Paul A. Samuelson, 1915-2009

I was curious about people's thoughts on this:

http://krugman.blogs.nytimes.com/2009/12/14/ah-...

Interesting... I've seen USSR comparisons, but no Nazi ones yet on here.

Krugman KOs another straw man: people in this country who "probably" equal advocacy of "vulgar Keynesianism" to mass murder. Rather than debate economic historian Bob Higgs (who nicely coined the term "vulgar Keynesianism"), Krugman conjures the mass murder equating straw man. Higgs in the Independent Review pulls no punches, metaphorically of course. And what really must have riled Krugman is that Higgs laid out the Austrian alternative clearly and articulately. Attacking the man won't work in this case for Krugman because it would attract attention to Higg's superior ideas. Ergo Krugman attacks the straw man; clever, cunning and deceitful.

How is he arguing with a strawman? Someone actually said that in the comment section. Is that really so hard to believe? I don't think it would take too much searching to find something comparable here, if you wanted to make an attempt. No straw man to speak of. Correct me if I'm wrong, but I don't think he ever suggested that every critic of Samuelson compared him to Eichmann or that every critic of Keynesianism compares it to Nazism, did he? He was just speaking of a specific case where that did happen.

Well, as long as we are getting into this...

What do you think of this Krugman statement?

And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.

How does one commit "treason" against the planet exactly? Is there some "contract theory" that explains this? This is fairly sloppy thinking IMHO.

Over the top and stupid is what I think of it. I think there's a lot of valid critiques to be leveled at "deniers", particularly because I think many (not all) are largely ideologically driven rather than driven by any scientific conclusions. But I'm not sure how accusing them of treason is appropriate or makes any sense. I mentioned the other one because it was about Paul Samuelson. It's really besides the point that it was on Krugman's blog. If it had been on someone else's blog I would have linked it too.

... particularly because I think many (not all) are largely ideologically driven rather than driven by any scientific conclusions.

Yet you don't think that Torquemuirduck's Church of AGW is ideologically driven?

BTW... there aren't many 'deniers' (as your side calls us), who deny 'climate change'. In fact most 'deniers' recognize that 'climate change' has been around as long as climate. Most of us are skeptical that humans played a significant role in the warming that occurred up until ten or so years ago, and are even more skeptical that the solutions promoted by The Church will have any significant impact, other than a negative impact on liberty and prosperity.

IMO, Methinks' comment about Stalin, above, is also appropriate to His Holiness: The Divine Prophet Algore I, and The Church of AGW, "He was rebuilding man and society and some stuff was just collateral damage."

Re: "Yet you don't think that Torquemuirduck's Church of AGW is ideologically driven?"

Why would you say that? Of course I think some of them are.

Re: "BTW... there aren't many 'deniers' (as your side calls us), who deny 'climate change'."

Right - the "denial" is with regard to the anthropogenic facet of it. I actually usually use the word "skeptics" because that's what they generally seem to call themselves... I'm not sure why I pulled out "deniers" in this case.

I personally think Al Gore is an alarmist and that he is over the top, but I think your critique of him is somewhat alarmist and over the top as well.

Yep. Krugman says so many stupid things that this bit of stupidity just doesn't seem interesting enough to stand out.

Take Krugman's "a number of people" whatever way you like; my view is that Krugman would rather conjure and deceive than argue straight up with Bob Higg's discussion of "vulgar Keynesianism." I could be wrong, of course; in any case, I completely agree with Higg's assessment of the vulgarity of "vulgar Keynesianism."

I see. So now you're no longer accusing him of attacking a straw man. You've upped the ante to simply calling him a liar.

Exactly what does Bob Higgs or an article that Bob Higgs wrote months ago have to do with anything?

Danielkuehn,

Occam's razor may apply; Higgs's article is in The Independent Review, Winter 2010, pp. 465-472. If you want to learn things that Krugman appears not to I recommend you read and find out for yourself; I don't have neither time nor desire to explain Austrian macro to you here. For more on the subject you might take a look at Roger Garrison's web page; there one can find lots of reading material and powerpoints on key aspects of Austrian macro. If you don't know what "vulgar Keynesianism" has to do with Austrian macro, your human capital is deficient. Happily, it need not remain so if due diligence is applied.

Oh I just googled Bob Higgs "vulgar Keynesianism" and found an article from the Spring. My point is I don't think Krugman had Higgs in mind when he made the comment, so I wasn't sure why you brought him up. I doubt Krugman even bothers to keep up with Higgs's publications.

And as I've said before, I don't need you to teach me Austrian economics. I suppose I'm grateful for the offer.

Re: "If you don't know what "vulgar Keynesianism" has to do with Austrian macro, your human capital is deficient. "

You're the one that brought up "vulgar Keynesianism", Austrian macro, and Higgs, no me! And after skimming the spring article, I hope you're not relying on Higgs for your understanding of Keynes.

