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Economies are driven by imagination. We give it other names, such as consumer confidence, expectations, and forecasts. It all boils down to imagining the future. If you imagine you'll have plenty of money tomorrow, you'll spend more of your savings today. If you think tomorrow will be challenging, you hoard your cash to be safe.

Our current economic situation is often described as a lack of demand. The country has capital to invest, and savings to spend, but people aren't so sure this is the right time. You wouldn't, for example, buy a house unless you imagine property values to be heading up instead of down.

A recent study showed that you can influence how much people save for retirement by having subjects simply imagine themselves older. When you imagine an old version of yourself, it changes how you act today.

Presidential election years are especially good for imagined futures. At the moment, both the supporters of Mitt Romney and the supporters of President Obama see a brighter future ahead because both groups imagine victory, and with it the improved economy they crave. The problem is that the day after the votes are counted half of the country will turn deeply pessimistic and imagine tragedy. According to the imagination theory of economics, you'd expect stocks to zoom with optimism as we approach a close election (check!) and a deep pullback right after the election when half the country turns to instant pessimism.

The three presidents who did the best job of manipulating citizen imaginations were probably Kennedy, Reagan, and Clinton. The economy was strong under each of their administrations.

President Obama is a master at manipulating our imaginations with his hope and change message. But I think Republicans have done an effective job of blunting his imagined future with their large doses of obstructionist reality and imagined drift toward greater socialism. The President's plan of taxing the rich doesn't feel like optimism; it feels more like the stranded survivors of a plane crash voting to eat the fat people first.

If society descends into chaos after the elections, for whatever reason, and I am forced into my role as Emergency Backup Leader (EBL), I'll use the country's collective imagination as my user interface to steer civilization back on course. I'll literally tell people to imagine being generous to the people in need, and imagine the wheels of commerce rolling forward. I'll ask people to remember how constipated and bloated the government was before civilization imploded and to imagine how we can learn from past problems and design a better model.

Rationalists will scoff at my methods and deride the idea of an imagination interface as new-age magic. They will compare it to the bestselling book The Secret. They will demand data-driven executive decisions, not gazing at crystals and thinking happy thoughts. I'll make all of the rational decisions that are needed, especially in cases where it will improve confidence. But I think science supports the notion that the job of a leader is to control imagination. When you get the imagination right, capitalism has all the direction it needs.

When things get so tough that only the rich have resources to spare, I'll ask the wealthy to imagine a future conversation in which someone asks what they did to help the country through its tough patch. I'll ask them to imagine remembering with pride how they intelligently opened the spigots to their capital and let it flow into the economy, boosting demand and increasing optimism when it was needed most. Perhaps some of the rich will imagine hiring more people than they needed. Others might imagine they invested in more projects than they would have normally bitten off. Some might imagine feeding the poor. It will be a source of great imagined pride - sort of a Greatest Generation thing - and an opportunity for the rich to regain respect in society.

Let's hope the economy self-corrects before I need to test that approach.

 
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+4 Rank Up Rank Down
Sep 24, 2012
What is interesting to think about is the relative tax rate and why presidents were able to do it. What you're willing to pay to your government depends on how you feel they are going to spend it. Under Eike Eisenhauer, they were able to tax at 91% and there are letters and written documents from the time demonstrating that due to the concept of patriotism and respect for the working class by the decent wealthy, the rich considered it okay since they still got to keep enough for mansions and caviar. It was a pride thing and they would laugh about the idea that the government needed to essentially use them as a necessary source of essential revenue just to keep the lights on.

Clearly now, they would simply move their money away and I'm not sure I blame them. The US government is simply not a good user of funds now. I'm from Canada and don't even really like going there on vacation since any tax money they might accrue from my spending will likely help pay for a drone strike on some innocent brown people in a country our citizens are not even aware exists.

So in conclusion, for the good of the world if not the people of the United States, please vote for Mitt Romney. He may be a terrible person and obviously won't be a worthwhile leader but at least he supports a US that can't afford its military. With Obama being at war with the whistleblowers, it's not like left has a candidate that represents them anyway.
 
 
+3 Rank Up Rank Down
Sep 24, 2012
I think the smart money is pretty certain which candidate will do what to the economy.
So they will act united, depending on who wins.
What the private (that is, imagination-susceptible) investors do, will be random noise in the post-election trading.
 
 
Sep 24, 2012
To test your theory, I wonder what would happen if all of the big internet companies (facebook, amazon, Bing, Google, etc.) added a statement like "America's future is looking brighter!"to their web pages for the next year. Most American's would be exposed to it every day, whether they were consciously aware of it or not. They'd be benefitting themselves if it worked.
 
 
Sep 24, 2012
Seriously, you think Clinton did a better job of controlling imagination than Roosevelt? You will have to refresh my memory because I was there during the Clinton years and don't recall him doing that great a job of controlling imagination.

And you may be interested to know that I bought a condo knowing it would go down in value. Its part of whats called a land lease, meaning that, where with most condos you get a share of the land the building is on, what I got was a share of a ridiculously cheap lease on the land the building is on, one that will go away in a little over 40 years. I got the condo anyway mostly because I wanted to get out of renting and the deal I got effectively saved me several hundred dollars a month and froze my 'rent' for the next 40 years.
 
 
 
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