Great Economists Quotes

Some can be more intelligent than others in a structured environment—in fact school has a selection bias as it favors those quicker in such an environment, and like anything competitive, at the expense of performance outside it. Although I was not yet familiar with gyms, my idea of knowledge was as follows. People who build their strength using these modern expensive gym machines can lift extremely large weights, show great numbers and develop impressive-looking muscles, but fail to lift a stone; they get completely hammered in a street fight by someone trained in more disorderly settings. Their strength is extremely domain-specific and their domain doesn't exist outside of ludic—extremely organized—constructs. In fact their strength, as with over-specialized athletes, is the result of a deformity. I thought it was the same with people who were selected for trying to get high grades in a small number of subjects rather than follow their curiosity: try taking them slightly away from what they studied and watch their decomposition, loss of confidence, and denial. (Just like corporate executives are selected for their ability to put up with the boredom of meetings, many of these people were selected for their ability to concentrate on boring material.) I've debated many economists who claim to specialize in risk and probability: when one takes them slightly outside their narrow focus, but within the discipline of probability, they fall apart, with the disconsolate face of a gym rat in front of a gangster hit man.

Nobody can be a great economist who is only an economist - and I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger.

Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction. They replace the old with the new. New sectors attract resources away from old ones. New firms take business away from established ones. New technologies make existing skills and machines obsolete.

Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money,set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!

There’s a famous and often-told story about the great economist John Maynard Keynes: once, when accused of having flip-flopped on some policy issue, Keynes acerbically replied, “When the facts change, sir, I change my mind. What do you do?

Since the Enlightenment, in the great tension between rationalism (how we would like things to be so they make sense to us) and empiricism (how things are), we have been blaming the world for not fitting the beds of “rational” models, have tried to change humans to fit technology, fudged our ethics to fit our needs for employment, asked economic life to fit the theories of economists, and asked human life to squeeze into some narrative.

It may well be that the chemist or physiologist is right when he decides that he will become a better chemist or physiologist if he concentrates on his subject at the expense of his general education. But in the study of society exclusive concentration on a speciality has a peculiarly baneful effect: it will not merely prevent us from being attractive company or good citizens but may impair our competence in our proper field—or at least for some of the most important tasks we have to perform. The physicist who is only a physicist can still be a first class physicist and a most valuable member of society. But nobody can be a great economist who is only an economist—and I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger.

Perhaps the answer is that it is necessary to slow down, finally giving up on economistic fanaticism and collectively rethink the true meaning of the word “wealth.” Wealth does not mean a person who owns a lot, but refers to someone who has enough time to enjoy what nature and human collaboration place within everyone’s reach. If the great majority of people could understand this basic notion, if they could be liberated from the competitive illusion that is impoverishing everyone’s life, the very foundations of capitalism, would start to crumble (p. 169).

Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction.

People will tell you, “What’s the use? What’s the point of reading novels and poetry?” They’ll tell you to go to law school or to be an economist or to do something useful. But books are useful. Books will make you thoughtful, and they might even make you happy. They will certainly help you to become more civilized.

I am not an economist, but things are not as bad as they seem. I have a great deal of confidence in our future.

Free money works. Already, research has correlated unconditional cash disbursements with reductions in crime, child mortality, malnutrition, teenage pregnancy, and truancy, and with improved school performance, economic growth, and gender equality.13 “The big reason poor people are poor is because they don’t have enough money,” notes economist Charles Kenny, “and it shouldn’t come as a huge surprise that giving them money is a great way to reduce that problem.

The clever economists who tell us that we don’t need British agriculture and that our farms should be turned into national parks seem to ignore the rather obvious snag that an unfriendly country could starve us into submission in a week. But to me a greater tragedy still would be the loss of a whole community of people like

Five Terms Correlated to a Higher Sale Price Granite State-of-the-Art Corian Maple Gourmet Five Terms Correlated to a Lower Sale Price Fantastic Spacious ! Charming Great Neighborhood

The financial sector provides ample rewards for those who agree with them: lucrative consultancies, research grants, and the like. The documentary raises a question: Could this have influenced some economists’ judgments?

There are six canons of conservative thought: 1) Belief in a transcendent order, or body of natural law, which rules society as well as conscience. Political problems, at bottom, are religious and moral problems. A narrow rationality, what Coleridge called the Understanding, cannot of itself satisfy human needs. "Every Tory is a realist," says Keith Feiling: "he knows that there are great forces in heaven and earth that man's philosophy cannot plumb or fathom." True politics is the art of apprehending and applying the Justice which ought to prevail in a community of souls. 2) Affection for the proliferating variety and mystery of human existence, as opposed to the narrowing uniformity, egalitarianism, and utilitarian aims of most radical systems; conservatives resist what Robert Graves calls "Logicalism" in society. This prejudice has been called "the conservatism of enjoyment"--a sense that life is worth living, according to Walter Bagehot "the proper source of an animated Conservatism." 3) Conviction that civilized society requires orders and classes, as against the notion of a "classless society." With reason, conservatives have been called "the party of order." If natural distinctions are effaced among men, oligarchs fill the vacuum. Ultimate equality in the judgment of God, and equality before courts of law, are recognized by conservatives; but equality of condition, they think, means equality in servitude and boredom. 4) Persuasion that freedom and property are closely linked: separate property from private possession, and Leviathan becomes master of all. Economic levelling, they maintain, is not economic progress. 5) Faith in prescription and distrust of "sophisters, calculators, and economists" who would reconstruct society upon abstract designs. Custom, convention, and old prescription are checks both upon man's anarchic impulse and upon the innovator's lust for power. 6) Recognition that change may not be salutary reform: hasty innovation may be a devouring conflagration, rather than a torch of progress. Society must alter, for prudent change is the means of social preservation; but a statesman must take Providence into his calculations, and a statesman's chief virtue, according to Plato and Burke, is prudence.

But economics has roughly the same relationship with its founding texts as the world’s other great religions.

The Poverty Tour provided the opportunity to meet many people who had been living paycheck to paycheck even before the economic downturn. To so quickly slide from the great middle into the underworld of the poor validated our suspicions that perhaps these citizens never really were bona fide, middle class Americans. Indeed, some economists assert that the middle class evaporated decades ago.

Well, one of the best ways to control people in terms of attitudes is by what the great political economist Thorstein Veblen called “fabricating consumers.” If you can fabricate wants, make obtaining things that are just about within your reach the essence of life, they’re going to be trapped into becoming consumers. You read the business press in the 1920s and it talks about the need to direct people to the superficial things of life, like “fashionable consumption,” and that’ll keep them out of our hair.

When the solution to a given problem doesn’t lay right before our eyes, it is easy to assume that no solution exists. But history has shown again and again that such assumptions are wrong. This is not to say the world is perfect. Nor that all progress is always good. Even widespread societal gains inevitably produce losses for some people. That’s why the economist Joseph Schumpeter referred to capitalism as “creative destruction.” But humankind has a great capacity for finding technological solutions to seemingly intractable problems, and this will likely be the case for global warming. It isn’t that the problem isn’t potentially large. It’s just that human ingenuity—when given proper incentives—is bound to be larger. Even more encouraging, technological fixes are often far simpler, and therefore cheaper, than the doomsayers could have imagined. Indeed, in the final chapter of this book we’ll meet a band of renegade engineers who have developed not one but three global-warming fixes, any of which could be bought for less than the annual sales tally of all the Thoroughbred horses at Keeneland auction house in Kentucky.

