Economists From The United States

"No monetarist, certainly not Friedman, welcomed this side-effect of monetary restraint. But then again, had Friedman been listened to earlier (and had the likes of Paul Samuelson been ignored), things would never have come to this tragic stage. By way of analogy, should we blame those who would end the war in Iraq, and who opposed it all along, for the tragic consequences that are likely to follow any rapid U.S withdrawal?"

"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."

"Critics argue that Hayek mixed a number of ethical and political philosophies in constructing his system, positions that do not necessarily cohere one with another and all of which have been independently criticized. … There are evident tensions as well between his earlier advocacy of planning a framework of law and his later enthusiasm for the gradual evolution of judge-made common law. Finally, Hayek's opinion that judges operating under the common law tradition are bound to draw "conclusions that follow from the existing body of rules and the particular facts of the case" has struck more than one observer as naive. If one is judging his work against the standard of whether he provided a finished political philosophy, Hayek clearly did not succeed."

"He linked the notion of a spontaneous order that forms when agents follow (often simple) rules with the idea of complex systems in the 1950s. This was a critical breakthrough, for it allowed him to drop the old natural science-social science dichotomy ..."

"It seems evident from his unpublished piece that his reading of the Mill-Taylor letters gave Hayek a bit of a shock. He knew, of course, from the Autobiography that Mill had an elevated opinion of Mrs. Taylor. The letters seem to have convinced Hayek that she dominated him. Hayek would doubtless have seen this as a weakness, and he might well have lost some respect for Mill as a result. It may also have provided a convenient explanation for Hayek for why a great mind like Mill might nonetheless “desert” the liberal camp. (Hayek’s hope to lead others to the same conclusion might have helped motivate him to write the book on the correspondence between Mill and Taylor.) Given what has sometimes been said about the dominating personality of Hayek’s second wife, one wonders whether Hayek would later in his life have felt even more commonalities with Mill."

"In his discussions of spontaneous orders, sometimes Hayek was simply trying to make the point that they exist; that is, he was trying to counter the claim that any beneficent social order needed to be constructed. This view was widespread when he first was writing; the mania for planning was then ubiquitous, so it was a point worth making. In later writings, Hayek sometimes did say, let’s trust to evolved orders rather than constructed ones, but then allowed that sometimes we needed to make piece-meal changes, and he gave no criteria for deciding."

"Hayek is a puzzle. Certainly he started out as one for me, now some twenty-odd years ago."

"James Buchanan … produced several seminal contributions to the literature prior to the appearance of The Calculus, and a continual stream of books and articles afterward. I view Buchanan’s Nobel Prize as a reward for this great body of work, and not just limited to The Calculus. Pursuing this line of reasoning, Gordon Tullock’s prodigious research output following the publication of The Calculus also justifies a Nobel Prize. Indeed, Tullock’s (1967c) seminal analysis of rent seeking, and his subsequent work on this topic might be regarded as sufficient achievements for the awarding of a prize."

"There are two elements of Hayek’s background that justify our considering him an Austrian economist: first, that he was raised and went to university in Vienna in the first three decades of the twentieth century, and second, that when he finally decided on economics as his field of study, he was trained within the Austrian tradition in economics."

"Some may wish to argue that Hayek was simply born with a sort of natural pessimism or cynicism, and that this generated his long standing belief in the inherent limitations that humans face when they try to intervene in social phenomena. Perhaps. But it is also possible that this view was the product of his having come of age during the final collapse of an already broken-down empire, of having experienced the multiple forms of disaster that surrounded postwar Vienna and enveloped interwar central Europe, and of having witnessed the failures of various high-minded social experiments to achieve anything like what their exponents had promised. In bearing witness to so much tragedy Hayek was again very much a part of the larger Austrian tradition. His famed ‘‘epistemic pessimism’’ may well have been another result of that larger experience."

