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What to Expect When the Evolution Bubble Is About to Pop


There may be some lessons about the evolution debate in a recent Wall Street Journal post, "When does a bubble spell trouble?" The article focuses on the stock market, but its general purpose is to help people tell when something is overvalued, and there's a "bubble" that's going to pop. It goes something like this.

First, people buy into an idea (say, stocks or maybe neo-Darwinian evolution), and the idea grows in stature in the public's eyes.

Then, some big shots who are part of the establishment begin to think that maybe the idea is overvalued -- i.e., maybe the idea is not as good as many people now think. A few prominent folks then back out of it. In the context of stocks, that might be people like Warren Buffet selling off because they believe certain stocks are overvalued, and they foresee a crash. In the field of evolution, it would be prominent scientists and scholars like Thomas Nagel, Jerry Fodor, or Lynn Margulis, declaring that they have doubts about Darwinism.

At first these big shot defectors are given some respect (e.g., Margulis). But then, many rank-and-file proponents of the original idea (e.g., in stocks, these would be investors; in evolution, they are scientists who have invested their own most precious capital, their own lives, in the idea) respond to the defection by "ridiculing" or "demonizing" the big shots who broke ranks. The investors fear that thanks to the mavericks, their investment is in peril and they react accordingly, in a fury. This is exactly what we saw with Thomas Nagel, Jerry Fodor, and many others. In essence those within the establishment fear attack from those who have broken rank.

According to the article, when you get to this stage, you should beware because the bubble is close to popping:

Another sign to watch for: In every bubble, there are always people trying to burst it by declaring that financial assets have become overvalued. At first, Prof. Goetzmann says, such skeptics earn respectful attention. But eventually, investors turn on them with anger and ridicule.

Just think of Warren Buffett, who in 1999 and early 2000 was widely derided as "a dinosaur" and "out of touch" for his refusal to buy technology stocks. When I asked him in January 2000 how he felt about that, Mr. Buffett replied calmly: "I know what will happen. I just don't know when." Two months later, the Internet bubble burst.

In investing, as in life, ridiculing the people who disagree with you is a fairly certain sign that you don't have the facts on your side.

"Once people buy in, they start to discount evidence that challenges them," Prof. Goetzmann says. "There seems to be a hinge point where investors go from thinking about quantifying economic trade-offs to a kind of binary framework where anybody who disagrees with them is demonized," he says.

That is when a bubble becomes trouble.

Is this where we are with Darwinian evolution today? The ridicule directed at Darwin-dissenters has reached a fever pitch, seeking as it does to compensate for a lack of good pro-Darwin arguments, but I can see how the tendency to demonize skeptics could grow even more extreme. Meanwhile there is the constant, nervous drumbeat of reassurance that there are no weaknesses whatsoever in Darwinian evolution, and nothing is wrong with the theory that couldn't be fixed by minor adjustments around the edges. This sort of behavior is also symptomatic of an impending burst, as the Wall Street Journal explains:
"The time to worry is when people are using all kinds of rationalizations as to why it's not a bubble."

None of this means, of course, that today's stock market is cheap; by most measures, it is at least slightly overvalued. But the fact that you can't open a newspaper, watch financial television or visit an investment website without encountering a commentator worrying about a bubble is probably encouraging.

And the fact that market pundits can declare that this is a bubble without being insulted is almost certainly a good sign.

When hearing someone call the market a bubble makes you want to call the person an idiot, that is when you should ask yourself whether in fact the idiot is you. We probably aren't there -- yet.

In summary, what do we see?

  • Strong emotional reactions directed at those who say neo-Darwinism is overvalued? Check.
  • Constant, even dogmatic reassurances that evolutionary theory is perfectly fine, and isn't in a "bubble"? Check.
It sure sounds like we are traversing a similar arc in the evolution debate that stocks traverse in economic bubbles. Now, the question must be asked: How much longer until the bubble pops?

Image: Floor of the New York Stock Exchange, 1963/Wikipedia.