Tyler Cowen points to this amazing forecast from Samuelson:
In the 1961 edition of his famous textbook of economic principles, Paul Samuelson wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster. As a result, one could comfortably forecast that Soviet GNP would exceed that of the United States by as early as 1984 or perhaps by as late as 1997 and in any event Soviet GNP would greatly catch-up to U.S. GNP. A poor forecast–but it gets worse because in subsequent editions Samuelson presented the same analysis again and again except the overtaking time was always pushed further into the future so by 1980 the dates were 2002 to 2012.
In subsequent editions, Samuelson provided no acknowledgment of his past failure to predict and little commentary beyond remarks about “bad weather” in the Soviet Union.
Cowen points to this paper by David M. Levy and Sandra J. Peart which analyse the forecast closely.
We examine the treatment of Soviet growth in successive editions of American economics textbooks published between 1960 and 1980. What we find repeatedly is over-confidence in the potential for Soviet growth and an asymmetric response to past forecast errors. More than this, the textbooks report faster Soviet income growth combined with a constant ratio of Soviet–US income. Textbooks that abstracted from these institutional details (thin) offered a wider range of application than those which focused on one society (thick). A simple way to distinguish these two traditions is whether the book used a productivity possibility frontier [PPF] for cross-societal comparisons. Thick accounts did not while thin ones did. It was in the institutional dimension that the account by Tarshis differed from that of Samuelson.
This is quite interesting. The paper makes it to the must read list. Having read Samuleson’s book long back, I don’t recall this forecast at all. Moreover, the day I discovered Mankiw’s textbook I never really got back to Samuelson’s textbook.
One lesson which I could draw from the above is the same kind of forecasts doing rounds for India and China. Well, growth rates are important but what is more important is the economic structure needed to achieve the growth. USSR clearly failed bigtime in this regard failing to provide good institutions and economic framework.
Though, Indian economy is not like USSR. But still we need more discussions on building the economic framework for achieving the high growth. However, all you get to read is India will achieve so much growth, India will become an economic superpower based on so much growth etc.
The faster we move to thinking (and executing) on how to build such a growth patter, the better it is. Otherwise, in 2050 someone will be looking at the rosy forecasts made by economists in 2010 on Indian economy and saying how it was all overhyped.