On the forming of National Commissions:
Of all the objectionable methods of persuasion, the use of false authority seems to me the most immoral — more so even than physical coercion.
On the Economics of Conflicts of Interest:
So (Charlie) Wilson owned about one share in 2,200 (of GM stock). An economist finds it difficult to believe that such a stake would have influenced even a man who was much less honest than Wilson palpably was. Suppose that by dint of ceaseless effective efforts, Wilson had managed to get an extra $1 billion of contracts beyond its fair share for GM during his period in office (wintercow: even Stigler might never have foreseen hundreds of billions however). On this then-great sum, the company would have earned about $70 million after taxes … Wilson’s share as a stockholder would have been about $30,000 … subtracting for taxes, what manner of millionaire would risk his reputation for $22,500?
On Why a University Cannot be the Best at Everything:
There are at most 14 first-class men in any field, and more commonly there are about 6 … gather with your colleagues and make up a numbered list of the 25 best men in one of your fields — and remember that these fields are specialized. Would your department be first class if it began its staffing in each fieldwith the 25th, or even the 15th name? …and no school, not even the richest, has a wages-fund sufficient to hire one of the six best men in each field within the traditional arts and sciences. Fifty or 100 institutions seriously seek such me, and even the 50th in wealth — which is only a quarter as rich as Berkeley or Harvard — can bid enough for one or two such leaders to make them prohibitively expensive to others. The richest museum cannot acquire all the Rembrandts, and the richest school cannot hire all the leaders. … Economics is sometimes called the dismal science. I resent the phrase, for only young children should get angry at a corpus of knowledge that prevents hopeless and costly endeavors.
On Why We Should Rejoice in Our Troubles – or the Paradox of Power:
The competitive industry is not one for lazy or confused or inefficient men: they will watch their customers vanish, their best employees migrate, their assets dissipate. It is a splendid place for men of force: it rewards both hard work and genius, and it rewards on a fine generous scale. The success of a competitive enterprise is not the least uncertain if tis employees are able and diligent and its leadership sane and courageous. No such guarantees of success are present for a monopolist: he is overwhelmingly dominated by forces over which he has negligible control. This paradox — that power deprives one of the certainty of success — is partly verbal, as all good paradoxes are, but it contains an important truth.
I rejoice, therefore, not as an economist, but as an employee of a singularly successful young competitive firm, in our troubles. If money came only to those who had it, we should never have existed. If great schools could easily get and retain all the able men, Chicago would never have been worth mentioning. If we dwelled in a pastoral college village, where neither squalor nor crime had evern been observed, it is likely also that intellectual ferment and adventure would be absent.
On the condemnation of “vulgar luxuries” by men of high taste and income:
they have shown … that if consumers had been content with the 1949 automobile, they would be saving over $700 per car by 1961. They properly have left open the question of whether improvements such as greater speeds and automatic transmissions were worth the cost; but after all, the 1949 cars ran, and kept out the rain. The $5 billion a year of “extra costs” had better alternative uses — paying higher tuition fees perhaps, or paying more adequate farm subsidies, or a violin in every home.
…
of course every sector displays a mixture of frivolous improvements … each year about 11,000 books are published in the United States. Not one would make the list of the 100 greatest books of all time. Why must we have The Rise and Fall of the Third Reich, when the Rise and Fall of the Dutch Republic is a better book, and in the public domain.
On Educating:
I do not know anyone who is impartial or, if he is, how we can know it.
On the Economics of Noneconomists:
To say it differently, the public will learn its economics from economists or from somebody else. Economics will be purveyed by the history courses in our schools whether it is or is not taught in economics courses, and the quality of this nonprofessional economics is simply deplorable. Let me give just three examples, chosen from two of the most popular textbooks on American history:
1. “Mortgages engulfed homesteads at an alarming rate; by 1890 Nebraska alone reported more than 100,000 farms blanketed with mortgages … “What caused the Great Depression? The basic explanation seems to have been overproduction by both farm and factory … The ability of the nation to produce goods had clearly outrun its capacity to consume them or pay for them. Too much income was going into the hands of the few wealthy people, who invested it in new factories and other agencies of production. Not enough was going into salaries and wages, where revitalizing purchasing power could be more quickly felt.” Nothin courteous could be said about such economic analysis.
2. “C. Vann Woodward observes that in the closing decades of the 19th century, “there was nothing to keep employers from cutting costs at the expense of their workers.” It would be equally perceptive for an economist to write, “TheSouth would never have lost the Civil War if its soldiers had shown more agility in dodging bullets.”
3. That well known New York economist Arthur Shclesinger, Jr., provides a new theory of price levels,” After the election in November 1946, Truman abandoned all controls. The conservative assault on the OPA was, in the end, responsible for the largest price increase in American history.”
To paraphrase the remark about Hungarian friends: with historians such as these, everybody needs an economist.
On Why Economic Literacy Might be a Pipe Dream:
People are wishful, not to say romantic, in their desires, and they much prefer easy and direct solutions to their problems. If there are unemployed textile workers, then stop imports of textiles from Hong Kong (my emphasis – this was written 50 years ago). If there is discrimination against black workers, then pass a law compelling people to be color blind. It is this wishfullness that makes people so susceptible to the propoganda of both illiterate reformers and self-serving special interests.
That is all from a collection of essays entitled The Intellectual and the Marketplace. Is there any legitimate economic scholar out there today who can do so much with mirth?
