How Positive Thinking Wrecked the Economy

(A shorter version of this appears as an op ed in the New York Times today)

Greed – and its crafty sibling, speculation – are the designated culprits for the ongoing financial crisis, but another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking. As promoted by Oprah, scores of megachurch pastors, and an endless flow of self-help bestsellers, the idea is to firmly belief that you will get what you want, not only because it will make you feel better to do so, but because thinking things, “visualizing” them  – ardently and with concentration – actually makes them happen. You will be able to pay that adjustable rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits, the reasoning goes, if only you truly believe that you can.

Positive thinking is endemic to American culture – from weight loss programs to cancer support groups – and in the last two decades it put down deep roots in the corporate world as well. Everyone knows that you won’t get a job paying more than $15 an hour unless you’re a “positive person” -- doubt-free, uncritical, and smiling—and no one becomes a CEO by issuing warnings of possible disaster.  According to a rare skeptic, a Washington-based crisis management consultant I interviewed on the eve of the credit meltdown in 2007, even the magical idea that you can have whatever you truly want has been “viral” in the business culture. All the tomes in airport bookstores’ business sections scream out against “negativity” and advise the reader to be at all times upbeat, optimistic and brimming with confidence—a message companies relentlessly reinforced by treating their white collar employees to manic motivational speakers and revival-like motivational events. The top guys, meanwhile, would go off to get pumped up in exotic locales with the likes of success guru Tony Robbins. Those who still failed to get with the program could be subjected to personal “coaching” or of course, shown to the door.

The same frothy wave of mandatory optimism swept through the once-sober finance industry. On their websites, scores of motivational speakers proudly list companies like Lehman Brothers and Merrill Lynch among their clients. Angelo Mozilo, the former CEO of Countrywide Mortgage whose subprime ventures precipitated the entire crisis, was known for his congenital optimism and described in the Guardian earlier this year as “absurdly upbeat” even as his industry unraveled. No one was psychologically prepared for hard times, when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on. In May, the New York Times reported that Merrill, caught up short, was suddenly trying to “temper the Pollyannas in its ranks,” and force its analysts to occasionally say the word “sell.”

For those at the very top of the corporate hierarchy, all this positive thinking must not have seemed delusional at all. They actually could have almost anything they wanted, just by expressing the desire. CEO compensation has ballooned in recent years, creating the new class of billionaires and centi-millionaires who inhabit Lear jets and four-figure a night hotel rooms, who can dispatch a private plane who pick up a favorite wine, or a pet, they happen to have left in the Hamptons. According to a new book from the UK, Unjust Rewards by Polly Toynbee and David Walker, these masters of the universe tend to be seriously uninformed about how the other 99 percent lives and, Toynbee told me, often uncomprehending of the financial operations – the derivatives, CDS’s, etc. – that their wealth is derived from. If you live in a bubble of perfect wish-fulfillment, how could you imagine that, for example, some poor fellow in Cleveland might run up against unexpected medical bills or car problems that could waylay his mortgage payments?

Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendents, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily “visualizing” success. Calvinists thought “negatively” as we would say today, carrying a weight of guilt and foreboding that sometimes broke their spirits. It was in response to this harsh ethos that positive thinking arose-- among mystics, lay healers, and transcendentalists – in the 19^th century, with its crowd-pleasing message that God, or the universe, is really on your side, that you can actually have whatever you want, if the wanting is focused enough.

When it comes to how we think, “negative” is not the only alternative to “positive.” As the case histories of depressives show, consistent pessimism can be just as baseless and deluded as its opposite. The alternative to both is realism – seeing the risks, having the courage to bear bad news, and being prepared for famine as well as plenty. Now, with our savings, our homes and our livelihoods on the line, we ought to give it a try.

Comments

[progressive reactionary]

Well said. Your notion of "delusional optimism" also makes me think of the now-common campaign strategy of delusional, endless repetition of falsehoods until they become accepted truths. It seems like not only our economy but our entire politics and culture is now predicated on delusion!!

[Fed up]

Thank you for being open and sharing with us what you think. Unfortunately, people only too often do not look for the facts. Instead they only see what they want to see, and say only what they think others want to hear. Fundamentally, people do not think that they think all their own thoughts nor make their own choices!!

