Economists From The United States

"Parallelism: Propositions about the behavior of individuals and the performance of institutions that have been tested in laboratory microeconomies apply also to nonlaboratory environments where similar ceteris paribus conditions prevail."

"It is not possible to design a laboratory resource allocation experiment without designing an institution in all its detail."

"In defining a microeconomic system two distinct component elements will be identified: an environment and an institution. The environment consists of a list of N economic agents {l,...,N}, a list of K + 1 commodities (including resources) {O,l,...,K}, and certain characteristics of each agent … Hence, a microeconomic environment is defined by the collection of characteristics e = (e',...,e”)."

"Economics as currently learned and taught in graduate school and practiced afterward is more theory-intensive and less observation-intensive than perhaps any other science. I think the statement that "no mere fact ever was a match in economics for a consistent theory" accurately describes the prevailing attitude in the profession (Milgrom and Roberts, 1987, p. 185)."

"I think it's different kinds of minds, and the recognition that certain mental deficiencies may actually have some selective advantages in terms of activities. We've lost a lot of the barriers that have to do with skin color and with various other characteristics. But there's still not sufficient recognition of mental diversities. And we don't all have to think alike to be communal and to live in a productive and satisfying world."

"By the time it comes to interpretation of the substantive conclusions, the assumptions on which the model has been based are easily forgotten. But it is precisely the empirical validity of these assumptions on which the usefulness of the entire exercise depends... A natural Darwinian feedback operating through selection of academic personnel contributes greatly to the perpetuation of this state of affairs."

"Even though Hayek, in my view, is the leading economic thinker of the 20th century who saw what must be the mainsprings of the extended order, Mises was the choice technician, and no one was better at articulating the primacy of the individual and the need to define and nurture individual rights."

"In the Autumn semester, 1955, I taught Principles of Economics, and found it a challenge to convey basic microeconomic theory to students. Why/how could any market approximate a competitive equilibrium? I resolved that on the first day of class the following semester, I would try running a market experiment that would give the students an opportunity to experience an actual market, and me the opportunity to observe one in which I knew, but they did not know what were the alleged driving conditions of supply and demand in that market"

"Much of current academic teaching and research has been criticized for its lack of relevance, that is, of immediate practical impact... The trouble is caused, however, not by an inadequate selection of targets, but rather by our inability to hit squarely any one of them... The weak and all too slowly growing empirical foundations clearly cannot support the proliferating superstructure of pure, or should I say, speculative economic theory."

"The total number of multiplications involved in the practical solution of our problem exceeds 450,000. This task alone would mean a two-year job, at 120 multiplications per hour. Fortunately, the recent invention of the Simultaneous Calculator by Professor Wilbur of the Massachusetts Institute of Technology has made it possible to perform all the necessary computations in a small fraction of the time they otherwise would have required. This apparatus solves nearly automatically a system of nine simultaneous linear equations."

"How will the cessation of war purchases of planes, guns, tanks, and ships … affect the national level of employment? How many new jobs will be created by the consumers’demand for an additional one million of passenger cars, how many of these jobs can be expected to be located in the automobile industry itself, and how many in other industries such as Steel and the Chemicals, the Coal and the Petroleum industries? How much additional freight traffic and revenue can the American railroads expect to derive from every billion dollars worth spent on post-war housing construction?"

"It is important to remove artificial barriers–stumbling stones, often local in origin and coming from incumbent opposition to entry–and to not burden businesses with taxes that reduce their internally generated funds for reinvestment, growth and striving to overcome market challenges."

"Economics today rides the crest of intellectual respectability and popular acclaim. The serious attention with which our pronouncements are received by the general public, hard-bitten politicians, and even skeptical businessmen is second only to that which was given to physicists and space experts a few years ago when the round trip to the moon seemed to be our only truly national goal."

"Among the many factors that have promoted economic change, I believe that technology or, rather, change in technology is the most prominent. I realize that it is dangerous to look for 'ultimate causes' in a world where everything seems to depend on everything else. But I believe that for the most part the economy, and ultimately the society, must adapt to the conditions that technology creates. If it cannot adjust to the challenges of changing technology, it fails."

"The statistical study presented in the following pages may be best defined as an attempt to construct, on the basis of available statistical materials, a of the United States for 1919 and 1929. One hundred and fifty years ago, when Quesnay first published his famous scheme, his contemporaries and disciples acclaimed it as the greatest discovery since Newton’s laws. The idea of general interdepence among the various part of the economic system has become by now the very foundation of economic analysis. Yet, when it comes to the practical application of this theoretical tool, modern economists must rely exactly as Quesnay did upon fictitious numerical examples."

