Politicians have chauffer knowledge.
Jerome Powell has Planck knowledge.
What’s the difference?
As the fable goes, when Max Planck won the Nobel Prize in 1918 for basically discovering quantum physics, he toured Europe giving lectures on the topic.
After 6 months, his chauffer proposed that he deliver the next day’s presentation to give Max a break. After all, the chauffer had heard the lecture over 200 times and knew it by heart.
So the next day, the chauffer pretended to be Max Planck and gave the lecture word-for-word while Max stood in the back with the chauffer hat on.
During Q&A, one of the attendees asked a particularly difficult question to which the actual chauffer (posing as Max) answered, “That question is so elementary that I’ll let my chauffer in the back answer your question.”
Charlie Munger said that that “chauffer knowledge describes every politician in our country.”
This is never as apparent as it is when Congress grills Jerome Powell during Fed testimonies like over the last two days.
Forget the grandstanders. I’m talking about the politicians actually trying to ask insightful questions.
Bless their hearts, but it’s readily apparent to anyone in my industry that they lack even the most basic knowledge of economics.
Chauffer knowledge is when you’ve read about it, but haven’t done it. When the unexpected happens, you’re a deer in the headlights.
Planck knowledge is when you’ve read it AND done it. You’ve done it enough times that when the unexpected happens, you can make instinctive adjustments drawing from your well of experience.
I’ve got Planck knowledge in financial planning. I can gather all the info I need about you in 15 minutes and in another 15 minutes recommend all the moves you need to make.
Not because it’s easy, but because I’ve been doing this for so long.
Where I’ve got chauffer knowledge is…
Ordering a bottle of wine at a restaurant…
Looking under the hood of a car…
Designing a website…
Chauffer knowledge is okay, as long as it’s not with something as important as your health or finances.
Take a minute to see where you’re applying chauffer knowledge instead of Planck knowledge in your life.
And if you find any politicians where you should see a Jerome Powell, stop and go find your Jerome Powell.
