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Publication: Globe and Mail, The
Issue: 18 October 2008
Title: Galbraith clan could raise a double toast
Web Link: link
From Saturday's Globe and Mail
October 17, 2008 at 7:31 PM EDT
University of Texas economist James Galbraith is taking a pilgrimage this weekend – to the farming settlement on Lake Erie's north shore where, 100 years ago this week, his late father, John Kenneth Galbraith, the U.S. liberal icon, was born.
The professor will join the gaggle of Galbraiths descending this evening on the West Elgin Dramatic Society hall in Dutton, Ont., to hand out a literary award in his father's name.
No doubt, they will also express bittersweet satisfaction that the financial crisis sweeping the world is proving John Kenneth Galbraith was right – about the dangers of hyper-capitalism, the excesses of Wall Street, and the madness of financial deregulation.
“He saw the whole thing as a march of folly and continued to write about it up to his last book published in 2005,” says James Galbraith, an occasional adviser to the Barack Obama campaign, and who carries the torch for the ideas of his father, who died in April, 2006.
Over the past 30 years, John Kenneth, a man of towering stature and ego, was dismissed by detractors as being out of touch with reality in face of the steamroller of free-market capitalism, and the apparent triumph of such laissez-faire adversaries as Ronald Reagan and economist Milton Friedman.
But now, his warnings about the dangers of unchecked capitalism seem prescient.
His son James says the scenario of 2008 was vividly anticipated in The Great Crash, his father's book about the dramatic 1929 market collapse.
“It's about the runaway and deregulated environment, the belief that good times will never end, about the fraud that builds up inside that cocoon, about what happens when the illusions are stripped away and the thing crashes,” James says.
In fact, James Galbraith is blown away by the speed at which a lame-duck Republican administration has embraced his, and his father's, views.
On the decision by Washington to buy equity stakes in U.S. banks, “I was wildly surprised in the sense that I recommended this was exactly what they should do.
“I thought I would have to wait for a new administration to straighten out what they were starting to do – but they moved quite quickly. They basically faced reality.”
James Galbraith believes the panic of 2008 will not descend into another depression. Government is a much more significant factor in the U.S. economy than in 1929, despite rearguard action by free-enterprisers. The recent moves by Washington help restore an appropriately regulated system in the New Deal tradition, he believes.
John Kenneth Galbraith's work will never win acceptance by mainline theoretical economists, who are disdainful of the lack of equations and numbers in his work, says Richard Lipsey, a prominent Canadian economist and professor emeritus at Simon Fraser University.
“But for people who worry about policy, he certainly is on the radar.”
Where better to celebrate his revival than in southwestern Ontario? Dutton, near his birthplace in Iona Station, seems far removed from Wall Street, its artificially contrived financial products, conspicuous consumption and executive bonuses.
“I think we've gotten away from basic finance,” says John Kenneth's nephew Jerry Galbraith, a local financial planner with Investors Group.
“There are so many things out there that are created just to put money in someone else's pocket.
“It's just basic greed. Everyone wants to find a way to just have more money. You don't find a lot of that out here in the country. That's what my uncle was raised on.”
Yet, as Mr. Galbraith wrote in his 1964 book The Scotch, the Scottish-Canadian farmers of Elgin Country were not antagonistic toward wealth that is honestly earned and modestly exhibited. He observed that some people like money for what it will buy, or for power and prestige, but “the Scotch wanted it for its own sake.”
The Galbraiths who will assemble tonight in the drama hall, above the Dutton-Dunwich municipality office, include James Galbraith's brothers Peter and Allan. Their mother, Catherine, died this month at 95.
The family is scattered around North America but it has retained its ability to navigate through troubled economic waters. James remembers calling his father in the depths of the October, 1987, market upheaval.
“James, not to worry,” John Kenneth Galbraith said, “I've been in cash for three weeks.”
There was a pause.
“But I'm sorry to say the same could not be said of your mother. She finds it very hard to sell the General Electric [stock] that her family bought from Thomas Edison for a dollar.”
The Scotch of southwestern Ontario would have understood.