Magical Thinking

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<p>Magical thinking is a term of art in both clinical psychology and cultural anthropology, and it refers to the common belief among both children and “primitive” societies (yes, intentional quotation marks there to show my arched eyebrow at the word) that thinking the right thoughts or saying the right words can control the invisible forces that shape our world.</p>
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<p>For example, as Jean Piaget (the father of developmental psychology) noted, children from the ages of 2 to 7 tend to have very little conception of real-world causality. Tell your four-year-old son that the family dog has died, and he is likely to a) blame himself for something he did or didn’t do for “causing” the death, and b) believe that there is some combination of proper words and proper thoughts and proper actions that can make the dog come back to life. That’s magical thinking. It’s a profoundly ego-centric conception of the world, and if you’re a parent you know exactly what Piaget is talking about. Every four-year-old child is an egomaniac, in the clinical, non-judgmental sense of the word.</p>
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  1. At least part of the problem here is that most of society finds the comfort created by artificially deferring the inevitable is preferable to confronting reality. Most of society prefers to work less (or better still, not at all) than to use tech and innovation to boost productivity, and nobody is structurally motivated to set us on a different course. Our reliance on magic spells provides the alt-priests with a source of power, which they like, and a basis for paternalistic overlord-like behavior, which they also like. As long as this setup also suits those holding political power, it’s hard to see any catalyst for change until some fairly disastrous consequences fall upon our economies and society. Then, after some period of extreme social and economic pain, everybody will forget and it can all start over.

  2. Amazingly enough, the U.S. can still grow its way out of the massive debt we’ve taken on. I know … hard to believe. But it’s true. The power of compounding is truly inexorable, and it’s amazing what a steady 3.5% growth rate on a huge economic base can do to make manageable even trillions of dollars in debt.

    Ben just wondering if you think this is still true ….it’s hard to believe it’s been over 5 years since I first read this note :scream_cat:

  3. On the same line, isn’t the US national debt actually a US national asset? Paying off the national debt would actually be the destruction of money. A 3.5% growth rate would just mean the national debt could grow larger. The US isn’t going to grow its way out of massive debt, it will grows its way into more debt. If stuck at 1% or 2%, then no more debt growth? I’m not sure, I think I have Lacy Hunt’s diminishing rate of return on debt in my head.

  4. Ben,

    lpusateri brought this to our attention on the Financial Nihilism thread… I’m taking the liberty to move it up.

    The original three commentators offer hope. We can grow out of this. Lacy Hunt’s commentary over the last ten years, imo, MAY, somehow be tweaked to use debt for increasing returns.

    We’re using debt for all the wrong reasons.


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