Tape 120 - Presidential economics: comparative review

Download
- Rights
- Limited Re-Use
  CC BY-NC 4.0
  More Rights Info
- Files (1)
- MP3
- Please be patient with media downloads. They are often large files.
Share

Embed Code
<iframe src='//idn.duke.edu/ark:/87924/r45m62p8r?embed=true' height='125px' width='100%' frameborder='0' marginwidth='0' marginheight='0' scrolling='no' allowfullscreen></iframe>
Permalink

https://idn.duke.edu/ark:/87924/r45m62p8r
Skip to Item Info

Loading the media player...

Files for this Item

Transcript

Transcripts may contain inaccuracies.

-	Welcome once again as MIT Professor Paul Samuelson	0:02
	discusses the current economic scene.	0:05
	This bi-weekly series	0:07
	is produced by Instructional Dynamics Incorporated	0:09
	and was recorded January 26, 1973.	0:11
-	There is no shortage of news on the economic front,	0:16
	we have the peace agreement,	0:19
	and the economic effects of that would be interesting	0:22
	to speculate about.	0:25
	We have the death of Lyndon Baines Johnson,	0:27
	that funeral was yesterday as I'm speaking here.	0:32
	And as a matter of fact, that funeral	0:35
	following after Harry Truman's death of just	0:39
	a month or so ago, raises the question of what's	0:43
	the relationship between the president United States	0:48
	and economics and what is in the same thing between	0:51
	presidents of the United States and economists.	0:54
	Ordinarily at this time, I would be talking to you	0:59
	about the state of the union message of President Nixon,	1:01
	about his budget message,	1:05
	and even might put off this taping for a day or two,	1:08
	in order to be able to talk about the economic report	1:12
	of the President and the Council of Economic Advisers.	1:15
	This year, those all come late,	1:19
	it's a inauguration day year that I think	1:22
	always delays things a little bit.	1:26
	And I think that the death of President Johnson	1:29
	has also delayed things a bit.	1:34
	Now I believe that I could speculate with you	1:37
	about what's going to be in those messages	1:40
	on the economic side.	1:44
	I think I could speculate with you on what's going	1:46
	to be in the economic report.	1:48
	Seems to me that that's fairly easy game	1:49
	since the President has formally abandoned phase two,	1:54
	in favor of a more loosely structured	1:59
	phase three form of wage price controls.	2:03
	He obviously, given the manifest strength	2:08
	of the American economy, is going to come out	2:12
	in his budget messages with practically draconian austerity	2:14
	on the federal spending side.	2:20
	We know from his pre Election Day promises that	2:24
	he will be very loath to propose tax increases,	2:27
	and so there is no substitute	2:32
	for contractionary fiscal policy,	2:36
	and contractionary monetary policy.	2:42
	When I say contractionary, I mean in comparison	2:45
	with what has been the case recently,	2:48
	and what would otherwise have been the case.	2:50
	There're always surprises for us and in fact,	2:54
	the only new information I think we can gain	2:56
	from the actual presentation of these documents,	2:58
	is the degree of that austerity	3:01
	and the quality and quantity of the rhetoric	3:06
	that goes with it.	3:11
	So this is a good time to look at more general matters.	3:15
	Let me begin	3:23
	by discussing the recent presidents of the United States.	3:27
	Where will Lyndon Baines Johnson stand in history?	3:33
	Where we stand in terms of power politics?	3:37
	That's not my bit, I won't waste any time	3:42
	in telling you whether or not I think that	3:49
	President Johnson made a mistake in getting	3:52
	into the quagmire of the Vietnam War.	3:56
	I would like to talk about his economic philosophy	4:00
	and what's equally important perhaps some people	4:05
	say more important, how that philosophy actually	4:09
	worked itself out in decision making.	4:12
	Indeed, it's worthwhile to discuss the economic philosophy	4:19
	of President Johnson.	4:25
	All of this, of course, will be by way	4:27
	of implicit comparison, if not contrast	4:30
	with the incumbent president, President Nixon.	4:33
	Then we go back to John F. Kennedy, Dwight Eisenhower,	4:37
	Harry Truman, and I think we can consign Franklin Roosevelt	4:43
	to the womb of history.	4:49
	First, let me say that on the economic side,	4:54
