Economic PTSD: The Psychological Effects of the Recession

By Michael Bader, AlterNet. Posted January 14, 2009.

Having recently lost 40 percent of my own retirement savings, it's not hard to empathize with others in the same boat, including their feelings of helplessness, rage, guilt and shame.

Empathy for oneself and others is necessary but not sufficient. The antidote to helplessness begins with compassion and acceptance, but it doesn't end there. It involves grief but can't rest there. We need psychological healing but not apart from healing the world.

Outrage is part of the healing that we need. But our public outrage at being betrayed by the greed, mismanagement and political shenanigans that created the current crisis is compromised by all the subtle and secret ways that we avoid confronting painful feelings of helplessness and, instead, irrationally hold ourselves accountable.

This creates a political problem: While the helplessness we feel is legitimate, our ability to rationally respond to it by trying to correct its real structural causes is compromised by the guilt and shame that we've internalized.

Our real responsibility to change the world -- something we can do -- is undermined by the false and self-blaming feelings of responsibility for things that we didn't and can't do. The paradox is that we have to face the ways that we're really helpless in order to own the ways that we're not.

What is the alternative? The alternative to irrational guilt is real innocence. The alternative to denial is grief. And the solution to helplessness is to get angry and fight back.

The problem for progressives is psychological as well as practical. Like everyone else, we struggle with passivity, cynicism and confusion about how to effect change in the current climate.

Some of us are waiting on the sidelines to see what Obama will do, criticizing or celebrating his choice of advisers. Others are actively organizing and participating in various efforts to influence political outcomes. But most of us, I believe, are facing the difficulty of maintaining and building on the hope and passion generated over the last year in the presidential campaign.

In my view, our capacity and energy for political engagement is sapped by hidden psychological reactions to the current economic catastrophe, reactions complicated by feelings of guilt, responsibility and helplessness.

We feel responsible for things we didn't do and helpless in the face of things we could do. We feel guilty when we should feel innocent, cynical when we should feel hopeful and powerless when we should feel powerful. Understanding and resolving this confusion should help progressives enormously.

Everyone processes economic stress and anxiety differently. For every rational response to this recession, there is an irrational one -- one that derives less from objective circumstances and more from the peculiarities of the human psyche. Such peculiarities are no less unreasonable because they are common. Irrational feelings of envy, self-blame and denial rear their ugly heads in many of us, often with painful results. I see them in myself. I see them in friends. And I see them in my clients.

Self-blame is one of the most insidious and common of these reactions. It's not that we blame ourselves for failing to anticipate the exact moment when the stock market began to collapse, although some do. Most of us are too rational to openly fault ourselves for not being that omniscient.

Instead, the self-blaming is subtler and starts a little later in the time-line, e.g., I should have moved everything to cash when it first happened, or I was in denial and now I'm paying for it, or So-and-So predicted that the bottom was falling out, and I just didn't listen.

Sometimes, such guilt is spiced up with a dash of envy: My neighbor just sold his house and was sitting on the profits waiting to buy another one -- the lucky bastard. Or, my brother-in-law saw this coming and moved to the sidelines a year ago, or even, from one patient, my best friend consulted a psychic last spring who convinced her to get completely out of the stock market!

Such stories, real and apocryphal, invariably provoke twinges of envy and self-criticism. Their good fortune highlights our failure. Often, such self-castigation continues right up to the present: I should probably get out now, but am afraid I'll miss the recovery. The implied judgment here is "fool me once, shame on you; fool me twice, shame on me." Whatever the facts of the matter (even the savviest of investors are not sure what to do at the moment), the underlying sentiment involves blaming oneself for some mistake, failure of nerve, intelligence or judgment.

In fact, while individuals here and there may have outguessed the markets, most of us didn't. And when "most of us" find ourselves in a similar predicament, that predicament can't possibly be an individual problem or be reasonably solved by individuals making smarter or more rational decisions.

When the dot-com bubble burst in the spring of 2000, many of my patients blamed themselves for being too greedy, or for going against their common sense by listening too much to their brokers, or for going along with the herd even though they knew better.

See more stories tagged with: economy, psychology, depression, recession, financial crisis, shame, guilt

Michael Bader is a psychologist and psychoanalyst in San Francisco. He is the author of "Arousal: The Secret Logic of Sexual Fantasies" and "Male Sexuality: Why Women Don't Understand It -- and Men Don't Either." He has written extensively about psychology and politics.

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