From the FT:
An influential Democrat who was also one of the world’s top-ten, highest-paid hedge fund managers last year thinks he knows which book is at the top of the White House reading list this spring: Animal Spirits, the powerful new blast of behavioural economics from Nobel prize-winner George Akerlof and Yale economist Robert Shiller.
Judging by the upbeat economic message we have been hearing from the White House, the Treasury and even the Federal Reserve over the past six weeks, that is a shrewd guess. The authors argue that “we will never really understand important economic events unless we confront the fact that their causes are largely mental in nature”. Our “ideas and feelings” about the economy are not purely a rational reaction to data and experience; they themselves are an important driver of economic growth – and decline.
What's amazing to me is that you need a whole book to understand two simple things: That consumer sentiment hugely affects the economy. And that politicians, and the news media, can steer consumer sentiment.
The Obama team and its tingle-legged friends understood that last year, when they talked the economy down in order to win the White House. Then, when they finally did enough damage to properly call it a recession, and after they had won the election, they unnecessarily ratcheted up the talk to "worst depression in the galaxy" levels. And now they realize that their talk influences consumer sentiment? Excuse me, but if you democrats don't have enough to tax now, it's your own fault.
I'm just thankful that someone on their side has noticed what they're doing and is pointing it out. The government can't tax me for 50% of what I get out of the dumpster behind the Safeway.
