The shaman, let’s say, wants the people to plant more crops and work harder in the fields to make the crops grow. So the shaman does a fertility dance to petition the fertility goddess for her favors. The people believe the fertility dance will make the crops grow. They get excited, and start planting with more alacrity. They also work extra hard and put in longer hours in the fields because they now believe the fertility goddess is on their side. And the crops grow! The dance worked; the prayers have been answered. The shaman might believe in his own magic; or he might be a manipulative cynic. It doesn’t matter. The desired outcome occurs either way.

Notice that the effectiveness of shamanistic economics, if and when it is effective, does not depend on what X and Y are. They could be almost anything. It could be that X is a reduction in the unemployment rate and Y is a program of Fed asset purchases. Or it could be that X is an increase in iPad sales and Y is an auction of relics from Steve Jobs’s house. All that matters is that apart from whatever actual causal connections exist between X and Y that operate independently of expectations, there are also a lot of popular beliefs about the connection between X and Y that cause people to act with the expectation that Y will cause X.

Shamanistic economics, when it becomes a routine way of life, debases and undermines our democracy. Its continued efficacy depends on the perpetuation of false and superstitious beliefs among the public, which corrupt public understanding and the capacity for rational public deliberation. It also encourages, and even depends to some extent for its operation, on an attitude of deferential awe toward the central bank and its leadership. And it encourages policy makers themselves to adopt an operating stance of aloof and frequently deceitful control of the masses, rather than a posture of open and accountable public service to the citizenry. The shamanistic policy maker is not a public servant; he is a magus.