Re: External Value of the Nobel
The article in the Post was sour grades. The reality is that GMU has been entrepreneurial in recognizing slightly out of sync economists and creating a spot for them and their programs. Buchanan and Smith bucked the dominant intellectual trends of the profession to push forward their agendas. Tullock has done the same, and when Boulding taught here it was the same thing. The reality is that 90% to 99% of out of sync work is accurately dismissed, but 10% to 1% of this work amounts to revolutionary in science. But in many ways we need the 90% of failed projects to get the 1 to 10% of truly innovative work. Now this is a risky strategy for most departments to follow and most shy away from it or get tired of supporting it. Note a few things about GMU's strategy --- in both cases (Buchanan and Smith) while they were recognized the movement they represented was for a long time discounted and they were not teaching at what one would term top tier universities before moving to GMU. VPI was a good school, but certainly not Harvard or Chicago, and the same for Arizona. Both had left schools that were rising (U VA and Purdue) because of various factors relatively early in their careers. So the idea conveyed in the Post article is that these figures worked for years at prestigous universities and then only in retirement did they come to GMU is wrong. Now on how that translates into increased value of a GMU degree. Well obviously it increases the name recognition of the program, but the question will always remain as to whether if a student was so good why would they go to GMU to their PhD --- this is similar to what happened at NYU when I taught there --- which went from 17 to 7 during my 8 years there in terms of the rankings, but it was know as a school where the faculty were 'better' than the students such that basically 1 student each year would receive a top placement, but the others would not get jobs in academics. I believe the situation has improved quite a lot there since I was there in terms of placement -- so the faculty addressed this issue by increasing the admission requirements, etc.But if we did that, we wouldn't attract students interested in the out of sync. So right now, I'd say GMU does best when it caters to the out of sync and our students do best when they are the best out of sync economists on the market. The reality is that GMU is a school that best serves the out of sync economist. We are clearly the best out of sync department in the world. Some of what goes on here is no doubt going to prove itself to have been a waste of intellectual resources, but other stuff will turn out to be absolutely cutting edge. We don't know that ex ante -- only ex post. What we should value in James Buchanan and Vernon Smith's prizes is not just that they got recognized for there genius, but the way they pursued their careers. Here we have two brilliant men who fought against scientific prejudies and pursued their work and "forced" the mainstream of economic thought to pay attention. In short they demonstrated not only the courage of their convictions, but the courage to withstand the critique of their convictions. As for Vernon Smith -- one of the most amazing things about him is how open he is to new and unconventional ideas. He is 75 and still trying to learn new things and incorporate them into his research program. It is very exciting to see him probing and questioning. As for Buchanan, we was willing (and still is) to ask big and deep questions about social philosophy in a discipline that rewards techniques and smarts and often reduces the worldly philosophy to exercises in mental gymnastics or social engineering. A final point about the 'Austrian' implications of Buchanan and Smith. First, both are deeply knowledgable and respectful of 'Austrian' economics. Second, both have made contributions which in many cases can be understood as 'Austrian' --- in Buchanan it was subjectivism and his understanding of catallactics, and in Smith's case it was his testing of Hayek's notion of the use of information and he demonstration of the groping market. Third, both have pushed Austrian economics in new directions which people can follow --- Buchanan into political economy and Smith into neuroscience. The missing element in mainstream economics is still a theory of change and with that a focus on the agent of change -- entrepreneurship. But the reality is that much of the progress in mainstream economics has been through the increasing recognition of points first pointed out by Mises and Hayek in the 1940s. The ideas are being incorporated if not recognition for the individuals who first developed the ideas. This is progress. And GMU is at the forefront of that progress and I would think that its graduates (such as JC Bradbury) would want to wear that label proudly and push those ideas more and more. I think GMU stands for a few things (a)
Re: Krugman on productivity
