Yale University President Richard Levin had some poignant things to say in his address to the 2009 graduates today. Among them a defense of capitalism:

The world economy is a mess. In the United States, we have experienced the sharpest reduction in gross domestic product in five decades, and the ride is not yet over. As many of you know all too well, jobs are scarce. Within the past year, the unemployment rate has increased from 5.0% to 8.9%, and, unfortunately, it is more likely than not to exceed 10% before declining again.

How did we get here? Not, I believe, because of any inherent flaws in the nature of the market system. This is a very important point. Indeed, the ascendancy of markets, the relative demise of centrally-planned economies over the past thirty years, the opening of nations to freer international trade and investment, and the rapid advance of science and technology have led to unprecedented levels of global economic growth. Even in the midst of this downturn it is crucial to remember that more people, both in absolute terms and as a percentage of the world’s population have crossed the poverty line in the past thirty years than in any previous period of history.

The cause of the current crisis is less fundamental: we accumulated too much debt – mortgages, credit card debt, corporate debt, debt to support financial speculation, and government debt. From January 1981, when Ronald Reagan took office, to September 2008 the ratio of total national debt – public and private – grew steadily from 160% to nearly 360% of gross domestic product.

He also offered them some words of encouragement from an old economist. Words that we should all probably take to heart:

In 1930, at the darkest moment of the Great Depression, the economist John Maynard Keynes wrote:

We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress … is over; that the rapid improvement of the standard of life is now going to slow down … ; that a decline in prosperity is more likely than an improvement …

I believe that this is a wildly mistaken interpretation of what is happening to us. We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes … The increase of technical efficiency has been taking place faster than we can deal with …; the improvement in the standard of life has been a little too quick …

Keynes went on to predict that the standard of living in advanced capitalist countries would increase by a factor of four to eight over the next century. He was right; in the nearly eighty years since 1930, the per capita gross domestic product in the United States, adjusted for inflation, has increased by a factor of six.

You might want to read the entire address. Here is the link.