The art of reasoned persuasion is an iterative, recursive heuristic, meaning that we must go back and forth between the facts and the rules until we have a good fit. We cannot see the facts properly until we know what framework to place them into, and we cannot determine what framework to place them into until we see the basic contours of the facts. The great economist Friedrich Hayek said, “Without a theory, the facts are silent.

In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in — or more precisely not in — the country’s businesses and banks. This inventory — it should perhaps be called the bezzle — amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks. … Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to a universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.

FDR recoiled from the plebeian food foisted on him as president; perhaps no dish was more off-putting to him than what home economists referred to as “salads,” assemblages made from canned fruit, cream cheese, gelatin, and mayonnaise.

the great British economist John Maynard Keynes, written 70 years ago: “It is dangerous . . . to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was.

Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong. If, on the other hand, you reduce tax rates and allow people to spend or save more of what they earn, they’ll be more industrious; they’ll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all—and more revenue for government. A few economists call this principle supply-side economics. I just call it common sense.

Two mystic states can be dissociated: the ecstatic-beneficent-and-benevolent, contemplation of the divine love, the divine splendour with goodwill toward others. And the bestial, namely the fanatical, the man on fire with God and anxious to stick his snotty nose into other men's business or reprove his neighbour for having a set of tropisms different from that of the fanatic's, or for having the courage to live more greatly and openly. The second set of mystic states is manifest in scarcity economists, in repressors etc. The first state is a dynamism. It has, time and again, driven men to great living, it has given them courage to go on for decades in the face of public stupidity. It is paradisical and a reward in itself seeking naught further... perhaps because a feeling of certitude inheres in the state of feeling itself. The glory of life exists without further proof for this mystic.

None of this excuses anyone from mastering the basic ideas and terminology of economics. The intelligent layman must expect also to encounter good economists who are difficult writers even though some of the best have been very good writers. He should know, moreover, that at least for a few great men ambiguity of expression has been a positive asset. But with these exceptions he may safely conclude that what is wholly mysterious in economics is not likely to be important.

Theoretical economists use their mathematical prowess the way the great stags of the forest use their antlers: to do battle with one another and to establish dominance.

As the eastbound flight reached cruising altitude, Cindy opened the latest issue of the Economist—she saved her smarter reading for public situations—when

Supply creates its own demand,” the classical economist Jean-Baptiste Say

This kind of machine-based learning is driven by a hunger for knowledge, not by a desire to show off your talent or to “signal” as we economists say.

What is the use of beauty in woman? Provided a woman is physically well made and capable of bearing children, she will always be good enough in the opinion of economists. What is the use of music? -- of painting? Who would be fool enough nowadays to prefer Mozart to Carrel, Michael Angelo to the inventor of white mustard? There is nothing really beautiful save what is of no possible use. Everything useful is ugly, for it expresses a need, and man's needs are low and disgusting, like his own poor, wretched nature. The most useful place in a house is the water-closet. For my part, saving these gentry's presence, I am of those to whom superfluities are necessaries, and I am fond of things and people in inverse ratio to the service they render me. I prefer a Chinese vase with its mandarins and dragons, which is perfectly useless to me, to a utensil which I do use, and the particular talent of mine which I set most store by is that which enables me not to guess logogriphs and charades. I would very willingly renounce my rights as a Frenchman and a citizen for the sight of an undoubted painting by Raphael, or of a beautiful nude woman, -- Princess Borghese, for instance, when she posed for Canova, or Julia Grisi when she is entering her bath. I would most willingly consent to the return of that cannibal, Charles X., if he brought me, from his residence in Bohemia, a case of Tokai or Johannisberg; and the electoral laws would be quite liberal enough, to my mind, were some of our streets broader and some other things less broad. Though I am not a dilettante, I prefer the sound of a poor fiddle and tambourines to that of the Speaker's bell. I would sell my breeches for a ring, and my bread for jam. The occupation which best befits civilized man seems to me to be idleness or analytically smoking a pipe or cigar. I think highly of those who play skittles, and also of those who write verse. You may perceive that my principles are not utilitarian, and that I shall never be the editor of a virtuous paper, unless I am converted, which would be very comical. Instead of founding a Monthyon prize for the reward of virtue, I would rather bestow -- like Sardanapalus, that great, misunderstood philosopher -- a large reward to him who should invent a new pleasure; for to me enjoyment seems to be the end of life and the only useful thing on this earth. God willed it to be so, for he created women, perfumes, light, lovely flowers, good wine, spirited horses, lapdogs, and Angora cats; for He did not say to his angels, 'Be virtuous,' but, 'Love,' and gave us lips more sensitive than the rest of the skin that we might kiss women, eyes looking upward that we might behold the light, a subtile sense of smell that we might breathe in the soul of the flowers, muscular limbs that we might press the flanks of stallions and fly swift as thought without railway or steam-kettle, delicate hands that we might stroke the long heads of greyhounds, the velvety fur of cats, and the polished shoulder of not very virtuous creatures, and, finally, granted to us alone the triple and glorious privilege of drinking without being thirsty, striking fire, and making love in all seasons, whereby we are very much more distinguished from brutes than by the custom of reading newspapers and framing constitutions.

There is one great advantage to being an academic economist in France: here, economists are not highly respected in the academic and intellectual world or by political and financial elites. Hence they must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything.

Halfway through the second term of Franklin Roosevelt, the New Deal braintrusters began to worry about mounting popular concern over the national debt. In those days the size of the national debt was on everyone’s mind. Indeed, Franklin Roosevelt had talked himself into office, in 1932, in part by promising to hack away at a debt which, even under the frugal Mr. Hoover, the people tended to think of as grown to menacing size. Mr. Roosevelt’s wisemen worried deeply about the mounting tension ... And then, suddenly, the academic community came to the rescue. Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes’s discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a Maypole, was a jubilant FDR, cigarette tilted almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: “We owe it to ourselves.” With five talismanic words, the planners had disposed of the problem of deficit spending. Anyone thenceforward who worried about an increase in the national debt was just plain ignorant of the central insight of modern economics: What do we care how much we - the government - owe so long as we owe it to ourselves? On with the spending. Tax and tax, spend and spend, elect and elect ...

At present the United States has the unenviable distinction of being the only great industrial nation without compulsory health insurance,” the Yale economist Irving Fisher pointed out in 1916.

Economists who simply advised leaving the economy alone, governments whose first instincts, apart from protecting the gold standard by deflationary policies, was to stick to financial orthodoxy, balance budgets and cut costs, were visibly not making the situation better. Indeed, as the depression continued, it was argued with considerable force not least by J.M. Keynes who consequently became the most influential economist of the next forty years - that they were making the depression worse. Those of us who lived through the years of the Great Slump still find it almost impossible to understand how the orthodoxies of the pure free market, then so obviously discredited, once again came to preside over a global period of depression in the late 1980s and 1990s, which, once again, they were equally unable to understand or to deal with. Still, this strange phenomenon should remind us of the major characteristic of history which it exemplifies: the incredible shortness of memory of both the theorists and practitioners of economics. It also provides a vivid illustration of society's need for historians, who are the professional remembrancers of what their fellow-citizens wish to forget.

