Academics From The United States

"In order to live in harmony with one another, humans must moderate and control their impulses, and that the unconscious and culture were thus really two sides of the same coin."

"While they create a way of seeing and suggest a way of acting, they also tend to create ways of not seeing, and eliminate the possibility of actions associated with alternative views of the world."

"Groups and departments often attempt to incorporate key skills and resources within their boundaries and to control admissions through selective recruitment."

"Power is the medium through which conflicts of interest are ultimately resolved. Power influences who gets what, when, and how."

"Conflict may be personal, interpersonal, or between rival groups or coalitions. It may be built into organizational structures, roles, attitudes, and stereotypes or arise over a scarcity of resources. It may be explicit or covert. Whatever the reason, and whatever the form it takes, its source rests in some perceived or real divergence of interests."

"The organization as a coalition of diverse stakeholders is a coalition with multiple goals."

"Contingency theorists suggest that we can best proceed by appointing 'the right people' to the job we have in mind, and by creating flexible authority, communications, and reward structures that will motivate them to satisfy their own needs through the achievement of organizational goals."

"To self-regulate, learning systems must be able to 1. Sense, monitor and scan significant aspects of their environment, 2. Relate this information to the operating norms that guide system behavior 3. Detect significant deviations from these norms, and 4. Initiate corrective action when discrepancies are detected. If these four conditions are satisfied, a continuous process of information exchange is created between a system and its environment, allowing the system to monitor changes and initiate appropriate responses. In this way, the system can operate in an intelligent, self-regulating manner."

"Any system that insulates itself from diversity in the environment tends to atrophy and lose its complexity and distinctive nature"

"As we look around the organizational world we begin to see that it is possible to identify different species of organization in different kinds of environments. Just as we find polar bears in arctic regions, camels in deserts, and alligators in swamps, we notice that certain species of organization are better ‘‘adapted’’ to specific environmental conditions than others. We find that bureaucratic organizations tend to work most effectively in environments that are stable or protected in some way and that very different species are found in more competitive and turbulent regions, such as the environments of high-tech firms in the aerospace and microelectronics industries."

"Organizations are complex and paradoxical phenomena that can be understood in many different ways. Many of our taken-for-granted ideas about organizations are metaphorical, even though we may not recognize them as such. For example, we frequently talk about organizations as if they were machines designed to achieve predetermined goals and objectives, and which should operate smoothly and efficiently. And as a result of this kind of thinking, we often attempt to organize and manage them in a mechanistic way, forcing their human qualities into a background role. By using different metaphors to understand the complex and paradoxical character of organizational life, we are able to manage and design organizations in ways that we may not have thought possible before."

"Bureaucracy can have dehumanizing effect upon employees, making them more like machines, especially those at the lower levels of the organizational hierarchy"

"The metaphor suggests that different environments favor different species of organizations based on different methods of organizing and that congruence with the environment is the key to success."

"Consider, for example, the mechanical precision with which many of our institutions are expected to operate. Organizational life is often routinized with the precision demanded of clockwork. People are frequently expected to arrive at work at a given time, perform a predetermined set of activities, rest at appointed hours, and then resume their tasks until work is over. In many organizations, one shift of workers replaces another in methodical fashion so that work can continue uninterrupted twenty-four hours a day every day of the year. Often, the work is very mechanical and repetitive. Anyone who has observed work in the mass-production factory or in any of the large “office factories” processing paper forms such as insurance claims, tax returns, or bank checks will have noticed the machine-like way in which such organizations operate. They are designed like machines, and their employees are in essence expected to behave as if they were parts of machines."

"Organization always hinges on the creation of shared meanings and shared understandings, because there have to be common reference points if people are to shape an align their activities in an organized way."

"It is difficult to conceive of buying trust in any direct way (though it can happen indirectly, for example, a trusted employee will be paid more as being more valuable); indeed, there seems to be some inconsistency in the very concept. Nonmarket action might take the form of a mutual agreement. But the arrangement of these agreements and especially their continued extension to new individuals entering the social fabric can be costly. As an alternative, society may proceed by internalization of these norms to the achievement of the desired agreement on an unconscious level."