Well since 85% of productivity of large companies is directly connected to intangibles and these companies are almost completely blind to the human qualities of what connects intangibles productivity : which you can test from 2 simple exercises in the top left column thread at www.valuetrue.com ... the chances of any growth - and when - are determined by when transparent corporate governance ushers in - and since that requires a mother of all benchmarking to make Baldrige quality gap's narrowing in the 80's look like child's play, I expect 2 years of deeper and deeper depression and social crisis are sadly on the cards before the vain bureaucracies unlearn This incidentally was the modal prediction that came about through interviewing intangibles experts early in 2001 when Brookings published Unseen Wealth and the European Union published an equally strongly worded criticism of every blindness built into accounting monopolies built round last term's number and Speculator Value Analysis ...and the rest has been history tracking the future so to speak www.valuetrue.com Transparency Mapping co-author Maps that Change Our World (2003) http://www.normanmacrae.com/netfuture.html Preferred Future Histories - Original Message - From: Alex T Tabarrok [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: 11 October 2002 19:10 PM Subject: Krugman on productivity Krugman finally gets back to economics and says something pretty smart about productivity, unemployment and growth. http://www.wws.princeton.edu/~pkrugman/jobs.html Alex -- Alexander Tabarrok Department of Economics, MSN 1D3 George Mason University Fairfax, VA, 22030 Tel. 703-993-2314 and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621 Tel. 510-632-1366
A man for all markets (interview with Galbraith)
http://www.observer.co.uk/business/story/0,6903,805309,00.html A man for all markets At 93, the scourge of contemporary economics, JK Galbraith, is on the attack. The author of The Great Crash tells William Keegan that President Bush's moves against recession are no use at all Sunday October 6, 2002The Observer Recent reports had said Galbraith looked frail, and he has certainly not been too well. But when this was being explained to me in advance, he grabbed ADVERTISEMENT the telephone and boomed: 'Keegan, I'm on the mend.' And certainly, when we spoke, his form of 93-year-old frailty seemed pretty robust. (He is 94 next week.) He began with a paean of praise for Adam Smith, who, he said, had been 'too fully captured by the right-wing'. In Galbraith's view 'much of what he said had large encouragement for the careful and intelligent Left. He was ruined to an extent by his acolytes, many of whom had never read him.' Thoughts of Smith's Theory of Moral Sentiments moved Galbraith to the ethics of the present. 'I have written a long essay, "The Economics of Innocent Fraud" about things that, for self-interest or convenience, we hail as the truth but have no particular relevance to reality.' With an eye on the Bush administration Galbraith said one minor example of this was relevant now: 'You can't stimulate an economy by reducing taxes on the rich. That is popular for what it does for those who get the money, and not for what it does for the economy.' He has always been superb at attacking 'conventional wisdom', a phrase he coined, and his current target is worship of the US Federal Reserve. America is 'having a somewhat painful recession, with no remedial action in sight of any consequence. The administration, in summary, has two lines of action: one is tax relief for the rich. The other is reliance on the Federal Reserve. It is at least consistent. Both are without effect.' This celebrated author feels his greatest achievement was not his books but his time as head of the body responsible for US price controls during the Second World War. He contrasts the success of this with the inflation that took place after the First World War, when the Fed was in charge. 'Historians never mention inflation as they did after World War One. But if - and I think this is the basic rule of all public service - if you succeed your work is forgotten.' Then came the rapier thrust: 'One of the most important things we did in those years was to set aside all reliance on central bank policy.' There will be more about the excessive reliance placed by governments and economists on central banks in the new book. 'But it will not be without admira tion for Alan Greenspan. We've never seen anything like his theatrical skills.' And European central banks? 'I've never been a close student of monetary policy in Europe, apart from the inescapable history of the Bank of England.' We returned to the present day. 'This is a very disagreeable time, and its burden is falling as usual on those least able to carry it. You pick up the newspaper any time, and on the financial pages you'll read of the constructive action some company or other is taking: in a commendable step it has just laid off 10 per cent of its workforce. There is no reflection on the discomfort that might follow from being so assigned to leisure, or what it might do if their children are going to college.' Galbraith has always written beautifully - a source of admiration and sometimes acute envy among fellow economists - and still speaks in measured, rounded sentences, choosing his words carefully, sometimes going back to substitute le mot juste. 'Being so assigned to leisure' is a classic Galbraithian use of irony, and reminded me of his book, The Affluent Society. 'Things are bad enough,' he said, 'so that I haven't noticed any great revival of interest in that book. Perhaps I should have a new edition with a new title. It could be "The Depressed Economy", and it would face the fact that only a reduced colony of booklovers could afford to buy it.' Which brought us to Galbraith's masterpiece The Great Crash, 1929. Surely there had been a revival of interest in that? 'The Great Crash has been in print since the mid-Fifties, and it still outsells all of my other books' (he has published 30). 'It has a wonderful, built-in salesmanship: any time anyone complains as to what he or she is suffering in the stock market there is someone who always says, "If you think that is bad, why don't you read Galbraith on 1929"?' This reminds him of when he used to peruse bookshops to see how his latest was doing. He noticed that one title was never on sale in the old La Guardia airport in New York. 'One night the woman in charge asked me what I was looking for. I was a little ashamed, but came out with the title, The Great Crash. She never hesitated: "That certainly is not a book
