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Views from the Prairie

August 2023

Authority or learner?

In 1907, George Soper tracked a series of typhoid fever outbreaks to the cook. He was certain that she caused the diseases and approached her in all the confidence of the professional who knows the answer. She reacted strongly to his attitude and it took government action to put Typhoid Mary into quarantine. Being a "professional" is not always the best way to get things done

A certain entrepreneur has spoken authoritatively on a number of subjects. People have listened, "because he is a genius." Yet, others who were experts in a field noted that he spoke nonsense when speaking on their field. Other very successful people have an attitude of listening and learning all the time. Which way are you?

It can feel good to be "the expert" and have people look up to us. The danger is that we can easily slip into making things up or speaking common myths. When people listen to anything we say, it becomes very easy to stop listening to others. We wind up not learning. We can easily fall into the trap of never questioning our assumptions.

No matter how experienced we are, there are always people who know more than we do. Almost always, someone else is smarter than we are. There is no way to know all the facts in any situation. No matter what our learning is, at some point, new knowledge will change the world around us violating our most basic assumptions. Being "the expert" can prevent us from seeing a new reality.

There are traps that professionals fall into. We run the risks of "confirmation bias" where we only see evidence that matches how we think things should be. We miss information that doesn't fit our ideas. We get caught up in the job pressures and accept only slight modifications of what was known before while missing out on huge sections of knowledge that we can't accept while under stress.

While we call ourselves professionals, the truth is that so many of us are actually amateurs in our current position. Conditions keep changing on us. Many of us change jobs a lot faster than we can learn all about the position. Accepting our amateur status can allow us to be far more open to learning and changing what we do.

The same principle holds true for companies. When a company assumes that they know the marketplace, they often get "blindsided" by market changes. Corporate decision makers do better when they listen to a wide range of experiences. This is why many companies are working to include more viewpoints into their operations and decision making. Listening to diverse viewpoints has historically paid off with more reliable corporate profits.

As we reduce our opinions of ourselves, we become more open to hearing other people's experiences, seeing opportunities in new areas, and becoming more aware of risks that need to be managed. This helps us be more resilient to economic and social changes.

Let us celebrate being "amateurs" and keep learning.

Financial Bubbles Unpreventable

Every so often, western society has a financial bubble. Ever since the Tulip craze in Holland, people have wondered how to prevent such bubbles. A study by the University of Miami shows that one of the deep causes of a bubble is a lack of knowledge by the buyers. This has profound implications for financial regulators. Bubbles are created by people gambling without knowledge and piling on in the fear of missing out on a "sure bet." Such gamblers do not want to know more.

If a bubble could be prevented by more knowledge, then a solution would be to make knowledge more available. In the 2008 meltdown, there were a few people who made a lot of money betting against the crowd. One of them even traveled to the city where the mortgages were originated and walked through the streets looking at the houses that were behind the securities he had been offered. He came back convinced that the securities would fail.

The Federal Reserve had even forecast the real estate mortgage collapse and figured that it wouldn't cause a big problem. They didn't see all the ways that interconnected financial companies would fail.

The problem with trying to regulate such activity is that people will believe what they want to believe. Facts do not get in the way. We see this in many fields where people hold ideas that are not backed up with verifiable facts. The result is that the regulators have the same problem as all the buyers. People don't see what they don't want to see.

Financial bubbles are a fact of humanity. No matter what we do, they will happen. All we can do is to find ways to alleviate the consequences.

Risky World

People who produce propaganda know that if you repeat a lie often enough, it becomes the dominant idea and people accept it as truth. Thus, the current AI can give very confident answers which just may be the current lie or accepted social myth. AI does not do research or try to find the truth.


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