Economic Stupidity

I have always found it curious how such seemingly intelligent people can be completely stupid when it comes to economics.  I suppose it is the same thing with politics in general.

I have met or seen some really intelligent people in my lifetime.  They are smart when it comes to most anything.  Some of these people are also quite dynamic.  There are just some people in this world who can entertain an audience.  They can use humor and charisma to influence others.

Yet when it comes to economics, they are complete idiots.  I don’t know if others recognize this, but I sure do.  And I’ll admit that they are smarter than I am.

I don’t know much about car engines.  I have met other people (adult males) who know even less.  But there are many people who know much more than I do.  This includes many people who are not mechanics by profession.  Of course, you can always expect someone to be smarter than you in any given area.  This is due to our high division of labor society.  You can find the most brilliant man on the planet and he probably would not know as much about a car as your average mechanic.  Maybe I’m wrong, but you get the point.

Entrepreneurs and business owners are an interesting bunch too.  They come from all walks of life.  Most of them are at least somewhat intelligent, at least in their own way.  On the other hand, I find that many entrepreneurs lack a little bit of common sense.  This sometimes can help them find success.  They don’t always sit down and calculate all of the risks of failure and the potential things that could go wrong.  They are not conservative with their money.  They generally are willing to take big risks.  You don’t hear about the hundreds of businesses that fail for every really successful one.  But the few successful ones never would have been successful had the entrepreneur not been willing to take a big risk.  Some people are just willing to go for it.

It is amazing when you find business owners who are completely ignorant of economics, which is really probably most.  You would think they would appreciate the capitalist system.

Warren Buffett is an interesting character.  His father was probably the second best congressman of the 20th century, at least from a libertarian standpoint.  (Ron Paul is first.)  I’m not sure if Warren Buffett is really corrupt and is lying about his knowledge of economics or if he is just plain stupid.  It is often a combination of both.

Is it right to call someone like Warren Buffett stupid?  He has a lot of money (more than almost anyone), but money isn’t always a measure of intelligence.

Here is my opinion on the whole thing.  Someone like Warren Buffett is highly intelligent when it comes to certain things.  When it comes to economics, he is stupid.  It is possible to have a high level of understanding in some areas and be almost completely ignorant in another.

It has baffled me for a long time and will probably continue to do so for a long time.  I think part of the reason is that I have had a basic understanding of free market economics since I was a child.  It came easy to me.  I did not become fully libertarian on other issues until my mid-twenties.  So I am more sympathetic on other issues that deal with foreign policy and civil liberties.  I try not to be this way, but it is still hard.  I understand that some libertarians were originally on the left when they were young.  They understood the pro-liberty arguments for foreign policy and civil liberties.  They did not understand free market economics until a later age.

When it comes to economics, and even politics, I can always make myself feel better when I am around someone who is more intelligent.  Again, I have seen some really brilliant people before who just seem flawless in their thoughts and expressions.  But as soon as they are asked a question about economics (or worse, venture into the subject themselves), their reputation in my eyes comes crashing down.  I just can’t understand how such a brilliant person cannot understand basic economics.  I think people (and this includes libertarians) are much more indoctrinated in society than they imagine.

How can someone successfully run a multi-million dollar business and not understand the negative effects of minimum wage laws?  How can a brilliant person think that higher oil prices are actually the cause of higher inflation in general?  How can anyone think that having the Fed creating new money will make us all richer?

I don’t know if I’ll ever know the answers to these questions.  We just have to accept that everyone in this world is different.  What might seem easy to some is difficult for others, and vice versa.  But I still won’t have patience for people like Warren Buffett who really should know better and who works the system in his favor.