Public opinion is a critical force in politics, including all aspects of governance. To provoke hostile or negative public opinion is to invite a gigantic hammer or a wrecking ball. And I am saying that not because I want to be dramatic but to capture some of the scale of what is happening in the current global financial crisis. For, financial markets are also affected by the power of public opinion. In fact, what market analysts and pundits often describe as public sentiment or market confidence is really the working of public opinion. The point is that whether the market trades in electoral votes or financial securities public opinion is a critical force. It is always better to have public opinion on your side.
Why am I talking about this? Because of what is happening in financial markets these days. Confidence is tumbling. Gigantic players in global financial markets are tumbling. Central banks everywhere are scratching their heads, wondering what is going to hit next as public sentiment turns dark, as waves upon waves of panic threaten to overwhelm ramparts long considered formidable.
These perturbing events remind me of this gem from a paper published in 1892 by Arthur Ellis ( It was brought to my attention when I was working on a chapter in a forthcoming book on governance reform.) Says Ellis:
'Good credit is public opinion that particular firms, or people in general, can pay up. If opinion goes the other way, credit breaks...The appetite to buy [shares on the Stock Exchange] is only based on the belief or opinion that there will be others to buy in their turn. That has been the history of all great booms, or bubbles, from the South Sea bubble onwards, and it is also the history of a number of little known booms of which the public have heard little, and would understand little even if they heard...Facts are "a good horse to ride" but the knights who tilt the markets know that opinion is their most trenchant weapon.' (From 'Influence of Opinion on Markets,' Economic Journal, 1892, pages 113-16.)
While researching the same chapter I also found this other gem. According to Jacques Necker (1792), finance minister to King Louis XVI of France: 'Only fools, pure theorists, or apprentices fail to take public opinion into account.'
Those who are managing the current crisis need to learn a thing or two about public opinion, particularly the market regulation/governance issues at the very heart of public concerns.
Photo Credit: Flickr user rednuht