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Golden Age of Economics
niranjan rajadhyaksha
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Anybody with a love for conspiracy theories would read all the wrong conclusions from Milton Friedman’s tongue-in-cheek statistical analysis of the first winners of the Nobel Prize in economics. The initial 22 laureates were all men, 12 of whom were American, and nine of these 12 either studied or taught at the University of Chicago. Why is it that American males with a Chicago link were more likely than any other group to win the coveted Nobel Prize in economics?

The gender bias is a bit inexplicable though Friedman says there was only one female candidate who could have made the cut: Joan Robinson. Even if we leave aside the disturbing fact that modern economics seems to be a boys’ club, there is still the rather intriguing tendency to award the prize to Americans from a few universities. This is where the conspiracy theorist would raise his eyebrows (needlessly, one might add).

The best economics has always come from certain spots in the world. For economists, the centre of intellectual gravity in the years leading to World War II was Cambridge, home to A.C. Pigou, Denis Robertson and then John Maynard Keynes and his band of disciples. This centre of gravity shifted across the Atlantic after 1945, to another Cambridge — home to Harvard University and the Massachusetts Institute of Technology (MIT). Not too far away was Chicago.

The point is that economists seem to flower when they are in close proximity with others of their species, rather than in splendid isolation. Hence, the preponderance of laureates from a few universities. A modern management consultant would perhaps describe this arrangement as an intellectual cluster.

The book under review is a series of talks given by Nobel laureates in economics at Trinity University in Texas. Each of them spoke on the same subject: my evolution as an economist. This outstanding book can be read as a series of individual autobiographical musings, or it can be read as an interwoven history of the great centres of excellence in modern economics and the high noon of modern economics.

WILLIAM BREIT is professor emeritus at Trinity University. He has taught at the University of Virginia and Louisiana State University. Breit is highly regarded for his expertise on antitrust economics, market and non-market decision-making, and the history and intellectual development of modern economic thought

First, let’s look at some of the lessons from the individual stories. It is truly surprising how many of the greatest economists of the past 50 years accidentally stumbled into the room. Many of them were pushed in there by the harsh realities of the outside world, and the Great Depression in particular. There was a problem that economists could (and did) solve. Once inside the room, they were drawn to the subject by its analytical rigour. And, they had great teachers in great universities who showed them the way forward.

BARRY T. HIRSCH is distinguished professor, Trinity University, and president of the Southern Economic Association. Earlier, he taught at Florida State University and the University of Kentucky. Hirsch is on the editorial boards of top economics journals in the United States

Many of the older economists whose speeches are collected in this book owe a lot to Keynes’ insurrection against the received wisdom of the day. “Keynes’ uprising against encrusted error was an appealing crusade for youth. The truth would make us free, and fully employed too,” says James Tobin in his speech. The Chicago boys, who were never impressed by Keynes, had Frank Knight as their guiding light.

Later, there were Paul Samuelson and Friedman. James Heckman describes the impact of Samuelson’s great textbook (which he wrote as a precocious graduate student): “It demonstrated to me that economics could be as rigorous and empirically relevant as physics.” And Gary Becker on the effect of attending Friedman’s lectures: “Here I saw economics as a tool and not simply a game played by clever academics… You can do economics and do it in a rigorous way and, nevertheless, talk about important problems.”

The eighteen lectures collected in this volume give us an inside view of what could, perhaps, be called the Golden Age of Economics. These were the men who built the grand post-war synthesis that coincided with the golden years of capitalism between 1950 and 1970, when there was strong economic growth, low inflation and no major financial crises. Part of the credit for the achievements of those years should go to people like Samuelson, Tobin and Franco Modigliani. Meanwhile, the sharpest attack on the economic policies of post-war Europe and America was led by the likes of Friedman, Gary Becker and Robert Lucas.

The interesting thing is that the ideological battles never came in the way of personal friendships. Let’s go back for a moment to Friedman’s observation about Joan Robinson: “The failure of the Nobel Committee to award her a prize may well have reflected bias but not sex bias. The economists here will understand what I am talking about.” What Friedman is most probably alluding to is the fact that Joan Robinson could have been denied the prize because of her left-wing political views. And this observation comes from Friedman, a free-market man.

Whether these great economists worked with each other or against each other, they maintained their intellectual honesty and personal friendships. They were a bit like the group of brilliant scientists across Europe who rewrote the fundamentals of physics a hundred years ago: the generation of Albert Einstein, Niels Bohr and Werner Heisenberg.

It will be difficult for any subsequent generation of economists to match the achievements of Friedman, Tobin, Samuelson and their other great contemporaries.

Siddhanta Sharma
CEO, Spicejet
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I am currently reading BUTTER DOWN THE WELL by Robert Collins. It is a wonderful insight into the life of common village folk of Canada during the Depression years. I like to read any unusual story, whether it’s fiction, a travelogue, or history. Butter Down The Well is interesting history. The simplicity with which those people accepted the hardships reminds me of the ever-tolerant nature of our own farmers. I would recommend it to anyone who believes that karma brings the satisfying fruits of labour, and to those who wish to know about the day-to-day life of a third of India.

I implicitly trust Reader’s Digest recommendations. Very often, I look for reviews and occasionally ask book store owners.

The Easy Way To Stop Smoking
by Allen Carr (Sterling)
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It’s a lot easier to quit smoking once you understand the reasons why you smoke. That is the underlying theme of this book. It is not a scare-tactic book. In fact, it rather forcefully addresses why scare tactics only make people smoke more. The author’s innovative EasyWay method addresses the reasons why people think they smoke and why these are mere illusions. Issues like nicotine addiction and social brainwashing are discussed threadbare. Read the book even if you don’t want to quit. You might end up quitting anyway.
Falling back on a fable
kunal n. talgeri
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When hardcore management theories don’t sell, there’s always the fable to fall back on. You might remember Subir Chowdhury — or, more likely, you may not — for The Power of Six Sigma, a worthy tome on implementing quality practices that he penned in 2001. Books such as these do not sell too well and, hence, THE ICE CREAM MAKER.

It is a standard management fable that follows the format of bestsellers like Fish!, Spencer Johnson’s The Present, and countless others.

The Ice Cream Maker (Currency-Doubleday) is the story of how Denver-based ice cream seller Pete manages to turn around his team in a bid to sell the products of Dairy Cream, after a meeting with Mike McMaster, who works with the professionally-run and quality-conscious Natural Foods.

The author cuts to chase; as a result, the book opens to a series of problems that the protagonist confronts. Most of the time, the characters don’t have full names, so it would be too far-fetched to expect them to be fleshed out. They simply have no character.

The protagonist’s moods plummet in the first part of the book, ranging from ‘my sheepish silence’ and embarrassment to feeling humiliated. [At this point, even a standard Hong Kong B-grade film treatment of story — a kung-fu fight — could have brought some life into this story and served as a diversion from Pete’s series of unfortunate events.]

By the time one reaches parts of the book with lines like “when it comes to innovation… American companies are the best in the world, hands down”, one is wondering what Chowdhury is trying to do.

But you can bet on one thing: this book will, in all likelihood, outsell his earlier one.



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