Fear

John Kay is a Scottish economist who writes thoughtfully on general issues. Recently he produced a short essay on the predilection of electorates, even loudly complaining ones, when confronted with a moment of truth, namely a ballot proposing an existential change to their society or polity, to opt for the familiar and reject change.

Mr. Kay lists a number of examples, beginning with Australia’s refusal as late as 1999 to sever ties with the British monarchy and declare itself a republic. But the most telling may be his description of Britain’s love-hate relationship with what was once the Common Market (now the EU). Britons almost surely would have voted against entry, had they been asked, but when confronted with a referendum some years later, despite much public criticism and polls predicting a vote to exit, a clear majority voted to stay. In Mr. Kay’s understated words:

Confronted with the specifics, rather than the principle, of constitutional change, many voters revert to the status quo.

In our own country, we have the example of the Equal Rights Amendment, which was approved by both houses of Congress yet died in the states. The text of the amendment was entirely innocuous:

 Equality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex.

Yet it proved to be too much.

There was predictable opposition among fundamentalist religious leaders. But the influence of fundamentalism was arguably less widespread than today, and my experience of the time suggests that the opposition was mainly successful in stirring up fear.

After all, what would such an amendment mean in practice? What kind of litigation would it spawn? Where would the Supreme Court go with it? No one knew.

Which was precisely the point. What appeared to be the most sensible proposition, that government should not discriminate against one gender or another, was overpowered by fear of the unknown.

Yes, people fear change, but change is sometimes thrust upon them, and far more profoundly they fear the unknown.

The terrorist attacks of September 2001 stunned the country because they came out of nowhere, completely unexpected (outside of classified warnings). What else was waiting to strike? Recalling the vote in Congress to authorize the invasion of Iraq despite lack of a tangible threat to the US, it’s clear that fear of the unknown – not just in Congress but across the country – played a significant role.

Franklin Roosevelt famously addressed fear in his first inaugural address, and it’s worth pondering his full context:

Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance…

They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.

The financial crisis that began in 2008 revived those fears, and certainly the ensuing recession contained echoes of the crisis described by FDR. Fortunately, we had learned enough to prevent the death spiral of deflation (“values have shrunken to fantastic levels”), but the measures taken still induced considerable public anxiety.

And so it continues. “Quantitative easing”, “stimulus”, the surge in the federal deficit, the frightening fiscal statistics (mainly frightening when put up like totems by issue-mongerers out of context), have fed public anxiety over where we are headed – but not because there are credible warnings of tangible dangers. The hysterical predictions of bond vigilantes, spiking interest rates, and imminent hyperinflation that have circulated in even the pages of respected media like the Wall Street Journal, have proven over and over to be not just unfounded, but practical demonstrations that the economic models employed by their authors are deeply flawed.

And yet they have received far more attention than the thinking of economists as diverse as Paul Krugman, Christina Romer, and Larry Summers, whose prognostications over the last four years have generally born out.

But fear sells. It sells newspapers, it sells talk shows, it sells hits on popular blogs. And that is what we should fear.

Related:

The Sky Just Refuses to Fall

Armageddon May Have to Wait

Taxing Matters

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