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Economists FU-Berlin M.I.T. Popular Economics Syllabus

Paul Krugman, academic scribbles and glimpses of yore and not so yore.

 

Adam Tooze’s review of Paul Krugman’s Arguing with Zombies: Economics, Politics and the Fight for a Better Future (London Review of Books, Vol. 43, No. 8, 22 April 2021) has received much deserved social media acclaim.

Since you are here now looking at economics in my rear-view mirror, I thought it as good a time as any to assemble a few links from this blog and Freie Universität Berlin that go back a decade and more. Krugman’s adoring fans and fiercest critics are welcome.

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Dr. h.c. FU-Berlin
(December 4, 1998)

Materials from the ceremony awarding Paul Krugman an honorary doctorate at Freie Universität Berlin are linked at this antique webpage archived by the Wayback Machine.

In case you missed the event…

Laudatio by Irwin Collier

Archived text: Original webpage (includes graphics) 

Audio recording

Paul Krugman’s award lecture: The Return of Demand Side Economics

Archived text: Original webpage

Audio recording

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 “The Failure of Crisis Management”
(October 20, 2010)

Paul Krugman’s Ernst Fraenkel lecture for the John F. Kennedy Institute of North American Studies at Freie Universität Berlin.

Video recording

Image Source: https://www.fu-berlin.de/campusleben/campus/2010/101022_krugman/

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Transcribed Artifacts from
Economics in the Rear-view Mirror:

M.I.T. Economics Department. Graduate Student Skit: “The Wizard of E52-383C” in which Paul Krugman played the role of Paul Samuelson and was co-author (1976).

M.I.T. Economics Department. Slides, Problems Sets, Exams for Principles of Macroeconomics taught by Paul Krugman (1998).

 

Categories
Economists Gender Germany Irwin Collier M.I.T. Yale

Farewell lecture of Irwin Collier, FU-Berlin. July 4, 2018

The ceremonial bookends to a professorship in a German university consist of an inaugural and a farewell lecture. I spoke before a public that included the six disciplines represented in the John-F.-Kennedy Institute for North American Studies (besides economics: political science, sociology, history, cultural studies and literature) as well as colleagues from the economics and business faculty of Freie Universität Berlin. Those attending included first-year undergraduates through the oldest cohorts of emeritus professors. I needed a lecture to keep the filled hall alert for 45 minutes on a particularly warm Berlin summer afternoon. I chose the fourth of July because there was no World Cup soccer on the day to compete with.

The ceremony began with an introduction by the Institute’s director, Professor Christian Lammert, who provided a comparative analysis of the twitter activity of President Donald Trump and me. It is a great way to get laughs and a gentle way to roast an honoree. Try it at your next official function, you’ll be glad you did.

Next a local American folksinger, John Shreve, warmed up the crowd for me with two songs, after which I took to the lectern and presented the following remarks. 

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“Reflections on academic communities, clans, and clubs”

Abschiedsvorlesung of Prof. Irwin Collier, Ph.D.

John-F.-Kennedy Institute for North American Studies
Freie Universität Berlin
4 July 2018

One of the self-granted privileges of age, is to talk about oneself under the altruistic guise of sharing experience. And for this I beg your indulgence. On the other hand this is a farewell lecture, what else could you really expect? Now you needn’t worry that I am about to spew the cumulated bile of an underappreciated, unfortunate scholar bitter at the prospect of sealing his academic obscurity with a ceremony where others are about to celebrate his exit. While as delightful as it would be to speak long-repressed truth to the powers-that-be, this occasion lends itself to thoughtful reflection. No, instead I’ll offer from my own experience a few simply illustrative stories that most of you can relate to either through direct personal experience or have heard within your personal information bubbles.

Before getting started, let me make one thing pedantically clear: when I use the words “community”, “clan”, and “club” in what follows, but especially those latter two words, they are only to be understood as short-hand, metaphorical labels. I trust there is no need for attempting Über-precision in what is after all only offered as a series of personal reflections. My intention in speaking of communities, clans, and clubs is to offer you a simple alliterative triad that has a better chance of surviving into long-term memory than, say, “communities, tribes, and networks”, though that is what I actually mean, to be honest.

When I say academic both as adjective and noun, it is in the sense of having to do with individual membership in “the Academy” broadly understood.  I have always liked how the words “scholar and scientist” fit comfortably within the single German word “Wissenschaftler” and the Academy for me has its foundation in the Humboldtian dual mandate of research and instruction. We, the scholars and scientists of universities, have answered the call to follow that dual mandate. Of course knowledge gets produced outside the hallowed halls of the university and there are plenty of institutions that exist with the sole mission of advanced instruction. As an economist I have mostly good things to say about such division-of-labor and specialization.  But personally, I have spent about a half-century studying or working within a university setting, and half that time here at Freie Universität, so my preference is clearly revealed to serve that dual mandate.

Having a career-long interest in the history of economics, I have often had occasion to consider the life of scholars among scholars. While the filiation of ideas typically takes center stage in histories of economics (by this I mean the chronicle of how Adam Smith’s ideas begat those of David Ricardo and Thomas Robert Malthus, that in turn begat the ideas of John Stuart Mill, that begat innovations by William Stanley Jevons, on to the synthesis by Alfred Marshall and so on up to the present day), sometimes historians of economics explore the ideas of economists within particular historical contexts (e.g., the Progressive Era, the New Deal or the Thatcher-Reagan revolution) or within the specific policy debates of their times (protectionism, industrial policy, social insurance, monetary policy rules). This afternoon I will be guilty of thinking aloud about the social context of the creation and diffusion of scientific methods and knowledge generally. Since I am an economist, presumably what I have to say fits my home discipline best. Nonetheless I would wager at least one free lunch that the structures and mechanisms I have identified are present at least in some modified form elsewhere in the Academy.

Now somewhere in my unordered college papers that have followed me from New Haven to Cambridge, Massachusetts down to Princeton, then Houston and finally a transatlantic trip to Berlin in 1994, followed by three moves within the greater Berlin area there must be the original acceptance letter I received from Yale in the Spring of 1969.  One phrase in that letter has been etched into my memory, namely, that I was thereby welcomed into the “community of scholars”. I can smile now when thinking about the enthusiasm and naiveté of that boy turning man about to embark on his journey of academic life. A “community of scholars” turns out to have been what I had sought and what I was convinced I found in the undergraduate life of Yale College. When I first explored the stacks in the tower of Sterling Memorial Library and argued about philosophy and politics in beer-fueled bull-sessions into the night with my roommates and classmates, I felt at one with a much larger academic community, not merely that of the Yale microcosm but one extending to the authors of century-old books with uncut pages waiting to be discovered in the stacks. As far as the larger academic community in that thin slice of the historical present, well, I felt cosmopolitan to a fault. I saw no higher calling than that of the scholar/scientist. Excellence was not about winning a phi-beta-kappa key for display, it was about serving a higher purpose within that greater community of scholars. I believed that the true academic freely contributed and imbibed from the ever growing pool of human knowledge and was free from lesser motives. Life-work balance could not be an issue, the life and work of an academic were simply an identity.

Two modifications of my scholar’s life plan resulted from changes in scenery: an internship in Washington DC and later graduate school along the Charles River in Cambridge, Mass.

During my early undergraduate years I had little concern for applying knowledge for good, it seemed too much like engineering. Two spells in Washington, D.C. as an intern at the Council of Economic Advisers during the highpoint of the Watergate crisis taught me much about the importance of the work of policy wonks, a concept that only gained currency decades later during the Clinton Administration. My respect grew for the leaves of absence for public service or earlier work in the war effort (WWII) that I found was quite common among my professors.  Had plan A, serving the university dual mandate, not have worked, I probably would have pursued my personal happiness with a plan B, working as a government economist perhaps in the Department of the Treasury, the Bureau of Labor Statistics or Bureau of the Census and this afternoon’s ceremony would most likely be taking place in some office building in the District of Columbia. But it was still clear under either Plan A or Plan B, I would need further training.

