Tape 114 - Political economics after the elections, assuming...

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/r4g44j670?embed=true' height='125px' width='100%' frameborder='0' marginwidth='0' marginheight='0' scrolling='no' allowfullscreen></iframe>
Permalink

https://idn.duke.edu/ark:/87924/r4g44j670
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 is produced	0:07
	by Instructional Dynamics, Incorporated	0:08
	and was recorded November 3, 1972.	0:11
-	I'm speaking a few days before the election.	0:14
	You will be hearing this tape after the election.	0:18
	So, I have to put myself in the position	0:21
	of forecasting what's relevant for the future.	0:25
	Please keep that in mind in interpreting what I'm saying.	0:30
	Now, I think that I have no reason	0:33
	to second guess	0:37
	the polls.	0:39
	So I must proceed on the assumption	0:41
	that with very high probability	0:43
	Senator McGovern is gonna lose the election	0:45
	and that President Nixon is going to win.	0:49
	I must put this in probability terms	0:52
	because as we have seen in connection	0:54
	with the recent Canadian election,	0:57
	although the Gallup Poll showed Trudeau's Liberal Party	0:59
	as ahead, I believe it was ahead 4%,	1:03
	there is a margin of error in all polling.	1:08
	And that was of about the order of magnitude	1:12
	of 4%, I believe.	1:15
	And apparently, Mother Nature availed herself	1:18
	of the use of the full margin of error.	1:22
	Because at the last recount,	1:25
	we found the Trudeau government, a minority government,	1:28
	tied with 109 votes each	1:31
	with the leading opposition party	1:34
	and with the new left-wing party	1:37
	having 30 seats and swinging the balance.	1:40
	You may say that I should assume	1:44
	that the same imprecision is possible here.	1:47
	I don't think that would be a fair way of putting it.	1:50
	The lead of President Nixon,	1:55
	even if it may be narrowing a little bit,	1:59
	is of the order magnitude of let's say a 20%.	2:01
	That's five times 4%.	2:05
	But in terms of probability of the polls being wrong it's...	2:09
	If we could use conventional probability,	2:14
	now I'll warn that conventional probability	2:16
	isn't always minutely applicable.	2:18
	That's really like a million times.	2:21
	If you go two or three standard deviations,	2:24
	you aren't doubling or tripling relationships.	2:27
	In terms of probability you are reducing them	2:30
	by a million-fold, if not a trillion-fold.	2:32
	So, I'm going to proceed on the	2:35
	basis of the odds as the evidence shows it.	2:39
	And I do this with good conscience.	2:43
	Because if it should turn out	2:45
	that McGovern has some hidden strength	2:47
	which the polls haven't recorded,	2:50
	I will not feel that I sound foolish when you hear me.	2:53
	Because on the basis of the evidence available to me,	2:57
	I did, I think, make the rational judgment.	3:00
	This being the case, it seems to me	3:05
	a little soul searching is in order.	3:09
	What's going to happen in a second Nixon term?	3:14
	I cannot predict whether in any degree	3:20
	there is a coattails effect and whether my projection	3:24
	should be based also upon the assumption	3:27
	of some more than usual change in the composition	3:30
	of the two houses of the Congress.	3:34
	Even if technically there isn't a coattail effect.	3:40
	And I must say to you that, as an amateur,	3:43
	I believe there is more of a coattail effect	3:45
	than the professionals have been able to validate.	3:47
	It still is a case that the same causes	3:51
	produce the same effects.	3:54
	And some of those causes, which are producing apparently	3:56
	a strong vote for President Nixon,	4:02
	I think in marginal congressional districts	4:04
	are going to produce a strong vote	4:07
	for Republican opponents of Democratic candidates.	4:09
	So I believe that even if one thinks	4:14
	the coattail effect is weak,	4:18
	one should suppose that a little bit of a mandate	4:19
	has been given to the victor.	4:23
	Is it important who wins the election?	4:29
	If you are on the far right, if you are on the far left,	4:34
	you always say it isn't important.	4:37