[jck]

I've had a hard time explaining why these self-help people irritate me so much. You nailed it. They're just like the idiots who started the war in Iraq and sneered at the "reality-based community" because we didn't have the gumption to make our own reality.

[Dave]

Not so new. I read (and tried to follow) Napoleon Hill's "Think and Grow Rich" back in the early '60. Worked at first, then went to my head and finally I had to go through my own "recession" and have never been in debt since. Hard but good lesson.

[E. Nowak]

Wow, this is an amazing essay! I've been thinking this in a nebulous way but I didn't have the words to articulate the thoughts the way you did. I especially fault Oprah Winfrey. I think she has single-handedly sold a bill of goods to American women. "You can have it all!" Sure, if I made her income, I could have it all, too.

I love how she has shows where she has experts scold viewers about their spending habits, but then 99% of her "average people" guests are upper middle class women with great clothes, makeup, shoes bodies, houses, kids, etc. And let's not forget "Oprah's favorite things." Or episodes where she gives tours of her mansions or styling tips from her various "life stylists." Who can afford the Oprah lifestyle except a small minority of people? It's the lie of our consumer society.

Finally, when I heard Oprah say on her show, "No one should have fake flowers in their house! Only real! And they should have them all the time!" It was her Marie Antoinette moment. That's when I said, "Off with my TV!" I haven't watched her since.

[Jody Lanard]

Calvinistic negativity as described in your essay is not the only kind of "negative."

Wellesley professor Julie Norem writes about "Defensive Pessimism," which includes (among other aspects) thinking through worst-case scenarios, and planning ways to cope with anxiety-provoking situations, rather than avoiding such planning.

"Defensive pessimism" isn't depressing -- it is close to what you mean by "realism" in some ways.

It characterizes several Asian cultures in which people plan much more for a rainy day -- without losing their joy and zest for life.

In Singapore, there is even a word that captures this: Kiasu!

[GS Chandy]

Ms Ehrenreich:

It is certainly possible for most of us - individuals as well as nations - to 'do our stuff' or 'get our acts together' in a better way than we are currently doing.

I agree that it is downright foolish to indulge oneself in what you term as the "delusional optimism of mainstream, all-American, positive thinking, as promoted by Oprah, scores of megachurch pastors, and an endless flow of self-help bestsellers" - but it definitely becomes difficult to accomplish even what one is actually capable of if one is entirely sceptical and/or "negative" about stuff.

What's needed is to arrive at a truly realistic assessment and understanding of what one should be striving towards. That is to say, DON'T be delusional about your 'positive thinking' (in the way that you've rightly poked holes into in your thought-piece), but, equally, don't be 'delusionally negative' either, in a way that hinders you from acting positively in pursuit of worthwhile goals. In order to accomplish something, it would always be useful to set oneself a *realistic* 'Mission', then ask oneself the following 'trigger question': "What, in my opinion, are the THINGS TO DO to accomplish my Mission?"

The list of ideas that one gets in response to that trigger question (perhaps with assistance from friends and others, worthwhile books, and the like) can then be developed into an action plan to help accomplish the Mission over time (by integrating appropriate things to do to overcome barriers and weaknesses and the like). I'd like to send you some information about how this process works. May I send you a PowerPoint presentation and a couple of Word documents about it? If you find my arguments realistic, you may like to feature some discussion on my counter to some of your negative thoughts about 'thinking positive'.

Thanks and regards
GS Chandy

[Darren Lewin-Hill]

Good post, Barbara. I'd be interested in your thoughts about how this kind of false positive thinking is also affecting current ideas about parenting. It's good to build confidence in children, but I think in some cases parents build what I consider obscene confidence, where a child begins to see him- or herself as the most valuable member of society, limitless in capacity and also entitlement. Maybe what this leads to is the kind of person who becomes a positive-thinking business leader, whose optimism leaves its footprints on the victims of the amoral pursuit of profit at any cost, not to mention the planet.

[Dawn]

Realism, yes we need and I dare say are getting a good dose of it. But we also need to find a way to restore trust. I think the first radio advertisement started the slide and television advertisement set the fall of truth cascading into the abyss. It has all but disappeared taking trust and trustworthiness along with it. Who truly trusts anything they hear? Who do you trust in government? If they bear the title 'politician' -- where's the trust? If a company says "this is good for you" who believes it.