Graduate School at M.I.T. marked a transition to a higher concentration of economics than I would have ever considered possible and looking back can hardly believe I survived with any dignity. Graduate coursework was not conceived according to the tenets of liberal arts to broaden the mind. Quite to the contrary, the graduate coursework at M.I.T. was an intellectual boot-camp, where the brain got trained without ever so much as a doubt on the part of the drill-sergeants or the recruits themselves whether this was a good way to educate a professional economist.  You want to be a Navy Seal, OK, it’s your choice…and if it turns out to be too much for you to handle, ring the bell, take your M.A. and leave honorably. Of course I am exaggerating, but I do recall a West-Point graduate in my class who declared that graduate school was the most academic freedom that he had ever enjoyed. Incidentally, that M.I.T. classmate turns up in Michael Lewis’ The Big Short as having been the chief risk officer for Morgan Stanley during the financial meltdown in 2008. I’ll add here that another classmate was a principal in Long-Term Capital Management when that famous hedge fund crashed and burned in 1998. I became an expert on the East German economy and we all know what happened there in 1989. You can see the pattern, but I digress…

Clearly I wouldn’t be standing here before you today had I not survived the rigors of graduate school. In a meantime that spans not quite a half-century I have come to the realization that a “community of scholars” is actually only a Platonic ideal, something as unreal yet appealing as the Garden of Eden, the legend of King Arthur’s court in Camelot or the utopian socialisms that fired the imaginations of radical progressives in the second half of the 19th century. And yet, my experience from dealing in an academic setting, having had contact with many permutations of human natures and across a few societies, has not at all discouraged me from the quixotic quest of building or becoming a part of a genuine community of scholars. The fundamental question we all face is how to get nearer there from here. Plot spoiler: this is my farewell lecture so that can gets kicked down the road for you young folks here.

My thesis is that real existing research and instruction take place in a world spanned by two basic types of institutional frameworks, that we can call clans and clubs for short. Just as there is a spectrum of virtuous behavior along which we, our friends, rivals, and enemies can be placed, clans and clubs differ in the degree to which they help meet the criteria of a “community of scholars”.

So what constitutes an ideal or a genuine community of scholars? (1) Inclusivity. There is no frontier between us and them with respect to the search for knowledge and understanding other than a sharp boundary separating magical thinking from those in the community for whom the collection and honest interpretation of evidence and logical thinking constitute the supporting pillars for science and scholarship.  (2) Meritocratic. There is not a fixed caste system within the community of scholars. It is not a hive with a queen, drones and worker bees. Results from the mixture of individual genius, creativity, good fortune, insight, and discovery are recognized, appropriated, and honored by the community. The demographic fact of overlapping generations results in a natural ordering of junior to senior, but the filial piety of Confucianism must yield the right-of-way to the Wunderkinder in the community of scholars. (3) Self-critical. By this I mean members of a community of scholars share a categorical imperative with respect to criticizing our own work as we criticize that of others. This is important because the accumulation of knowledge and understanding is but an imperfect ratchet. Any one of us, repeat…anyone, has the capacity to pursue dead-ends, and even to forget lessons once learned.  (4) Team spirited. Yet even with all that humility we still have a capacity to cry Eureka upon discovery and other members of the community rejoice at the sound of that cry.

Undoubtedly I have missed a few items in my proposed check list of criteria. But it is easy to see their necessity to be included in any such list by considering what a university would look like when the polar opposite cases occur, where (1´) exclusivity (2´) impermeable stratification (3´) immunity from doubt and/or criticism (4´) Schadenfreude are the rule. Sounds a bit like a sequel to A Handmaid’s Tale without the dramatic costuming doesn’t it?

The essence of club and clan is captured in the Groucho Marx quip “I wouldn’t want to be a member of any club that would have me as a member” and the familiar expression, “You can choose your friends but not your family”.  While I grant that there is a process of selection and self-selection to graduate schools that bears a resemblance to the formal admission procedure for joining a club, there is a good reason to distinguish between the two. In the case of a club you are accepted or rejected for who and what you are.  When you enter, you are a member, a peer. In contrast for a clan, the selection criteria can be quite distinct from the requirements to attain full clan membership.  The network from club membership is valuable to you as a member, but the clan becomes a part of your identity.

But before we talk about this psychological transformation of identity, allow me a brief historical word here.

My research over the past several years has focused on the evolution of graduate training in economics. Both from my own experience but also from listening to colleagues as well as reading random biographical and autobiographical accounts, I became convinced that the critical transmission of the tools of research and the ultimate values that provide the background for the selection of “interesting” questions takes place in graduate schools and there the formation of scholarly character embedded within a network of graduates becomes recognizable as a “school”.  This interest led to an inaugural grant from the Institute for New Economic Thinking for me to begin exploring university archives for documentary material that would prove useful for marking the evolution of economic theories and methods actually acquired by successive cohorts of professional economists in different universities. The research question was to identify the forces that have contributed to the convergence of economics into a contemporaneous mainstream of common scope and methods.

It was in Germany where the modern university seminary for science and scholarship emerged and it provided the ultimate model for research training at the graduate level. And that academic DNA from those seminaries was carried across the Atlantic to the emerging great universities of the United States. Johns Hopkins, Harvard, Columbia, Chicago and points west all profited from the ambitious young scholars and scientists who had been “made in Germany”. The leading role played by Germany will come again when we turn to clubs.

The clan or tribe has played an enormous role in the history of economics. Just to name a few instances, there was the grand Methodenstreit between Carl Menger of Vienna and Gustav von Schmoller of Berlin in the late 19th century on the relative merits of deduction vs. induction (sort of chicken-or-the-egg debate). The debate was ultimately won in a scientific sense by Menger but the academic street-fighter Schmoller had much greater success in occupying the professorial chairs in the German-language areas of Europe for several generations.

Other notable debates between “schools” of economics include the capital debate between the “two Cambridges” of the 1950s and 1960s, Keynesian fiscalism vs. Chicago monetarism, especially in the 1960s, fresh- vs. salt-water macroeconomics more recently, and there is the always evergreen controversy between Austrian economics (which I note in its present form is neither Austrian nor economics) and wherever the mainstream happens to find itself.   There have been cases in economics where Saul turns into Paul well along in the career. But such late breaks, such as that from the Keynes critic hired by Harvard to the man who brought Keynes to America, Alvin Hansen, or from neo-classical darling to radical economist, Stephen Marglin in the 1960s, have been rare. These are news stories much as “man bites dog” is news, because “dog bites man” is considerably less newsworthy.  The correlation between where and how you have been trained and your research style/policy positions is strong and robust. But of course you ask, is it really causation or a case of post-hoc-ergo-propter-hoc inference when there is really a background factor responsible for both?

