The very nature of confidence implies that human feeling transcends rational
thought. More specifically, we rely on confidence to make nearly every decision we face. Where it is impossible to quantify the probabilities of all possible outcomes, we make a selection because we have a history, because we’re familiar, or because we’re following our gut. Do you buy the same brand of mayonnaise at the grocery store or do you try a new variety each time? That’s easy – you buy the same one because you know you like it. Why take a chance? In the same way, we decide where to live, how to interact, and what to invest, not because we have all the information but because we have some degree of confidence in our choice.
Uncle Sam expends an extraordinary amount of resources to enable economic growth: we seek to optimize unemployment and interest rates, regulate business enterprise, and manage spending to stimulate investment. In reality though, this is only one small piece of a successful economy. We cannot possibly accrue all the data we need to make purely rational decisions, so rely on confidence to cover the deficit. To truly maximize the potential for growth, we must achieve consumer confidence. No prospector would make an investment without believing themselves protected from consumer fraud, nor would a business owner build capability or a consumer make a purchase without the confidence that he or she will be able to reap the benefits. You wouldn’t be reading this if you hadn’t some degree of confidence you might gain something from it.
The true priority of our government, then, is to inspire this irrational feeling of trust. Whether that be through healthcare availability, consumer protection regulation, or law enforcement, our animal spirits require confidence: a subjective and arbitrary feeling that investing in our world is in our best interest. Political and economic beliefs aside, there can be no economic growth where there exists no public trust. A deliberate investment in the social capital of mankind is therefore necessary to maximize global economic potential, not because we lack data, but because our decisions are far more than simply rational.