[Nasional-e] Man for all markets

Wed Oct 9 10:00:13 2002

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Man for all markets

JK Galbraith, distinguished author of The Great Crash, tells William =
Keegan that President Bush's moves to stimulate the economy will have no =
effect at all

Recent reports had said Galbraith looked frail, and he has certainly not =
been too well. But when this was being explained to me in advance, he =
grabbed the telephone and boomed: "Keegan, I'm on the mend." And =
certainly, when we spoke, his form of 93-year-old frailty seemed pretty =
robust. (He is 94 next week.)
He began with a paean of praise for Adam Smith, who, he said, had been =
"too fully captured by the right-wing". In Galbraith's view "much of =
what he said had large encouragement for the careful and intelligent =
Left. He was ruined to an extent by his acolytes, many of whom had never =
read him."
Thoughts of Smith's Theory Of Moral Sentiments moved Galbraith to the =
ethics of the present. "I have written a long essay, The Economics Of =
Innocent Fraud, about things that, for self-interest or convenience, we =
hail as the truth but have no particular relevance to reality."
With an eye on the Bush administration Galbraith said one minor example =
of this was relevant now: "You can't stimulate an economy by reducing =
taxes on the rich. That is popular for what it does for those who get =
the money, and not for what it does for the economy."
He has always been superb at attacking "conventional wisdom", a phrase =
he coined. His current target is worship of the US Federal Reserve. =
America is "having a somewhat painful recession, with no remedial action =
in sight of any consequence. The administration, in summary, has two =
lines of action: one is tax relief for the rich. The other is reliance =
on the Federal Reserve. It is at least consistent. Both are without =
effect."
This celebrated author feels his greatest achievement was not his books =
but his time as head of the body responsible for US price controls =
during the second world war. He contrasts the success of this with the =
inflation that took place after the first world war, when the Fed was in =
charge. "Historians never mention=20
 inflation as they did after World War One. But if - and I think this is =
the basic rule of all public service - if you succeed, your work is =
forgotten."
Then came the rapier thrust: "One of the most important things we did in =
those years was to set aside all reliance on central bank policy." There =
will be more about the excessive reliance placed by governments and =
economists on central banks in the new book. "But it will not be without =
admiration for [the Federal Reserve chairman] Alan Greenspan. We've =
never seen anything like his theatrical skills."
Discussing the present day, he said: "This is a very disagreeable time, =
and its burden is falling as usual on those least able to carry it. You =
pick up the newspaper any time, and on the financial pages you'll read =
of the constructive action some company or other is taking: in a =
commendable step it has just laid off 10% of its workforce. There is no =
reflection on the discomfort that might follow from being so assigned to =
leisure, or what it might do if their children are going to college."
Galbraith has always written beautifully and still speaks in measured, =
rounded sentences, choosing his words carefully, sometimes going back to =
substitute le mot juste .
"Being so assigned to leisure" is a classic Galbraithian use of irony, =
and reminded me of his book, The Affluent Society. "Things are bad =
enough," he said, "so that I haven't noticed any great revival of =
interest in that book. Perhaps I should have a new edition with a new =
title. It could be The Depressed Economy, and it would face the fact =
that only a reduced colony of booklovers could afford to buy it."
Which brought us to Galbraith's masterpiece, The Great Crash 1929. =
Surely there had been a revival of interest in that?
"The Great Crash has been in print since the mid-50s, and it still =
outsells all of my other books" (he has published 30). "It has a =
wonderful, built-in salesmanship: any time anyone=20
 complains as to what he or she is suffering in the stock market there =
is someone who always says, 'If you think that is bad, why don't you =
read Galbraith on 1929?'"
This reminds him of when he used to peruse bookshops to see how his =
latest was doing. He noticed that one title was never on sale in the old =
La Guardia airport in New York. "One night the woman in charge asked me =
what I was looking for. I was a little ashamed, but came out with the =
title, The Great Crash. She never hesitated: 'That certainly is not a =
book you could sell at an airport.'"
Galbraith is one of the diminishing band who knew John Maynard Keynes - =
"one of the great figures in our life, and certainly in mine. One of the =
unwritten paragraphs in his life is advice I had from him on economic =
action in World War Two."
Galbraith said one of his achievements at Harvard - "with others, of =
course" - was bringing Keynes to the US. Public servants used to come=20
 from Washington to join the discussions. "There was some seminar on the =
General Theory almost every day. It was also helped by Joseph =
Schumpeter, who was by far the most articulate critic [of Keynes]."
Galbraith recalls how his wife, who was working on a doctorate on =
comparative literature, became fed up with the way no day ended and few =
began "without seminars with someone or some group on Keynes. She =
concluded she must read the General Theory. In the introduction Keynes =
explains there are some matters he hasn't thought through. She closed =
the book and decided she would wait until he had finished the job."
Galbraith has advised many presidents, including Roosevelt and Kennedy. =
He was ambassador to India under Kennedy, and jokes: "First he would =
call me up to ask what to do. Then to tell me what he was doing. Then he =
would not call me at all." Even the mightiest are sometimes ignored. The =
Observer=20

