Tuesday, December 2, 2014

The Washington Post Rewrites Economic History

Robert Samuelson has a weekly column in The Washington Post that gives him a platform to broadcast his views on economic topics.  His approach is similar to that of David Brooks who writes opinion pieces in the New York Times.  They both rely upon conservative think tanks, and conservative authors, to fuel their imagination about the political economy.  They are both skillful writers with the ability to condense complex economic ideas into short articles that reach millions of readers.  Samuelson follows that tradition in this article.  The libertarian Cato Institute hosted a conference that featured James Grant who wrote a book on the US recession in 1921.  Grant argued that the recovery from the 1921 recession was more rapid and stronger than the recovery from the Great Recession because the government did not intervene in the market.  Prices and wages were allowed to fall.  Lower prices encouraged consumers to spend and lower wages provided businesses with an incentive to hire more workers.  Samuelson, following Grant, concludes that we would have had a faster recovery from the Great Recession if we had allowed the price system to work its magic.  Samuelson takes Grant a step further.  He asserts that the recovery from the 1921 recession destroys the intellectual capital of the economics profession which advocates counter cyclical fiscal policy in response to recessions.

Samuelson's article will misinform millions of readers about the political economy.  The rebuttals to his article will reach a handful of readers.  It is no wonder that the public is generally confused about the political economy and the role of government in the economy.  The new owner of the WP is a libertarian who will be pleased with Samuelson's contribution to the public understanding of the political economy.

No comments:

Post a Comment