The illusion of consensus on deficit

image: from http://www.moillusions.com/
The two vertical red bars are the same height on the screen if you measure them with a ruler. "All" you have to do is ignore the the subway walls and just look at the two red bars. (or get a ruler, or move to the side and look across the screen.) Some illusions are so powerful they work even when you know they are working.

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The cartoon figure Dennis the Menace once wondered "How come dumb stuff seems so smart when you're doing it?"

It's a very insightful question we should not rush by.

I think what's missing here the most is a popular understanding of the power of fear and desire to distort one's thinking.

There are three errors related to that most popular human activity, yielding to temptation.

The first is the incredible power of desire to overcome reason and twist perception so that the reasons for doing what you want to do anyway seem solid and strong, and the reasons against it seem distant and weak.

The second is the remarkable ability of people to be unaware of the difference between how things look from the inside and how they look from the outside. In the same breath as condemning home-buyers and banks for going way too far into debt, the same people turn and suggest with a straight face that the solution is "obviously" for the country to go much further into debt.

There is zero realization that the sin they accuse the bankers of looked exactly the same to the bankers as this "consensus" of going a few more trillion in debt looks to politicians today. And the actions that make so much sense today will look as unfathomable as the homebuyers and hedge-fund's actions look to us today.

"How could they have been so stupid?" It's worth understanding exactly how they could have been so stupid, and why very bright people end up doing very dumb things.

And the third is the remarkable power of group-think to solidify an opinion in a closed room and decide that those who have a different opinion are enemies of all that is right and decent, again obviously. And, as everyone knows, once everyone around you is sinning, it is much harder not to fall in line with them yourself, especially if you wanted to all along.

Again, rationality comes up behind, making up and changing justifications on the fly to make the choice look sane and rational and even fair and balanced.

Prompt for this post was the following
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The New York Times hs an article this morning

Deficit Rises, and Consensus is to let it Grow
Louis Uchitelle and Robert Pear
Excerpt:

Like water rushing over a river’s banks, the federal government’s rapidly mounting expenses are overwhelming the federal budget and increasing an already swollen deficit.

and

But the extra spending, a sore point in normal times, has been widely accepted on both sides of the political aisle as necessary to salvage the banking system and avert another Great Depression.

“Right now would not be the time to balance the budget,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan Washington group that normally pushes the opposite message.

Confronted with a hugely expensive economic crisis, Democratic and Republican lawmakers alike have elected to pay the bill mainly by borrowing money rather than cutting spending or raising taxes.

First, I noted that the vast majority of the comments on this article were very negative, so, like the bailout itself, it seems the consensus in Washington flies in the face of the concensus on Main Street.

I did comment myself, as follows:

The cartoon figure Dennis the Menace once wondered "How come dumb stuff seems so smart when you're doing it?"

Teenagers with their first credit card, families with their first great deal on a mortgage, hedge funds and even conservative banks with their soaring debt, all are so swayed by the temptation that they forget the bills will come due some day.

Regardless of the consensus on the issue, I would suggest that letting the debt out of the bag is less "river water over the banks" and more "water over-topping the earthen levee". God help us all.

and, later,

If more debt is acceptable, why not just borrow $3 trillion and give everyone $10,000?

I think that's a reasonable alternative to compare any other borrow-and-spend scheme to for pros and cons.