Animal Spirits, An Obama Book Club Selection

The American Thinker ^ | May 13, 2009 | Lee Cary

[Scanian]

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 us and them, is put aside as a healthy man puts aside the expectation of death.'"

According to Akerlof and Shiller, Keynes focused on animal spirits as "referring to a restless and inconsistent element in the economy."