Paul Samuelson's place in the history of economics and economic thought

From the AP's Polly Anderson in the C-J...

Economist Paul Samuelson, an Indiana native who won a Nobel prize for his effort to bring mathematical analysis into economics, helped shape tax policy in the Kennedy administration and wrote a textbook read by millions of college students, died Sunday. He was 94....

In 1970, Samuelson became the second person, and first American, to win the Nobel Memorial Prize in Economic Sciences...The award citation said Samuelson “has done more than any other contemporary economist to raise the level of scientific analysis in economic theory.”

Samuelson was a liberal, and like many of his generation a follower of British economist John Maynard Keynes, who proposed that a nation needs an activist government that could foster low unemployment by steering [spending and] tax and monetary policies...

It's weird that the author leaves out spending policies-- the most important (and popular) piece of the Keynesian policy prescriptions which were discredited in the 1970s but have been followed religiously by Bush and Obama over the last decade.

He was among a circle of JFK advisers, who also included John Kenneth Galbraith and Walter Heller, who led Kennedy to recommend the historic income tax cut that Congress eventually passed in early 1964, three months after the president was assassinated. The cut was widely credited with helping foster the 1960s economic boom.

I had no idea about this! Samuelson and Galbraith were supply-siders, working to reduce the top marginal tax rate from 91% to 70%. (Reagan and his Democratic Congress would later reduce it again to 28% in 1981.)

And then this, from fellow economist, David Henderson, in the WSJ, focusing on Samuelson's promulgation of mathematics within economics...

His influence has been profound, but the mathematization of economics has been a mixed blessing. The downside is that the math hurdle in leading U.S. economics programs is now so high that people who grasp the power of economic concepts to explain human behavior are losing out in the competition to mathematicians. The upside is that Samuelson sometimes used math to resolve issues that had not been resolved at a theoretical level for decades....

In the 1954 Review of Economics and Statistics, Samuelson gave a rigorous definition of a public good that is still standard in the literature....

He revised his own widely read textbook, "Economics," about every three years since 1948. One of the best and punchiest statements in the 1970 edition was his comment about a proposal to raise the minimum wage from its existing level of $1.45 an hour to $2.00 an hour: "What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"

This is the kind of comment that causes many on the left to grit their teeth; and yet Samuelson was a liberal Keynesian and the best-known rival of the late libertarian monetarist, Milton Friedman. The two men respected each other highly, but the intellectual influence was mainly one way. Over time, Samuelson came more to Friedman's views, especially on monetary policy.

In the 1948 edition of his textbook, Samuelson wrote dismissively, "few economists regard Federal Reserve monetary policy as a panacea for controlling the business cycle.'' But in the 1967 edition, he wrote that monetary policy had "an important influence'' on total spending. In the 1985 edition, Samuelson and co-author William Nordaus (of Yale) would write, "Money is the most powerful and useful tool that macroeconomic policymakers have,'' and the Fed "is the most important factor'' in making policy....

Samuelson had an amazingly tin ear about communism. As early as the 1960s, economist G. Warren Nutter at the University of Virginia had done empirical work showing that the much-vaunted economic growth in the Soviet Union was a myth. Samuelson did not pay attention. In the 1989 edition of his textbook, Samuelson and William Nordhaus wrote, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

A funny story on this last paragraph: In the mid-1990s, I was attending a wedding at one of those big old homes. I looked around in the library and bumped into an old edition of Samuelson's text. There was a graph depicting the then-supposed growth rates of the U.S. and USSR. At the current rates of growth, the USSR was scheduled to pass the U.S. during the year that I happened to be perusing the book. Of course, history had already been quite unkind to such prediction; the USSR had dissolved a few years earlier and revealed itself to be an economic basketcase.