Paul A. Samuelson, 93: Based on my observations of economic history, both short run and long run, I believe that there is no satisfactory alternative to market systems as a way of organizing both economically poor and economically rich populations.
However, using markets is not the same thing as unregulated capitalism so beloved by libertarians. Such systems cannot regulate themselves, either micro-economically or macro-economically. Wherever tried they systematically breed intolerable inequalities. And instead of such inequality being the necessary price to encourage dynamic progress via technological and managerial innovations, it instead breeds dysfunctional shortfalls in what economists call “total factor productivity.”
PAUL A. SAMUELSON
Paul A. Samuelson, 93, received the Nobel Prize in economics in 1970 for his contributions to the development of economic theory and enhancing economic analysis.
Convincing proof of these points can be found in the deterioration in the US from 2001 to 2008. As CEO pay rose respective to median employee pay — from a more normal 40 to 1 ratio up to and beyond 400 to 1 — industrial progress deteriorated rather than accelerated.
In consequence, my view is incurably centrist. That should be the US goal for 2009 and onward. And I nominate it as the target goal for countries big and small. Libertarians are not just bad emotional cripples. They are also bad advice givers. I refer of course to the views of both Milton Friedman and Friedrich Hayek. The “serfdom” they warn against is not that of Genghis Khan or Lenin-Stalin-Mao or Hitler-Mussolini. Rather, they warn against the centrist states of the modern world. Think only of Switzerland, Britain, the US, the Scandinavian countries, and the Pacific Rim. Why do citizenries there report high indexes of “happiness” and enjoy broad freedoms of speech and belief?
President George W. Bush will figure in the history books as the worst president in the 234 years of US history. One of his inevitable legacies will be, among other things, the danger in 2009-2014 of a US majority that swings leftward far past center. If America turns protectionist, blame past Republican deregulating — a fine instance of the Law of the Unintended Consequences.
Yes, public policy should regulate (rationally regulate) corporate life and should work to stabilize the macro economy. Yes, future fiscal systems can in a limited degree reduce the more glaring evils of inequality. However, a centrist system can do measurable harm if it acts too strongly to reduce inequality. My goal is the Limited Centrist State.
I am not a centrist because I can’t make up my mind about the Right and the Left. It is because each of those has proved itself to be so non-optimal that rationality and experience move me toward the dynamic moving center.