Economists From The United States

"History shows there are no "one day" dictatorships. When democracies fall, they typically fall completely."

"I thought I couldn’t be more shocked and sickened than I already was, but what’s happened this week is truly horrifying. In the Oval Office, before cameras and journalists, Trump openly lied to the president of South Africa about alleged violence against white South Africans. The Trump regime has also granted refuge to white South Africans while continuing to bar or deport people of color who desperately need refuge. The regime told Harvard it can no longer enroll foreign students and that its existing foreign students must transfer to another university or lose their legal status in the United States. Trump auctioned off a personal dinner to foreigners who poured money into his own crypto business. He has also accepted Qatar’s gift of a $400 million “flying palace” (it’s also just for him — no other president in future years can use it). At Trump’s insistence, House Republicans have passed a giant bill that would, if enacted, be the largest redistribution of income and wealth in American history — from the poor and working class to the rich and super-rich. The bill includes a poison pill that eliminates the power of courts to hold officials in contempt for disregarding court orders."

"The mistakes made at one point in time have an eerie way of reemerging two generations later, as memories fade."

"The more Trump’s tyranny is exposed, the stronger the resistance. The worse it gets, the larger the backlash. The crueler and more vicious his regime becomes, the more powerful the alliances being formed at every level of society to stop him. We will sweep vulnerable Republican lawmakers out of office in 2026 or before. We will support groups like the ACLU that are taking Trump to court. We will spread the truth. Tyrants cannot succeed where people refuse to submit to them. We will not submit. We will emerge from this stronger than we were before, and more committed to the common good. Be safe. Be strong. Hug your loved ones."

"Wealthy corporations and their enablers have spread 5 big lies about unions in order to stop workers from organizing... Know the truth and spread the truth. Lie #1: Labor unions are bad for workers. Wrong. Unions are good for all workers – even those who are not unionized... Lie #2: Unions hurt the economy. Wrong again. When workers are unionized they can negotiate better wages, which in turn spreads the economic gains more evenly and strengthens the middle class... Lie #3: Labor unions are as powerful as big business. No way. Labor union membership in 2018 accounted for 10.5 percent of the American workforce, while large corporations account for almost three-quarters of the entire American economy... most economic gains have been going to executives and shareholders rather than workers... Lie #4: Most unionized workers are in industries like steel and auto manufacturing. Untrue... the largest part of the unionized workforce is workers in the professional and service sectors – retail, restaurant, hotel, hospital, teachers–which comprise 59% of all workers represented by a union... In 2018, unionized service workers earned a median wage of 802 dollars a week. Non-unionized service workers made on average, $261 less... Lie #5: Most unionized workers are white, male, and middle-aged. Some unionized workers are, of course, but most newly-unionized workers are not... Today’s unions are growing, expanding, and boosting the wages and economic prospects of those who need them most."

"The critical things to watch out for aren't the rare big events, such as the 2008 bailout of [Wall] Street itself, but the ongoing multitude of small rule changes that continuously alter the economic game. ... The "free market" is a myth that prevents us from examining these rule changes and asking whom they serve. The myth is therefore highly useful to those who do not wish such an examination to be undertaken."

"The U.S. economy crashes when it becomes too top heavy because the economy depends on consumer spending to keep it going... For a time, the middle class and poor can keep the economy going nonetheless by borrowing. But, as in 1929 and 2008, debt bubbles eventually burst. We're getting dangerously close. By the first quarter of this year, household debt was at an all-time high of $13.2 trillion."

"Almost 80 percent of Americans are now living paycheck to paycheck.... 40 percent of Americans said they wouldn't be able to pay their bills if faced with a $400 emergency. The underlying problem isn't that Americans have been living beyond their means. It's that their means haven't been keeping up with the growing economy. Most gains have gone to the top..."

"Amid the coronavirus outbreak and financial crisis, older voters are backing Biden. He may be boring but at least he’s familiar and safe. Since 24 February, with the lethal coronavirus spreading around the world, middle-aged and older Americans – not only most vulnerable to the disease but also accounting for most retirement savings – have been fleeing stocks for the relative safety of US government bonds."

