Monday, April 1, 2013

Beware of wagging the dog!

Good morning economists! After taking a long break from blog writing (mainly due to increased workload and due to current events in Cyprus) I would like to examine today the idea of wagging the dog.  In fact today's post is inspired by the current economic crisis in Cyprus.

In 1997, a great movie hit the cinemas starring Dustin Hoffman and Robert De Niro. The movie was called "wag the dog" coined from a well known phrase in politics. The movie was about a presidential candidate who was involved in a sex scandal. In order to throw off the public's attention to the scandal, a movie producer was hired by the candidate's staff in order to stage a fake war. The idea was that everyone (voters) would be too preoccupied with "war" events to pay any attention to the sex scandal.

In a sense we as individuals are "wagging the dog" on a daily basis and on a much smaller scale. Haw often do you find yourself caught in a conversation which makes you feel uncomfortable? Think about your first reaction. Most likely, you will attempt to gracefully change the subject of the conversation. "Isn't the weather nice today", is one of the more usual catch phrases when you "wag the dog".

The problem with this short term solution is that the problem continues to exist and will eventually surface in the future. In the movie, staging a fake war may have thrown off the public's attention but it was not a real answer to the sex scandal. Wagging the dog will most likely work to minimize short term disutility (sense of uneasiness and anxiety) but as long as no real solution is found, the problem will continue to exist in the long term and most probably it will become more severe as well.

Have a great day!


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