Paul Samuelson, who died on 13 December at the age of 94, was one of the greatest economists who ever lived. A generation of economics students had their first exposure to the subject through his textbook, Economics, first published in 1948 and now in 19th edition. His research covered many topics in economics and he brought a rigour to economic analysis that has had a profound influence on the development of the subject.
Tributes have flowed in from around the world and many obituaries have been written. The following is a selection that give you a feel for the huge contribution he made to the subject.
Thinking about his achievements, try answering the question below.
Nobel Prize-winning economist advised several U.S. presidents Washington Post, Patricia Sullivan (14/12/09)
‘Samuelson was the pre-eminent economist of our times’ Business Standard (India), Amartya Sen (19/12/09)
Across the Spectrum, Economists Mourn Paul Samuelson the Atlantic Wire, Max Fisher (14/12/09)
Pioneer who turned economics into a science Financial Times, Stephanie Flanders (14/12/09)
Paul Samuelson, RIP The Hindu Business Line, T.C.A. Srinivasa-Raghavan (14/12/09)
Paul Samuelson Telegraph (14/12/09)
Paul Samuelson The Economist (17/12/09)
Question
What makes a great economist?
At a three-day event from 27 to 29 November, people were given the opportunity to barter for works of art on display at the Rag Factory gallery in London. Works by many famous contemporary artists were displayed, although none of the works was signed and the artist’s name was not displayed.
The idea was that people would barter for works on their own merits rather than because of the name of the artist. People could offer anything they chose. They simply wrote the offer on a slip and then the artist would choose which ever offer appealed to them the most. Offers ranged from a lettuce, a curry and even a song, to a Ferrari and a person’s own kidney.
As Stephanie Hirschmiller writes in the third linked article below, “Bartering has long been a mechanism on which the art world spins – from Picasso exchanging sketches for meals and London’s YBAs running tabs at The Ivy in exchange for pieces of their work to adorn the venues walls. Even Manhattan’s Chelsea Hotel, home to a slew of famous residents including Bob Dylan, Allen Ginsberg, Dylan Thomas and William Burroughs would once accept art in lieu of rent from its cash strapped incumbents.”
So is barter a realistic alternative to the market – at least for works of art and some other items? Does it have any advantages? The following articles consider the issues.
Barter for Art (video) BBC Today Programme, Evan Davis (28/11/09)
Pick up an Emin for a song Independent, Annie Deakin (27/11/09)
Barter Economy The Handbook, Stephanie Hirschmiller (24/11/09)
Don’t believe the hype New Statesman, Stephanie Hegarty (27/11/09)
Saving on Art the Old-Fashioned Way New York Times, Alice Pfeiffer (23/11/09)
Questions
- What are the necessary conditions for successful barer to work? Can it ever be an efficient form of exchange?
- What are the advantages of barter over normal market exchange with money and prices?
- For what other products and services might barter be an appropriate form of exchange?
- Do you take part in barter at all? If so, under what circumstances and why?
To mark the 20th anniversary of the fall of the Berlin wall, the BBC World Service commissioned a survey across 27 countries to gather people’s views about capitalism and whether it is working well. The findings are striking. Only 11% felt that it is working well. “Most thought regulation and reform of the capitalist system were necessary. There were also sharp divisions around the world on whether the end of the Soviet Union was a good thing.”
The following articles look at the detailed findings of the poll and consider its implications for the functioning and reform of the world economy.
Global poll: Wide dissatisfaction with capitalism 20 years after fall of Berlin Wall BBC Press Office (9/11/09)
Free market flawed, says survey BBC News, James Robbins (9/11/09)
Wide dissatisfaction with capitalism, years after fall of Berlin Wall Dawn.com (Pakistan) (9/11/09)
Capitalism confronted with growing doubts Global Times (China) (11/11/09)
The fall of the Berlin wall – Pt 1 (video), The fall of the Berlin wall – Pt 2 (video), Al Jazeera (on YouTube), Riz Khan (9/11/09)
Column : Why Berlin was a win for all of us Financial Express (India), Lord Desai (Emeritus Professor, London School of Economics) (9/11/09)
The real lesson of 1989 is that nothing is ever settled Guardian, Seumas Milne (12/11/09)
The Wall fell and hope rose – for a while Otago Times (New Zealand), Andrew Rawnsley (10/11/09)
New name for a new economy? BBC News, Stephanomics (13/11/09)
Questions
- What are the alternatives to free-market capitalism?