"Those who argue for "less government" are really arguing for a different government—often one that favors them or their patrons."

"Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street's excessively risky lending. But Trump's real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid—all of which put more stress on the paychecks of most Americans."

"Government doesn’t "intrude" on the "free market." It creates the market."

"If nothing is done to counter present trends, the major fault line in American politics will no longer be between Democrats and Republicans, liberals and conservatives. It will be between the 'establishment'—political insiders, power brokers, the heads of American business, Wall Street, and the mainstream media—and an increasingly mad-as-hell populace determined to 'take back America' from them."

"The coronavirus has starkly revealed what most of us already knew: The concentration of wealth in America has created a health care system in which the wealthy can buy care others can't. It's also created an education system in which the super-rich can buy admission to college for their children, a political system in which they can buy Congress and the presidency, and a justice system in which they can buy their way out of jail... The system is rigged. But we can fix it... The great divide in American politics isn't between right and left. The underlying contest is between a small minority who have gained power over the system, and the vast majority who have little or none. Forget politics as you've come to see it – as contests between Democrats and Republicans. The real divide is between democracy and oligarchy."

"The oligarchy understands that a “divide-and-conquer” strategy gives them more room to get what they want without opposition... oligarchies cannot hold on to power forever... When a vast majority of people come to view an oligarchy as illegitimate and an obstacle to their wellbeing, oligarchies become vulnerable. As bad as it looks right now, the great strength of this country is our resilience. We bounce back. We have before. We will again. In order for real change to occur – in order to reverse the vicious cycle in which we now find ourselves – the locus of power in the system will have to change. The challenge we face is large and complex, but we are well suited for the fight ahead. Together, we will dismantle the oligarchy. Together, we will fix the system."

"The rich know that as long as racial animosity exists, white and black Americans are less likely to look upward and see where the wealth and power really has gone."

"Your reminder that America's richest 1 percent now own half the value of the U.S. stock market. The richest 10 percent own 92 percent. So when Trump says the stock market is the economy, know who he's really talking about."

"Modern macroeconomics flourished in its pursuit of the secrets of long-run economic growth, but it neglected short-run economic problems. In the long run, prices are flexible, and the growth of the economy is determined by the growth in the ability to supply goods and services. But in the short run prices are not flexible. Growth can be held back because prices are too high and, as a result, demand is too low. Keynes made his name by analyzing short-run problems caused by the stickiness or even rigidity of some important prices. But these Keynesian ideas were abandoned by modern macroeconomics."

"We can see good economic policies in the context of a consistent analysis of the economy."

"Central banks have moved to stimulate spending in the face of this attempt to increase savings by lowering interest rates. They lowered them to the zero lower bound without having much effect; the fall in desired savings was too large. We are in a Keynesian liquidity trap. Central banks have tried to stimulate spending by actively increasing the money supply, raising fears of inflation in many circles. But no inflation has resulted as the cash sits idle in corporate coffers. Even at zero interest rates, business firms are reluctant to spend! What to do? Many pundits say we must simply endure what they call secular stagnation. This is an unhappy prediction. Much better is the Keynesian insight that this is the perfect time for fiscal policy. In the U.S. again, there are immediate needs to repair roads and bridges, rebuild the energy grid, and modernize other means of travel. Keynesian fiscal policy expansion will benefit the economy in both the short and long run."

"Most students who take introductory economics seem to leave the course without really having learned even the most important basic economic principles."

"Paul's insight is that the infrastructure for creating new ideas is the engine room of economic growth. So we need to pay attention to patents, the number of scientists that are out there, the incentives to do science. And as long as we can keep generating new ideas, we can keep generating economic growth."

"The amazing thing about cities is that they're worth so much more than it costs to build them."

"You will almost never see an economist whom the academics themselves regard as important or interesting. For example, niether Robert Lucas, without question the most influential economic theorist of the 1970s, nor Paul Romer, arguably the most influential theorist of the 1980s, has ever appeared on any public affairs program."

