Which theory is "basically loopy"?
That Hitler was hysterically blind? See - Eur Arch Psychiatry Clin Neurosci (2007) 257:245 DOI 10.1007/s00406-006-0648-4 supported by... http://www.dredmundforster.info/1-edmund-forster-adolf-hitler supported by... "The letters made available to him were exchanged between two prominent American physicians and confirm that Hitler was treated for hysterical amblyiopia, the psychiatric or conversion disorder commonly known as hysterical blindness" - http://www.abdn.ac.uk/news/archive-details-10772.php
or that he was treated for the hysterical blindness with hypnosis? (2004, October 13). Fuhrer doctor not a shrinking violet. MX (Melbourne, Australia) (1 - Melbourne ed.), 010. Retrieved November 26, 2011, from NewsBank on-line database (Australia's Newspapers) supported by... http://books.google.com.au/books?id=TzG26VVP8BMC&pg=PA98&lpg=PA98&dq=Hitler+'found+blind+faith'&source=bl&ots=zsTz8pOFWH&sig=IqpXzj6KjXsP0J7ytQEfaoQ3n6o&hl=en&ei=drLRTqTYK-aoiAeOibXcDg&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCQQ6AEwAQ#v=onepage&q=Hitler%20'found%20blind%20faith'&f=false or Have a look at the literature yourself, and when you struggle to find primary sources, please do keep in mind that Hitler actively sought to destroy those sources and actively sought the death of the eye witnesses also.
Anyways, regardless of the truth of Hitler's hysterical blindness and his treatment by his Psychiatrist of instilling a delusion, the concept is supportive of ata's point that... "I'd estimate that it would be pretty dangerous to grant yourself permission to decide what delusions to instill in other people for their own good."
Sorry to bring up such an extreme example in support of ata's point, but I honestly believe that instilling a delusion in another is indeed a very dangerous thing to do, and hence granting oneself permission to do so is also dangerous.
One should also consider Hitler's instilling of a mass delusion upon the German people, the propaganda-delusion that the Jews were "sub human" also made it possible for the Holocaust to occur, in this consideration it is revealed that an instilled delusion facilitated the death of 6 million Jews.
One might also consider other examples of instilled delusion by propaganda as also being dangerous, for example fundamentalist Muslim propaganda that "all Americans are evil doers", or Christian propaganda that "all Muslims are fundamentalists", and how these delusions create a world of distrust, hatred and war between two cultures that for the main part laud peace.
Anyways, regardless of the truth of Hitler's hysterical blindness and his treatment by his Psychiatrist of instilling a delusion, the concept is supportive of ata's point that... "I'd estimate that it would be pretty dangerous to grant yourself permission to decide what delusions to instill in other people for their own good."
You're aware that this basically endorses generalization from fictional evidence?
What if self-deception helps us be happy? What if just running out and overcoming bias will make us—gasp!—unhappy? Surely, true wisdom would be second-order rationality, choosing when to be rational. That way you can decide which cognitive biases should govern you, to maximize your happiness.
Leaving the morality aside, I doubt such a lunatic dislocation in the mind could really happen.
Second-order rationality implies that at some point, you will think to yourself, "And now, I will irrationally believe that I will win the lottery, in order to make myself happy." But we do not have such direct control over our beliefs. You cannot make yourself believe the sky is green by an act of will. You might be able to believe you believed it—though I have just made that more difficult for you by pointing out the difference. (You're welcome!) You might even believe you were happy and self-deceived; but you would not in fact be happy and self-deceived.
For second-order rationality to be genuinely rational, you would first need a good model of reality, to extrapolate the consequences of rationality and irrationality. If you then chose to be first-order irrational, you would need to forget this accurate view. And then forget the act of forgetting. I don't mean to commit the logical fallacy of generalizing from fictional evidence, but I think Orwell did a good job of extrapolating where this path leads.
You can't know the consequences of being biased, until you have already debiased yourself. And then it is too late for self-deception.
The other alternative is to choose blindly to remain biased, without any clear idea of the consequences. This is not second-order rationality. It is willful stupidity.
Be irrationally optimistic about your driving skills, and you will be happily unconcerned where others sweat and fear. You won't have to put up with the inconvenience of a seatbelt. You will be happily unconcerned for a day, a week, a year. Then CRASH, and spend the rest of your life wishing you could scratch the itch in your phantom limb. Or paralyzed from the neck down. Or dead. It's not inevitable, but it's possible; how probable is it? You can't make that tradeoff rationally unless you know your real driving skills, so you can figure out how much danger you're placing yourself in. You can't make that tradeoff rationally unless you know about biases like neglect of probability.
No matter how many days go by in blissful ignorance, it only takes a single mistake to undo a human life, to outweigh every penny you picked up from the railroad tracks of stupidity.
One of chief pieces of advice I give to aspiring rationalists is "Don't try to be clever." And, "Listen to those quiet, nagging doubts." If you don't know, you don't know what you don't know, you don't know how much you don't know, and you don't know how much you needed to know.
There is no second-order rationality. There is only a blind leap into what may or may not be a flaming lava pit. Once you know, it will be too late for blindness.
But people neglect this, because they do not know what they do not know. Unknown unknowns are not available. They do not focus on the blank area on the map, but treat it as if it corresponded to a blank territory. When they consider leaping blindly, they check their memory for dangers, and find no flaming lava pits in the blank map. Why not leap?
Been there. Tried that. Got burned. Don't try to be clever.
I once said to a friend that I suspected the happiness of stupidity was greatly overrated. And she shook her head seriously, and said, "No, it's not; it's really not."
Maybe there are stupid happy people out there. Maybe they are happier than you are. And life isn't fair, and you won't become happier by being jealous of what you can't have. I suspect the vast majority of Overcoming Bias readers could not achieve the "happiness of stupidity" if they tried. That way is closed to you. You can never achieve that degree of ignorance, you cannot forget what you know, you cannot unsee what you see.
The happiness of stupidity is closed to you. You will never have it short of actual brain damage, and maybe not even then. You should wonder, I think, whether the happiness of stupidity is optimal—if it is the most happiness that a human can aspire to—but it matters not. That way is closed to you, if it was ever open.
All that is left to you now, is to aspire to such happiness as a rationalist can achieve. I think it may prove greater, in the end. There are bounded paths and open-ended paths; plateaus on which to laze, and mountains to climb; and if climbing takes more effort, still the mountain rises higher in the end.
Also there is more to life than happiness; and other happinesses than your own may be at stake in your decisions.
But that is moot. By the time you realize you have a choice, there is no choice. You cannot unsee what you see. The other way is closed.