Friday, September 5, 2014

How it is when times are good

"When times are good" -- When was that?

Oh, in the early 1960s, say, and in the latter 1990s.

Consider the '90s. In The Sixteen-Page Economic History of the World, a paper from 1999, Gregory Clark wrote:

There are surely many surprises ahead for mankind in the centuries to come, but for the most part the economic future is not an alien and exotic land. We already see how the rich live, and their current lifestyle predicts powerfully how we will all eventually live if economic growth continues. Anyone who has visited the British Museum or the Sistine Chapel, for ex­ample, has had a foretaste of the relentless tide of tourism set to be unleashed on the world by another few decades of strong economic growth. Even the high-income demand for unique and individualized travel and dining expe­riences is now catered to on an industrial scale.

Just a little over the top, don't you think? I mean, the nineties were good, but who would have written such a thing during the crappy economy we had after the fall of the Twin Towers? Or after the fall of Lehman? Today, surely, no one would express such expectations.

Consider the '60s. In the 31 December 1965 issue of Time magazine, we read:

In Washington the men who formulate the nation's economic policies have used Keynesian principles not only to avoid the violent cycles of prewar days but to produce a phenomenal economic growth and to achieve remarkably stable prices.

Just a little over the top, don't you think?

What was it Minsky said? Something like the expectation of good times feeds on itself. Something like that.

But, dammit, that's what we have policy for: to prevent irrational exuberances.

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