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by Deepak Chopra
When Barack Obama's remarkable eloquence was dismissed as "just words" during the primary campaign, he survived the criticism. Telling the truth and offering inspiration aren't just words. They are incredibly important in keeping a society together. Now Obama faces another challenge where words can make a difference over whether the economy recovers. Injections of billions of dollars have done little good to the financial system so far. What we need is an injection of confidence.
I was reminded of Japan's aging Emperor Hirohito, who went in for surgery on his pancreas in the fall of 1987. He recovered well until a year later when he suddenly collapsed, and from that time onward, his health steadily deteriorated until he died the following spring. What he didn't know is that his surgeons had discovered cancer of the duodenum during the original operation. No one told the emperor he was dying, because in Japan the news of a fatal diagnosis is traditionally kept from the patient.
The connection with the economy is this: When is too much news worse than none? Full disclosure can harm the patient, whether you are talking about a sick emperor or a sick economy. The words "You are dying" have a devastating effect, and I'd say the same is true of the words "worst crisis since the Great Depression." It's a firm belief among doctors that some patients die from their diagnosis; they go into sudden, rapid decline despite assurances that their condition is treatable. There's even a term for this, the nocebo effect, which is the opposite of the placebo effect (where patients get better because they are told they will).
The American public took the news of economic crisis harder than anyone expected. Consumer confidence and spending nose-dived, and much of it was due to "just words." It wasn't just ordinary citizens who reacted this way; sophisticated financial institutions panicked as well.
Which brings up an ethical dilemma. For decades in this country it was standard practice not to frighten patients by telling them that they had a fatal illness. Sometimes even the family wasn't told (the emperor's family wasn't, as I understand it). Then ethics changed, and now we have the opposite practice: full disclosure. Is that an improvement? Nobody knows, really. Most patients demand full disclosure as their right, just as market analysts demand full disclosure from companies. A lot of the current crisis, we are told, was brought on by lying. Banks were doing their best to keep secret their astoundingly foolish risks.
Fortunately, the U.S. economy isn't dying. But it has collapsed, just like Hirohito, when the official press report was that things were just fine. Now we are going through a weird phase in which happy talk is foisted on us, alternating with dire warnings. It's like telling the emperor, "You're dying, but the outlook is rosy." The great economist John Maynard Keynes realized almost a century ago that all markets are psychological. The current crisis is proving how right he was, and how tricky a role "just words" play in the ongoing drama. As a master of words, Obama needs to give us some we can believe.
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