So what leads me to assert the strong identification of scholar with the school? My pop-psychological explanation is that the intense training and focus of a graduate education brings a young scholar up to humanity’s frontier of knowledge for the first time. That frontier advances rapidly and only a few, certainly not all Ph.D.’s, will move fast enough or long enough to remain on that frontier. Nonetheless that moment of arrival at the hilltop and looking out on the vast, uncharted landscape before you for the first time is a profound life-altering experience in adulthood and there is a warm-fuzzy object that you bond with — it is not a parent, rather it is the collectivity of the professors from whom you have learned and been guided and the authors of the books and papers you have digested in the course of your studies. Sure, later we all pass through a form of intellectual puberty and develop a hypersensitivity to all our professors’ faults. I think back: God there were some really awful teachers, I have witnessed examples of narcissism unchained! Etc.  One of my dearest professors upon hearing that Herbert Simon was awarded a Nobel prize in economics actually said “He can’t be any good, I haven’t read anything he has written.” Later in our careers we might have our own Mark Twain moment: “When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”

OK, time for a quick summary of what I have been rambling on about thus far. It appears that I had the enormous good fortune to have stumbled into what seemed a virtual academic heaven on earth.  Following that formative period when I acquired my scholarly/scientific values together with a box of analytical tools, it was time for Hänschen-klein to march off into the real world. I was an apprentice turned journeyman sorcerer, a fledgling member of a clan of economists associated with the Yale-MIT axis. Had you asked me at the time what it meant, I would have answered it was really no more than a pedigree, if anything, a signal as to the quality of the people who taught me. Gradually, I learned as I interacted in a professional context with people trained at other places and in other traditions, this Yale-MIT axis signaled belonging to a well-defined clan. Think of West Side Story, the gangs of Sharks and Jets, just without the dancing.

The first inkling I had about the influence of where you learned your economics was as an undergraduate during my Council of Economic Advisers time when a fellow intern, a graduate student from UCLA, derisively commented on the fact that I had waited hours to watch the Watergate Hearing for Nixon’s chief-of-staff H.R. Haldeman, “queues are inefficient”. Subtext: a market should have been created to let a price mechanism allocate the scarce space to the highest bidders.  Since he was my first observation, I thought it was the individual effect talking, i.e., he was just a jerk. But then later another UCLA man, a senior professor at the University of Houston when I was an assistant professor there, nonchalantly dismissed a vast swath of applied economic analysis as we interviewed young people at the annual job market, “Nobody believes welfare economics…”  I recall my first serious encounter with German ordo-liberalism at the University of Siegen. Hearing so much praise for Walter Eucken and his Freiburg school that inspired the policy architects who brought us the German social-market economy led me to read some of his work.  I felt like I was listening to folks speaking German in some remote alpine valley.

The point of these examples is that it was beginning to look to me that how and where you were trained had a major impact on the sorts of questions you asked and the style of argument and the forms of evidence you accepted. Thinking back I expected the sorts of political differences and research strategies would be more-or-less randomly distributed across departments. People, and I stress economists are people, are a heterogeneous bunch, simply put, “a mixed bag”. But even allowing for concentration of the one or other paradigm for research, couldn’t we expect serious scholars to outgrow their apprentice years as they would become exposed to inter-university variation? In a statistical sense I interpreted what I observed, namely, knowing where someone had been trained had “too much” explanatory power for what a mature university research economist would think about economics. You could see a definite family resemblance across the clan. What I still don’t really understand was why academic disputes between clans have almost invariably escalated to the intensity of a shooting feud between the Hatfields and McCoys. But then again, I’m the sort of guy who is still shocked that people are so rude to each other on twitter. The working hypothesis perhaps is best expressed in the adage, “Academic politics are so vicious because the stakes are so low.”

Time for another short historical break before reflecting on networks or clubs that academics have established.

Economics became an easily identifiable collective pursuit of truth for the first time in the middle of the 18th century at the court of Louis XV at Versailles where the French Physiocrats coalesced into a self-conscious school for the purpose of enlightened economic policy. They actually called themselves les économistes and they even had their own journal. Their time on the world stage was brief, the French Revolution scattered the school to the winds, and one member, DuPont de Nemours settled in the United States where his son founded the gunpowder business that ultimately became the DuPont corporation. Incidentally Thomas Jefferson’s idealization of the yeoman farmer and contempt for the mercantile classes was a reflection of his reading Physiocratic texts. In England in the nineteenth century political economy was passionately debated among gentlemen in clubs. Members would read their Hume, Smith, Ricardo and Malthus to join the chatter and contribute to the literary magazines of the time debating economic policy.  From about 1935 through 1950 the gradual expansion of mathematical and statistical tools had become such a critical part of the kit of the professional economist that political economy or economics was no longer “clubbable” in the literal sense.

But even before the shift to mathematical and statistical methods had become complete, substitutes for the club were found in the extra-university learned societies, professional associations, and regularly recurring conference groups. All of these networks had established admission procedures to establish whether a potential peer brought the right stuff to the table.

Just as the modern research seminar goes back to the university seminaries of Germany, the Verein für Socialpolitik was officially founded at its conference in Eisenach in October 1873 a year after an initial conference a year earlier also in Eisenach on the “soziale Frage” (social question). This association brought economists, lawyers and government statisticians together. Now some twenty-three standing field committees span the scope of economic research in the German language area. Thanks to a retired colleague, Wolfram Fischer, I received an invitation to become a member of the standing committee for the history of economics. For these standing committees one is invited to present a paper and is voted membership.  The Verein itself used to be the sort of association that members had to propose candidates whose approval then was voted upon.

The very same American students who studied in the German seminaries of economics during the last third of the 19th century, returned to become founding members of the American Economic Society, that unlike the Verein für Socialpolitik, which was long to have a sharp anti-Manchester capitalism profile, reached out to their classic liberal colleagues who initially resisted joining forces. From its early years the American Economic Association was a bigger tent than the Verein für Socialpolitik.

Two other societies worth mention are the international Econometric Society that was dedicated to the use of mathematical and formal statistical modeling in economics. It was first organized in December 1930 in Cleveland, Ohio with Joseph Schumpeter chairing a meeting of sixteen people who elected Irving Fisher of Yale as its president. The Econometric Society then met officially for the first time the following September in Lausanne. Not quite four decades later dissatisfaction with the scope of mainstream economics that focused excessively on “plenty” and with too little attention to its distribution and almost none to issues of power and politics, the Union of Radical Political Economy was founded in 1968 (This year celebrating its fiftieth anniversary at the University of Massachusetts in Amherst).

In the course of the Allied Social Sciences Meeting every year, field associations organize their panels where the networks of colleagues meet.  Of course no list of clubs would be complete without mentioning the Mt. Pelerin Society founded by economists along with historians and philosophers at the invitation of Friedrich Hayek in 1947 and which formed a bedrock of neoliberalism, long before it was fashionable.

As we say, birds of a feather, flock together and the communication among researchers working on similar topics, using similar methods, interested in the same kinds of evidence is necessary for the success of the cooperative endeavor. These networks allow sub-fields to achieve scales impossible to expect in all but the largest and richest university settings. Indeed stepping back and regarding the research output of these professional clubs whose membership spans university, disciplinary, territorial bounds, few of us would want to go back to the high days of the London Political Economy Club or even the early days of the relatively exclusive professional societies requiring formal nomination for membership.

At this point I need to insert a big fat German “Aber…” (But…). The clans and clubs of economics (and economics is hardly unique here) have a diversity problem with respect to, I’ll limit myself to the United States here, race, ethnicity, and gender. In the course of my INET funded research, I have examined archived economics departmental records of M.I.T. from the 1970s dealing with the recruitment and subsequent performance of students from traditional black colleges and of women admitted to the program. Something that struck me was the sheer experimental willingness of this overwhelmingly white, male and politically liberal department to expand the numbers of blacks and women in the economics Ph.D. program. Of course M.I.T., sitting at the apex of the economics graduate programs at that time, was able to recruit easily. But after several years, the realization set in that to avoid the creation of a Zwei-Klassensystem (twin tracks) the recruiting pools needed to be equalized and this would require a strategic switch to recruiting aggressively and exclusively from elite undergraduate programs. Having been an observer-participant from a time that I can now witness again in an archival light, I appreciate the dilemma felt by the M.I.T. economics department then between increasing the inclusivity of the clan but only at the cost of an increased risk of failure for precisely those new groups who had been previously overlooked.