FOR MORE THAN FIFTY YEARS, AT&T had remained intact at the pleasure of the United States government—always, as the economist Peter Temin points out, “operating at the limit of what the antitrust laws would allow.

The big reason poor people are poor is because they don’t have enough money,” notes economist Charles Kenny, “and it shouldn’t come as a huge surprise that giving them money is a great way to reduce that problem.”14

Lake Michigan, impossibly blue, the morning light bouncing toward the city. Lake Michigan frozen in sheets you could walk on but wouldn't dare. Lake Michigan, gray out a high-rise window, indistinguishable from the sky. Bread, hot from the oven. Or even stale in the restaurant basket, rescued by salty butter. The Cubs winning the pendant someday. The Cubs winning the Series. The Cubs continuing to lose. His favorite song, not yet written. His favorite movie, not yet made. The depth of an oil brushstroke. Chagall's blue window. Picasso's blue man and his guitar. ... The sound of an old door creaking open. The sound of garlic cooking. The sound of typing. The sound of commercials from the next room, when you were in the kitchen getting a drink. The sound of someone else finishing a shower. ... Dancing till the floor was an optional landing place. Dancing elbows out, dancing with arms up, dancing in a pool of sweat. All the books he hadn't started. The man at Wax Trax! Records with the beautiful eyelashes. The man who sat every Saturday at Nookies, reading the Economist and eating eggs, his ears always strangely red. The ways his own life might have intersected with theirs, given enough time, enough energy, a better universe. The love of his life. Wasn't there supposed to be a love of his life? ... His body, his own stupid, slow, hairy body, its ridiculous desires, its aversions, its fears. The way his left knee cracked in the cold. The sun, the moon, the sky, the stars. The end of every story. Oak trees. Music. Breath. ...

Economists focus on income, public health scholars focus on mortality and morbidity, and demographers focus on births, deaths, and the size of populations. All of these factors contribute to wellbeing, but none of them is wellbeing.

To the accepted Christian tradition that man must be free to follow his conscience in moral matters if his actions are to be of any merit, the economists added the further argument that he should be free to make full use of his knowledge and skill, that he must be allowed to be guided by his concern for the particular things of which he knows and for which he cares, if he is to make as great a contribution to the common purposes of society as he is capable of making.

Countless aid organizations and governments are convinced that they know what poor people need, and invest in schools, solar panels, or cattle. And, granted, better a cow than no cow. But at what cost? A Rwandan study estimated that donating one pregnant cow costs around $3,000 (including a milking workshop). That’s five years’ wages for a Rwandan.17 Or take the patchwork of courses offered to the poor: Study after study has shown that they cost a lot but achieve little, whether the objective is learning to fish, read, or run a business.18 “Poverty is fundamentally about a lack of cash. It’s not about stupidity,” stresses the economist Joseph Hanlon. “You can’t pull yourself up by your bootstraps if you have no boots.”19 The great thing about money is that people can use it to buy things they need instead of things that self-appointed experts think they need. And, as it happens, there is one category of product which poor people do not spend their free money on, and that’s alcohol and tobacco. In fact, a major study by the World Bank demonstrated that in 82% of all researched cases in Africa, Latin America, and Asia, alcohol and tobacco consumption actually declined.20

The great twentieth-century economist John Maynard Keynes is often credited with having popularized the idea that “if you owe the bank one hundred pounds, that’s your problem. If you owe the bank one hundred million pounds, that’s the bank’s problem.

There are some people who, if they don't already know, you can't tell them. As the great philosopher of uncertainty Yogi berra once said, "Don't waste your time trying to fight forecasters, stock analysts, economists and social scientists, except to play pranks on them.

After the New Deal, economists began referring to America’s retirement-finance model as a “three-legged stool.” This sturdy tripod was composed of Social Security, private pensions, and combined investments and savings. In recent years, of course, two of those legs have been kicked out. Many Americans saw their assets destroyed by the Great Recession; even before the economic collapse, many had been saving less and less. And since the 1980s, employers have been replacing defined-benefit pensions that are funded by employers and guarantee a monthly sum in perpetuity with 401(k) plans, which often rely on employee contributions and can run dry before death. Marketed as instruments of financial liberation that would allow workers to make their own investment choices, 401(k)s were part of a larger cultural drift in America away from shared responsibilities toward a more precarious individualism. Translation: 401(k)s are vastly cheaper for companies than pension plans. “Over the last generation, we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as by government, onto the fragile balance sheets of American families,” Yale political scientist Jacob S. Hacker writes in his book The Great Risk Shift. The overarching message: “You are on your own.

The experience of France in the Belle Époque proves, if proof were needed, that no hypocrisy is too great when economic and financial elites are obliged to defend their interests—and that includes economists, who currently occupy an enviable place in the US income hierarchy.

The time has surely gone in which economists could analyze in great detail two individuals exchanging nuts for berries on the edge of the forest and then feel that their analysis of the process of exchange was complete, illuminating though this analysis may be in certain respects.

In the world of words, the hardest facts can be made to vanish into thin air by a clever catchword or soaring rhetoric. In a public discourse where slogans and images have too often replaced facts and logic, words have indeed become for some what Hobbes called them, centuries ago—the money of fools,114 often counterfeit money created by clever people. Our educational system, which might have been expected to develop students’ ability to “cross-examine the facts,” as the great economist Alfred Marshall once put it, has itself become one of the fountainheads of insinuations and obfuscations.

This book aims to learn from that mistake. One of its goals is to ask whether Minsky’s demand for a theory that generates the possibility of great depressions is reasonable and, if so, how economists should respond. I believe it is quite reasonable. Many mainstream economists react by arguing that crises are impossible to forecast: if they were not, they would either already have happened or been forestalled by rational agents. That is certainly a satisfying doctrine, since few mainstream economists foresaw the crisis, or even the possibility of one. For the dominant school of neoclassical economics, depressions are a result of some external (or, as economists say, ‘exogenous’) shock, not of forces generated within the system.

The oligarchy that emerged in the Russian Federation after 1991 had a great deal to do with the centralization of production under communism, the ideas of Russian economists thereafter, and the greed of Russia’s leaders. American conventional wisdom contributed to the disaster by suggesting that markets would create institutions, rather than stressing that institutions were needed for markets.

Some very elegant dishes were served up to himself and a few more of us, whilst those placed before the rest of the company consisted simply of cheap dishes and scraps. There were, in small bottles, three different kinds of wine; not that the guest might take their choice, but that they might not have any option in their power; one kind being for himself, and for us; another sort for his lesser friends (for it seems he has degrees of friends), and the third for his own freedmen and ours. My neighbour . . . asked me if I approved the arrangement. Not at all, I told him. "Pray, then," he asked, "what is your method upon such occasions?" "Mine," I returned, "is to give all my visitors the same reception; for when I give an invitation, it is to entertain, not distinguish, my company: I place every man upon my own level whom I admit to my table." . . . He replied, "This must cost you a great deal." "Not in the least." "How can that be?" "Simply because, although my freedmen don't drink the same wine as myself, yet I drink the same as they do." And, no doubt about it, if a man is wise enough to moderate his appetite, he will not find it such a very expensive thing to share with all his visitors what he takes himself. Restrain it, keep it in, if you wish to be true economist. You will find temperance a far better way of saving than treating other people rudely can be. . . . Remember, then, nothing is more to be avoided than this modern alliance of luxury with meanness; odious enough when existing separate and distinct, but still more hateful where you meet with them together.

