I’ve just finished reading John Kenneth Galbraith’s The Great Crash. While I had long been aware of the book, somehow I had managed to miss actually reading it. With the exception of some cringe-inducing gender references, much of the book continues to be relevant. This is true of of Galbraith’s main message regarding what makes people prone to speculation and regarding many of his colorful asides.
Galbraith lays out five reasons for the Crash and the ensuing severity of the Depression, pointing to fundamental economic weaknesses. First, he points to “the bad distribution of income.” The question of inequality, obviously, is once again central today, as Janet Yellen’s comments indicate. Second, to bad corporate structures, particularly shaky holding companies and investment trusts. Third, “the bad banking structure.” Fourth, “the dubious state of the foreign balance,” which in this case was a large U.S. surplus that was draining Europe of its gold reserves. Finally, Galbraith mentions “the poor state of economic intelligence,” on which there have certainly been improvements, though evidence could be found of continued pretensions of omniscience.
“The fact that no business is transacted at a no-business meeting is normally not a serious cause for embarrassment to those attending. Numerous formulas have been devised to prevent discomfort. Thus scholars, who are great devotees of the no-business meeting, rely heavily on the exchange-of-ideas justification. To them the exchange of ideas is an absolute good. Any meeting at which ideas are exchanged is, therefore, useful. This justification is nearly ironclad. It is very hard to have a meeting of which it can be said that no ideas were exchanged.” …
“The no-business meetings of the great business executives depend for their illusion of importance on something quite different. Not the exchange of ideas or the spiritual rewards of comradeship, but a solemn sense of the assembled power gives significance to this assemblage. Even though nothing of importance is said or done, men of importance cannot meet without the occasion seeming important.” (144-145)
This reminds me of the frequent admonition of my late mentor Bob Pastor, who often pointed out to bureaucrats that they were measuring accomplishments by the numbers of meetings held and the presence of important people at those meetings. Meetings are a poor substitute for actions.
John Kenneth Galbraith, The Great Crash, (Boston: Houghton Mifflin Co., 1961 )