- Do you agree that “however flawed free-market capitalism is, it is still the best of all systems”? Explain your answer.
- In what ways does free-market captialism fail to provide the optimum allocation and distribution of resources?
- What forms can government intervention take to influence markets?
The following article by Will Hutton looks at the relative efficiency of private- and public-sector organisations. The public sector is typically characterised as inefficient and providing a poorer level of service and poorer quality products than the private sector. After all, the private sector is driven by the profit motive, where providing a good service would seem to be a key ingredient in making more profit.
Yet when you look around you, this portrayal can be seen as far too simplistic. On the one hand, much of the public sector has been forced to be efficient, following many years of tight budgets. At the same time, many in the public sector are keen to deliver a good service, not only because that is required by their employers, but because they are motivated by a sense of public duty and professionalism. On the other hand, there are many market failings in large parts of the private sector, where monopoly power, asymmetric information and externalities are rife. Read the article and see if you agree with Will Hutton’s analysis.
These money-grubbing companies make the public sector look good Observer (1/11/09)
Questions
- What are the incentives to encourage either private-sector companies or public-sector organisations (a) to be efficient in the sense of cutting out waste (X-efficiency); (b) to be allocatively efficient; and (c) to provide a high quality of service to customers / clients / patients / students, etc.?
- What market failures may prevent private-sector companies from achieving (a) to (c) above?
- What organisational failures may prevent public-sector organisations from achieving (a) to (c) above?
- How is Goodhart’s Law relevant to the setting of performance targets in both the private and public sectors?
According to Sir Liam Donaldson, England’s Chief Medical Officer, swine flu is on its way back. However, vaccinations are now available to the most vulnerable people, including front-line medical staff, people with chronic health problems and pregnant women. But, what about every-day workers? Surely, these are people that need protecting too, as they are the ones who contribute to the economy. How do you prioritise?
A key question is how much swine flu has actually cost the UK economy. Here, we’re not just concerned with the cost of the vaccines, but also the opportunity cost of that money, the lost output from illness, the human suffering – both of the victims and of their relatives and friends – and, of course, the impact on business and the economy. Some of the countries worst hit by the outbreak of swine flu have faced particular problems, such as protectionist trade policies and a significant fall in business through tourism.
So, will the vaccine prove cost effective for the government, or is it more about the moral obligation to provide it? These articles look at some of the recent developments in the worst pandemic in years.
Mexico economy squeezed by swine flu BBC News (30/4/09)
Swine flu vaccine on its way to GPs Grimsby Telegraph (21/10/09)
Exclusive – WTO protectionism report to feature swine flu bans Reuters (12/6/09)
Flu bill ‘may hit fire plans’ Teletext (27/10/09)
Swine flu vaccination under way BBC News (21/10/09)
Swine flu costs have put dent in profits, Amerigroup says Pilot Online, Tom Shean (27/10/09)
Swine flu gives Pharmaceutical Companies a New Edge Top News, Tangaroa Snell (26/10/09)
Economic cost of swine flu could be around $3 trillion to $4.4 trillion Today’s Zaman (Turkey) (2/11/09)
Swine flu mass vaccination programme launched Guardian (21/10/09)
Full list of swine flu cases, country by country Guardian (updated daily)
Doctors plan mass swine flu jabs for under-18s Times Online (1/11/09)
Questions
- What is the opportunity cost of swine flu? How could you illustrate this on a diagram?
- Vaccines are going to those at risk first. Why is this particularly relevant in terms of the economic problem?
- What is protectionism and what are the main forms? Discuss the advantages and disadvantages of protectionist policies in the context of swine flu.
- If the government had to decide whether or not a swine flu vaccine was worth producing, how could they have done this? Outline the process by which costs and benefits can be weighed up. Are there any drawbacks to this method?
- How have businesses been affected by swine flu? Think about those who have benefited as well as those that have lost.