Robert J. Samuelson Says Goodbye and Good Luck

From Robert J. Samuelson’s column in today’s Washington Post headlined “Goodbye, readers, and good luck—you’ll need it. What 50 years of writing about economics has taught me.”:

Dear Readers,

It’s time to quit. Since coming to Washington in 1969 as a young reporter, I have written, by my crude calculation, about 2 million words, most of them columns for The Post, Newsweek and the National Journal. Some years ago, I promised myself that I wouldn’t overstay my welcome: I would not continue my column simply because I could. I’m almost 75. If I haven’t yet said what’s on my mind, I never will.

Here are a few parting observations. As regular readers know, I write on the economy and its connection with society and politics. Over the years, I’ve explored dozens of subjects: recessions, inflation, executive pay, budget deficits, climate change, poverty, the welfare state, trade, taxes, aging, cybersecurity, China, the stock market — and many others.

So far as I can tell, nothing that I have written has ever had the slightest effect on what actually happened. I’ve routinely suggested shutting down Amtrak, not because I dislike trains (I don’t) but because Amtrak is an excellent example of how the federal government has acquired so many nonessential functions. Amtrak continues chugging along, costing billions of dollars for small public benefits. But I’m resigned to this. No one elected me to anything. In our system, the people rule, not the pundits; and that’s how it should be.

The truly big economic story of the past half-century has been the rise and fall of “macroeconomics.” This is economists’ fancy term for using interest rates, taxes and government spending to regulate the economy’s growth and stability. This once seemed doable. Now, less so.

What happened?

In the 1960s, the American disciples of British economist John Maynard Keynes (1883-1946) argued that they could tame the business cycle. One well-known economist put it this way: “Recessions are now generally considered to be fundamentally preventable, like airplane crashes and unlike hurricanes.”

It didn’t work. Instead of reaching “full employment” (generally defined as an unemployment rate of 4 percent to 5 percent), we got easy money and inflation (peak: 13 percent in 1980). Paradoxically, we also got four recessions from 1970 to 1982 as the Federal Reserve tried to contain the inflation it had unleashed. “Stagflation,” it was called. Only a deep recession in the early 1980s, engineered by then-Fed Chair Paul A. Volcker, reduced inflation to single digits.

A similar saga occurred in the late 1990s and early 2000s. A long period of solid economic growth — labeled the Great Moderation by economists — fueled easy credit, shaky loans, defaults and insolvent lenders. Presidents George W. Bush and Barack Obama responded decisively. Fed Chair Ben Bernanke and Treasury secretaries Henry Paulson Jr. and Timothy Geithner did yeoman work in avoiding a second Great Depression. But that doesn’t excuse their failure to anticipate the housing boom and to preempt the bust.

I didn’t see it coming, either. But I’m not an economist, as I periodically reminded readers. I’m just a reporter who covers economics. One of the pleasures of journalism is that you get to learn lots of new “stuff.” I have learned much from economists. With some exceptions, most are intelligent, informed, engaged and decent. In my experience, this truth spans the political spectrum. But it’s not the only truth.

Another is this: 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.

I hope I am wrong about the future. That’s one excuse for my throwing in the towel now, in the midst of one of the great news stories of our time. I am a man of the 20th century, but we are now facing the problems of the 21st century, which demand new policies and norms. Goodbye and good luck — you’ll need as much help as you can get.

My special thanks over the years to Bill and Sue Jones, who made a young reporter feel at home in a strange city; to Richard Frank, the late editor of the National Journal, who first assigned me a column; to Peter Silberman, who moved the column to The Post; to Marge and Mel Elfin, who moved the column also to Newsweek; to Rich Thomas, the former chief economic correspondent for Newsweek, who has been a constant source of intellectual stimulation and moral support; to Alan Shearer, who syndicated the column through The Washington Post Writers Group; to Joel Havemann, a superb editor and better friend; and to Fred Hiatt, The Post’s editorial page editor who has kept me on the op-ed page for many years.

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