Ronald Reagan told the following anecdote. On May 1st I was in Moscow next to Leonid Brezhnev, leader of the Soviet Union (USSR) and general secretary of the Central Committee of the Communist Party of the USSR until 1982. Both were rehearsing during the parade in front of none other than Lenin’s Mausoleum . All the military might of the Soviet Union on Red Square and in front of the President of the United States no less.
Reagan noted that the battalions of elite troops circulated first as they were explained to him. They were imposing soldiers, all six feet tall, marching with Olympic synchronicity.
Phalanxes of guns and latest-model tanks soon arrived. Then the nuclear missiles. Finally a line of six or seven civilians, all dishevelled, badly dressed and out of place.
Then an advisor approached Brezhnev. He made a gesture of not understanding who they were and asking for forgiveness. “Comrade Secretary, I apologize, I do not know who these people are or how they came to our parade.”Reagan later learned that he had told the general secretary.
“Don’t worry, comrade —Brezhnev replied—. I am responsible. They are our economists and you cannot imagine the damage they can do.”
Reagan confirmed his distrust of economists right there, especially those who, like those in the Kremlin, represented interference in the market. “They are the ones who push the buttons.” In fact, the American believed that the way the Soviet Union could fall in the future would be by increasing the weight of the state.
The political-economic relationship around a president has almost always been tense. There is an example in the United States and another locally.
When Franklin Roosevelt met John Maynard Keynes, the famous English economist, in the United States, the American president said he found him “more of a mathematician than a political economist” and I didn’t understand it “There is a practical limit to what the government can do”.
“For me, I would throw a grenade here.”Jaime Durán Barba said it, a little gracefully and a little seriously, in front of the presentation of Mauricio Macri’s economic plan – made by his economists – at the Diagonal Norte NH, as Hernán Iglesias Illa portrayed it in his newspaper electoral Cambiamos. It was 2015. The Ecuadorian said that a dramatic economic plan “generates a huge quilombo” and was against sharp corrections in energy prices. With that diagnosis, the Macri government began to embrace his rule a gradual correction of the fiscal deficit he had inherited from Cristina Kirchner. The former president, years later, wrote in his memoirs that he regretted not making a greater adjustment early on.
Read more today and continuing with the Argentine case, former President Kirchner confirmed this week that adjustment policies often destabilize governments. “The political forces, in the different phases, have acquired their own strength which has infused them with a founding air, They failed to follow through on their terms when they have failed to give society the quality of life it requires”.
Economists sometimes unmask a president as Brezhnev implied. Reagan knew it. Cristina exaggerates. And Milei?
The current Argentine president, speaking about the economy, has cited the Walrasian concept of general equilibrium in several speeches, showing the interdependence of all variables and markets. Of course, this may not work in practice. Former Economy Minister Juan Sourrouille once said that without the existence or uniqueness of general equilibrium positions – something the general equilibrium approach presupposes – everything economists know falls apart. “So here are the economists We don’t have the solidity that people who don’t know us take for granted. At the same time, we have solidity in areas that people don’t imaginethat you can’t imagine, that come from our training”.
Milei, without knowing it, agrees with what the former minister said when he responded to Cristina Kirchner this week as follows: “Economics is not an exact science; The fact that we use mathematics does not give it credence to be considered an exact science. If you stop issuing, sooner or later you will exterminate inflation. As much as Cristina Kirchner doesn’t like this, inflation is always a monetary phenomenon “which is generated due to the excessive supply of money”.
William McChesney Martin, chairman of the Federal Reserve in the 1950s, said: “We have 50 econometricians working in the Reserve. They are all located underground and there are reasons for being there: they ask good questions, but they are in the basement because they don’t know their limits and have a greater sense of confidence in their analyzes than I think is necessary”.
History, and their enthusiasm, prove it.
Source: Clarin
