is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
One of the bigger tragedies played out in the domestic scene relating to trade was when a local industry got the idea of filing a safeguards measure petition. The problem was that the lawyers consulted weren’t really knowledgeable about trade law. As the product in question wasn’t even subject to a “bound” tariff rate, the safeguards petition then was unnecessary to protect the industry and the latter just wound up needlessly paying millions of pesos to those consulted. Expertise does matter.
However, experts have been getting a bad rap lately. Several (very good) books have come out questioning the merit (in varying degrees) of experts. One of the best books on the subject is The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. Written by James Surowiecki, the book argues that accumulated information by a group resulted in decisions made that are far superior to those of individuals, even if such individuals be experts.
David Freedman’s Wrong: Why Experts Keep Failing Us -- and How to Know When Not to Trust Them is another very good book. The book starts with him relating that around 30% of the findings published in the top medical journals are reversed within just a few years. He then goes on to find that around 90% of doctor’s medical knowledge are eventually found to be entirely wrong. In fact, there is allegedly an 8.33% chance that every doctor’s diagnosis will actually harm a patient. Freedman doesn’t single out doctors, mind you. He goes on to examine the experts of many fields, from accountants preparing tax reports to newspaper reporting to the fact that most studies made by economists turn out to be wrong (well, the last one we know!).
Finally, there’s this book by one of my favorite writers, Tim Harford of the Financial Times (and of The Naked Economist). His latest book, Adapt: Why Success Always Starts With Failure, dwells again on the theme that the world’s problems are so complex that the combined thinking of our leaders and experts would always be found wanting compared to the collective decision of the many. The book starts by relating an experiment done whereby experts from various fields were asked “to make specific, quantifiable forecasts -- answering 27,450 of his questions between them -- and then waited to see whether their forecasts came true.” The outcome was disappointing, with the experts doing just a little better than mere college undergraduates.
So, with all such findings, does this mean the irrelevance of experts? The answer is complex, and for the Philippines the answer even more so. One thing that should be noted is that the studies or findings made in those books were taken from the context of decisions made by societies that had a high degree of education, free exchange of information, and cultures that allowed for spirited and objective (as opposed to emotional) debates. This can be seen from Surowiecki’s book, which actually makes a distinction between “wise” crowds and “irrational” ones. Thus, a “wise” crowd is composed of persons with adequate private information, with individual opinions not determined by the opinions of the people surrounding him, with the ability to specialize and yet tap on local information, and institutions exist that can effectively utilize such private judgments and translate them to collective action.
Surowiecki therefore discards the idea of an infallible crowd and instead bolsters an idea we all already know: a deliberate and studied decision by an informed people will always be better than one made out of the emotional unthinking actions of the many. Our history is replete with the latter. Surowiecki talks about crowds that made very bad decisions because the individual members of the crowd were not thinking, letting their own judgment be determined by those around them, to the point that a bandwagon is produced but of which everyone is simply imitating and conforming to the sloppy or emotionally impaired thinking of others (or of those sufficiently loud enough to let their positions known). The tragedy in such situations of “irrational’ crowds is that any good, studied, and learned thinking by individuals become lost and are discarded. In this regard, Andrew Keen’s The Cult of the Amateur: How Today’s Internet Is Killing Our Culture would be good to read.
The necessity, therefore, for an educated, mature, objective crowd (or people) is obvious. All the more so if Harford is right: that today’s problems are so complex that a fixed solution will simply not do the trick and that such problems can only be tackled by a great deal of improvisation, dealt from varied sources of information, by a people that is willing to select the best (either of people or ideas) and adapt as needed.
Until that happens, the need of the Philippines for more knowledgeable, expert individuals is all the greater.