Nobel Laureates From The United States

"Two main alternative views of the regulation of industry are widely held. The first is that regulation is instituted primarily for the protection and benefit of the public at large or some large subclass of the public. In this view, the regulations which injure the public -as when the oil import quotas increase the cost of petroleum products to America by $5 billion or more a year- are costs of some social goal (here, national defense) or, occasionally, perversions of the regulatory philosophy. the second view is essentially that the political process defies rational explanation: "politics" is an imponderable, a constantly and unpredictably shifting mixture of forces of the most diverse nature, comprehending acts of great moral virtue (the emancipation of slaves) and of the most vulgar venality (the congressman feathering his own nest)."

"The state --the machinery and power of the state-- is a potential resource or threat to every industry in the society. With its power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. That political juggernaut, the petroleum industry, is an immense consumer of political benefits, and simultaneously the underwriters of marine insurance have their more modest repast. The central tasks of the theory of economic regulation are to explain who will receive the benefits or burdens of regulation, what form regulation will take, and the effects of regulation upon the allocation of resources."

"The great disservice of the leaders of Negro opinion was to direct the discontent at the white population. It was proper to demand political rights that only a majority could confer. It was proper to ask the white population to assist in the rise of the Negro—a small enough restitution for the unreversible mistakes of the past. But it was a terrible disservice to identify the white man as the main obstacle to the rise of the Negro."

"Lacking education, lacking a tenacity of purpose, lacking a willingness to work hard, he will not be an object of employers' competition. What leader of Negro thought is fostering the ancient virtues of diligence and honesty and loyalty? It is so much easier to seek quotas for Negroes?"

"Consider the Negro as a neighbor. He is frequently repelled and avoided by the white man, but is it only color prejudice? On the contrary, it is because the Negro family is, on average, a loose, morally lax group, and brings with its presence a rapid rise in crime and vandalism. No statutes, no sermons, no demonstrations, will obtain for the Negro the liking and respect that sober virtues commend. And the leaders of Negro thought: they blame the crime and immorality upon the slums and the low income—as if individual responsibility could be bought with a thousand dollars a year."

"Unlike the members of the physical and biological sciences, the economist is asked to explain his work in a manner that is interesting and convincing to a weary listener. Yet there is no reason to believe that the explanation of our economic and social world is inherently simpler than the explanation of our physical world."

"We are entitled to be disappointed, but not to be surprised, by the persistence of governmental intervention in economic life. A school of thought attributes great influence to public opinion in the movements toward or away from laissez-faire. Among the many members of this school one may mention Albert Venn Dicey, John Maynard Keynes, and Milton Friedman."

"For consumers, the price message is clear: economize on goods that are in short supply relative to demand, and splurge on those in ample supply: eat raspberries in summer, and ski in winter. But the accommodating is not done just by consumers: resorts in the Caribbean are much cheaper in July than in January, precisely because people are not so eager to vacation in hot, humid places."

"Unexpected changes, on the contrary, lead to windfall gains or losses for those who are in the right or wrong places at a given time."

"So the price system gives innumerable messages on the state of supply and demand for each commodity or service at each place where it is bought or produced. If a city is in short supply for windows (following a hailstorm) or has an excess supply of workers, the movements of prices and wages communicate the facts to other communities. Some messages are swift and others slow."

"A modern economic system is of extraordinary complexity. Imagine a three-dimensional jigsaw puzzle, consisting of roughly 100 million parts. Some parts touch against, let us say, 1,000 other parts. (That is, each family deals at one time or another with that many employers, banks, retail stores, domestic servants, and so on.) Other parts touch—let us be conservative—50,000 other parts (firms that sell to retailers and buy from other firms and hire laborers and so on). It would be enough of a task to fit these 100 million pieces together, but the real difficulties have yet to be mentioned. The pieces change shape quite often—a family has twins; a firm does the next best thing and invents a new product. The economist has the interesting task of predicting (in the aggregate) each of these movements. Meanwhile a busy set of people—congressmen, members of regulatory bodies, central bankers, and the like—are changing the rules on who or what the jigsaw pieces will be and how they are shaped. And of course there are other jigsaw puzzles (foreign economies) of comparable complexity, and these other puzzles are connected at literally a million points with our puzzle."

