The Consensus Fallacy
Thomas Friedman suggests that what we need to get out of this financial mess is a little more BOGSATT:
Which is why I wake up every morning hoping to read this story: “President Obama announced today that he had invited the country’s 20 leading bankers, 20 leading industrialists, 20 top market economists and the Democratic and Republican leaders in the House and Senate to join him and his team at Camp David. ‘We will not come down from the mountain until we have forged a common, transparent strategy for getting us out of this banking crisis,’ the president said, as he boarded his helicopter.”
Brendan Nyhan is less than impressed:
I will never understand why so many establishment pundits believe that all problems have a bipartisan solution. From a practical perspective, it’s not clear that a banking policy exists that “20 leading bankers, 20 leading industrialists, 20 top market economists and the Democratic and Republican leaders in the House and Senate” would unanimously prefer to the status quo. More importantly, why would we assume that such a policy is best? There’s no reason (beyond wishful thinking) to imagine that bipartisan compromises are always optimal, particularly on technical issues like banking policy. Sometimes one side is right and the other side is wrong.
Quite so. But which side is which?
When writing my earlier post on Mark Cuban, I stumbled upon a post he wrote for HuffPo in November titled “President-Elect Obama’s First Big Mistake.” He makes an argument that Dave Schuler has been shouting from the mountaintops for quite some time:
Its great to see President-elect Obama aggressively taking on the economy prior to his taking office. Unfortunately, the economic advisory team that he has put together looks more like a semester’s worth of great guest speakers for an MBA class than an economic advisory team that can truly help him.
Not a single entrepreneur. Yes Warren Buffett started a business, but he will be the first to tell you that he “doesn’t do start ups”. Which means there isn’t a single person advising PE Obama that we know of that knows what it’s like to start and run a business in this or any economic climate. That’s a huge problem.
Things like forcing companies from being taxpayers to the underground cash economy, or forcing new hires to be independent contractors to avoid having to pay their insurance or higher matching social security amounts. Your current group has no one with 100% of their net worth on the line. I promise you that the possibility of losing it all will provide a completely different perspective than any of the “knowledge” the esteemed, learned members of his current advisory team offer.
Now, Cuban overstates things a bit in his enthusiasm. I’m sure plenty of people on Team Obama are at least intellectually aware of these things. Hell, I’m intellectually aware of these things. But, if we’re making policy by BOGSATT, we should probably have some entrepreneurs at the table.
As to Brendan’s point, I largely agree. Technical issues like financial regulation are more amenable to bipartisan consensus than more purely ideological issues like abortion or stem cell research, since there’s more common ground. Still, Republicans and Democrats differ substantially on goals and philosophy. While it might be useful for Team Obama to have some Republicans in the room, the Democrats won in November and get to try to enact their policy preferences into law.
Photo by Flickr user J D Lasica under Creative Commons license.