Shorter Niall Ferguson
Shorter Niall Ferguson. Keynes was so totally gay that he would never write about Economic Possibilities for our Grandchildren.
update: Ferguson has apologized very fully, firmly denouncing his comment on Keynes, sexuality, and time horizons.
I’m sure that Ferguson will retract, in the long run, all he’s said.
“I’m sure that Ferguson will retract, in the long run, all he’s said.”
In the long run we are all dead.
well, at the risk of being totally off topic and ignorant about the reference
i wonder if “economic possibilities for our grandchildren” doesn’t represent a core fallacy of the macroeconomics religion.
as Andrew Biggs was reported to say in a recent comment: “if Social Security wasn’t there and working people had to “save” their money instead, the 8% return they could get on their savings would make everyone rich beyond our wildest dreams in the future.”
what’s wrong with this, besides a number of other things, is that is assumes that “8% return” is just going to happen, and that money is the measure of all things.
i am not sure that we haven’t been seeing over the last 30 years a kind of “limit to growth.” sure, you can still “make money” on the markets except when you can’t. but the workers are not getting any richer and living conditions seem to be getting worse for even the rich, though they may not notice it standing in front of the golden urinals at their favorite places where rich people like to spend their time and money.
probably i am just an old crank, but i think “economists” ought to be asked to explain in greater detail what they mean about “economic possibilities” and just how they expect to get there.
as they like to say about government, just throwing money at it won’t fix it.
What Ferguson said was actually pretty intriguing.
Without kids, you can just live for today. Once you have kids, you think a LOT more about their future.
I have no children and am far more environmentally responsible than anyone I know that has children (or grandchildren). Typically, I note, they are vested in their belief in the American Dream, and although they may now use their own waterbottles, they otherwise consume like sailors on shore leave.
hmmmmm…I know people who have children and some who don’t. Can’t say there is a correlation regarding economic thought, nor what future and how to get there.
“Without kids, you can just live for today.”
You can. But that isn’t an imperative. I know people without kids who have a huge social conscience.
“Once you have kids, you think a LOT more about their future.”
Some do. Some don’t. It isn’t an imperative. I know a number of bad parents who neither care about their kids or anyone elses.
Ferguson apologized but he’s said the same thing many times before. Essentially he’s apologizing for getting caught this time.
i suppose it might be true that some people think more about the future after they have kids than they did before.
but what good does it do if you don’t know what’s true and what isn’t.
if thinking more about the future means “worrying about the deficit” you have been scammed. if it means cutting Social Security (so you can invest more in the stock market) you have really been fooled.
if it means worrying in a vague way about the environment but not doing anything about it… not even “protesting”… then what good does it do?
which is a long way of saying i think most of us “think about the children” but that just makes us easy marks for any politician who claims to be “worried about the children.”
Our lives are not getting better only if you are a white, male, central class American, but if you are rich, an immigrant, or a factory worker in China, your life really is getting better
@Jake we are lucky to have such a noble commenter — and modest too.
I have children. I have noticed a fundamental change in my attitude towards the distant future. I don’t have time and energy to worry about it any more. When I was young and stupid (now I’m old and stupid) I planned to live a life of extreme thrift saving all my then hypothetical income to give it to the poor and consuming as little energy as possible. It didn’t work out that way. I shouldn’t blame others for my sins, but it has a lot to do with the birth of my daughter.
My (largely theoretical) willingness to sacrifice my own comfort did not extend at all to sacrificing hers. In effect I became vastly more selfish and short sighted roughly when her mother became visibly pregant.
it happens to also be true that my income increased 10 fold when she was 4.5 months old. It is a lot easier to decide not to spend hypothetical income than to actually not spend actual income.
Oh another thing, for the 15 years preceding her birth I didn’t voluntarily kill any living thing (voluntarily because I did when it was required for a job). After she was born, I decided that I would kill mosquitoes which might bite her. Now I kill them even though she is hundreds of miles away. Also papatacci which look like gnats but have a bite which is ten times as irritating as a mosquito bite.
In any case, my experience is that having children makes me worry much less about things like the national debt or atmospheric C02 concentrations. Sure I don’t want my daughters drowned by rising oceans. But when they were babies I sure thought that they could handle rising oceans as adults better than they could handle dirty diapers right now. Parenthood focuses the mind wonderfully — on the here, now and near future.
@Coberly Your point is Keynes’s point. He wanted to argue that there are more important things for a socieity than ever increasing GDP. However, he had to admit that GDP in his country at his time was low enough that many people were necessarily poor. His thought was that by 1970 or so the UK would be so rich that further GDP growth wouldn’t be needed and productivity advances could go to increased leisure (he seems to have worked pretty much all the time spending a large part of his huge gigantic effort praising leisure). In fact GDP per capita in 1970 was higher than Keynes’s most optimistic forecast. But somehow we are never close to satisfied. Economic possilities … is wildly optimistic, but it is wildly optimistic about limits to materialism (consumismo) not about non limits to GDP growth.
