On Expertise

Two snippets in the past few Financial Times editions have set me wondering once more about a favorite topic of mine: the relationship between the complexity of a modern economy [and society in general] and our consequent reliance on the expertise of others.

There is, of course, little new in this: it is a standard and frequent observation. What intrigues me is the effect of it all on society and its cohesion. And, especially in our current circumstances, our ability to resolve our problems.

There seems, to me at least, to be a direct relationship between the anger in our voting public and their expressed lack of trust in those purportedly leading them. The profusion of misleading statistics, half thought through arguments, and ill applied analytical techniques have endowed us with a massive over burden of information detritus. Most of what we read, even in the supposedly informed media, is inconsequential rubbish.

In the first of the FT articles I want to highlight, John Kay goes off on an elongated riff on the problems with statistics. He is absolutely right. We are bombarded with such every day. Most are utterly incomprehensible. The rest do not support the argument they are intended to illuminate. They are – mostly – so much noise in an already noise filled environment. The key point, though, is that they bestow an aura of expertise on the person presenting them.

This is especially true if the statistic is accompanied by some bland and irrelevant statement about the way in which the data was handled – as in “according to GAAP accounting rules”. It may well be that the numbers on the page in front of me conform to GAAP accounting, but that doesn’t invest them with much meaning if I have no idea what GAAP accounting is, nor does it prevent them from having been manipulated beyond recognition. Expertise is more often deployed to misdirect the reader – as anyone exposed to bank income statements in 2007/2008 can readily attest. Why else do large bureaucracies employ armies of lawyers and accountants? Simply compiling accounts requires relatively little effort. It is the careful manipulation and massaging that requires true expertise.

The same goes, of course, for national accounts.

We all wait breathlessly for each report to be released, and then wonder at the variety of interpretations that immediately follow. Any sensible layperson is correct in thinking that economics is a black art rather than a science when confronted with the divergence of opinions that even a simple data series can evince.

And the very nature of the series carries with it an embedded bias. Most regular folk have no idea what the compromises, distortions, and omissions are in GDP, for example, but they have to take it on trust that the numbers actually mean something. Why else would the experts hang on every release the way they do?

It undermines the professional standing of the bureaucrats in question if we all accepted that each and every number we read is an approximation – more than an outright guess, but very far from an incontrovertible truth.

The public is right to be skeptical. Especially of anyone – lawyers, accountants, doctors, economists, and business people generally – who portray themselves as expert. The key question being twofold: is the expertise something we can rely on as having substance? And, is the expert deploying that expertise in a trustworthy, ethical, or objective manner? The answers are all too often: maybe and perhaps. In other words the expertise adds to the muddle rather than adding illumination.

This, I think, is what underlies Samuel Brittan’s question at the end of his book review, also in a recent FT. He asks whether complexity will be the ruin of our civilization.

I find his question odd. He is, after all, a prime example of an expert who flourishes as an interpreter of the very complexity he appears to decry. Without the complexity of modern society, where we are all far removed from the production of the goods and knowledge we collectively rely on to support our standard of living, people like Brittan would be superfluous. Their expert interpretations would not be needed. Furthermore, the professions like economics, would be vastly less useful: there’d be less to theorize about, fewer opportunities to preen that education, and less ego all around.

The complexity he alludes to is that of the constant and ever more fine specialization that allows us, collectively, to acquire the knowledge needed to maintain a rising standard of living despite the appearance of resource constraints. We can keep conjuring wealth from a limited set of physical resources and even invent ways to use things that we had previously looked an as useless. In a simple world oil was a useless and messy thing. Now it is vital and we are all worrying about it being limited.

Our ever increasing reliance on expertise increases our reliance on others. We become less self reliant. It is like standing on the outer edge of a balloon. As the balloon is inflated are neighbors are moved away from us. Our ability to see other regions is successively reduced. Eventually we appear to be alone. We are solid in what we know ourselves, but cannot se far enough to comprehend other regions of knowledge. We become dependent up others, and their expertise. An important outcome of this that ideas that place the self at the center are less and less useful as tools to assist our understanding of contemporary problems. We all become more and more context dependent and less and less able to determine, or influence, that context.

So the ever unfolding complexity that brings about our ability to fend off the constraints of limited resources, brings with it an ever increasing alienation from the simple world portrayed in much of our older theorizing. Our constant attempt to simplify in order to extract insights has to be balanced with an understanding that those simplifications are ever more unreal. We risk irrelevance if we persist too far.

This challenge is particularly true of economics where much of its bedrock was put in place in a world bereft of modern production and where reliance on decentralized markets really could deliver the goods. That is manifestly not the case any longer: the very existence of large corporations tells us so. Economic expertise fails us if it ignores this complexity and carries forward narratives based on centuries old images of social interaction.

One last thing:

The proliferation of expertise throughout our modern complex societies places a burden on the experts to perform their role ethically. The trust that is so essential to the proper functioning of our economy is betrayed, in part, by the insistence of many economists that the naive vision of human interaction embedded in classical microeconomics is anything less than antiquated. I would go beyond and call it damaging.

Naivety is charming in young children. It is not, though, an appropriate characteristic of experts upon whose theories tens of millions of jobs rely. Our economies have become more complex and dependent upon a web of interlocking and mutually sustaining sets of expertise. It would be nice if the experts – in this case economists – recognized that, and behaved accordingly.