Even as some wrongly continue to attribute to John Maynard Keynes (or possibly going even as far back as Adam Smith) the post-war interest in economic academia to “the short, medium, and long term”, historical accuracy should really credit Alfred Marshall (1842-1924) for first bringing out the distinction between “the long and the short period”. (“the medium term” came later).
I had to revisit Marshall’s three main books (Principles of Economics, Industry and Trade, and Money, Credit and Commerce) to refresh my ideas at the height of the current sudden flare-up of references to “long-term vision”, which have suddenly became rebranded buzzwords after presentation of the recent Budget 2019. Both terms – “long term” and “vision” – need to be discussed and fleshed out in what detail the editor’s space permits.
“Vision” is to many restrictedly considered only in terms of dreams, wishes, and desires. When still a young boy, while walking with my late father on the Sliema front, he used to often indulge with me in “Giochiamo la fantasia Giovanni, che non costa niente (let’s play fantasy [verbally of course] John, it doesn’t cost anything). And vision can very easily become this, fantasy playing.
Nothing really wrong in that, and one could correctly hold that everyone has (should have?) ambitions, dreams, wishes. But pragmatism can very easily and very quickly bring everyone quickly down to real life today, and with a big thud… especially when family bills (all short term) drop in through the letterbox.
“Long term”, considered on its own, often reminds economists of John M. Keynes and his famous “In the long run we are all dead”. Before discussing that approach, let us never ever forget that in itself the “long term” is only a wet-glasses perception of what is essentially a summation: each and every single day, every single week, month, or year, which even as we breathe is moving on. The “long term” does not in fact exist if not as a factual summation of the daily links that are factually only “the short term”. In speaking about savings, for example, we often say: “Take care of the pennies (the short term) and the pounds (the long term) will take care of themselves.”
So is all thinking and blabbering about ‘the long run’, or some sort of long-term ‘vision’ wrong? Not necessarily
Does this excuse any politician who thinks only about today in his decisions? It certainly doesn’t, but it certainly doesn’t excuse either those whose thinking processes are not fleshed out with firm ideas about how to change all of the short, medium, and long term’s practical, on the ground, realities. It’s called being creative and pragmatically constructionist.
Does austerity kill? Are there inflationary consequences in high national debt? Populist pragmatism, or visionary long-termism? What is the link between wealth transfer and the incentives, motivations, morals and ethics of society (or, better put, how much progressive taxation)?
Shouldn’t we all really do some serious thinking within these, and other related contexts, when we blindly embark on lauding about, or criticizing about, the lack of, “long-term visions”? At first glance he is right he who holds that this battle of the minds must at first glance currently appear as if it is being squarely won by populist politicians, with Trump’s misguided “America first!” and protectionist tariffs in the US being perhaps the best examples of assured long-term disasters.
Populist politicians find it convenient to use Keynes’s “In the long run we are all dead”. That can of course be a dangerous attitude. There is, even without Kondratieff’s seminal works on trade cycles, or even the Bible’s own “Seven years of plenty, then seven years of scarcities”, enough evidence that to simply only press the short-term gas for constant maximum speed, sooner or later sums up to situations where the resources for inevitable downturns will not be available.
Am I fantasising about an absolutely and perennially, debt-free, unemployment, and inflationary free future? I might well be.
Every single morning workers, mothers, students, wake up and start attending to their duties, thinking of what? I really doubt about how many of them pause to think about how what they would be doing during that day will be doing to them in the long term, or even the medium term for that matter. By nature these are short-termists, concerned only with the short term… possibly most pensioners fit the same definition, even as these are simply oblivious to the fact that health budgets around the whole world are under pressure from the escalating costs of medical services.
So is all thinking and blabbering about “the long run”, or some sort of long-term “vision” wrong? Not necessarily. But making it a buzzword about which so evidently next to no serious thinking would have been put into… well yes, that is bad policymaking… for now, for any next coming up elections, or even for the future (when we will all be dead, incidentally).
John Consiglio lectures in the Department of Banking & Finance at the University of Malta.
This is a Times of Malta print opinion piece