"Gordon Tullock, on the other hand, might be characterized as the somewhat cynical pragmatist, who set out to understand the world, not to change it. This side of Tullock is visible in his early paper on simple majority rule, and is perhaps most apparent in his work on rent seeking. These differences should not be pushed too far, however. Buchanan (1980) also contributed to the rent-seeking literature, and often has described public choice as “politics without romance.” One of the most dispiriting contributions to the public choice literature has to be Kenneth Arrow’s (1951) famous impossibility theorem. In a too little appreciated article, Tullock (1967b) demonstrated with the help of a somewhat torturous geometrical analysis, that the cycling that underlies the impossibility theorem is likely to be constrained to a rather small subset of Pareto-optimal outcomes, and thus Arrow’s theorem was “irrelevant,” a rather happy result, and one which anticipated work appearing more than a decade later on the uncovered set. In Chap. 10 of Toward a Mathematics of Politics, Tullock (1967a) engages in a bit of wishful thinking about constitutional design by describing how one could achieve an ideal form of proportional representation in a legislative body. He also was an early enthusiast of the potential for using a demand-revelation process to reveal individual preferences for public goods (Tideman and Tullock 1976)."

"It is probably best to start off by noting that Hayek knew a lot about Mill, probably for a time more than any other contemporary scholar. So we should not underestimate him. Next, what he had to say about Mill, what portion of Mill’s work he drew upon, was very much dictated by the sort of project he was working on. When he was making an argument about how the British liberal tradition lost its bearings, or about how Comtean positivism came to be known and gained influence across Europe, Mill was classed among the perpetrators. When he was writing about what made the British liberal tradition great, Mill could be one of the heroes. There is, I think, no inconsistency in the fact that Hayek could hold both views simultaneously."

"In his 1975 book, The Limits of Liberty, Buchanan returned to the study of constitutions, but now approached them with a somewhat more cynical (realistic?) Hobbesian perspective. His later books with Geoffrey Brennan (1980,1985) also emphasized the importance of constitutional rules as constraints on the selfish pursuits of individual actors, and as means for controlling that public sector beast—Leviathan. This concern with constitutional decision making and constitutional rules can be regarded as one of the salient characteristics of James Buchanan’s research throughout his career."

"When looking at the two streams of research these men produced, it is tempting to characterize Buchanan as a somewhat romantic optimist holding the belief that the pursuits of selfish individuals can be channeled for the common good, if the right set of constitutional constraints are adopted,and believing that individuals are capable of designing constitutions that achieve this goal. Thus, some 35 years after the publication of The Calculus, we find Buchanan, in joint work with Roger Congleton (1998), accepting the fact that legislatures always will adopt the simple majority rule, and trying to design constitutional constraints that will lead to outcomes benefiting all members of the community under that rule."

"The most obvious negative feature of capitalism is that it can produce private monopolies that restrict output and thereby harm consumers."

"Compared with the necessity of protecting ruling class privileges and prerogatives, the right of a man to express his mind goes for nothing. That is the lesson of history and that is what we are witnessing today. Men who have stirred up the people; men who have raised their voices in protest; men who thought straight; men who have loved their fellow men too much; men who have had conviction and courage and purpose; men who were willing to stick by their ideals—such men have suffered in every age."

"The masters in all ages have put men like Debs in jail because it is the truth-teller that the masters fear most. They fear the Truth; they fear the Light; they fear Justice; and the man who turns on the Light and speaks the Truth and cries out for Justice—is their greatest enemy. So they have always tried this process of putting ideas into jail."

"Q: You are a pacifist even to class struggles? [Nearing]: I am a pacifist in that I believe that no man has a right to do violence to any other man. Q: Even in the class struggle? [Nearing]: Under no circumstances."

"I became a vegetarian because I was persuaded that life is as valid for other creatures as it is for humans. I do not need dead animal bodies to keep me alive, strong and healthy. Therefore, I will not kill for food."

"Live within your income; spend less than you get; pay as you go."

"Economics should not be accessible only to the experts. The ideas are too important and too interesting. Indeed, naked economics can even be fun."

"Good government is a prerequisite for a thriving market economy. At the same time, the coercive powers of government can be put to use in ways that serve narrow organized interests, including the government employees themselves. One of the most important tasks for policy analysts is determining when, where, and how government ought to involve itself (or not involve itself) in a modern economy."

"The creation of economic “stories” from real life is an ongoing process—because new stories appear every day."

"The goal of public policy is to make our lives better. Does that mean richer? Or healthier? No policy change is good for everyone, so we must weigh total gains against total losses. But even that task is more complicated than it first appears."

