Summary
An email roundtable among eight leading Georgist thinkers examining the evidence for and limitations of the 18-year cycle theory. The exchange is rich with methodological debate: Gaffney is “moderately confident”; Harrison is confident for repetition “subject to absence of overwhelming shocks”; Foldvary cautions that “18 years is just a statistical average, probably nothing much more than that.” Key discussion: why no crash in 1911 (answer: strong property taxes then), why the cycle has persisted through Keynesian intervention, and whether the empirical pattern can be given a theoretical grounding.
Key Claims
- Gaffney: moderately confident in the cycle — “History says people don’t learn; their lust for unearned increments takes them over.” — Notes why cycle may have failed in 1911: strong property tax reform movement (Hoyt, Purdy, Tom Johnson, Hazen Pingree etc.) — confidence: high [Source: Georgist Journal roundtable, 2012]
- Harrison: “confident of the repetition of the 18-year periodicity (+/-)… None of the responses to this latest crash alters the DNA of the capitalist system.” — confidence: high [Source: Georgist Journal roundtable, 2012]
- Foldvary: “The average period, 18 years, could well be a coincidence… we should not get too hung up on the number 18. It is an average.” — confidence: high [Source: Georgist Journal roundtable, 2012]
- Foldvary: policy can alter timing — Japan hasn’t followed 18-year cycle because banks didn’t clear bad debts; WWII prevented the 1940s boom; 1970s inflation disrupted the cycle — confidence: high [Source: Georgist Journal roundtable, 2012]
- Harrison: the 18-year formulation attracted mainstream media attention (BBC World Service), financial advisors (Mark Dampier, Hargreaves Lansdowne), MP Vince Cable, and economist John Calverley — confidence: high [Source: Georgist Journal roundtable, 2012]
- Methodological weakness: the cycle needs theoretical grounding beyond empirical pattern — “without a theoretical underpinning, the skeptics can get away with saying ‘the future will be different this time’” — confidence: high [Source: Georgist Journal roundtable, 2012]
- Dan Sullivan: “It’s not so important whether the cycle is always 18 years, or sometimes 17 and sometimes 19, except to the speculators themselves who want to time their bets. The important message is that these crises are not precipitated by recent events.” — confidence: high [Source: Georgist Journal roundtable, 2012]
Notable Quotes
“Moderately confident. History says people don’t learn; their lust for unearned increments takes them over after a while. It’s like watching fireweed take over a field after it’s burned over.” — Mason Gaffney
“They shoot the messengers of bad news. There is also the problem of relying just on history to repeat itself. To be credible the 18-year periodicity needs to be explicable in theoretical terms.” — Fred Harrison