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Samuelson: "Frank Knight Thought Keynes Was The Devil" And Other Insights

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Originally posted by John Cassidy at The New Yorker,

In the fall of 1996, I arranged to interview Paul Samuelson in his office at M.I.T. for an article I was writing on the state of economics, which is available online to subscribers. At the allotted time, 12:00 if I remember rightly, there was no sign of Samuelson, who was then eighty-one. A few minutes went by. Then he bounced in on the soles of his feet, a diminutive man dressed in a light gray suit, a red-and-white-striped shirt, and a snazzy bow tie. He had gray, frizzy hair, shaggy eyebrows, and a wicked smile. His usual parking space had been occupied, he shouted to his secretary, so he had been forced to park in somebody else’s. “I hope it’s Franco’s. He’s out of town.” (Franco was Franco Modigliani, a fellow M.I.T. Nobel Laureate, who died in 2003.)

Befitting a scholar of his stature, Samuelson had a big airy office that overlooked the Charles River. Books and journals lined the walls and floors, but Samuelson’s desk was neat. On the blackboard, there was a note of congratulations from his colleagues for winning the “National Medal of Science,” which he had received at the White House earlier that year. Samuelson joined M.I.T.’s faculty in 1940. He wrote more than four hundred journal articles, numerous monographs and a famous undergraduate textbook, which, he proudly informed me, had sold “three million or four million copies—I can’t remember which.” When he was awarded the Nobel Prize, in 1970, the citation read: “By his contributions, Samuelson has done more than any other contemporary economist to raise the level of scientific analysis in economic theory.” Almost forty years later, few would quibble with that description.

I began by asking Samuelson whether he was still a Keynesian. Early in his career, he helped to formulate the income-expenditure framework that John Maynard Keynes put forward in his 1936 book, “The General Theory of Employment, Interest, and Money,” capturing its essential elements in a simple diagram that is still used in elementary economics classes.

“I call myself a post-Keynesian,” Samuelson replied. “The 1936 Model A Keynesianism is passé. Of course, it doesn’t meant that it wasn’t right for its time.” He recalled attending an event that was held in Cambridge, England, in 1986 to mark the one-hundred-and-fiftieth anniversary of Keynes’s birth. “Everybody was there. And they all stood up and said, ‘I am still a faithful Keynesian. I am still a true believer.’ I was a bit rude. I said, ‘You remind me of a bunch of Nazis saying, I’m still a good Nazi.’ It’s not a theology: it’s a mode of analysis. I think I am a different Keynesian than I was ten years ago.” Samuelson then quoted Keynes himself. “When my information changes, I change my views. Don’t you, Sir?”

Q: At this stage, how would you rank Keynes?

A: “I still think he was the greatest economist of the twentieth century and one of the three greatest of all time.”

Q: “Who are number one and number two?”

A: “Adam Smith and Leon Walras.”

Walras was a nineteenth century French economist who taught at the University of Lausanne. He was the first economist to write down the equations for a ‘general equilibrium’ of the entire economy, incorporating the markets of everything from sugar to iPods. He is widely regarded as the founder of mathematical economics. “We all march in his footsteps,” Samuelson said of Walras.

Q: “Why did you become a Keynesian?”

A: “I was taught by the best neoclassical economists in the world at the University of Chicago”—Samuelson went to Chicago at sixteen in 1931, two years into the Great Depression and did his B.A. there. He then went to Harvard for his Ph.D.—“I did not throw out my education lightly, but what I was being taught was of no use in explaining what I saw around me. It was the Great Depression. In one year, there were virtually no housing sales in all of Chicago. Model A Keynesianism really fitted what was going on pretty well. It was the best wheel in town, so you used it to explain what was happening.”

“Keynes’s contribution was not just to advocate spending government money in the middle of a recession. Every government had done that going back to the days of the Irish potato famine. What he gave to us was a way of thinking about the magnitude and the dimensions, and so forth.”