	if I were giving grades to now dead presidents,	4:57
	I would give very high grades to Franklin Delano Roosevelt.	5:03
	He had a very spotty record,	5:09
	but I think it was a brilliant record.	5:11
	I'm gonna qualify that,	5:15
	because in a moment I'm gonna say that I don't think	5:16
	he knew very much economics,	5:18
	I don't think he was a very good economic analyst.	5:20
	I think that Harry Truman on the economic side,	5:25
	comes into history book with flying colors,	5:29
	He didn't have the challenges which Franklin Roosevelt had,	5:34
	but life was plenty exciting, and I believe that history	5:38
	won't give him the A plus that I would give	5:44
	to Franklin Roosevelt,	5:47
	but I think that it will give him an A.	5:48
	Dwight Eisenhower, and of course you understand	5:56
	that I'm speaking from the standpoint	5:58
	of a mainstream economist,	6:00
	a Post-Keynesian eclectic economist of our day,	6:03
	so called New economist.	6:06
	From that viewpoint, Dwight Eisenhower	6:08
	gets a surprisingly good grade.	6:12
	I say surprisingly good, because at the time,	6:15
	you would have thought that he was about the worst president	6:17
	going particularly in his second term,	6:22
	but I think we've got to take into consideration,	6:25
	the actions of President Eisenhower in his first term.	6:28
	I give a great deal of credit to that, to his advisors.	6:34
	But of course, you have to give credit to the prince,	6:37
	for having chosen his advisors,	6:40
	because it's been my experience both personal	6:41
	and in reviewing the role of economists	6:47
	as advisors in governments,	6:51
	that they shift and pretty much gets the kind of advisors	6:53
	that he wants you might say,	6:56
	everybody gets to kind of advisors which he deserves.	7:00
	That raises the question	7:03
	what the economists are doing there.	7:04
	Are they simply rubber stamping the initial prejudices	7:05
	of the head of state?	7:10
	I don't think that's the case anymore	7:12
	than that Henry Kissinger is just a neutral errand boy,	7:17
	an extension of the telephone, so to speak,	7:22
	of President Nixon.	7:25
	The main reason I guess why Eisenhower gets a good	7:28
	grade from me and by the way,	7:38
	let me say that that good grade is about a B,	7:39
	in his first term he was the first Republican	7:42
	after a very long time, he could have come in and tried	7:47
	to-- got the	7:51
	inherited Civil Service	7:55
	and the now customary way of doing things.	7:58
	In other words, he could have made a desperate effort	8:03
	to set back the clock of history.	8:05
	I think that he made a small effort in that direction.	8:09
	I could name many people on his staff	8:13
	who made large efforts in that direction,	8:16
	but you can't argue with continuity really,	8:20
	you can try but you will be defeated.	8:23
	And most of the new setup	8:25
	which we had developed	8:30
	in the way we run the political economy of this country,	8:33
	I'm thinking primarily of the responsibility	8:37
	of the government under the Employment Act of 1946	8:41
	to I won't say ensure a full employment,	8:45
	but to work toward full employment.	8:50
	That is now the government's business was maintain.	8:53
	I think that the fortunate choice of Arthur Burns	8:59
	as the first term Chairman	9:03
	of the Council of Economic Advisers	9:06
	deserves a great deal of credit for that,	9:09
	because the big problem which Eisenhower faced in his term	9:11
	was the recession of 1953, '54.	9:17
	That's recession in terms of the chronology	9:23
	of American business cycle history	9:26
	might have been said to have been do anyway.	9:28
	But you will remember that during the election campaign,	9:31
	Eisenhower said that he was going to go to Korea	9:36
	and end that war.	9:40
	Well, that more did end early in President Eisenhower's term	9:41
	and as predictably as the night follows a day,	9:46
	one could expect that the expenditure decrease,	9:52
	incident to that war would have an effect upon a mature	9:56
	business cycle situation.	10:01
	If you add to the fact that the independent Federal Reserve	10:04
	in the first half of the year of 1953,	10:08
	Eisenhower's first year was more Republican, you might say,	10:14
	more austere than more contractionary,	10:21
	than the administration itself.	10:25
	It was no surprise that the recession of 1953, '54	10:28
