Lyric discussion by whatsthematterhere 

How about this for how the meaning of the song applies to the movie Magnolia: All the main characters in Magnolia have been subject to some form of child abuse by their parents -either sexual or emotional (abuse of trust/abandonment etc). Their lives are now significantly impacted by the consequences of this (mainly low self-esteem, self-hatred, feeling of worthlessness). They have been seeking various ways or achievements to make themselves feel better which turn out to not repair the problem.
But its actually not going to stop until until they wise up and accept that there is nothing wrong with them, but the problem is their parents previous treatment of them. So "just give up" trying to protect them or deny the harm they did, and learn to like yourself again. Hence the last line of the song is actually ending on a postive and optimistic note.

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