I am perhaps doubly disillusioned having just completed a 'merit' evaluation from my employer who is having budget problems. My 'boss' was told to give us all mediocre values on our merit evaluation. I suppose that gives them a reason to not give reasonable wage increases or opens the door for reasons to 'downsize' us out the door. So my work evaluation has nothing to do with merit and everything to do with more lies, half-truths, and nothing whatsoever about the loyalty and effort I put into my work. And employers wonder where loyalty has gone?

How does one restore trust, I wonder?

I appreciate that you point out something that until now has been protected by 'politically correct' attitudes. I hope a few more fall from that protection and we can actually start to get real again and face our problems rather than pretend that 'all is well.'

[Solo]

As someone who was faulted for being realistic, I can attest to the deaf ears that dominate Corporate America.

Like Cassandra of old who could see the future, but no one believed her, our society only wants to hear the good news.

To philosphy of punishing the messenger is ingrained in our society.

I grew up in a family where something was always going wrong and learned early to PLAN FOR THE WORST. I've lived my life that way and taken a lot of heat for it.

The Tony Robbins and others of his ilk are selling snake oil. It's made them rich and their followers delusional. The super-optimstic TV types are cult leaders in the same vein as Jim Jones. They put the blame on the victim if you're downsized, get sick, have a parent with dementia, etc.

According to them EVERYTHING is can be achieve with a postive attitude.

Fine. Let's seem them lift the market and solve the credit crisis.

[Julie Laursen]

Thank you so much Barbara. Whenever I feel like the odd one out, all I have to do is read an excerpt from your books or blog to know that I'm not crazy. I've felt the same way for a very long time, and have lost more than a few jobs by not being "positive" enough and not having enough "passion" for the job. And btw, the jobs I lost were all in accounting. In all my non-corporate jobs, I've excelled. Unfortunately, all my friends have bought into books like "The Secret" so I've felt no one shares my grief. By the way, I graduated two years ago with an MBA and bachelors in computer science. I currently work at a call center, train clients at a gym, am doing an unpaid computer field technician internship, promote alcohol sales through a modeling company, do taxes at H&R Block, and strip at an gentleman's club once a week to pay my loans/private health insurance, which is so high that I am struggling even with six jobs. Bait and Switch was comfort food for me. Thank you again for your words.

[Marion]

Preach it, Barbara!!
One wonders if there are also mind-altering substances involved in such delusional optimism.... Crack, Prozac, hm. As a German living in the U.S., this can often feel quite creepy, as if one lives in the nation of Stepford.
And true enough, it's never very helpful to go from one extreme to the other, from negative to positive, or vice versa. Oh, if we could figure out some blurring of the lines and balance...

[realpc]

Of course we should try to balance optimism and pessimism. Of course things can't always be good, better, best without limit.

I agree with Barbara that this mess resulted partly from too much positive thinking. But on the other hand, what we have now is just a bigger more extreme example of what has happened many times in many places. As real estate prices went up and up and up, no one could say exactly when the party would finally be over. And some were high enough on success to convince themselves that what goes up keeps going up.

What we had was the Enron phenomenon on a global scale. Corruption and crookedness, gambling mania, self-deception, lack of foresight, along with honest miscalculation, all added up to mega-disaster.

The only thing new about this crisis is its unprecedented magnitude, and that's only because the US and world economies are so much bigger than ever before.

[Josten]

I do not agree saying positive thinking wrecked the economy. If you think positive how can that wreck an economy therefore the economy would be in better shape than it is.

[Danny Boy]

Yeah, I've known churches in which the so-called "name it, claim it" and "health and wealth" gospels were taught as natural scientific laws. Moreover, it was common for the church (in general) to insist that if you tithed, you would be blessed with checks rolling in the mail from nowhere, care of "sowing and reaping doctrines". Obviously, the church got its money, which it then abused. However, any failure to find checks in your mialbox dropped down from heaven was chocked up to a lack of "faith", read here as positive thinking. It's easy to defeat an unrealistic, postitive thinking cream puff in a debate. But thanks to their positive thinking, those people are usually deluded into thinking they are still right. Now they're probably homeless. Unless they're mooching off someone.

