Logic and Emotion in Politics

Winston Churchill’s famous quote on this topic goes as follows: “If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty you have no brain.” Depending on your political persuasion this is not necessarily the most endearing polemic to lead off with, but it certainly frames the issue. Are fiscal liberals governed primarily by their emotions? Are fiscal conservatives governed primarily by their logic? There are countless ways to examine this – to wit:

Did the entirely valid emotional desire to see financially less-fortunate families become homeowners create the edifice of sand upon which the financiers of Wall Street built their derivatives house of cards?

Did the hyper-literate, ruthlessly logical calculations of economists and bankers – who thought they had mastered the art of risk management – completely backfire on them? Was the forest of fundamentals obscured by trees of logic?

In the above set of scenarios, emotion and logic both backfired, but a cynic would disagree with both assessments. A cynic would suggest policymakers knew perfectly well their attempts to sell homes to anyone regardless of their earnings or credit history was bound to fail, and that they pushed these manifestly irresponsible policies because they were taking money off the table the whole time. A cynic would make a similar claim against the Wall Street folks – that they knew the whole scheme was going to crash, but they collected their bonuses, bet against their own clients, concocted elaborate models that obfuscated [...] Read More