White House Budget Director Peter Orszag... has been spending
his time recently reading not about spreadsheets, but about
psychology. In particular, he has been reading a new book by the
economists George Akerlof and Robert Shiller called "Animal
Spirits: How Human Psychology Drives The Economy, and Why It
Matters For Global Capitalism." ("A White House Seized by the
Animal Spirits," TIME.) A book by two economics professors has
the attention of the White House. It implies we're irrational
economic animals and the government is the wise zookeeper.
First, here's a definition of "animal spirits" as coined by
British economist John Maynard Keynes (1883-1946). "The
colourful name that Keynes gave to one of the essential
ingredients of economic prosperity: confidence. According to
Keynes, animal spirits are a particular sort of confidence,
‘naive optimism.' He meant this in the sense that, for
entrepreneurs in particular, ‘the thought of ultimate loss which
often overtakes pioneers, as experience undoubtedly tells