Thursday, February 11, 2010

The Ghost Of Paul Samuelson

I stumbled upon an interview with the late Paul Samuelson that I found interesting. In particular, I thought his comments on Economic textbooks shed some light on a serious problem with the field. “[M]y book came along and swept the field, and set a pattern so that every time somebody -- this is just scuttlebutt -- so that every time some economics textbook writer sued another textbook writer for plagiarism, it never got anywhere because the judge would just say, 'it's all Samuelson lite,' so to speak.”

I’ve heard this before; every macroeconomic textbook is Samuelson’s. If it isn’t, it is derived from Samuelson’s. The consequence of this is that every macro book is the same or at the very least, makes the same arguments and as a result, everyone who studies from these books, which is everyone, thinks the economy works one way.
Because everyone in the world of Economics went to the same ten schools and read the same textbooks, they all think the similarly and that is very bad, because if there is any flaw in the common knowledge, there’s nobody to notice. Samuelson points out, “The macro book…I went through the index to look for liquidity trap. It wasn't there!” No wonder nobody saw the liquidity trap coming.

Another belief of mine that Samuelson confirmed is that our good friend Alan Greenspan is an ideologue. “You can take the boy out of the cult but you can't take the cult out of the boy. He actually had instruction, probably pinned on the wall: 'Nothing from this office should go forth which discredits the capitalist system. Greed is good.'” That’s one hell of a quote.

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