Let us shift focus now from entry to the clan to the issue of gender diversity in the clubs or professional networks.  [Due to unexpected turbulence, the captain has turned on the fasten seat belt sign.] Last year a dynamite paper originally submitted as a Berkeley senior thesis was published by Alice H. Wu “Gender Stereotyping in Academia: Evidence From Economics Job Market Rumors Forum”. Ms. Wu processed more than a million posts from the anonymous online message board econjobrumors.com.  It is as close to systematic eavesdropping around a water cooler that can be done legally. It turns out that the ordered list of the thirty words most uniquely associated with women were (warning: NSFW): [read list very quickly] “hotter, lesbian, bb (internet speak for “baby”), sexism, tits, anal, marrying, feminazi, slut, hot, vagina, boobs, pregnant, pregnancy, cute, marry, levy, gorgeous, horny, crush, beautiful, secretary, dump, shopping, date, nonprofit [?!], intentions, sexy, dated and prostitute”. The analogous men-words included: [read slower] “juicy, keys, adviser, bully, prepare, fought, wharton, austrian, checkers, homo [!], genes, mathematician, advisor, burning, pricing, philly, band, nobel, amusing, greatest, textbook, goals, irate”–with the singular exception of a homophobic slur, not nearly so much to be ashamed of in guy gossip…about guys. But even before the publication of Wu’s paper, the active standing Committee on the Status of Women in the Economics Profession of the American Economic Association was addressing issues of sexual harassment and drafting of codes of conduct. Manels (i.e., panels consisting of only men) still occur quite regularly at professional meetings but the outcry cannot be overheard. Let us just say, the situation regarding the issue of gender falls seriously short of the Platonic community of scholars, but it is not hopeless. I say this as a member of Yale’s first four-year coeducational class — looking back a half-century the differences for the better are truly striking.

I see the shortfall in meeting the criterion of inclusivity less to be found either on the race or gender fronts where important corners have been turned. The greater problem seems to me to be one of a relentless trend in which we observe the homogenization of particular methods and approaches to the exclusion of others. For a five-year old with a hammer, everything looks like a nail.

Today’s heterodoxy can improve the quality of the flow in the mainstream as well as vice-versa. Loyalty to the clan is only a virtue to the extent that your clan is up to good. Besides the obligation to expose one’s future students to a wide-range of views, as good as we feel and as justly we might think that we can adequately summarize “the other side”, we Hatfields are probably a poor substitute for the real McCoy.

Calls for broadening the curriculum clash with the budgetary realities forcing faculties to choose a balance between breadth and depth in the coverage of fields and methods. But my decades in this business have led me to conclude that we have less to fear from the tragic constellation of beer budgets and champagne tastes than we have to fear from the narcissistic gene of scholars, present company excluded of course (I want to be able to eat lunch in Dahlem in the future!). That narcissistic gene leads even top scholars to attempt to clone themselves into entire faculties. My hope is that a pragmatic tolerance and taste for diversity in paradigms can trickle down from senior to junior and through all levels of instruction.

In their modern clubs scholars find kindred spirits, it is there scholars can find honest peer review.  So what could possibly go wrong?  Well here is where we need a second, a vertical dimension to understand what is happening. In a race for status, gatekeepers and judges play an important role. The old question necessarily arises, who will guard the guards? Can we be confident that the norms of the Platonic community of scholars will be able to weather the winds of rivalry for the zero-sum game of status or of self-interested competition for scarce resources?

One expects economists to talk about money. So let’s talk about it in this context. My father once wisely told me when he thought that I was getting too academically big for my real-world britches: brains don’t hire money, money hires brains.   Expressed in terms a Marxist might appreciate:  my father apparently believed that the reproduction cycle goes Money—Brains—Money rather than Brains—Money—Brains. Besides putting the horse (money) before the cart (brains), I can only mention en passant that large private concentrations of wealth can and have been used to support research programs of a particular political stripe just as an unequal distribution in wealth can and has been used for disproportionate political influence (i.e. violating the essential democratic symmetry of one citizen, one vote / one voice). I’ll just mention the documented ability of the Koch brothers to have funneled enormous funds into George Mason University that had strings attached with respect to faculty hires that no self-respecting faculty member could possibly support.

Before I start foaming at the mouth, I pause to bid my colleagues here this afternoon to reflect on the distance they perceive between the Platonic ideal of an academic community and their personal experience.

A lecture title that signals “reflections” is an open confession that no attempt has been made for rigorous argument. My somewhat random walk defies summary. Still I have been raised to think that it is prudent to leave one’s audience with a nugget to share when they leave, in the event that someone should ask what I, the speaker, had to say.

For me (and I am sure for many in this room) the happiest and most productive times were in those moments when I felt firmly embedded within an environment approaching a community of scholars. Academic life has taught me that such communities are mostly figments of some philosopher’s imagination. The work of a scholar, when not the fruit of a monastic life-style, is conducted within clans and clubs. My experiences from a career in university life and listening to the experiences of others have led me to the conclusion that “academic community” is analogous to genius, and when or if ever it really exists, it is extremely rare and probably the result of rather random dependent paths of history rather than the result of conscious human intention. My plea, especially to the undergraduate and graduate students in the room, is not to sink into cynicism once you discover for yourselves that your professors and their professors, that researchers in private or government laboratories, that senior researchers in think-tanks happen to display the shortcomings I have identified in clubs (especially, exclusivity regarding who gets admitted) and clans (especially, an allegiance where blood is thicker than water). Clubs can open themselves and clans can indeed coexist peacefully and even intermarry. Rival research programs need not have to end in blood feuds like the Hatfields and McCoys. While my pursuit of happiness is found in the pursuit of truth, due diligence demands that all of us sharing that pursuit keep a watchful eye on those serving as the gate-keepers of our clubs.

So much for my reflections. Allow me a few personal words in closing.

*  * *  *

One enters and remains in our imperfect community of scholars, in part on one’s own merits but more importantly due to those who trusted that ex post merit would justify ex ante support. These scholars, near colleagues, friends and family members are too numerous to mention outside of an extended written memoir. But without them the arc of my academic life would have ended far short of Freie Universität Berlin. Fostering the development of latent or raw talent made the difference for me and my hope is that I have played a similar role in the academic lives of others.

I have had the pleasure of working with both colleagues and staffs of the Faculties of Business and Economics and the John-F.-Kennedy Institute. Secretaries like our own Kerstin Brunke have provided that first line of defense known as the front office and they deserve medals for valor. Good cheer and a quite competency have served as a wonderful complement to my management-challenged ways of dealing with the world outside.  From the offices of administration in the Faculty of Political and Social Sciences to the bowels of the libraries, I have had a reasonably blessed time. Perhaps we only survive in a Burgfrieden, a truce in times of trouble, but I cannot say that I have suffered either severely or disproportionately. At this point of my professional life I am so happy for the continued emotional and intellectual support provided by my wife, the psychiatrist Prof. Isabella Heuser-Collier, whose own Abschiedsvorlesung at Berlin’s Charité I eagerly await some two years from now.

General Douglas MacArthur immortalized the refrain from an old barracks song in his farewell address to the U.S. Congress in April 19, 1951: “Old soldiers never die, they just fade away.” In that spirit, beginning this September at Bard College Berlin I shall fade to teaching half-time with an increased emphasis on the history of economics. This will give me significantly more time for transcribing and curating archival artifacts for my blog Economics in the Rear-view Mirror (www.irwincollier.com). I don’t really believe in the prospects of a happy hunting ground in the sky, but as a member of the greater academic community going forward, I find the prospect of my work surviving in a happy virtual cloud in the sky a spur for me to continue my work. I once toyed with the idea of slipping a $100 bill into the library copy of my M.I.T. Ph.D. dissertation to reward an anonymous anybody who has decided to fish the dissertation from the safe obscurity of the Dewey library stacks. Now the thought occurs to me that perhaps leaving a bitcoin in the cloud somewhere buried in my blog would be a legacy worthy of a scholar of the early 21st century.

