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View Diary: Morning Feature: Animal Spirits, Part I - Irrational Economic Actors (72 comments)

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  •  Induced "magical thinking." (1+ / 0-)
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    Picking up on an idea below, our irrational response to those changing fundamental economic conditions may have been a case of induced magical thinking.  Some recently declassified studies and reports from the late 1940s suggest that at least some top officials and economic advisors recognized that World War II dealt the U.S. a sweet economic hand, and advocated policies to seize on and maintain those advantages.

    Ordinary Americans heard a different story, wherein our postwar boom reflected an inherent cultural and political superiority.  Many elected officials still tell us that story, e.g.: "Americans are the most innovative and most productive workers on earth."

    Conservatism has deliberately induced magical thinking, contrasting the boom times of the 1950s with the slowed economic growth after the civil rights era to suggest that if we could just return to a society based on white male supremacy, we'd get the 1950s economic boom back.

    This thread shows that progressives have our own version as well: if we return to the economic policies of the late 1940s and 1950s, we'll get the same results again.  One key difference between economics and poker is that in poker you know when you've been dealt a new hand.

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