Interview of Paul Samuelson

An interview of Paul Samuelson, a renowned and noble laureate economist, has been published in the Atlantic. I have copied the glimpses of his comment on other economists like Milton Friedman and Alan Greenspan. Here are the full interviews: Part I and Part II. Thanks to Conor Clarke, who published this interview.

"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."

"When the economy was going up, we both gave the same advice, and when the economy was going down, we gave the same advice. But in between he didn't change his advice at all. He wanted a machine. He wanted a machine that spit out M0 basic currency at a rate exactly equal to the real rate of growth of the system. And he thought that would stabilize things."

"However, unlike someone like Milton, Greenspan was quite streetwise. But he was overconfident that he could handle anything that arose. I can remember when some of us -- and I remember there were a lot of us in the late 90s -- said you should do something about the stock bubble. And he kind of said, 'look, reasonable men are putting their money into these things -- who are we to second guess them?' Well, reasonable men are not reasonable when you're in the bubbles which have characterized capitalism since the beginning of time."

Paul Samuelson's advice to starting graduate study in economics. "Well, I'd say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that's the raw material out of which any of your conjectures or testings will come. And I think the recent period has illustrated that. The governor of the Bank of England seems to have forgotten or not known that there was no bank insurance in England, so when Northern Rock got a run, he was surprised. Well, he shouldn't have been."

"But history doesn't tell its own story. You've got to bring to it all the statistical testings that are possible. And we have a lot more information now than we used to."

Read yourself : Part I and Part II

Pro-Poor Free Market System

Tata, the Indian company that made worldwide headlines with its $2000 Nano car, now plans to build 1000 tiny apartments outside Mumbai. It would also start such projects in Chennai and Kolkata and subsequently to other Tier-I and tier-II cities. Tata group has once again caught the attention of the world media with its announcement of the launch of a low-cost housing programme. According to the Tata Group, the houses will cost less than Rs.4 Lakh. This is an example, how market mechanism supply goods for poor.

There is enormous wealth at the bottom of the pyramid. In his 2006 book “The fortune at the bottom of the pyramid”, Mr. Prahlad describes the people at “the bottom of the pyramid” as those 4 billion people living on less than $2 per day. He believes that embracing innovative, low-cost services have wider benefits for the economy, for example, low-cost housing, affordable educational hubs, and reliable health care facilities. Nano products are low price products. It is affordable to low-income people that raises their capabilities to goods and services.

Tata Group aims to achieve two things from this venture – first, fulfill its corporate social responsibility and second, make profit. Tata Group is to effectively use this idea of the “bottom of the pyramid”. First they came up with Tata Nano. Now they are planning to repeat the success of the idea with its Nano homes. With this, Tata Group is once again setting a great example as a company that cares not only for profits but also for people.

What the people, who are against capitalism, say about it? This is one of examples that free market system is pro-poor ideology.