Selling The Recession-The Lie of Authority Hot

 

The National Bureau of Economic Research, NBER, has a more general framework for declaring recessions.

 

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.”

 

The prospect of a recession is the talk of Washington. It’s also the talk of every major newspaper across the country. Look at the headlines from a recent paper,

 

“Home prices could fall 20% from 06 levels, S&P reported back in 2008.”

 

This report from Bloomberg News continues to state, “There is a growing economic consensus that U.S. home price declines will be larger than previously forecast and that the slump in the U.S. housing market will last longer then previously anticipated. The real estate slump has taken its toll, with more than 31,000 jobs eliminated last year in the sub prime mortgage industry by California-based companies, including 12,000 positions at Countrywide financial in Calabasas, (and) 3,200 at New Century in Irvine, Ca.”

 

Let’s look to the experts, the authorities who should know.

 

Alan Greenspan, former chairman of the Federal Reserve recently stated that the current financial crisis in the U.S. is likely to be judged as the most wrenching since the time that followed World War II.

 

Other noted authorities are sounding alarms, too. Harvard professor Martin Feldstein, former head of the National bureau of Economic Research, said recently that he believes the country is in a recession and it could be a severe one. He has also stated that the Fed needs to be more aggressive in responding to the credit crunch if a serious economic slump is to be averted.

 

Treasury Secretary Henry Paulson said that the housing correction will take time to work out and that it continues to cause the biggest downside risk to the economy.

 

For those who have predicted a “mild” slump the credit crisis that erupted last August and claimed its biggest victim with the forced sale of Bear Stearns Co. is raising doubts that this will be “mild”.

 

“Bear Stearns was a clear wake-up call. It resonates with everybody and highlights the severity of the stresses in the financial system, “ said Mark Zandi, chief economist at Monody’s Economy.com.

 

Lyle Gramley, a former Fed board member and now an economist with Stanford Financial Group said, “It is possible that we could be entering the worst recession of the post-World War II period. The threat is certainly there.”

 

This just in from “The Fiscal Times”;

‘If you think the U.S. economy is bad now, just wait for a few months.  Things are about to become absolutely nightmarish.  None of the long-term economic trends that are hollowing out our economy have been addressed and more bad economic news seems to come out virtually every single day.  Now there is constant talk of the "next recession" in the mainstream media.  But did the last recession ever truly end?  The number of good jobs continues to decline, more stores are closing, incomes continue to go down, credit card debt and student loan debt are soaring, the housing market resembles a corpse, the number of Americans living in poverty continues to rise and government debt is at unprecedented levels.  We are losing blood fast, and almost all of our leaders are either too corrupt or too incompetent to be able to do anything about it.  The U.S. economy really and truly is about to go into the toilet, and if something is not done very quickly we are going to experience a complete and total economic disaster in this nation.

 

So I say, why live? Why not just throw up your hands and surrender to being miserable, having financial difficulties, and blaming the politicians whose policies or lack of have put us in this no-win predicament?

 

Because it’s a lie! It’s a mind-set. It’s the same old submission to authority that has happened before. The recession is not real. It’s a perceptual choice.

 

It’s the lie of authority that creates what is called perceptual bias. In other words, the authority states something as being true, and then you and I are set up to see a world that establishes that truth.

 

This affects an area of the brain called the reticular activating system, which dictates what you pay attention to in your environment. The statements of authority effect your perception.

 

Many times in my live presentations I’ll have an audience member come up on stage after I ask “who’s afraid of snakes?” I’ll give this person an envelope with a picture of a rattlesnake on the front and ask them to open it. I’ll tell them to “trust me-it’s safe!” They open the envelope to a popping sound and movement and usually scream and jump away!

 

Then I show them what they actually responded to. It wasn’t real. It was their perception. They expected danger so the slightest evidence to support their expectations was exactly what they paid attention to. What they responded to was a wire in the shape of a U with a rubber band stretched across and a washer in the middle. The washer was wound tight so when the envelope was opened it unwound making a popping sound. This is called “perceptual bias.”

 

After the individual sees this I then wind it up again and ask them to open the envelope one more time. Of course, this time there is no scream. What was different? Their expectations were different. Their perception was different. Their mind-set is the only thing that was different.