	All Chinese look alike to occidentals.	4:40
	It's Tweedledum and Tweedledee	4:44
	between the Republican Party and Democratic Party.	4:46
	Conservatives, extreme Conservatives	4:51
	argue that President Nixon is winning his victory	4:54
	only by behaving like a Democrat.	4:58
	So what's the difference whether a man	5:00
	who calls himself a Republican,	5:02
	but who behaves like a Democrat, gets reelected	5:03
	that they provide the only real option.	5:06
	Similarly, a plague on both your houses is used by	5:10
	exponents of the left,	5:15
	the way out left, the far left.	5:17
	Indeed, I saw that Michael Harrington had resigned	5:20
	from the Socialist Party, because he felt	5:25
	they were undercutting McGovern.	5:28
	It's been noticed in political life,	5:30
	and you can see this in any university	5:33
	if there's a fight over an academic oath,	5:35
	that the sharpest intensity of emotional feelings	5:38
	is generated not between a person who is on the left	5:43
	against a colleague who is on the right.	5:48
	Each of them knows the other has been long since	5:53
	disillusioned with the other,	5:57
	and there are no new surprises, no novelties.	5:58
	The tension comes when you are just left of center	6:01
	and arguing with a dear friend who is	6:05
	just at the center,	6:10
	or not quite so far left of center as yourself.	6:11
	He's the man from whom you expect greater things.	6:14
	And when he turns out to disappoint you	6:17
	by not having your views, then a bitterness intervenes.	6:20
	And I have known professors	6:24
	at the University of California in Berkeley	6:25
	during the oath fight of some decade ago,	6:27
	who cease to be friends just because one of them	6:31
	signed the oath a week before the other.	6:34
	Same thing was true at the time of	6:39
	the Vecchi in France.	6:42
	Did you go over and support the collaborations	6:44
	government Vecchi 10 days before	6:47
	your neighbor down the block?	6:50
	And if you did, then there may be bad blood	6:52
	between you for a long long time to come.	6:54
	I believe I speak from the,	6:58
	not from the two extremes	7:02
	that there is a difference in the election.	7:04
	And to me the most important problem,	7:07
	and this is not a matter of political gossip,	7:10
	but it's a matter of basic importance for political economy.	7:13
	It's of importance for what the computers	7:18
	will be forecasting with respect to GNP tables	7:20
	is the identity crisis that I think	7:25
	the Democratic Party has	7:28
	developed.	7:32
	Let me expand on this.	7:34
	I'm full of the subject because at the same time	7:41
	that I'm talking here, I have to be preparing	7:43
	a brief 750 word column for Newsweek.	7:47
	Again, that column has to be written	7:52
	without a knowledge of the outcome of the election.	7:55
	And yet the readers of Newsweek,	7:58
	since the magazine's gonna be held up until	8:00
	after the election, are going to know the answer.	8:02
	And in that column I mentioned	8:07
	a congressional hearing	8:13
	that I witnessed and participated in.	8:16
	I testified before the joint economic committee	8:20
	of the Congress on the mid-year report	8:23
	of the state of the nation.	8:26
	Standard economics	8:31
	requirement to look at the GNP report	8:34
	on how things are doing.	8:37
	I suppose that every six months	8:39
	panels of economists, businessmen, trade groups do appear.	8:43
	I myself try ration my appearances in events of this sort	8:49
	because their time consuming.	8:55
	But on the average of about once every 18 months, I testify.	8:57
	It was my good fortune to be appearing this time,	9:03
	testifying before Senator Proxmire's committee	9:06
	with two very interesting co-panelists,	9:09
	Walter Heller, one, and John Kenneth Galbrath.	9:14
	I think actually I've mentioned on these tapes	9:18
	some of the differences in GNP estimates	9:21
	that developed from those testimony.	9:25
	But the colloquy that I'm now going to refer to	9:27
	had to do with a broader issue.	9:31
	Congressman Conable from New York	9:34
	at one point said to John Kenneth Galbraith...	9:38
	I should set the stage	9:42
	by saying that Galbraith	9:46
