Samuelson retired this week as a columnist in the Washington Post having written about economics and business for this publication since 1977. He wrote about his views on economists, which to this jaundiced individual summarised the discipline of economists pretty accurately. His pertinent comments on the economy were also well worth reading. Here’s some of what he wrote:
Economists consistently overstate how much they know about the economy and how easily they can influence it. They maintain their political and corporate relevance by postulating pleasant policies. Presidents claim the good and repudiate the bad. There are practical limits to how much economic growth and living standards can be accelerated and sustained.
Recessions remain a threat. Any doubts about that were settled by the 2007-2009 Great Recession and global financial crisis, which at the time was the worst economic collapse since the 1930s’ Great Depression. The business cycle hasn’t been conquered yet and possibly never will be. That’s my main conclusion from a half-century of economy-watching. For at least three reasons, I see this cycle of overpromise continuing.
First, the quest for economic status and power pushes economists and their political sponsors toward exaggerated promises that lead to widespread public disappointment. To be sure, there are long periods of prosperity, but they tend to end badly. That’s been the case since the 1960s.
Second, people have a hard time changing their minds. Once their minds are made up, they are relatively impervious to argument, evidence and persuasion. Life is infinitely complex. To simplify, people make assumptions. If they routinely changed all their assumptions, they’d go crazy, as would the people around them. People do change, but the catalyst is usually some traumatic event.
Third, modern democracies have a hard time making sacrifices in the present for gains in the future. We’re already grappling with this problem. From 2010 to 2030, the elderly’s share of the population (65 and over) is projected to rise from 13 percent to 20 percent. Spending on Social Security and Medicare will skyrocket, and already is. Yet we have done little to prevent spending on the elderly from squeezing the rest of the federal budget. Global warming poses a similar issue: As yet, there is no consensus to spend today in the vague hope that we can curb climate change several decades from now.
When I read these fine words, I thought about the National Party economic policy this election. Once again, they are proposing to stop putting money aside for future superannuation funds. Will they never learn? They don’t seem to be able to keep their hands off this fund.
I joined the Labour Party for two reasons. One was I found Norm Kirk an absolute inspiration. The other was that I was a huge fan of the Labour Party superannuation scheme. Muldoon ran Cossacks across the screens of New Zealand and people soaked it up. One generation took the cash and sold the next ones down the creek. Still the National Party continue this monstrous con on our society.
Here’s the article which covers this nonsense: