The Planning Fallacy

David Brooks, sounding (unusually) like the conservative that he claims to be, writes about the planning fallacy:

…Most people overrate their own abilities and exaggerate their capacity to shape the future….

The planning fallacy is failing to think realistically about where you fit in the distribution of people like you….

Over the past three years, the [government of the: ED] United States has been committing the planning fallacy on stilts. The world economy has been slammed by a financial crisis. Countries that are afflicted with these crises typically experience several years of high unemployment. They go deep into debt to end the stagnation, but the turnaround takes a while.

This historical pattern has been universally acknowledged and universally ignored. Instead, leaders in both parties have clung to the analogy that the economy is like a sick patient who can be healed by the right treatment.

The Democrats, besotted by the myth that the New Deal ended the Great Depression, have consistently overestimated their ability to turn the economy around….

Combine the planning fallacy with the Nirvana fallacy — comparing actual things with unrealistic, idealized alternatives– and you have governance at its worst: politicians making an inevitably imperfect and messy world even less perfect and messier.

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