Paul Samuelson: Economics is now the Hopeful Science.

While what Samuelson calls the Friedman-Hayek idiocies may have taken a beating as capitalist financial and other corporations had to be rescued by the government rather than let the market perform its vaunted creative destruction free market ideology is alive and well. Perhaps Samuelson should just listen to talking heads on TV. The old refrain of government intervention being bad and free markets being good is incessant.

Samuelson claims that the situation would have been much worse if John McCainJohn McCain had been elected. Perhaps but we will never know. However, we do know that George BushGeorge Bush had already begun the massive intervention to save the US financial system. While the amount devoted to the bailout might have been less certainly McCain would have gone in the same direction since that is the direction Wall street demanded.

Some of course see the new economy as some sort of socialism which is an even weirder position than Samuelson. Of course it is true that there is a greater govt. involvement in the market but the whole purpose of that is to rescue capitalism. The govt. ownership stakes in big corporations and financial institutions is not being used to provide benefits for the public as a whole but to nurse the corporation back to financial health with taxpayer money so that the corporations will eventually be returned to private capitalists who are the real beneficiaries of govt. help.

Samuelson seems to think that the new economics is somehow of great benefit to the poor. This just seems weird to me. It is not the poor and lower middle class that are to be bailed out but the reckless huge financial insitutions that helped create the financial mess. Even after the bailout there were huge bonuses paid to the wheeler dealers who got the US into this mess. The new economy sounds very much like the old free market economy in terms of wealth distribution and who benefits from it.

This is from the New York Times.

""--------------------------------------------------------------------------------

October 24, 2009
Op-Ed Contributor
Heed the Hopeful Science
By PAUL A. SAMUELSON
President Barack ObamaBarack Obama's 2008 electoral landslide victory averted a global financial meltdown. Had John McCain won that election, the present G.D.P. in the United States would have been even lower than it is now by more than 15 percent. Similar losses in global productivity would also have taken place.

Hail then the flexibility of Chairman Ben BernankeBen Bernanke's U.S. Federal Reserve and of the European Central Bank for embracing activist fiscal policy for the first time since the Franklin D. RooseveltFranklin D. Roosevelt New Deal.

Former Federal Reserve Chairman Alan GreenspanAlan Greenspan and the governors of the European central banks avoided the preventive policies that could have averted most of the present meltdown. They had falsely believed that unregulated capitalism could dodge the bullet of depression. That's proved to be a wrong belief everywhere.

The 2008 election brought an end to Bush administration blunders, and to other post-Reagan "make the poor and middle classes subsidize the ultra rich" enactments. These are bad morals and not justified by higher growth efficiency.

We begin now a new era in which China will increasingly make obsolete America's 1950-2009 world leadership. Your children and my grandchildren will live in this new and challenging era.....

...., within the coming decade, there will be a massive run against the U.S. dollar. Why? Because ever since the year 1000 A.D., export-led growth has been the rule whenever an educatable low-wage population has begun to imitate the technology of a more advanced nation, and thus out-compete the industries of the affluent regions.

So it was and so it will always be. Whenever a low-wage, educatable population can imitate the technology of a more advanced nation, it will do so. That's why protectionism is like a persistent herpes virus, and must be guarded against.

Gone forever, one hopes, are the idiocies of Friedman-Hayek libertarian selfishness.

When I started my economic studies at 16, Carlyle was right to call economics the Dismal Science. Thanks to modern science and better economic knowledge, this Malthusian curse has been vanquished. Good modern economics make economics the Hopeful Science. At last!

Paul A. Samuelson is an Institute Professor at the Massachusetts Institute of Technology and recipient of the 1970 Nobel Prize in economics."'"""