Samuelson misses cues

As usual, Robert Samuelson doesn’t see what is right in front of him, as do most economists. He correctly points out that since the mid-70s, annual productivity gains have declined. He blames entitlements and the complicated “forces that move productivity.” He does not take into account two more important actions that occurred in that decade that had a huge impact on economic growth.

One is the winding down of Kennedy’s space program, which was a science-driven economic engine that promoted economic productivity. The second was Nixon’s removing us from the gold standard and putting us in the current floating exchange rate system.

It is this system that is the problem. Look at Wall Street today. It resembles more of a casino than a place for promoting economic productivity. How does investing in currency speculation or betting if the market goes up or down promote economic productivity? How does investing in derivatives, those complicated deals that have caused numerous bankruptcies but have no connection to the physical economic forces that create real wealth, aid in economic development? The bigger questions is where does the money come from when these bets are won?

Garth Fowler

Coeur d’Alene