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Archive for January, 2015

An old (wrong) recipe: we all want to be consumers

I should start with an apology; it’s been far too long since my last post and I haven’t attended this blog as I would have liked. There have been so many things happening around in money and central banking that I will certainly need some time to catch up. I hope the patient readers of this blog find the forthcoming entries worthy of their time.

Last Autumn I was kindly invited to attend a very interesting seminar organised by the Institute of Economic Affairs (IEA) at its headquarters in London, and chaired by S. Davies; the topic was the so-called ‘stagnation hypothesis’, recently popularised by L. Summers at the 14th IMF Research Conference. Interesting as it was I am not going to write on it today but rather on a poem (that I must confess I hadn’t read at the time) a colleague of mine at the University of Buckingham (Malcolm Rees) brought to our attention. While we were in the midst of the discussion about the best way to tackle the slow (hypothetically secular) growth of the developed economies, Malcolm used his turn to read aloud a poem written in 1934 by Patrick Barrington, ‘I want to be a consumer’, which you will find below. Following the recipes of those economists supporting the underconsumption theory back in the 1930s, of course very well-known and popular well before the publication of Keynes’ General Theory, the poem summarises the views of a boy willing to consume more for the good of the economy as a whole. Then and now we all hear these young (and not so young) ‘lads’ encouraging us all to borrow more money and simply spend or even better asking the government to do so in our own interest, so the magical multiplier of spending operates the needed miracle. I am afraid this old recipe is quite short-sighted: as the brilliant (and austere) Catalan writer (Josep Pla) famously asked in 1954 during his visit to New York and saw all the lights displayed everywhere in the city, ‘and this, who pays for it?’. Even more, if adopted as a systematic policy, will this pattern of more and more spending be sustainable? And who works and saves more so we can increase production on long term basis? Well, I guess the answers to all these questions are only implicit in the poem and I am sure the readers of this blog will certainly know that these tricky questions are not so easy to answer; but indeed essential to bear in mind so perhaps we can avoid the same policy mistakes that have brought us to the chaotic economic situation where we are still in.

Juan E. Castaneda

PS. I am afraid ‘the old lady’ is back.

‘I Want to be a Consumer’

(by Patrick Barrington. Originally published in Punch, 25th April 1934. Text taken from the blog StudyofEconomics.wordpress.com)

“And what do you mean to be?”
The kind old Bishop said
As he took the boy on his ample knee
And patted his curly head.
“We should all of us choose a calling
To help Society’s plan;
Then what do you mean to be, my boy,
When you grow to be a man?”

“I want to be a Consumer,”
The bright-haired lad replied
As he gazed up into the Bishop’s face
In innocence open-eyed.
“I’ve never had aims of a selfish sort,
For that, as I know, is wrong.
I want to be a Consumer, Sir,
And help the world along.

“I want to be a Consumer
And work both night and day,
For that is the thing that’s needed most,
I’ve heard Economists say,
I won’t just be a Producer,
Like Bobby and James and John;
I want to be a Consumer, Sir,
And help the nation on.”

“But what do you want to be?”
The Bishop said again,
“For we all of us have to work,” said he,
“As must, I think, be plain.
Are you thinking of studying medicine
Or taking a Bar exam?”
“Why, no!” the bright-haired lad replied
As he helped himself to jam.

“I want to be a Consumer
And live in a useful way;
For that is the thing that’s needed most,
I’ve heard Economists say.
There are too many people working
And too many things are made.
I want to be a Consumer, Sir,
And help to further Trade.

“I want to be a Consumer
And do my duty well;
For that is the thing that’s needed most,
I’ve heard Economists tell.
I’ve made up my mind,” the lad was heard,
As he lit a cigar, to say;
“I want to be a Consumer, Sir,
And I want to begin today.”

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