I just finished a book by Richard Overy called The Twilight Years analyzing the dying throes of the exceptionalism of the British Empire (American clerisy, please take note).  There was a fascinating discussion about the peace movement in the UK between the wars and its impact on the collective psyche of the nation.  That movement was robust, heterodox, complex and very wooly.  There were dozens of platforms, committees, leagues and unions pursuing one version or other of peace from the absolutist to those heretics (that the absolutist hated the most) who thought that it was OK to defend peace with war if push came to shove.  I particularly loved the loony notion of an international Air Force to bomb aggressors for peace.  Reminiscent of the famous 1960s bumper sticker Kill a Commie for Christ!  Multiple millions of people were involved in this exercise at one level or the other and this fascination with the notion that peace could be achieved if we had enough meetings, sang enough songs and engaged in enough marches and protests (some suggested meditation…no, really!) survived Mussolini’s little fete in Ethiopia, the Spanish Civil War, the Japanese in Manchuria and Hitler’s revanchist behavior in central Europe.  Magical thinking came to mind.  

Magical thinking is the notion that what one thinks about how reality works, or indeed what reality is, is indubitably true.  Uncontestably true.  If we think it, it must be true.  It metamorphosizes “I wish” into the certainty of a mathematics.  Opinion aspiring as physics.  Think astrology!  

Magical thinking is absolutely destructive of rational discourse on any issue on which it touches, and this has been important throughout history and is important today.  We may applaud ourselves as comparatively rationalists compared to the darkest of the Dark Ages, but it’s really not true, is it?  

Let’s start with some historical examples.  Of course, the problem is that there’s not too few, but just shockingly too many.  Just for a taste, how about these whoppers?

  • Geocentric Astronomy.  It certainly looked like the sun circled the earth, but until it was debunked by Copernicus and others, science was largely stalled.  
  • Returning to the gold standard after the first World War will fix everything.  Yeah, it fixed the British economy, but good.  Depression ensued.  
  • How about attaque à outrance, initially thought up by Marshall Joffre, who was so already ancient when the war broke out, and clearly hadn’t had a new idea since Napoleon had his troop line up in nice, neat lines and marched them toward the enemy.  This meant attacking machine guns with bayonet charges.  And to make all this especially delightful, the French, at the beginning of the war, costumed their infantry in red and blue uniforms with white cross hatching on their chests.  A gesture of amity to the German soldiers, making it way easier to aim their guns?  Hundreds of thousands died uselessly.  
  • Or how about the notion in 1914 that the war would be over by Christmas?  That certainly didn’t work out, but degraded any planning or preparation for a long war.  
  • Rock and roll will degrade the brains of youngsters (okay, it was perhaps a little true).  It did contribute to a generational divide which didn’t do the United States any good at all.  
  • Remember the Domino Doctrine…if we lose one squalid jungle enveloped country, the commies will rule the world?  Wasn’t Viet Nam a delightfully uplifting experience?  It achieved nothing geopolitically; it killed thousands of US kids (not to mention Vietnamese) and ironically gifted us with a nifty trading party with whom we have a large trade deficit 50 years on.  
  • If a foreigner doesn’t understand your English, talk slower and louder.  ‘Nuff said.  
  • The rational man assumption behind virtually everything in classical economics.  Took us a while to notice that the rational man hadn’t left the building, indeed, he’d actually never been in the building in the first place.  

I could go on.  

The point is that if any of these things become predicates…things of absolute certainty, unquestionable rightness, and proof against questioning, any conversations about choices or outcomes that require taking on the shibboleths of magical thinking was going to run off the rational tracks right quickly.  

Magical thinking is ubiquitous because it’s easy.  It attracts consensus.  It simplifies the hard work of actually thinking.  If all believe the predicate, the space in which people can have disputation narrows, harmonious relationships ensue.  It also saves a lot of time and energy.  

Magical thinking is also sticky and rapidly ossifies into consensus.  Once that happens, it’s hard to break down.  I suspect there’s still some people around who think that Copernicus got it wrong.  

As the Scottish poet and writer Charles McKay said in Extraordinary Popular Delusions and the Madness of Crowds, “Men, it has been well said…go mad in herds, while they only recover their senses slowly, one by one.”  So it is with almost all these examples of magical thinking.  Once the herd turns to follow the bell cow of a really dumb idea; it thunders on for a considerable while and is extremely resistant to contrary voices.  If we’re lucky, eventually, common sense degrades silliness, but it’s usually too late to avoid considerable pain and hardship.  