	had been arguing that the Republican Party	9:48
	is the party of the interests.	9:51
	And that if you think of them as having for their brief	9:53
	the self-interest of the large corporations,	9:58
	then you'd have to say that the Republican Party	10:00
	had been doing a pretty good job for their constituency.	10:02
	And by the same token, the Democratic Party what is it?	10:07
	It is the young Lochinvar.	10:10
	It is the Sir Galahad.	10:13
	It is the party of the	10:14
	legitimate masses.	10:18
	Now I'm caricaturing the elegant	10:20
	and profound analysis	10:27
	which Dr. Galbraith gave in his testimony.	10:29
	But at one point Congressman Conable interrupted him	10:33
	and said, "Professor Galbraith,	10:37
	"I know that you have a certain vision	10:41
	"of the Democratic Party.	10:43
	"You want the Democratic Party to be liberal	10:45
	"even if it is not successful."	10:48
	And although Congressman Conable didn't so much as say this	10:52
	in so many words, what was clear from the colloquy was,	10:57
	"And also Professor Galbraith I want you to know	11:02
	"that that's the kind of Democratic Party	11:04
	"that we Republicans want you to have."	11:07
	It's like that famous story from Finley Peter Dunne's	11:10
	Mr. Dooley about the attitude of businessmen towards unions.	11:15
	Mr. Hennessy, the bartender says,	11:21
	"But these open shop men say they're for unions."	11:25
	I'm omitting the Irish brogue.	11:28
	And Mr. Dooley replies, "Sure, unions if properly conducted,	11:30
	"no strikes, no rules, no contracts, no scales,	11:34
	"hardly any wages, and damn few members."	11:37
	Well, that's the kind of Democratic Party	11:40
	which naturally a Republican in competition	11:43
	would like to have.	11:47
	A Democratic Party, if it wishes to indulge itself	11:49
	with the conceits of fine spun ideals,	11:52
	let it.	11:56
	But let it also have a darn few members.	11:57
	Well now it may be that when the votes comes,	12:02
	and when we find how few	12:04
	of the Democratic...	12:08
	How few of the 50 states in the Union go Democratic that	12:10
	Dr. Galbraith has, indeed, received his wish	12:16
	from the good fairies,	12:20
	namely a Democratic Party in his image.	12:22
	After this colloquy took place,	12:26
	I could not detect any appreciable sign of discomfort	12:28
	on the part of Professor Galbraith.	12:32
	He's a man of great aplomb.	12:34
	I have now way of knowing whether	12:36
	the aimed shaft pierced his hide in any degree.	12:40
	But I can tell you that as a Democrat,	12:45
	as a supporter of McGovern,	12:47
	as I sat there the arrow hit me.	12:51
	I thought back to the time of Franklin Roosevelt	12:53
	who was able to weld together	12:58
	not only hardhats, but intellectuals	13:01
	in a winning coalition.	13:04
	And I thought back in a degree,	13:07
	to John F. Kennedy who could accomplish that same feat.	13:10
	And it seemed to me that the great political leaders	13:15
	are those who can bring together people of	13:18
	somewhat different political persuasions.	13:23
	And this caused me to go back and do my homework.	13:26
	I had read in 1970 a little book by Professor Galbraith	13:28
	on the Democratic Party.	13:34
	Who Needs the Democrats, that's the title.	13:35
	And the subtitle is And What It Takes to Be needed.	13:37
	Well I read this over.	13:40
	Professor Galbraith can be a very witty writer.	13:42
	And I must say that this is a very witty book.	13:45
	There are many chuckles to be found in it.	13:49
	Moreover, there are a couple of points	13:53
	on which it seems to me using the wisdom of hindsight,	13:55
	Professor Galbraith was undoubtedly correct.	13:58
	Or at least a strong case can be made for his point of view,	14:01
	and that point of view needed to be put forward in 1970.	14:05
	For one thing, Galbraith came out very strongly	14:09
	against the Vietnam War.	14:13
	And he emphasized the importance and necessity	14:14
	for the Democratic Party to shake the legacy	14:18
	of President Johnson in being associated with that war.	14:22
	Now, I think that's an important message.	14:28
	I think that on noneconomic grounds,	14:31
	but also think that has a relevance to the economic picture.	14:33
