53: Why We Stopped Trusting Experts

SPEAKER_1 (0:00)

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Tracy Alloway (0:24)

Hello, and welcome to another edition of the Odd Lots Podcast. I'm Tracy Alloway, executive editor of Bloomberg Markets.

Joe Weisenthal (0:31)

And I'm Joe Weisenthal, managing editor at Bloomberg Markets.

Tracy Alloway (0:34)

Joe, can I just say I'm glad to have you back, because I missed you for two episodes.

Joe Weisenthal (0:40)

That is really sweet of you to say, and I am very glad to be back. I had some interesting travels around the world, but glad to be getting back in the routine. And I have to say, I really enjoyed the episodes that I listened to, the episodes I really enjoyed them. So I was glad to see my substitutes did a substitute.

Tracy Alloway (1:00)

Great. I'm glad we could provide you with listening material on the plane.

Joe Weisenthal (1:05)

I appreciate it.

Tracy Alloway (1:06)

All right. Well, as a welcome back gift today, I think I have a guest that you're going to really enjoy, because one of the things we've been talking about for, I guess, the past few months now, when we've been dealing with things like globalization, Brexit, US politics, things like that, is the idea of the world distrusting people in authority and in particular experts and technocrats.

Joe Weisenthal (1:33)

Yeah, I think this seems like such a big theme that pervades all aspects of life, from the media, which is the industry, obviously, that we're directly into, finance, which we cover, and obviously politics, which we have a certain election on our plates right now. So, yeah, I agree, this sort of whole idea of distrust of experts and the erosion of traditional structures of authority is about as big of a theme as you can get right now.

Tracy Alloway (2:03)

Exactly. And you and I both know that in finance and economics and markets, there is an over-offundance of experts, let's put it that way. And perhaps one of the, I guess, most stereotypical experts in the field would have to be the central banker, your sort of ivory tower technocrat at the ECB or the Fed or the Bank of Japan sitting in their sort of ivory tower and, I guess, pronouncing monetary policy.

Joe Weisenthal (2:33)

Yeah, I would say the central banker probably has a unique role in our society, and it's hard to think of any other position quite like it because they're not really accountable to anyone. There's no obvious checks and balances except over time with them.

They can implement policy without dealing with the political ramifications, at least in the short term. They're incredibly influential.

Tracy Alloway (3:01)

Absolutely, that was well put. So our guest for today is actually the author of a new biography on Alan Greenspan, who's one of the most famous central bankers of all time, I guess you would say.

It's Sebastian Malaby. He's a longtime journalist. He's also penned a bunch of really good books, many of them to do with economics and finance. And we are going to be looking at this phenomenon of the world falling in and then out of love with experts, with technocrats, through the prism of Alan Greenspan. So I think it'll be good.

Joe Weisenthal (3:36)

Yeah, I'm looking forward to that. I mean, I think I remember the 90s economy pretty well, and the degree of reverence towards Alan Greenspan at the time was absolutely extraordinary. And it's pretty hard to imagine in 2016, anyone quite achieving that level of love in the popular culture and the popular press ever again or at least anytime soon.

Tracy Alloway (4:00)

All right, let's bring Sebastian in. Hi, Sebastian, thanks for joining us today.

Sebastian Mallaby (4:14)

Hi, Tracy.

Tracy Alloway (4:16)

All right, so should we maybe start with Greenspan's role as the ultimate technocrat? Can you walk us through how he got to that position and what made him different to other technocrats?

Sebastian Mallaby (4:29)

Greenspan was the ultimate central banker, partly because of the length of time that he survived in office. If we think of other sort of big names we associate with the Federal Reserve, there's Ben Bernanke, who survived there for eight years, there's Paul Volcker, also eight years. Greenspan, in contrast, survived in office for 18 and a half years, more than twice as long. And if we add in the two and a half years he spent as the chairman of the Council of Economic Advisers in the Ford White House, you get 21 years. So by sheer dint of longevity, Greenspan is the ultimate technocrat, the ultimate central banker.