On the 8% I see a different problem. Real people could earn 7% real if they invested their wealth in a highly diversified portfolio of equities. But we don’t. Many of us seem more dedicated to making financiers rich. Most seem terrified of the whole business so we accept low returns which are safe even in the short run. Also the 7% is on average and relevant only to an infinitely lived agent — like the social security administration. The correct response to huge returns on equities is for the social security administration to invest in equities as all other pension funds do. I think that this would have some nice effects such as providing funds for more generous pensions, eliminating the national debt (on net Federal financial assets equal to liabilities) and making recessions milder. In contrast there would be the cost of … well something … if it’s so great why don’t Reagan and Clinton agree it should be done … uh …
Just do it.
In any case, invest in treasuries vs Invest in equities is a completely separate question from invest collectively through the SSA or individually through the financial services industry, which unlike the SSA has only our best interests at heart.
The GAY comment aside, I believe that Niall Ferguson is right, and that this Keynesian bull-sh*t will eventually cause a catastrophic economic collapse that will make this farce, otherwise know as “Efficient Markets”, blow up in the faces of Central Dictators, in one cosmic super-nova….
while I agree with much of what you say, and might agree with more if we had time to really talk about it, i think you’d find that 8% or 7% is a chimera.
certainly my state, which based on pension on the expectation of earning 8% in the markets, has had to reduce my pension because the markets are not delivering… not for the past 13 years.
i think “pay as you go with wage indexing” is an elegant solution to the problem.
as for all that other stuff, i tried to provide for my children… just like almost every other parent… but “skills and opportunities” are not as equitably distributed as we might like.
as for Keynes point about leisure… I agree with him. and we could have that level of income/leisure if we only had a culture that supports the idea. instead we have massive corruption and a culture that supports mindless consumption among those who get the money and grinding poverty among those who don’t.
also, of course, we have to keep up with the Russians.
oh, btw, my daughter is a ph.d. biologist and SHE is worried about global warming.
oddly enough, not about rising oceans. more about rising mosquito populations. (rising in latitude).
There is a pressing need for a new law for blog comments. A one similar to Godwins’. Any economics comment thread will be ended by someone commenting that Keynes was queer.
@ Wall Street Fool;
That is an apt nom de blog, emphasis on the Fool. Keynes was bullshit you say? Presently there is a documentary from Ken Burns et al titled The Dust Bowl. Check it out. For seven years from about 1930 to 1937 Nature, the weather and poor farming techniques turned much of the southwest into a Sahara in America. Misery and economic ruin accompanied by deteriorating health were rampant in the region. It was the Depression on steroids. And low and behold in steps the big government of FDR. Programs to buy out marginal farmers, recondition the land on a grand scale and put people to work, any kind of work, were implemented. Our too big government under FDR and the New Deal saved this nation from mediocrity.
Yes Wall Street Fool, your chosen name fits. Wear it well.
@coberly the fact that the stock market often yields much less than 7 % real (sometimes less than 0% nominal) is another reason why the SSA should invest in stock. such an investment would imply a huge budget deficit when the market crashes. That would be an automatic stabilizer.
The risk is an additional benefit. The Federal Government should bear (really hide) the risk. This would stabilize the economy. 7 % real on average and much much better for the country than risk free. What’s not to like ?
well, Robert, I think you are having me on. but at my age it’s time to be serious. I cannot even picture a world in which everyone is 7% richer every year.
but money is funny. as others have pointed out, when we have to go to the store to buy the air we breathe, we will count that as a huge increase in GDP and think ourselves quite smart because we made 10% on “air stocks.”
You, of all people, should not be criticizing anyone else’s nom de plume. Particularly when yours fits so well.
If I knew an investment strategy that paid 8%, or even 6%, with some degree of reliability over periods as long as 20 years, I would get rich setting up a mutual fund capable of delivering that level of performance. Go to any mutual fund “fund picker” page and try to find a fund with that level of return over a commensurate period. Good luck. Even the index funds don’t cut it, and the others are horrendous in comparison. People have been spouting this 7% nonsense since the 70s, but no one has simply opened up a fund that consistently provides such a high level of return, and that’s pre-tax. And no, it isn’t the fees that get you. It’s the raw lack of long term performance.
with respect to “in the long term we are all dead.”
i think this also applies to the thinking of the pfree marketeers. they don’t worry about long term consequences… just get what they can today.