	got underway, that recession was foreseen	10:33
	by a great number of analysts.	10:36
	Many analysts predicted it as early	10:39
	as late spring, June 1953.	10:43
	I think we know from the Donovan book	10:49
	on the cabinet meetings of the Eisenhower administration,	10:53
	that in September Arthur Burns had fully briefed	10:56
	the President on the likelihood of a recession.	11:00
	At that time, President Eisenhower made very clear	11:05
	that he would throw every rule of Orthodoxy out the window,	11:08
	if it were necessary to fight a recession	11:13
	in the United States.	11:17
	During the recession itself, Arthur Burns put	11:22
	very heavy pressure on the independent Federal Reserve	11:26
	to expand, the Federal Reserve resisted	11:29
	a good deal of that pressure,	11:33
	and actually the 1954 recession was a more serious one,	11:35
	than it should have been.	11:39
	Now why a B in this period and not the an A?	11:41
	Well, I think that since there was a foreseeable	11:45
	vacuum of purchasing power due to the cessation	11:49
	of Korean War expenditures	11:54
	there should definitely have been a budgetary	11:58
	expansionary policy by the Eisenhower administration,	12:04
	by discretion more than there was.	12:09
	If that had been done in September,	12:13
	when people saw the recession coming in 1953,	12:15
	for the new fiscal year, then you wouldn't have had	12:19
	1954 being such a dismal one.	12:22
	But we can't ask for fine tuning perfection	12:27
	and it's a fairly creditable performance.	12:32
	1955 was very strong,	12:34
	1956 already these things beginning to seem ancient history	12:37
	was the hour when Arthur Burns quit while he was ahead.	12:42
	At this point, you'll recall before this actual month,	12:48
	I believe, President Eisenhower had his heart attack.	12:54
	It's very hard to factor out the personal	12:58
	elements in history.	13:00
	I know that I have heard Arthur Burns say	13:02
	couple of years later around 1960,	13:05
	that although he continue to have contact	13:09
	with the President Eisenhower, and President Eisenhower	13:12
	leaned upon him for advice, supplementary to the advice	13:15
	which he was no doubt getting from Gabriel Huggy	13:19
	in the White House and from Steve Sonia,	13:25
	the successor to Arthur Burns.	13:28
	Burns felt that Eisenhower was never the same man.	13:31
	Raises the question is whether he should have run	13:34
	for that second term.	13:36
	I happen to be a neighbor	13:40
	and a an acquaintance of Dr. Paul Dudley White	13:43
	and I have heard Dr. Paul Dudley White privately say	13:47
	that it was his advice that Eisenhower not run,	13:53
	although there was no overriding medical reason which would	13:58
	prevent him from running if he had to.	14:01
	This reminds me by the way of the good old days	14:04
	or perhaps we should say the bad old days	14:07
	when college presidents were presidents for a long time,	14:09
	and the college president was really the captain	14:13
	of the ship of the university.	14:15
	A. Lawrence Lowell continued as president at Harvard	14:18
	into his 70s.	14:24
	I think how different that is from now where if you've been	14:27
	10 years at Princeton, you'll be the president	14:30
	with the most seniority in the Ivy League.	14:33
	President Lowell has told the story that he always	14:36
	said to his private physician, his personal physician,	14:41
	who was a member of the of the Harvard Corporation,	14:45
	Roger Lee, "Roger when you think I should quit let me know."	14:47
	One morning when Lowell was in the 70s	14:52
	Dr. Lee told him, "Lawrence, I think you should quit,"	14:57
	and that afternoon he tendered his resignation.	15:01
	I think that Mr. Lowell told us a something	15:05
	of a self congratulatory story.	15:08
	As it fell upon my useful ears, I felt that on the evidence	15:10
	he obviously should have quit the sooner.	15:17
	In any case the second Eisenhower's term	15:21
	I think was a an economic,	15:25
	well, disaster would be too strong	15:30
	but a period of stagnation.	15:32
	There's only one saving direction from which you could find	15:35
	something good to say about that second term,	15:40
	namely if you thought of it as a long	15:42
	and painful investment in fighting inflation.	15:44
	Because there can be no doubt that	15:49
