Zombie Hysterical Lunatic Government Banking Economy
PBS NewsHour: “The Hysterical Economy” by Paul Solman presents ‘A Commentary by Larry Kotlikoff,’ who writes:
Economists use different words to describe the economy’s ability to freak out and spontaneously contract based on nothing more than hearsay. Sunspot equilibria, multiple equilibria, coordination failure, and animal spirits (coined by Keynes) are all used to reference what FDR told us we had most to fear: fear itself.
Personally, I think The Hysterical Economy best describes this problem.
and Kotlikoff continues
Today we’re searching “fiscal cliff,” two words strung together by none other than Fed chairman Ben Bernanke that are both panicking the public and justifying yet further delay in dealing with our country’s enormous fiscal problems.
Let’s be clear. Absent collective panic, our economy will not implode
Isn’t that why sociologist Robert K. Merton came up with the indelible phrase “self-fulfilling prophecy”? “Hysteria” is an outdated, in fact sexist term. But in the context of the economy, it describes a deeply human tendency that cannot simply be wished (or counseled) away. And once you expect others to act “hysterically,” in either a boom or bust, you’d be foolish to buck the trend. Keynesians like Paul Krugman believe that a sudden spending shock to the economy should we vault over the fiscal cliff would spiral us down and down. He’s really predicting just the negative feedback loop that Larry has described.
Next recall that Congress removed “lunatics” from Federal Law. That meant bipartisan support for the idea that word choice matters.
What happens when you think of “lunatic” that is no longer useful for banking?
How has “fiscal cliff” frame the coming possibilities of panic? Even if it is a “fiscal slope”, even the slightest slow-down might cause mass panic and make the dig us down into a cliff. Or maybe more a like stampede. What could we call it so that people don’t panic?
Recall also, bipartisan support for the criminalization of chemicals when they were connected to bath salts zombies (and in that case the actual bath salt zombie attack had nothing to do with bath salts). And consider the military training to fight zombies. Is this framing our hysteria? Surely it is. That’s exactly the point for the CDC epidemiologists and survivalists. Our epistemic beliefs have behavioral effects.