Paul Samuelson was an economist's economist.

The nation's first Nobel laureate for economics and author of a textbook used by millions of college students died today at the age of 94. (See:)

Samuelson was a frequent visitor to the isles between 1971 and 1990, delivering several keynote speeches to annual economic forums sponsored by First Hawaiian Bank.

He was no ivory tower academician. He was accessible, had a rapier wit and never pulled any punches.

I was fortunate to have covered his last speech in October 1990 at the Halekulani Hotel.

As a 26-year-old rookie reporter then, I vividly remember Samuelson covering a lot of ground with blunt predictions about the U.S., Japanese and Hawaii economies.

At the time, Iraqi leader Saddam Hussein's tanks had just rolled into Kuwait and Operation Desert Storm was several months away.

Hawaii's economy was at the peak of its bubble economy, flush with more than $18 billion investment from Japanese buyers of local hotels, apartment buildings, office complexes and other real estate.

Samuelson provided reporters covering the speech with a scoop that day: A monthly survey of 50 of the nation's economists (that included himself) had just concluded that day that the nation's economy was going into a recession.

But he also predicted an impending doom to Japan's economy, much to the dismay of several corporate executives and local businessmen in the audience who had benefited from the Japanese investment boom in Hawaii.

Holding up a piece of floor tile, Samuelson said a downturn in Japan's overheated economy was inevitable and cited that tile as evidence. A piece of land the size of the tile in Tokyo was worth more than his annual salary, he said.

Japan's bubble economy was being held together "by chewing gum," Samuelson quipped.

During the question and answer period, I remember asking Samuelson what he thought the impact of a national recession and a downturn in Japan would be.

Without pausing, Samuelson said what people in the audience didn't want to hear: That a downturn in Japan's economy will hurt tourism and that the Mainland recession will also affect the local economy.

History of course sided with Samuelson. After the first Gulf War and the collapse of the Japanese investment bubble, Hawaii's economy went into its longest tailspin since statehood.

Record job losses, soaring business failures and the exodus of thousands of local residents to greener pastures like Las Vegas are an all to familiar memory from that period.

Samuelson's accomplishments are legion. He was the nation's first Nobel Prize winner for economist, he helped shape the President John F. Kennedy's economic policies and his textbook on economics was used by millions.

But to me, what stands out is his honesty. During my two decades of writing about economics and finances, economic commentary often lacks independence or forthrightness.

Economics analysis is often spun by policy makers and corporations to serve their interests.

Had the financial analysts, rating agencies and economists who reviewed the billions of dollars in subprime loans and toxic collateralized mortgage obligations during the past decade showed just a fraction of the honesty and skepticism of this economist, we probably wouldn't be in the mess we are today.

Tags: economics, First Hawaiian Bank, Gulf War, Japanese investment bubble, Paul Samuelson

This entry was posted on Sunday, December 13th, 2009 at 2:12 pm and is filed under Biz Bites. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.