Although Samuelson quickly accepted Keynes’s new teachings, many others didn’t. “Inexact sciences like economics advance funeral by funeral,” Samuelson said, and he brought up one of his teachers at Chicago, Frank Knight, a brilliant scholar who is today remembered primarily for the distinction he drew between risk, which can be assessed in probabilistic terms, and uncertainty, which can’t be represented mathematically.

“He”—Knight—“really thought that Keynes was the devil,” Samuelson recalled. “He didn’t believe in God, but he knew a devil when he saw one. He insisted that the old economic system—the neoclassical one worked pretty well, except in the Great Depression.” Samuelson shot me an impish grin. “That’s a pretty good science,” he went on. “One that is true except for its exceptions.”

Q: “Why did Keynesianism go into decline?”

Samuelson answered my question in three parts. Firstly, he said, Keynesian economists and policymakers made the mistake of projecting the experience of the Great Depression onto the post-war era. When the military conflict ended, and defense spending started falling, they expected the economy to go into another slump. “That isn’t what happened at all,” Samuelson said. “People came back (from the war) and they were eager to consume. What is more, they had the wherewithal to consume.”

Secondly, it turned out that, contrary to what Keynes had said in “The General Theory,” monetary policy mattered a lot. “In 1936, money had no important role,” Samuelson recalled. “Interest rates were one-eighth of one-eighth of one per cent. I did some research, and I found that the interest on one million dollars of ninety-day Treasuries was $37. People didn’t even bother to collect it. The Fed wasn’t important. During the war, the rumor went around that it’s authority would be stripped out and given to one of the wartime agencies. Post-war, money did matter. Milton Friedman et al turned out to be right. Where I fault my English colleagues is that they didn’t change when the situation changed. The English Keynesians got stuck too close to Model A Keynesianism.”

The final blow to Keynesianism was stagflation: the combination of rising inflation and unemployment, which emerged in the early nineteen-seventies. In any democracy, Samuelson noted, there is a temptation for the government to try and stimulate the economy, even if that leads to a modest rise in inflation. “You bite the apple,” Samuelson said. “You know you can do it, so you are damn well going to do it. The temptation was to over-use it. It was a disease that Lord Beveridge (an early English Keynesian), Alvin Hansen (an early American Keynesian) and, indeed, Keynes, in some moods, were aware of. They suspected that at really full-employment you would have an incipient inflation problem.” It was this fear, Samuelson recalled, that led to direct restrictions on wages and prices—so called prices and incomes policies—but these measures didn’t have much success. “There’s nothing in Keynesian economics that would allow you to solve stagflation. But there’s nothing in neoclassical economics that would allow you to solve stagflation, either. Except, if you don’t allow unions to exist, or you don’t allow the poorest fifty-one per cent of the population to use the levers of politics in order to shift the income distribution in their way.” Nevertheless, Samuelson went on, “the failure to solve the ongoing problem of stagflation was the most important nail in the coffin of Keynesianism.”

Q: “What is left today of Keynesianism?”

Quite a lot, Samuelson replied. “Fairly simple Keynesianism has worked pretty well in explaining what has happened to the U.S. economy since 1980—certainly much better than it worked in the nineteen-seventies, with the supply shocks.”

Q: “What do you think of Robert Lucas? (Lucas, a professor at Chicago, helped to found the rational expectations approach to macroeconomics, which sees the economy as self-correcting and views attempts to stabilize the economy, by, for example, raising and cutting interest rates, as futile. The previous December, Lucas had picked up a Nobel Prize.)

“I applaud the fact that Robert Lucas received the Nobel Prize last year. I thought it was overdue,” Samuelson said. In terms of economic theory, he went on, the rational expectations approach was very significant, but its practical importance was negligible. “The rational expectations paradigm of analysis had nothing to contribute to the Reagan administration, where it would have been welcome, or, indeed, to the Federal Reserve Board’s outside committee of academic consultants, which I used to attend. There was usually one rational expectations man at each meeting, but it was rarely the same one twice. In terms of practical analysis, they had nothing to teach us.”

