A great generalist

I am making my way through to the end of Poor Charlie's Almanack, the collection of the writings/speeches of Charlie Munger. In Talk 11, he returns again to criticism of academic psychology. Sort of. Really he just picks a straw man over which to riff as he muses on what he's learned in his time on earth.

But why, one must wonder, does he keep coming back to psychology as a field, as opposed to, say, investment theory, which is more pertinent to how he's earned his bread in the world? To be sure, he does also spill some ink attacking the latter. I believe he just wants to find a set of specialists to attack so as to promulgate his belief in broad, interdisciplinary generalism, and also because he believes in focusing on fundamental disciplines, and he believes that understanding psychology, or how and why people think and behave as they do, is fundamental. Almost certainly he has said that five times and I've just forgotten it because I don't remember everything I read and hear.

But there's one paradox deep within Munger's thought. He cites Adam Smith's example of the pin factory and the power of specialization, in which twenty people handling different aspects of producing pins in an 18th century British pin factory are able to produce a very large number of pins in a year (hundreds of thousands), whereas the same twenty workers performing all the tasks in producing pins could only produce a few thousand.

The world is like that. It needs both specialists and generalists. In fact, the more fine-grained the articulation of a supply or value chain, the higher the aggregate productivity. That's why cities are such productive economic entities, they allow people to specialize.

Now, in the coronavirus crisis we are learning a lot about the risks of dispersed supply chains and the relative value of efficiency vs. resiliency. It is efficient to have China produce all our N95 masks, but there are risks associated with it, etc. But, by and large, I am glad there are specialists. We need virologists, epidemiologists, etc, to get us through this, and lots more specialists in functions we're not thinking about. We need management consultants who can quickly write training materials and procedures to train people to process SBA loans under the rules in the new stimulus bill.

But we also need the generalists who can pull it together, the Andrew Cuomos, Mandy Cohens, and all those who see a need (fund, produce and otherwise source masks!) to get through this. Also the truckers, UPS drivers, and the people who stock warehouses and harvest food.

So I think sometimes Munger may go overboard attacking specialists. But God is the way that he does it interesting, and ultimately not mean-spirited.