If we've learned one thing during the recent global meltdown, it's that no one really understands how the 21st-century economy works. Which means that we all need to get out there and play a part in finding the right path forward — and not leave everything for the experts to decide.
The problem is that, until now, none of us felt qualified. "Economic literacy" was defined as having a fancy degree or, at least, having made our way through one of those thick economic textbooks that they make you read in Econ 101.
But what did all that book-learning give to those who were asked to chart the course of the world economy over the past few years? Not much, apparently. Recessions, depressions, bubbles, currency crashes, credit crunches, and global economic meltdowns. That's what the so-called experts were able to cook up.
It's amazing that the best and the brightest, running the world's banks and governments (and regulatory agencies), were unable to see that the "financial weapons of mass-destruction" — as Warren Buffet called the new-fangled financial instruments — were going to one day blow up in our faces.
Even second-rate crooks like Bernhard Madoff were able to fool the smart guys who were sent to oversee his bogus investment activities. Even after someone tipped off the SEC that something was rotten in Madoff's world, the experts were unable to uncover any wrongdoing.
Huh? Madoff was supposedly overseeing the investment of more than 50 billion dollars worth of clients' funds, and yet had apparently bought virtually no stocks or bonds for years. So, how hard would it have been for the SEC agents to tell him, "Hey, Bernhard, show us the money — or show us where it was invested." How hard could it have been?
And yet the experts got fooled.
So if we can't trust those "in the know," who can we trust? Maybe we should take a lesson from the game show Who Wants to Be a Millionaire? and rely more on the audience to help sort out the world economic mess. Maybe the amateurs could actually do a better job that the experts.
Statistics actually support this hypothesis. The success rate of the audience in answering the difficult questions is considerably higher than any other tool at the contestant's disposal — including the carefully chosen friend that people are allowed to call when they're stumped. It seems that the crowd gets it right more than 90 percent of the time, versus less than 70 percent for the so-called "experts."
But the people in power tend to ignore our voices. Brushing us off with an arrogant "Let us run the economy. You'll see, everything will be made right. Just be patient." But aren't these the same "experts" who decided to send Air Force One on a flyby of New York monuments? If Obama had decided to consult the people on the ground — asking them how good an idea it was to send a big 747 heading toward the statue of liberty in broad daylight, along with an F16 in pursuit — the answer would have been an overwhelming "Go back to Washington and come up with a better idea."
But they didn't ask. They left the decision-making up to the experts. And look what happened.
Now the whiz kids in Washington, London, and New York are trying to solve the economic crisis. Why aren't they asking any of us what we'd like them to do? Maybe we should tell them — without being asked.
But how can we step up and have our voices heard if we can't tell the difference between Keynesian stimulus plan or quantitative easing? Between the G8 or G20? Or even the difference between GNP or GDP? If we don't have the economic tools at our disposal, how can we become a part of the debate?
It's not easy. In this increasingly complex world, people tend to throw up their hands and say, "It's all too difficult for me to understand. Let the experts figure it out." Remember when people actually got down and crawled under their cars to see what was keeping them from running properly? When was the last time anyone you know did that? We hand over the reins to someone who's supposed to know more than we do. Which is the right way to proceed — as long as there's some sort of accountability.
But without any real knowledge of the underlying mechanism, economic or otherwise, it's hard to know if the person telling us we need a new carburetor (or economic stimulus plan) is really giving sound advice. It's important. Because what's being done in Washington and New York does affect us. In more ways than we can imagine.
In the interconnected world economy we live in, everything is connected in ways none of us can really understand. I call it "fusion economics." Think of a fusion reaction, where molecules interact constantly, giving off an enormous amount of energy. We just need to know how to use all that new energy.
And instead of waiting for the experts to figure out what's right — for us and for them — maybe we should start asking, and answering, the salient questions. There's no reason that our lack of formal economic training should keep us silent.