Oh, of course, there’s typically a small rump of folks who dispute the consensus, who are prepared to take on magical thinking, but that’s an arduous road to travel and can, in fact, be dangerous.  We blessedly stopped burning heretics at the stake (yes, we did that for a while, just ask Giordano Bruno…Galileo got a January 6th pardon).  The throng of villagers with torches and pitchforks defending received wisdom are always angry and noisy when their certainty is challenged.  Today, nonconsensual views are roundly condemned as misinformation (a terrific Brave New World’s version of doublespeak).  How quickly the consensus congregation moves from “you’re wrong” to ‘you’re bad” to perhaps you just committed a crime!  It’s one thing if your fellows scoff, it’s another thing if you get disinvited from all the best parties.  It’s certainly a different level of screwed if you end up in a small jail cell addressing someone as “daddy.”  Consequently, for those few who contest magical thinking, they often do it gently, extremely carefully and consequently the impact on the consensus is often feeble and long in coming.  

Magical thinking often leads to disaster.  Okay, not always.  If you thought with certainty that indulgences got you into a Catholic heaven hundreds of years ago, no one died (well, actually they all did, of course) and the church got to commission some nifty art work.  No harm, no foul?  

But much in magical thinking’s fief can result in considerably disagreeable outcomes, and indeed can kill, as witnessed by the historical record.  I started all of this with a list of historically significant bits of magical thinking, but there are some candidates for today’s game of magical thinking Truth or Consequences, aren’t there?  

  • How about the Republicans continuing to insist they can cut marginal tax rates, reduce the deficit and not touch Medicare, Medicaid and Social Security?   Huh?
  • Covid and the consequences of enforced distancing and delay return to school, offices and regular way life (not to mention bleach) by governmental diktat.  We’re still struggling with the negative consequences of those decisions.  
  • Ukraine can win the war (okay, technically the jury is still out, but really?)  
  • Antisemitism died with old Adolf.  
  • One can talk sense into chubby, fanatical or psychopathic dictators because really, they’re just like you and me.  Did I see Neville in the West Wing recently?  
  • Inflation is transitory.  That cost 3+ years of inflation which we’re not getting back.  
  • The current administration can reverse the 20% general run up in price levels from the past four years, lower costs for Americans without anyone uttering the word deflation (which I think we all agree is pretty damn bad).  
  • The United States and Europe can, through the shear strength of belief, socializing the costs of lots of unwanted EVs and annoying windmills, solve the world’s climate change problems alone.  
  • Nothing we can do can change adverse climate change.  (Note that we often enjoy dueling magical thinking.). 
  • There’s nothing wrong with big, strong men competing in girls’ sports.  
  • Marxism is terrific, it’s just that Stalin, Lenin, Mao and Pot Pol got it wrong.  We should give it a try again!  Cheers to the 30% of clueless millennials who really say that they prefer it to capitalism.  
  • Governmental debt doesn’t matter.  We even have a name for this nifty idea…Modern Monetary Theory.  Does naming it make it less silly?  
  • Rent control is good for folks.  (That is, so long as they don’t need to be housed…“housed” is the right woke usage these days, correct?). 

All of these are strong contenders for a magical thinking award.  All of these drive out actual thought, debate and sweet reason.  

We should try not to let this happen (too often).  We should fight the obduracy of our reflective, perhaps innate, love of magical thinking (and it’s kissing cousin, conspiracy theories).  Let’s try to identify things which feel magical thinking-ish.  Let’s look for views that don’t really have conclusive data supporting the proposition and let’s be a little reserved about the certainties flowing from this type of thinking.  Take a little risk!  Be a contrarian!  Dare them to blackball you from the bougiest parties.  One of my favorite aphorisms is from Michael Crichton who said, “If it’s science, it’s not certain; and if it’s certain, it’s not science.”  Embrace it!  

Even if we are just a bit successful in treating the certainties of magical thinking with a little critical thinking, the quality of our conversation, debates, deliberation and indeed the quality of outcomes will be better.  

Diagnosing the disease is easy; curing or ameliorating its symptoms is much harder.  It would be delightful if we could agree that we will all, in good faith and with amity, allow or perhaps encourage contrary views, allow criticism, allow analysis of our favorite bits of magical thinking.  But that itself, may perhaps be a bit of magical thinking.  

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Richard D. Jones (“Rick”), Rick Jones is a capital markets and securitization practitioner highly rated by both Chambers, USA  and Legal 50

A leader in the industry, a recipient of both the CREFC Founders Award and the Distinguished Service Award from the

Richard D. Jones (“Rick”), Rick Jones is a capital markets and securitization practitioner highly rated by both Chambers, USA  and Legal 50

A leader in the industry, a recipient of both the CREFC Founders Award and the Distinguished Service Award from the Mortgage Bankers Association (MBA) for his leadership.  Rick publishes widely and speaks on a wide range of issues effecting the capital markets and mortgage finance.  He is a past president of the CRE Finance Council; a founder of the Commercial Real Estate Institute (CRI); a member and past governor of the American College of Real Estate Lawyers and a former chair of its Capital Markets Committee; and a past  member of the Commercial Mortgage Board of Governors (COMBOG) of the MBA.  He currently is chair of the CREFC  Policy Committee and co-chair of its PAC, Mr. Jones is a member of the Real Estate Roundtable, serving on its Capital and Credit Policy Advisory Committee.