The IMF and Our Increased Dependence on Faux-Experts

I was in Korea last week with a collection of suit-wearing hotshots. On a panel sat Takatoshi Kato, IMF Deputy Managing Director. Before the discussion he gave us a powerpoint lecture showing the IMF projections for 2010, 2011, ..., 2014. I could not control myself and got into a state of rage. I told the audience that the next time someone from the IMF shows you projections for some dates in the future, to show us what they PROJECTED for 2008 and 2009 in 2004, 2005, ..., and 2007. They would then verify that Mr. Takatoshi and his colleagues provide a prime illustration to the "expert problem": they serve as experts while offering the scientific reliability of astrologers. Anyone relying on them is a turkey.

This allowed me to show the urgency of my idea of robustness. We cannot get rid of charlatans. My point is that we need to build a society robust to charlatanism and expert-error, one in which Mr. Takatoshi and his staff can be as incompetent as they want without endangering the general public. We need less reliance on these people and the Obama administration has been making us more dependent on the "expert problem".

Epilogue. At formal dinner, jetlagged (I was served red wine when my biological time was at 7 AM), I saw in horror that I was sitting next to... Mr Kato. He was somewhat nervous, but very polite.

 

Comments

[yakolev]

Oh forescaters forecasters
Well, I was almost saying that Astrology would less damage than the economy taken as "science" but so I remember R.Reagan and nearly change my mind, nearly...

[hamstercheese]

Just a general comment - Nassim, I am a fan of your advocacy and your intelligent criticisms are always music to my ears. Thank you!! Thank you for your direct approach in attempting to turn this sinking armada in the right direction.

[Michael Martin - Huffpost Blogger]

Nassim:

Sounds like the long-only institutional mindset of Wall St with their projections, but what were you expecting from "Dr. John" Kato...?

[jbatch]

Nassim:

Insightful as always. The same could be said of EIA's projections on energy prices and supply. It is certainly true of Obama's economics team.

Very sad

[lastpost]

“I could not control myself and got into a state of rage.”

Try not to do that Nassim. It tends to lead to a lot of pointless paperwork flying about.
Simply wait for the right moment, and drop a bombshell-question into the discussion.
Such as: In the highly unlikely event that your understanding of the situation is incorrect. And that X, Y, Z, or something other should occur. What is the nature of your recovery position?

[GardenerNorCal]

Instead of rage I've lately reached a point where I find the whole expert opinions and projections question as hysterical.

I do hope the American public has developed an acute means of discerning true fact from fiction. I think that may be something we can credit the Bush/Cheney administration with accomplishing.

[woolwit]

I love it when NNT 'enters a state of rage', it shows he really means it! There is a place in the world for anger–I didn't say violence. When we stop being outraged by injustice and stupidity we throw in the towel. NNT made his FU money a long time ago. He has a study full of valuable books (the unread ones!) so certainly he's got better things to do than traipes around the world delivering his message to crowds of 'experts' who don't get it. But he does anyway because he's passionate about how screwed up things are. And he has a simple solution that could really make the world a better (imo) place.
Thanks Nassim! Go NNT!

[peterg76]

IMF 'economic projections' are just for show. Everyone knows they have no connection to reality.

[marinara]

The problem is that the people in charge aren't responsible for the people affected. If they had the possibility of losing their own lunch, things would be completely different.

[josephXY]

A nice collection of really problematic experts are in that video. The viewer knows instantly how
things worked out in that cases. Also instantly clear is the value / cost of such advice, expertise:
http://www.youtube.com/watch?v=2I0QN-FYkpw

[ScreenName05]

You realize that by railing against the IMF and the World Bank, you are actually railing against U.S. policy and the economic policy of the U.S. for pretty much the last 50 years. The U.S. has made a killing off the rest of the world by loaning them money, that they usually didn't want, if and only if they spent the money with U.S. companies buying goods that benefited U.S. companies (like oil equipment from Haliburton or GE so that Exxon Mobile and Chevron could steal their oil), and leaving those countries in incredible levels of debt to the U.S. for all time. And that if they wouldn't take our loans we arranged for their leaders to be removed or killed and replaced by someone who would take our loans - for those who don't know that is why the Republicans are so frustrated with a certain President of Venezuela, who not only nationalized the aforementioned equipment but also took the oil and denied any debt to the U.S.

Just want you to be sure you know who the IMF really is before you randomly accuse some one else of the problems we Americans created and continue to create every single day.

[Romeover]

We have met the enemy, and they are us.

[Billy Hell]

The IMF has impoverished and destituted almost every nation it has imposed it's loan conditions on, leaving them in a worse economic and social condition than prior to accepting the loans.

t's conditions have led to devastation of farming communities with it's insistence on "fair trade agreement" removal of import tariffs and the cessation of agricultural subsidies, leading to dumping of highly subsidized agricultural produce from the US and the subsequent inability of local farmers to compete.

It has insisted on privatization of state assets and resources leading to utility and services costs few can afford and the pillaging of natural resources. Health care has been made inaccessible due to costs, education levels have been slashed due to costs and the list goes on and on and on.

More important than the "expert issue" within the IMF in my opinion, is the need to review their loan conditions which have only had the goal of enriching a small minority elite and the US corporations wanting to do business in recipient countries

[joebhed]

Thanks, Nassim,
We appreciate your willingness to confront the reality of the expert-economist genre in these days of unprecedented monetary-f­inancial-e­conomic realities. And we also appreciate your almost unique ability to see the solution to the problem, which is the creation of equity, rather than debt.
Unfortunately, you have not fully met the enemy.
The enemy is the CREATION of all that debt. At issuance.

Rather than these new debt-eating conversion­-securitie­s, we need to eliminate the cause of the problem at the source. The answer, Nassim, is equity-money, a.k.a. . debt-free money.

The American Monetary Institutes reform to the money system of debt-money creation, BOTH through fractional reserve lending on the commercial banking side, as well as the debt-thing­ie-generat­ors (financilaization) on the IB or shadow banking side. www.monetary.orgg)

You are one of the few capable of seeing the real solution, Nassim.
Why not come over?
Become what we really need.
The Man With A Plan.

The Money System Common.
www.economicstability.orgg)

[WmC]

Taleb should join the Institute of Expertology: their "studies" confirm his annecdotal evidence.