When somebody tweeted two pictures juxtaposing the two crowds, I immediately wanted to retweet it, because it wonderfully confirmed my prejudices. Judging from their looks, the anti-Maduro crowd consisted mainly of angry Venezuelans, while the pro-Maduro crowd consisted mainly of London hipsters.
It was quite a contrast. On the one hand, you had people who had lived under socialism, and who hated it. On the other hand, you had people who romanticised socialism from afar, presumably on the basis of what they had read in the Guardian and the Independent.
And yet – I resisted the temptation to retweet it. The subtext of the juxtaposition was that the opinion of people who have personal experience – or “lived experience” – of something should count for more than the opinion of people who don’t. And on matters of economics, I don’t accept that premise. In an economic argument, personal experience should be largely irrelevant.
Let’s remember Hayek’s distinction between formal or codifiable knowledge, and ‘tacit’ knowledge. Tacit knowledge is the kind of knowledge that is specific to time and place, and that is hard to communicate, not least because it often cannot be put into numbers or words. Most jobs, for example, involve a mix of formal and tacit skills, the latter being the skills you develop with experience, and that you would struggle to explain or pass on to a successor.
Tacit knowledge is at least as important in economic life as formal knowledge. An economy that fails to tap into and utilise people’s tacit knowledge stagnates – this is one of the major reasons why socialism failed. “Lived experience” can be a form of tacit knowledge, so in areas where tacit knowledge matters, it can trump formal knowledge.
I’ll give you an example. I try to avoid reading articles about German politics in the British press, because they are almost always full of clichés, misunderstandings and half-truths. This is not because the journalists writing them lack in competence or formal skills. It is because it is very hard to understand the political culture of a country unless you have lived there for a while, are fluent in the language etc. It requires tacit knowledge. An outsider can acquire it, but they will not possess it from day one.
However, in other areas, codifiable knowledge trumps lived experience. If I told you that Germany had a tropical climate, that the average male height was 1.65m, or that average incomes were higher than in Switzerland, you would confidently tell me that I’m talking nonsense. You would not accept it if I appealed to my “lived experience”, and tried to derive any special authority from it. And you would be completely right.
In economic policy debates, people often try to weaponise their (or someone else’s) personal experience. Here are a few examples from my own recent – sorry – lived experience:
Me: “The NHS is in the bottom third of league tables for healthcare outcomes.”
Opponent: “The NHS saved my mum! It’s easy for you to slag it off, but trust me, one day, you’ll need it badly! And then you’ll realise that your fancy graphs won’t cure you.”
Me: “Hiking the minimum wage would risk negative employment effects.”
Opponent: “That’s easy for you to say! Have you ever worked in a minimum wage job? This just shows how out of touch privileged economists like you are!”
Me: “Almost all economists agree that rent controls cause shortages of rental supply.”
Opponent: “Tell that to the single mother who struggles to pay her rent! People can’t eat supply and demand curves, you know?”
Me: “Scrapping protectionist measures after Brexit would make us more prosperous.”
Opponent: “So you’re saying, the jobs of real people should be sacrificed on the altar of your “free trade” ideology? Have you ever worked in manufacturing? Forget your theories – you need to look at what’s going on in the real world!”
Me: “The British planning system is driving up house prices.”
Opponent: “What do you know about the needs of our local community? This isn’t some textbook model that we’re talking about. This is a real place, which real people call home! And we don’t want to be wrecked by your growth-at-any-cost ideology.”
I could go on. I have several issues with this style of arguing, of which I’ll mention just two.
Firstly, there is the assumption that since numbers, and the economic evidence derived from them, require a bit of abstraction, they are somehow detached from The Real World. They are not. Where do the Realworldians and the Realpeopleistas think the numbers economists use come from? As Jonathan Portes points out:
“[S]preadsheets […] are far more closely connected to the “real world” than any individuals’ experience can hope to be. Consider the Labour Force Survey […] [T]he LFS samples 40,000 households, […] a representative sample of (broadly) the UK resident population; lengthy interviews are conducted […] and cover a wide range of topics in considerable detail […]
[A]nalysis is formulated in terms of numbers on a spreadsheet or data points in a regression. But behind those numbers are what tens of thousands of real people have told professional interviewers, and in a way which means that the results are in turn representative of lived experience of the UK population as a whole.”
Secondly, there is the assumption that The Lived Experience of Real People in The Real World represents a more authentic form of evidence, because while eggheads like me are pushing an agenda, Real People just Tell It Like It Is. This is not so. Believe it or not, Real People in The Real World have prejudices too. “Lived experience” is a lot like the old cliché about “lies, damn lies and statistics”, in that people only ever bring up those phrases when confronted with evidence they don’t want to be true. It is not a coincidence that “lived experience” usually comes up in connection with specific topics, namely, topics on which a majority of the public passionately believes one thing, while all the evidence shows the opposite.
In Britain, it is most commonly brought up in discussions about immigration, or more specifically, the impact of immigration on job prospects and wages among the native population. The economic evidence is clear that the adverse labour market effects of immigration are between zero and negligible. And yet, the narrative that employers use “cheap immigrant labour” to undercut British workers remains wildly popular, and those who insist on it will often cite their “lived experience” as ersatz-evidence.
Meanwhile, when I lived in Germany, “lived experience” was most commonly brought up in connection with inequality. All the evidence showed that inequality was very moderate by
international standards, especially when bearing the size of the country, and the historical anomaly of the East-West divide, in mind. And yet, the vast majority of the public was convinced that inequality was out of control, and that it was getting worse all the time.
“Lived experience”, then, tells you a lot about the political priorities and obsessions of a country. Broadly speaking, the German public is about as obsessed with inequality as the British public is obsessed with immigration. I have no doubt that in other places, people will be obsessed with something else, and they will confidently assure you that you can’t trust the official figures on whatever that “something else” is, because their “lived experience” tells them otherwise.
Or at least, that’s what they would tell you, if you asked them. Which I won’t. Because I will be looking at spreadsheets instead.