I think our people in congress should take heed of the definition of blunder that Zachary Shore provides in the introduction to his book Blunder (Zachary Shore – Home).
To fully understand Shore’s definition you need to first understand the term “cognitive traps.” He says “cognitive traps” consist of “rigid ways of approaching and solving problems. Cognitive traps are inflexible mind-sets formed from faulty reasoning.”
The term “cognitive trap” applies to much of the thinking that passes for modern economic theory. And the Obama economic team and congress have fallen into a cognitive trap in formulating their “stimulus” plan.
Shore makes the distinction between mistakes and blunders. “A mistake is simply an error arising from incorrect data.” Most of the people involved in this economic mess (e.g. bankers and securities dealers) have made mistakes. They based their decisions on erroneous pricing data caused by the expanding supply of money. (I have covered this topic elsewhere.)
“A blunder, in contrast, is a solution to a problem that makes matters worse than before [they] began… [A] cognitive trap is the mental framework that led [them] to a blunder.” Caught in the cognitive trap known as Keynesian Economics, the Obama economic team and congress continue to advocate solutions that will eventually make the problem worse.
The current blunder has the same framework, or cognitive traps, as the blunder of the Great Depression. Hopefully, this one won’t be quite so bad.
Shore also says, “I believe we often blunder not because our thinking is wrong, but because it is rigid.” I, on the other hand, think the people in government suffer from wrong and rigid thinking.
(Quotes all extracted from Blunder by Zachary Shore.)