"Economics presents us with a powerful, and not necessarily complex, set of analytical tools that can be used to look back and explain why events unfolded the way they did; to look around and make sense of the world; and to look forward so that we can anticipate the effects of major policy changes. Economics is like gravity: Ignore it and you will be in for some rude surprises."

"Indeed, most bright, intellectually curious college students suffer through Econ 101, are happy to pass, and then wave goodbye to the subject forever. Economics is filed away with calculus and chemistry—rigorous subjects that required a lot of memorization and have little to do with anything that will come later in life. And, of course, a lot of bright students avoid the course in the first place. This is a shame on two levels. First, many intellectually curious people are missing a subject that is provocative, powerful, and highly relevant to almost every aspect of our lives.…Second, many of our brightest citizens are economically illiterate."

"Having written all that, I must admit that there is some soul searching going on in the economics profession. As obvious as the financial crisis seems after the fact, few economists saw it coming (with some notable exceptions). Virtually none anticipated how severe it might be. In the fall of 2005, several prominent economists wrote in a prestigious journal, “As of the end of 2004, our analysis reveals little evidence of a housing bubble.” Wrong. Actually the article was worse than wrong, because it was written explicitly to refute the signs of a bubble that had become obvious to many laypeople—which is kind of like the fire department showing up at a house with smoke wafting from the roof and declaring, “No, that’s not a fire,” only to have flames start leaping from the attic twenty minutes later. There was a bubble. And it can be explained best by incorporating psychology into economics, namely the tendency of individuals to believe that whatever is happening now is what’s most likely to happen in the future."

"The reality is that business and investment spending are the true leading indicators of the economy and the stock market. If you want to know where the stock market is headed, forget about consumer spending and retail sales figures. Look to business spending, price inflation, interest rates, and productivity gains."

"The question of the value of Hayek’s work in technical economic theory from the middle 1920s through early 1940s is one over which there is considerable dispute in the academic economic community. Some, such as contemporary Austrian economists Roger Garrison, Mark Skousen, and Gene Callahan, consider this work to be of vital, continuing relevance. Others, such as Nobel Prize winners Milton Friedman, James Buchanan, and Ronald Coase, while they have the highest opinion of Hayek, do not consider his work in technical economic theory to be of much worth."

"From his earlier orthodox, even conservative, tendencies Harris was released by Keynes and the New Deal. His work came to reflect a strong commitment to Keynesian economics and policy and to the broad welfare measures of the Roosevelt, Kennedy and Johnson years. He was not a compelling writer; in his books, however, this was more than compensated for by the solid competence of his research and preparation, his strongly compassionate views on welfare issues and his very evident desire to extend knowledge on a great range of subject matter."

"Samuelson's textbook has delivered a great deal of economic wisdom. For many economists, the positive side of the balance sheet has outweighed the negative. Indeed, his defenders might ask: Might the United States and the West have suffered another Great Depression if Samuelson had not emphasized the need for "automatic stabilizers"? Did not Samuelson's heralding of the "mixed" economy curb the appetite of third world countries for national socialism? We will never know, of course, but it is humbling to speculate on whether alterations in principles textbooks might have led to a different U.S. economy."

"The triumph of persuasion over force is the sign of a civilized society."

"In contrast to the natural sciences, where Isaac Newton and Albert Einstein made their major contributions, most economics masterpieces were written when the authors were middle aged. Adam Smith, Karl Marx, John Maynard Keynes, and Milton Friedman come to mind. However, Paul started much earlier, in his 20s; and, even now, his new articles influence the fields of economics and finance."

"When Paul’s Foundations was published in the 1940s, readers experienced a kind of revelation that created a sensation. This brings to mind the post-WWI public’s similar reaction to Marcel Proust’s Remembrance of Things Past. Critics compared Proust’s prolific writings to those of Homer, Dante, and Shakespeare. But, what a difference in Proust’s and Paul’s dispositions!"

"Paul has no problem with wealth, yet he advocates positions that work against his personal economic interests. He notes that, while advocating the closing of tax loopholes, he has no difficulty taking advantage of those that remain. Fundamentally, Paul represents a middle path, as expressed in the ancient dictum that "men with vision walk in the middle.""