"Prices instruct us on what people desire, but prices do not tell us why those things are desired. Our desires are accepted as a datum by economists: desires are some amalgam of biological needs, the cultural values of the society in which we grow up, and our own experiments."

"One should hardly have to tell academicians that information is a valuable resource: knowledge is power. And yet this occupies a slum dwelling in the town of economics. Mostly it is ignored."

"The essence of scientific progress is to edge up this ladder from ignorance to knowledge, and it is complicated by the fact that the ladder keeps getting longer!"

"And anyway, although a fancy theory is not so good as a simple one (more things can go wrong with the fancy one), a fancy theory is better than none. Let the reader try to contrive an alternative explanation of the fact that prices of washing machines vary relatively more than prices of automobiles. He may come up with a rule such as the more expensive the commodity, the less its price varies, which seems to fit our facts-in fact, it makes the same prediction. But quite aside from the fact that it has no logical basis, this alternative explanation will often be wrong: the price of sugar varies much less than that of tea, although sugar costs less per pound. This is not a contradiction of our theory, which in a fuller version says that the aggregate amount spent on a commodity governs the amount of search."

"The user of a theory has a simpler task: his not to reason why, his but to sigh and try. If the right element in the diverse situations has been isolated, the theory will work: it will yield predictions better than those which can be reached with any alternative theory."

"Footnotes are not an occasional token of respect for an obsolete and purposeless tradition. It will come as a shock to many, I am sure, even to realize that references can be checked."

"A rational man must be guided by the incentive system within which he operates. No matter what his own personal desires, he must be discouraged from certain activities if they carry penalties and attracted toward others if they carry large rewards. The carrot and the stick guide scientists and politicians as well as donkeys."

"Whether one is a conservative or a radical, a protectionist or a free trader, a cosmopolitan or a nationalist, a churchman or a heathen, it is useful to know the causes and consequences of economic phenomena."

"Some important aspects of important aspects of economic organization take on a new meaning when they are considered from the viewpoint of the search of information."

"Economists are neither distinctively good nor bad, no more or less virtuous or brave or generous or faithful than the sum of mankind, and certainly no more modest."

"Economic theories are infinitely diverse in their predictive power. Entirely too many have zero predictive power-they are statements of tautologies. Thus the statement that to maximize profits one should operate a firm where marginal revenue equals marginal cost is a mere mathematical statement of the condition for a maximum. The example we gave of search theory is not a tautology because we can identify the factors that influence costs and returns.· Some theories have negative power: they predict the opposite of what happens (and then become useful in the hands of a sophisticated user)."

"Price dispersion is a manifestation — and, indeed, it is the measure — of ignorance in the market. Dispersion is a biased measure of ignorance because there is never absolute homogeneity in the commodity if we include the terms of sale within the concept of the commodity. Thus, some automobile dealers might perform more service, or carry a larger range of varieties in stock, and a portion of the observed dispersion is presumably attributable to such differences. But it would be metaphysical, and fruitless, to assert that all dispersion is due to heterogeneity."

"In recollecting Schumpeter, it is hard to tear oneself away from the exotic manner, the dubious politics, the carefully crafted image, the hidden self-doubts, the convoluted life story, the complicated relations to three wives and several non-wives."

"More generally, Schumpeter seemed to be playing the role of grand seigneur, and he tended to flatter where flattery was not due, no doubt satirically. All this went along with his reputation as a casual and easy grader. We used to say that he threw the exam books up a staircase: the ones that stuck at the top got an A, the ones that fell to the bottom an A minus. I was surprised to learn that in Austrian universities he had the reputation of a stern taskmaster."

"In my view—and that of most contemporary economists, I believe—Schumpeter’s most original and most lastingly significant book was Theory of Economic Development, which appeared in 1911 (and was translated into English in 1934). It was at the University of Czernowitz, not far from the beginning of his career as an economist, that he worked out his conception of the entrepreneur, the maker of “new combinations,” as the driving force and characteristic figure of the fits-and-starts evolution of the capitalist economy. He was explicit that, while technological innovation was in the long run the most important function of the entrepreneur, organizational innovation in governance, finance, and management was comparable in significance."