The presence of the migrants “in such large numbers crushed and stagnated the progress of Negro life,” the economist Sadie Mossell wrote early in the migration to Philadelphia. Newly available census records suggest the opposite to be true. According to a growing body of research, the migrants were, it turns out, better educated than those they left behind in the South and, on the whole, had nearly as many years of schooling as those they encountered in the North. Compared to the northern blacks already there, the migrants were more likely to be married and remain married, more likely to raise their children in two-parent households, and more likely to be employed. The migrants, as a group, managed to earn higher incomes than northern-born blacks even though they were relegated to the lowest-paying positions. They were less likely to be on welfare than the blacks they encountered in the North, partly because they had come so far, had experienced such hard times, and were willing to work longer hours or second jobs in positions that few northern blacks, or hardly anyone else for that matter, wanted, as was the case with Ida Mae Gladney, George Swanson Starling, Robert Foster, and millions of others like them.

the economists Milton Friedman and Anna Schwartz pieced together an extraordinarily detailed history of money in America. They showed that the Fed’s policy of making money scarcer and raising interest rates—that is to say, following the rules of the gold standard—turned what would have been a nasty but ordinary downturn into a cataclysm. The Fed, and the gold standard it managed, caused the Great Depression.

In this tiny interval of the twenty-first century, we, the human species, will either learn to become a life-enhancing element within the greater Earth community . . . or we will not. If we fail, humanity will be reduced to a small number, we will have forsaken our potential as a species (this time around, at least) and we will have perpetrated the extinction of many thousands of species, perhaps millions — beyond those that have already perished at our hands. And yet we now behold the possibility of a radical and foundational shift in human culture — from a suicidal, life-destroying element to a way of life worthy of our unique human potential and of Earth's dream for itself. What lies before us is the opportunity and imperative for a thorough cultural transformation — what eco-philosopher Joanna Macy calls the Great Turning, the transition from an egocentric “Industrial Growth Society” to a soulcentric “Life-sustaining Society,” or what economist David Korten in The Great Turning calls the transition “from Empire to Earth Community.” The cultural historian Thomas Berry refers to this vital endeavor as the Great Work of our time.2 It is every person's responsibility and privilege to contribute to this metamorphosis. Transformational

Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings.

All respected economists know that long periods of prosperity have never been assured by markets, but by political leaders who guarantee a high-quality education, spur a dynamic demography through pro-natal policies, encourage investments by great national programs, keep taxes low, limit imports, assure a free and transparent domestic market, support national entrepreneurs, develop research and strictly control immigration.

But this is not to say that parents don’t matter. Plainly they matter a great deal. Here is the conundrum: by the time most people pick up a parenting book, it is far too late. Most of the things that matter were decided long ago—who you are, whom you married, what kind of life you lead. If you are smart, hardworking, well educated, well paid, and married to someone equally fortunate, then your children are more likely to succeed.

Corporations go to great lengths to employ geniuses: technologists, designers, financial engineers, economists, artists even. I’ve seen it happen,’ he said. ‘But what have they done with them? They channel all that talent and creativity towards humanity’s destruction. Even when it is creative, Eva, capitalism is extractive. In search of shareholder profit, corporations have put these geniuses in charge of extracting the last morsel of value from humans and from the earth, from the minerals in its guts to the life in its oceans. And these brilliant minds have been used to cajole governments into accepting their raids on the planet’s resources by creating markets for them: markets for carbon dioxide and other pollutants – phoney markets controlled by their employers! Unlike the East India Company, the Technostructure does not need its own armies. It owns our states and their armies, because it controls what we think. The dirtier the industry, the richer and more despised, the more its captains have been able to tap into the rivers of debt-derived money to purchase influence and to blunt opposition. Previously they would buy newspapers and set up TV stations; now they employ armies of lobbyists, found think tanks, litter the Internet with their trolls and, of course, direct monumental campaign donations to the chief enablers of our species’ extinction, the politicians.

The great irony, then, is that the nation’s most famous modern conservative economist became the father of Big Government, chronic deficits, and national fiscal bankruptcy. It was Friedman who first urged the removal of the Bretton Woods gold standard restraints on central bank money printing, and then added insult to injury by giving conservative sanction to perpetual open market purchases of government debt by the Fed. Friedman’s monetarism thereby institutionalized a régime which allowed politicians to chronically spend without taxing. Likewise, it was the free market professor of the Chicago school who also blessed the fundamental Keynesian proposition that Washington must continuously manage and stimulate the national economy. To be sure, Friedman’s “freshwater” proposition, in Paul Krugman’s famous paradigm, was far more modest than the vast “fine-tuning” pretensions of his “salt-water” rivals. The saltwater Keynesians of the 1960s proposed to stimulate the economy until the last billion dollars of potential GDP was realized; that is, they would achieve prosperity by causing the state to do anything that was needed through a multiplicity of fiscal interventions. By contrast, the freshwater Keynesian, Milton Friedman, thought that capitalism could take care of itself as long as it had precisely the right quantity of money at all times; that is, Friedman would attain prosperity by causing the state to do the one thing that was needed through the single spigot of M1 growth.

The implications of introducing a second intelligent species onto Earth are far-reaching enough to deserve hard thinking.”1 So ended The Economist magazine’s review of Nick Bostrom’s Superintelligence. Most would interpret this as a classic example of British understatement. Surely, you might think, the great minds of today are already doing this hard thinking—engaging in serious debate, weighing up the risks and benefits, seeking solutions, ferreting out loopholes in solutions, and so on. Not yet, as far as I am aware.

The lesson: Once our minds slip into default mode, it takes a great deal of flexibility to override this state. This is why specialists are often the last ones to notice commonsense solutions to simple problems, a limitation economist Thorstein Veblen called the “trained incapacity” of experts. Inflated confidence leads old hands to ignore contextual information, and the more familiar an expert is with a particular kind of problem, the more likely he is to pull a prefabricated solution out of his memory bank rather than respond to the specific case at hand.

As the brilliant economist-educator Russell Roberts points out, chroniclers of the cult of celebrity have an extensive pedigree. Writing in The Theory of Moral Sentiments in 1759, Adam Smith points out, 'We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous.' This perfectly anticipates the modern day cult around Z list celebrities. He argues that a fascination with others who are loved is part of our natural desire to be loved ourselves. So a natural obsession with celebrities is funneled toward managers, regardless of their virtue.

What is America to do about the rising tide of horror? Visitors from Europe or Japan shake their heads in wonder at the squalor and barbarity of America’s cities. They could be forgiven for thinking that the country had viciously and deliberately neglected its poor and its blacks. Of course, it has not. Since the 1960s, the United States has poured a staggering amount of money into education, housing, welfare, Medicaid, and uplift programs of every kind. Government now spends $240 billion a year to fight poverty,1278 and despite the widespread notion that spending was curtailed during Republican administrations, it has actually gone up steadily, at a rate that would have astonished the architects of the Great Society. Federal spending on the poor, in real 1989 dollars, quadrupled from 1965 to 1975, and has nearly doubled since then.1279 As the economist Walter Williams has pointed out, with all the money spent on poverty since the 1960s, the government could have bought every company on the Fortune 500 list and nearly all the farmland in America.1280 What do we have to show for three decades and $2.5 trillion worth of war on poverty? The truth is that these programs have not worked. The truth that America refuses to see is that these programs have made things worse.

