Experts, Economists and Posers

I love experts. Don't we all? Remember in that distant dim past when your father was an expert? He had all the answers, or at least he had some answers and sometimes he was actually correct.

My own father was not an expert about a lot of things, particularly mechanical things. You could not ask him how to fix the lawnmower or the car. He'd tell you to take it to the mechanic.

The mechanic though, now there was an expert. He could get the car started, which was truly miraculous. He crawled under our car once and whacked something underneath with his hammer and the car started right up without anybody having done anything to the battery. "You have to know where to whack it," the mechanic said.

So, yes, there are some experts in the world, but mostly they are technicians, scientists or engineers. Those guys know stuff that works.

But then there are economists, especially Nobel prize winning economists.

Milton Friedman fascinated me, because for a practitioner of the dismal science, he seemed very sure of himself--none of that self doubt or obsfucation you got from Alan Greenspan. Milton Friedman knew precisely what caused the Great Depression: The government clamped down on the money supply, raised interest rates and poof, there went the economy. None of those other problems you might have heard about which contributed were important: The government had driven farmers to plant fencepost to fencepost with consequent erosion, the Dust Bowl and the Grapes of Wrath. And then there was the worldwide economic mischief emanating from the treaty of Versailles, none of that mattered. Milton Friedman could point to a single cause: regulation. The Federal Reserve should have loosened its grip on interest rates and there would have been no Depression.

I listened to him interviewed on NPR and he knew we over regulated the world. My father, who had lived through the Depression never seemed to understand what caused it, but here was Milton Friedman who was so certain. I was so impressed I mailed away for the casette tape of the interview and I listened to it over and over to be sure I was not misunderstanding what he had to say.

On the same tape, in the same interview, he left the topic of the Depression and he started talking about disbanding the Food and Drug Administration. The FDA is just another federal bureaucracy up to no good, restraining the wild horses of inventiveness in the drug industry. No need for the FDA, Nobel laureate Friedman said. Regulation is bad.

But what about all those people who would be harmed by dangerous drugs if we didn't have the FDA to interpose itself between the drug companies and the population of unknowing people out there willing to swallow whatever they find on the shelves of their pharmacy? That's what we have the courts for, replied Dr. Friedman. That's what Tort law is all about. A self correcting system. The invisible hand made visible by the jury system. If a drug company was irresponsible and made a harmful product, it would be sued into oblivion.

Dr. Friedman knew that answer. He was very sure of himself.

I thought he was kidding. But he wasn't.

I started talking to my casette player, as if he could hear me: But what about all those people who took the drugs for years before the wayward drug company got sued into oblivion? What about all those thousands of English kids born without arms or legs because their mothers took thalidamide? The FDA stood between thalidamide and American mothers, and spared us a lot of suffering, lives lived in disability.

The other problem with Professor Friedman's facile solution to preventing mischief by drug makers is our legal system is actually a pretty miserable tool for controlling mistakes rooted in technology, science and other things lay juries cannot understand.

The doctors who get hauled in front of juries tend not to be the careless, the indifferent, the "bad" doctors. They tend to be doctors who got thrown into a situation where a bad outcome was going to happen, one way or the other.

The chief of neurosurgery at Cornell New York Hospital once told me he never had any fewer than seven suits pending against him and the same was true for the head of every other head of neurosurgery around the city. "Now, we may not necessarily be the best neurosurgeons in New York City, but it's not real likely the chief of neurosurgery at each center is going to be the worst surgeon. So why do we get to spend so much time in court? Because we get the cases dropped at our feet who have been hauled around and rejected everywhere else."

What this meant to me is this Nobel prize winner did not have the faintest idea what he was talking about. When he talks about economic models, numbers, and uses lots of economic lingo, he can intimidate me into thinking he knows more than I do. But when he starts talking abut something I know about, I see the emperor with his clothes.

Which brngs to mind the whole notion of what a Nobel prize in economics means. These economists cannot do controlled, double blind prospective experiments. If they cannot do testing of their theories, what could they possibly know?

There are Nobel prizes in chemistry and in physiology and in medicine. The prize committees may not get the credit to the right people, but they generally point a spotlight on an important advance: The discovery of insulin, the identification of the HIV virus, the understanding of cholesterol metabolism.

But what does a prize in economics mean? Would a prize in astrology be any less meaningful?

Admitedly, I do not know what I am talking about here. I cannot understand the mathematical models which economists generate, display and defend. I am as uncomprehending as those juries who hear medical malpractice cases and patent cases.

But I can at least understand the verbal descriptions of the implications of the inscrutable math. One may be thoroughly intimidated by the numbers, but in the end, you get a statement in words: When Milton Friedman says all we need to prevent a Depression is the Fed loosening up the money supply by lowering interest rates and you see the Fed dropping the interest rates to zero and the econonmy continuing its plunge as if that safety net did not exist, does it not make you wonder?

When Friedman says markets stabilize because smart investors will buy when all the morons are selling, but that does not happen in 2009, does that not make one wonder?

In science, there is sometimes a tenuous consensus: We accept the propositions the heart pumps blood (except when it doesn't) and insulin lowers blood sugar, (except when it doesn't), but there is far more unsettled than settled. Physicians (we are not talking about surgeons here) are humble. They know what we know today, what we are using as current knowledge will be disproven or at least altered with time and we do what we can with the tools we have until we have something better. But we do not snigger at those with whom we disagree because we know we may be right today and wrong tomorrow.

A friend of mine, who was an analyst at the CIA on the Russian desk, told me about her boss, who placed a very tightly organized, concise and authoriative document on the President's desk which said, in essence, the Soviet Union was firmly in the grip of the Communist party and the reigning powers and would remain that way for the foreseeable future. That was 1989, a week before the Berlin wall fell. I think I recall correcty that savant was fired.

But what of Mr. Greenspan and even Mr. Bernanke?

We all want to believe there is an expert out there who actually knows. Like our fathers, when we were kids. Maybe Paul Krugman, who sounds like he knows. His stuff is there edged in print in the New York Times. It must be correct.

And he won a Nobel prize in economics. Just like Milton Friedman.