Wednesday, June 22, 2011
Why do people fall into bubble thinking and how does one communicate to them when they do? Here is a case. Law schools are turning out tens of thousands of young lawyers for whom there is no work or jobs at low wages. Yet, young men and women continue to go to law schools as if the employment picture doesn't affect them. There is magical thinking in a bubble -- for example, the belief that real estate values will continue to rise and property prices will never retreat. Americans are subject to bubbles time and again, and they never seem to learn. Logic doesn't apply even to the most sophisticated thinkers and analysts as we learned in the last financial meltdown. So, how does one talk to people who won't listen -- perhaps, can't hear you because of their psychology? The answer is most likely that you don't. They have to learn for themselves what folly is, which says a great deal about the limits of communication. Remember when we didn't listen to our parents and had to find out for ourselves? Bubbles are like that.