Recently at Reason.tv: Robert J. Samuelson on The Great Inflation and Its Aftermath—how Reagan and Volcker tamed economic policy and why Obama should be listening

Nick Gillespie | December 13, 2008

For the past quarter-century, Robert J. Samuelson has written about business, politics, and economics for The Washington Post and Newsweek.

His masterful and eminently readable new book, The Great Inflation and Its Aftermath: The Past and Future of American Affluence, may just be the most important non-fiction volume published this year-or next year, for that matter. Certainly, in a world of economic chaos and seemingly never-ending bailouts and "stimulus packages," The Great Inflation is essential reading for anyone interested in understanding what happens when the government tries to tame the business cycle and fine-tune the economy as if it were a two-stroke engine. (Are you listening, Henry Paulson? George W. Bush? Congress? Barack Obama?)

The Great Inflation tells the story of how smug economists and politicians in the post-war era almost wrecked the U.S. and how President Ronald Reagan and Federal Reserve head Paul Volcker tamed double-digit inflation in the 1980s. Samuelson provides a rich history of wisdom triumphing over hubris-and he provides a singular commentary on just where the U.S. economy might be headed for the next decade or more.

Samuelson sat down with reason.tv's Nick Gillespie in December for a wide-ranging conversation about economics, media, politics, and the desperate need for reality-based commentary. The interview was filmed by Michael C. Moynihan and edited by Dan Hayes. Approximately 50 minutes.

For an audio podcast of this interview, go here.

Comments

Elemenope|12.13.08 @ 2:09PM|#

Um, isn't Volcker a star member of Obama's economic team?

Elemenope|12.13.08 @ 2:28PM|#

And for the record, Reagan didn't tame shit. He just rearranged the cards.

|12.13.08 @ 2:34PM|#

Um, isn't Volcker a star member of Obama's economic team?

Um, didn't Jimmy Carter appoint Volker, and Reagan refuse to reappoint him?

zoltan|12.13.08 @ 3:05PM|#

Volcker is the chairman of the Economic Recovery Advisory Board for the Barack Obama administration. Considering Obama wants to keep more credit in the hands of U.S. citizens though, I doubt anyone will be raising interest rates anytime soon.

Elemenope|12.13.08 @ 3:39PM|#

Um, didn't Jimmy Carter appoint Volker, and Reagan refuse to reappoint him?

Huh? Volcker was reappointed by Reagan in 1983. Both Carter and Reagan get the (credit/blame) for him and his policies.

BakedPenguin|12.13.08 @ 4:13PM|#

Volcker was appointed under Carter.

BakedPenguin|12.13.08 @ 4:20PM|#

Oops. I misread LMNOP's post. Never mind, nothing to see here.

Lefiti|12.13.08 @ 6:24PM|#

Why the fuck would anybody go to Samuelson for advice on economics? What economics training does he have? Try Krugman.

Kolohe|12.13.08 @ 6:58PM|#

Good piece. More of this pls.

Samuelson alludes to, but comes just short of echoing my biggest criticism of Greenspan.

Voelker's actions came at the expense of a Carter second term but with the benefit of long term stable growth. And Greenspan himself took similar actions in 91-92 that came at the expense of a Bush I second term. What is completely inexplicable to me (except through either senility or conspiracy theory) is that Greenspan did not take such necessary and obvious actions a third time in 03-04 to nip this bubble in the bud early. He mentions something in his book that all the data he was getting was hunky dory, which surprised him, but guided him to stay the course. This is where senility comes in - he had seen the same data cycle - everything's great until it's not - his entire life, but this one time decided that things were indeed 'different' (which is another idea he had warned against his entire life), he decided that this time he could let it ride. Of course, we wound of crapping out with a heck of lot money on the table than we would have in '04.

And the inner conspiracist in me says the only reason why he did not follow in '03-04 his own example of 91-92 or his predecessor in the early 80's is that doing so would inevitably retard economic growth - which would of course made re-election chances in Nov '04 slightly less favorable for the Republicans in both the White House and the Capitol.

On a different note, the only thing I could quibble about what Samuelson said is his idea that 'now is not the right time to do drastic makeovers to things like energy policy because it will just make the downturn worse.' It's not so much that I disagree with his assessment, because he's likely correct, TANSTAAFL and all that, but that you are never going to find the 'right time' if you indeed think something should be done. These most recent events illustrate this phenomenon well - no one wanted to pop the housing bubble because everyone doing so would disrupt the economy. Likewise, even after we're in a recovery, there's going be the same idea that we can't remake the energy delivery sector because it's going to undo the recovery. And the kicker is, this idea is probably correct as well. Which is my quibble with Samuelson - there's always going to be that tradeoff, not just now.

Lefiti|12.14.08 @ 6:48PM|#

Oh, I get it. Samuelson is libertarian kosher on economics just as Bjorn Lomborg is libertarian kosher on climate change. I keep forgetting the dietary thought laws--cashroot.