Question

What did Keynes mean when he said “In the long run, we are all dead”?

Does that mean that we should focus on achieving short term goals and forget about planning for the future?

Answer 1

KEYNES-"IN THE LONG RUN, WE ARE ALL DEAD"

In the long run we are all dead. Economists set themselves too easy, too useless a task if it tempestuous seasons they can only tell us that when the storm is past the ocean if flat again. Keynes wrote this in one of his earlier works, The Tract on monetary reform in 1923. There are no fixed definitions of short, medium and long run and generally in macro-economics short term can be viewed to 1-2 or 3 years; medium to 5 years and long run 5 years to 20 or 25 years. Ageing and climate change generally are subjects that have longer term horizons.

The long run is speculative in economics and governments typically operate in accordance with the election cycle upto five years. However it is economic growth in the long run that is key to the standard of living in the economy. Typically new innovative sectors are not a significant driver of economic growth. Improving productivity in the economy is not only dependent on invention and innovation but also issues such as education, management, the power of vested interests, the difficulty or ease in setting up a business. Regulation can promote or hinder this and can impact competition and productivity.

FOCUSES ON ACHEIVING SHORT TERM GOALS

Economists should focus both long and short term but should focus mainly on short term goals since short term goals provide easy solutions to the problems. When properly formulated, they offer a series of milestones-astep-by-step system that paves a path towards your long term goals. They give you a clear plan to grasp what may otherwise seem possible.