Why does half a trillion in wealth have to evaporate before we all wake up?
Today every business pundit and his brother are going around saying that they always knew Henry Blodget was a hypester, or that it was clear a mile away that Cisco's share price was inflated.
But where were these skeptics a year and a half ago? Why couldn't markets and their muses distinguishes between the genuine features of the New Economy, such as increased productivity, and the part that was merely cell phone chatter?
Why does half a trillion in wealth have to evaporate before we all wake up?
A new sort of conventional wisdom is the trouble, says syndicated columnist Robert J Samuelson in a timely new collection of his articles, "Untruth: Why the Conventional Wisdom is (Almost Always) Wrong".* Americans have always tended to act en masse.
But nowadays a number of factors exacerbate this tendency, turning them into a nation of lemmings (or should that be "e-lemmings"?).
In the policy arena, advocacy groups, which used to be something close to mom-and-pop outfits, have morphed into lobbying giants with the power to win mass popular support for even highly questionable theories and reforms.
Compounding this problem has been the increasing political bias of the media. While Americans are still pretty much split 50-50 in their allegiance to the ideas of the two big parties, the media has tilted further and further left.
In the 1992 presidential race, for example, 43% of Americans voted for Mr Clinton, while 90% the Washington press corps did. When 9 in ten of your peers think alike, it's pretty darn hard to avoid marginalisation and parody as a weirdo extremist when you dare to voice dissent.
In the arena of markets, economy illiteracy among analysts and the media has made possible both overly pessimistic attitudes - remember the downsizing scare of the early 1990s? - and last winter's tech-stock nirvana.
And in both worlds, the hold of conventional wisdom is so strong that dissent, however wise, is likely to go ignored. "By its nature", notes Mr Samuelson, "conventional wisdom resists or assault or argument".
As much as contrarian journalists and television hosts may deny it, they have little influence to fight a trend. It takes a Nasdaq crash or something similarly dramatic to change public opinion.
Americans, of course, are not the globe's only lemmings. But Mr Samuelson believes an attribute that is usually perceived as a virtue-Americans' pioneering pragmatism-is also Yankees' downfall.
As Tocqueville noted, Americans believe in "the indefinite perfectibility of man" and believe that all problems can be solved, either by the market or government. This makes them receptive to any snake-oil solution being hawked in the village square.
"Untruth" contains columns dating back more than a decade, which means it marshals an impressive roster of conventional wisdom bloopers.
The myth of Japanese hegemony as it held in the late 1980s gets glaring exposure. So does the assumption, even more prevalent in the early 1990s than it is today, that a trade deficit always reflects poor overall economic health and poor prospects for employment growth.
Mr Samuelson rips into editors at the New York Times and the Philadelphia Inquirer in particular for promoting this view. After all, from 1980 to 1995, Germany boasted 16 annual surpluses-and developed a wicked case of structural unemployment.
Then there is the assumption, now fading a bit but still tenacious among America's senior citizens, that the nation's high-tax pension programme, Social Security, is faultless and must never be altered.
As Mr Samuelson points out, the system may have made sense in Roosevelt's day, when most seniors expired before reaching their 70s, but today has become prohibitively expensive for those born after 1955 or so. He sums up: "What started out as a selfless concern for the old is now selfish plundering of the young".
My own favourite Samuelson column is one about a pair of New Hampshire parents who sued their crabby octogenarian neighbour after she refused to return their son Gary's kickball, which had landed in her garden.
As he points out, the real sinners here were the parents, who, in typically American fashion, sought to teach their son that court action was the appropriate remedy when a ball flies over the fence, while totally neglecting old-fashioned lessons in civility. "Couldn't someone have said 'Gary, apologise to Mrs Martineau?'"
But the most relevant part of "Untruth" is Mr Samuelson's hilarious work assailing the invulnerability of the internet. Earlier than the other fellows, he attacked the assumption that internet companies could provide increasing numbers of services for free ("Capitalism is not a charity", noted Mr Samuelson, in what should have been an obvious observation, but alas, somehow wasn't.)
In 1998 Mr Samuelson warned of a coming Depression and laid his concern about the decline in the US savings rate.
You don't have to agree with all his economic logic to admit that, in this crash week, such material makes compelling reading.
© Copyright 2001 Financial Times
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