I thank you for your attention this afternoon but especially for being with me now at this cusp of my academic life-cycle.

 

Categories
ERVM Irwin Collier

Third Anniversary of Economics in the Rear-view Mirror, 2018

 

Today, 8 May 2018, Economics in the Rear-view Mirror celebrates its third anniversary. As your faithful scribe and curator of this digital collection of archival artifacts from the history of economics, I am happy to report that the project is on right on schedule, and I have been able to add artifacts at a rate of 250 per year. Here is the catalogue of (at this moment exactly 750) items.

The following table lists the top twenty postings/pages ranked by page-views for year three. As one might expect, names like Schumpeter, Hayek, Samuelson, Friedman and Solow are the big draws for what is after all a pretty nerdy boutique blog. It is my hope to entice visitors to check out some of the 19th and early 20th century artifacts and to help expand the market for the young historians of economics who have been generous in their likes and retweets over at the Twitter and Facebook outposts of Economics in the Rear-view Mirror.

While it should be obvious, let me explicitly say that the work here is strictly and solely motivated by educational and research purposes and that this blog is not in any way a commercial enterprise. It is merely a publicly viewable log of my ongoing research into the evolution of undergraduate and graduate education in economics for (approximately) the century before I began my own economics education. Beware ye who may attempt to exploit for non-educational-and-research purposes my good-faith in remaining well within the fair-use of material to which copyright might rightfully be claimed!  

Title   Views
Harvard. Final Examination for Paul Sweezy’s Economics of Socialism, 1940 4,832
Harvard. Graduate economic theory exams. Taussig, 1930-35 2,687
NBER. Mitchell to Burns about Friedman. 1945 1,439
M.I.T. Student evaluations for core microeconomics course taught by Samuelson, 1970 1,403
M.I.T. Complaint about ill-treatment of woman in job interview, 1982 818
Harvard. Exams from Principles of Economics. Day, Davis, Burbank et al., 1917-18 687
Wisconsin. Business Cycles. Readings and Exam. Friedman 1940-41 604
M.I.T. Student evaluations of second term core macroeconomics. Solow, Foley. 1967-70 584
Harvard. Graduate Core Economic Theory, Readings and Exams. Schumpeter, 1936-37 504
Harvard Economics. Course. Economics of Socialism. Sweezy. 1940 490
Harvard. History of Economic Theory. Final exam questions, Taussig, 1887-90 487
Chicago. Monopoly course proposal by Abram Harris with George Stigler’s (Dis)approval, 1961 486
Chicago. Hayek’s Seminar “Equality and Justice”, 1950-51 457
Harvard. Graduate core economic theory exams and enrollments. Taussig, 1926-30 441
Yale. James Tobin on Freedom to Friedman in 1964 333
Harvard. Graduate Economic Theory, Scope and Methods. Carver, 1914-15 308
Chicago. Milton Friedman from Cambridge to T.W. Schultz. 29 Mar 1954 239
M.I.T. Economics skit from about 1971 233
Harvard. Exam questions for Mason and Leontief’s Marxian economics course, 1937 231
The Economics Rare Book Reading Room. Classic Economics. 227
Categories
Economists Funny Business M.I.T.

M.I.T. Analysis in Wonderland. Graduate Student Skit, 1975

 

The annual skit party was a huge social event in the economics department at MIT in the 1970s and presumably before and after.  Each of the cohorts was expected to write and perform its own skit in which economics and economics professors were the principal targets. Faculty written skits were often a part of the festivities. Here in this posting for the historical record, a parody of Alice in Wonderland set in the Wonderland Institute of Technology in 1975 written by the first-year class of 1974-75. But first I provide a list of my classmates with links to some biographical information where I was able to find something…whatever happened to Paul Krugman? Not everybody participated in the preparation and performance so there remains a presumption of comic innocence for the majority of the following.

In 1978 many of this cohort were involved in Casablank, a parody of the movie Casablanca. That script has been transcribed and posted at the highlighted link.

__________________

First Year Economics Graduate Students, 1974-75
M.I.T. (Spring 1975)

Abel, Andrew B.
Aspe, Pedro A.
Begg, David K. H.
Beleza, Luis Miguel C. P.
Bookstaber, Richard M.
Collier, Irwin L., Jr.
Datcher, Linda P.
Daula, Thomas V.
Desormeaux, Jorge J.
Donnelly, John F.
Duarte, Virgulino
Klorza, Santiago C.
Feiger, Margaret C.
Frankel, Jeffrey A.
Geehan, Randall R.
Giavazzi, Francesco
Halpern, Janice D.[sic, H.?]
Helms, L. Jay
Hill, Raymond D.
Krasker, William S.
Krugman, Paul R.
Malveaux, Julianne M.
Mincy, Ronald B.
Mooney, Patricia D.
Mork, Knut A.
Nagatani, Hiroaki
Neuer, Margaret R.
Smith, David A. [Alton]
Startz, Richard
Winicker, Mary K.

Source:  M.I.T. Archives. MIT Department of Economics Records, Box 1, Folder “Women & Minorities”.

__________________

While transcribing this skit from my own days as a graduate student, I discovered how much I had indeed forgotten. The mapping of many a character to the corresponding faculty member was no longer obvious to me. I have added a listing of  Dramatis Personae with annotations based on the combined incomplete memories of myself,  Jeff Frankel, Dick Startz, Andy Abel, Ray Hill and Jay Helms. Perhaps some long-lost member of the troupe will stumble across this page and help me fill in the blanks, especially with respect to casting (20 characters!). 

______________________

ANALYSIS IN WONDERLAND

Composed and performed by the first-year economics graduate students at M.I.T.
Second term, 1974-75

 

DRAMATIS PERSONAE

Narrator: played by Richard Bookstaber
Alice (Representative Graduate Student): played by Margaret (née Agnew) Feiger
Advisor (presumably the actual first-year advisor, Peter Diamond): actor unknown
Cheshire Cat (Jagdish Bhagwati): actor unknown
Micro: (Hal Varian?): actor unknown
Macro: (Stanley Fischer?): actor unknown
Quick & Dirty (Martin Weitzman): actor unknown
Palmer (Palmer, an actual Sloan School graduate student): actor unknown
Dormouse (Evsey Domar?): actor unknown
Mad Hatter (Charles Kindleberger): played by Jeffrey Frankel
March Hare (Robert Engle?): actor unknown
Tweedledee (Jerry Hausman):  possibly played by Jay Helms
Tweedledum (Robert Hall): possibly played by Bud Collier
Knave of Hearts (Franco Modigliani): actor unknown
Knave of Clubs (Arthur Burns): actor unknown
Knave of Spades (William McChesney Martin): actor unknown
Knave Alan (Allan Greenspan): actor unknown
King (President Gerald Ford): actor unknown
Joker (Paul Samuelson): possibly played by Ray Hill
White Rabbit (Robert Bishop?): actor unknown

ACT I

Narrator: The first year class presents…

Analysis in Wonderland, a tragicomedy in four unnatural acts. Any resemblance to faculty members living or otherwise should be inferred from the initials worn by the characters.

Act I, Alice enters Wonderland and meets the Cheshire cat.

(Alice is sitting at a table reading Samuelson’s Economics.)
Narrator: One day Alice was reading a book, but she was getting very bored, for the book had no conversations or jokes in it.
Alice: And what is the use of a book without conversations or jokes?
Narrator: And so she began to drift off. And eventually she noticed that there was someone on the other side of the desk…
Advisor: Hi! Welcome to the Wonderland Institute of Technology. You must be a first year graduate student. I’m your first year advisor, and it’s my job to talk to you and give you a feeling that someone cares about you personally.