[Barbara E]

Thanks to everyone for their comments. Solo, Julie, and others: I'm looking for cases of people who got into trouble at work for being insufficiently positive. Please write to me at barbeh@aol.com. Thanks.

[Jennifer]

Oh. My. God. You came back from being gone over a month and you didn't write about Sarah Palin?!

This is worse than the "Not Without My Anus" episode!

I totally disagree with the premise of this essay though. The "positive thinking" movement IS Calvinism - it's just wearing a slightly different outfit.

Calvinism is based on the idea that we are responsible for our own salvation.

Twist that a little to the right and you get objectivism: the belief that we create our own destinies to such an extreme degree that no one can ever take responsibility for the situation of someone else.

But twist it a little to the left and you get the self-help movement. Liberals aren't inclined to see the ugly face of it right away because a lot of it (especially when you get into alternative medicine) is shrouded in liberal language of equal rights and environmentalism.

But it's the same old Calvinism: You are ultimately responsible for your own salvation, so if anything goes wrong, you have no one to blame but yourself.

I'll email you the only story I have that illustrates my point.

[PeonInChief]

I think some lenders may have deluded themselves, believing that somehow all of these people with toxic mortgages would pay up. They'd cut spending, sell the plasma TV, take a second job and so on. What they didn't understand, because they have no idea what living on $30-40,000 a year means was that they couldn't make enough money to pay the mortgage if they worked 24/7, that there wasn't much to sell and they'd already cut spending to afford the introductory mortgage rate.

[Brian]

Was this the United States our founding fathers intended for us? Its so clearly geared to the benifit of the rich, which has now formed an elite class above the people. The middle class was more a temporary phenommena post world war 11, the age of television and mass commercialsim, and the peak of our industrialization. Now they have sunk it by diluting that work force with untold millions of new immigrants and elevation of the former slaves of the agrarian south to compete. The middle class was simply a temproray triumph of large numbers of workin people and pershaps the late 60's signaled the end of it. Now its just an illusion that credit cards and creative borrowing helped prolong another few decades. Its no wonder real incomes haven't increased for this group since 1968, the year aftet the Tate LaBianca hollywood murders that killed the peace and free love of the 60's that was mostly a middle class young people's movement. Then corporate america got smart and co-opted that lifestyle into its marketing while pushing a go-go anybody can make it era. At the same time it got the government to start building the velvet police state that has recently taken off its gloves to the citizenry over all matters of things, while completely ignoring the outright fraud of wallstreet. There is no middle class, just a credit empowered populace that feeds those at the top with magnified gains. When they ran into a finanical wall of their own undoing, they got the government to bail them out big time while offering next to nothing to the working classes. This nation eats its own and burps out anything it doesn't like to be cleaned up by the custodial crew at public expense. How convienent for those at thet top. They paid themsleves 10's, 100's, 1000's of millions of dollars and hardly anyone sqwaked. It took forever for the media to even beging to carry this story. I think the people have been cheated in ways the founding fathers would have been shocked at. True they represented mainly farming interests compared to todays finanical industry. Isn't tripling the price of a home, thus the mortgage payements, a type of useary? I think they w ould have seen that immediately as human nature has changed little if at all. I would love to see them look over some of these banking and mortgage ledgers and how wallstreet works. This is what their country of intent has become. What would they say?

[Danny Boy]

Brian does have a good point there. The protections built into the constitution by the founding fathers were meant to protect the people from a tyrannical governement. These protections included the bill of rights, 3 branches of government with checks and balances, and periodic elections. However, the founding fathers could never have seen the rise of multinational corporations, like banking institutions, which are far more powerful and tyrannical than any government in world history. Without such foresight, we have been stuck with a constitution that is too weak to handle the threats of highly bureaucratized multinational corporations.

I'm not sure what the solution is, but here is an idea: The only way to fix this is to have elected officials in office who are not money motivated, and will stand up to MNCs. This means writing laws. This means repealing other laws protecting MNCs. Moreover, it would also help to get the ball rolling on amending the constitution, since it does not address multinational corporations. Maybe a constitutional convention? Of course, I know this is a pipe dream. Where are we going to find politicians uncorrupted enough to do this? I leave this to all of us, as an assignment.

