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Interview with Paul Samuelson
Find it here, run by Conor Clarke. Excerpt:
Milton Friedman. Friedman had a solid MV = PQ doctrine from which he deviated very little all his life. By the way, he's about as smart a guy as you'll meet. He's as persuasive as you hope not to meet. And to be candid, I should tell you that I stayed on good terms with Milton for more than 60 years. But I didn't do it by telling him exactly everything I thought about him. He was a libertarian to the point of nuttiness. People thought he was joking, but he was against licensing surgeons and so forth. And when I went quarterly to the Federal Reserve meetings, and he was there, we agreed only twice in the course of the business cycle.
Posted by Tyler Cowen on June 17, 2009 at 02:27 PM in Economics | Permalink
Comments
Isn't a surgeon about the very last thing you need to license?
What would be nuttier, licensing Senators? Licensing Presidents? Maybe licensing economists.
Posted by: Andrew at Jun 17, 2009 2:30:12 PM
licensing parents would be a good place to start.
Posted by: babar at Jun 17, 2009 2:45:31 PM
"Mankiw's bestseller, both the macro book and his introductory textbook, I went through the index to look for liquidity trap. It wasn't there!"
are Mankiw and Samuelson ever "off" when it comes to trying to push their books?
Posted by: Chris at Jun 17, 2009 3:06:23 PM
Mankiw had a response to Samuelson's claim about liquidity traps in their continuing textbook war. I think Samuelson may be even more shameless than Mankiw with regard to the textbooks. Mankiw seems to just shamelessly plug it on his blog. I can't recall him devoting several paragraphs to it in an actual interview, although I may be mistaken.
Posted by: Bobar at Jun 17, 2009 3:12:00 PM
The most interesting part of the interview comes at the end. Samuelson still believes that IS/LM is the best way to analyze monetary policy. Translation: there has been no progress in macroeconomics in the past 40 years.
Posted by: Representative Agent at Jun 17, 2009 3:22:30 PM
I am looking for a quotation by Paul Samuelson which says something like this: "Looking at the past, I think Milton Friedman was always right (made no mistake), contrary to me." Please could you help me? Thanks in advance.
Posted by: Yann at Jun 17, 2009 3:28:31 PM
I know I've said this before... somebody get Paul Samuelson a blog!
Posted by: Michael F. Martin at Jun 17, 2009 3:56:29 PM
People thought he was joking, but he was against licensing surgeons and so forth.
Hyuk hyuk hyuk, that's just so funny, to wanna certify surgeon capability some way other than imprisoning folks who won't join a government cartel! What a side-splitter!
Next he's going to say we shouldn't use slaves in the army! Oh, what a riot.
Posted by: Silas Barta at Jun 17, 2009 4:39:16 PM
"licensing parents would be a good place to start."
There's probably two ends of the spectrum that don't need licensing-things everyone can do, and things almost noone can do. In either case, noone is qualified to judge.
Posted by: Andrew at Jun 17, 2009 5:09:54 PM
It must be a tad frightening to be so lucid at such an advanced age, but I do think it is an absolute treasure to have such a sharp mind around that has lived through and played a major role in the history of macroeconomics. That first hand knowledge of pretty much the entirety of modern macroeconomic thought is invaluable.
It reminds me of a professor I had who could still vividly recall conversations he had with Hayek and Mises 40+ years ago. Man that made it hard to argue with him about their theories!
Posted by: Nylund at Jun 17, 2009 5:48:54 PM
People thought he was joking, but he was against licensing surgeons and so forth.
But in the absence of state licensing, there would certainly be private certification organizations. What reason do we have to think that state licensing authorities are necessarily more trustworthy and reliable? Do you really have confidence that incompetent MDs lose their licenses quickly? Based on the stories I hear from my wife, I certainly don't.
Posted by: Slocum at Jun 17, 2009 5:50:39 PM
@Andrew -- i was kidding
Posted by: babar at Jun 17, 2009 5:58:30 PM
Malpractice be damned. Caveat Emptor!
Posted by: Scott F at Jun 17, 2009 6:12:21 PM
Whether one agrees with everything he says or not , what unvarnished fun reading it !
Posted by: Rama at Jun 17, 2009 6:16:56 PM
As a mental exercise, I wonder if going from negative savings to zero would qualify as hoarding to a Keynesian.
Posted by: Andrew at Jun 17, 2009 6:29:36 PM
I agree that Friedman was a nut and a maniac and a loon for wanting to de-license surgeons... but that doesn't mean he's wrong.
Do we really need licensing to maintain quality? I say no. Health care is tricky because it's publicly administered up here in Canadia so let's talk about lawyers. If I were in the market for one, I would be more than happy to hire someone who has 1) Passed the bar, 2) Been recommended by a friend, or 3) Guaranteed by the highly-esteemed independent licensing board LawyerCert (tm). 7 years of education is a noisy and wasteful signal. Whoever wants to practice law.. let 'em. Mechanism for ensuring quality will appear.
And not just lawyers. I bet we could come up a better, cheaper method of ensuring K-12 teacher efficacy then the current system. Some written tests (only really necessary for the 9-12 teachers) and 1-2 year internships to ensure they're patient, judicious and organized. Boom. Higher quality teachers than we have now (admittedly, the bar is set low) at a fraction of the cost.
How bout the civil service? A four-year degree is practically a necessity for government jobs. Why? Bring back the exams. The Friedmanite position on licensing rests on the premises that 1) Some education is wasteful signaling, and 2) Professions have an incentive to enforce such wasteful signaling to create barriers to entry. Education in the above fields cannot be plausibly explained as human capital acquisition. Let the free market decide who is qualified and who isn't, and maybe we can put a dent in the excessive over-education of North American young adults.