"[Arrow's] experience as an Air Force weather forecaster during the Second World War "added the news that the natural world was also unpredictable." ... One incident that occurred while Arrow was forecasting the weather illustrates both uncertainty and the human unwillingness to accept it. Some officers had been assigned the task of forecasting the weather a month ahead, but Arrow and his statisticians found that their long-range forecasts were no better than numbers pulled out of a hat. The forecasters agreed and asked their superiors to be relieved of this duty. The reply was: "The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.""

"Arrow’s Impossibility Theorem is quite surprising. It shows that three very plausible and desirable features of a social decision mechanism are inconsistent with democracy: there is no “perfect” way to make social decisions. There is no perfect way to “aggregate” individual preferences to make one social preference. If we want to find a way to aggregate individual preferences to form social preferences, we will have to give up one of the properties of a social decision mechanism described in Arrow’s theorem."

"I’m an optimist, so I am hopeful. I don’t think Samuelsonian economics can be the long-run equilibrium of such an important field such as economics. I think that because of the two secret sins of Samuelsonian economics, the qualitative theorems and significance testing in the absence of the loss function, we can’t make scientific progress. We can do a lot of other stuff. We can take a look at tables and see how large schooling is in the national economy; that kind of thing is science. So I’m sure we can make some progress, off the center of the scientific stage of so-called mainstream Samuelsonian economics. An interesting concrete example of this was a presentation Ken Arrow made when he came to Iowa, where he was trying to make the obvious point that we shouldn’t spend all of our time in undergraduate economics preparing people for graduate school. This is a point that I have made over and over again, that we should be preparing students for life, for business and law school. Arrow said, “Look, the main argument for this is not very complicated: as we all know, half of 1 percent of our students, if that, go on to graduate school in economics, end of argument.” The argument is not special to Arrow, but the fact that it came from Arrow was very interesting. He didn’t come and say there is an existence theorem proof that there doesn’t exist some social welfare function such that blah blah blah. He didn’t do that. He said, “Look, here’s the number that shows obviously that the policy of making undergraduate programs into junior graduate programs is a mistake.”"

"And I am glad that you talked to Ken Arrow. But Nobel laureates, who have wide responsibilities and much on their mind, are not necessarily on top of what has been going on in research outside their usual field. I happen to know of one laureate who, circa 1991, was quite unaware that anyone had thought about increasing returns in either growth or trade."

"It is not easy to see him. Not because he’s short. Rather because the piles of books and papers scattered around his admittedly relatively narrow office in the Landau Building are so high. ‘They’ve moved us here and now I’m trying to look through all my stuff and see what I can possibly throw out’, says Kenneth J. Arrow, rising swiftly from behind one of the book piles, with an apologetic gesture. In spite of his 86 years, he seems physically quite fit and, no wonder, he prides himself in cycling to the office every day. The room is nice, bright, modern and new, but there is no way Arrow could possibly fit everything into the book shelves along the walls. ‘Never mind’, he says, laughing. He has a great warm open smile, and is eager to talk – which he then does at an amazing speed. Politely, he liberates a chair for me, opens a drawer next to himself for me to place the microphone in since there is no more space on the desk, of course – and off we go."

"But the old dilemma between efficiency and fairness was about to be shattered by a young New Yorker called Kenneth Arrow, who knew all about unfairness after watching helplessly as a teenager while his father lost his successful business and all his savings in the Great Depression. The desire for social justice stayed with Arrow, but intellectually he couldn’t just ignore the question of efficiency. The young economist set his logical mind to wrestling with the tension between the unerring efficiency of the free market and the imperative that some kind of fairness should prevail. His solution was brilliant, twisting the traditional thinking about competitive markets and efficiency on its head. He proved that not only are all perfect markets efficient, all efficient outcomes can be achieved using a competitive market, by adjusting the starting position."