“What is real”—of the rational expectations approach—“is that you can’t fool all of the people all of the time,” Samuelson said, but the suggestion that changes in monetary policy don’t impact the economy, at least in the short-term, was plainly wrong. “That is the Achilles heel of the Lucas vision.” Equally troubling, Samuelson went on, were later elaborations of the rational expectations approach, particularly the “real business cycle” theory, which posited that the economy at large was in a continuous state of equilibrium, and that economic outcomes, including mass joblessness, were a product of voluntary choices. “If somebody says, as Friedrich Hayek said when one in four Germans were unemployed, that people are out of work because they are choosing to consume leisure, that, to my mind, is a ridiculous real-business cycle theory.”

The rational expectations approach isn’t just an economic theory: it is an austere theory of human behavior. It assumes that consumers and businessmen are ultra-rational, and that they are endowed with complete knowledge of how the world operates. In one famous adaptation of this idea, Robert Barro, who is now at Harvard, argued that increases in government spending had little or no impact on GDP: they merely prompted people to save more because they know that, ultimately, the increases in spending would have to be financed by higher taxes. Samuelson expressed skepticism about this idea, noting that during the Reagan era there had been enormous budget deficits but no concomitant rise in private saving.

“I’m about as rational a person as you could get, but did I set up a sinking fund to pay off my taxes? No. Was I lazy and irrational? No...At bottom, I’m in the Herbert Simon camp of limited rationality. People are rational, but you are always doing things in a hurry and with limited information. The last thing you can do is a big optimization problem down to five decimal places.”

Samuelson’s role in the evolution of economic methodology is somewhat ambiguous. On the one hand, he was skeptical of the formal methods that Lucas and Barro employed. But it was he, more than anybody else, who helped to turn economics into a branch of applied mathematics. In his 1947 treatise “Foundations of Economics Analysis,” Samuelson showed how many types of economic decisions, such as what good a consumer should purchase, or how many employees a firm should hire, can be viewed as mathematical optimization problems. The framework he elucidated, which employed multivariate calculus, still dominates graduate textbooks. By the mid nineteen-nineties, many economists, including some very eminent ones, were concerned that the formalization of economics had been taken too far: that it had come to dominate the subject at the expense of economic intuition. I asked Samuelson whether mathematics was now too important in economics.

Rather than answering the question directly, he talked about a lecture he attended in the nineteen-thirties by Lionel Robbins, a well-known professor at the London School of Economics. “Lionel Robbins gave an address saying this math stuff is just a passing fad. I was all of twenty-eight, but I thought, ‘Poor fellow, he just doesn’t realize that he’s missing the train.’ That was just a bad understanding of the dynamics of the profession. Math is a problem for everybody in the profession and it has been for years. We all say, math should be used just up to the point that I have used it, and no more...I always say to our graduate students when they are leaving: ‘As a graduate student at a top-notch university, you tend to lose touch with reality. You have been engaged in puzzle solving and learning a new language. When you emerge, you may tend to think you have been asleep for several years.’ The paradox is that the best people in practical terms are the Jim Tobins, the Bob Solows—the guys who are awfully good at the technical stuff as well.” Samuelson also brought up his colleague Modigliani, whose parking space he may have been occupying, noting “he has done more for Italy than pizza,” and the prevalence of technically adept M.I.T. graduates in the Clinton administration. (They included Lawrence Summers, Joseph Stiglitz, and Laura Tyson.)

“Like herpes, math is here to stay,” he said. “It takes strong math to defeat misleading math. For example, ordinary least squares”—a standard statistical method—“is misleading. It takes more mathematics than ordinary least squares to understand three-stage least squares, co-integration, or unit roots, all of which are improvements on ordinary least squares. But it does lead to a communication problem. The number of people who can communicate effectively, like Paul Krugman, is very small. I will say something. It won’t be a new John Kenneth Galbraith who cleans of the Augean stables of economics. I think that the big changes in economic doctrines which will be used in the twenty-first century will come from inside the profession.”

Q: “But what about the state of macroeconomics? Is it not troubling?”

