Last weekend, Nashville ran out of gas. This was not because of significant shortages, but because of a belief that there were significant shortages. So, people rushed to get gas. And we ran out.
This is a demonstration of sunspot equilibria, one of the items on my still- incomplete list of the five useful things I learned in macroeconomics. What if people believed that sunspots cause the populace to turn into violent beasts who, behind their smiles, “good morning”s, and “bless your heart”s, secretly plot our demise; they appear to act normal in every way but wait for their chance to attack us. In what Charles Gibson incorrectly labeled the “Bush Doctrine,” we may all contemplate preemptive self-defense by attacking first. Then, of course, sunspots did cause the populace to turn violent.
A feature of these self-fulfilling prophecies is that there are multiple equilibria; usually one very good one where we expect calm and act calmly, and another very bad one where we expect the worst and, by our reaction to it, cause it.
One simple role of government is to help coordinate the populace on the better outcome. Neither our local Nashville government, nor our presidential candidates, seem to grasp that.