Where have all the smart people gone?

Economic cycles are prone to bubbles that grow so big they eventually burst and wreck havoc on everything around them. We all know of the historical bubbles: from the Great Tulip bubble, to the Dot Com bubble to the recent US Housing bubble. I think there is one more bubble that we hardly recognized but we are witnessing it burst even as you read this.

I am talking about the end of the “smart guy” bubble. You may have never heard of it but for two long we seemed to accept the idea that there was a special caste of intellectual elites that knew more than everyone else. We were too deferential to their ideas and behavior because we bought into the belief that due to their education, technology or wealth they knew more than the rest of us. We held back on our thoughts and actions despite our own private concerns that the intellectual elite might be wrong.

Who am I talking about? These intellectual elites were often found in the field of finance. I am talking about the great investment bankers who funded the housing bubble. I am talking about the hedge fund managers that for a few years had astronomical returns but today they look rather pedestrian. I am talking about the globalist that said the sky would fall if Britain voted to leave the EU. The list goes on and on. These people dominated the media and seemed to go unchallenged.

If there is one thing the last few years has shown there is no fixed intellectual elite caste. Some have a few moments in the sun and disappear. Others do not leave so quietly but in the end they too prove they are fallible.

So what does this mean? Of course there are plenty of very smart people who work incredibly hard. However, they are not demi-gods and they are fallible. We should all remember that and guard against becoming too deferential to the new crop of elite who will certainly step forward. I am reminded by the phase that was drilled into me as a young auditor. It would be wise to maintain a “healthy skepticism” the next time we see our society check reason at the door and give too much reverence for the elite.

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Kirk Hancock