The Cult of Confidence

Yglesias takes issue with David Ignatius’ invocation of Warren Buffett as an iconoclast in the debate over who to appoint to head up the intelligence services, writing:

I just think it says something interesting (read: bad) about American society that having gotten really rich is thought by many to ipso facto qualify Warren Buffet for a wide range of incredibly complicated and important tasks, including running the United States Intelligence Community. Buffet doesn’t even particularly seem to have gotten rich through management prowess. Rather, he’s either been incredibly clever in his investment decisions or else incredibly lucky or some combination of the two. And you see this sort of thing all the time.

Ezra responds:

Meanwhile, one of Buffett’s famous decisions was to sit out the tech boom because he felt the fundamentals to hard to understand, and thus too hard to predict. “I think it’s much easier to predict the relative strength that Coke will have in the soft drink world than Microsoft will in the software world,” Buffett said. “That’s not to knock Microsoft. If I had to bet on anyone, I’d bet on Microsoft. But I don’t have to bet.” In other words, he’s built his career on the idea that you should have specific knowledge of your particular area of labor, and when you don’t possess that expertise, you should sit the subject out. His success is a stark repudiation of the idea that brilliance in business is broadly transferrable.

Which is to say that, yes, Buffet has enoyed a large amount of luck, but he’s done so in part because he’s avoided a lot of risky ventures, especially in areas he knows little about. And this reminds me of one of my pet peeves of the times; the idea that confidence is in and of itself a virtue.

I think I blame it on the prevalence of sports metaphors in the way we frame our understanding of things. And while it may be true that it’s hard to win a football game if you don’t think you have a chance, believe it or not life doesn’t imitate sports. Sports are very much zero sum games. To the extent that one team must win and one team must lose, your position in the grand scheme of thing (i.e. your record) inevitably changes each game. The winner leaves better than they came in, the loser leaves worse off. And if you don’t play, your position still changes relative to everyone else. But life doesn’t work that way, unless you define yourself based on how you relate to everyone else. If Buffet had poured a lot of money into Microsoft when they started, he’d have made an obscene amount of money. But lacking much knowledge about the industry, Buffet decided that the odds were just as good, if not better, that he’d make a bad decision and dump money into a company that would quickly tank, in which case he’d have lost quite a bit of money. And at the end of the day he just stayed out of things altogether, and his lack of confidence might have “cost” him a bunch of money in the abstract, but he’s still a fabulously wealthy man based upon a lifetime of similar good decisions about his money.

The pinnacle of this confidence worship seems to have been Sarah Palin’s VP candidacy. I think nearly every profile done through the campaign, and probably every defense as well, made note of the fact that Palin was very confident, and that’s certainly hard to argue with. Palin was confident that she was ready for national politics, that she could handle the scrutiny of a national campaign, and that she could learn the things she needed to learn in record time. But obviously she was wrong, and the consequence of that is that she’s now a national punchline. It’s obviously hard to say what she could have done by not taking the VP nomination, but it’s much more likely (which is to say there’s a better chance than none) that she’d have some real national viability had she not taken the leap before she was ready. Maybe that does denote a certain lack of confidence in oneself, but it’s also smart. And obviously abundant confidence didn’t really serve Palin well.