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Originally Posted by alexamenos
lol...you're so reliable.
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..as you are so very predictable.
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"Animal spirits" is not a metaphor. It is a horribly elitist and demeaning phrase certainly, but when keynes called people in the market place animals he literally means they're animals -- we are animals who don't act rationally (we private people that is, not politicians who are rational actors according to keynes). We are driven by base animal instincts and we need to be managed accordingly.
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"elitist and demeaning"? not in the least.
yes, we are all animals. you may wish to believe that you are not, yet that is merely self deception on your part.
the argument is not that people "don't act rationally', and really quite the opposite is the message in this piece. mistrust and a lack of confidence is truly a rational reaction to the economic situation that we are confronted with today.
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...same with the Ivy League professor....
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now who is engaging in elitism? why yes, it appears to be alex.
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The points that he makes on confidence and trust are typical keynesian confusion of effect and cause -- of course people are unconfident with respect to the economy....anyone loaded down with debt and incapable of paying their phone bill is quite rationally unconfident. Likewise, a lender is likely to be quite unconfident about lending 6 figures to someone who isn't holding a job. This lack of confidence is a result of the recession, not it's cause.
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the issue is that a lender is uncomfortable lending to a borrower who
does have a job, and the consumer who isn't loaded down with debt and fully capable of paying their phone bill isn't confident in their future.
schiller goes into an explanation of cause and effect, and it is a rational conclusion of how the crisis has sapped the trust of the public. schiller doesn't place the blame for the recession on this mistrust, he is offering the cause of the deepening of the recession on this animal instinct.
apparently you don't understand the concept...
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Moreover, to say that problems in our economy came about because of a drop in confidence is like saying that I can't play basketball for the Dallas Mavericks because I lack confidence rather than the fact that I'm white, short, slow and I can't shoot. It's a stupid and irrational explanation, in other words.
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as he doesn't say what you suggest he does, there is no response I can make.
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To say that business cycles are caused by inexplicable changes in animal spirits is to say that business cycles are caused because they happen. It's no explanation at all, just a bunch of noise preceding the inevitable call for more government.
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you appear to be making an argument that consumption is not influenced by individual decisions. now I see why you react so negatively to the suggestion that the economy is influenced by 'animal spirits", you believe that people act like machines.
they (we) aren't and don't.