In context it refers to the very same fallacy mentioned in Beyond the Reach of God just put into psychoanalytic terms. I understand if you dislike the style. I completely understand if you think psychoanalysis has a really shitty use of words, but that's really what he's saying, and you would have known if you were paying attention.
The point made in Beyond the Reach of God, that the universe can really hurt, kill and maim you without moral limit, that cancer isn't only allowed to happen to you in theory, but really to you, at any moment, that catastrophies like the holocaust, and the collapse of science in the middle east, and really can and do happen, is a real point that deserves to be made again and again. And again. And again.
You're actually citing evidence that supports my position. Yudkowsky makes it explicit in his essay that he didn't "get it" before, but that he does now. That goes against The Last Psychiatrist's claim that everyone (everyone!) makes decisions as thought they believe in God
http://thelastpsychiatrist.com/2012/09/the_nanny_state_didnt_show_up.html
Saw this and I thought it went so well with Beyond the Reach of God and Blue and Green on Regulation that I just had to post it here. It definitely articulates some of the frustrations I've had with people who break out in a rash of Libertarianism over one (on the surface) silly law being passed and reported on and then not:
A. Using the Principle of Charity to see what the opponent is really about. Even if it's silly, it shouldn't be *that* silly. See Policy Debates Should Not Appear to be One Sided.
B. Considering how it applies in the larger context. You should be free to buy big sodas but not [insert literally anything the government regulates here, which is a ton of stuff]. Why is this sillier than the other thing? See anything Less Wrong has written about the absurdity heuristic.
C. Thinking about your source of information, noting the feeling it's giving you, why it's giving you that feeling. Then realizing that it was specifically designed to give that feeling. If they did this, then dropping the line of thought or, deciding that they're so much smarter than the people in charge. *And then forgetting that the fact that they feel that was part of the plan of those who reported it, too.* Seriously, The Last Psychiatrist is great for that stuff.