How basic psychology and social mores may help tip us into depression

[Kurt_and_Hunter]

In our hunter-gatherer brains (on edit: and/or basic agrarian brains) a bad economy seems like scarcity, akin to drought and dwindling buffalo herds. When tribal resources are scarce being thrifty becomes both a private necessity and a public virtue.

There is nothing in our innate psychology to deal with a modern economic downturn. In times of slow or negative growth government should be profligate, not thrifty! That's just basic, uncontroversial Keynes.

But since we intuit economic crisis as akin to a shortage of food our psychology rebels against the economically correct answer; everyone needs to eat MORE! (We also intuit crisises as war which also calls for reduced individual consumption so that more resources can go to feed the fighters.)

The best thing for all would be for private people and industries to also be profligate if they have the money to spend. The government steps in only because individual agents stop spending. The government is abstract enough to do what feels so wrong for individual actors.

It doesn't help anyone for the Queen of England to announce she's being more thrifty in response to the times. That is exactly 100% backward... the worst possible example to set.

I saw a piece about shops in Rodeo Drive that are hurting even though their clients are still plenty rich. A shop-owner said that, "In this kind of economic crisis nobody wants to be seen spending $100,000 for a dress."

And there we have it.

The worst possible way for the rich to show solidarity with the average man is to stop circulating money. Yet we have a bad emotional reaction to people spending freely when times are tough for most.

We are just not designed for economics. Our innate sense of things is that 1) goods have an intrinsic price (rather than a fluctuating market price), 2) middle-men are parasites and 3) interest is theft. We can add to those three, 4) economic crisis calls for reduction of consumption and economic activity.

[HereSince1628]

1. Are you sure it's hunter gatherer psychology?

I expect you don't want to explore this concept but...

Wouldn't hunter gatherers simply LEAVE a place of scarce resources? If your assumption is true shouldn't we be seeing evidence of population migration?

Isn't the notion of staying in place and hording resources for the starving time more a psychology of seasonal agriculture society?

As a agriculturally based society/civilization, we know that we regularly have seasons too harsh for crop production, so in our system we grow surplus and set it aside for the harsh season.

Non-farmers barter with money for their resources, so when they become aware that an "economic season" may be particularly harsh doesn't rationing money mirror the same sort of rationing of crop resources that is fundamental to an agrarian psychology?

[Kurt_and_Hunter]

3. You make a series of good points

I was using hunter-gatherer is kind of a throw-away way, like "reptile brain"

You are quite right that nomads have different practical responses to something like drought. In some ways the agrarian is screwed because he's fixed in place. In other ways he benefits because grain can be stored. (I suspect the Egyptian reverence for cats arose to some degree from their being vital to national survival... re: rats in the grain stores.)

Our societies have certainly evolved along agrarian lines, whether or not our brains have had time to. (Though evolution can be pretty brisk regarding behaviors that are life&death. The genes of a group of thrifty sharers would do very well through a series of dietary shortages.)

[HereSince1628]

6. Learned behaviors don't require some sort of special physiological module

they just require a basic physiology that provides an ability to learn. Learned solutions don't need rediscovery every generation, because we have communication and transgenerational sharing of knowledge the memes can then be passed along in societal memes as "culture." So a cultural attitude could "evolve" very very quickly.

I'm not any sort of expert on evolutionary pyschology, or psychology in general, but a cultural awareness of annual cycles and some notion of how to deal with annual shortages seems to be fundamentally what is needed. When the nation experienced $4 gasoline and 20-30% hikes in food during the summer and some pundit tells us that winter heating fuel costs are going to be double or triple of what we were planning, it only makes sense that consumers went into a rationing mode with their money. Money is what most people need to survive winter.

It seems to me that the money rationing that began in late summer and has continued through Sept. Oct. and Nov is what crippled retail sales and shrunk global demand. Why do I think that? Because the collapse of inter-bank lending didn't really end production. If demand was good and production was halted we would be looking at price inflation in consumer goods. Instead we are seeing price lowering in major areas of consumer spending including---housing, automobiles, fuel, and clothing.

The widening gyre of job-loss, falling consumer confidence and linked decline in descretionary consumer spending causing falling demand leading to job-loss is the cycle that must be ended so that better times are percieved and the need to ration money can be eased and economic recovery/expansion can resume. I'm hopeful that as the summer arrives heating bills ease, and deflation makes purchasing attractive that consumer spending will increase and we will see the glimmer of hope for a recovery. Though, a recvery won't happen if job loss keeps increasing.

I think your general notion that spending is important to getting past this recession is correct, and to some extent it is a problem based on consumer psychology, though I wouldn't go to where Phil Gramm is and say this recession is simply in people's heads.

[Kurt_and_Hunter]

7. Phil Gramm's comment was both an outrage and a tautology

Bad times are, in one sense, all in people's heads insofar as EVERYTHING in a modern economy is to some degree in people's heads... even our placing value on currency is an attitude that people can lose faith in, as happens from time to time with disasterous effects.

Of course Gramm could have said just as meaningfuly that World War II was all in people's heads in that a change in mass psychology would have stopped it in its tracks.


You are quite right that social structures form templates that individual psychologies grow into. And, as with so many things like this, nature v. nurture is not very important when the effect is indistinguishable—when all human societies happen to incorporate certain modes those are defacto human nature.

(Or social nature... there are probably some emergent traits of society that are implied by individual psychology en masse, including many that would be difficult or impossible to extrapolate from individual nature.

[geek tragedy]

2. Personal economic security is a feeling just as much as

personal economic insecurity is a feeling. And, the reality is that a staggering number of households have someone underemployed or unemployed and that an even larger number have someone who could lose their job within six months.

Sure, if we all got together and decided to spend the money, it could work. But c'est le collective action problem.

[Kurt_and_Hunter]

4. Hence the handy government... everyone hates it, but only it can do the right thing sometimes

[Odin2005]

5. Our economic behavior sems to have a split personality, which is obvious in most cultures.

In human societies there seems to be a "Jekyll-and-Hyde" contrast between "virtuous Apollonian asceticism" and "exuberant Dionysian hedonism" that expresses themselves during different time periods and in different people. To use a Medieval example, it's the contrast between the monastery and the carnival. We party and fatten up during times of plenty so we can survive on our fat reserves during lean times. And during lean times conspicuous consumption is strongly discouraged because it is perceived as wasting scare resources.

I have also noticed that there is a cyclical pattern that is about 80 years long associated with this. Since the mid 60s we have been in a "Dionysian" period. Before that, from 1929 to 1963, the US was in an "Apollonian" period, and before that the US was in another Dionysian period much like the past 44 years. Before that there was an Apollonian period around the time of the Civil War, before that a Dionysian period in the antebellum US with Transcendentalism and crazy "Born Again" religious movements, and before that there was an Apollonian period associated with the American Revolution and the years following it. The start of a Dionysian period seems to correspond to a Baby-Boom-like generation coming of age and a WW2-Gen-like generation entering elderhood, while the start of Apollonian periods are just the opposite, a Boomer-like generation entering elderhood and a WW2-Gen-like generation coming of age.