Dumb individuals, smart crowds??

This crisis has many lessons for us, and one of them is that there is no such thing as "wisdom of the crowds" or "smart mob". I don't know who first came up with this nonsense, but it is so obviously stupid that it is hard to believe these phrases actually entered our vocabulary. What is the premise? That a bunch of people who make stupid decisions on their own would somehow be more capable of making correct decisions by being in a large group? Or is it so that their own stupidity is counterbalanced and diluted by the wisdom of others in that group? (But if that's the case, wouldn't we be better off with just the good decision makers, without the need to counterbalance the fools?)

This fallacy was, supposedly, reinforced by the Word Wide Web, which seemed to prove the Marxist thesis that sufficient quantity will transform itself into quality, in other words, a gigantic pile of garbage will create such a pressure that it will beget diamonds.  One has only to read the comments left by readers of articles and blog posts to know that this can't be true.  It is, in fact, rather depressing that so many of us are such idiots. Among the 327 comments left undearneath an excellent interview with Niall Ferguson, there are  "insighful" analyses like this one:

Paul Collins from Canada writes: Niall Ferguson is not the voice of reason but is in fact as mad as those in government and in industry. Those in power are mad if they can hold onto power forever. Nothing lasts forever. THESE PEOPLE ARE MAD!

Sure, this drivel is outnumbered by many more sane - even if negligibly so - comments, but how does this make the crowd of commenters smarter? Garbage does not produce diamonds, just makes them more difficult to find.

The opportunity in front of us

The current economic crisis is big and scary, but we would all be much better served viewing it as the huge opportunity it is. (Not unlike the tragedy of 9/11, which was a golden opportunity - to push us toward energy independence among other things -  largely squandered later.) It is an opportunity to remake our deeply flawed economic system based on fake prosperity of living beyond our means instead of building real prosperity. I'm therefore quite encouraged by President Obama's apparent thinking on some of the crucial issues that will determine our future: federal budget deficit, healthcare costs, alternative energy, infrastructure. Of course, at the same time I am deeply unnerved by so much power being given to the Democrat-dominated Congress, who will use the excuse of this crisis to go nuts printing money and spending like a drunken sailor more for political than for economic gain. (You don't have to look very closely at the just passed Stimulus Bill to see a pork-laden train. )

There is plenty of worry to go around, including the fact that things will most likely get much worse before they start getting any better, or that there will be a big shift of economic power from debtors (Europe and the US) to creditors (China and Middle East), but if we play this thing right and hold the course, we may emerge with a much more sane and stable system within the next decade.  I am optimistic that we're smart enough to do that.