Wall Street and Frodo

In the current discussion about the economic state of the country (and the world) a word that is prominent in the lexicon is "confidence." Whatever the vagaries of the markets, there seems to be an agreement among analysts that the ultimate determining factor in the overall health of an economy is "confidence" (or more specifically "consumer confidence" or "investor confidence"). While there are many analytical models that can be used to determine levels of "confidence," there is, as we are finding out this week, no sure-fire way to directly manipulate those levels.

If "confidence" truly were something that could be harnessed and controlled, it could be the first example of human telekinesis actually working. Forget bending spoons, if enough white-collared folks concentrated hard enough, they really could do miracles ("miracle" defined here as a manipulation of reality using nothing more than the powers of the mind). But the reason these miracles will never come to pass is because even as financial culture is dissected and prodded with data, numbers, formulas, and complex objective algorithms, it is still ultimately governed by old-fashioned irrational psychological impulses, one notably being "fear."

But the optimist might ask why we can't rise above such primitive notions, particularly given that it was a long time ago now that FDR laid bare the spectral nature of that particular impulse. My response would be that "fear," despite all of its unreasonable permutations and manifestations, is a primal and necessary check on another primal impulse: "confidence." It doesn't take a genius to see that confidence is both necessary and dangerous. Not enough confidence, and you will starve to death. Too much confidence, and you will be eaten. So to complicate the aphorism: "We have two things to fear--fear itself, and the denial of fear."

From this perspective, a look at the vast majority of narratives throughout human history and across cultures can be read as the attempt to strike the balance between confidence and fear. The hero must take risks in order to accomplish something, but must use prudence to mitigate those risks. If the hero dies, we call this a tragedy. And traditionally, the tragic flaw that brings about this death is hubris, or too much self-confidence. But even in stories where the hero lives, they must often overcome a hubristic flaw.

This formula has been in place since ancient times, but an example that continues to resonate in contemporary culture would be the Lord of the Rings trilogy. Several of the protagonists are forced to negotiate a balance between confidence and fear, most notably the central protagonist, Frodo. He fits the reluctant hero archetype--fearful and even timid from the outset, he learns to overcome that fear with ever-increasing doses of confidence. However, his self-confidence swells upon his maintaining possession of the ring (which in granting invisibility also grants complete fearlessness), and all would have been lost had in not been for the intervention of Gollum.

But the presence of Gollum also complicates the "confidence/fear" binary. He introduces another factor--greed. Greed is an element which can tip the balance between these impulses. Greed feeds confidence and eradicates fear, at least at first. Once greed has run its course, the balance is reversed, as confidence is crushed and fear is unleashed. One more thing about greed: it is an irrational impulse that can't be factored in algorithms.