The Unassuming Economist

From American Enterprise Institute (AEI):

“An important event takes place this week that is recognized annually on CD. Tuesday, July 31 is Milton Friedman’s birthday — he was born on that day in 1912 and would have been 106 years old this year. Unfortunately, Milton died on November 16, 2006, when he was 94 years old. In an editorial in the Wall Street Journal following Professor Friedman’s death, they reported his loss with the same tribute Milton used when Ronald Reagan died, saying “few people in human history have contributed more to the achievement of human freedom.” In honor of his legacy and birthday, here are 20 of my favorite Milton Friedman quotes, along with a bonus video and some special birthday graphics:

1. There is nothing as permanent as a temporary government program.

2. Many well-meaning people favor legal minimum-wage rates in the mistaken belief that they help the poor. These people confuse wage rates with wage income. It has always been a mystery to me to understand why a youngster is better off unemployed at $15 an hour than employed at $7.25 (updated). The rise in the legal minimum-wage rate is a monument to the power of superficial thinking.

3. First of all, the government doesn’t have any responsibility to the poor. People have responsibility. This building doesn’t have responsibility. You and I have responsibility. People have responsibility. Second, the question is how can we as people exercise our responsibility to our fellow man most effectively? That’s the problem. So far as poverty is concerned, there has never been a more effective machine for eliminating poverty than the free enterprise system and the free market. The period in which you had the greatest improvement in the lot of the ordinary man was the period of the 19^th and early 20^th century.

4. In the international trade area, the language is almost always about how we must export, and what’s really good is an industry that produces exports, and if we buy from abroad and import, that’s bad. But surely that’s upside-down. What we send abroad, we can’t eat, we can’t wear, we can’t use for our houses. On the other hand, the goods and services we import, they provide us with TV sets we can watch, with automobiles we can drive, with all sorts of nice things for us to use.”

Continue reading here.

 

From Dani Rodrik’s preface to Santiago Levy’s Book:

“A few years ago as I was finishing up my book Economics Rules: The Rights and Wrongs of the Dismal Science (Norton 2015), I realized that the manuscript contained a serious omission. I had written at length about how and why economists misuse the powerful tools of their discipline, but had said little about the successes. So I decided I would open the book with three vignettes of economics at its best. Each vignette would have its hero: an economist who combined economic models with real-world judgement to make life better for lots of people.

Santiago Levy was one of the three heroes I chose. (The names of the other two heroes will let the reader gauge how demanding was the standard I applied: John Maynard Keynes and William Vickrey.) Santiago was the principal force behind the anti-poverty program Progresa in Mexico that quickly became a model for many other countries. This was an innovative, incentive-based program that was novel at the time, in 1997. It replaced inefficient price subsidies with direct cash grants to poor families as long as their children were kept in school and received periodic health checks. So successful was the program that subsequent Mexican political administrations would seek credit for it by renaming it; hence Progresa would turn into Oportunidades, which eventually became Prospera.”

Continue reading here.

From LSE Business Review:

“Q: What’s your personal interest in the Future of Work?

From my late teens – well before ‘good work’ became the fashionable concept that it is today – I knew the route to happiness was a good job. Work is where most of us spend most of our waking time and it is at the heart of family life. It’s also the driving force behind our local and national economies. Work connects the experiences and living standards of individuals to the economic and social health of the country. Knowing this has driven my own working life. I’ve researched employment, unemployment and job creation for over 40 years now, concentrating on the social and economic conditions needed to create good and long-lasting work.’

Continue reading here. Also see my profile of Christopher Pissarides here.

 

From a new post by Timothy Taylor:

“Richard Thaler won the Nobel Prize in economics in 2017  “for his contributions to behavioural economics.  He tells the story of how the field evolved from early musings through small-scale tests and more comprehensive theories and all the way to public policy in his Nobel prize lecture, “From Cashews to Nudges: The Evolution of Behavioral Economics.” It is ungated and freely available in the June 2018 issue of the American Economic Review (108:6, pp. 1265–1287).”

Continue reading here.

(Picture from University of Chicago web page.)

From new Documentos CEDE by Erich Pinzón-Fuchs:

“Lawrence R. Klein was the father of macro-econometric modeling, the scientific practice that dominated macroeconomics throughout the second half of the twentieth century. Therefore, understanding how Klein developed his identity as a macro-econometrician and how he conceived and forged macro-econometric modeling at the same time, is essential to draw a clear picture of the origins and subsequent development of this scientific practice in the United States. To this aim, I focus on Klein’s early trajectory as a student of economics and as an economist (from 1938-1955), and I particularly examine the extent to which the people and institutions Klein encountered helped him shape his professional identity. Klein’s experience at places like Berkeley, MIT, Cowles, and the University of Michigan, as well as his early acquaintance with people such as Griffith Evans, Paul Samuelson, and Trygve Haavelmo were decisive in the formation of his idea on how econometrics, expert knowledge, mathematical rigor, and a specific institutional configuration should enter macro-econometric modeling. Although Klein’s identity defined some of the most important characteristics of this practice, by the end of the 1950s, macro-econometric modeling became a scientific practice independent of Klein’s enthusiasm and with a “life of its own,” ready to be further developed and adapted to specific contexts by the community of macroeconomists.”Picture from Nobelprize.org.