Would default of the U.S. Government be catastrophic to the
world economy? In searching for an answer, the discerning inquirer knows to
avoid the incredulous reports. One problem is that the American media treats
even such sources as just as valid as those that are backed up by expertise. It
may even be that enough Americans presumptuously dismiss or discredit expertise
out of sheer jealousy and resentment that the media have become accustomed to
treating public surveys as equivalent to experts on matters requiring
expertise. In Madison’s Notes on the
Constitutional Convention, a fear of excess democracy can be found among
some of the delegates who feared that expanding popular election in the U.S.
Government beyond the U.S. House of Representatives would unbalance that
government (i.e., in terms of “the one, the few, and the many” in favor of the many).
The fear has been realized as the U.S. Senate turned to popular election and
the Electoral College has been captured by the political parties (i.e.,
electors are forced or pressured to vote in line with the election results). I
contend that excess democratization of presumed expertise is related to the
expansion and the values (e.g., anti-elitism) behind it.
Regarding anticipations of the impact of a government
default, the U.S. Treasury released a report
in October 2013 with the following results: "A default would be unprecedented and has the
potential to be catastrophic. . . . Credit markets could freeze, the value of
the dollar could plummet, U.S. interest rates could skyrocket, the negative
spillovers could reverberate around the world, and there might be a financial
crisis and recession that could echo the events of 2008 or worse." This
forecast came from experts on the
topic at Treasury, whom I suspect made use of the expertise of economists.
Hence, the report has high credibility.
At
the same time, however, American news networks were reporting that, according
to public-survey polls, a default would not be catastrophic. The media was also
reporting poll results indicating that a quarter of the Americans believe that
Obama was secretly working to on a third term. Doubtless the journalists give
no credibility to such claims. In fact, the tone of the reporting suggests that
the sheer madness of such a belief is what is really being reported. “Just
where is such paranoia coming from?” one journalist asked after reporting the
poll. Yet the tone used by journalists reporting that a default would not be
catastrophic according to a significant percentage of Americans suggests that opinions—even those biased by political
ideological agendas—can be treated as fact or at least as of equal value to the
Treasury report or those of economists. The underlying assumption is deeply
problematic, yet it has become a staple of the public discourse via the media.
Of the 21% who claim the U.S. dollar would no longer be a reserve currency around the world, how many people are just guessing? How is it that non-finance/economists know the market would not tank? For my part, I don't know. I'm not an economist. Source: CFA Institute
As an experiment of sorts, try
paying extra attention to the claims that people make generally and you will soon come
to the realization that many people go beyond their justifiable basis of
knowledge or expertise in making clreaims with absolutely no caution that such
would even be possible. The proclivity may be inversely related to the level of
education, though the know-it-all graduate students and even professors is
hardly a rarity. Even just after a few sentences from one, the arrogance-fueled
over-reach is easily detected.
Try
listening for the media basing findings requiring expertise as valid simply
because a majority of Americans polled say so. Even though expertise renders a
conclusion more credible (and accurate!), even experts can over-reach on their
own territory. For example, an airline pilot who announces from the cockpit
just after take-off, “We will arrive in Paris at 7:34am is overshooting. What
if touch-down is at 7:35am due to a bit stronger headwind than anticipated?
Would the passengers bail or storm the cockpit were the pilot to have said “around
7:30” instead?
Many
Americans will leap to sue a professional (e.g. pharmacist, physician, surgeon,
lawyer, CPA) who goes beyond his or her expertise such that people are harmed.
So it is telling that we take at face value the economic conclusions of a political pundit whose expertise is in
journalism or politics. The presumption that a majority of Americans saying X is
not a problem can be taken as reason to conclude X really won’t be a problem
makes it easy for the self-proclaimed “experts on the content” in the media to
beguile an incredulous viewership.