"If you see something that needs doing, do it. It is not easy for me to explain what I mean by this guideline, but I think it has been deeply ingrained in me for a long time. I rather believe that I was once promoted to Acting Corporal at the age of 19 because of this trait. I suppose that it entails a partial contradiction of the conventional injunction to get your priorities straight before acting. To my mind, the priorities are not so certain that one ought to pass up any opportunity to get something useful done. Perhaps it also reflects my belief that much more good is done by tinkering than by starting over from scratch. I claim for this approach that it fits in with the Hippocratic injunction to the doctor to "do no harm" and that gradient methods are a good all-purpose method for local optimization. What about global optimizations? Good point. I suppose I worry that enthusiastic seekers after global maxima run the risk of falling off steep cliffs. On the bad side, I know I sometimes find myself doing meaningless busywork when I could presumably spend my time at something more useful. My wife reminds me that once, when we discovered that the automatic wake-up mechanism in our hotel room was not working, I spent an hour and a half trying to fix it. (I got it to work. Once.) No recipe for coping is perfect."

"Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon Bonaparte. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous – that is, by laughing at it – so as not to fall into the trap of taking it seriously and passing on to matters of technique."

"Well, I certainly was not going to study physics, and I knew I was not going to study biology, but I could have become a sociologist or an anthropologist. However, I found sociology a little soft. I think that somewhere in my mind, I probably already had the notion – which turned out to be right – that if I was going to be a social scientist of some kind, I would like a rigorous social science. The analytical aspect of economics already appealed to me. That must have been so. It was not really a matter of chance. But if my wife had said ‘oh, no, economics was terribly boring’, I would probably have found something else to do."

"I think that this is Schumpeter’s main legacy to economics: the role of technological and organizational innovation in driving and shaping the growth trajectory of capitalist economies."

"Everything reminds Milton of the money supply. Well, everything reminds me of sex, but I keep it out of the paper."

"It is possible to see Keynesian and Schumpeterian ideas as complementary. Keynes is about short-run economic fluctuations brought about by erratic variations in the willingness of investors and governments to spend; Schumpeter is about the long-run trajectory driven by the erratic march of technological progress. This complementarity only became clear later, after both men had died, when economic growth became an explicit objective of public policy and topic of systematic analysis. Schumpeter was left frustrated by the younger generation’s affinity for his rival. In any case, the “preliminary volume” never materialized. The world turns. Today, some sixty years after their deaths, Schumpeter’s star probably outshines Keynes’s. The business cycle has receded in importance, partly because the large industrial economies have sprouted a more stable structure, and partly because the lessons that Keynes taught have been learned by central banks and finance ministries. Instead, long-term economic growth has moved to the top of the political and intellectual agenda, and that was Schumpeter’s topic. As Robert Lucas memorably put it, once you have begun to think about economic growth, it is hard to think about anything else. It is a pity that troubled old Schumpeter did not live to see the triumph of his obsession."

"You can see the computer age everywhere but in the productivity statistics."

"I don't think that Solow, in particular, has ever tried to come to grips with any of these issues except by making jokes."

"There is an ancient Chinese saying "He who labours with his mind rules over he who labours with his hand". This kind of backward idea is very harmful to youngsters from developing countries. Partly because of this type of concept, many students from these countries are inclined towards theoretical studies and avoid experimental work. In reality, a theory in natural science cannot be without experimental foundations; physics, in particular, comes from experimental work."

"The beauty of physics lies in the extent to which seemingly complex and unrelated phenomena can be explained and correlated through a high level of abstraction by a set of laws which are amazing in their simplicity."

"Science is about measurement, dammit — it's not about ideas. (55:20 in video)"

"What we live in, unfortunately, is a time when we are infected by what I call quantum field theory idolatry. (39:30 in video)"

"Newton would have been laughed out of the country if Kepler hadn't done the measurement. ... The facts speak for themselves. ... History has shown that you need a little luck — and if you don't have the luck, you're out of luck. (1:00:00 to 1:01:00 in video)"

"My rule is simply to do for my students exactly what I hope someone else will do for my sons when the time comes: I teach them to have faith in themselves and in their own compass, to listen to nature to find truth, to love knowledge for the sake of itself, and to strive for greatness."

