reading the news lately transmits the feeling of unease. it seems as if the thick clouds on the economic horizon are darkening. worst case scenario: the economic crisis is back.
what people miss to mention is that the crisis was never actually gone. looking at the overall impression of expectiations projected after the enormous falldown in economy in 2007/08 was that a quick recovery was possible – like in a V shape. this positive expectation turned out to be more of a L structure instead. the tricky thing is, that this L still felt like a V for the projection of emotions, expectations and positive future predictions that was transmitted through the media. the mere fact that the economy was not decreasing any further was celebrated as if we were about to experience the same kind of incline we had before the crisis. and the simple reason for why people actually believed it is that they wanted to.
there is no worry about a possible repetition of historic developments of the 1930s in the general public today. concernes in that direction are voiced here and there, but it seems to be too wide spread to be identified as the main reasoning about the 2007/08 crisis. more than that, it is about people worrying about their daily income, their standard of living and their financial and social survival. these concerns might lead to individual reactions, trying to protect what one owns in a preventive measure. the most common reaction is to save money in anticipation of worse time to come.
this behavior is a stone, about to disturbe the calm surface of water. – throwing one stone into a lake, triggers several waves. the bigger the stone, the bigger the splash. if one could throw tons of small stones into the lake at the same time at a very close density, it would trigger the same reaction as a rock. what this metaphor is to say, is that individual behaviour of people can create massive outcomes. if coordinated this movement can be a political force. if it is not coordinated, it is still a force but it is less predictable.
since our economic system builds on the pillars of commerce, a potential mass reaction of saving money has to be avoided. there is no reasoning with people, who are afraid to lose their job, that they should keep spending money for otherwise it is even more likely for them to get unemployed, since this behavior would deteriorate the general economic situation even further. machiavelli already noticed, that a good leader knows when to lie. and this is what we experience in the case of media coverage and official statements on economic stability today. the situation about the financial crisis is a brilliant example to study the balance between facts and expectations, the influence of perception on reality and a normative question of if, when, and how far machiavelli’s theory is, can be, or should be applied.