Now, let me see your schedule (grabs book). Well, uh, (looks at book then says with emphasis) Paul, this schedule looks fine to me (signs it) and remember to turn in your roll cards on the first day of each class.

(Through all this Alice keeps going “uh” and “but”…but can’t manage to say anything)

Remember that if you have any questions or problems, just come in and talk to me, I have plenty of time. Excuse me!

(The advisor gets up and runs out. Alice runs after, then comes back)

Alice: What a strange place! But where should I go from here? Why there’s a Cheshire Cat. (Enter Cheshire cat) Excuse me, sir, but can you tell me where I ought to go from here?
Cheshire Cat: Why, I’m wery [sic] glad you asked me that. You should go to the optimal point, of course.
Alice: But how long will that take me?
Cheshire Cat: I can’t tell you that, listen to this. (Turns on radio, which produces static. Turns it off.) You see! Our economic theories are all static.
Alice: I would like to see some faculty.
Cheshire Cat: Well, you could go to Harward [sic], but it’s wery rare that anyone sees any faculty there. Or you could stay here, but everyone here has completely lost their faculties. They’re all mad, you know.
Alice: But I don’t want to go among mad people.
Cheshire Cat: Oh, you can’t help that; we’re all mad here. I’m mad. You’re mad.
Alice: How do you know I’m mad?
Cheshire Cat: Well, a physicist’s not mad, you grant that? Now, a physicist starts with facts and tries to find theories that fit them. I start with theories and don’t bother with facts. Therefore I’m mad. Yes?
Alice: But what are your theories about?
Cheshire Cat: Do they have to be about anything?
Alice: Well, I’ve often seen a subject without a theory, but a theory without a subject? It’s the most curious thing I ever saw in all my life!

(Alice suddenly starts)

Cheshire Cat: Don’t worry, it’s just the inwisible hand.
(Enter two characters with paper hats (?) on which are cross diagrams. One has a potato chip taped to his shoulder.)
Cheshire Cat: They’re Mike and Mac Ro
Micro: Someone must stop him! It’s shameful! Look at that silly diagram he’s wearing! It’s a disgrace to the profession.
Macro: It’s a perfectly good diagram. Not like that ridiculous diagram you’re wearing!
Alice: But the diagrams look just the same.
Cheshire Cat: Shhh! You’ll only get them more upset.
Alice: Why don’t you try to talk your differences over?
Micro: Well, we microeconomists believe in logic, so I’m willing to reason it out.
Macro: You can’t expect me to be reasonable. Can’t you see I’ve got a chip on my shoulder?
Alice: Why, yes—it’s a potato chip in fact.
Macro: I wear it in honor of our founder, Cain’s. So prepare to defend yourself.
Micro: I warn you, I’m a master of the Marshallian arts.
Macro: But I’m armed with the most deadly tool of macroeconomics: (pulls out several pairs of pliers)…Multi-pliers!
Micro: And I have the most dangerous concept of microeconomics. (pulls out a slingshot) Elasticity!
Alice: Oh no, they’re going to have a duel and micro is a semi-strict under dog!

(Mike and Mac turn back to back)
(enter panting, the Quick and Dirty banker, carrying a money bag and a calculator)

Q&D: Wait! You can’t have a duel without a primal.
Alice: Who are you?
Q&D: I’m duh quick and doity bankuh. And by my quick and doity bankuh’s calculation, I find dat what you need is more liquidity which I will now provide.

(out of the moneybag he pulls a waterpistol, shoots everyone, then runs)

Macro: Now we’re all wet. What are we going to do?
Alice: It’s all right, I know just what to do. Here’s the driest thing I know.

(begins reading from Bishop [notes])

Micro: This isn’t getting me dry at all.
Macro: Now there’s only one way to get dry, and this will prove to you that macroeconomics is good for something.
Alice: What are you going to do?
Macro: I’m going to do some hand-waving! Macroeconomists are always drying things out by waving their hands.
Alice: They are?
Macro: Of course! That’s why none of their theories will hold water. Now, watch this! (He begins to draw a diagram)
Alice: What do those lines mean?
Macro: Oh, I don’t know. But they’re pretty good lines, and Lord knows I have the right to a few good lines in this ridiculous skit.
Palmer: Haven’t you got the A line drawn wrong?
Macro: (Going very fast) Well, that line doesn’t really matter. (erases it)
Palmer: But then shouldn’t you erase the k line, too?
Macro: Well, all right (erases).
Palmer: What do X and Y stand for?
Macro: Oh, don’t worry about the axes (erases them). Actually, these are not quite like this anyway. (erases remaining lines) And, as you can see, equilibrium is at the intersection.
Alice: Well, I’ve often seen lines without an intersection, but an intersection without lines? It’s the most curious thing I ever saw in my whole life.
Narrator: You’re repeating yourself, Alice.
Alice: What do you expect, Mel Brooks?
Micro: You think that’s hand-waving! Why, I have seen hand-waving, compared with which that is no better than eternal bliss.
Alice: But what is better than eternal bliss?
Micro: Well, a ham sandwich, for instance.
Alice: But nothing’s better than eternal bliss.
Micro: And a ham sandwich is better than nothing. So, by transitivity, there you are!
Alice: (ignoring Micro as she turns to the Cheshire Cat) Isn’t there anyone here who isn’t mad?
Cheshire Cat: You might try an assistant professor.
Alice: Which one should I try?
Cheshire Cat: It doesn’t matter—pick one at random.
Alice: How do I do that?
Cheshire Cat: Just draw one from an assistant professor urn.
Alice: What’s an assistant professor urn?
Micro, Macro, Cheshire Cat, Narrator (in unison) About eleven thousand a year!
(pause)
Narrator: …and a copy of Bishop’s notes.
Alice: Curiouser and curiouser.
(exeunt all)

 

ACT II

Narrator: Act II. The Mad Boston Tea Party
(Dormouse sleeps throughout. Mad Hatter stuttering throughout; price keeps going up on hat.)
Mad Hatter: What’s your liquidity preference my dear?
Alice: It looks like you have nothing but tea.
Mad Hatter: That is all we have.
Alice: Then why did you ask?
Mad Hatter: Consumer sovereignty. (gives Alice tea) I would like to suggest to you that that will be eight pence (takes shilling from Alice.)
Alice: No cover charge?
Mad Hatter: A gentleman never takes cover, as we say in the old country.
Alice: Hey, I gave you a shilling and you only gave me two pence change back!
Mad Hatter: A gentleman never counts his change.
Hare: Gentleperson!
Alice: This sounds like a liquidity trap to me.
Mad Hatter: Alright, I’ll put it down on the T-account…(gets book)
Alice: There is something floating in my tea.
March Hare: (looking) Exchange rates.
Mad Hatter: … two pence… (fiddling with T-accounts)
Alice: No it’s ice.
Mad Hatter: …under frozen assets.
Hare: Gary Becker! (general laughter)
Mad Hatter: Why is the Poisson distribution like a temperature of 102?
Alice: Well, let’s see… I suppose you would have to integrate e to the…
Mad Hatter: Integration! They only do that in South Boston.
March Hare: No, that’s disintegration.
Alice: I suppose you have to differentiate between…
Mad Hatter: Differentiate? The first derivative is the last refuge of a scoundrel.
Alice: I give up, why is the Poisson distribution like a temperature of 102?
Mad Hatter: I haven’t the slightest idea.
Alice: That’s not very funny.
Mad Hatter: Funny?
March Hare: She wants to hear a joke.
Mad Hatter: A joke, a joke!
March Hare: …Fogel and Engerman! (general laughter)
Alice: I’m afraid I don’t get it.
Mad Hatter: Well, you see, certain names are standing jokes around here, like…Walt Whitman Rostow! (laughter)
Alice: Can I try one?
Mad Hatter: Go right ahead.
Alice: Milton Friedman! (silence among the actors who look sour a moment after the audience’s laughter dies down.)
Mad Hatter: Try another one.
Alice: Jay Forrester….(more silence).
Alice: I don’t understand. What’s wrong?
Mad Hatter: Well, some people just can’t tell a joke.
March Hare: Perhaps you’d like to see a proof?
Mad Hatter: A proof! A proof!
March Hare: This is a proof I recited before the Queen of Hearts. (goes to board)

Twiddle Twiddle lambda star
Alpha hat, beta hat times X bar.
Alpha hat, beta hat sigma Xi

One over n, equals mean of Y.