	However, for a liberal writer	14:41
	in 1970 to come out against the Vietnam War	14:44
	does not require any great novelty or even,	14:49
	if I may say so, any great deal of courage.	14:52
	The second point is therefore, more interesting.	14:56
	Professor Galbraith also stressed	15:00
	the need for an incomes policy.	15:03
	He's been associated with this view for a long time.	15:06
	And he emphasized that in a modern mixed economy	15:08
	there is a danger of stagflation,	15:12
	that you get stagnation and inflation at the same time.	15:15
	That in the short run, at least,	15:18
	Phillips Curves behave badly.	15:20
	And there is a trade off, if not a dilemma,	15:23
	between the choice of full employment	15:26
	or reasonable priced ability.	15:28
	And Professor Galbraith very forcefully	15:32
	advocates cutting the Gordian Knot,	15:36
	grasping the nettle, improving the Phillips Curve	15:41
	by mandatory	15:45
	price wage controls.	15:48
	I can say with good grace I can compliment him	15:53
	on this position, because I was one of those	15:56
	who was rather skeptical.	15:58
	I knew that such methods work in the short run.	16:00
	But I believed that they work with only limited success,	16:02
	and that as the short run becomes the intermediate run	16:06
	and longer run, that they cease to work.	16:10
	And they begin to have a cost benefit appraisal,	16:13
	more costs and benefits.	16:19
	One presumes that Professor Galbraith	16:23
	was directing this advice to his fellow Democrats.	16:26
	There's no particular evidence that we listened,	16:29
	that he was persuasive.	16:33
	But you might say quixotically,	16:35
	that a little bird did waft his message to the White House.	16:38
	Who knows, perhaps that little bird came from Texas.	16:43
	But in any case, it's now a matter of history	16:46
	that on August 15th in the wake	16:49
	of the international dollar crisis,	16:51
	President Nixon stole the thunder of the Democrats.	16:54
	Went perhaps even far beyond the Galbraith recommendation	16:59
	in introducing wave price controls.	17:04
	Of course he, for the first 90 days,	17:06
	introduced the freeze, complete freeze phase one.	17:08
	Then there's a phase two and a phase three.	17:12
	And I must say, and therefore I must give Galbraith	17:16
	some of the credit, that this program has worked out	17:20
	better than I had thought it would.	17:24
	Better than I had dared hope.	17:27
	I would never have believed that the GNP deflator	17:28
	could be brought down to 1.8% annual rate,	17:33
	as was true in the spring of this year.	17:37
	And it's not much above 2% now.	17:38
	To illustrate how much better it seems to have worked	17:42
	than one might have expected	17:45
	on the basis of previous experience,	17:48
	just consider the construction trades.	17:51
	The construction trade wages have been going up	17:54
	in the recent past on collective bargaining	17:56
	contracts at 18, 20%.	18:00
	And when Dr. John Dunlop of Harvard	18:03
	was put in charge of the operation	18:07
	to bring these rates down, we were all supposed	18:09
	to feel very grateful that in the first year	18:12
	of phase one and phase two they were brought down to 11%.	18:15
	And I suppose we were grateful.	18:20
	But I was talking to Dr. Dunlop just recently,	18:22
	and he showed me that in recent quarters	18:25
	they've been down to 6% and below.	18:29
	The rate of increases of wages in the construction trades	18:33
	are actually less than for the pay board generally.	18:36
	And this the more remarkable.	18:39
	Anyone who knows anything about construction,	18:41
	when you remember that about half the cases	18:42
	decided by the pay board are nonunion wage cases anyway.	18:45
	Well, I've given credit to Galbraith.	18:50
	Now I have to go to the other side.	18:53
	It seems to me, those two points aside,	18:55
	that the book is a prescription for disaster.	18:59
	What Galbraith is saying is that the	19:03
	Democratic Party should become homogenous.	19:08
	If you're a Southerner, typical a Southerner.	19:12
	If you're an old line pow, a city, a boss, a daily,	19:14
	this is my language not his.	19:20
