But we shouldn’t delude ourselves: What’s justified in the short run won’t work in the long run. Ensuring permanent “full employment” in a “high-pressure economy” is a seductive goal. It’s also utopian. It exceeds our powers of economic management.
The promise of constant full employment poses internal contradictions. If people believe that prosperity is guaranteed, they will behave in reckless ways that destroy prosperity. This happened in the 1960s with inflationary psychology, in the late 1990s with the tech bubble and in the 2000s with the housing crash. Societies that sow unrealistic expectations will reap destructive disappointments.
This is a typical example of Samuelson's opinion articles about economic policy. This article, like most of his articles, begins with several paragraphs that demonstrate his familiarity with economics. In this case, he shows that he is familiar with the idea of the "natural rate of unemployment". That is, the unemployment rate consistent with an acceptable rate of inflation, which can vary over time. After showing that he is familiar with freshman economics, he proceeds to the conclusion that is quoted above. He claims that three large swings in the US business cycle were caused by the false expectation that prosperity is guaranteed. Apparently, his unsupported explanation for the three economic events he cited, proves that it is counterproductive for governments to have a goal of a full employment economy. Governments, of course, cannot eliminate the business cycle but Samuelson argues that is a mistake for governments to create the expectation that they will develop policies to moderate the business cycle.
I have gotten into the habit of reading Samuelson's opinion articles by skipping to the conclusions that he reaches in the last couple of paragraphs. That is the message that he wants to deliver to his readers. The rest of what he writes is generally superfluous. It serves primarily to convince readers who share his political views that they are credible. In other words, Samuelson is good propagandist.
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