When one’s sense of one’s value (or one’s existence) is dependent upon the delusions that indicate they are better than they actually are, that’s about as convincing as anything can be.
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People depend upon delusions in perception. There’s less contention when delusions are shared so that is usually the goal, but that doesn’t mean they should always be shared. You imply that majority determines what isn’t better. That is just as much a delusion as the delusions the paranoid homeless man uses to defend his grandiose perception. The majority is wrong all the time, and the perception of the majority is wrong all the time, even in scientific consensus; this is evident in our shared delusions of history.
There’s no reason to believe that grandiose stances are naturally unjustified. It’s funny how grandiose perceptions of authority, (whether king, god or majority,) are so socially acceptable, but grandiose perceptions of one’s self (or one’s group) are so condemnable. Both are equally delusional but the latter is more empowering to perception and so more naturally useful. It’s probably mostly in rebellion to the former the latter even exists, come to think about it.
If someone is incapable of bringing their views that conflict with the perceived majority’s (authority’s) views to the surface, delusions of grandeur is a way to defend those views within themselves. It’s not so much an illness as it is an adaptation to an illness. (Except when the term is used clinically, where I’m pretty sure you can just call it an illness; I mean, when janitors turned super-spies are involved. But even that seems related.)
Almost all people seem to give in to ideas of grand authorities on one level or another. Those who don’t must either have the constant resources necessary to deconstruct the notions of authority, or sever their minds in order to contain them. The more powerful the authority they must escape, the more powerful their separation from the authority must be.
If the authority is people in general it might only make sense for one to believe they know better than generally everyone on specific points they have significant confidence in. This, like you implied in your description, is understandable. I think the egotistical version of this happens when “generally everyone” becomes absolutely everyone and the point of contention becomes one’s very existence that has somehow grown to seem dependent upon believing oneself to be better as a whole than everyone else. It can be useful, in the perceptions it allows, but it’s not sustainable. Like dreams.