Where’s the pessimism?
At last year’s Milken Global Conference, the mood was one of pervasive worry and uncertainty. This year, I had some hope that the assorted plutocrats would evince some measure of contrition in the wake of their precious “financial innovation” being revealed to have been the proximate cause of the largest financial and economic crisis in living memory.
Instead, there’s lots of bellyaching about the increased role that government is playing in the economy, there’s lots of unthinking boosterism when it comes to the abilities of unfettered markets to make the world a better place, and there’s enormous quantities of finger-pointing: everybody seems to be agreed that this was all everybody else’s fault.
Partly, this is the worst form of survivorship bias: the people who obviously screwed up have no inclination to come to this conference, even if they were invited, which they probably weren’t. But a lot of it just sounds delusional. If I were being charitable about these things, I might concede that it’s really hard to change the basis of one’s entire worldview in the space of a few months. But I do tend to be unconvinced by proposed solutions which invariably seem to be rehashes of the very things which caused the problem in the first place.
At the very least, I had hoped that this conference would have more debate than usual, and less respect for authority, given how atrociously the experts managed to get things wrong. But I’ve been disappointed on that front, too: if anything, the panelists have been increasingly prone to retreating to their own narrow areas of expertise, resulting in little in the way of substantive disagreements.
This weird combination — of failing to revisit fundamental assumptions while also failing to question self-appointed experts — lends a certain air of unreality to the whole conference, the general theme of which can probably be summed up in the idea that things have got so bad that they’re bound to start getting better soon. The quintessentially Californian can-do spirit of optimism has achieved many great things in the past, but I find myself, here in Beverly Hills, pining for much more in the way of bearishness and dissent.
Update: Barry Eichengreen does a good job of diagnosing the problem, and says that the solution lies in increasingly empirical economics. I’ll believe it when I see it.