Saturday, March 4, 2017

How I “met” Samuelson and Friedman

Several weeks ago, a Belgrade weekly asked me to write a free-form piece with some reminiscences  of how intellectual life was for a student of economics like myself in the 1970s Belgrade. I am not a big fan of personal memoirs (of people whose lives, like mine, have no greater resonance) so I dithered until yesterday when I read this interview by Paul Samuelson. This brought back the memories of how I first “encountered” Samuelson.

I was then in my sophomore or junior year, studying economics and statistics. We knew of Samuelson vs. Friedman, one who was a kind of a social-democrat, the other a rightist. A very simplified version of  Samuelson’s Economics (just up to the Keynesian cross) was taught in our macro class. But his book was mentioned repeatedly and so students knew of him. I never took any finance classes, and I do not know if Friedman was ever taught there or not. (Yugoslavia was a market economy with predominantly non-private ownership of companies and persistently high inflation, so teaching both had some obvious policy meaning too.)

One day as I was waiting for my haircut, a copy of Newsweek laying around attracted my attention. This was unusual because foreign papers (few people spoke English) would not be normally found lying around in barber shops. (They still do not: I have never seen a foreign-language publication except for fashion magazines since.) It was also politically a bit suspicious. But my barber must have been quite pro-American because he had there also a propaganda monthly published in Serbo-Croatian by the American Embassy in Yugoslavia. I took the Newsweek (my English was quite good by then) and read a column by Samuelson. Afterwards, I  continued buying for perhaps a year every single issue of Newsweek where alternatively Samuelson and Friedman were writing their columns.

Gradually I became more and more disillusioned. Their articles were exceedingly narrowly US-based, dealt with (what I considered) tiny and unimportant topics, and were boring. For somebody brought up on the grandiosity of Marxist economics where economics is about the development of social formations, their columns dealing with (I remember that quite well) busing, housing rents in New York and similar topics were incredibly petty. I was expecting discourses about the future of mankind, and was offered a write-up on rent subsidies and cost of education. It was also difficult (America being a very different world from Europe), to understand many of their columns. I just couldn’t follow what is the big fuss about busing. I then had no idea how the American school system was organized and although I broadly guessed what were the issues, the whole problem was entirely alien to me. I did not know about the extreme decentralization of US school system, the huge variability of school quality and importance of going to the “right” school, nor did I realize fully the long physical distances between homes and schools.

So, after a year, I tired of both Samuelson and Friedman.

But then Samuelson reappeared a year or so later when I prepared for my GRE. I bought his beautifully-crafted and illustrated Economics (I still have the book, paperback edition) and I loved it. It just opened up for me an entirely new world where both the grand themes of economics and chicken-feed issues from his columns coexisted and enlightened each other. I read I think every word of the book: I still have my notes on the margins, my numerous one-pagers explaining this or that. The book was absolutely right for me as I was then at 21. It was neither too easy nor impossibly hard. It had challenging parts but such that  I knew I would, with effort, figure out.

Economics was not  an exceedingly expensive book (perhaps $10), although it was some 4-5% of the average after-tax salary. I have to say though that I was then, compared to most of my friends, quite “well-off”. I was earning money, mostly through consecutive translation but also from tutoring and other odd jobs, since I was 18. As I lived (like almost everybody else) with my parents and had zero living expenses, and also had a girlfriend who lived outside the country and so I was practically not going out, I spent most of my time either with friends at home, or reading and reading and reading. Both were cheap occupations and most of my money was spent on books and soccer games (and later on records).

There were however several small things in Economics that—I still remember this  40 years later--irritated me.  The first was Samuelson’s frequent exhortation to readers which would end with “Bon appetit!” (in French), and a similarly vulgar “the proof of the pudding is in the eating”. And then there was his parochialism where, other than for the classics, all other citations were from professors from about four or five top US universities. I found this annoying: was not there anyone else in this wide world who has done something worth mentioning? Constant references to person’s university were also silly because people would change universities. (I suppose Samuelson had then, in the next edition, to revise their provenance.) Also I did not like Samuelson’s use of possessives like “Harvard’s Johnson” (rather than “A. Johnson from Harvard University”) as if people were slaves of universities. But it was a great book, and I remember it warmly.

Fast forward to 1990, when I was already in the United States. A group of university friends who were then in the economic commission of the Democratic Party (that was the time when the multi-party system in Yugoslavia/Serbia was just born) suggested that we ask Milton Friedman for privatization advice. (I must say that I liked a lot his unfinished Price Theory and never cared for The Theory of the Consumption Function which I think was tautological.)

I wrote a nice letter. What was our surprise when a week or so later, we received a three-page detailed, nicely typed (this was before word processors) reply from Friedman! Unfortunately, I do not think I have kept it: it must have gotten lost in my many moves. It was friendly, substantive, used both UK and British Columbia privatization examples, and if I recall correctly, advised a free voucher privatization. Friedman never came to Yugoslavia (in the letter he said he would come to Belgrade if we could also arrange for him to visit Dubrovnik; but this was said in a very amiable way), and privatization went much worse than anyone expected. I read later that Friedman said how he, like everybody else, was wrong in underestimating the difficulties of transition and privatization.

Thus without ever meeting any of these two giants, they did influence a bit my economics. On a more serious note, I think that Samuelson may be remembered in the longer-term much less well than deserved by his intellectual capacities perhaps because he had a too narrow and too technical view of economics. Unlike Keynes, Pareto, Walras or Marx, for example, his interests were narrow and he was not a great writer.  Friedman may be different as he got closely associated with one big idea (as Nassim Taleb says, one should have only one big idea) and that idea will be around as long as economics exists. 

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.