Anyways. That's why licensing is generally a bad idea. But Samuelson wasn't calling Friedman a nut for advocating the de-licensing of some fields. He was talking about doctors. So I'll respond to that point. (cont'd)
Admittedly, if there is a case to be made for mandatory certification of any profession, it is medicine. But what would ACTUALLY be the result of ending mandatory licensing for doctors? Would it be this? I don't think so. I think we'd see:
- The creation of a new field of sub-doctors who could cheaply handle many of the basic, easy-to-diagnose maladies that family doctors currently deal with.
- Innovation in the assessment and training of potential doctors and nurses and streamlining of their education and training.
- An active field of government certified and regulated capital-D Doctors who practice medicine in much the same way it is practiced today.
I don't know that this will happen though. Maybe a de-licensed system will fail a thousand Dr. Nick's will flourish. If so, individuals will stick with the higher-priced, but much better quality licensed care. If it succeeds, the licensed sector will shrink, the options available to consumers (and practitioners) of health care would expand, children will dance in the streets and there will be a rainbow every day.
So with de-licensing, no one loses. The squeamish can continue playing it safe with gov't-licensed practitioners, while the intrepid can go to Dr. Nick's Emporium of Tire Rotation, Medical Care and Used Small Appliances. It's a crazy idea, sure, but perhaps it's a crazy idea whose time has come.
Cheers,
Conor
Posted by: Conor at Jun 17, 2009 7:12:05 PM
We've got to start licensing economists.
Posted by: David at Jun 17, 2009 7:20:51 PM
Was Milton Friedman against licensing of university teaching positions?
In my view, the fact I haven't paid the fees and done the time as an indentured servant to one of the members of the university licensor board members, shouldn't disqualify me from a full professorship, tenured for life, at say George Mason, Harvard, Yale, et al.
I am the smartest economist in the world, so why should I be required to subject myself to fools who can't understand my superior knowledge, and are jealous of my genius.
And doctor licensing is just a government rubber stamp on the same medical revenue and slave labor institution issued licenses, often issued over the signature of some government official.
Posted by: mulp at Jun 17, 2009 8:46:14 PM
But in the absence of state licensing, there would certainly be private certification organizations.
Why? How would they get revenue? Why wouldn't they end up like Moody's, etc.? isn't this just libertarian fantasy?
Posted by: Bernard Yomtov at Jun 17, 2009 9:14:20 PM
I can remember a large billboard on I-10 on the way in from Mississippi, it read: "LOUISIANA'S SHAME". The fine print explained that La. did not license chiropractors. The sign was not placed by patients.
Posted by: Harkins at Jun 17, 2009 9:38:33 PM
"Brown was also an expert on broader issues of fiscal policy. His 1956 paper on "Fiscal Policy in the Thirties: A Reappraisal" was one of the first applications of the full-employment budget deficit concept. In contrast to the then-prevailing wisdom, the study suggested that fiscal policy had not been particularly expansionary through much of this period, thereby calling into question the extent to which fiscal policy could have contributed to the U.S. economy's recovery from the depths of the Great Depression."
It's interesting the Samuelson remembers Brown's paper as saying almost the opposite of this ....
Posted by: Greg Ransom at Jun 17, 2009 10:11:00 PM
Folks, Friedman's dissertation was on this topic -- explaining how licensing was used to restrict supply and increase wages.
Posted by: Greg Ransom at Jun 17, 2009 10:12:49 PM
@ Bernard Yomtov, spot on champ. That was a good point about Moodys. The field of accounting operates with private certification through the CPA. they raise funds by charging members fees. So the logic de-licensing goes like this: in the absence of state licensing, private certification would replace it. This would be more effective than state licensing because surgeons have an very strong incentive to protect their reputation and thus the profession would be self-regulated. But even if you subscribe to this argument, there is still a case for government oversight. for e.g., the accounting profession is monitored by the SEC. And given the inability of the profession to protect their own reputation during the Enron, Worldcom etc scandals, it is only right for there to be government oversight in some way, shape or form. The ratings agencies, as you have rightly pointed out, is another such scandalouos example of market self-regulation gone wrong. Additionally, i think that health is one of those industries that people want the government involved in regulating (leaving aside the question that people also want the government to provide health care as they do in all other rich countries). People just want that assurance from government. That's just how people think, and in a democratic society they have every right to decide what the government should or should not be doing.
Posted by: simmo at Jun 17, 2009 10:19:20 PM
Why? How would they get revenue? Why wouldn't they end up like Moody's, etc.? isn't this just libertarian fantasy?
How does Underwriter Laboratories get revenue? How about Consumer Reports?
Do you think state licensing currently gives you useful information about which MDs are excellent, which are mediocre, and which are lousy (but not so quite so lousy that they haven't yet committed enough malpractice to lose their licenses)?
The point is that being against licensing isn't inherently crazy--licensing is pretty feeble in terms of quality control and providing consumers relevant information and, on the other hand, we have a number of instances of good private ratings organizations.
Posted by: Slocum at Jun 17, 2009 10:22:51 PM
This is the quote of the interview: Samuelson on Greenspan: "But the trouble is that he had been an Ayn Rander. You can take the boy out of the cult but you can't take the cult out of the boy."
I cracked up when reading this!
Posted by: simmo at Jun 17, 2009 10:33:26 PM