The virtues are economists, but some of the vices are also...Pride is handsome, economical; pride eradicates so many vices, letting none subsist but itself, that it seems as if it were a great gain to exchange vanity for pride. Pride can go without domestics, without fine clothes, can live in a house with two rooms, can eat potato, purslain, beans, lyed corn, can work on the soil, can travel afoot, can talk with poor men, or sit silent well contented in fine saloons. But vanity costs money, labor, horses, men, women, health and peace, and is still nothing at last; a long way leading nowhere. Only one drawback; proud people are intolerably selfish, and the vain are gentle and giving.

The economy has ceased hiding itself behind mystifying words like God, devil, fatality, grace, damnation, nature, progress, duty, and necessity, with which, over the years, it gave itself an inescapable credibility. It no longer troubles itself with the frilly liberals, it is no longer bothered by the leninists in blue jeans — it laughs at the idea of taking any great leaps while wearing fascist jackboots or socialist bootees. It’s so simple and obvious it stands naked, and its omnipresence makes it familiar and familial. Reduced to the final necessity of survival, the economy brings together all its past lies; the lie that there is no hope for humanity’s survival outside of the economy.

That economics has a considerable conceptual apparatus with an appropriate terminology can not be a serious ground for complaint. Economic phenomena, ideas, instruments of analysis exist. They require names. Education in economics is, in considerable measure, an introduction to this terminology and to the ideas that it denotes. Anyone who has difficulties with the ideas should complete his education or, following an exceedingly well-beaten path, leave the subject alone. It is sometimes said that the economist has a special obligation to make himself understood because his subject is of such great and popular importance. By this rule the nuclear physicist would have to speak in monosyllables.

For parents—and parenting experts—who are obsessed with child-rearing technique, this may be sobering news. The reality is that technique looks to be highly overrated. But this is not to say that parents don’t matter. Plainly they matter a great deal. Here is the conundrum: by the time most people pick up a parenting book, it is far too late. Most of the things that matter were decided long ago—who you are, whom you married, what kind of life you lead. If you are smart, hardworking, well educated, well paid, and married to someone equally fortunate, then your children are more likely to succeed. (Nor does it hurt, in all likelihood, to be honest, thoughtful, loving, and curious about the world.)

Why Did the Stock Market Crash? The most persuasive explanation for the 1929 stock market crash blames the Federal Reserve. Throughout the 1920s, but particularly in 1927, the Fed pumped artificial credit into the loan market, pushing down interest rates from their free-market level. Lower interest rates exaggerated the feeling of prosperity, and misled businesses and investors. In a laissez-faire market where money and banking are not disturbed by the government, the interest rate is a price that tells borrowers how much capital citizens have saved and made available to fund projects. But when the Fed adopts an “easy-money” policy by pushing down interest rates, this signal is distorted and the interest rate no longer does its job of channeling the available capital into the most deserving projects. Instead, an unsustainable boom develops, with firms hiring workers and starting production processes that will have to be discontinued once the Fed slows down its injections of new money. Many economists point to the Fed hikes in interest rates during 1928 and 1929 as the cause of the stock market crash. In a sense this is true, but the deeper point is that the crash was made inevitable by the bubble in the stock market fueled by the artificially cheap credit preceding the hikes. In other words, when the Fed stopped pumping in gobs of new money that pushed up the stock market, investors came to their senses and asset prices plunged back towards their pre-bubble level.

What the economist and historian Deirdre N. McCloskey calls the Great Enrichment began in seventeenth-century Holland, gathered steam—literally—in eighteenth-century Britain and the American colonies. Although agriculture was invented about 11,000 years ago, it took 4,000 years for it to supplant hunting and gathering as mankind’s main source of food. This made possible the rise of cities, which involved transactions that led to the development of writing about 5,000 years ago and mathematics about 4,000 years ago. But modernity means velocity. It took 4,000 years for mankind to adapt harnesses to the long necks of horses. But just sixty-six years after the Wright brothers’ first flight, which covered a distance shorter than the wingspan of a Boeing 747, a man walked on the moon.

The economist John Maynard Keynes once said, “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” He should have included defunct law professors. The state we find ourselves in today can be traced back to the economists of the Chicago School. We would not have highly concentrated industries if it were not for Robert Bork and the Chicago School. Like all revolutions, an organized group of ideologues developed the ideas and spread them zealously. The Chicago School, led by Milton Friedman and George Stigler, was the vanguard of attack against antitrust laws. The great irony is that they decried monopolies and concentration of power, but in practice they created all the conditions necessary for them.

Another great mystery for economists and central bankers is why businesses are not investing more. It is a puzzle why they're returning almost all cash to shareholders rather than doing more research and development or spending it on new factories and equipment. Larry Summers, the former Secretary of the Treasury and Harvard economics professor, shares the view with the 1930s economist Alvin Hansen that we're experiencing a “secular stagnation.” Supposedly, the economies of the industrial world suffer from “an imbalance resulting from an increasing propensity to save and a decreasing propensity to invest.”59 This means that the slowdown is structural and not cyclical. He blames inequality and technology. “Greater saving has been driven by increases in inequality and in the share of income going to the wealthy.

Day after day we seek an answer to the ageless question Aristotle posed in Ethics: How should a human being lead his life? But the answer eludes us, hiding behind a blur of racing hours as we struggle to fit our means to our dreams, fuse idea with passion, turn desire into reality. (...) Traditionally humankind has sought the answer to Aristotle's question from the four wisdoms - philosophy, science, religion, art - taking insight from each to bolt together a livable meaning. But today who reads Hegel or Kant without an exam to pass? Science, once the great explicator, garbles life with complexity and perplexity. Who can listen without cynicism to economists, sociologists, politicians? Religion, for many, has become an empty ritual that masks hypocrisy. As our faith in traditional ideologies diminishes, we turn to the source we still believe in: the art of story.

Thomas Piketty, an economist at the Paris School of Economics, warned in his zeitgeist-shifting book, Capital in the Twenty-First Century, that without aggressive government intervention economic inequality in the United States and elsewhere was likely to rise inexorably, to the point where the small portion of the population that currently held a growing slice of the world’s wealth would in the foreseeable future own not just a quarter, or a third, but perhaps half of the globe’s wealth, or more. He predicted that the fortunes of those with great wealth, and their inheritors, would increase at a faster rate of return than the rate at which wages would grow, creating what he called “patrimonial capitalism.” This dynamic, he predicted, would widen the growing chasm between the haves and the have-nots to levels mimicking the aristocracies of old Europe and banana republics.

In 1910, capital inequality there was very high, though still markedly lower than in Europe: the top decile owned about 80 percent of total wealth and the top centile around 45 percent (see Figure 10.5). Interestingly, the fact that inequality in the New World seemed to be catching up with inequality in old Europe greatly worried US economists at the time. Willford King’s book on the distribution of wealth in the United States in 1915—the first broad study of the question—is particularly illuminating in this regard.13 From today’s perspective, this may seem surprising: we have been accustomed for several decades now to the fact that the United States is more inegalitarian than Europe and even that many Americans are proud of the fact (often arguing that inequality is a prerequisite of entrepreneurial dynamism and decrying Europe as a sanctuary of Soviet-style egalitarianism). A century ago, however, both the perception and the reality were strictly the opposite: it was obvious to everyone that the New World was by nature less inegalitarian than old Europe, and this difference was also a subject of pride.

