdom.

Mesofacts are the facts that change neither too quickly nor too slowly, that lie in this difficult-to-comprehend middle, or meso-, scale. Often, we learn these in school when young and hold onto them, even after they change. For example, if, as a baby boomer, you learned high school chemistry in 1970, and then, as we all are apt to do, did not take care to brush up on your chemistry periodically, you would not realize that there are 12 new elements in the Periodic Table. Over a tenth of the elements have been discovered since you graduated high school!

A more significant problem is that people’s political values and positions are rarely derivations of empirical observations, and in this sense, very few things are equal. Indeed, when it comes to politics, I would re-assert Galbraith’s original thesis, which was that “the conventional wisdom” contains pervasive errors, and the conventional wisdom is potentially dangerous. For example, conventional wisdom would posit that a country should strive for the highest quality of health care possible. After all, what’s more important than one’s health, the conventional thinker would ask. The problem is that the practical implications of such policies are never considered by the conventional thinker who often hold values that are not subject to comparison:

That decrementally cost-effective innovations are so rarely described in the health-care literature suggests that medicine is distinct from most other markets, in which cost-decreasing, quality-reducing products are continuously being introduced—think IKEA, Walmart and the Tata car. Several reasons may explain this “medical exceptionalism.” First, there is fundamentally a lack of incentives both for physicians to control costs, especially under a fee-for-service regime, and for patients to demand less expensive treatment when insurance shields them from the direct costs of care. Second, medical “bargains” frequently come with health risks, and trading health for money strikes some as vulgar, regardless of ratio. The inherent ethical unease that decrementally cost-effective innovations can elicit poses a serious public relations and marketing challenge.

Moreover, the conventional thinker need not consider the process required of adapting his or her political preferences to reality in a representative democracy. They just have to whine and insist that someone else do it for them. The problem is that usually, the representatives do the same thing, and the buck gets passed from voter to politician to industry, without any intervening oversight to ensure that the policy goals are actually achieved. Eliot Spitzer apparently makes that point simply and directly enough for the conventional thinker in his latest book. To paraphrase, in a cut-and-paste fashion, for the sake of the conventional thinker:

Rule 1. Only government can ensure integrity, transparency, and fair dealing: To protect the market, government had to come in and say something very simple: tell the truth to your customer…There are certain core values—values that we as a society embrace—that the marketplace simply will not address.

Rule 2. In the face of externalities, government must intervene to change the way the market behaves: When companies get too big they underperform because they cannot be managed. Too-big-to-fail is too-big-not-to-fail.

Rule 3. The government needs to intervene on behalf of core values: Regulators don’t need additional power, they just need to use their existing power appropriately. And this will not happen unless different people are in charge…Corporations run the economy and they should. But if we don’t run our corporations properly, then we will not get ourselves out of this pit…Taxpayers have been getting the short end of the stick in everything we’ve been doing. The Treasury Department is not negotiating for us.

It’s just too bad that the conventional thinker is also probably more likely to be distracted by Spitzer’s marital infidelities than his policies if he were to ever consider running for public office again, almost by definition: those are the ideas more easily and universally accepted. Sigh.

3 Comments leave one →
  1. March 3, 2010 7:27 am

    Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.

  2. March 3, 2010 7:28 am

    I found your site on Google and read a few of your other entires. Nice Stuff. I’m looking forward to reading more from you.


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