[writes on board:]:
\begin{array}{l}\mathop{{\tilde{\tilde{\lambda }}}}^{*}=\hat{\alpha }+\hat{\beta }\cdot \bar{X}\\=\hat{\alpha }+\hat{\beta }\cdot \sum{{{X}_{i}}}\left( \frac{1}{n} \right)=\bar{Y}\end{array}
Mad Hatter: Time to move on to the next place.
(everybody gets up to move)
Alice: What?! You mean you just move on to the next place without erasing?
March Hare: We don’t have to erase; we just relabel the axes.
Mad Hatter: I always erase twice, once before the period and once afterward. (erases)

(everyone moves down one, and relabels axes and curve)

     
Alice: And I suppose when you use up all the places you just start again at the beginning of the circle?
Mad Hatter: Yes. It’s called recycling.
March Hare: You better wake up the Dormouse.

(Mad Hatter and March Hare exit)

Alice: (To Dormouse) Wake up, wake up. (shakes him)
Dormouse: (waking) Whaaaaat?
Alice: Wake up. It’s over.
Dormouse: (Pause…) Can I Xerox your notes?
Alice: (starts to leave. turns and says) Why is a Poisson distribution like a temperature of 102? (Pause. Alice exits)
Dormouse: (alone) Because it’s not normal.

 

ACT III

Narrator: Act III. Alice meets Tweedledum and Tweedledee, who have a battle.
(Alice enters and sits down. Dum and Dee enter, arm-in-arm, prancing. Dee sits down; Dum goes to the board and begins. Throughout, Dee is frantic, pacing, and talking very fast. Dum is red-faced, slow-talking, constantly looking at the floor; arms folded, with noticeably short pants and a turtleneck.)
Dum: So, to conclude yesterday’s talk, we can see that it’s entirely possible that for the two sub-groups, say, men and women, you could have different parameters in the regression…
Dee: (jumping up to interrupt) I think I can draw a picture that will make that all clear. Wish I had my colored chalk… [draws pictures].
     
…so you see that while the slope in the pooled regression is zero, contrariwise; it’s actually negative for men and positive for women.
Dum: …Sort of, different slopes for different folks, which tells us…
Dee: [interrupting] …and contrariwise, I can clear this up by drawing a picture that would show…[draws picture]
 
Dum: [interrupting]…that there could be kinky behavior in some subgroups….
Dee: Right. (sits down)
Dum: But, as I was going to say, this illustrates the 287th “Iron Law” of econometrics, which states that….
Dee: (again jumping up to interrupt)…Contrariwise,…I think I can make that clear with a picture in four dimensions. Damn, I just wish I had my colored chalk…(draws pictures)
…which shows that…
Dum: (getting very irritated, interrupting) Nohow!

The time has come, the Walras said
to talk of many things,
of matrices and error terms
of cabbages and kings,
and keeping out your pictures
that keep complicating things.

Dee: Contrariwise!

In my way of showing things
I’m better far than you,
Your talk is like an old dead horse–
It’s slow, not unlike glue.

Dum: Now wait a second…
(Dum and Dee break into a general dispute, yelling at one another.)
Dum: ….you’re not consistent…
Dee: …you’re almost surely driving me to the p-limit…
Dum: …you’re a homoscedastic deviate…
(While Tweeledum and Tweedledee continue arguing, the Narrator breaks in…)
Narrator: So Tweedledum and Tweedledee
Agreed to have a fight
For Tweedledum said Tweedledee
Couldn’t prove Gauss-Markov right.
Dum: Of course we must have a fight. What time is it?
Dee: 10:40—We’re late getting started, so we better hurry up.
Dum: Let’s fight ‘till noon, then have lunch.
Narrator: So they agreed to fight and, as Alice watched, they began to see who could prove the theorem better.
(Dum and Dee give lectures simultaneously, beginning and ending at the same time with the same words.)
Dee:

[simultaneously with Dum]

I CLAIM THAT OLS IS BLUE.

Basically, we want to prove that

{{\sum{\left( \mathbf{{X}'Y} \right)}}^{-1}}\mathbf{{Z}'}\beta \le {{\sum{\left( \mathbf{{X}'\tilde{Y}} \right)}}^{-1}}\mathbf{{Z}'}\gamma

Now just take the inverse of the antilog of the Jacobian and delete the fourth row. Let little x be the square root of big X, and let medium-sized x be measured from its mean; substitute back in and we have

{{\sum{\left( \mathbf{{X}'}\left[ \begin{matrix}  \mathbf{Y} \\  \mathbf{Z} \\  \end{matrix} \right] \right)}}^{-1}}{\left| J \right|\cdot \Pi \cdot {{R}^{2}}}/{\text{hat size}}\;

which you will recall from 14.381.

Then, as I promised, you can use this by transposing Z and x, deleting R and reversing the inequality…..OH SHIT…I’ve screwed up…Well, just change every medium-sized x in your notes to big X, delete all sigmas, and reverse the third and fourth steps of the proof I gave last week which was right here on the board. Or look in Tahl’s [Theil with an West Virginian accent] book. Everyone should understand this perfectly—and of course the notation is clear. Then, adding the obvious steps we learned in 14.381 to this proof completes the argument. SO OLS IS BLUE, as promised.

Dum:

[simultaneously with Dum]

I CLAIM THAT OLS IS BLUE.

Well….a lot of people go around proving the Gauss-Markov….Theorem….but the literature is full of cases….where what’s done is wrong….Take matrix addition for example….Some people just add element-by-element….while often the more interesting thing to do…..is to use the Choleski factorization of one of the matrices….And recalling that Tweedledum and I are the final arbiters of econometrics at W.I.T. (at least until Fisher gets back off leave) you’d better do it this way, or consider dropping the course. SO OLS IS BLUE, as promised.

Palmer: Shouldn’t you invert that Jacobian before proceeding to expansion in Lambert spaces….
Dee: [interrupting] If it was so, it might be; If it WERE so, it could be; But as it isn’t, it ain’t. That’s logic.
Narrator: Alice couldn’t figure out just who had won the fight, although Tweedledee HAD used a lot more words….
[exeunt]

 