A peasant who has harvested twenty sacks of wheat, which he with his family proposes to consume, deems himself twice as rich as if he had harvested only ten; likewise a housewife who has spun fifty yards of linen believes that she is twice as rich as if she had spun but twentyfive. Relatively to the household, both are right; looked at in their external relations, they may be utterly mistaken. If the crop of wheat is double throughout the whole country, twenty sacks will sell for less than ten would have sold for if it had been but half as great; so, under similar circumstances, fifty yards of linen will be worth less than twenty-five: so that value decreases as the production of utility increases, and a producer may arrive at poverty by continually enriching himself. And this seems unalterable, inasmuch as there is no way of escape except all the products of industry become infinite in quantity, like air and light, which is absurd. God of my reason! Jean Jacques would have said: it is not the economists who are irrational; it is political economy itself which is false to its definitions. Mentita est iniquitas sibi.

Inflation is not caused by increasing the fiduciary circulation. It begins on the day when the purchaser is obliged to pay, for the same goods, a higher sum than that asked the day before. At that point, one must intervene. Even to Schacht, I had to begin by explaining this elementary truth: that the essential cause of the stability of our currency was to be sought for in our concentration camps. The currency remains stable when the speculators are put under lock and key. I also had to make Schacht understand that excess profits must be removed from economic circulation. I do not entertain the illusion that I can pay for everything out of my available funds. Simply, I've read a lot, and I've known how to profit by the experience of events in the past. Frederick the Great, already, had gradually withdrawn his devaluated thalers from circulation, and had thus re established the value of his currency. All these things are simple and natural. The only thing is, one mustn't let the Jew stick his nose in. The basis of Jewish commercial policy is to make matters incomprehensible for a normal brain. People go into ecstasies of confidence before the science of the great economists. Anyone who doesn't understand is taxed with ignorance! At bottom, the only object of all these notions is to throw everything into confusion. The very simple ideas that happen to be mine have nowadays penetrated into the flesh and blood of millions. Only the professors don't understand that the value of money depends on the goods behind that money. One day I received some workers in the great hall at Obersalzberg, to give them an informal lecture on money. The good chaps understood me very well, and rewarded me with a storm of applause. To give people money is solely a problem of making paper. The whole question is to know whether the workers are producing goods to match the paper that's made. If work does not increase, so that production remains at the same level, the extra money they get won't enable them to buy more things than they bought before with less money. Obviously, that theory couldn't have provided the material for a learned dissertation. For a distinguished economist, the thing is, no matter what you're talking about, to pour out ideas in complicated meanderings and to use terms of Sibylline incomprehensibility.

It is often asserted that education is breaking down because of overspecialisation. But this is only a partial and misleading diagnosis. Specialisation is not in itself a faulty principle of education. What would be the alternative - an amateurish smattering of all major subjects? Or a lengthy studium generale in which men are forced to spend their time sniffing at subjects which they do not wish to pursue, while they are being kept away from what they want to learn? This cannot be the right answer, since it can only lead to the type of intellectual man, whom Cardinal Newman castigated -'an intellectual man, as the world now conceives of him. ,..one who is full of "views" on all subjects of philosophy, on all matters of the day'. Such 'viewiness' is a sign of ignorance rather than knowledge. 'Shall I teach you the meaning of knowledge?' said Confucius. 'When you know a thing to recognise that you know it, and when you do not, to know that you do not know - that is knowledge.' What is at fault is not specialisation, but the lack of depth with which the subjects are usually presented, and the absence of meta- physical awareness. The sciences are being taught without any awareness of the presuppositions of science, of the meaning and significance of scientific laws, and of the place occupied by the natural sciences within the whole cosmos of human thought. The result is that the presuppositions of science are normally mistaken for its findings. Economics is being taught without any awareness of the view of human nature that underlies present-day economic theory. In fact, many economists are themselves unaware of the fact that such a view is implicit in their teaching and that nearly all their theories would have to change if that view changed. How could there be a rational teaching of politics without pressing all questions back to their metaphysical roots? Political thinking must necessarily become confused and end in 'double-talk' if there is a continued refusal to admit the serious study of the meta- physical and ethical problems involved. The confusion is already so great that it is legitimate to doubt the educational value of studying many of the so-called humanistic subjects. I say 'so- called' because a subject that does not make explicit its view of human nature can hardly be called humanistic. All

Fervent partisans of democracy often grant that democracy and the market are substitutes. As Kuttner puts it, “The democratic state remains the prime counterweight to the market.”45 Their complaint is that the public has less and less say over its destiny because corporations have more and more say over theirs. To “save democracy,” the people must reassert its authority. Fair enough. Though their opponents greatly overstate the extent of privatization and deregulation, these policies take decisions out of the hands of majorities and put them into the hands of business owners. But the critics rarely wonder if this transfer might be desirable. They treat less reliance on democracy as automatically objectionable. This is another symptom of democratic fundamentalism. If all that an economist had to say against a government program were, “That’s government intervention. Government is supplanting markets!” he would be pigeonholed, then marginalized, as a market fundamentalist. But when an equally simplistic cry goes up in the name of democracy, there is a sympathetic audience. It is logically possible that clear-eyed business greed makes better decisions than confused voter altruism. Why not at least compare their performance, instead of prejudging?

It's not that we're dumb. On the contrary, many millions of people have exerted great intelligence and creativity in building the modern world. It's more that we're being swept into unknown and dangerous waters by accelerating economic growth. On just one single day of the days I have spent writing this book, as much world trade was carried out as in the whole of 1949; as much scientific research was published as in the whole of 1960; as many telephone calls were made as in all of 1983; as many e-mails were sent as in 1990.11 Our natural, human, and industrial systems, which evolve slowly, are struggling to adapt. Laws and institutions that we might expect to regulate these flows have not been able to keep up. A good example is what is inaccurately described as mindless sprawl in our physical environment. We deplore the relentless spread of low-density suburbs over millions of acres of formerly virgin land. We worry about its environmental impact, about the obesity in people that it fosters, and about the other social problems that come in its wake. But nobody seems to have designed urban sprawl, it just happens-or so it appears. On closer inspection, however, urban sprawl is not mindless at all. There is nothing inevitable about its development. Sprawl is the result of zoning laws designed by legislators, low-density buildings designed by developers, marketing strategies designed by ad agencies, tax breaks designed by economists, credit lines designed by banks, geomatics designed by retailers, data-mining software designed by hamburger chains, and automobiles designed by car designers. The interactions between all these systems and human behavior are complicated and hard to understand-but the policies themselves are not the result of chance. "Out of control" is an ideology, not a fact.