"The general, and at the same time dynamic, type of analysis still remains an unwritten chapter of economic theory, the claims of innumerable “model-builders” notwithstanding... The … theoretical approach, based on the combination of the complexities of a general interdependent system with the simplifying assumptions of static analysis, constitutes the background of this investigation."

"Computers and robots replace humans in the exercise of mental functions in the same way as mechanical power replaced them in the performance of physical tasks. As time goes on, more and more complex mental functions will be performed by machines. Any worker who now performs his task by following specific instructions can, in principle, be replaced by a machine. This means that the role of humans as the most important factor of production is bound to diminish—in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors."

"Microeconomics, including the study of individual choice and of group choice in market and nonmarket processes, has generally been considered a field science as distinct from an experimental science. Hence microeconomics has sometimes been classified as "non-experimental" and closer methodologically to meteorology and astronomy than to physics and experimental psychology (Marschak, 1950, p. 3; Samuelson, 1973, p. 7). But the question of using experimental or nonexperimental techniques is largely a matter of cost, and generally the cost of conducting the most ambitious and informative experiments in astronomy, meteorology, and economics varies from prohibitive down to considerable. The cost of experimenting with different solar system planetary arrangements, different atmospheric conditions, and different national unemployment rates, each under suitable controls, must be regarded as prohibitive."

"GDP! The right concept of economy-wide output, accurately measured. The U.S. and the world rely on it to tell where we are in the business cycle and to estimate long-run growth. It is the centerpiece of an elaborate and indispensable system of social accounting, the national income and product accounts. This is surely the signal innovative achievement of the Commerce Department in the 20th century. I was fortunate to become an economist in the 1930's when Kuznets, Nathan, Gilbert, and Jaszi were creating this most important set of economic time series. In economic theory, macroeconomics was just beginning at the same time. Complementary, these two innovations deserve much credit for the improved performance of the economy in the second half of the century."

"Simon Kuznets is best known for his studies of national income and its components. Prior to World War I, measures of GNP were rough guesses, at best. No government agency collected data to compute GNP, and no private economic researcher did so systematically, either. Kuznets changed all that. With work that began in the 1930s and stretched over decades, Kuznets computed national income back to 1869. He broke it down by industry, by final product, and by use. He also measured the distribution of income between rich and poor."

"This work may be best described as an attempt to construct a of the United States."

"The paper is perhaps 5 per cent empirical information and 95 per cent speculation, some of it possibly tainted by wishful thinking. The excuse for building an elaborate structure on such a shaky foundation is a deep interest in the subject and a wish to share it with members of the Association. The formal and no less genuine excuse is that the subject is central to much of economic analysis and thinking; that our knowledge of it is inadequate; that a more cogent view of the whole field may help channel our interests and work in intellectually profitable directions; that speculation is an effective way of presenting a broad view of the field; and that so long as it is recognized as a collection of hunches calling for further investigation rather than a set of fully tested conclusions, little harm and much good may result"

"[The principal characteristic of this economic epoch is] a sustained increase in per capita or per worker product, most often accompanied by an increase in population and usually sweeping structural changes."

"The inescapable conclusion is that the direct contribution of man-hours and capital accumulation would hardly account for more than a tenth of the rate of growth in per capita product — and probably less. The large remainder must be assigned to an increase in efficiency in the productive resources, or the effects of changing arrangements, or to the impact of technological change, or to all three"

"The very fact that after a while, an increasing proportion of the urban population was "native," i.e., born in cities rather than in the rural areas, and hence more able to take advantage of the possibilities of city life in preparation for the economic struggle, meant a better chance for organization and adaptation, a better basis for securing greater income shares than was possible for the newly "immigrant" population coming from the countryside or from abroad"

"The central theme of this paper is the character and causes of long-term changes in the personal distribution of income. Does inequality in the distribution of income increase or decrease in the course of a country's economic growth? What factors determine the secular level and trends of income inequalities?"

"An invariable accompaniment of growth in developed countries is the shift away from agriculture, a process usually referred to as industrialization and urbanization. The income distribution of the total population, in the simplest model, may therefore be viewed as a combination of the income distributions of the rural and of the urban populations. What little we know of the structures of these two component income distributions reveals that: (a) the average per capita income of the rural population is usually lower than that of the urban;' (b) inequality in the percentage shares within the distribution for the rural population is somewhat narrower than in that for the urban population... Operating with this simple model, what conclusions do we reach? First, all other conditions being equal, the increasing weight of urban population means an increasing share for the more unequal of the two component distributions. Second, the relative difference in per capita income between the rural and urban populations does not necessarily drift downward in the process of economic growth: indeed, there is some evidence to suggest that it is stable at best, and tends to widen because per capita productivity in urban pursuits increases more rapidly than in agriculture. If this is so, inequality in the total income distribution should increase"

"[An] epochal innovation [consisting of the] spreading application of science to processes of production and social organization."

