Grand Illusion - Page 7

Why is this important? Combining the insights of psychology about how and in what ways we act irrationally and about the unconscious, emotional subtext of many apparently "rational" decisions with the hard, numerical realities of economics could have a profoundly positive impact on our society. Recently Time magazine ran the long piece "How Obama Is Using the Science of Change," describing some of the ways the new administration will bring behavioral techniques to public policy. The idea is to apply psychological knowledge of human quirks—inertia, shortsightedness, bias, herd mentality, and procrastination—to principles and regulations involving healthcare plans, retirement savings, energy, finance, home mortgage loans, and the like to encourage people to make better, more genuinely rational decisions. The goal isn't Orwellian manipulation, but gentle pushes in the right direction (a key book informing this movement is Nudge: Improving Decisions about Health, Wealth, and Happiness, by behavioral economist Richard Thaler and law professor Cass Sunstein, who happens to be the "regulatory czar" nominee in the Obama administration).

This discovery of psychology by at least some economists probably makes many therapists roll their eyes and shake their heads. "Are these guys only just figuring all this out now?" the question begs to be asked. These truths—that people are intrinsically emotional and not robotic, that we all want and need personal and social connection, and that what constitutes a genuinely human vision of the good life often doesn't coincide with quantifiable profit and loss calculations—are the standard working assumptions of every therapist who's ever practiced. So, finally, in the 21st century, at least some of the geniuses and money deities who presided over the current debacle actually seem to be listening to these strange, new ideas—and those who aren't seem to be keeping quiet about it.

Renewing the Commons

It seems particularly relevant these days that the word economics derives from the ancient Greek term meaning the management of the household or the family, and it still carries something of this meaning, though the "family" may refer to a school, a corporation, a public institution, a community, even a whole nation. An "economy" in this sense is very much a social organism, a way of life shared by millions of people, which depends as much on public and collective resources as on individual enterprise. In fact, there couldn't be any individual enterprise were it not for the public foundation—legal, educational, military, and monetary systems, regulatory agencies, social safety nets, police, firefighters—that allow it to thrive. Without this public network, we'd probably still be living in isolated little tribes bartering with the members of other tribes—when we weren't killing them and being killed in turn. Ask Iraqis or Afghanis how much individual "freedom" or opportunities for individual entrepreneurship they have without public services, an effective police force, or government accountability.

This isn't to cast too many aspersions on rugged individualism—in this culture, at least, we all feel our own sense of individual selfhood as the foundational rock of our identity. And, as Americans, we probably have in our collective DNA the stubborn belief that we have an inalienable right to do and be whatever we want. But, paradoxically, free market fundamentalism and the cult of the completely rational Homo oeconomicus have become increasingly irrational, as well as antisocial. It's becoming clear that the success of the market, the growth of GDP, absent anything else, may be economically "good" in a narrow way, but bad overall for the society.

Selling more cars produces more pollution and hastens global warming; a huge market in junk food makes more people diabetic and obese, which requires them to purchase more health care. Overspending, overbuilding, and overconsuming are driving our society and our environment off a cliff, but don't yield the intended satisfactions. Research indicates that, after a certain modest level, and factoring in momentary pleasure, novelty, and keeping up with the Joneses, these activities actually don't make us any happier personally.

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