Psychology of Acting to Stabilize the Economy

It is critical to give careful attention to normative rules of rationality and problem solving here.

It is clear to all of us that we face a condition of uncertainty that is being described as a crisis of confidence in the financial, credit market.

Uncertain conditions lead to irrationality of what psychologists call an availability heuristic, or what a person is likely to verifiably and reliably know to be the problem and an appropriate solution.

For the most part, the public generally feels that problems are too complex and largely out of its hands anyway. It is exactly what an elitist form of government and model of power intends to achieve. Do not succumb to this psychological modeling in which an elitist bias is falsely described as the collective will.

When we make inferences from the available evidence, for example, we tend to reason with representative samples, like a stereotype. There is a tendency to mistake the more generally inclusive properties as being more probable than the more specific.

In the case of our economic stability, we generally infer that "We The People" is representative of macro economic decisions made by elits. While elits are included in the concept of The People, their exclusive, specific self-interest is falsely inferred to be the General Welfare because it is the result of a generally inclusive public process.

In the same way, do not judge the veracity of economic analysis in theory or practice by representative sample and similarity. Just because the wealthy argue the general health of the economy is represented by their economic well being, it is not reasonable to infer that policies and programs that promote their specific welfare is the General Welfare. It is a mistake to reason that the more inclusive property is more probable than the more specific: that passing the bailout bill is a more probable positive event because it includes the extension of credit to everyone.

It is unreasonable to infer that the harm to The People will be more inclusive and extensive if the stabilization legislation is not enacted. This is called the anchoring effect. The harm is overstated to determine the level of acceptance by suggestion of an unconfirmed hypothesis based on prior beliefs and experiences (the harm being experiencing now despite belief in the policies promised to be beneficial).

In order to reasonably assess the risk, it is necessary to determine if the expected value of the gamble is equal to the sure thing. We all tend to predictably avoid a dead loss and assess the risk as reasonable by accepting a lesser loss to avoid a sure loss. By being risk averse in a condition of high uncertainty with dire consequences, accepting the stabilization act will avoid the possibility of a sure loss and keep the possibility for a stabilization when the probable values are equal and status quo.

By intuitively miscalculating the probable odds, there is a dread factor aasociated with the unfamiliar. There is a tendency to calculate risk with the most available impression of the odds and the easiest assessment. While we all know that overextending credit leads to bankruptcy, it seems that not bailing out Wall Street will be the more harmful probable event because it would be more catastrophic.

To preserve unity and harmony of the nation toward the conservation of traditional means and ends of the power structure (the elitist model), it is necessary to instill the value of us all being in crisis together, and a process of group thinking. Critics of the stabilization act should be self-censored in the public interest so that a lack of criticism is assumed to be the collective will of a popular consent.

Instilling the sense of the necessity for a group think also minimizes the zero-sum properties of the negotiating process. It is necessary for the outcome of the stabilization act not to appear zero-sum in order for it to have proper legitimacy of public authority, avoiding the appearance of conflict resolution instead of a consent of the governed.

The perceived inequity of the stabilization act resulted in some very loud protest of The People, and there is a significant element of cognitive dissonance built into passage of the bill. Socializing either a benefit or a detriment conflicts with belief in the operation of markets, free or not. A change must be made to accomodate what is believed, or what is to be done.

The change needed here to eliminate the dissonance is to choose freedom.

Let it be a free and unconsolidated marketplace in priority.

Let it be a legitimate collective will of The People appropriately rewarding the righteous and the unrighteous toward a peaceful and prosperous body politic that the dictates of power can only crudely approximate.

Very best wishes.