Puddle, the arrogance is and isn't justified. It's true that smart people are smart and can justifiably feel happy about their ability to solve tough problems, as they surely can in whatever field of endeavor they may happen to have studied.
However, the arrogance isn't justified when it extends beyond what their analytic abilities actually support, and this is a _frequent_ mistake of smart people. They get so used to being right because they have analyzed things well that they forget and just think they're right because they're smart.
Just as bad (if not worse), they see the enormous success of intellectual endeavors in the last few centuries and wrongly think that every problem is just as amenable to solution by intelligence on the same time frames. (Hopefully it's clear that I'm badly overgeneralizing and oversimplifying, but you can pick out the more complicated points I'd make from the narrative). The real world, though, is vastly more complex than the isolated and often artificial problems that have yielded so spectacularly to analysis in science; economics is absurdly more intricate than physics, and absurdly less predictive. If I had to bet my life on Maxwell's equations or a modern economic theory being essentially exactly correct, the choice would be easy. But when solving things by analysis is your way of life, it can be all too easy to forget this, and arrogance is no longer justified when you're blundering into problems far beyond your abilities to actually solve. (See Paul Dirac's bizarre Nobel acceptance remarks for a rather elementary and amusing example of this).
Similarly, I think the evidence is scant that intellectuals know a whit better than the average man how he should manage his life, so any belief to the contrary is simply misplaced arrogance. (For non-misplaced arrogance, I would probably use the word pride instead).
Your gentle complaint about my non-citation is fair. Feel free to PM me if you want more details of the town in question. I learned the history personally, viva voce, from current professors there. I'm sure there are written sources, but I couldn't direct you to them. You're quite right, anyway, that it was a case of bad theories. But at the time they thought the theories were good. That which led them to believe this over the din of common voices clamoring their anger is precisely the arrogance I am referring to, and I don't think it's justified in the least, then or now.