Privatization Pep Rally

Max Sawicky sawicky at
Thu Jul 30 07:33:31 PDT 1998

>Max Sawicky wrote:
>>The proper analogue to a 75 year average is
>>one over a business cycle, from peak to
>>peak, not "the thirties". If you're not
>>an economist, you can be excused from being
>>obliged to know this.
>Why is that the proper analogue? A 75-year period contains many business
>cycles, and probably includes incomplete parts of two. A decade is a
>medium-term periodization that also contains more than one cycle. It's not
>just the cycles that matter, but the length and relative patterns too. Lots
>of people think in decades, even economists.

Because the fewer the years in the period, the more the inclusion or exclusion of a trough skews the average. For instance, your fellow Manhattanite Robert Bartley in his book The Seven Fat Years likes to mark the Reagan Administration as beginning in the trough of the 1980 recession, thereby magnifying the average rate of growth he would like to attribute to supply-side policies.

It is true that economists speak in terms of decades. This is partly a bow to the lay, public audience. Sometimes it may not matter for the analysis. Otherwise it is just laziness.

>The evidence, at least according to Cutler, Poterba, Sheiner, and Summers
>in Brookings Papers 1990, is that lower pop growth is associated with
>higher prod growth. Assuming both fall is redundantly bearish.

"Associated with" it may be, but that still leaves causes to the imagination. In any case, as noted elsewhere, this debate does not proceed strictly on the merits. Unfortunately their paper is not the consensus view. If it was, we'd be having a different conversation.

There's also the argument, which I don't buy, that in retirement policy, it pays to be bearish. The real ideological obstacle is the savings paradigm, which discounts or disallows altogether any cost to pro-savings policies.


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