When the time comes, & I hope it comes soon, to bury this era of moral rot & the defiling of our communal, social, & democratic norms, the perfect epitaph for the gravestone of this age of unreason should be Iowa Senator Chuck Grassley's already infamous quote: "I think not having the estate tax recognizes the people that are investing... as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” Grassley's vision of America, quite frankly, is one I do not recognize. I thought the heart of this great nation was not limited to the ranks of the plutocrats who are whisked through life in chauffeured cars & private jets, whose often inherited riches are passed along to children, many of whom no sacrifice or service is asked. I do not begrudge wealth, but it must come with a humility that money never is completely free of luck. And more importantly, wealth can never be a measure of worth. I have seen the waitress working the overnight shift at a diner to give her children a better life, & yes maybe even take them to a movie once in awhile - and in her, I see America. I have seen the public school teachers spending extra time with students who need help & who get no extra pay for their efforts, & in them I see America. I have seen parents sitting around kitchen tables with stacks of pressing bills & wondering if they can afford a Christmas gift for their children, & in them I see America. I have seen the young diplomat in a distant foreign capital & the young soldier in a battlefield foxhole, & in them I see America. I have seen the brilliant graduates of the best law schools who forgo the riches of a corporate firm for the often thankless slog of a district attorney or public defender's office, & in them I see America. I have seen the librarian reshelving books, the firefighter, police officer, & paramedic in service in trying times, the social worker helping the elderly & infirm, the youth sports coaches, the PTA presidents, & in them I see America. I have seen the immigrants working a cash register at a gas station or trimming hedges in the frost of an early fall morning, or driving a cab through rush hour traffic to make better lives for their families, & in them I see America. I have seen the science students unlocking the mysteries of life late at night in university laboratories for little or no pay, & in them I see America. I have seen the families struggling with a cancer diagnosis, or dementia in a parent or spouse. Amid the struggles of mortality & dignity, in them I see America. These, & so many other Americans, have every bit as much claim to a government working for them as the lobbyists & moneyed classes. And yet, the power brokers in Washington today seem deaf to these voices. It is a national disgrace of historic proportions. And finally, what is so wrong about those who must worry about the cost of a drink with friends, or a date, or a little entertainment, to rephrase Senator Grassley's demeaning phrasings? Those who can't afford not to worry about food, shelter, healthcare, education for their children, & all the other costs of modern life, surely they too deserve to be able to spend some of their “darn pennies” on the simple joys of life. Never mind that almost every reputable economist has called this tax bill a sham of handouts for the rich at the expense of the vast majority of Americans & the future economic health of this nation. Never mind that it is filled with loopholes written by lobbyists. Never mind that the wealthiest already speak with the loudest voices in Washington, & always have. Grassley’s comments open a window to the soul of the current national Republican Party & it it is not pretty. This is not a view of America that I think President Ronald Reagan let alone President Dwight Eisenhower or Teddy Roosevelt would have recognized. This is unadulterated cynicism & a version of top-down class warfare run amok. ~Facebook 12/4/17

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

gave up on the idea of creating “socialist men and women” who would work without monetary incentives. In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946. As early as 1918, the principle had been recognized that an innovator should receive monetary rewards for his innovation, but the rewards set were small and unrelated to the value of the new technology. This changed only in 1956, when it was stipulated that the bonus should be proportional to the productivity of the innovation. However, since productivity was calculated in terms of economic benefits measured using the existing system of prices, this was again not much of an incentive to innovate. One could fill many pages with examples of the perverse incentives these schemes generated. For example, because the size of the innovation bonus fund was limited by the wage bill of a firm, this immediately reduced the incentive to produce or adopt any innovation that might have economized on labor.

The vast majority of energy that powers today’s global economy is from the sun. Some of that solar energy, such as sunshine and wind, arrives in real time each day. Some has been stored in recent times, like the energy bound up in crops, livestock and trees. And some has been stored up since ancient times, particularly the fossil fuels of oil, coal and gas. Which of these sources of solar energy the economy uses matters a great deal, and here’s why. It was thanks to the balance between real-time solar energy entering Earth’s atmosphere and heat escaping back out into space that Earth maintained a steady and benevolent average temperature during the Holocene. Over the past two hundred years, however, and especially since 1950, humanity’s use of ancient fossil-fuel energy has released carbon dioxide and other greenhouse gases into the atmosphere at an entirely unprecedented rate, with potentially dangerous consequences. Most of these gases occur naturally in the atmosphere and, together with water vapour, act like a blanket around the Earth, keeping its surface much warmer than it otherwise would be.

As both an economist and public-health specialist put it: “Only saving lives will save livelihoods”,[23] making it clear that only policy measures that place people’s health at their core will enable an economic recovery, adding: “If governments fail to save lives, people afraid of the virus will not resume shopping, traveling, or dining out. This will hinder economic recovery, lockdown or no lockdown.

Analysts such as Jeremy Rifkin believe that today’s emerging horizontal networks of renewable energy generation and 3D printing are set to amplify this trend. If they do, it could result in a great deal of economic value that was once sold at a profit in the marketplace being shared for low or no cost in the collaborative commons.

Another recent event is the almost-instant bankruptcy, in 1998, of a financial investment company (hedge fund) called Long-Term Capital Management (LTCM), which used the methods and risk expertise of two “Nobel economists,” who were called “geniuses” but were in fact using phony, bell curve–style mathematics while managing to convince themselves that it was great science and thus turning the entire financial establishment into suckers.

Carlyle has a specific issue in mind, a case where he wanted to ridicule economists for objecting to something that was the subject of considerable feeling and heart, something that Carlyle had defended with great emotion. What was this issue that the economists were being so negative about? Slavery. Carlyle was upset because the economists were against slavery. He argued for the reintroduction of slavery in the West Indies and was annoyed that the economists railed against it.

There never was a ‘canal to Kamchatka’, any more than there was a plan for animating the Dead Sea. A canal construction mania, however, did take place in England in the early 1790s. Canals were capital-intensive projects that took years to complete and even longer to pay back. Such long-dated investments are inevitably sensitive to changes in the discount rate. It is no surprise, therefore, to discover that canal-projecting was most intense when interest rates reached a low point.26 The economist and statistician Thomas Tooke considered the fall in interest rates, which dipped below 3 per cent in the 1790s, as ‘both a cause and an effect of the great extension of the country bank system which about that time took place’.27 The canal mania ended with a banking crisis in 1793 after war broke out with Revolutionary France.

Bagehot penned an editorial (The Economist, 23 November 1867) ‘On the Dangers of Lending to Semi-Civilised Countries’. The borrower under scrutiny was Egypt. It was not a question of that country’s great resources or agricultural fertility. Rather, what is required for the repayment of foreign debts, wrote Bagehot, is ‘a continuous polity; a fixed political morality; and a constant possession of money’. Egypt did not possess these qualities. The editorial concluded starkly: ‘We lend to countries whose condition we do not know, and whose want of civilisation we do not consider, and, therefore, we lose our money.’66

hindrances and its inability to resume the path of economic growth. The United States had in truth become the greatest economic and military power in the world but had no interest in taking over the world’s leadership from the hands of Great Britain. History gives us examples of what happens when a global hegemonic power ceases to exercise its dominant role, either from isolationist self-interest or from simple weakness, while the emerging power does not have enough interest or strength to assume the leadership. Basically, the function of a hegemony is to provide what economists call “global public goods,” such as world public order via military supremacy or international institutions that facilitate orderly world trade, international law or the preservation of the environment. If no single power has the strength or interest to provide these global public goods, the most likely consequence is permanent conflict, global recession, genocides and, in the end, war. Furthermore, when the ambivalence of the world’s leader coincides with a medium-sized power harbouring pretension of domination in its region, as did Germany after 1925, the likelihood of a worldwide conflagration increases even more.

The great economist John Maynard Keynes once calculated that from “two thousand years before Christ down to the beginning of the eighteenth century, there was really no great change in the standard of living of the average man in the civilized centers of the earth.