"To rephrase what Cicero wrote of Socrates, Paul called down modern economics from the skies and implanted it in the universities throughout the world."

"The Houses of Friedman and Samuelson disagreed on both methodology and policy. Nevertheless, the intellectual battles never encroached upon their personal respect for and friendship to each other."

"Samuelson clearly defined himself as a centrist, rather than an advocate of a right- or leftwing philosophy."

"Indeed, Paul’s capacity for irreverence and wit is true to the John Maynard Keynes maxim: "Words ought to be a little wild, for they are the assault of thoughts on the unthinking""

"What is amazing about Paul is that his life’s work continues even today. What trumpet player Clark Terry stated of Duke Ellington applies equally well to Paul."

"In other words, aggressiveness and selfishness are associated with superior performance by scientists. But my experiences and observations of eminent economists do not support these assertions. In Paul’s case, not only does he know how to maintain a balance between scholarship, family, and play, but he exhibits a high degree of humanity and kindness. The term mentsch aptly describes him."

"In the world of music, it is a rarity to find a person who is both a gifted composer and a top conductor. So it is in economics as well. Paul is that rarity. When Paul is writing, the sun is always out. His writing—ever eloquent, ever stirring—is done with the kind of verve that one seldom finds today."

"The great superiority of debating, as the schools should look upon it, lies in the fact that it adds to many of the elements of the present absorbing interest in athletics those educational values which contribute directly to the highest type of citizenship."

"It is not easy to phrase the proposition so that it shall mean precisely what we wish to argue; so that it shall include the whole matter at issue, nothing more and nothing less ; so that there shall be no possible ambiguity. Yet, unless the proposition is so phrased, a debate may degenerate into a lifeless quibble concerning the meaning of the terms, under which the living heart of the question is buried."

"Let us not be surprised, however, if the study of the principles of argumentation — or even Burke's much mis-taught Speech — seems dry without the prospect of actual debate. We should hardly expect a half-back to feel much enthusiasm over reading the rules of the game and tackling a dummy if he could not look forward to tackling a man. When elocution and argumentative writing have failed to stimulate interest, formal debate may succeed, for it is a kind of game. In the time limit, the order of speakers, the alternation of rides, the actual struggle of opposing forces, the give and take of rebuttal, the fixed rules and the ethics of conduct, the qualifications for success, and the final awarding of victory, debate has much in common with tennis and football."

"Princeton's Edwin W. Kemmerer [was] widely referred to as the “money doctor” by virtue of his advisory missions to position foreign governments on the gold standard in the 1920s."

"At home, as well as abroad, there is paralyzing uncertainty among business men as to whether the Reserve Board will allow that expansion of bank credit without which such prosperity as we have had in recent years simply cannot last. In short, the Board has created a state of mind which breeds business depression."

"One of the early presidents of Harvard College wrote a dissertation on the question, "Whether angels speak any language; if so, whether it is Hebrew." Much futile discussion on such questions has at various times brought debating into ill repute. A question should offer something more than an ingenious exercise; it should offer the chance of arriving at some conclusion regarded by the particular audience or disputants as of some practical importance. It should be discarded if, like the proposition, "The pen is mightier than the sword/' it offers no possibility of arriving at reasonably sound conclusions through the process of argument."

"They aimed at and directed action towards the establishment of an internationally interconnected monetary and credit system based on stable national currencies in fixed value relationship with gold and other gold currencies. Financial reconstruction and the approbation of external loans were accordingly made conditional upon institutional safeguards of central bank independence; the settlement of past external debt ; and the establishment ... They were Professor Edwin Walter Kemmerer, of the United States, for the second Polish stabilization ; Professor Charles Rist and Roger Auboin, of France, for the Romanian stabilization; and anonymous representatives of the Banque de"

"Professor Fisher's The Purchasing Power of Money is dedicated to Simon Newcomb, from whom vid Professor Kemmerer the PT = MV formula ultimately derives. Newcomb was not a professional economist but a mathematician (Professor of Mathematics in the U.S. Navy and at Johns Hopkins). His Principles of Political Economy, published in 1886, is one of those original works which a fresh scientific mind, not perverted by having read too much of the orthodox stuff, is able to produce from time to time in a half -formed subject like economics."