"The rural and urban populations does not necessarily drift downward in the process of economic growth: indeed, there is some evidence to suggest that it is stable at best, and tends to widen because per capita productivity in urban pursuits increases more rapidly than in agriculture."

"Koopmans was also like Kantorovich in generalizing his approach from one sector of the economy to the economy as a whole. Koopmans showed the conditions required for economy-wide efficiency in allocating resources. He also, again like Kantorovich, used his activity analysis techniques to derive efficient criteria for allocating between the present and the future."

"The welfare of a nation can scarcely be inferred from a measurement of national income."

"Three precepts are offered to constitute a foundation for the use of laboratory experimental methods in testing hypotheses about the behavior of allocation mechanisms."

"Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what."

"Koopmans complained that macroeconomic models weren't satisfactory because they didn't handle randomness. He talked about building models in continuous time, which is something we're trying to do now."

"we need far more empirical study than we have had so far of the universe of inventors; any finding concerning inventors... would be of great value... for public policy in regard to inventive activity."

"Linear programming was developed as a discipline in the 1940's, motivated initially by the need to solve complex planning problems in wartime operations. Its development accelerated rapidly in the postwar period as many industries found valuable uses for linear programming. The founders of the subject are generally regarded as George B. Dantzig, who devised the simplex method in 1947, and John von Neumann, who established the theory of duality that same year. The Nobel prize in econonmics was awarded in 1975 to the mathematician Leonid Kantorovich (USSR) and the economist Tjalling Koopmans (USA) for their contributions to the theory of optimal allocation of resources, in which linear programming played a key role. Many industries use linear programming as a standard tool, e.g. to allocate a finite set of resources in an optimal way."

"If the history of economics in the twentieth century were properly written, the two great figures associated with what has come to be called the Keynesian revolution would be John Maynard Keynes and Simon Kuznets. And this is a judgment in which Keynes would concur. Keynes showed in analytical terms the possibility of a shortage in aggregate demand and argued the means for its correction. But it remained for Simon Kuznets and his talented associates to put this in the quantitative terms that made it persuasive, indeed irresistible. The Keynesian argument could be resisted; the Kuznets figures could not."

"Without recognising indivisibilities — in human person, in residences, plants, equipment, and in transportation — location patterns, down to those of the smallest village, cannot be understood"

"Decisions and plans made by others... [can be judged to be] quantitatively at least as important as the primary uncertainty arising from random acts of nature and unpredictable changes in consumers' preferences."

"The solution of important problems may be delayed because the requisite tools are not perceived. Or the availability of certain tools may lead to an awareness of problems, important or not, that can be solved with their help."

"We look upon economic theory as a sequence of conceptual models that seek to express in simplified form different aspects of an always more complicated reality."

"It is worth pointing out that in this particular study our authors have abandoned demand and supply functions as a tool for analysis, even as applied to individuals... [The problem] has been reformulated as one of proving that a number of maximizations of individual goals under interdependent restraints can be simultaneously carried out."

"If evolutionary selection is the basis for a belief in profit maximization, 'then we should postulate that basis itself and not the profit maximization which it implies in certain circumstances."

"According to a frequently cited definition, economics is the study of “best use of scarce resources.” The definition is incomplete. “Second best” use of resources, and outright wasteful uses, have equal claim to attention. They are the other side of the coin."

"One is led to conclude that economics as a scientific discipline is still somewhat hanging in the air."

"Optimizing responses of economic agents are simultaneously feasible only if the proper prices are already known to them. But these prices must somehow themselves be the result of the same responses."

"The early thirties brought what liberal economists called the Great Depression and Marxist economists described as the great crisis of capitalism. It dawned on me that the economic world order was unreliable, unstable, and, most of all, iniquitous. I sought intellectual contacts and friendship with a group of socialist students and also with a small handful of communist-oriented students and unemployed workers."

"[This work urges] a clearer separation, in the construction of economic knowledge, between reasoning and recognition of facts, for the better protection of both."

"Econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference."

"… a rather different class of applications of the idea of best allocation of scarce resources... usually referred to as the theory of optimal economic growth. In most studies of this kind made in the countries with market economies there is not an identifiable client to whom the findings are submitted as policy recommendations. Nor is there an obvious choice of objective function, such as cost minimization or profit maximization in the studies addressed to individual enterprises. The field has more of a speculative character. The models studied usually contain only a few highly aggregated variables. One considers alternative objective functions that incorporate or emphasize various strands of ethical, political, or social thought. These objectives are then tried out to see what future paths of the economy they imply under equally simplified assumptions of technology or resource availability."