Anthropologist Robin Dunbar tried to find out how many people the typical person "really knows." He compared primate brains to social groups and published his findings in papers with titles like "Neocortex size as a constraint on group size in primates."
Dunbar concluded that the optimum number for a network of human acquaintances was 147.5, a figure which was then rounded up to 150 and became known as "Dunbar's Number." He found groups of 150-200 in all sorts of places: Hutterite settlements. Roman army units. Academic sub-specialties. Dunbar concluded that "there is a cognitive limit to the number of individuals with whom any one person can maintain stable relationships."
150 or 200 people form a human being's social universe. They shape his or her world view, his or her world.
That means that 147 people can change the course of history. Not necessarily the same 147 people, of course. But the small social groups which surround our world's leaders have extraordinary power.
Economist Simon Johnson mentioned Dunbar's Number last week in a column about incoming Treasury Secretary Jacob Lew and the new SEC chair, Mary Jo White. "The issue is not so much their track record," Johnson wrote, "because neither has worked directly on financial-sector policy issues; it is much more about whom they know."
"If most financial experts you know work at, for example, Citigroup," added Johnson, "then you are more likely to see the financial world through their eyes."
Lew is a former Citigroup executive. That mismanaged megabank is also the former corporate home of ex-Clinton Treasury Secretary Robert Rubin, and the current home of Peter Orszag, formerly President Obama's OMB Director. For her part, White went from prosecuting criminals to defending Wall Street bankers. That was also Attorney General Eric Holder's profession before he was appointed to his current position.
These are the people who surround our President, our Senators, our Representatives. They talk to them every day. They say, This is how the world works. They say, Everybody knows these things.
Their European counterparts saw the effects of austerity on the economies of their Union: Unemployment up. GDPs down. Even the deficits, which austerity was meant to reduce, have been rising as the result of these unwise cuts.
But, they say, we know Angela Merkel. We know George Osborne and Christine Lagarde. We trust their judgement. How did the predictably disastrous plan to tax guaranteed savings accounts in Cyprus get approved? It's not hard to imagine: "Everybody we know" thought it was a great idea.
That's how it works here in the US, too. Larry Summers, Alan Greenspan and Robert Rubin were spectacularly wrong about everything: deregulation, the housing bubble, government spending, everything. But we know them.
Nobel Prize-winning economists like Paul Krugman and Joseph Stiglitz keep explaining why more stimulus spending is needed. But we don't know them -- not the way we know Larry, Alan, and Bob. Same for Simon Johnson, or William K. Black Jr., or Robert Johnson, or any of the other economists we don't know very well.
And when we don't know someone very well, their criticisms make us uncomfortable.
Bill Clinton's "Third Way" triangulation led to welfare "reform" that's proven disastrous. His Wall Street deregulation ruined the economy, and his brand of old-fashioned pseudo-centrism is out of touch with today's political and economic realities. But we know him.
Bill Clinton doesn't make us uncomfortable at all.
Investigate Jamie Dimon, or Lloyd Blankfein, or Robert Rubin? But they were our clients, and will be again once we leave government. Investigate them? We know them.