Yesterday’s WSJ offered an extensive article with the following title:
The Mystery of Missing Inflation Weighs on Fed Rate Move: U.S. near full employment, but inflation hasn’t risen as predicted; Fed officials can’t figure out why
I believe the period in history that we are experiencing is one of great change, and that some of the truths that we accept today will not hold up forever. Some of the economic theories that have been true in the past may not be true in the present. I have discussed this before in these pages, so I will not repeat it here, but I think it will be worth your time to consider some of the books which have informed and influenced my views. Following is some information concerning a few such books and some of the interesting information from them. There is much more, but for now a brief discussion of truth.
In the early 1970s I read a recently published book as required to complete one of my college courses. The book, Future Shock was the first of a series of books written by Alvin and Heidi Toffler concerning the acceleration of change during coming years as a result of increasing knowledge. It is a fascinating book, as are those which have followed it. (You can view brief bios, etc. here.)
The most recent book in the Tofflers’ series is Revolutionary Wealth. In this book the authors continue and advance the thesis proposed in their book The Third Wave, which is that there have been two previous major economic systems, namely agricultural and industrial, and we have now moved into an economy based on knowledge. (Of course, knowledge played a part in previous systems, but not to the extent present today.) One interesting point made in the book is that not all “truth” is actual truth. And not all truth is ALWAYS true. Some truth is true for a time, but becomes obsolete. For example, in 1990 Japan was the second largest global economy. This is no longer true. And, for more than two hundred years Europeans “knew” that tomatoes were toxic to humans. Likely never true.
So, in a global economy where wealth is based on knowledge it is important to find truth. The Tofflers identify five truth filters that are commonly used. They are as follows:
Consensus: A lot of what we call truth is assumed to be because of consensus. It is conventional wisdom. Everyone “knows” X to be true, therefore, it must be true. We absorb consensus truth from family, friends, co-workers and the surrounding culture, usually without thinking twice.
Consistency: This criterion is based on the assumption that if a fact fits with other facts regarded as true, it too must be true. Detectives, lawyers and courts lean heavily on consistency as the primary test of a witness’s truthfulness.
Authority: In our daily lives a great deal of accepted truth is based on authority – secular as well as divine.
Durability: Here the test of truth is based on age and durability. Has the truth stood the test of time. Is it tried and true, or is it new, hence questionable?
Science: It is a process, often messy and non-sequential, for testing ideas. The ideas must be testable, at least in principle, and, some would add, falsifiable. The tests involve observation and experiment. Results must be reproducible. Knowledge that hasn’t met these tests is not scientific. Even the most entrenched scientific findings are at best partial or temporary truths and hence uncertain.
I refer to the Toffler books here because I think their research brings to light some important perspective concerning life and wealth in the 21st century. Many of the predictions made in their books have proven true and are relevant to life decisions we make in these changing times. Likely, a fair amount of the “truths” that we have believed will be found incomplete at some point. This is good, but can be stressful.