Silver Lining

Just the other day I was wondering if retired persons on fixed pensions are better-off during recession; after all, their income doesn’t change and prices either fall or rise more slowly. If nothing else, I’m sure they are pleased to see the price of oil back where it was in their youth.

Via Mark Thoma, Galbraith (back in 1993) outlines who has a vested interest in economic contraction:

There are the many who live in recession with a wholly secure livelihood and with a lessened fear of price increases, of inflation. They are in no real danger of loss or diminution of income. Present here are the more secure parts of the modern corporate bureaucracy. …

Similarly secure are many in the professions, professors, needless to say, some public servants, lawyers, doctors and media stars. Also very important is the modern large rentier class. And many who live on Social Security or pensions.

He goes on to demonstrate that our efforts to restart the economic engine are more unpalatable to these people than the recession itself.

The complicated nature of a recession is often lost in the bail-out hysteria.


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