My WSJ Article on Samuelson
By David Henderson
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.”