What better way to spend a sunny afternoon reading about economics or, better still, watching a video of two people talking about economics?
The transcript of a part of Dominic Pino’s interview with economist Tyler Cowen is a must-read for the weekend. The interview is the latest in the series of YouTube interviews that Dominic has arranged with the authors of books on economics. Scroll to the bottom of the transcript for the video.
The book in question is Cowen’s GOAT: Who Is the Greatest Economist of All Time and Why Does It Matter?
Among a name who rates an honorable mention is one that (at least to those on the right) might come as a surprise — Paul Samuelson. Albeit there are . . . qualifications.
Cowen:
He’s one of the very, very sharpest of all economists. He had very important contributions in just building out contemporary micro and macro. He was an amazing economic modeler. But, you know, in terms of being GOAT, for me, first, he’s too narrow. And I think he was just flat-out wrong on too many things. He thought the Soviet Union would catch up to the U.S. economy. That to me is a sign of a very bad economic understanding, kind of an unforgivable sin, I might even say.
He disagreed with Milton Friedman. He thought a lot of inflation was some kind of cost-push or wage-push phenomenon. Even if you think that’s sometimes true, he just lost that debate. He was wrong on a lot of macro, and Friedman beat the pants off of him. So I have great respect for Samuelson’s sharpness, intelligence, and modeling abilities, but I don’t think he makes the final short list of the top six.
One of the reasons that Cowen rates Samuelson is his success in institution-building (at MIT), something that Cowen considers (reasonably enough) to be relevant:
If you’re assessing [someone’s] legacy, surely that should count, whatever it was that they did. So if you look at Adam Smith, he didn’t build an institution. But if you think of David Hume as more powerful than most institutions, Smith was his best friend, and they discussed everything and worked together closely. So that’s a big thing in Smith’s favor.
John Maynard Keynes, you could say his attention moved sequentially, but say Bretton Woods — imperfect, but probably more or less the best we could have done at the time. Keynes gets a lot of credit for designing that. Friedman and Becker helped build up University of Chicago, most of all Friedman. Becker stayed there longer. Samuelson and Solow, and somewhat Modigliani, MIT.
It’s an interesting notion, although ideas, by definition, ought to have more permanence in their original form — what’s written is written — than institutions. That said, ideas can be “revised” by the ways in which they are interpreted over the years by the institutions that shape a society’s intellectual understanding, institutions, of course, that themselves change.
We’re a lazy bunch. Original texts can be time-consuming to consume, and conventional wisdom is typically digestible and, moreover, hard to avoid. What someone actually wrote can matter less than the way in which their words are later interpreted.
I was disappointed not to see any disapproving mention made of John Stuart Mills’s liking for the idea of (ultimately) a “stationary state” economy. This was a precursor of the limits-to-growth ideas that run through so much contemporary environmentalism, and which, even as envisaged by Mill, show him not to be the classical liberal of (inaccurate) popular imagination.
It was good, however, to see a brief reference (if only as one of the snubbed) to the 19th-century English economist William Jevons. Jevons gave his name to the Jevons Paradox, the paradox that more efficient use of a resource may increase the amount of that resource that is actually used (so, reducing the amount of coal needed to generate a given amount of power may, by reducing the cost of that power, increase the demand for it, and thus, ultimately, the demand for coal).
The implications of this paradox for some environmentalists are interesting. If renewable energy really does end up becoming a source of very cheap energy, what will this mean for what many of them believe to be a severely resource-constrained planet? With extremely cheap energy, we could make even more stuff, a glorious prospect that would make many greens shudder.