NEW YORK -- With the recession and a presidential campaign placing an extraordinary emphasis on economic policy, Wall Street Week, a Maryland Public Television production, will feature tonight two of the nation's most prominent economic gurus, Nobel laureates Milton Friedman and Paul Samuelson.
Don't expect either to deliver a rousing new blueprint to quickly reinvigorate the nation, however.
Indeed, while candidates and Congress are spewing forth one proposal after another stuffed with tax cuts and special incentives, these two men, heavyweight presidential advisers for the past three decades (as well as academically revered economic theoreticians), both favor doing less rather than more, they said in interviews this week. Their premise is that the current malaise is cyclical and either already ending or soon to be over.
"There's a 55 percent probability that come Labor Day, we will be in a mild advance and people will ask what America got all lathered up about," said Mr. Samuelson, 76, who supports a temporary investment tax credit, continued benefits for the unemployed and the most modest government stimulus to the economy.
"We will recover. We are in the early stages now from a cyclical point of view," said Mr. Friedman, 79, who -- as has been his belief in the past -- disputes the worth of any government intervention outside of changing money supply growth. "But what is really important is to strengthen the economic potential of the United States. What we can best do is stop intervening, stop fine tuning."
"I am an economist," he added, "but the problems that bother me about the country are not economic. The problems that bother me more are a deteriorating educational system, the destruction of inner cities, the rise in crime and lawlessness, the decline in social values and a medical system out of control. Those are the real problems, and they all come from excessive government. And those human problems in my mind are ultimately more important than the economic problems."
The current re-election campaign has left both men without a candidate to support, at least so far, though Paul Tsongas's "no Santa Claus" platform receives grudging respect. That these two men should be outside of the race is a change from recent decades. For more than half a century they have had a warm, respectful friendship and, at the same time, blistering arguments. Their debates have become the economic arguments of the nation.
Mr. Friedman's support of laissez- faire policies became a fundamental tenet of the Republican Party during the Reagan administration. Mr. Samuelson's advocacy of a government that "leans against the wind" of economic turbulence has been almost as important for Democrats.
Mr. Samuelson, a prominent participant in the Kennedy and Johnson administrations' activist policies, now argues for only a modest "lean" against the current difficult times. But it is a "lean" nonetheless.
While it's likely the recession will soon end, he said, it would be wise to ensure against the possibility it won't. Thus government should institute some stimulative policies, such as further extending unemployment benefits and instituting investment tax credits.
Once the recovery begins, the government should increase the amount of money it collects to finance infrastructure improvements, entitlement programs and transfer payments. "America is an under-taxed country," Mr. Samuelson said. "To make us a humane and well-functioning democracy, we should have higher taxes."
This remains anathema to Mr. Friedman, who believes lower taxes are critical -- except when applied selectively through methods like investment tax credits. These, he contends, don't increase the money available for investment (which is a function of savings) and cause other problems.
The arguments in favor of investment tax credits, he said, reflect "the usual inability to understand what is good for an individual is not good for the economy. You don't get a tax credit for starting a new chain of supermarkets, or a new software company, but for buildings and machinery, so it tends to distort investment by leading to an artificial advantage of some types rather than others."
What then, should be done?
Narrowly speaking, Mr. Friedman suggests indexing the value of assets to inflation for determining capital gains, a move he predicts would raise real estate values and strengthen the base of the economy. But he ruefully added: "That's the only item, and it hasn't been suggested."
More broadly? "Government," he said, "has become a self-generating monstrosity." The answer? "At the moment, the most promising development is term limits," he said.
Given the opportunity, Mr. Friedman would like to spend some time on Wall Street Week addressing monetary policy, his specialty, and, in particular, his new book, "Monetary Mischief," which is the primary reason that a publicist at his publisher arranged for him to go on the air, he said.
The book examines historical events in which seemingly small and distant changes in monetary policy precipitated dramatic changes in societies -- a shift in the early 1870s of the precious metals used to back the dollar, for example. That change, Mr. Friedman said, led to decades of unrest and domestic political upheaval and the rise of the Free Silver movement.
Need to view these changes in the context of more recent developments? The Roosevelt administration's silver policies in the 1930s, Mr. Friedman said, precipitated hyperinflation in China, which at the time had the world's only silver- backed currency. That, in turn, contributed to the fall of the capitalist government and the imposition of communism.
The argument is elegant and extensive and even relevant. It encompasses the implications of the United States' willingness in the early 1970s to go off the gold standard. Mr. Friedman, however, is resigned to the idea that such matters may not make it to television.
"I doubt we will spend more than two minutes on those things," he said.