Why are smart people so dumb?
The question has haunted savants, wives and bartenders throughout the ages. But at least we have a hypothesis.
A guy gets a PhD in physics. You ask him a simple question. He comes up with one of the dumbest answers you ever heard.
Another guy becomes a world chess champion. The next thing you know he's promoting a cause you know is moronic.
And what about Warren Buffett? There's a smart guy. He must be smart; he's made a lot of money.
The French admire intellectuals. The English admire people who can hold their tongues. The Australians admire people who can hold their liquor. But Americans admire people who make money.
A man who can make money is assumed to have qualities of judgment, brains and energy that set him apart from his fellows. Let drop the news that you have made a few million and the local paper will want to ask your opinion on the Egyptian politics or global warming.
And so someone must have asked Mr. Buffett what he thought about taxes. Bloomberg reports:
|'Billionaire investors Warren Buffett and George Soros are calling on Congress to increase the estate tax as lawmakers near a decision on tax policies that expire Dec. 31.
'In a joint statement today, Buffett, Soros and more than 20 other wealthy individuals asked Congress to lower the estate tax's per-person exemption to $2 million from $5.12 million and raise the top rate to more than 45 percent from 35 percent.
'Obama has used Buffett's call for higher taxes on capital gains to promote the "Buffett rule", which would require a minimum tax rate for top earners.
'Soros, 82, is chairman and founder of Soros Fund Management LLC. He is worth $21.6 billion, placing him at 24th on the Bloomberg Billionaires Index. He has donated more than $3 million to Democrats and has financed groups such as the American Civil Liberties Union.
OK. So two rich dudes want to increase taxes. Do they really believe that federal bureaucrats and elected politicians will do a better job of allocating scarce resources than the rightful owners of it?
The story continues:
|'Other signers of the statement include Bill Gates Sr., father of the Microsoft chairman; Richard Rockefeller, chairman of Rockefeller Brothers Fund Inc.; and Leo Hindery, managing partner of InterMedia Partners LP.'
Wait, Leo Hindery? The name rings a bell. Oh yes, is this the same Leo Hindery writing in the Financial Times and proving our point. Mr Hindery must be a smart guy. But what has gone wrong with his brain?
In his FT article on Wednesday of last week, Mr Hindery is as sharp as a baseball bat, bluntly pounding through dull ideas and leaving one hell of a mess behind him. He recites the facts as he sees them: unemployment is high; wages are stagnant and so forth.
And then he moves, like Custer to the Little Big Horn, onto the ground where meddlers cause disasters. In his simpleminded way, he imagines a world where results follow intentions, like marriage follows love. He sees no need for a pre-nup.
No need for second guesses or arrières pensées. It will work out. Why? Because he has thought it out thoroughly! He has used his large brain.
What is his solution to high unemployment and low wage growth? Government! No kidding:
'The creation of a department of business would be a reflection of enlightened political and corporate leadership,' says he.
What would this new bureaucracy do? It would, yes... you guessed it, be responsible for a new 'manufacturing and industrial policy...' Central planning, in other words. He endorses President Obama's 'one-stop shop reform of the commerce-side of the executive branch'. And he rejects the 'discredited libertarian canard that government has no meaningful role to play in the nation's commerce'.
The man is a deep thinker. Deeeep.
In the itals beneath his article we get his credentials. As might be anticipated, he is 'chair' of one worthy group and 'co-chair' of another. On the board of numerous trusts, non-profits, and other organizations, he is a smooth operator. The man is a fast-talking zombie, in other words.
He was brought in briefly to run Global Crossing. When he took the job, the stock was $61. A month later, it was $25. Later, after Hindery was removed, the company went bankrupt. Hindery probably had no idea what was going on.
And then...what about the geniuses at the central banks? A report in the Wall Street Journal tells us that a small group of central bankers all went to MIT... all believe they can engineer an economy, almost as if it were a jet engine.
Bernanke, Draghi at the ECB, King at the BoE, Fischer at the Israeli central bank - all are MIT men. Together, they and colleagues, have added $10trn to the world's monetary footings in the last four years. None has any experience with this sort of thing - it's never been done before. All admit that they really don't know what they're doing.
'There's a lot we just don't know,' says former Fed man, Donald Kuhn.
And yet, they plunge on...forward...confident that the will figure it out as they go.
Hindery, Buffett, Soros, Bernanke... to say nothing of Nobel Prize winners Krugman and Stiglitz - they're all such smart guys. What's wrong with them? Are they so good at getting their names in the paper...or making money... or whatever it is that Mr. Hindery does...that they have no brainpower left for common sense?
Or, are their smarts the real source of the problem. They are capable of remembering, manipulating and connecting ideas...does this give them the confidence to want to manipulate the entire world and create a better one?
A strong man trusts brute force. A wily man thinks he will win by his cunning. A man with a silver tongue expects to seduce and persuade his listeners.
And the smart man? He thinks he can figure things out...and use his brain to create the kind of world he wants.
Why can't he? Because no matter how smart you are... the world is far more complex and far more nuanced than you will ever understand. Trying to control it always leads to disaster.
for The Daily Reckoning Australia