 

What mind-set are the authorities creating? One of doom and gloom. You better not put that new flooring in your office right now because that’s non-essential spending and with today’s uncertain economy, the failing stock market, uncertain world status, rising gas prices, you better spend as little as possible.

 

You better not make that new hire or that acquisition to gain market share in this uncertain market. You better not implement that training program now. You better wait to live!

 

What about these authorities? Who are they any way? Are they right? If they are then how do you explain the realtor in New Jersey, selling residential properties that is having the best year of her life? How do you explain the financial advisor and the estate planning, asset protection attorney who are having the greatest years ever in their businesses and are taking a 2011 $100,000 Mercedes for a test-drive as they upgrade their personal vehicle? How about the small business owner that just signed two major agreements with clients and is now buying a new Bonanza airplane as he redefines his wants versus needs? What about the doom and gloom?

 

Let’s take a closer look at how humans respond to authority. Up until about five years ago it was thought to be impossible to grow new nerve tissue, that is, until it was done! The mind-set that nerve tissue could not regenerate was destroyed when the protein ocumodulin was discovered to generate this process. Doing what was thought to be impossible destroyed the old mind-set.

 

Consider the now famous experiments of by Yale psychologist Stanley Milgram. This experiment measured the willingness of study participants to obey an authority figure that instructed them to perform acts that conflicted with their personal conscience. He described his findings in detail in his 1974 book, “Obedience to Authority: An Experimental View.”

 

Obedience is a basic element in the structure of social life. Some system of authority is a requirement of all living. For many of us obedience is a deeply ingrained behavior tendency and overrides ethics, sympathy and common sense.

 

Milgram set up an experiment to test how much pain an ordinary citizen would inflict on another person simply because he was ordered to by an experimental scientist.

 

“Stark authority was pitted against the subjects’ strongest moral imperatives against hurting others, and with the subjects’ ears ringing with the screams of the victims, authority won more often than not.” (Stanley Milgram)

 

The basic experiment was to be a study of memory and learning. One participant was designated as the “teacher” and the other as the “learner”. The experimenter explains that the study is concerned with the effects of punishment on learning.

 

A list of paired words is read and whenever a mistake is made the teacher is to deliver electric shocks that escalate in degree. The shocks consisted of levers labeled from slight shock, moderate, strong, very strong, all the way up to severe and two levers labeled simply XXX.

 

What the teacher didn’t know was that the learner was an actor, never receiving any shocks at all. This experiment was focused on the teacher, not the learner.

 

With each incorrect response the teacher was instructed to execute a higher voltage, a more painful shock. As the actor (learner) would appropriately scream in agony, the experimenter simply gave the teacher one of the following responses;

 

 

The prediction was that virtually all of the subjects would refuse to obey the experimenter as the learner was in extreme pain. They expected only 4% would reach the level of 300 volts.

 

What they found however was quite the opposite. Dr. Thomas Blass of the University of Maryland Baltimore County performed a meta-analysis on the results of repeated performances of the experiment. He fount that the percentage of participants who are prepared to inflict fatal voltages remains remarkably constant, 61-66% regardless of time or place.

 

Professor Milgram elaborated two theories explaining the results. The first is the theory of conformism describing the relationship between the group of reference and the individual person. A subject, who has neither ability nor expertise to make decisions, especially in a crisis, will leave decision making to the group and its hierarchy. The group is the person’s behavioral model. This is also referred to as “group think”.

 

The second is the agentic state theory, wherein, per Milgram, the essence of obedience consists in the fact that a person comes to view himself as the instrument for carrying out another person’s wishes, and he therefore no longer sees himself as responsible for his actions. Once this critical shift of mind-set has occurred in the person, all of the essential features of obedience follow.

 

What you see here is the common theme that obedience to an authority is anchored in forfeiting your responsibility over to that person. You may not be an expert on the economy so you forfeit that over to authorities and then you behave accordingly.

 

That’s the key here. You can participate and be a part of an ongoing recession in 2011 and obey the authorities, or you can take responsibility for your choices, for your actions and take the necessary steps to generate the successes that you demand for yourself now and in the future. Or, you can of course suffer because after all, it’s a recession! Reality is in the mind of the observer. What will you pay attention to in 2011-12? It’s your choice.

 

Bob Davies