Marginal Revolution

The Political Psychology of Stimulus

David Hirschleifer writes:

Regardless of who's right on the economics, clearly the ‘stimulus' language captures the pro side perfectly, and the con side not at all. Indeed, the term immunizes the mind to opposing evidence. After a cup of stimulus from Starbucks, if I'm still drowsy, by definition I need another jolt.

....Opponents have lots of metaphors they could choose from. Instead of the image of rousing activity, there could be the economic ‘suppression plan,' ‘deadweight package,' or ‘growth-retardant system.' For alliteration, there's ‘prosperity Propofol.' To honor the frugality of government, how about ‘resource-flush scheme,' ‘wealth dump,' or ‘porkapalooza'? As for mechanical metaphors, there's ‘recovery off switch,' ‘opportunity crusher,' and ‘investment choke button.' For the computer savvy, how about ‘stagnation drag and-drop-down device,' or ‘system freezer'.

In recognition of our gleaming new infrastructure, there's the ‘road-to-Hell-paving project'. And to celebrate the new Star Trek film, how about economic ‘stasis-field mechanism', ‘enterprise eliminator,' 'job vaporizer,' or just plain ‘black hole'?

So, here's a political psychology question. Why did opponents gullibly swallow the stimulus terminology, and thereby defeat? Any ideas?

Thanks for your interest

It's been great (#1 Business book on Amazon yesterday) and I'm working to "fill the orders" as fast as I can.  If I'm not sending you your chapter *now*, it is because a) I am blogging, b) I am sending someone else the chapter, or c) I am getting on a flight.  I will get to it, it's also very good to hear from you all, and keep the orders coming.

If you're having trouble clicking through to other book outlets, the link for Barnes&Noble.com is here, the link for Borders.com is here.

Understanding politics

I was wondering why there had been so much talk recently of ramping up antitrust attacks on Google.  Now I know.  This is the way politics works.  See my letter on antitrust protectionism (pdf) if you need more.

John Calvin as behavioral economist

Tomorrow marks the 500th birthday of John Calvin.  If you read John Calvin you will find a great deal of what we now call behavioral economics.

He wrote about non-convexity:

For there is no medium between the two things: the earth must either be worthless in our estimation, or keep us enslaved by an intemperate love of it.

Here is one reason why there is "evil" in the world:

Whatever be the kind of tribulation with which we are afflicted, we should always consider the end of it to be, that we may be trained to despise the present, and thereby stimulated to aspire to the future life. For since God well knows how strongly we are inclined by nature to a slavish love of this world, in order to prevent us from clinging too strongly to it, he employs the fittest reason for calling us back, and shaking off our lethargy.

Adam Smith and David Hume were influenced by Calvin:

If we see a funeral, or walk among graves, as the image of death is then present to the eye, I admit we philosophise admirably on the vanity of life. We do not indeed always do so, for those things often have no effect upon us at all. But, at the best, our philosophy is momentary. It vanishes as soon as we turn our back, and leaves not the vestige of remembrance behind; in short, it passes away, just like the applause of a theatre at some pleasant spectacle. Forgetful not only of death, but also of mortality itself, as if no rumour of it had ever reached us, we indulge in supine security as expecting a terrestrial immortality.

It is odd to call someone so famous an "underrated thinker" but indeed Calvin is.  You'll find the whole text of the Institutes of Christian Religion here; it makes for good browsing.

This chapter is John Calvin imitating Robin Hanson.

Buy the book here on Kindle for 99 cents.

Markets in Everything: Dead and Live Souls

Wikipedia describes the history behind the plot of Gogol's Dead Souls:

The [Russian] government would tax the landowners on a regular basis, with the assessment based on how many serfs (or "souls") the landowner had on their records at the time of the collection. These records were determined by census, but censuses in this period were infrequent, far less so than the tax collection, so landowners would often find themselves in the position of paying taxes on serfs that were no longer living, yet were registered on the census to them, thus they were paying on "dead souls."

It is these dead souls, manifested as property, that Chichikov seeks to purchase from people in the villages he visits; he merely tells the prospective sellers that he has a use for them, and that the sellers would be better off anyway, since selling them would relieve the present owners of a needless tax burden...

Chichikov's macabre mission to acquire "dead souls" is actually just another complicated scheme to inflate his social standing (essentially a 19th century Russian version of the ever popular "get rich quick" scheme). He hopes to collect the legal ownership rights to dead serfs as a way of inflating his apparent wealth and power. Once he acquires enough dead souls, he will retire to a large farm and take out an enormous loan against them, finally acquiring the great wealth he desires.

All this leads Marina Gorbis guestblogging at Boing Boing to note: 

So every time I see another article or an ad about how to acquire more followers on twitter, friends on Facebook, or otherwise collect more "souls" for money, fame, or reputation, I start thinking about Chichikov. He did come to an ignominous end, finally fleeing town. Makes me wonder.