A: “A lot of people think that macroeconomics is in a mess, and it is true. But the mess in macro is not that there are now inferior people going into the subject. The problem is that you are dealing with complex, intractable, and imponderable problems. I can, in three afternoons, think up a new puzzle in portfolio theory and work out its implications. But that doesn’t enable me to translate that knowledge into cleaning up the mess in macroeconomics. Macroeconomics is in a mess because we have made so much progress in the control of the old-fashioned business cycle. When macroeconomics was crucial, during the Great Depression, things were by no means as clear as they are now.”

At this point, Samuelson again gave credit to Keynes, for enabling economists to think through the causes and solutions to economic slumps. He brought up the economic situation in Japan, which was enduring a lengthy period of stagnation following the bursting of a stock market and property bubble. “The Japanese government doesn’t have the power to expand the economy through monetary policy because interest rates are at half a per cent. That’s pure Keynes. That’s the liquidity trap. That’s a little bit of 1936 Model A Keynesian economics.”

Moreover, he said, it wasn’t just the Keynes of “The General Theory” that remained valuable. He cited one of Keynes’s earlier books, “A Tract on Monetary Reform,” in which he put much more emphasis on money and interest rates. “I think nineteen-twenties Keynesianism—the Keynes of the Tract on Monetary Reform—that is what is needed in a well-run market economy. You lean against the wind and you try to do it intelligently.” By this, Samuelson meant that during an economic downturn the Fed should reduce interest rates to stimulate the economy; when the economy has recovered, the Fed should raise interest rates to head off a speculative boom. At the time of the interview, Alan Greenspan and his colleagues were holding off from raising interest rates despite the fact that the economy was chugging along. The previous day they had again held rates steady. “I think the Federal Reserve made a mistake in not raising interest rates yesterday,” Samuelson said.

Samuelson’s comments proved prescient. The Fed’s reluctance to raise interest rates eventually resulted in the stock market bubble of 1998-2000 and the real estate bubble of 2003-2007.

When I had finished asking my questions, Samuelson inquired about the article I was writing. “Is it going to be one of those interminable New Yorker pieces?” he asked. I assured him that these days we tried to keep things at more manageable lengths—perhaps five thousand words, or so. “Nice work if you can get it,” he said, looking at his watch and leaping up for his chair. The weekly faculty lunch was about to begin. “I’ve gotta go,” Samuelson said. And with that, he marched out of the office.

 


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Sun, 12/16/2012 - 23:07 | Link to Comment lolmao500
lolmao500's picture

Bernanke is a devil and will be the biggest murderer since Mao Zedong when the full consequences of QEFOREVA are unleashed around the world.

Wed, 12/19/2012 - 17:51 | Link to Comment Pinto Currency
Pinto Currency's picture

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The following is personal opinion.

 

These economists all reject the Austrian School because it basically is of the view : don't touch money and get out of the way.

If they accepted this premise, they'd all be unemployed (they'd argue for days that they are really marginally employed) instead of heaping awards and accolades on one another and occupying government positions where they can apply arbitrary discretion on vast numbers of people. 

Further, they always espouse the Keynesian comment "I change my opinion when the facts change" to cover their consistently incorrect views.

When you look at Keynes, and chatterbox mathematician economists like Samuelson, Bernanke, and Samuelson's nephew Larry Summers, it seems clear that while shit may roll downhill, a good bullshitter can rise to incredible heights.

Sun, 12/16/2012 - 23:16 | Link to Comment Aziz
Aziz's picture

Samuelson continually predicted the Soviet Union would overtake the USA in GDP...

So um yeah.

Central Planning FTW!

http://azizonomics.com/2012/07/15/penis-length-libor-soviet-growth/

Mon, 12/17/2012 - 00:31 | Link to Comment garypaul
garypaul's picture

Obviously it's true that the Soviet Union did not overtake the USA in GDP, but isn't "Red" China well on it's way? (i.e. that guy was correct even if the details were off). Just askin'

Mon, 12/17/2012 - 01:11 | Link to Comment economics9698
economics9698's picture

China is more capitalist than America in 2012.

