The Importance of Getting the Right Idea
Recently I read about the ongoing saga of the opioid crisis in the United States. Crises are generally attributed to some turpitude or other. However, having the wrong idea also lurks behind person-made crises. In the case of the banking crisis the wrong idea was that derivatives, by repackaging debts among many investors, systemic risk would be reduced. It turned out that derivatives were more cause than solution. In the case of opioids, there were two wrong ideas: the new generation of pharmaceuticals carried a lower addiction risk than traditional opioids, and medical reluctance to prescribe opioids reflected a lack of medical sympathy for people in pain.
It is true that in both cases, selling derivatives and promoting opioids, self-interest was being served by people promoting the failed practice. Bankers were indeed making money on the back of repackaged debt. Likewise, pharmaceutical companies were making money from the so-called ‘new generation’ opioids. But to concentrate entirely on commercial turpitude is too narrow a focus. A false theory was also to blame in each case. Thus we need to consider the role of proper evidence as a guide for action and the tendency for social bandwagons to form. Ideas spread like a virus through societies and are insufficiently tempered by skepticism and a demand for evidence. Further, once a bandwagon has formed, it takes immense courage and leadership to stand against it.
Richard Lilford, ARC WM Director
- The Economist. Johnson & Johnson, Purdue and other opoid-peddlers face a reckoning. The Economist. 29 August 2019.
- Lewitt M. Financial Crisis 2.0: Beware of Derivatives for Dummies. Forbes. 8 October 2018.