If Irish economist David McWilliams is to be believed, overconfident fools are tampering with the global economy.

“If I were an American, Canadian or — God forbid — a British economist, . . . I’d come here today armed with graphs and charts and all that malarkey,” he said during the keynote session at the Canadian Investment Review’s 2023 Global Investment Conference. “But I’m an Irish economist. I’m here with a book of poetry by W.B. Yeats.”

In 1919, Yeats wrote the poem ‘The Second Coming’ to describe the world in the aftermath of World War I, which McWilliams read to the audience. “Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world. . . The best lack all conviction, while the worst are full of passionate intensity.

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“He could be writing about today, but this is from 100 years ago. At the time, economists were saying, ‘Don’t worry. We’ll go back to the gold standard. Germans will pay reparations, trading will start again and the world will go back to normal.’ . . . But Yeats was right. Four years later, Mussolini was in power, Stalin was ascendant and a little man with a silly moustache was leading his first putsch.”

According to McWilliams, the poet’s ability to see the future far more clearly than the economists of his day stemmed from his ability to think unconventionally. “People who are thinking unconventionally see around corners and come to different conclusions. We need them now more than at any other time and yet, do we value unconventional thinkers? Not really.”

This problem begins at school, he added, where children who memorize facts and write exams well are rewarded and pushed to succeed. After school, the children who were pushed to succeed are given the most important jobs. “What you have is a concentration of these types of people. . . . It’s very difficult for them to be wrong because it affects their status. That leads to overconfidence, which masks incompetence.”

The accumulation of linear thinkers has caused and worsened global catastrophes throughout history, said McWilliams, noting that, with the invention of central banks, their proliferation began taking its toll on global markets as well. “In 2008, all the economists in the world, the [U.S. Federal Reserve], the World Bank and the [International Monetary Fund] didn’t expect the crash.”

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The need for economists to broaden their perspectives has become particularly acute, he added, because interest rates are, for the first time in a long time, a factor in the global economy. “A 30-year experiment with interest rates has stretched market valuations and culminated in a bizarre situation where, up until a few months ago, the rate of interest was zero.”

During the decades of negligible interest rates, institutional investors became unable to appropriately judge the value of businesses, said McWilliams. “When interest is zero, it’s impossible to value anything so the person with the best story wins. . . . So you get these things called unicorns. And what is the flip side of a unicorn? A zombie — or, if you’re lucky, a mule.

“The problem is that my former colleagues at central banks believed they were instrumental in the war against inflation when they weren’t. Now we’re in a situation where the banks that lent out all this easy money to mules can’t get it back because it’s all been spent.”

Read more coverage of the 2023 Global Investment Conference.