The Guardian Weekly 10-10-2002, page 14

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<DIV>Man=20
for all markets JK Galbraith, distinguished author of The Great =
Crash,=20
tells William Keegan that President Bush's moves to stimulate the =
economy will=20
have no effect at all Recent reports had said Galbraith looked =
frail, and=20
he has certainly not been too well. But when this was being explained to =
me in=20
advance, he grabbed the telephone and boomed: "Keegan, I'm on the mend." =
And=20
certainly, when we spoke, his form of 93-year-old frailty seemed pretty =
robust.=20
(He is 94 next week.) He began with a paean of praise for Adam Smith, =
who, he=20
said, had been "too fully captured by the right-wing". In Galbraith's =
view "much=20
of what he said had large encouragement for the careful and intelligent =
Left. He=20
was ruined to an extent by his acolytes, many of whom had never read=20
him." Thoughts of Smith's Theory Of Moral Sentiments moved Galbraith =
to the=20
ethics of the present. "I have written a long essay, The Economics Of =
Innocent=20
Fraud, about things that, for self-interest or convenience, we hail as =
the truth=20
but have no particular relevance to reality." With an eye on the Bush =

administration Galbraith said one minor example of this was relevant =
now: "You=20
can't stimulate an economy by reducing taxes on the rich. That is =
popular for=20
what it does for those who get the money, and not for what it does for =
the=20
economy." He has always been superb at attacking "conventional =
wisdom", a=20
phrase he coined. His current target is worship of the US Federal =
Reserve.=20
America is "having a somewhat painful recession, with no remedial action =
in=20
sight of any consequence. The administration, in summary, has two lines =
of=20
action: one is tax relief for the rich. The other is reliance on the =
Federal=20
Reserve. It is at least consistent. Both are without effect." This =
celebrated=20
author feels his greatest achievement was not his books but his time as =
head of=20
the body responsible for US price controls during the second world war. =
He=20
contrasts the success of this with the inflation that took place after =
the first=20
world war, when the Fed was in charge. "Historians never mention=20
 &nbsp;inflation as they did after World War One. But if - and I =
think this=20
is the basic rule of all public service - if you succeed, your work is=20
forgotten." Then came the rapier thrust: "One of the most important =
things we=20
did in those years was to set aside all reliance on central bank =
policy." There=20
will be more about the excessive reliance placed by governments and =
economists=20
on central banks in the new book. "But it will not be without admiration =
for=20
[the Federal Reserve chairman] Alan Greenspan. We've never seen anything =
like=20
his theatrical skills." Discussing the present day, he said: "This is =
a very=20
disagreeable time, and its burden is falling as usual on those least =
able to=20
carry it. You pick up the newspaper any time, and on the financial pages =
you'll=20
read of the constructive action some company or other is taking: in a=20
commendable step it has just laid off 10% of its workforce. There is no=20
reflection on the discomfort that might follow from being so assigned to =

leisure, or what it might do if their children are going to=20
college."<BR>Galbraith has always written beautifully and still speaks =
in=20
measured, rounded sentences, choosing his words carefully, sometimes =
going back=20
to substitute le mot juste .<BR>"Being so assigned to leisure" is a =
classic=20
Galbraithian use of irony, and reminded me of his book, The Affluent =
Society.=20
"Things are bad enough," he said, "so that I haven't noticed any great =
revival=20
of interest in that book. Perhaps I should have a new edition with a new =
title.=20
It could be The Depressed Economy, and it would face the fact that only =
a=20
reduced colony of booklovers could afford to buy it."<BR>Which brought =
us to=20
Galbraith's masterpiece, The Great Crash 1929. Surely there had been a =
revival=20
of interest in that?<BR>"The Great Crash has been in print since the =
mid-50s,=20
and it still outsells all of my other books" (he has published 30). "It =
has a=20
wonderful, built-in salesmanship: any time anyone <BR>&nbsp;complains as =
to what=20
he or she is suffering in the stock market there is someone who always =
says, 'If=20
you think that is bad, why don't you read Galbraith on 1929?'"<BR>This =
reminds=20
him of when he used to peruse bookshops to see how his latest was doing. =
He=20
noticed that one title was never on sale in the old La Guardia airport =
in New=20
York. "One night the woman in charge asked me what I was looking for. I =
was a=20
little ashamed, but came out with the title, The Great Crash. She never=20
hesitated: 'That certainly is not a book you could sell at an=20
airport.'"<BR>Galbraith is one of the diminishing band who knew John =
Maynard=20
Keynes - "one of the great figures in our life, and certainly in mine. =
One of=20
the unwritten paragraphs in his life is advice I had from him on =
economic action=20
in World War Two."<BR>Galbraith said one of his achievements at Harvard =
- "with=20
others, of course" - was bringing Keynes to the US. Public servants used =
to come=20
<BR>&nbsp;from Washington to join the discussions. "There was some =
seminar on=20
the General Theory almost every day. It was also helped by Joseph =
Schumpeter,=20
who was by far the most articulate critic [of Keynes]."<BR>Galbraith =
recalls how=20
his wife, who was working on a doctorate on comparative literature, =
became fed=20
up with the way no day ended and few began "without seminars with =
someone or=20
some group on Keynes. She concluded she must read the General Theory. In =
the=20
introduction Keynes explains there are some matters he hasn't thought =
through.=20
She closed the book and decided she would wait until he had finished the =

job." Galbraith has advised many presidents, including Roosevelt and =
Kennedy.=20
He was ambassador to India under Kennedy, and jokes: "First he would =
call me up=20
to ask what to do. Then to tell me what he was doing. Then he would not =
call me=20
at all." Even the mightiest are sometimes ignored. The Observer =
 The=20
Guardian Weekly 10-10-2002, page =
14 </DIV></BODY></HTML>

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