"after skimming the spring article," blah, blah, blah.

Your human capital is deficient and you are "skimming"?

And on the basis of "skimming" you are making recommendations about what I should rely upon in the article.

Shit; are you really incapable of seeing your arrogance and fatuous presumptiveness?

Good luck with that daniel, good luck!

Why do you always have to be so vicious to people you disagree with on here? Look - you started sharing random pieces by Higgs that you liked. You didn't even give me a citation - I had to search it out myself. It was a non-sequitor to begin with: completely unrelated to what I was talking about. I'm not under any obligation to do anything more than skim it. That's not a human capital deficiency - that's just me not hanging on every single word you write.

"Vicious"? No.

Brutally honest: Yes.

Skim, skimp, scam, do whatever turns you on; but remember, just as there is no free lunch and no free economic growth, there is no free human capital in Austrian macro. If you want to engage the people at Cafe Hayek, rather than just try to enrage them, I'd suggest you spend about 45 minutes a day for the next month studying Roger Garrison's book: Time and Money.

Of course you are under no obligation to do it; I'm just making a friendly suggestion. You seem capable enough, but seem to suffer from the common dillusion that understanding can be got on the cheap.

Re: "Shit; are you really incapable of seeing your arrogance and fatuous presumptiveness?"

You don't think that's vicious? I seem to recall you saying once that you are a teacher. Do you lash out like that to colleagues who don't agree with you?

Come on - I was talking about a Krugman post and you give me a laundry list of indianajim's favorite books. I read plenty and I read broadly - the fact htat I don't read your laundry list says nothing about my human capital.

"Shit" is what I say when I'm frustrated; what do you say? I gave you a reading recommendation to improve your human capital; what do you expect a teacher to do when he sees a deficiency? I'd say I'm being damned collegial with someone who I'm not alone in being frustrated with here at Hayek. But I may be alone in having recommended Garrison's book to you; I spent a lot of hours last summer on it and found it well worth my time. You may well be a much faster study than I, but if you read it I wouldn't suggest skimming it.

Haha - sorry for the confusion. It was "arrogance and fatuous presumptiveness" that bothered me, not "shit".

Like I said - I'm grateful for the recommendations but they struck me as completely unrelated to what we were talking about, that's all. And since the recommendations came with accusations about how deficient I am, I didn't jump up and run to the bookstore. I'm sure you'd have a similar reaction if I ranted about how deficient you were and rattled off a few books I think you should read. I hope I've never treated you like that - I don't think I have.

Shit; all of us are "deficient" in a host of ways. Get a skin; don't cut off your nose to spite your face; don't throw the baby out with the bathwater; don't look a gift horse in the mouth; a word to the wise should be sufficient; don't miss the forest for the trees; read Garrison's book.

Collegially yours,


indianajim

:) well of course all of us are deficient.

Disagreeing with indianajim doesn't qualify as "fatuous presumptiveness" in my book, though!

Well, if one thinks that the neo-Keynesian synthesis is destructive I'm not quite sure what is wrong with that. Now comparing it to national socialism is another matter.

Krugman's whining is really not interesting enough to comment on.

And yet here you are commenting - imagine that :)

Yes, Danny. Somehow, I didn't think you would understand without someone drawing you a picture. Here it is - what you think is interesting isn't. I was commenting on your post, not Krugman's whinig. Get it, big boy?

"The scary thing is that there probably are a number of people in this country who believe that advocating Keynesian economics is a crime comparable to being complicit in mass murder."

Awe, poor Krugman. Such the victim.

The scarier thing is, there are people who think it's crime to advocate liberty. Just watch the reaction of any hard-core left-winger when you bring up a name like Milton Friedman.

I first read Samuelson's textbook in grad school. I found it disturbing and all but incomprehensible. Later, after reading Friedman, among others, I realized that the source of my discomfort was Samuelson's implicit (socialist/marxist) assumption that government was a necessary part of the economy.

For me Samuelson's contribution was to bless the many socialist initiatives of Congress. Not at all commendable, IMO.

I could never get over Samuelson's public goods work. The whole formula revolved around the presumption that you can know the unknowable. Some of the smartest people on earth are the biggest idiots.

Paul Samuelson in his economics text published in 1989: ""The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

By 1989 there was plenty of evidence that the exact opposite was the case.

So Samuelson was an idiot.

The Soviet economy to anyone remotely familiar with it stopped "thriving" in the late 1960s to early 1970s. There was a brief near decade of rapid improvement in the late 1950s and early 1960s, but most of that was very easy low lying fruit.

The Soviet economy to anyone remotely familiar with it stopped "thriving" in the late 1960s to early 1970s.

