If the gift of youth is originality and boldness, the gift of experience is what JK Galbraith called "the immunising memory"—the caution that follows from living through painful events. In a reasonable world, the boldness of youth would be balanced by the wisdom of experience, so that society neither explodes in a flurry of incompatible revolutionary ideas nor ossifies in a frozen consensus. It's when the balance fails that things go wrong.
It failed on a truly grand scale over the last couple of decades. First there was the dotcom bubble, a modern tulipmania, followed by two young leaders, aglow with hubris, navigating confidently into a disastrous war, sure that history was on their side. As a communal blunder, the financial crisis tops either of those. So many of us were part of it, willing to swallow our incredulity at the crazy rises in asset values. We didn't really understand it—but nobody wants to be the guy at Decca who didn't sign the Beatles, so we all kept quiet. When you're told by a couple of Nobel academics that they've finally cracked how the markets work and it looks something like this:
where
you do tend to feel a bit outclassed. Only a few old fogeys like Warren Buffett refused to jump aboard.
These failures had at their base an inflated faith in techniques and technologies, and a lack of interest in lived experience. The warmongers thought their weapons were so smart they couldn't lose, and the financiers were reassured by the mystifying authority of those equations.
So what's the good news? A failed experiment can be just as useful as a successful one. Lessons about free lunches, groupthink, fundamentals, realism, instinct and experience are being learned—and they won't be forgotten for at least a generation. This will be a truly immunising memory. I therefore look forward to a good long period of better-balanced governance. And more respect for old fogeys...