Wed, 12/19/2012 - 13:36 | Link to Comment Pinto Currency
Pinto Currency's picture

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Mon, 12/17/2012 - 05:50 | Link to Comment A Nanny Moose
A Nanny Moose's picture

China had the benefit of learning from the Hong Kong model, when they took it over from Britan. With 4x the us population, I would think they could simply crap bigger GDP than us.

Sun, 12/16/2012 - 23:18 | Link to Comment nmewn
nmewn's picture

"The final blow to Keynesianism was stagflation: the combination of rising inflation and unemployment, which emerged in the early nineteen-seventies."

Which is impossible under Keynes "theory".

So, lets keep teaching absolute PROVEN bullshit to students of finance and economy at our major universities. Afterall, our tenure, pensions and government largesse depend on it.

BAUUUUGH...you fucking bastards!

Sun, 12/16/2012 - 23:37 | Link to Comment disabledvet
disabledvet's picture

i've been told economics has been the "go to study area" for new students in our Universities for some time. Obviously running trillion dollar deficits for as far as the eye can see is a total failure of the likes of Samuelson et al...and i note know empirical thoughts on solutions...unlike me whose "couch research" has declared a veritable cornucopia of wizardry on "things worth doing while blowing a trillion dollars a year." i simply cannot understand folks such as this...people who truly don't want to put their theories to the "engineering test." There's no outrage at how little has even changed over the past four years...and how what little that actually has has come from the private sector and how all these Government projects have completely failed the "practical applications test." I think the time to wind down the totality of the Federal edifice outside of Social Security, the Army Corps of Engineers, the FCC, the FDIC and a fully funded and staffed Judiciary are long past the due date. What a catastrophe the response to 9/11 has been. And no "talking about it doesn't make it better" either. I mean c'mon Samuelson...can we at least agree that the huge deficit is by far the biggest reason for slow growth and high unemployment right now and going forward?

Mon, 12/17/2012 - 02:09 | Link to Comment economics9698
economics9698's picture

Here in this blog are a couple of graphs showing the inverse relationship between spending and economic activity.

http://www.floridapoliticalpress.com/2012/12/16/do-spending-cuts-or-taxe...

Mon, 12/17/2012 - 02:43 | Link to Comment defender
defender's picture

I particularly liked that his stated the reason that he became a keynesian is:

I did not throw out my education lightly, but what I was being taught was of no use in explaining what I saw around me.

Then he goes on to talk about how stagflation doesn't fit keynesianism, but did he switch to a better theory?  Naw, he just bolted a few more caveats onto his non-functional theory and called it good.  Hypocrite writ large.

Sun, 12/16/2012 - 23:59 | Link to Comment NoDebt
NoDebt's picture

And that's what it looks like from the big chair, friends.  Guys like that advise policy makers around the world.  Feel better?

Economics is not a science.  That's why they teach it in Liberal Arts schools.  Complicated math and the specialized language of Economics are the stuff they use that is designed to make you think they know what they're talking about.  (I have some backround in this as a recovering economist myself.)

Whether they realize it or not, they are studying human behavior.  If they can boil that down to a mathematical equation, then they have a real science.  Otherwise, it's psychology on a macro scale.  Beyond understanding basic supply and demand is little but guesswork wrapped in equations.

When they can spit out a half-decent forecast that comes anywhere close to reaity, you should start to pay attention.  Otherwise, you're chasing phantoms listening to them.

Markets know more than economists.  They are the real teacher.  Which is why applying significant dostortions to them, as we are now, is so dangerous.  They are there to keep things from wandering too far out in the weeds.  Manipulate and distort them and you have no guidepost back to reality.

 

Mon, 12/17/2012 - 01:13 | Link to Comment Bohm Squad
Bohm Squad's picture

Bingo!  There's a lot of money floating around for these modern-day witch doctors...the fact no one has cut off the spigot is a huge problem.

 

Reversion to mean in 5....4....3....2....

Mon, 12/17/2012 - 02:11 | Link to Comment economics9698
economics9698's picture

There are economists that can predict economic markets, they are called Austrians.