	because President Eisenhower ran so sluggish in economy	15:54
	in the 1950s,	15:58
	this made it easier for his successor,	16:00
	John F. Kennedy to run an upbeat economy from 1961	16:04
	through the date of his assassination,	16:09
	and President Johnson inherited in the fall of 1963,	16:12
	an economy marching	16:18
	rather nicely toward full employment.	16:22
	It was no accident then that the 1960s is the longest	16:27
	history of expansion in all the Annals	16:31
	of the National Bureau business cycle history.	16:35
	I believe that's true, even including	16:39
	the long World War II period, the number of months	16:41
	is a is a record.	16:45
	Well, that was very altruistic, you might say,	16:48
	but it was bad for the country in my judgment,	16:51
	and it used to be a matter really of mortification.	16:54
	When economists went to any international meeting,	16:59
	that the United States was lumped with stagnant Britain	17:03
	because if you look at the numbers,	17:08
	you will find that from 1952,	17:09
	1953 to 1960	17:14
	the average rate of real increase	17:16
	was less than two and a half percent.	17:18
	Let me stress that there was no evidence	17:22
	that the productivity of the country was stagnating	17:25
	at that time, taking the period as a whole,	17:29
	there were the ordinary cyclical ups and downs.	17:32
	So that I have to give President Eisenhower	17:34
	on the purely economic front a low grade.	17:39
	Other people will judge him on the diplomatic	17:42
	and the power politics front.	17:47
	I simply wanna say that the rapprochements was Khrushchev,	17:48
	Stalin was was dead, it seems to me, historians	17:54
	of the far future will record as one	17:58
	of the most important events,	18:01
	and I would also give a great deal of credit	18:03
	to President Eisenhower that there was an occasion	18:06
	when his advisors, including his vice president,	18:09
	would have liked him to intervene in Laos,	18:14
	and he did resist that.	18:18
	Well, I'm going to stick to economics.	18:22
	Now, what about john F. Kennedy?	18:24
	Well, John F. Kennedy, I would say	18:26
	was a tabula rasa, a clean slate.	18:29
	Although he had studied some elementary economics,	18:33
	he had not really thought much about economics.	18:37
	He was an active senator, but it turned out	18:41
	as an active senator in connection with labor corruption	18:44
	and matters of that sort.	18:48
	And he very rarely as a senator, had attended meetings	18:50
	of the Joint Economic Committee,	18:54
	the various hearings when people like myself testified.	18:57
	I learned to my surprise when I became an advisor to	18:59
	John F. Kennedy was actually on that on that committee.	19:02
	It took a long period of of education	19:06
	because John F. Kennedy was anything button impetuous man.	19:11
	There's just a new book on the Kennedy era by Henry Fairlie,	19:14
	a very excellent English writer.	19:18
	He tends to be a little bit on the conservative side,	19:22
	he's a fine stylist, he is the man I believe,	19:25
	who originated the expression, the establishment.	19:29
	I have not finished the book, but from my samplings	19:35
	up to this date, it seems to me that he has things	19:39
	all wrong in interpreting President Kennedy.	19:43
	I think that the people who deal with the actors	19:49
	on the stage of history, have a tendency to feel rightly	19:52
	that history never gets anything right.	19:57
	So all each person can do is give his own testimony.	19:59
	One of the themes which Fairlie enlarges upon	20:03
	is that Kennedy had, I'm gonna exaggerate this,	20:07
	kind of a fascistic streak in him,	20:10
	a reckless a glorification of the country,	20:13
	if not a glorification of danger.	20:17
	Coming from a touch ball playing family with a sister	20:20
	who died in an airplane wreck,	20:25
	was a brilliant war record behind him,	20:26
	with a brilliant older brother who was supposed	20:29
	to be groomed for the presidency,	20:32
	who was heroically killed in battle.	20:34
	This all fits in superficially with the candidate image.	20:37
	But in my experience, he was an extremely cautious person.	20:41
	He liked to win, but he didn't like to fight.	20:47
	Roosevelt I think other things being equal,	20:50
	liked a good fight.	20:53
	He likes to take on the malefactors of great wealth.	20:54