"Romer demonstrates how knowledge can function as a driver of long-term economic growth. . . . Previous macroeconomic research had emphasised technological innovation as the primary driver of economic growth, but had not modelled how economic decisions and market conditions determine the creation of new technologies. Paul Romer solved this problem by demonstrating how economic forces govern the willingness of firms to produce new ideas and innovations."

"Presenting a model is like doing a card trick. Everybody knows that there will be some sleight of hand. There is no intent to deceive because no one takes it seriously. Perhaps our norms will soon be like those in professional magic; it will be impolite, perhaps even an ethical breach, to reveal how someone’s trick works."

"Economic growth springs from better recipes, not just from more cooking. New recipes produce fewer unpleasant side effects and generate more economic value per unit of raw material."

"The question that I first asked was, why was progress . . . speeding up over time? It arises because of this special characteristic of an idea, which is if [a million people try] to discover something, if any one person finds it, everybody can use the idea."

"We've maintained accelerating growth over time [in part because of] changes in our institutions. We have things like universities . . . patent laws, [and] research grants which have created incentives for those individuals [who develop innovations] to engage in more discovery. . . . [T]he rules of the game create incentives . . ."

"Many people think that dealing with protecting the environment will be so costly and so hard that they just want to ignore the problem. I hope the prize today could help everyone see that humans are capable of amazing accomplishments when we set about trying to do something."

"I quote somewhere a correspondence with Ken Arrow, after he wrote Arrow and Hahn. I wrote to him and I said that the trouble is that neoclassical economists confuse risk with uncertainty. Uncertainty means non-probabilistic. And he said, 'Quite true, you're quite correct that Keynes is much more fruitful, but the trouble with the General Theory is, those things that were fruitful couldn't be developed into a nice precise analytical statement, and those things that could were retrogressions from Keynes but could be developed into a nice precise analytical statement.' That's why mainstream economics went that route. And my answer is, I would hope that even Nobel Prize winners didn't believe that regression is growth, which it clearly isn't. But that's right. The fear that everybody has, you see, is nihilism: you won't be able to say what's going to happen . Well, evolutionists don't worry about being unable to predict. You ask the evolutionists, who tell you what happened in the past, just what next species is going to appear, and the answer is, anything could. Right? Does that bother people? Explanation is the first thing in science. If you can't explain, you don't have anything. But you needn't necessarily predict. Now, if you know the future's uncertain, what does that mean? It means basically, the way Hicks put it in his later years, that humans have free will. The human system isn't deterministic or stochastic, which is deterministic with a random error. Humans can do thins to change the world."

"Then what you find out is, what humans then do is, they create institutions - that's where institutionalism has a tie with Post Keynesianism - they create institutions which limit outcomes, which permit you to control outcomes as long as the society agrees to live by the rules of the game, which are the rules of the institutions. Now, if society rejects those rules, then society breaks down. What are the rules of the game? Well, money is a rule of the economic game. There are lots of human economic arrangements which don't use money. The family unit solves its economic problems, of what and how to produce within the family, without the use of money and without the use of markets. All the 24 hours of the day are either employed or leisure. There's no involuntary unemployment in the family. So you can solve the problem, but it's a different economy. We are talking about a money-using economy, and money is a human institution. You have to ask yourself, why was it created? Why is it so strange? You see, in Lerner, in neoclassical economics, money is a commodity. It's peanuts, with a very high elasticity of production. If people want more money, that creates just as many jobs as if people want goods. Then you have to say to yourself - and this was the question that Milton Friedman asked me in the debate - he says, 'That's nonsense; Davidson says money is not producible. Why are there historical cases where Indians used beads as money? Aren't beads easily producible?' But not in the Indian economy. They didn't know how to produce them."

"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles. The only way to break this pattern was for the government to step in and regulate the moneymen. Many of Minsky’s colleagues regarded his “financial-instability hypothesis,” which he first developed in the nineteen-sixties, as radical, if not crackpot. Today, with the subprime crisis seemingly on the verge of metamorphosing into a recession, references to it have become commonplace on financial Web sites and in the reports of Wall Street analysts. Minsky’s hypothesis is well worth revisiting. In trying to revive the economy, President Bush and the House have already agreed on the outlines of a “stimulus package,” but the first stage in curing any malady is making a correct diagnosis."

