Animal Spirits

A failure to control the animal spirits

By Robert Shiller

“Keynes knew from the experience of his in-laws the horrors of living in the worst of socialist economies. But he also knew first-hand the great difficulties that come from unregulated, unfettered capitalism. He lived through the British depression of the 1920s and 1930s. Thus Keynes was inspired to find a middle way for modern economies.”

If A Failure to Control the Animal Spirits caused the most recent economic meltdown–sometimes called The Great Recession–the solution is a government policy to tame these spirits. 

Or…are there other solutions?

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One Response

  1. While reflecting on the article A Failure to Control Animal Spirits I realized that there are some points with which I agree. However there were several which I did not agree with. I would like to start with a quote from our founding father Thomas Jefferson where he said “Yes, we did produce a near perfect republic. But will they keep it, or will they, in the enjoyment of plenty, lose the memory of freedom. Material abundance without character is the surest way to destruction.”

    Jefferson starts out saying that the founders did a good job setting up the foundation of this nation, which I would say is accurate looking at the successes of our country, but he did not say that is was completely perfect or without fault. This is true for the economic side of things. American economics could use some adjustments. But for the most part it is the capitalist view that has made our country rich and as prosperous as it is today.

    In the second sentence of the quote Jefferson asks if we will keep our freedom and republic. It is unfortunate that today very few Americans understand what freedom and security truly are. Most think they are the same, but they are not. Freedom, in its purest since is the ability to do anything you want, whatever the consequences maybe they are yours. In freedom you may fail or succeed or land somewhere in the middle, you could be solely on your own or have a group to help you, to protect you if you fail, but it’s whatever you choose. Security in its purest since is protection from harm or failure. The most secure people on earth are the ones locked in maximum security prisons. They will get food and water; they will live, unless a jury decides otherwise, but they are protected. Personally I think that is a miserable life that I would not want; pure freedom can have negative consequences also, so we need to find a happy medium. We need to have a system where people can think for their selves and do what they what but still have some security, but it should be aimed to help those people get back on their feet and not to support them forever.

    Anyhow Americans today have come to be that freedom and security are the same and they are not. People don’t want to lose their jobs; they don’t want any risk of any bad thing to happen. That is understandable, we don’t want any harm to be fall ourselves, but to demand that our government or economy ensure us in this way is not conducive to democracy. A system that has the power to provide everything has the power to take it from you.

    As we look at the third part of the quote it speaks of character. If our system had the ability to provide all and control all aspects to hedge us from harm, someone would take advantage of us is our vulnerable state. It has happened repeatable through history, look at Augustus Caesar. On a lesser scale, look at home there are people abusing welfare and social security in this country every day. People are robbing each other in ponzi schemes; you cannot change the hearts of men. We have achieved a wealth that is unknown in most parts of the world and we must not set back and make bad decisions and lose it. We need to remember the fundamentals.

    The article comes across as saying we must protect American from all negatives economically, that people must not be allowed to fail. That is impossible and a hindrance. People learn best by failures, many of the most successful people have had their break through right after their greatest failure. And I would like to point out that no system is immune to fluctuations and economic down turns. So to even suggest such a thing is possible is folly.

    I don’t believe however that our system is unflawed there are many areas that need improvements as the article does suggest. We need to look at our budget problems and get them under control, we need to cut out some of the petty junk that we waste money on and use it for important things epically in a recession. Welfare, social security and health care do need reforming. However, the government run health care that is being proposed is a bad idea. The government has bankrupted Social security, Medicare and Medicaid; I don’t want my health care to be next.

    I do believe we need changes, but not the changes this article hints at. I believe we need to stay focused on remaining capitalist. I also do not believe we should seek to place people in a bubble economically, but we should strive to educate them so that they can make better decisions themselves, instead of having the government telling them what they can and cannot do. I believe there should be some regulations on what businesses can and cannot do it order to protect workers and smaller businesses. By and large I believe we need to let the market control itself is stead of trying to cater to its every move.

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