Negative Interest

Kuehn on Paul Samuelson and the post-WWII economy

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One of my favorite newer econ bloggers is Daniel Kuehn, a PhD candidate in economics at American University who writes a blog called Facts & Other Stubborn Things. In a recent post addressing Russ Roberts, he explains a few factors that would change his mind away from Keynesianism, and a few that wouldn’t. He addresses a common point of anti-Keynesians:

I’ve been reading up on this in detail and am still forming my reaction to it, but I’m tiring of this argument too. People have explained to Russ Roberts and David Henderson many times why it’s not surprising from a Keynesian perspective that the post-WWII economy would do relatively well. It’s not a convoluted argument either – it’s pretty straightforward. Russ writes that “they explained it away” as if there is something underhanded or insincere about what we’ve said. If he’s going to react to counter-arguments that way there’s not much I can do – he’s clearly made up his mind on this. And it’s also clear he thinks a valid test of Keynesianism is whether the economy can do well without government stimulus – which is an absurd test. Of course it can. Keynesian theory doesn’t say it can’t. Paul Samuelson was indeed worried about the post-war economy. You know who argued against these fears? (1.) John Maynard Keynes, (2.) Nicholas Kaldor, (3.) the CED (institute which promoted Keynesianism in business circles), (4.) The Brookings Institution (quite Keynesian at the time), (5.) Alvin Hansen (a.k.a. “The American Keynes”). Samuelson was swimming against the tide on this one. I think Abba Lerner disagreed with him too, although I’m still hunting that source down. William Beveridge is unclear on what he thinks in the book of his that I have and was reading last night, but he seems like he might disagree with Samuelson too. You know who agreed with Samuelson and who also expected a post-war depression? Friedrich Hayek. I don’t blog at “Cafe Samuelson”, but Russ still blogs at “Cafe Hayek” – yet for some reason we still have to deal with this Samuelson/WWII nonsense as apparently definitive of what we think every single time we have this discussion. Can we bury this please?

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Written by negativeinterest

October 30, 2011 at 9:19 pm

Posted in Uncategorized

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