What is your definition of "thriving"? I left in 1976 and saw nothing thriving except bribery and corruption before then. Of course, it did get a lot worse in the 1980's when the idiot Galbraith exclaimed that the Soviet Union was a thriving Utopia in the New Yorker magazine after a visit to his Mecca in 1984.

Thank you, Marcus. This is just the gibberish I was referring to.

Of course in reaching for that long hanging fruit they often either ignored or did not understand the unintended consequences of their actions.

Unintended consequences generally result from people not understanding that they will occur. Soviet central planners were remarkably smart and knowledgeable - including Stalin. Although the agricultural five year plans read like they were written by an escaped chimp, Stalin was very knowledgeable about agriculture. Which, I think, makes it worse.

Much of what was happening in the country was hidden from Stalin; this is a common trait of societies where "total control" is exercised by one person.

What makes you think Stalin didn't know what was going on? Are you assuming that if Stalin knew, he would be willing to do things differently?

Stalin knew plenty. He was rebuilding man and society and some stuff was just collateral damage. For example, in his first initiative, he purposely set out to starve the peasants by redistributing wealth from the country to the city in order to increase industrial production. The peasants balked, resulting in nothing to redistribute. Oops. That's when he began terrorizing the peasants. Terror is not much of an incentive to put your best foot forward in the fields and expensive to boot. Don't mistake purposeful tyranny for ignorance, Mommsen. You seem to be well versed in general history, but not in Russian history.

What makes you think Stalin didn't know what was going on?

Because that is what the primary sources demonstrate. Party members actively hid all manner of information from Stalin; for their self-preservation amongst other reasons.

Are you assuming that if Stalin knew, he would be willing to do things differently?

Yeah, he would have been even more vicious.

Yeah, he would have been even more vicious.

I don't think so. He learned early on that viciousness didn't actually increase production and that maximizing production was a balancing act between consumption and investment and he could not escape the fair wage. He was mostly vicious with political rivals - real and imagined.

Stalin was an extremely capricious creature driven by - amongst other psychological factors - paranoia. He made all manner of what we might call objectively irrational decisions based his own particularized incentives and psychological needs.

Your point?

"Thriving" as in it stopped its trend of post-war improvement. Like I wrote, there was a whole lot of low hanging fruit that the Soviets could reach for.

What low hanging fruit? What post war improvements? How are you measuring these improvements?

All I am suggesting is that there was a general improvement in the Soviet economy following the deaths of Stalin and Beria. It was unsustainable however.

You're suggesting lots of vague things which suggests you don't really don't know what you're talking about.

As a result of various policies implemented from the 1920's until the early 50's, the Soviet Union's productivity declined more than any other major country. By the mid-50's Khrushchev wrote to his party: ""In the last fifteen years, we have not increased the collection of grain. Meanwhile, we are experiencing a radical increase of urban population. How can we resolve this problem?". Yes, while Americans were worried about buying cars and their first televisions, Russians were concerned about feeding the population. Thriving?

Plans were drawn up to increase grain production. It worked. Unfortunately, grain production wasn't increased enough to keep up with the urban population growth (important because in the "derevnya" or the "country" which was anything not in the city, there was no electricity, no running water and no paved roads - except at the "dachas" of the nomenklatura). Thus, by 1963 the "breadbasket of Europe" informed the socialist bloc countries that it will no longer export grain to them. That same year, that same "breadbasket" spent one third of its gold reserves to import 12 million tons of grain. Khrushschev was humiliated (and the man was an idiot peasant who remained unhumiliated by the fact that he, the head of the communist party, could not explain communism to his son). Grain production remained fixed at 65 million tons per year in the mid-60's no matter what anyone did.

A hungry population is a population ready to revolt. Yet to feed the masses, the soviet union needed hard currency to exchange for food. Only problem was that the soviets could not sell soviet produced goods as the goods were such crap, the raw materials were worth more than the finished product. Again I ask - where's the thriving? So, exporting commodities became the only way to obtain that all important hard currency. The largest export was oil and the fortunes of the Soviet government and the nomenklatura rose and fell with the price of oil - until that day in 1991 when the Soviet version of a central bank informed the leadership that it didn't have one single kopek.

Meanwhile, hospitals in the Soviet Union resembled third world facilities (I had years of experience as an inmate - literally. They had bars on the windows and family visits were strictly regulated and often forbidden. My mother had to bribe the hospital by agreeing to wash the ward floors with bleach in exchange for visitations with her child who lay dying in the hospital). Soviet citizens hobbled along in less comfort and style than Appalachian laid off coal miners. Where, I ask you, is this post-Stalin post-Beria thriving?

Yes, the Gulags - an inefficient use of labour - were finally not as widely used. Stalin's paranoia died with him. But, as a child I was still baptized in secret and it was explained to my 4 year old self post Stalin and post Beria that I am never to wear the cross on top of my shirt or I risk the safety of my family. We could all be shot, it was explained to me. Imagine the cost benefit analysis of explaining that to your 4 year old.

