Saturday, March 23, 2013

Animal Spirits

I also finished animal spirits today.  It's a good complement to the rational optimist.  Not that the rational optimist is wrong, but that it doesn't cover the failings and limits of capitalism.  Yes people choose rationally, but they only choose rationally about things they think about.  Many choices in our life are not thought through.

Animal spirits then covers the gap between rational thought and emotional experience and how it affects the economy.  It argues that we must be wary of snake oil and market conditions that allow for runaway economy not a healthy growing economy.  Snake oil can be very attractive in many circumstances you may not realize you've bought snake oil until years of gone by.  Take the housing bubble for example.  It was years before that correction happened.  Too many people had had no incentive to think rationally about what they were doing.  They were paid to sell house after house, issue mortgage after mortgage, and pass the risk on to someone else.

 

It's too bad that animal spirits isn't as fun of a read as the rational optimist.  The rational optimist has a certain exuberance to it.

 

 

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