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Wednesday, February 4, 2009

The Weakening Economy and the Language of Fear

One of the most crucial economic numbers in the next few months will be the consumer confidence numbers. Ultimately, this economic malaise is a crisis in confidence. Banks won't lend, business won't invest, and consumers won't spend because they believe that the future of the economy will only get worse. That's why the language of our leaders is absolutely critical. Our leaders must project confidence because one way or another the public will follow their lead. FDR famously said "the only thing we have to fear is fear itself". At the time, the economy was in much more dire straits than it is today. Yet, FDR knew full well that the public couldn't have confidence in the economy if its leader, the President himself, didn't have confidence first.

It's in this context that I want to look at two quotes. The first is from President Obama.

failure to act quickly "will turn crisis into a catastrophe and guarantee a longer recession."

Then, there is this now infamous video from Nancy Pelosi

Now, besides the extra zero that Ms. Pelosi added, she portrayed an air of crisis. Both these statements present a government terrified of the future. Now, I understand that both Speaker Pelosi and President Obama are trying to sell the urgency of their action. Yet, they should sell the merits of their legislation. Trying to sell fear is a very counter productive way to do things in these economic times?

How could banks lend, businesses invest, and consumers spend when our President and our head legislator are telling them the sky is falling economically? Such statements have a way of being self fulfilling. As a someone with experience in sales, I understand the power of fear. Certainly fear is a great way to sell something, be it a stock, a mortgage, or a bill. Yet, in this case there are much larger things to think about.

This legislation won't work at all if the public at large is convinced that they are in the beginning of an economic apocalypse. That is the way that the economy is being portrayed by our political leadership and it has a way of fulfilling itself.


james Raider said...

Consumers should ignore the commentary admonishing them of spreading “weakness,” and “lacking confidence.”

Stay the course.

Anonymous said...

Obama is emphasizing the problem because

1. its the truth
2. it makes Republicans look bad if they don't go along with supporting the package
3. its shows he actually understands what a lot of America is going through right now [as opposed to Bush]

I don't mind a leader actually being in touch with what is really happening right now and telling it like it really is.

A lesson John "the fundamentals of our economy are strong" McCain learned too late.

mike volpe said...

Yeah. That's right. Talking down, way down, on the economy is telling it like it is.

No, it's his way of getting the bill passed, and it will cost him, the economy, and the U.S. in the end.

Anonymous said...

How so?