The human mind is built to think in terms of narratives, of sequences of events with an internal logic and dynamic that appear as a unified whole. In turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework for motivation. Life could be just "one damn thing after another" if it weren't for such stories. The same is true for confidence in a nation, a company, or an institution. Great leaders are first and foremost creators of stories.
Social psychologists Roger Schank and Robert Abelson have argued that stories and storytelling are fundamental to human knowledge. People's memories of essential facts are, they argue, indexed in the brain around stories. Facts that are remembered are attached to stories. We keep in mind a story of those memories, a story that helps define who we are and what our purpose is.
Politicians are one significant source of stories, especially about the economy. They spend much of their time talking to their public. In doing so they tell stories. And since much of their interaction with the public concerns the economy, so also do these stories.
A good example of this was the waxing and waning of economic confidence in Mexico, as analyzed by Wharton School doctoral student Stephanie Finnel. She finds that economic confidence in Mexico over the past 50 years reached a peak under the presidency of José López Portillo, who served between 1976 and 1982. He made Mexico itself the subject of an "underdog" story. López Portillo had published a novel in 1965 entitled Quetzalcóatl. Quetzalcóatl was an Aztec god, who, like Christ, was expected to make a reappearance at a time of great transformation. The novel was reissued in 1975, on the eve of López Portillo's election campaign, and it became a story for Mexico's future greatness, itself regenerated from the ancient Aztec tale. The presidential jets were named Quetzalcóatl and Quetzalcóatl II.
The story was all the more convincing because of two fortuitous events. First was the discovery of new oil reserves throughout the 1970s just before López Portillo's presidency. As a succession of wells was drilled, proven reserves steadily rose. Expectations ran wild. Some even claimed that Mexico would eventually be second only to Saudi Arabia, with no fewer than 200 billion barrels of proven reserves. A second stroke of luck came with the second oil crisis, as the price of oil reached a peak in 1980 that was more than double its level compared with the early 1970s.
The idea of undreamt-of Mexican wealth took hold of people's imaginations. Starting with his state of the union address in 1976, López Portillo stressed the importance of oil: "in the current era, countries can be divided into those who do and those who do not have oil." And he began to act like the president of a wealthy country, offering a Global Energy Plan to the international community, joining with Venezuela in the 1980 Pact of San José to sell oil at preferential rates to the nations of Central America and the Caribbean, and even offering foreign aid. In 1979 Pope John Paul visited Mexico, and the visit was widely interpreted as a sign. Mexico had become rich and important.