Herbert Stein? Paul Krugman? Anonymous?
Dear Quote Investigator: Economic trends are sometimes unsettling. For example, political commentators in countries that develop large foreign trade deficits often complain that the situation is untenable. A prominent economist responded to this fretting with a tautology. Here are four versions:
- If something cannot go on forever, it will stop.
- If it can’t go on forever it will stop.
- If something can’t go on forever, it won’t.
- Things that can’t go on forever, don’t.
Would you please help me to identify the creator of this saying together with a citation?
Quote Investigator: In May 1985 economist Herbert Stein wrote a column in “The Wall Street Journal” in which he discussed the shift in the U.S. balance between foreign debts and foreign assets. Emphasis added to excerpts by QI: 1
What economists know seems to consist entirely of a list of things that cannot go on forever, and this may be one of them. But if it can’t go on forever it will stop. And if we never do anything that we can’t go on doing forever we will never do very much.
Below are additional selected citations in chronological order.
In November 1974 Nobel-prize-winning economist Friedrich Hayek wrote an opinion piece in “The New York Times” about the contemporaneous economic malaise. A novel and burdensome combination of stagnation and inflation had led to the popularization of the word “stagflation”. Hayek’s commentary fit the general template of “this can’t go on”: 2
Politicians in that position have now little choice but to speed up inflation. But this process cannot go on forever, as an accelerating inflation soon leads to a complete disorganization of all economic activity.
In May 1985 Herb Stein employed the saying as mentioned previously:
But if it can’t go on forever it will stop.
In January 1986 Stein participated in a panel discussion that was part of a U.S. Congressional Hearing, and he used a different phrasing for the saying: 3
Mr. STEIN. Well, I recently came to a remarkable conclusion which I commend to you and that is that if something cannot go on forever it will stop. So, what we have learned about all these things is that the Federal debt cannot rise forever relative to the GNP. Our foreign debt cannot rise forever relative to the GNP. But, of course, if they can’t, they will stop.
In the case of the Federal debt, there may not be a mechanism. In the case of the foreign debt, which is essentially private debt, it will stop when the rest of the world doesn’t want to hold it any more. It will stop rising, and when it stops rising the dollar will decline and we will stop running this big balance of trade deficit.
Ten days after the Congressional Hearing a journalist writing in “The Boston Globe” ascribed the expression to Stein: 4
“If something cannot go on forever, it will stop,” said Herbert Stein, a leading conservative economist who helped make policy in the early 1970s.
Also in 1986 Stein published “Washington Bedtime Stories: The Politics of Money and Jobs” which included a reprint of his 1985 article containing the adage. 5
In 1994 the law was described as “Stein’s Law” by its creator: 6
If health care expenditures continue to rise relative to the GDP at the same rate as in the past 25 years, they will equal the entire GDP in 62 years. But that is obviously not going to happen. Stein’s Law will intervene; that is, if something cannot go on forever it will stop.
In 2003 economist and influential columnist Paul Krugman employed an instance: 7
Academic economists often cite Stein’s Law, a principle enunciated by the late Herbert Stein, chairman of the Council of Economic Advisers during the Nixon administration. The law comes with various wordings; my favorite is: “Things that can’t go on forever, don’t.” Believe it or not, that’s a useful reminder.
In conclusion, Herbert Stein crafted and popularized this tautology in the economic domain, and it is sometimes called “Stein’s Law”. The meaning is ambiguous. Sometimes the statement warns that a trend must be halted, and sometimes it suggests that a trend is self-limiting and precipitous intervention is not necessary.
Image Notes: Illustration of upward and downward trends in a graph from Mediamodifier at Pixabay.
(Thanks to researcher Barry Popik who explored this topic and located the 1986 citation in “Washington Bedtime Stories”.)
- 1985 May 10, Wall Street Journal, My Foreign Debt by Herbert Stein, Quote Page 24, New York. (ProQuest) ↩
- 1974 November 15, New York Times, Inflation and Unemployment by Friedrich A. von Hayek, Quote Page 37, New York. (ProQuest) ↩
- 1986, A Symposium on the 40th Anniversary of the Joint Economic Committee, Hearings Before the Joint Economic Committee, Congress of the United States, Ninety-Ninth Congress, First Session, January 16 and 17, 1986, Panel Discussion: The Macroeconomics of Growth, Full Employment, and Price Stability, Speaker: Herb Stein, Quote Page 262, U.S. Government Printing Office, Washington D.C. (HathiTrust Full View) link ↩
- 1986 January 26, Boston Sunday Globe, Growing Debt Shadows US Economy by Thomas Oliphant (Globe Staff), Start Page 1, Quote Page 26, Boston, Massachusetts. (ProQuest) ↩
- 1986, Washington Bedtime Stories: The Politics of Money and Jobs by Herbert Stein, Chapter: My Foreign Debt (Reprinted from “The Wall Street Journal” on May 10, 1985), Start Page 176, Quote Page 179, The Free Press, New York. (Verified with scans) ↩
- 1994 May, The American Enterprise, Volume 5, Issue 3, Wondering about health care reform by Herbert Stein, Quote Page 6, American Enterprise Institute, Washington D.C. (ProQuest ABI/INFORM) ↩
- 2003 November 4, New York Times, This Can’t Go On by Paul Krugman, Quote Page A25, Column 5, New York. (ProQuest) ↩