Dane Stangler: Robert Samuelson’s history of postwar inflation belongs on Obama’s bookshelf
In conventional telling, postwar American history resembles thermodynamics: action and reaction ad infinitum. The dull Eisenhower years gave way to the optimism of the John F. Kennedy and Lyndon Johnson administrations. Student movements (in reaction to the Vietnam War) and race riots of the 1960s exploded into chaos, out of which Richard Nixon emerged, promising order only to give us Watergate. This ushered in the malaise-ridden cardigan presidency of Jimmy Carter, which then propelled Ronald Reagan and conservatism to power. And so on.
President-elect Barack Obama promises deliverance from this combustible cycle. Before he sets out to fulfill this pledge, however, he may want to read Robert Samuelson’s new book. The Great Inflation and Its Aftermath is revisionist history like it ought to be. Samuelson, a Washington Post and Newsweek columnist, downplays some conventional elements, resurrects others long forgotten or ignored, and weaves them all into a compelling—and instructive—narrative.
The book’s title refers to the period from the mid-1960s to the early 1980s, when “inflation was rising from negligible to double-digit levels.” Samuelson’s ambitious argument is that the entire history of the U.S. since 1960 can be viewed through an inflationary lens: “Inflation and its fall shaped, either directly or indirectly, how Americans felt about themselves and their society,” he writes. Everyone fears inflation but few claim to understand it—it differs from what we think of as a “normal” economic shock, like a stock-market crash or a natural disaster. Money is the economic equivalent of blood circulating through the body: we know it’s important, but its ubiquity can obscure its vitality. When inflation stealthily saps the value of money, the consequences become apparent only too late.
This is precisely what happened in the 1970s, when double-digit increases in the consumer price index wrecked asset values, wage gains, and productivity growth. Samuelson sets out to revise the historical misreading that placed blame solely on Middle East wars and corrupt oil sheikhs. If we treat inflation as an outside force that suddenly attacks the economy, he believes, we will combat it with the wrong weapons. The real source is human: “The malaise,” he writes, “was man-made.”...
Samuelson brings a broad indictment against storied economic names: Paul Samuelson (no relation), James Tobin, Robert Solow, and others. Led by Walter Heller, chairman of Kennedy’s Council of Economic Advisers, these economists saw themselves as “public-spirited engineers” who could “fine-tune” the economy....
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President-elect Barack Obama promises deliverance from this combustible cycle. Before he sets out to fulfill this pledge, however, he may want to read Robert Samuelson’s new book. The Great Inflation and Its Aftermath is revisionist history like it ought to be. Samuelson, a Washington Post and Newsweek columnist, downplays some conventional elements, resurrects others long forgotten or ignored, and weaves them all into a compelling—and instructive—narrative.
The book’s title refers to the period from the mid-1960s to the early 1980s, when “inflation was rising from negligible to double-digit levels.” Samuelson’s ambitious argument is that the entire history of the U.S. since 1960 can be viewed through an inflationary lens: “Inflation and its fall shaped, either directly or indirectly, how Americans felt about themselves and their society,” he writes. Everyone fears inflation but few claim to understand it—it differs from what we think of as a “normal” economic shock, like a stock-market crash or a natural disaster. Money is the economic equivalent of blood circulating through the body: we know it’s important, but its ubiquity can obscure its vitality. When inflation stealthily saps the value of money, the consequences become apparent only too late.
This is precisely what happened in the 1970s, when double-digit increases in the consumer price index wrecked asset values, wage gains, and productivity growth. Samuelson sets out to revise the historical misreading that placed blame solely on Middle East wars and corrupt oil sheikhs. If we treat inflation as an outside force that suddenly attacks the economy, he believes, we will combat it with the wrong weapons. The real source is human: “The malaise,” he writes, “was man-made.”...
Samuelson brings a broad indictment against storied economic names: Paul Samuelson (no relation), James Tobin, Robert Solow, and others. Led by Walter Heller, chairman of Kennedy’s Council of Economic Advisers, these economists saw themselves as “public-spirited engineers” who could “fine-tune” the economy....