Mon, 12/17/2012 - 01:23 | Link to Comment Temporalist
Temporalist's picture

It is not just studying human behavior it is an attempt to manipulate and modify it for the "greater good" as they see it.  In coordination with politicians and financiers (that economists use to justify their own existence as being important) via corporate owned media they have mindfucked the world.

 

Sun, 12/16/2012 - 23:56 | Link to Comment apberusdisvet
apberusdisvet's picture

The most salient point of the above post was Samuelson's advice to parting graduates.  I was one of them.  My first 10 years after graduation was relearning the true function of supply and demand in the real world.  My total MIT experience was only worthwhile because I learned how to connect dots, regardless of the economic ideology.

Mon, 12/17/2012 - 02:12 | Link to Comment economics9698
economics9698's picture

Yep, I had one good class, money and banking, which woke my ass up to the theft, and the rest worthless.

Sun, 12/16/2012 - 23:56 | Link to Comment Seasmoke
Seasmoke's picture

clearly, this is before he heard of Paul Krugman

Mon, 12/17/2012 - 00:06 | Link to Comment ball-and-chain
ball-and-chain's picture

Keynes wasn't the devil?

So my college economics professor was wrong all this time?

What a bummer.

http://www.angrysinner.blogspot.kr/2012/12/yesterday-i-hiked-ten-miles-through.html

Mon, 12/17/2012 - 01:04 | Link to Comment Bohm Squad
Bohm Squad's picture

No one was "missing the train".  Math and economics doesn't mix.  Keynes just thought he was smarter than everyone else...oops.

Mon, 12/17/2012 - 01:09 | Link to Comment Temporalist
Temporalist's picture

"Macroeconomics is in a mess because we have made so much progress in the control of the old-fashioned business cycle."  Is that newspeak for "our disastrous control is progress"?

Mon, 12/17/2012 - 01:23 | Link to Comment yogibear
yogibear's picture

To Bernanke and the current Federal Reserve Rabbis Keynes is their god.

Mon, 12/17/2012 - 02:14 | Link to Comment economics9698
economics9698's picture

Freidman is their god. 

Mon, 12/17/2012 - 01:36 | Link to Comment q99x2
q99x2's picture

A Sunday treat of an article.

Mon, 12/17/2012 - 03:25 | Link to Comment lasvegaspersona
lasvegaspersona's picture

may I suggest that a simple issue...seperating money's medium of exchange function from it's store of value function may prove to be more helpful than all the differential equations of quants put together. This would 'look like' fiat currency existing along side a strong store of value (physical gold) with gold shining a light on the faults of profligate fiats . Fofoa and those he explores have suggested this. I believe he may be onto something.

Mon, 12/17/2012 - 04:12 | Link to Comment Oldrepublic
Oldrepublic's picture

I used to live in  the former Soviet Union. Could not get over the fact that the brillant central planners there did not allow individual hot water heaters, but had two central water supplies for all apartments, one hot water and one cold water!

Mon, 12/17/2012 - 06:25 | Link to Comment Setarcos
Setarcos's picture

I do not believe you.

I do not believe that you lived in the Soviet Union, but I do think that you are a shill who makes things up for some nefarious purpose.

Maybe I am wrong, but state where you exactly lived.

Mon, 12/17/2012 - 05:40 | Link to Comment unirealist
unirealist's picture

Wow, here's a gem:

"...technically adept M.I.T. graduates in the Clinton administration. (They included Lawrence Summers, Joseph Stiglitz, and Laura Tyson.)"

Oh, yeah, that Larry Summers.  He may be "technically adept," but he's done more damage in his I'm-the-smartest-guy-in-the-room act that any other economist on the planet.

If Summers is the kind of economist Samuelson admires, I think we can understand why our economy is so screwed up.  Is Samuelson dead now?  Is it too late to hang him with the rest of the preening academics who think they know how to improve the markets?

