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by Neville Kennard, veteran preaching and practising capitalist

Not all Conventional Wisdom is wrong. Sometimes the crowd and the media and the chattering classes get it right. But it’s as well to be sceptical of Conventional Wisdom. And it is also rather boring to adopt the conventional wisdom of the day. Often the Conventional Wisdom is rather shallow, banal and inconsequential. At cocktail parties, at suburban dinner parties, the usual patter is Conventional Wisdom. Most people are compliant, are part of the mainstream, they go along with what is popular, they change with what becomes popular. In other words they are Conventional; they espouse the Conventional Wisdom.

The Mainstream Media often establishes and then pours out the Conventional Wisdom. That is their job and that is their market so we should expect little more. The Mainstream Media likes to be dramatic and provoke emotional responses in us. They like to provoke outrage, condemnation, pity, blame, guilt — and sometimes admiration and respect. The content and the presentation is frequently banal and of little depth. So typically there is little to learn from it. It is “Conventional”.

In investments Conventional Wisdom, as a rule, holds little prospect of gain and profit. All that is known is conventional and priced into the market. Sometimes momentum and the conventional wisdom will carry the market on in the same direction for a while, but by the time it is “conventional” the crowd is on board and it is time for the prudent to exit if they are looking to profit. Seeking out alternative views and opportunities, being Contrary, developing skills in the Art of Contrary Thinking can often be more profitable than going along with the Conventional Wisdom. Most investment advisers are part of the Conventional Wisdom.

With half of the population, by definition, below average IQ then it is a good idea to step aside from the crowd and have a good hard sceptical look where they are going and decide for your self if this is the way you want to be going. Many wars are fostered and fought because people, with government encouragement, go along with the Conventional Wisdom. A classic book on the subject of not following the crowd is The Art of Contrary Thinking by Humphrey B Neill.

The same applies with much social thinking. Recent and current examples could be Climate Change/Global Warming, where until recently the CW was that it was “proven science”, because the IPCC and governments told us so. A few sceptics started to question this orthodoxy and eventually the tide turned. And also currently “everyone” believes in the ascendancy, the superiority, the unchallengeable rightness of “Democracy”. To question this orthodoxy is seen as heresy.

Democracy may or may not be superior to other forms of societal and political organisation, but it is more interesting to question it than to blindly accept this, or any, orthodoxy. What is also interesting is to ask someone to define what they mean by “Democracy”: you will get some interesting answers. And what is curious about this widely accepted belief in the superiority of democracy is that in the recently released Heritage Foundation’s Index of Economic Freedom for 2010 the two countries that are #1 and #2 respectively —  Hong Kong and Singapore — Hong Kong is not and has never been a democracy, and Singapore is a quasi-democracy — a kind of authoritarian democracy. Both offer the best economic freedoms in the world with-out what would be called any or real democracy. Australia, incidentally, a real democracy (albeit with compulsory voting), came in #3 this year. (If Australia with its high taxes and burdensome regulations is #3, then the rest of the world’s economic freedoms must be rather dismal.)

The book Extraordinary Popular Delusions and The Madness of Crowds by Charles Mackay documents some of the events in history where Conventional Wisdom, mass hysteria and going with the crowd has proved to be very stupid.

Sceptical thinking, contrary thinking, challenging the conventional wisdom, being curious may bring you back to the conventional wisdom, or it may not; but at least you’ve arrived there of your own accord and not just followed the crowd. Be a sceptic, a contrarian, an iconoclast even, if you have the where-with-all for it. Most don’t, so it will never be a crowded field.

Developing some Unconventional Wisdom may or may not be truly wise, but it is much more fun, and possibly more profitable, than being part of the crowd and the Conventional Wisdom.

(in order of appearance on Economics.org.au)
  1. Welcome from Neville Kennard
  2. Think Tanks Don't Work
  3. "Market Failure": Just what the government ordered!
  4. The Tragedy of the Tax Pool Commons
  5. Corporate Welfare
  6. Citizenship for Sale?
  7. I Don't Vote
  8. Voting: Right or Privilege?
  9. Stockholm Syndrome and our Love-Hate Relationship with Government
  10. Civil Disobedience: The Rules of Engagement
  11. Should Respect for Law Extend to Bad Laws?
  12. Jaywalking as a Demonstration of Individuality
  13. Government Likes War
  14. Collusion is Our Right
  15. Why Not the Drug Olympics?
  16. Unconventional Wisdom
  17. Tiger Farming: An Alternative to Extinction
  18. Looking Backwards: Mont Pelerin Society Conference, Sydney, 2010
  19. Tax Avoidance is a Patriotic Duty
  20. Kennard Writes to IPA Review Editor
  21. Genocide by Welfare: A Tragedy from the Aboriginal Welfare Industry
  22. Separating Sport and State
  23. Your Home is Not an Investment
  24. Dick Smith, Celebrity Philanthropist
  25. A Libertarian's New Year's Resolution
  26. Extend Politicians' Holidays to Create Prosperity
  27. Entrepreneurs are Disruptive, and Bureaucrats Hate It
  28. What is a good Australian?
  29. Governments Like Employment But Hate Employers
  30. The Market Failure Industry
  31. Neville Kennard: The Tax Avoidance Imperative
  32. Wot if ...?
  33. The Tribal Chief and the Witch Doctor
  34. The Tannehills
  35. Democracy versus Property Rights and Prosperity
  36. Government Doesn't Work, and That's the Way They Like It
  37. Minarchy vs Anarchy
  38. Euthanasia and Self-Ownership
  39. The Right Policies to Fix a Depression
  40. Is Howard Our Best PM?
  41. Tax Producers vs Tax Consumers
  42. Where There's a Queue, There's a Business Opportunity
  43. Authoritarian Freedom
  44. Why Classical Liberals Should Debate Anarchocapitalists
  45. The Tyranny of the Majority
  46. If you could choose to whom you paid your tax
  47. Business Should Exploit Boat People
  48. The Immorality of Trade Unions
  49. "America" vs "The United States"
  50. Sweet Anarchy
  51. The Illusion of "Job Creation"
  52. Gold Is Money
  53. Guilty Capitalists
  54. Bureauphobia
  55. Prosperity vs Growth
  56. Capitalism vs Democracy
  57. More people = More fun
  58. Self-Ownership - the very idea!
  59. Government will murder Neville Kennard if he doesn't back away
  60. The Australian Dollar Has Been Cowardly and Criminally Devalued, Harming the Poor Particularly
  61. Is Taxation Theft and Government a Tax Cheat?
  62. My Journey to Anarchy:
    From political and economic agnostic to anarchocapitalist
  63. Government Needs Bad Guys –
    that's why they like wars
  64. What Is Obscene?
  65. Traffic Economics
  66. Wayne Swan stands on the shoulders of other intellectual pygmies
  67. Neville Kennard Obituary
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