In my most-recent column for AIER I ponder the unseen – indeed, the unfathomable – complexity of modern economic orders. This complexity is lost on most people because they mistake the words, graphs, and statistics used to describe modern economic reality for that economic reality itself. A slice:
Leonard Read’s “I, Pencil” is the best-known attempt to convey the vital insight that economies are far more complex than they appear to the naked eye. “I, Pencil” reveals that behind even an item as seemingly simple as a pencil there teem untold numbers of specialized workers, from around the world, who are, without knowing it, cooperating with each other to make possible an abundance of pencils. Yet judging from the incessant stream of naïve proposals that issue forth from the commentariat and politicians, very few people understand just how complex the economy actually is. The assumption seems to be that the economy is no more complex than are the words, graphs, and columns of data that are commonly used to describe it.
This assumption is wildly mistaken. It’s the equivalent of assuming that anyone can play quarterback in American football at an elite level merely by observing with the naked eye the play of New Orleans Saints’ star quarterback Drew Brees.
There are indeed a small number of things that can be learned about quarterbacking by observing an all-time great such as Brees. How many steps, on average, does he take back from the line of scrimmage after receiving the snap from center? What kind of physical condition is he in: lean, or bulked-up muscular? Does Brees throw overhead or side-armed?
Observing Brees’s play isn’t utterly without value to anyone who aspires to play well at that position. But the overwhelming majority of conscious actions, reflexive movements, thoughts, split-second decisions, knowledge, and ‘feel’ that Brees performs and relies upon to play quarterback well are unobservable and unmeasurable.
Indeed, Brees himself is unaware of many of the facts that contribute to his skillful play. For example, he surely knows nothing of the particular genetic code that determined the precise arrangement of the muscles and ligaments in his throwing arm – an arrangement that, were it just slightly different, might prevent him from succeeding as a quarterback.
Behind what is seen in Brees’s play teem an immeasurable amount of relevant, factual details all of which contribute to his success yet none of which is visible to the naked eye, and very little of which is accessible to third parties even with close diagnoses and high-tech statistics.
If only implicitly, everyone understands the above-stated reality about Drew Brees and other successful athletes. No one would propose that careful observation and measurement of Brees’s play could result in a written set of rules and instructions that when articulated to a careful reader thereby enable that reader to play quarterback at any skill level, and much less at the high level routinely achieved by Brees.
And yet an even more ridiculous supposition about the economy is regularly made by pundits, professors, and politicians. They suppose that through statistics and theorizing they can learn enough about how the details of how the economy actually works in order to enable government to mimic the economy, but in ways that rid it of real or imagined ‘imperfections.’