This ability to look beyond the obvious of the immediate seen and to foresee its later outcomes was, in Bastiat’s view, the true differentiator. “Now this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a present small evil.

Indeed, if one was a cold-hearted economist, whose sole aim was to maximise GDP, or even better GDP per head, then one’s advice on the best way to respond to the coronavirus pandemic would have been to do absolutely nothing, to ignore it entirely and let it take its course. It primarily affects the elderly; the average age of death so far in the UK has been about 80; and even then the younger deaths are mainly amongst those with other severe medical problems, co-morbidity in the jargon. This is a group largely dependent on others to help with daily living, and thus stopping their carers from producing goods and other services to swell GDP per head.

Mr Xi worries about what h e calls “historical nihilism”: a tendency that was once evident among China’s liberals (though few dare raise their heads these days) to dwell on negative aspects of the party’s history, especially during Mao’s brutal rule. Study of the four histories is intended to ensure that no such nihilism mars the party’s birthday. Instead, the idea is that only one lesson can be drawn from the party’s past century, and that is an uplifting one. There is an app to help, called “Study the Great Nation”.

JUSTIFYING OPPRESSION While history has proven Malthusianism empirically false, however, it provides the ideal foundation for justifying human oppression and tyranny. The theory holds that there isn’t enough to go around, and can never be. Therefore human aspirations and liberties must be constrained, and authorities must be empowered to enforce the constraining. During Malthus’s own time, his theory was used to justify regressive legislation directed against England’s lower classes, most notably the Poor Law Act of 1834, which forced hundreds of thousands of poor Britons into virtual slavery. 11 However, a far more horrifying example of the impact of Malthusianism was to occur a few years later, when the doctrine motivated the British government’s refusal to provide relief during the great Irish famine of 1846. In a letter to economist David Ricardo, Malthus laid out the basis for this policy: “The land in Ireland is infinitely more peopled than in England; and to give full effect to the natural resources of the country, a great part of the population should be swept from the soil.” 12 For the last century and a half, the Irish famine has been cited by Malthusians as proof of their theory of overpopulation, so a few words are in order here to set the record straight. 13 Ireland was certainly not overpopulated in 1846. In fact, based on census data from 1841 and 1851, the Emerald Isle boasted a mere 7.5 million people in 1846, less than half of England’s 15.8 million, living on a land mass about two-thirds that of England and of similar quality. So compared to England, Ireland before the famine was if anything somewhat underpopulated. 14 Nor, as is sometimes said, was the famine caused by a foolish decision of the Irish to confine their diet to potatoes, thereby exposing themselves to starvation when a blight destroyed their only crop. In fact, in 1846 alone, at the height of the famine, Ireland exported over 730,000 cattle and other livestock, and over 3 million quarts of corn and grain flour to Great Britain. 15 The Irish diet was confined to potatoes because—having had their land expropriated, having been forced to endure merciless rack-rents and taxes, and having been denied any opportunity to acquire income through manufactures or other means—tubers were the only food the Irish could afford. So when the potato crop failed, there was nothing for the Irish themselves to eat, despite the fact that throughout the famine, their homeland continued to export massive amounts of grain, butter, cheese, and meat for foreign consumption. As English reformer William Cobbett noted in his Political Register: Hundreds of thousands of living hogs, thousands upon thousands of sheep and oxen alive; thousands upon thousands of barrels of beef, pork, and butter; thousands upon thousands of sides of bacon; and thousands and thousands of hams; shiploads and boats coming daily and hourly from Ireland to feed the west of Scotland; to feed a million and a half people in the West Riding of Yorkshire, and in Lancashire; to feed London and its vicinity; and to fill the country shops in the southern counties of England; we beheld all this, while famine raged in Ireland amongst the raisers of this very food. 16 “The population should be swept from the soil.” Evicted from their homes, millions of Irish men, women, and children starved to death or died of exposure. (Contemporary drawings from Illustrated London News.)

The great economist John Maynard Keynes is supposed to have said “when the facts change, I change my mind. What do you do, sir?

the first step is to realize that success or failure sometimes arises neither from great skill nor from great incompetence but from, as the economist Armen Alchian wrote, “fortuitous circumstances.” Random processes are fundamental in nature and are ubiquitous in our everyday lives, yet most people do not understand them or think much about them.

Yes, of course, the U-shaped curve—she’d been mentioning that a lot lately, whenever Jack prodded her in this way. It was a phenomenon well known among certain economists and behavioral psychologists, that happiness, in general, over a lifetime, tended to follow a familiar pattern: people were most happy when they were young and when they were old, and least happy in the middle. It seemed that happiness spiked around age twenty, spiked again around age sixty, but bottomed out in between, which was where Jack and Elizabeth now found themselves, at the bottom of that curve, in midlife, a period that was notable not for its well-publicized “crisis” (actually a pretty rare phenomenon—only 10 percent of people reported having one) but for its slow ebb into a quiet and often befuddling restlessness and dissatisfaction. This was, Elizabeth insisted, a universal constant: the U-shaped curve pertained to both men and women, both the married and unmarried, the rich and poor, the employed and unemployed, the educated and uneducated, the parents and the child-free, in every country, every culture, every ethnicity, for all the decades that researchers had done this work—the science showed that people in midlife were carrying around with them, all the time, a feeling that was, statistically speaking, the equivalent of someone close to them having recently died. That’s how it felt, she said, that’s how far you were from your early-twenties peak, according to objective measures of well-being. Elizabeth suspected it had something to do with biology, natural selection, evolutionary pressures millions of years ago, as it had been recently shown by primatologists that great apes also experienced the exact same happiness curve, which suggested that this particular midlife sadness must have provided some kind of prehistoric advantage, must have helped our ancient primate ancestors survive. Perhaps, Elizabeth hypothesized, it was because the most vulnerable members of any troop were the young and the old, and so it was important

Lewis was interested in bringing into existence industrial unions like his own, in which he had always believed. Roosevelt was interested in bringing into American labor unions as many voters as possible and in capturing their leadership to be used to build up a powerful labor faction which could control the Democratic party and which he and his allies could control through the vast power of the government and the vast powers of the labor leaders, along with the immense financial resources that so great a labor movement would have. The Communists were interested in getting into the unions, into key positions as union officers, statisticians, economists, etc., in order to utilize the apparatus of the unions to promote the cause of revolution. I think we have to be fair in saying at this point that neither Roosevelt nor Lewis realized the peril to which they were exposing both the unions and the country. This thing called revolutionary propaganda and activity is something of an art in itself. It has been developed to a high degree in Europe where revolutionary groups have been active for half a century and where Communist revolutionary groups have achieved such success during the past 25 years.

I often feel embarassed to admit that I'm an optimist. I imagine it knocks me down a peg or two in people's estimations.But the world desperately needs more optimism. The problem is that people mistake optimism for 'blind optimism', the unfounded faith that things will just get better. Blind optimism really is dumb. And dangerous. If we sit back and do nothing, things will not turn out fine. That's not the kind of optimism I'm talking about. Optimism is seeing challenges as opportunities to make progress; it's having the confidence that there are things we can do to make a difference. We can shape the future, and we can build a great one if we want to. The economist Paul Romer makes this distinction nicely. He separates 'complacent optimism' from 'conditional optimism'.