If you’re bullish and you know it

The economy has been so bad for so long that public confidence in a recovery is low — half of what it was in (the economically unremarkable benchmark year) 1985. Without confidence in the economy, households have pared expenditures to the essentials, companies are delaying hiring and putting off investment in new lines of business, and banks are doing the bank equivalent of hiding their money under the mattress — all of which makes the economy bad, which produces low confidence, which makes the economy bad, etc., etc.

It’s one of the trickiest chicken-and-egg problems in the world. A good economy relies on confidence, and confidence relies on a good economy. In a very real way, confidence is the economy. How can we get back to a good economy if doing so requires confidence that the bad economy is preventing us from having?

You may not be surprised to hear that I have a modest suggestion: lie. I wrote once before that pretend confidence can lead to real confidence, and I don’t see why this situation is any different.

Starting immediately, work some offhand comments into your everyday conversation, to the effect that the economy is finally picking up steam. Mention, for instance, that you noticed a couple of long-empty office buildings have been leased, or that some unemployed Facebook friends finally found jobs just recently, or that you read somewhere that now’s the time to get that fancy new TV because sales are finally ramping up again and those big manufacturer discounts will be coming to an end. It won’t take much, because people are starving for good economic news and will devour morsels like these. And don’t worry that they’re not true. If enough of us start implementing this idea, pretty soon they will be.

Update, 8 October 2010: A week after I posted this, Planet Money ran a story about four economists who saved Brazil by — wait for it — getting everyone to lie.

One thought on “If you’re bullish and you know it

  1. Burt

    Bob,

    You have realized one of the most important “truths” in human psychology… PERCEPTION IS REALITY! It doesn’t matter whether something is an objective fact or a subjective belief – if it is believed to be true, it IS true for the believer (in fact, ALL facts are subjective beliefs [including this one] as they must be filtered through each subject’s worldview.)

    I have been using your modest suggestion for years and it has worked quite well. It’s not lying if you believe it’s true, it’s a projection of the reality one wishes to inhabit.

    In order for pessimists to justify their beliefs, they must experience the result of those “negative” beliefs (I knew [fill in the less than ideal occurrence] that would happen) – i.e., they win by losing. OTOH, an optimist will experience the results of his beliefs either as “Wow, that’s good – I knew everything would work out” or “Shucks – it’ll work out for the best eventually”. A belief that things will improve actually improves one’s outlook and the improved outlook is infectious. I wholeheartedly endorse your anti-Swiftian “Modest Proposal” and encourage every reader of this blog to implement your suggestions.

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