[Brian]

There is no reason the people couldn't convene a constitutional convention to simply update the constitution for the modern era. There are plenty of history and legal and economic scholars out there looking for a new wikepdia like hobby. They could ceertainly do plenty of research and make lots of nice charts. As a populist cause it would draw in some of the elected politicians too. It would not be binding, but would create great national and press interest and vett some of or best and worst ideas to hone into a finished document we could simply present on the media or to congress with a large peaceful march that garners the kind of attention mlk got. I am sure it would have a profound effect.

[Frank Sabatino]

This govenment is based on Natural Law Theory, that each human has the right to compete, survive, pursue happiness, and keep his profits. Any collectivism shall have direct representation back to the individual. This system represents the natual condition of humans, as primarily preditory pack animals.

Frank Sabatino

[Brian]

yes, we are certainly predatory pack animals, that is why when I look at the architecture of skylines such as NYC and SF it makes me wonder where all that engineering talent came from.

[John]

Denmark has consistently won the happiest country on earth. Why? They have low expectations. If something good happens, then great, but they don't expect to be rich, or never get old, etc. Something to think about. Another thing is that Danish culture is fair. wages are fair, health care is free and lavish. If you think America is a Democracy, then you must be joking. I have no hope that America will ever be a good place to live in again. This whole place is going down. Move to Denmark, Canada, Ireland, or some other "civilized" place to live. Do any of you really want to raise kids here? Another main reason is that in post industrial America they simply don't need that many workers anymore. The working class and most of the middle class is going to scrape by. If you aren't already rich, there is very little chance of becoming rich, even if you are smart or talented. There simply aren't the avenues for you. It is much like winning the lottery. Same thing with playing professional sports, look at the statistics. How many people become a famous actor, etc.? The American dream has to be redefined around family and friends and little comforts.

[Brian]

well our type of speed up economy has taken us from our family and friends and none of us have free time to do anything other than work and shop anymore. America's population has grown 100 million in my time so our growth rate is extremely high compared to other developed nations. You can feel the crowding pushing us all in, and creating a more cantankerous self absorbed populace. Perhaps that is why there are so many more laws on the books, zero tolerance, and so many arrested for all sorts of "offencses" now. The only thing allowed anymore is to work and to shop. When I was a kid a fathers income would be sufficient to provide a middle class living for a family of 4-7 and they would have some free time to pursue friends, hobbies, sports, travel, a small house on the shore. Now it takes two incomes to barely scrape by with a simple house and a perpetual wall of incoming bills and no free time. The pressures are so great they are tearing apart middle class families. I am not even talking about the poorer people in urban and rural areas who have become fatherless single parent hellholes with many disturbed kids moving through the juvenile justice system, many members of predatory felony gangs. Denmark is one of those countries where everybody gets 5-6 weeks vacation and they really celebrate their holidays like we use to. The American press use to roundly criticize their long vacations as I guess the American corporate advertisers didn't want their workers taking more than a week or two, and amazingly our own workers bought into their master's interests. What I see is the type of corporate economy we have has substituted its own interests in profits and power over a better more fun lifestyle for its workers. You can understand this up to a point, but the obssessive hammering of the middle class's previous lifestyle so that they can pay every more of what was once their wealth to the leadership and moneyed classes. It is a one way class warfare, where the media pushes the star system in sports and industry in a way that ordinary workers without a hint of a chance believe they too can become a star if they just work harder. Shows like American Idol and teams like the lakers so brainwash the optimistic viewers, most of whom will be lucky to even get two full weeks a year vacation to really take. So yes, I agree your take is on mark. I can remember when it was pretty common for the town's men to stop in a bar and have a few beers with friends on the way home from work or on a holiday and it wasn't a felony or job loser. People had hobbies, people built up fantastic yards and did much of their won remodeling and painting of their house and grew beautiful little gardens. Now all that is either not done or outsourced to the lowest on the labor totem pole, usually immigrants where once it was high school kids and local tradespeople. With that goes our sense of community and new strata's are shelved in insulating our organic feeling of being interconnected. I can see why the government is so worried over a possible credit contraction as that could fundamentally be a game changer if people start finding alternative ways to occupy themselves rather than simply working and shopping.