"A crisis is a terrible thing to waste."

"I had the fortune to meet Jacob Marschak. He took me in his hands. There were other good people there, but he was very instrumental in giving me a style. [...] I would say the combination of theory, that is, modeling, with testing of empirical facts. The objective was to develop models that could be tested. Marschak also emphasized the importance of mathematics and econometrics, something that was quite unusual at that time. He was a wonderful teacher. He taught me macroeconomics. We discussed Keynes and Schumpeter. So he helped me to develop both in terms of tools and of ideas. Marschak invited me to a very distinguished seminar, attended by prominent economists such as Oskar Lange, Tjalling Koopmans, and Abraham Wald. Abba Lerner would come now and then."

"Except for Marxian theories, nearly all modern theories of the business cycle have essential elements that trace back to Knut Wicksell's turn-of-the-century writings on interest and prices. Austrians, New Classicists, Monetarists, and even Keynesians can legitimately claim a kinship on this basis. Accordingly, the recognition, that both the Austrians and the New Classicists have a Swedish ancestry does not translate into a meaningful claim that the two schools are essentially similar. To the contrary, identifying their particular relationships to Wicksellian ideas, like comparing the two formally similar business-cycle theories themselves, reveals more differences than similarities. … [T]o establish the essential difference between the Austrians and the New Classicists, it needs to be added that the focus of the Austrian theory is on the actual market process that translates the monetary cause into the real phenomena and hence on the institutional setting in which this process plays itself out.The New Classicists deliberately abstract from institutional considerations and specifically deny, on the basis of empirical evidence, that the interest rate plays a significant role in cyclical fluctuations (Lucas 1981, p. 237 151–1). Thus, Wicksell's Interest and Prices is at best only half relevant to EBCT. … Taking the Wicksellian metaphor as their cue, the New Classicists are led away from the pre-eminent Austrian concern about the actual market process that transforms cause into effect and towards the belief that a full specification of the economy's structure, which is possible only in the context of an artificial economy, can shed light on an effect whose nature is fundamentally independent of the cause."

"The all-inclusiveness of the equilibrium concept in New Classicism warns against comparisons of EBCT and ABCT that ignore the radically different methodological contexts. For instance, the inevitable bust that figures importantly in ABCT cannot easily be translated into the language of EBCT. For the Austrians, "equilibrium bust" is a term at war with itself; for the New Classicists, "disequilibrium bust" can only mean an unexplainable downturn (cf. Lucas 1981, pp. 225 and 231)."

"While many of the conflicting claims can be reconciled in terms of the short-run and long-run orientation of Keynesians and monetarists, respectively, and in terms of their contrasting philosophical orientations, neither vision takes into account the workings or failings of the market mechanisms within the investment aggregate.Austrian macroeconomics is set apart from both Keynesianism and monetarism by its attention to the differential effects of interest rate changes within the investment sector, or—using the Austrian terminology—within the economy's structure of production."

"Accounting for the artificial boom and the consequent bust is not part of Keynesian income-expenditure analysis, nor is it an integral part of monetarist analysis. The absence of any significant relationship between boom and bust is an inevitable result of dealing with the investment sector in aggregate terms. The analytical oversight derives from theoretical formulation in Keynesian analysis and from empirical observation in monetarist analysis. But from an Austrian perspective, the differences in method and substance are outweighed by the common implication of Keynesianism and monetarism, namely, that there is no boom-bust cycle of any macroeconomic significance."

"The recent flourishing of New Classical economics, and especially its Equilibrium Business Cycle Theory (EBCT), has given a fresh hearing to the Old—but still developing—Austrian Business Cycle Theory (ABCT). While the New and the Old differ radically in both substance and methods, they exhibit a certain formal congruency that has captured the attention of both schools. The formal similarities between EBCT and ABCT invites a point-by-point comparison, but the comparison itself dramatizes differences between the two views in a way that adds to the integrity and plausibility of the Austrian theory."