Not only was thriving "unsustainable" as you put it, it was also non-existent. The soviet economy never thrived in any meaningful way (and I don't consider building a giant, rotting, post-war military industrial complex "meaningful"). Soviet escapee economists such as Igor Birman (who escaped to the west in 1974 and was an economist in the USSR before escaping) loudly disputed the Sovietologists' claims that the Soviet economy thrived. He was publicly derided by the American intelligentsia, including Samuelson and, of course, Galbraith. I can't believe people still buy into the myth that the Soviets ever built anything that resembled a "thriving economy" for any length of time.

Of course, there was a perfectly sustainable and very much thriving black market for such precious and hard to come by goods as shampoo and macaroni.

Dude, you are arguing with me no reason.

First, I tried to understand what you're talking about. Since you couldn't define "thriving", I corrected your assertion that the USSR was ever thriving. BTW, I'm not a dude.

Oh and these days, dude need not have a gender associated with it. See the urban dictionary: http://www.urbandictionary.com/define.php?term=...

I used the term "thriving" in quotes. Get your first clue from that.

Oh, of course. I was just confused by all the talk of picking undefined low hanging fruit and post war improvements. I should have known that this could mean absolutely nothing in light of the quotations around thriving. But what can you expect from someone who isn't up on her street lingo? Do you guys still use "honky"? That was popular when I came to the United States.

Anyway, forgive me for having the temerity to insert myself in the conversation you were having with yourself before I intruded.

BTW, this was one of the reasons why Soviet planners put so much faith in computers in the 1960s; because the complexity of centralized planning had outstripped the ability of mere humans. Of course the computer angle didn't work either, though it was pretty typical of a kind of technophilia that always gripped elements of the Soviet nomenklatura. They were also looking for some deus ex machina to save them from the problems associated with their system.

Ok, I'll be replying to my comment for a second time, but so be it...

I'll observe that both "liberals" and "conservatives" viewed the Soviet system as competent and robust in the post-war period, but for very different ideological reasons. It is so odd (yet not) that both could come to the same conclusion, and yet be totally wrong.

The way economists think has been shaped by Adam Smith, Alfred Marshall, John Maynard Keynes, Milton Friedman. The actual nuts and bolts that they work with are largely attributable to Samuelson.

I'm not sure we should let that slip to frustrated students, though - they may appreciate the man less as a result :)

According to the article public goods are, as envisioned by Samuelson:
"goods that can be provided effectively only through collective, or government, action. National defense is one such public good. It is nonexclusive; the Navy, for example, exists to protect every citizen. It also eliminates rivalry among its many consumers; that is, the amount of security that any one citizen derives from the Navy subtracts nothing from the amount of security that any other citizen derives."


I wonder why market prices weren't noted as the most important exception. Market prices emerge out of the un-centrally coordinated actions of private demanders and suppliers, and from market prices emerge orders that allocates scarce resources efficiently among competing contemporaneous users and across time. As Hayek noted, no central authority is capable of producing such orders; indeed when prices are made up by government and imposed the results are often decisively destructive to the general welfare.

Well government can't provide prices (that sort of defeats the purpose of prices!), but it can provide the context and preconditions for prices to emerge - precisely because a lot of the institutions that make a functioning market possible are non-excludable and non-rivalrous (not to mention there are strong positive externalities in any sort of network, and markets are no exception).

Market prices can and do exist without government. Government is neither necessary nor sufficient for the advent of market prices.

Agreed.

Of course market prices generate strong positive externalities; this is a big point in Deirdre McCloskey's "The Bourgeois Virtues" for those with wit to read and understand this. It is for this reason, as well as allocative inefficiency, that governments create such havoc when they directly set/manipulate prices, wages, and interest rates.

You are missing the point or muddying the waters by saying that "government can't provide prices". While it is true that government can't provide market prices, it is factually false to say that governemnts never set prices (e.g., the minimum wage).

Not missing the point - probably writing it poorly. Governments can't provide prices with any hope of success, I should say. I understand the irony of saying this as a central bank advocate, but I think there are special circumstances to consider in that case. There's nothing you've written about prices I've disagreed with - I probably just wrote it unclearly.

I've heard her lecture on the book, but haven't gotten a chance to read it yet - thanks for the reminder.

Yes, yes. The world is filled with special circumstances to consider. In fact, there's a special circumstance to fit every central planner's excuse for central planning.

If it was filled with them they wouldn't be special, would they? :)

Is that a lightbulb I see over your head or am I hoping for too much? I think I'm too hopeful.

Haha - more confirmation that I am just a walking, talking strawman for you. Oh well.

I think of prices as a mechanism, not a good.

Prices can be thought of in any number of ways. When thought of as information they can be thought of as a good; people pay for lots of kinds of information in markets from advertising to tax counselling.

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