	When Kennedy annoyed the business community,	20:58
	it was in every case not because he wanted to a tweak	21:02
	their noses, it was because they were doing something	21:07
	which he didn't want with one exception,	21:10
	and that was a Roger blow incident when President Kennedy	21:13
	actually lost his temper because he thought	21:17
	that there had been dirty dealings on the part	21:19
	of the steel employers in terms of agreements	21:23
	which he thought had been implicitly at least made	21:27
	and which had been part of getting the labor unions	21:30
	to make a an earlier settlement.	21:34
	He felt betrayed by the decision to the steel industry	21:37
	to raise prices, and then his Irish temper was lost.	21:41
	This is important from a standpoint of economics	21:46
	'cause it makes a great deal of difference.	21:48
	What kind of a battle a President is willing to make	21:50
	in terms of leadership for his programs.	21:55
	During the early Kennedy years,	22:00
	the advisors of Kennedy and I don't mean outside advisors,	22:01
	I mean inside advisors,	22:04
	were in very many cases telling him to be more expansionary	22:06
	to ask for tax reductions, which which he didn't	22:10
	actually ask for until years later.	22:15
	President Kennedy didn't want to take on Congress.	22:20
	He did not want to get into trouble with the majority	22:22
	leader of the Senate, his own party senator Karl	22:27
	or put any pressure on on Sam Rayburn.	22:29
	He always tried to take the conciliatory rule a way.	22:34
	That expression which we associate with John F. Kennedy,	22:37
	ask, not what your country can do for you,	22:43
	ask what you can do for your country,	22:46
	although it's not an original bit of rhetoric,	22:47
	according to historians with the President,	22:51
	was part of his trademark and slogan and you could say	22:54
	that his campaign after his Labor Day speech,	22:56
	picked up steam for the first time.	23:00
	Fairlie interprets this as a Mussolini like	23:02
	call to live dangerously.	23:06
	Actually it was not that at all President Kennedy	23:09
	had sensed as a political strategist,	23:14
	I've heard him say this,	23:18
	that the country was in a mood for sacrifices.	23:19
	And this actually stood in the way of good economic policy,	23:23
	because the new president used to say it was advisors.	23:28
	"How can I as my first act, having asked the country	23:33
	for a sacrifice, give them a tax reduction."	23:37
	Say, "Please accept the sacrifice of a tax reduction."	23:40
	So it was a case where the rhetoric actually got in the way	23:44
	in my opinion of well timed and good policy.	23:47
	Let me leave President Kennedy was just one incident to show	23:54
	the falsity of the Fairlie thesis.	23:59
	Very early in his term, Kennedy's term,	24:02
	the Berlin Wall was put up.	24:06
	And there was a decision made to increase the amount	24:09
	of military expenditure by the United States.	24:13
	This was done for strategic purposes, but also, I think,	24:15
	as a signal to the Russians	24:19
	of our unhappiness with that act.	24:21
	There was an almost universal agreement	24:25
	by all the non economists in the Kennedy administration,	24:27
	that there ought to be a tax increase,	24:30
	to show the country and the world that we meant business.	24:34
	This made no economic sense in terms of the business cycle	24:40
	situation of mid 1961, and the decision was fought hard	24:43
	by the economists in the administration.	24:48
	My small role in history was to finally convert	24:53
	the president to whom I was not an official advisor,	24:57
	but who I advised earlier,	25:00
	in whom he had some considerable confidence,	25:03
	maybe I even was prepared to use up a little	25:05
	of that confidence get money in the bank,	25:09
	I did persuade him,	25:12
	helped persuade him I should say,	25:14
	not to ask for that tax increase.	25:16
	Well, that doesn't fit it all it was Fairlie's thesis.	25:23
	But let me move on to Lyndon Johnson very rapidly.	25:25
	It's important I think what a man's image is of himself.	25:29
	It's extremely important that every president be thinking	25:34
	about how we look in the history books.	25:37
	Because most of the time that lifts him above	25:40
	mundane, petty, short run party politics.	25:43
	On the few occasions when I saw	25:52