	If you are a hard hat.	19:23
	If you are a union organizer, the old fashioned type.	19:25
	If you are a George Meany, an I.W. Able.	19:31
	Get lost.	19:33
	AppLy elsewhere.	19:35
	There's no room in the new Democratic Party for you.	19:36
	Well, who does this leave us with?	19:40
	I'm afraid this leaves us with blacks,	19:43
	because in any calculus the blacks must feel	19:49
	that the Democratic Party is gonna do better by them.	19:54
	And the only reason to deviate from this	19:56
	is that you don't want the Democratic Party	19:59
	to be to sure of you and have you in the bag.	20:00
	And also some local reasons for deviating.	20:05
	Furthermore, if you are a liberal of academic type.	20:10
	I'm not thinking of a person exactly like myself.	20:14
	I'm not thinking of a person who shares	20:16
	the precise views of Professor Galbraith.	20:18
	But the sort of person that you'll meet	20:21
	in any one of our 50 states	20:22
	if you go to the faculty club for lunch,	20:24
	then you'll be in the Democratic Party.	20:27
	I would love to have a successful party	20:30
	made up with such platforms,	20:33
	and with such constituents, and with such attitudes.	20:35
	But I remember so vividly of what Ike did to Adlai,	20:39
	what Eisenhower was able to do repeatedly	20:44
	at the poles to Adlai Stevenson.	20:47
	Stevenson was my ideal of a candidate.	20:50
	He was, one presumes, Professor Galbraith's ideal.	20:55
	But I realize by the same token, that I admired him so much.	20:59
	Our cleaning woman, who had never deviated	21:04
	from voting for the Democratic Party,	21:06
	didn't wander off in voting for Eisenhower.	21:10
	The great leaders, it seems to me, of the past,	21:18
	Roosevelt, in lesser degree John F. Kennedy,	21:22
	were able to put people of different viewpoints together.	21:26
	They were able to gradually change the viewpoints.	21:31
	I think I probably have mentioned on this tape	21:35
	the pictures shown to me by a Canadian broadcasting crew	21:38
	who went to Gary, Indiana at the time	21:43
	that Robert Kennedy was, just before his assassination,	21:45
	was campaigning for the nomination.	21:50
	And they showed me pictures of black hands and white hands	21:53
	reaching up to Robert Kennedy.	21:56
	My point isn't that the mob should adulate the leader.	22:00
	My point is that those were in wards and precincts	22:04
	which on the white side George Wallace had carried	22:08
	which had been polarized apart.	22:12
	The candidates were able to bring these people together.	22:14
	And here's Galbraith saying that the Democratic Party	22:16
	has no room for the traditional people	22:21
	who have given the Democrats the majority.	22:25
	It seems to me, and this is important from the standpoint	22:27
	of political economy, that for Galbraith,	22:30
	now I'm giving more importance to him	22:34
	than he personally deserves, but it's the viewpoint	22:37
	that needs to be brought out in a caricature.	22:40
	To turn over to President Nixon the great middle ground	22:42
	is a tragedy in terms of the forward looking legislation	22:47
	that I think is important	22:54
	for this country in the period ahead.	22:56
	If all the signs are correct	23:01
	and if President Nixon comes in with something of a mandate,	23:03
	then I think you must consider the odds	23:08
	a little bit changed on the trends for worse or for better,	23:10
	depending upon your viewpoint.	23:15
	We'll have plenty to look for in the new Congress.	23:18
-	If you have any comments or questions	23:23
	for Professor Samuelson,	23:24
	address them to Instructional Dynamics, Incorporated	23:26
	166 East Superior Street	23:29
	Chicago, Illinois 60611.	23:31

Item Info

Title:

Tape 114 - Political economics after the elections, assuming...

Date:

1972

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-0112
ref2363_81u
samuelsonpaul
duke:325135
pstau001112
ark:/87924/r4g44j670
03230f85-7e91-4e25-a074-d46c33608ed3

Permalink:

https://idn.duke.edu/ark:/87924/r4g44j670

Sponsor:

Sponsor this Digital Collection

Tape 114 - Political economics after the elections, assuming...

Transcript

Item Info

Economists' Papers Archive

More Info & Options