Humble, Competent Dentists

Catching up on some reading over the long holiday weekend, which provides an excellent opportunity to sit back with some left over turkey and reflect. I thought the piece below was particularly fitting against the current economic backdrop:

We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterised the nineteenth century is over; that the rapid improvement in the standard of life is now going to slow down . . . that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us.

I believe that this is a wildly mistaken interpretation of what is happening to us. We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires.

For the moment the very rapidity of these changes is hurting us and bringing difficult problems to solve. Those countries are suffering relatively which are not in the vanguard of progress. We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come–namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour. But this is only a temporary phase of maladjustment. All this means in the long run that mankind is solving its economic problem.

Unfortunately, most of us are too concerned about today, tomorrow and next week to focus on the long run, but we still have plenty to be thankful for. We have certainly had our share of struggles in the years leading up to and following the global financial crisis, but we submit that the US remains the cleanest dirty shirt in the laundry. I’ll elaborate on this statement between now and year end, but for the time being, interested readers can review Advantage America, written by Gary Shilling, one of the most insightful (and bearish) economists on the street.  For what it’s worth, I agree with most of the points here, but the bull story is largely priced for perfection at all-time highs in US equity markets. And in many ways, we still haven’t learned a thing.  Back to our holiday reading:

To those who sweat for their daily bread leisure is a longed–for sweet – until they get it. Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy. To judge from the behaviour and the achievements of the wealthy classes today in any quarter of the world, the outlook is very depressing!

The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.

Of course there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth – unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them.

But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

Some things never change. The global risk that respondents at this year’s World Economic Forum rated most likely to manifest over the next ten years is severe income inequality. Perhaps we’ll have better luck over the next hundred years if we don’t pull ourselves apart at the seams before then.

Meanwhile there will be no harm in making mild preparations for our destiny, in encouraging, and experimenting in, the arts of life as well as the activities of purpose.

The pace at which we can reach our destination of economic bliss will be governed by four things – our power to control population, our determination to avoid wars and civil dissensions, our willingness to entrust to science the direction of those matters which are properly the concern of science, and the rate of accumulation as fixed by the margin between our production and our consumption; of which the last will easily look after itself, given the first three.

But, chiefly, do not let us overestimate the importance of the economic problem, or sacrifice to its supposed necessities other matters of greater and more permanent significance. It should be a matter for specialists-like dentistry.

If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!

– John Maynard Keynes, Economic Possibilities for our Grandchildren (1930)

Splendid indeed, says my good friend and family dentist, Dr. Graham. Despite my personal ongoing bad attack of Keyne’s economic pessimism, my no-cavity streak remains intact. See you in six months!