"The interesting thing is that Ken Arrow was a dove and Bob Solow was then a hawk, in 1963-4. We used to have huge debates. Hahn was very hawkish, Meade was hawkish, only Arrow and what's now the Cambridge left were doves, particularly the Asians, for obvious reasons. After all, it was the Asians who were being napalmed. There were terrible fights going on, and the beginning of huge rifts in the faculty over the Vietnam war. Solow switched, later on, and to his everlasting credit came out and said he'd switched. Arrow was always a dove. That's why, fond as I am of Bob Solow, and much thought I admire him, I've always admired Arrow more, because Arrow, I think, has always had the right instincts. He's a self-declared socialist, he was a dove, he was always active on civil rights, he fought for Sam Bowles at Harvard, and so on. He's always gone out on a limb for the right issues - on the left issues, actually. By that time (1967-8), I was in the thick of moratoria and death threats and bombs and all the rest of it. I wrote the survey in about four months. It was refereed by Arrow, Stiglitz, Samuelson and one other - I've never found out who it was. Samuelson recommended publication 'as is'. Arrow wrote to me and said, 'May I use you brilliant survey for my graduate class at Harvard?', which is the letter I prize most of any I've received in all the world. Stiglitz didn't say anything at the time, but he saved it all up for when he wrote that very critical review article of my book (which he kept calling my article!) in the Journal of Political Economy."

"Ken Arrow was involved with the Santa Fe Institute from its beginning. He is one of my heroes, because he’s a guy who does something, and then moves on. He’s moved on from general equilibrium to complexity."

"I was influenced very early on, my first time at the—I spent a year at the Center at Palo Alto, the Center for Advanced Study there, and I became a good friend of Kenneth Arrow. I think he was not at the Center that year but he lived in Palo Alto. [...] Marvelous man. Both as a person and as a scholar. And I became as I say greatly influenced by the way in which he dealt with phenomena. [...] So I was influenced by that as a model, a way of thinking more abstractly, perhaps, than customary, about democratic theory. Making clear the premises, the epistomological assumptions and matters of that kind, and I think that sort of set the stage. And then once you get in of course, into that field, which was not highly— I don’t know how to put this properly—as a formal field of political science was not highly developed at the time, once you get into it you quickly become aware of how rich the potential subject matter is. One of the enormous changes, perhaps anticipating your question, one of the changes in the world is the extraordinary increase in the number of countries that, by the standards that we use today, can be called democratic—always, I repeat this and repeat this, but, always keeping in mind the difference between the ideal and the threshold at which we now accept a country as democratic, or a polyarchy as I would say. And the enormous increase in the number of those available for study—when I was a graduate student, there were maybe half a dozen countries that you could study: France and Britain and, I’m not quite sure of Canada at that time . . . and then the expansion created out there a field . . . that was both a challenge and an opportunity."

"During this period I also came-across Kenneth Arrow's now famous Social Choice and Individual Values. Although I hardly did full justice to that pioneering work, it emboldened me to take a stab at a much more formal presentation than I had encountered in political theory. The form of my two chapters certainly owes something to my having ploughed my way through that book. For better or worse, Arrow's book must also have influenced my decision to present parts of the argument in a formal notational system (though only in footnotes and appendices)."

"In technical economics, I see a peak with Paul Samuelson and Kenneth Arrow and some of the core developments in game theory. Since then there are fewer iconic figures being generated in this area of research, even though there are plenty of accomplished papers being published."

"Then during the early '50s Kenneth Arrow published his book Social Choice and Individual Values (1951). That stirred up a great deal of interest, both in political science and economics. My general reaction was that the people who criticized Arrow, and Arrow himself, really didn't quite get the message in the sense that the concentration was on the fact that majority rule would not give you a political equilibrium, that you get this political cycle and so forth. My criticism basically was, if that's the way the preferences are, that's what you want to have. A democracy should not mean one majority simply ruling. It ought to be a rotation, if that's the way the preferences are. I was kind of an anti-majoritarian then and now. So my critique of Arrow, which not many people paid much attention to, got me further into thinking about these things."

