In my previous post I quoted TV-show-President Josiah Bartlet from 25 years ago, who said GDP growth of 2 to 2½ percent is "lackluster, even anemic" and that growth in the 4½-to-5 percent range is "considered robust" but not "spectacular".
25 years ago, 2½ percent growth was thought lackluster. Sickly. Weak and unhealthy. In current thinking, 2½ percent growth is considered good.
Today's definition of good growth is half what it was 25 years ago. They moved the goalposts.
Keynes said economists are the caretakers of "the possibility of civilization." In other words, economists do not create
civilization. They make it possible.
Less optimistically, we can say that by holding to failed ideas, economists make civilization impossible.
A depression is a long, severe recession. A dark age is a long, severe depression. In the dark age, civilization is impossible.
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Freshman orientation, Fall ’81—Volcker’s prime rate towered over my dorm loft, yet Econ 101 lectures still preached: “Anything under 4 percent real GDP is stall-speed—civilization demands better.”
Spring mid-terms, ’82. The economy prints –1.8 percent real GDP, and the same profs abruptly bless 2–3 percent as a “nice, steady clip.” Convinced the numbers didn’t match the narrative, I crossed the quad that April and changed my declared major from economics to political science.
To commemorate the defection, I typed up a sheet of economist one-liners, stuck it in a bookstore frame, and hung it above my dorm-room desk—right where the macro problem sets used to sit:
# Classic quip 1981-82 Reality Check
1 George Bernard Shaw: “If all the economists were laid end to end, they would not reach a conclusion.” Monetarists vs. Keynesians in the student union—chalk dust, no TKO.
2 Paul Samuelson: “The stock market has predicted nine of the last five recessions.” Wall Street’s ’81 mini-rally split the faculty boom/bust, 50-50.
3 John K. Galbraith: “The only function of economic forecasting is to make astrology look respectable.” My roommate’s horoscope nailed ’82 better than our regression homework.
4 Thomas Carlyle’s parrot: Teach it “supply” and “demand” and you’ve got an economist. After three weeks of IS-LM, the parrot felt over-qualified.
5 Edgar Fiedler: “Ask five economists and you’ll get five answers—six if one went to Harvard.” Our TA was from Harvard; we got seven.
6 Laurence J. Peter: “An economist will know tomorrow why the things he predicted yesterday didn’t happen today.” Every post-mortem on the ’81-’82 slump began, “What the model meant to say was …”
7 Ronald Coase: “If you torture the data long enough, it will confess.” My highlighter felt complicit each time –1.8 % became “transitional softness.”
8 William G. Simms: “Economists put decimal points in forecasts to show they have a sense of humor.” 2.937 % “projected rebound” for ’83—sure, very precise.
9 Ronald Reagan quip (spirit alive on campus): “Economists see something work in practice and wonder if it works in theory.” Supply-side chalkboards filled faster than Pac-Man gobbled dots.
10 Galbraith, encore: “Economics is extremely useful—as a form of employment for economists.” The only recession-proof jobs on campus were in the econ department itself.
Post-script, Senior Spring ’85: GDP roared back to 7.2 % in ’84 and settled at 4.2 % in ’85, yet by then the goalposts had permanently reset to “anything north of two is robust.” Political science never pretended otherwise—and my framed wall of zingers still reminds me why the switch made perfect sense.
Oh, I like that! I remember the George Bernard Shaw one. The Ronald Coase one (on torturing data) is my new favorite. Thanks!
I looked it up: TV-show-President Josiah Bartlet was born in 1942. He could have been out of high school by 1960. He would have had the 60s and most of the 70s to embrace the high-growth-rate numbers that I quoted him saying. The timing seems to work.
On high growth in the 1970s:
Everybody says growth was slow in the 1970s. As I see it, growth was good in the 1970s, but there were less months of growth in the 1970s than the 1960s. There were more months of recession in the 1970s, plus the months of growth when the Fed was slowing the economy to fight inflation. As I see things, an economy that is being slowed by policy is not the same as a slow economy. To me, if the central bank had to step in and slow the economy, then growth was certainly not slow before they stepped in. But people talk about "stagflation" as if it was a natural phenomenon.
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