"Putting a low price on valuable environmental resources is a phenomenon that pervades modern society. Agricultural water is not scarce in California; it is underpriced. Flights are stacked up on runways because takeoffs and landings are underpriced. People wait for hours in traffic jams because road use is unpriced. People die premature deaths from small sulfur particles in the air because air pollution is underpriced. And the most perilous of all environmental problems, climate change, is taking place because virtually every country puts a price of zero on carbon dioxide emissions."

"My own view is that there basically is no alternative to a market solution. The reason is, if you look around, who are we talking about that’s going to solve the problem: it’s you and me. There are billions of individuals, millions of firms, thousands of governments, hundreds of nations, and for them to take action, they’re going to have to have incentives. The kind of incentives we’re talking about; they’re not speeches - we can sermonize all day - but the incentives of market prices. [This requires us to] raise the prices of goods and services that are carbon intensive, and to lower the ones that are less carbon intensive."

"When I talk to people about how to design a carbon price, I think the model is British Columbia. You raise electricity prices by $100 a year, but then the government gives back a dividend that lowers internet prices by $100 year. In real terms, you’re raising the price of carbon goods but lowering the prices of non-carbon-intensive goods."

"We have to be grown-ups, I think [when discussing the payment of funds today to prevent climate harm which may be decades in the future]. There are lots of things we do where the investments come way, way in the future. Educating 4-year-olds . . . that's an investment that goes way into the future as well."

"The world probably would have been much better off had macroeconomics never been devised. Although I have in mind Keynesian macroeconomics above all, I include other types of macro models as well. I even include, somewhat reluctantly, the whole quantity theory approach descended from David Hume to the Friedmanites, now known as monetarism. … In short, among its many other deficiencies, as spelled out by Mises and his followers, monetarism’s most fundamental flaw is identical to the most fundamental flaw of Keynesian, Post-Keynesian, New Classical, and other theories advanced by macroeconomists during the past seventy or eighty years: not only does the theory leave out critical variables, but it is too simple, being expressed in huge, all-encompassing aggregates that conceal the real economic action taking place within the economic order."

"Carbon prices must be raised to transmit the social costs of GHG emissions to the everyday decisions of billions of firms and people."

"In the mid-1990s, [Nordhaus] became the first person to create an integrated assessment model, i.e. a quantitative model that describes the global interplay between the economy and the climate. His model integrates theories and empirical results from physics, chemistry and economics. Nordhaus’ model is now widely spread and is used to simulate how the economy and the climate co-evolve."

"Although I realize that Austrian-school economists have themselves been highly critical of monetarism, many of its most fundamental claims are in fact fully consistent with their own understanding of monetary theory. Indeed, back in the 1970s the difference between Austrian and monetarists writings about money seemed trivial compared to the difference between them and the writings of other (broadly "Keynesian") economists. I recall very well how I myself got "deprogrammed" from mainstream thinking about money and inflation by reading Henry Hazlitt's wonderful book, The Inflation Problem, and How to Resolve It . Hazlitt was, of course, a thoroughgoing Misesian. Yet no one who reads his book can fail to note the many crucial similarities between his arguments and those of Milton Friedman concerning the same subject."

"Your friend, rather perversely I think, refers to the "disastrous results" that followed the monetary tightening of Volcker and other more monetarist-minded central bankers without even hinting at the facts that that the tightening was aimed at bringing down inflation rates, and that it succeeded remarkably well in doing precisely that. In other words, the tightening did precisely what monetarism said it would do, and what monetarists' critics at the time, wedded to the view that monetary policy was ineffective, and that inflation was entirely caused by OPEC (or by unions, or by anything except monetary policy) insisted it could not do. And yet your friend imagines that the experience proved the monetarists wrong!"

"In one respect, however, I agree that monetarism was wrong, namely, to the extent that it failed to recognize the need to allow inflation to occur to the extent that it was solely due to falling output or productivity—a case I have argued, along with the symmetrical one for letting prices fall as productivity improves, in my IEA pamphlet Less Than Zero."