"Alchian: Perhaps it might have been more appropriate for the Nobel Prize to have gone to you and Hicks together, and [Kenneth] Arrow and [[Gunnar Myrdal|[Gunnar] Myrdal]] together. Hayek: Oh, surely. [laughter]"

"In 1972 American economist Kenneth Arrow, jointly with Sir John Hicks, was awarded the Nobel Prize in economics for “pioneering contributions to general equilibrium theory and welfare theory.” Arrow is probably best known for his Ph.D. dissertation (on which his book Social Choice and Individual Values is based), in which he proved his famous “impossibility theorem.” He showed that under certain assumptions about people’s preferences between options, it is always impossible to find a voting rule under which one option emerges as the most preferred."

"There’s a famous Churchill quote: “democracy is the worst form of government, except for all the others.” That applies to regulation as well. In the late 1800s, we had a natural monopoly: railroads. The government created a regulatory enterprise – the Interstate Commerce Commission – and of course it was captured. But it still made a difference. I think we just have to accept that capture does occur, but it’s limited. The Federal Trade Commission, for example, is a pretty active body. Monopolies have been broken up. The AT&T telephone monopoly was broken up in 1982 – Stigler was still writing about regulatory capture then. AT&T was a classic monopoly, but a pretty benevolent one. It delivered good service – rates were too high, but not by that much. It didn’t necessarily pass on value to the consumers, but Bell Labs were a source of great innovative function. Nevertheless, it was broken up by antitrust measures, brought on by government. So there is regulatory capture, but it is by no means complete. Regulations do play a role. One example of non-regulatory capture fighting against effective regulation was during the run-up to the 2008 crash, when several officials argued for CDOs to be regulated, which means they would have had to meet certain requirements of transparency. This was not accepted. I’m not saying the crash could have been avoided if that happened, but that would have made a big difference."

"We don’t have a laissez-faire system. The intervention of the federal government, as measured by expenditures, is growing. It is not a private system at all. Roughly 50 percent of health costs are paid for by the government, and state governments are spending more and more on health. It’s crowding out education. State budget-support for education, especially higher education, is crowded out by two things: health and prisons. Nobody is prepared for the idea of a laissez-faire system, and we never really had one."

"Once individuals are acting to carry out a norm and cannot be fully checked, their natural norm of self-interest will come into play. The rules actually acted upon will therefore move away from any norm that might be acceptable on the basis of general principles."

"As we see it, a choice is not something you do today in isolation; it is part of a plan that includes some choices to be made in the future."

"Clearly, information is of the utmost importance in making economic decisions, especially when it comes to securities or other assets whose value depends on events not yet known. Now the distribution of information cannot simply be taken as given. On the contrary, information can be acquired at some cost."

"I then follow up with four major aspects of economic research in the last 60 years, the period of my scholarly activity. One, econometric methodology and practice, is of such fundamental importance that it cannotgo unnoticed, although I played no role in it. With the other three, general equilibrium, dynamic processes, and uncertainty and information, I was more intimately involved."

"We don't have much time left. We are moving towards temperature increases of around two degrees Celsius, which is going to have consequences in the tropics, and we will lose things like glaciers. That's not a theory; it's happening right now. It's not a prediction; it's happening right now. But you just sightsee near those glaciers. But the glaciers are a big source of water. And on the questions of water, in California we store our water in a snowpack. When that's gone, the rain will be the same but it won't accumulate. With warming temperatures the snowpack will not work. It might be possible to substitute with dams, but that's complicated. This is conjoined with a big energy problem and I think that we really have to encourage development in this area. Just waiting for technological improvement won't work. We need to encourage it."

"There are information asymmetries in this story. Health insurance is limping along. It's limited in scope, and then you other consequences. Insurance companies have high premiums to protect themselves. The ones who come to the insurance company are sicker and the people have to pay more. You have adverse selection. You have moral hazard. And the doctor does what's on the safe side -- defensive medicine -- without regard to cost. These are fundamental conditions that make health insurance difficult. You have some things that help. Some doctors understand that they shouldn't abuse the system. But you still see problems in the way doctors behave towards patients. They goof off. Sometimes it's too much work. Some things are difficult and risky to diagnose."

