Economics

Paul Samuelson, Economist for the State

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Following up on Peter Suderman's noting economics textbook legend Paul Samuleson's death, the very interested might want to check out libertarian economist and economics historian Mark Skousen, writing in 2002, with his very detailed examination of some shifting themes in the varied changing editions of Samuelson's primary text. He notes him pushing the Keynesian consensus as all anyone need think about economics, getting the details of the Soviet economy wrong til pretty much the end of the Soviet economy, shifting from a fiscal policy guy to a monetary policy guy when it came to stabilization policy, and being pretty consistently pro-government all the way. Some excerpts on that last point:

Through 15 editions, Samuelson has appeared to favor a substantial role for the state. In an early edition, he forecast that while the growth in government was not "inevitable," there was no end in sight (4:112). In a later edition, he observed, "No longer does modern man seem to act as if he believed 'That government governs best which governs least'" (8:140). In keeping with the Keynesian motif, a large government provided "built-in stabilizers" to the economy, such as taxes, unemployment compensation, farm aid and welfare payments that tend to rise during a recession (8:332-4). In discussing the overall U.S. tax burden, Samuelson has argued that to a large extent, higher taxes are a byproduct of economic and social development…

….Samuelson has been a strong supporter of the welfare state and antipoverty programs as a response to inequality. "Our social conscience and humanitarian standards have completely changed, so that today we insist upon providing certain minimum standards of existence for those who are unable to provide for themselves," he wrote early on (1:158). He denied that welfare expenditures were "anti-capitalistic" (7:146). Moreover, "Contrary to the 'law' enunciated by Australia's Colin Clark–that taking more than 25 per cent of GNP is a guarantee of quick disaster–the modern welfare state has been both humane and solvent" (8:140). Although welfare assistance was "indeed costly" and "often inefficient" (11:761), there was little choice, since private charity has always been inadequate" (11:760)….

For society's retirement programs, Samuelson has been a strong supporter of a pay-as-you-go Social Security system. Earlier editions contained a chapter on "Personal Finance and Social Security," which called the pay-as-you-go system "a cheap, and sensible way" to provide retirement benefits to individuals." Samuelson argued "It is one of the great advantages of a pay-as-you-go social security system that it rests on the general tax capacity of the nation; if hyperinflation wiped out all private: insurance and savings, social security could nonetheless start all over again, little the poorer" (4:179). But this statement–along with the chapter on personal finance and Social Security–was dropped after the fifth edition. His recommendation to buy U.S. savings bonds earning 3 percent, which were "a very great bargain," was removed after the third edition.'…

For further libertarian critiques of Samuelson, see Murray Rothbard's 1973 review of the ninth edition of Samuelson's text, with this notation of Samuelson's blindness to fresh developments on the free-market side:

Samuelson's eagerness to include every new development in the profession or in the economy has unaccountably overlooked what is perhaps the most important development in the economics profession in the past decade: the Coase-Demsetz analysis of the importance of property rights and of transaction costs and their use of property-rights concepts to analyze all the various problems of external economies and costs. The fact that there is not a single mention of transaction costs or of property-rights analysis in Samuelson demonstrates that perhaps our chef, of the economic mulligan stew has a blind eye to developments that occur among his free-market colleagues.