"Bell Labs had been a kind of holy place of solid state physics since the 1950's when it was built up by Shockley after the invention of the transistor. I had no idea at the time of the significance of this placement, but I did notice during my job talk that everybody understood what I was saying immediately — this had never happened before — and that the audience had an irresistible urge to interrupt, heckle, and argue about the subject matter loudly among themselves during the talk so as to lob hand grenades into it, just like back-benchers do in the House of Commons. Being a combative person I rather liked this and lobbed a few grenades of my own to maintain control of my seminar. I later came to understand that this heckling was a sign of respect from these people, that the ability to handle it was a test of a person's worth, and that polite silence from them was an extremely bad sign, amounting to Pauli's famous criticism that the speaker was "not even wrong.""

"It has been my experience that good theoretical physics is empowering, in that it enables thinking to take place that would otherwise not occur, and, in its highest form, facilitates experiments that would otherwise not be done."

"The world is full of intelligent, well-meaning people who, for one reason or another, did not attend university but are nonetheless well-read and educated. Out there on the prairie lost opportunities of youth were the rule rather than the exception, and I slowly became disabused of the myth of the Bright Young Thing and have not believed in it since."

"Oklahoma is laid back and rather beautiful, with rolling brown hills not unlike the ones in California. The Pershing missiles, on the other hand, were not beautiful. They were horrible weapons of war — solid-fuel rockets five feet in diameter at the base, long as a moving van, and capable of throwing a tactical nuclear warhead 500 miles. They were launched from trucks and required a team of 10 men to service and fire. The most interesting thing I learned during this time was how small a nuclear warhead was. The nose cone of a Pershing is only about 18 inches in diameter at the base. I had not been interested at all in nuclear weaponry as a student, and so I had never thought through carefully about their "efficiency". It is sobering thought that these missiles were actually deployed in continental Europe in those days and that on at least one occasion, namely the 1973 Arab-Israel war, there was an alert serious enough to leave the commanding officers trembling."

"I learned about X-ray diffraction, neutron scattering, raman scattering, infrared absorption spectroscopy, heat capacity, transport, time-dependent transport, magnetic resonance, electron diffraction, electron energy loss spectroscopy — all the experimental techniques that constitute the eyes and ears of modern solid state physics. As this occurred I slowly became disillusioned with the reductionist ideal of physics, for it was completely clear that the outcome of these experiments was almost always impossible to predict from first principles, yet was right and meaningful and certainly regulated by the same microscopic laws that work in atoms. Only many years later did I finally understand that this truth, which seems so natural to solid state physicists because they confront experiments so frequently, is actually quite alien to other branches of physics and is vigorously repudiated by many scientists on the grounds that things not amenable to reductionist thinking are not physics."

"When a thing gets very, very small, you can't tell the difference between a solid and a liquid. (16:30 in video)"

"I like to talk about renormalization as an epistemological barrier. … Nature has been kind, and nature has been unkind. … for what it's worth, I don't tell people what kind of research to do. I have been wrong many, many times in anticipating what will happen. … I’ve learned the hard way that the art of good physics is to ask a question that’s just barely beyond where the technology can go, and then you place your bets. And if you’re right you win the bet, and if you’re wrong you lose."

"The reason we believe in relativity today is not because we had a great transition in our beliefs about what should be so. We believe in relativity because we have no choice. It's true — measured to be true."

"Real understanding of a thing comes from taking it apart oneself, not reading about it in a book or hearing about it in a classroom. To this day I always insist on working out a problem from the beginning without reading up on it first, a habit that sometimes gets me into trouble but just as often helps me see things my predecessors have missed."

"I realized that nature is filled with a limitless number of wonderful things which have causes and reasons like anything else but nonetheless cannot be forseen but must be discovered, for their subtlety and complexity transcends the present state of science. The questions worth asking, in other words, come not from other people but from nature, and are for the most part delicate things easily drowned out by the noise of everyday life."