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“It suddenly struck me that that tiny pea, pretty and blue, was the Earth. I put up my thumb and shut one eye, and my thumb blotted out the planet Earth. I didn't feel like a giant. I felt very, very small.” – Neil Armstrong (1930-2012)

Fresh Reads from the Science 'o sphere!

Friday, January 23, 2009

Pretending To Believe

Here's a question for you:

If the United States of America is predominantly a nation of believers, how can they suffer from a "crisis of confidence"?

Indeed this enormous economic bucket of shit that we are going through right now is purely a social phenomenon, with no exogenous causative factors like poor harvest, infectious disease or a one-million-tonne meteor dropping in from outer space.

Everybody knows that this recession will eventually end.

Everybody knows that this recession provides a rare opportunity for huge gains.

Yet nobody seems to believe that she/he will be the one to emerge unscathed, thereby worsening the recession.

Sounds like a subsystem conflict of interest to me.

It's a positive feedback loop - the market index falls, which spooks some investors into pulling out causing the index to fall further, which then spooks more investors to pull out...

Some banks fall and other banks start to distrust each other and even their own customers. They make it harder for businesses to obtain credit, which causes businesses to close and the unemployment rate to rise, creating a climate of uncertainty which discourages consumer spending, causing even more businesses to close.

And thus the USA drags everybody screaming and kicking onto a slow train to hell.

It shouldn't have happened.

The USA is supposed to be a nation of patriots and believers. If they really believed that everything is going to work out fine because they have divine support, then it is impossible for the crisis to spiral into such depths.

That immediately brings to mind our old friend Pascal's Wager.

Pascal failed to take into account the possible negative consequences of pretending to "believe".

Unfortunately, the Gods have spoken and totally kicked his ass.

This economic disaster has made it abundantly clear that pretending to believe is NOT the same as really believing.

There are no two ways about this.

A true believer could not have made a run on the market. How can someone profess true faith but yet put in a stop loss, "just in case"?

Putting in a stop loss immediately indicates that the person has no faith in his decision at all.

Anyone can say that they believe in anything. Under normal conditions, this can be very beneficial to the person to help build social consensus and gain social rank.

But when the push comes to the shove, many of these people will simply abandon what they have pretended to believe and act upon what they really believe.

They will sell off all their shares, they will engage the services of a gay hooker, they will inject insulin into their bloodstream and they will use stem cell derived therapies to save their lives.

Hypocrisy? An integral aspect of human society.

This current crisis of confidence is a social problem, and social problems require social solutions.

As you can see, I'm a fan of double-edged swords (there are plenty of these in biological systems eg. sugar, glutamate, blood clotting pathway, tumour suppressor proteins...).

If greed was the problem that led us into this mess, then greed (of a different group of people) will be the solution to lead us out of it.

People who pretended to believe in growth while preparing for a decline were the source of this disaster; people who pretend to believe in decline while preparing for growth will be the source of economic recovery.

It's difficult for greed to go out of fashion - the consequences of lacking this driving force in a cruel, competitive society are severe. The benefits, on the other hand, are immense if not a little transient.

But life is transient and people have short memories.

In this way - greed, faith and hypocrisy will persist for many generations to come.

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