Saving us from ourselves

[we vs us]

Heard an outstanding segment on NPR this afternoon about some of the ideological underpinnings of Obama's approach to fixing the economy.  If you have 10 minutes to read/listen it's well worth your time: 

http://www.npr.org/templates/story/story.php?storyId=104803094

In a nutshell, some of his closest advisors are behavioral economists, a fairly new discipline that challenges one of the central assumptions of classical economics . . . namely that, all things being equal, individual actors in the economy will pursue self interest in a rational manner.  Behavioral psychology assumes the opposite:  we are fallible, irrational actors, often in pursuit of things that don't make logical sense, but which will make us feel good, often in the short term. 

If true, the rhetorical idea of the nanny state will need a thorough rethinking.  Meaning that free will in an economic system-- which is potentially as destructive as it is constructive -- has to be balanced with stronger nudges in the right direction by the government, which is the only entity in the system capable of keeping things moving towards "the good." 

So:  people/companies aren't only acting in self interest, they're doing it irrationally, sometimes poorly.  The result is the massive malfunction that's our economy.  Your savior?  The government!

Gaspar? 

[FOTD]

Take a ride on how much money can we print until the presses break express......

we are sooooo screwed.

POTUS OBAMA is in a no win situation.....

[Conan71]

Heard an outstanding segment on NPR this afternoon about some of the ideological underpinnings of Obama's approach to fixing the economy.  If you have 10 minutes to read/listen it's well worth your time: 

http://www.npr.org/templates/story/story.php?storyId=104803094

In a nutshell, some of his closest advisors are behavioral economists, a fairly new discipline that challenges one of the central assumptions of classical economics . . . namely that, all things being equal, individual actors in the economy will pursue self interest in a rational manner.  Behavioral psychology assumes the opposite:  we are fallible, irrational actors, often in pursuit of things that don't make logical sense, but which will make us feel good, often in the short term. 

If true, the rhetorical idea of the nanny state will need a thorough rethinking.  Meaning that free will in an economic system-- which is potentially as destructive as it is constructive -- has to be balanced with stronger nudges in the right direction by the government, which is the only entity in the system capable of keeping things moving towards "the good." 

So:  people/companies aren't only acting in self interest, they're doing it irrationally, sometimes poorly.  The result is the massive malfunction that's our economy.  Your savior?  The government!

Gaspar? 

All fine and good if you assume that government is entirely altruistic, or a neutral referee in the economy which it is not because government is run by individuals, not a machine or computer.  There are 537 elected officials in Washington looking out for the interests of their largest campaign contributors.  There's a whole bureaucracy staffed by a few million minions looking to keep themselves in a job with great benefits.

The President and legislators must act in the self-interest of high approval ratings and to retain power when it comes up for vote again.  So long as retaining power and partisan politics is the #1 priority of politicians, they are the least-equipped to steer the economy in an altruistic manner.

I agree that if you could throw politics out of the equation, government could be the solution.  You and I both know that's not reality though.

[Nik]

Here's an article from Time magazine on how Obama used behavioral science to help win the election: http://www.time.com/time/magazine/article/0,9171,1889153,00.html

[Gaspar]

Too bad Behavioral Science is no match for Real Economic Theory.

[Nik]

Too bad Behavioral Science is no match for Real Economic Theory.

to say human behavior has no effect on economics is ridiculous. its a merging of two related fields.

[Gaspar]

Yes economic numbers are swayed by emotion, but at the end of the day emotion creates dependency. 

Seekers of security usually rely on the product of more logical minds for sustenance, or they perish at the feet of silver-tounged politicians.