David R. Henderson  

My WSJ Article on Samuelson

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My article on Paul Samuelson's work is in today's (Tuesday's) Wall Street Journal. They cut it by about 600 words to fit the space.

My favorite paragraph that appeared is this one:

"Let those who will write the nation's laws if I can write its textbooks," Samuelson said during a speech at Trinity University in San Antonio, Texas. He revised his own widely read textbook, "Economics," about every three years since 1948. One of the best and punchiest statements in the 1970 edition was his comment about a proposal to raise the minimum wage from its existing level of $1.45 an hour to $2.00 an hour: "What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"

I had three critical paragraphs that they cut. Here's one:

Samuelson wrote, in a 1969 Newsweek column, "there is no sight in the world more awful than that of an old-time economist, foam-flecked at the mouth and hell-bent to cure inflation by monetary discipline. God willing, we shan't soon see his like again." Actually, Samuelson ultimately accepted, along with the rest of the economics profession, Milton Friedman's view that excessive monetary growth causes inflation.

Here are the other two:

Yet, as his fellow Nobel laureate (and brother-in-law) Kenneth Arrow, now an economist at Stanford, pointed out in a 1967 review of Samuelson's collected work, his work "revealed a questioning, ambivalent attitude to the relevance of neoclassical price theory." Arrow continued: "A careful examination of the papers both on theory and on policy yields only the most oblique suggestions that neoclassical price theory is descriptive of the real world."

Arrow challenged Samuelson's agnosticism about the relevance of economics, which spilled over to Samuelson's agnosticism about economic policy. Quoting Samuelson's statement, "there are no rules concerning the proper role of the government that can be established by a priori reasoning," Arrow replied, "such banalities are not entirely to the point. Economic theory, being abstract, cannot of course state that government expenditures should be 31.732 percent of gross national product. But it can state general principles which relate the allocation of resources between public and private uses to the underlying preferences of individuals, including those for public goods."

Also, they cut the following paragraph:

Samuelson once said: "Once I asked my friend the statistician Harold Freeman, 'Harold, if the Devil came to you with the bargain that, in exchange for your immortal soul, he'd give you a brilliant theorem, would you do it?' 'No,' he replied, 'but I would for an inequality.' I like that answer." Samuelson continued, "The day I proved that no one could be 60,000 standard deviations dumber than the mean, that Samuelson inequality made my day."

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CATEGORIES: Economic Methods

COMMENTS (8 to date)
E. Barandiaran writes:

Until the first Nobel Prize in Economics was awarded to Tinbergen and Frisch, I had eagerly studied most of Samuelson's work and regularly read his Newsweek column. But upon reading his column about that award, and because he was so dismissive of Tinbergen and Frisch's contributions, I started to think again about what economists had been doing and to focus much on the social value of their contributions. I was then a Ph.D. student and years later I realized that reading that column was a turning point in my academic life.

Tom writes:

I'd say they made the right call on at least two of three -- the second one says more about Arrow than about Samuelson, and the third one probably says more about Freeman and your own sense of humor.

gnat writes:

I'd say they made the right call on all three. In "Animal Spirits" Akeroff quotes Samuelson as saying that Friedman had a point but often overstated it like a boy who learned how to spell the word banana but did not know where to stop.

Sid Knight writes:

From a non-economist: I especially liked the grace (yours and his) in the final quote, "My loss." It was characteristic of the balance and tone of the article, which led me to this site.

David R. Henderson writes:

Sid Knight,
Thanks. I worked on it. :-)

Robert writes:

Can someone why the last paragraph is funny? "But I would for an inequality" ?

chris writes:

It is all of our loss that Prof. Samuelson never wrote that piece for the CEE

Elvin writes:

I learned from Samuelson's textbook in the early 1970s. At first I thought it was great, but five years later, when I looked at my brother's textbook, I realized that it wasn't that good. (It might have been good in 1949.)

Samuelson could be too cryptic or subtle, which is not good at the introductory level. Like the commentator Robert above, I remember myself scratching my head with Samuelson's textbook and asking, "What does he mean by that statement?" Maybe I'm just not that bright. (I never had that problem with Milton Friedman.)

That said, he was a great economist and deserved the Nobel Prize. He is our loss.

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