Column

‘An economist ought to be given the same welcome as a body washed up on shore’

Roderick McQueen September 17 1979
Column

‘An economist ought to be given the same welcome as a body washed up on shore’

Roderick McQueen September 17 1979

‘An economist ought to be given the same welcome as a body washed up on shore’

Column

Roderick McQueen

Back in January, when the world was snowy white, they warned us it would come suddenly this summer. Economists in think tanks and futurists in hot tubs all studied the entrails of their mascot, the weasel word, and proclaimed: the recession is coming, the recession is coming. All of the predictions were like hailstones—identical, impossible to swallow and potentially destructive. They said interest rates would head higher, the U.S. economy would slow down, Canada’s balance-of-payments problems would worsen and the bad times would flow like tortillas through a tourist. The border, they said, is no more a barrier to economic disarray than it is to such 20th-century savagery as roller disco or Legionnaires’ Disease. If Jimmy Carter overheats his economy, Joe Clark gets fricasseed. If U.S. growth cools, Canada suffers freezer burn.

Those repetitious predictions created a heard mentality among listeners and started the countdown for the longest anticipated recession in modern times. When Statistics Canada announced late last month that Canada’s real gross national product had declined at a 2.8-percent annual rate during 1979’s second quarter, the sad news was almost received with some relief by the gloomsayers. The question is this: did Canada go where they predicted it would ... or where it was told to go? If the third quarter shows continuing decline in the value of all the goods and services produced in Canada, that will mean two successive downward quarters—the classic definition of a recession.

But who are these bad news bears who rumbled their self-fulfilling prophecy? They work for banks and other reliably usurious sources in a variety of ivory office towers and just come down to earth to take the elevator home. You must understand, too, that economists never were children; they materialized on street corners full-grown. As cheerless souls, economists want to cover up laughter wrinkles with Supp-hose face

masks. An economist may well be wise, but will expect the purchase price of a hat to include lessons in how to wear it. In short, an economist ought to be given the same welcome as a body lately washed up on shore. They’re such a sour crowd, these promoters of pessimism.

An economist’s greatest skill comes in constantly updating predictions, so that by the end of the year accuracy is assured. In addition to edging closer toward moving targets, the names change regularly. Theorists take on new guises and so pretend that someone else

must have been responsible for the last bout of bad vibes. Today’s “in” crowd is called neoconservative. Most of them were labelled liberal a few years ago, preaching income redistribution and broad social services. And they earned $20,000 a year. As their status improved and income neared $40,000, their personal taxes skyrocketed. So they bit the hand that bled them, urging government to reduce both services and taxes. Eureka, neoconservatism was born, running wet and naked in parks everywhere. With Irving Kristol’s The’Public Interest as vehicle, and Milton Friedman’s monetarist views now rampant, they would even do away with stoplights, given the chance. As Kristol has said: “Economic growth is easy to achieve. Stopping it is very difficult, and the government works very hard at it.” Trouble is, all economic theory has been shattered by the events of the past decade, and the massive flow of dollars from oil-consuming to oil-producing nations. But it is here where the Canadian

reality is far different from the bleak recession predicted, even in the face of the declining gross national product numbers. While Canada cannot be isolated from a world out of joint, the perch is an enviable one, viewed from afar. Inflation is running at 8.1 per cent, lowest 12-month rate in more than two years. Unemployment is now 7.2 per cent, lowest level in three years. Of all the industrial countries, Canada has the lowest price for oil. Business capital spending is up a healthy seven per cent this year and profits have surged 43.1 per cent, aided by strong export sales with the 86-cent Canadian dollar. Retail sales for the first half of the year were up more than 12 per cent. C&C Yachts of Oakville, Ontario, sold $3 million in luxury personal vessels in one recent 30-day period. Rock group Supertramp sold $5 million in tickets in a July series of concerts in 10 Canadian cities. Investment dealers predict Canada will need and find $1.4 trillion for capital investment in Canada during the next 12 years.

The best of times, say those numbers; the burst of times, say the economists. But the public is no longer a gullible traveller, expecting cheap oil, fast cars and quieter times. The beleaguered Canadian dollar has made everyone, if not sophisticated, at least aware of the fragility of world economics. Even the tenfold rise in world oil prices has not destroyed, as economists predicted it would, the world’s monetary system. There is, however, a new dilemma. The continuing dark view of the future that is predicted by economists sets a demoralizing tone. Such a dose of the DTs causes a spirit of despair, a selfish huddle of individualism. While there is no need for a blatant Pollyanna view where all is wonderful, there shouldn’t be a blind pessimism that all is wounded. Face the problems, certainly, but search for solutions. Let’s cease the endless sightings of recession under every rock and shrub. And if economists choose not to live hopefully, well, in every life a little brain must fail.