"I don't know which way human psychology will go wrong. We have a world in which there is uncertainty. There are new technologies. And one of the problems is that we do things today with a thought to the future. Any purchase is one for the future. If you buy a refrigerator you are making a commitment to the future, so that you have food to eat for the next ten years. That's a simple theory, one of many simple theories -- theories that people agree on and that don't, in a fundamental way, change. But every once in a while there is unemployment, and wages will drop, and there will be several different interpretations."

"The Austrian a priori dogmatism (von Mises, especially; Hayek, to a lesser degree)."

"I was a very polite person, though. Paul Samuelson tells these stories how he used to correct his professors. I assume that’s true. But I wasn’t that type."

"The creation of knowledge that constitutes an innovation is in turn dependent on the acquisition and application of existing knowledge; information is an input into the production of information. This background knowledge and the ability to use it are the most important elements of the social context of individually motivated innovation."

"My own view is that both endogenous and exogenous elements are important in explaining innovation. Incentives certainly play a role, but so does the general state of scientific knowledge, which is not directly produced by profit-making entities."

"Various medical groups are continually putting out advice as to health-inducing behavior (diet, exercise, and so forth). Individuals who follow this advice will reduce their demand for medical services. An extreme version is the campaign of the American Dental Association for fluoridation of water, a measure designed to reduce cavities and so the demand for dental services. There is also a logical problem. How does the relatively small group of physicians acquire power? In a democratic system, political power derives from numbers or from wealth. While physicians are certainly relatively well off, they do not have the concentration of wealth of many industries. Their power, it seems to me, is derived from moral authority. It is derived from the same professional respect that we are trying to explain. Indeed, when the American Medical Association came into conflict with either the retired or with the business interests that bought medical plans, the weakness of its power base quickly became apparent."

"There are many unknowns in the creation and use of knowledge as a factor of production. Still, two main lessons stand out: * Every country or firm must have education and training in technology and science, even if the research is not on par with that being conducted elsewhere. Knowledge cannot be absorbed unless some knowledge is already possessed. * Countries and firms must be open to new ideas, have multiple sources of new ideas, and see that ideas are diffused. This point strongly argues for freedom of entry, even when it seems to forgo economies of scale."

"Krugman's whole attack is directed at a statement made neither by Arthur nor by Cassidy. Krugman has not read Cassidy's piece with any care nor has he bothered to review what Arthur has in fact said."

"Child care has grown up under different circumstances than education and probably for a mixture of reasons, good and bad. There are many systems of child care, some private, some public. As compared with primary and secondary education, there is clearly less need for coordination. The sequencing of classes is much less important. It would appear that the ability of parents to monitor the conduct of the child care activity is much greater because the activity is much closer to everyday experience and knowledge. Most of the informational and structural arguments for the public supply of education are absent in the case of child care. Reputation and experience may suffice for adequate monitoring."

"For the voucher system to work, it would be necessary to have informed parents. One cannot be dogmatic without empirical evidence, but I would be surprised if the average parent has the time or patience or competence to digest the relevant information. Indeed, one wonders where the information is to come from and in what form it should exist. Do we use test scores, themselves affected by the selection processes of the students? Impressions of individual teachers or of the physical appearance of the school will tend to dominate."

"The conflict of incentives and information is increasingly leading to a diffusion of responsibility for medical decisions. The simple picture of the physician making decisions for the patient has certainly become more complicated. Patients always had a role in choosing to seek medical advice and from whom. Their choices are becoming increasingly restricted as medical practice becomes more organized. The problems of cost control in an insured world are partly met by the increasing use of control of medical services through review by health maintenance organizations and insurance carriers."

"The slippery role of information as an economic good is of deep significance to economic behavior, especially in the relatively information-rich modern economy. It is an economic good in the traditional sense; it is valuable, and it is costly. But it has a peculiar algebra. Adding one ton of steel to another permits more to be done; repeating the same item of information does not add anything useful. On the other hand, supplying a ton of steel to another reduces the steel available to the supplier; supplying information to another does not reduce the information available to the supplier."