The financial and economic crisis that we continue to endure and suffer holds, certainly, many lessons for the future. Some of them are obviously specific: don't finance the purchase of an $800,000 home by an asset-less borrower making $15,000 a year; don't trust the rating agencies; beware of credit derivatives.
But we can highlight a more general (and central) theme -- one whose relevance and influence has been demonstrated beyond suspicion by the meltdown. We are talking about the unmitigated dangers of iatrogenics, or when the (purportedly helpful) perceived expert ends up causing far more harm than good.
Those whose comforting guidance we seek as a beacon out of the darkness of uncertainty, turn out to be two-faced malfeasants, inflicting untold deleteriousness upon a naively unsuspecting world. In this crisis (as in many other instances throughout history), humanity has paid a dear price for having showered too much heed and attention on the dictates of the treacherous, harmful, fake wise men.
The term iatrogenics originally derives from the medical world, literally meaning "physician-induced". An iatrogenic death, or disease, would then be one that is directly caused by the doctor. It is well documented that for many many centuries, patients on many occasions incurred greater risks by putting themselves into the hands of conventional, standard, guild-belonging physicians. Stupefying but true, you were likely to be much worse off by going to see the renowned expert. We can share a bunch of eye-popping illustrations (courtesy of extensive work on the subject by bestselling author and philosopher of science Nassim Taleb).
The Harvard biochemist L.J. Henderson is supposed to have remarked that it was only sometime between 1910 and 1912 that a random patient, with a random disease, consulting a doctor chosen at random, had, for the first time in the history of mankind, a better than 50-50 chance of profiting from the encounter. Surgeons resisted anesthesia for a long time (because it was considered cheating), doctors were still bleeding patients at the end of the 19th century (even though bloodletting could triple the death rate in a pneumonia).
The credit crisis was also the result of rampant iatrogenics, and in this case too the damage had been going on for a while (we had plenty of accusing evidence). A myriad of apparently unassailable, presumably all-knowing experts proved disastrously wrong -- and as a consequence -- disastrously destructive, en masse. The AAA-ing by the glorified rating agencies, the valuations and measures of risk by Nobel-endowed theories and the forecasts by pompous academics were all exposed as a sad joke. Those misguidings by those we trusted as guides were instrumental in igniting the devastation.
The current mayhem is a harsh reminder that we, as a species, invariably suffer from an excessively acute case of extreme bowing at the altar of presumed wise men. This prevents us from scrutinizing (even if a tiny bit) the experts' true capabilities. It happened with the ancient doctors, it has happened more recently in the markets. Don't forget that an analyst may be someone who has never worked in the industry he is analyzing and rating, and that a financial economist is typically someone who has never seen any real action and who theorizes from the isolated confines of a secluded campus office. It is easier for such non-ready individuals to become iatrogenists, as the hubristicly arrogant imposition of unsound dogma can be a good ally (and instigator) of trouble.
The early part of the 21st century thus irrefutably shows, once again, how human welfare can be immodestly hampered by a desire to tame uncertainty into subjugation via waving of the "expert" magic wand. The patients who through the years registered into the hospital of perceived expertise tempted by the loudly-peddled claims to have found a rigorous, conventionally-accepted cure suffered, as their ancient brethren, devastating infections at the physician's table.
While things have certainly improved when it comes to historical monuments to iatrogenistic pain, like official medicine, other repositories of physician-induced bleeding remain insalubriously unreformed. Witness the financial markets. The rating agencies are still there, openly operating; so are the quantitative risk analysts and the professors. The iatrogenic atrocities keep recurring (this was far from being the only market crisis caused by expert guidance gone insanely awry), yet the hospital remains open for business, unremittingly sticking to its perennial marketing pitch, doggedly refusing to reform itself or to punish the malfeasant surgeons.
If the experts won't be forced to drastically change or utterly removed from the scene, it seem obvious that there is only one way for society to protect itself from the iatrogenists. Decidedly stop paying attention. The only sure way to close down the inmate-decimating, experts-laden infirmary is for would-be patients to stop registering there, no matter how irresistibly enchanting the sophisticated uncertainty-ending cure prospectus may look.