Mon, 12/17/2012 - 06:33 | Link to Comment falak pema
falak pema's picture

The only thing  I retain from this is that a top economist says all schools of economia, although necessary (like herpes), are limited and mathematical modelling is a dangerous two edged sword.

SO ZH, stop nailing Keynes as your favorite bogeyman. He is dead and like all economists "stagflated" out of reckoning, having done his historical bit in a voodoo type science; which people feel is the magic compass of industrial/post-industrial world. 

I know the TDs like playing at Kaiser Sauzee to please the crowd, with their line up of Usual Suspects in this merry-go-round! 

Our financialista world is now heading for bad Keynesian type medecine for want of another solution; its 1929 blues and its world wide news. Nobody wants to fall into foggy bottom, but that doesn't mean we won't! 

Mon, 12/17/2012 - 07:59 | Link to Comment spanish inquisition
spanish inquisition's picture

When fraud and corruption are the overriding factors in a casino, people quit playing. None of the fancy economic theories incorporate the 1-3% drag of institutionalized Fed skimming into their macro equations.

Sorry, don't buy the union as a scapegoat for everything that is wrong in the world.

 

Mon, 12/17/2012 - 08:45 | Link to Comment GreatUncle
GreatUncle's picture

The Keynes mechanism was abused because

THE RATE WAS INCREASED PAST WHICH IT WAS STABLE".

Other than that it has a part to play in modern economics  to continually fill the economic gap. Where does the economic gap come in? Rather simply it is a fundamental human flaw in humantity to become ever more efficient and where the gap I mentioned is created.

The three points mentioned to model an economic system is incomplete or should we say we expanded a newer component where it becomes noticeable.

“The General Theory of Employment, Interest, and Money,”

YOU LEFT OUT EFFICIENCY = TECHNOLOGICAL ADVANCEMENT.

This what was insignificant has grown to be a fully fledged component of any equation you attempt to use.

The comments on here would suggest evil, NWO etc, they have always been there. The noticeable difference is the scale of action has grown all in the attempt to keep those with power in the position they are accustomed too.

All a one trick pony on the state of the economic system.

 

Mon, 12/17/2012 - 13:12 | Link to Comment calgal
calgal's picture

Here is a famous quote from Keynes himself:

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.  The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.  Those to whom the system brings windfalls . . . become 'profiteers', who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat.  As the inflation proceeds . . . all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless."

Mon, 12/17/2012 - 18:53 | Link to Comment terryfuckwit
terryfuckwit's picture

Believe or not I went to school with John Cassidy son of a construction foreman second generation Irish like myself here in Leeds uk. Did the famous government politics and history at oxford and actually was recorded as getting a higher score than Harold Wilson in a particular exam. I wish him well big style but would. Love to see him comment here on my favorite blog zh..... I know he has written prescient articles reflecting on the accuracy of Marx writings but he takes the msm coin and may not bite the hand that feeds......

Tue, 12/18/2012 - 05:46 | Link to Comment Mediocritas
Mediocritas's picture

Reminds me of this: http://www.zerohedge.com/news/2012-10-03/fed-confused-reality-does-not-c...

Samuelson is no different to the rest. Clowns, all of them, none of them scientists. I'm fucking sick of economics being referred to, in any way, as a science: IT'S NOT. Here's another asshat (Samuelson) doing it again.

Economics can't earn respect in and of itself, so it simply attempts to steal it. Science has a long track record of feeding into useful application (engineering) that we call technological advancement. That track record earns science respect. Economists play scientist the same way a child plays doctor and apparently some people fall for it, allowing some of their respect for science to spill over (undeservingly) to economics.

Samuelson pretends to be scientific in this interview time and time again, even with his pithy little saying: "the inexact science of economics advances one funeral at a time". Want to know who said that first? 

"Science advances one funeral at a time" -- Max Planck

Yep, a scientist. In true economist style, not only does Samuelson steal, he then misapplies because, unlike science, economics does NOT advance. Period. Strip away the obfuscating mathematics and the economic "state of the art" has not changed in a thousand years. Economics is just politics in disguise and human politics is the same now as it has always been.

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