Why We Are All Dead In The Long Run

The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. - John Maynard Keynes

This gets quoted, mainly, as "in the long run we are all dead," a retort whenever an economist starts talking about the long run or the idea that recessions etc. don't really affect long-term growth trends. He was, specifically, attacking the idea that inflation would just naturally control itself "in the long run." I'm sitting in economics class right now, listening about the long-term relationship between nominal prices and the real economy (i.e. the same thing as Keynes was talking about), and I think I see pretty clearly why we are all dead in the long run. It's not so much that everyone dies etc. but that we will never get to the long run.

The idea of "the long run" is that, once you let the economy alone for a decade or two everything evens out, and there aren't any noticeable changes in, say, the money supply/the price level, everything adjusts so that, yes, it really is just like you doubled all dollars and didn't change anything. But think about the crucial part of that: "if there aren't any noticeable changes." There are always noticeable changes. Stuff happens, all the time. There are real-world events, technological discoveries, oil shocks, stupid Republican policies, wars, etc. So yes, eventually we will hit the Long Run of the Great Recession of 2008-09. Eventually we will reach the time at which the effects of this particular shock have vanished into the past. But by then, some new factor will be disturbing the equilibrium, and we'll be in the Short Run vis-a-vis it. If you sit on a tropical island and see one particular hurricane sweep across the ocean where you are, yes, you can say, well, the storm will pass soon, and the ocean will be calm again. But if you consider the weather as a whole, you know that, hey, there might be another hurricane a week later.

So since we never really get our decade or century or whatever of clear-skies economics, it makes no sense to think primarily of the long run. It's always the short run somewhere; do you know where your children are? And each time it is the Short Run, there will be real suffering in the present that can either be exacerbated or ameliorated. Yes, long-run growth is an important thing, and policies that encourage long-run growth are a good thing (though they should keep environmental concepts like sustainability in mind). But the long run is unpredictable and rarely all smooth sailing, whereas current troubles are immediate and concrete, as is the real suffering they cause. Attacking the suffering in the present that we know for certain is happening is and should be the first priority of economics.