Brian Gongol Show on WHO Radio - April 18, 2010

Brian Gongol

Brian Dean served as a chaperone at a high school prom this weekend, and he noted that most of the kids conducted themselves really well. We all, of course, hear more about the kids who get into trouble and make bad decisions. But I think we need to both applaud the kids who were behaving well, and acknowledge that some decisions aren't made out of malice as much as they're made from plain old stupidity.

A phrase called "Hanlon's Razor" says, "Never attribute to malice that which can be adequately explained by stupidity." Just as a great deal of what high-schoolers do to get into trouble is due to stupidity instead of malice, a great deal of what has gotten the financial world into trouble over the last few years has been more the result of stupidity (with some greed, too) than intentional evildoing.

The truth is that the world's knowledge of finance and economics is about as mature as our knowledge of medicine was around 1915. We know just enough not to be completely dangerous to ourselves -- but not a lot more. In 1915, we knew about the germ theory of disease, but we hadn't figured out such basic things as the use of penicillin and CPR. Similarly, in the financial world, we're still like infants: Try to figure out the rules of this strange and complicated world around us.

It should be obvious that we haven't matched our knowledge to our restraint yet: The government has us $12.8 trillion in debt, and households are in about the same amount of debt. There was a widespread assumption that led to a lot of our troubles that assumed we could average out the worst-case scenarios and profit. But it turns out that the world is messier and more complicated than that, and bad conditions sometimes compound upon one another.

The bottom line is that we need to learn more about how our economic world works, and in the process we'll probably learn a lot more about just how little we actually know. If medicine is still as much an art as a science, think of economics and finance as being another half-century or more behind.

Fortunately, as dumb as we might be about pieces of the puzzle, life is still much better than it was in the 1500s (even if e-mail forwards about life in that time period mis-state the case).

Good news, though: Des Moines has been named the #1 place in the country for business and careers by Forbes...not because we're stellar at one thing, but because we're pretty darned good at a lot of things. Kudos all around, right?

Thanks for listening this week -- hit me up on Twitter anytime if you have a great news item to share.