	President Johnson, I was the head of a task force	25:55
	on maintaining economic prosperity	25:58
	for him in 1964, he always emphasized	26:00
	that he was at bottom the Roosevelt new dealer.	26:04
	Now you can expect him to put on that set of clothes	26:09
	for the kind of person I am.	26:12
	But I think it went deeper than that.	26:14
	He was not a simple new dealer,	26:18
	but he's Great Society programs, that poverty program.	26:20
	These were things that he was interested in.	26:23
	And if I could give an example,	26:25
	I heard him once say, "I visited some slums, rural slums,"	26:28
	I think was in West Virginia.	26:34
	"There were those people would never had dental care.	26:36
	Why can't we just we draft their sons into the army,	26:38
	Why can't we use the army to fix the dentistry	26:41
	of these boys, to give them literacy,	26:44
	to give them an education."	26:46
	I other words why can't the army since we must,	26:47
	in any case, have it, be a social instrument	26:50
	of regeneration and development.	26:53
	There was a very characteristic strain.	26:57
	However, just as in the history books,	27:01
	it will be recorded that President Johnson blotted	27:04
	his copy book you might say,	27:08
	toward the end by his involvement in the Vietnam War.	27:09
	His not being able to get out of the Vietnam War.	27:14
	He did I have to report, make one tactical and strategic	27:19
	error of decisions in connection with economics.	27:24
	When it was decided to escalate the Vietnam War in 1965,	27:29
	the American economy was essentially gliding	27:33
	into full employment by almost any definition.	27:36
	Therefore, his advisors I suspected at the time,	27:42
	I knew that's what Dr. Gardner actually	27:46
	must be advising him,	27:49
	we later learned from the revelations of Mr. Johnson	27:50
	after he ceased to be president that was the case they said,	27:55
	"You have to have physical contractionary policy."	27:58
	Now, it wasn't a case of his refusing that advice	28:02
	because he believed in some other theory of macro economics.	28:05
	He was for example a monetarist who believed	28:08
	that fiscal policy has nothing essential	28:11
	to do with the aggregate of total purchasing power.	28:14
	Rather, the rate of growth of the money supply	28:18
	as engineered by the Federal Reserve is the single	28:21
	most important determinant, and the only one	28:25
	with any predictable accuracy	28:27
	in affecting the overall state of demand.	28:30
	That wasn't President Johnson's reason for rejecting	28:34
	the advice, I think that he simply	28:37
	was afraid that his war program would be jeopardized	28:40
	and some of his other Great Society programs	28:44
	would be jeopardized, and that it was politically	28:47
	unpopular thing to raise taxes at any time.	28:49
	I guess we have to write Lyndon Johnson down	28:54
	in the history books as somewhere	28:59
	between a B plus and A minus at best.	29:02
-	If you have any comments or questions	29:06
	for Professor Samuelson,	29:08
	address them to Instructional Dynamics Incorporated,	29:10
	166 East superior Street, Chicago, Illinois	29:13
	Six, O, Six, one, one.	29:16

Item Info

Title:

Tape 120 - Presidential economics: comparative review

Date:

1973

Contributor:

Samuelson, Paul A. (Paul Anthony), 1915-2009

Subject:

Format:

audiocassettes

Language:

English

Digital Collection:

Paul A. Samuelson papers, 1933-2010 and undated

Source Collection:

Paul A. Samuelson papers, 1933-2010

Series:

Economics Cassette Series: Paul Samuelson

Rights:

Limited Re-Use

CC BY-NC 4.0

Rights Note:

This material is made available for research, scholarship, and private study. Copyright in this material has not been transferred to Duke University. For reuses of this material beyond those permitted by fair use or otherwise allowed under the Copyright Act, please see our page on copyright and citations: https://library.duke.edu/rubenstein/research/citations-and-permissions.

Identifier:

RL10082-CS-0118
ref2375_4rs
samuelsonpaul
duke:325141
pstau001118
ark:/87924/r45m62p8r
b1b6b464-4880-4d0b-9a9a-e17146861f1a

Permalink:

https://idn.duke.edu/ark:/87924/r45m62p8r

Sponsor:

Sponsor this Digital Collection

Tape 120 - Presidential economics: comparative review

Transcript

Item Info

Economists' Papers Archive

More Info & Options