ACT IV

Tweedledee: Act Four, “The trahl”.
Narrator: Within a few moments Alice will witness the trial of the Knave of Hearts who is in deep trouble now because the King of Hearts is flying all the way from the Capital of Wonderland to preside at the trial. You are undoubtedly familiar with the Knave of Hearts most important contribution to economic analysis, “A Life-Cycle Built for Two”. But now he has been accused of starting the latest Wonderland inflation and depression—or as they say in the seminar rooms down by the River Chuck—“inflession”. The economic experts of the King—Knave Arthur of Clubs, Knave William of Spades, and Knave Alan of Diamonds—have all convinced him that economic voodoo has been practiced on models on the Wonderland economy in the hallowed halls of W.I.T. Since the King of Hearts has never played with a full-deck in his life, he was easily deceived by these rascals. Fortunately for the Knave of Hearts the Queen was unable to come to the trial due to a prior speaking engagement before the Veterans of Foreign Business Cycles.
(Enter Knaves of C.S. &D. They play “Hail to the Chief” on kazoos for a few bars and end with “Pop goes the weasel.” Then the King enters wearing a helmet and carrying a football. A WIN button is conspicuous. King bends over, hikes the ball to Knave of Clubs. King sits down on throne in middle of stage.)
Knave of Clubs. Where’s the jury?
King of Hearts. (points at the Knaves) You. (Knaves turn around but no one is behind them. King continues…) Yes, you. You are his peers. And for a proper trial before we cut off his grant, we must have a jury of his peers.
Knight of Diamonds. (tossing a coin à la [George] Rath) We know what to do.
(Enter all the other characters from Wonderland, except Joker and reporters)
King: What are the charges?
Knave of Clubs: Eleven dollars a barrel.
White Rabbit: The King of Hearts, he has no smartz
But Unemployment yes.
The Knave of Hearts has played his part
To make inflation worse.
Knaves in the jury-box: Boo, Hiss, Boo!
King: It is a pretty despicable offense isn’t it?
Knave of Spades: Are you kidding? The charges don’t even rhyme.
King: Will the defendant rise?
Knave of Hearts: If I had known you were going to ask me that question I would have built it into my model.
King: I’ll hold you in contempt!
Knave of Hearts: I don’t suppose I’ll become overly fond of you either.
King: Let the jury note the defendant’s behavior.
Knave of Hearts: Which reminds me of my 1944 paper, but that is of course a secondary issue given the gravity of the problems which we now face. While I can’t formally defend the following equation to my own satisfaction, I think that it does make some economic sense. But first I should say that things will be getting much worse before they will get better, I can give you the latest predictions…..
King: (fuming through all of the above) Bind the bearer of bad tidings or he’ll talk us to death…
Knave of Clubs: But what shall we bind him with?
King: Bearer bonds, naturally!
(The Knaves come out of the jury box and use first-aid gauze to tie the knave of Hearts by body and legs & gag him—leaving only one arm free. Knave of Hearts has been talking with his hands throughout his testimony, and he continues gesturing with his free hand while occasional grunts can be heard under his gag.)
King: May it be noted that in the tradition of Wonderland jurisprudence we have left the defendant with one degree of freedom in spite of his lack of respect for this court. Are there any witnesses?
Mad Hatter: I am.
King: Take the stand.
Knave of Clubs (to Mad Hatter): Did the defendant do it?
Mad Hatter: Certainly not.
Knave of Spades: And you witnessed this with your own eyes?
Mad Hatter: And I didn’t hear or smell him do it either.
Knave of Diamonds: But how strong was your prior?
Mad Hatter: Well, I don’t like to boast but when I was a young man working for the OSS during the War, I once spent a week in bed with a….
Knave of Clubs: No, no, no. How much could new data affect your prior beliefs, and if considerably, what was your posterior judgment?
Mad Hatter: I don’t now, that’s a good one. But I’ve got one for you. What weighs 12,000 pounds and has a twice differentiable indifference map over hay and peanuts?
King: That’s irrelevant!
Mad Hatter: That’s right.
King: Give your evidence, or I’ll cut your grant off on the spot!
Mad Hatter: (stutters) I’m a poor man your majesty.
King: You’re a very poor speaker. (knaves laugh) I thought that was a pretty good one too. I’m in the mood for a few laughs (to White Rabbit) Call in the Joker.
White Rabbit: The Joker.
(Enter Joker, attended by secretary, fans seeking autographs, and reporters taking pictures)
Joker: It’s great to be back in Wonderland folks. A funny thing happened on my way…
King: (interrupting) You have been called here to testify. What is the Keynesian viewpoint?
Joker: As Uncle Miltie Friedman would say, only blindmen use Keynes. Hey, that’s a pretty good one. (To secretary) Write that down for my textbook—Better yet, put out a new edition. But, seriously folks just the other day I was leafing through a volume of Ricardo’s letters in the Sraffa collection when I came across a letter from Ricardo to James Mill describing the following encounter between Thomas Malthus and David Ricardo. Ricardo was walking down the street one day when he ran into the good Reverend who was, much to Ricardo’s surprise, sporting a banana in his left ear. Ricardo was surprised because Malthus was always the last of the political economists to adopt a new fashion. Finally Ricardo’s curiosity got the better of him and he asked, “I say Tom, why is that banana in your ear?” Malthus didn’t seem to understand—but that was hardly unusual as Malthus, more often than not, couldn’t understand what his friend was saying. In fact, old Malthus personally thought that Ricardo couldn’t optimize his way out of a paper sack, much less a Lambert space. Finally Malthus said, “I’m sorry Dave, but I can’t hear you, you see, I have this banana in my ear.” (everyone in the courtroom is sleeping) And now….ahem…ahem (everyone wakes up). A few of your favorite impressions: Francois Quesnay! (He covers his face with his hands; removes hands; expression unchanged) Böhm-Bawerk! (same routine)
King: Enough!
Joker: Nassau Senior! (same routine)
King: Take him away. (White rabbit and knaves carry Joker off, still doing impressions. e.g. Stanley Jevons, Joseph Schumpeter, Vilfredo Pareto….)
King: Who is the next witness?
Rabbit: Alice!
Alice: Here! (she goes to the witness stand)
King: What do you know about this business?
Alice: Nothing.
King: If you say anything, I’ll give you part credit. Otherwise….
Alice: But I don’t need part credit!
King: Young lady, I’m growing impatient. Either tell us something about this business or I’ll cut off your grant.
Alice: (crying) But I don’t have a grant.
King: Then why are you so upset, indeed.
Alice: What sort of….(alarm clock goes off in the jury box and the knaves wake up).
Knaves: (in unison) Verdict time!!
Knave of Spades: (To Knave of Diamonds) Do you have the coin?
Knave of Diamonds: Yes I do. (to Spades). You’re innocence, (to Clubs) you’re guilt. Call it innocence. (he tosses the coin high in air)
Alice: What kind of trial is this?
King: Don’t be a stupid child. It’s a Bernoulli trial.
Knave of Spades: Tails.
Knave of Diamonds: Sorry it’s heads. He’s guilty!
Alice: May I see the coin? (it’s tossed to her) This coin has two heads.
King: Did anyone say p equaled one half?
(Lights out. Everyone leaves but Alice. Lights on she has book and wakes up.)
Alice: I’m glad I woke up before I had to take generals. (She leaves)
Audience: (Deafening applause) Bravo. Cheers. Whoopee.

 

Source: Transcribed by Irwin Collier from personal copy.

Categories
ERVM

On the road again

Dear subscribers,

Some of you might wonder about the recent interruption in regular posts here at Economics in the Rear-view Mirror. Not to worry, all is well. First I was on an archival expedition for three weeks. I am currently touring Vietnam. I’ll only be tweeting links to some of the golden oldie posts (@irwincollier) that have attracted the most visitors as well as a few of the underappreciated jewels of the collection.

By mid-April the flow of new content will resume.

Categories
Funny Business

On the second day of Christmas my colleague wrote with me…

a doggerel about 2-016:

“A Visit from St. Vlad” by Michael Burda and Irwin Collier.

 

Image SourceTrump Tower @ 5th Ave by Victor Harota posted on Flickr: .

Categories
Economists Irwin Collier M.I.T.

MIT. Samuelson at the Joint Economic Committee, 1973

Backstory:

When I was an undergraduate I was extremely fortunate to have received an internship at the Council of Economic Advisers in Washington, D.C. Even though I was anything but a Republican and the semester-long internship began less than three months after the bungled Watergate break-in at the Democratic National Committee by the White House “plumbers”, I eagerly grabbed this opportunity when it was offered in August, 1972 to begin that September. I was assigned to two labor market economists, one of whom (June O’Neill) would be tasked to write chapter 4 “The Economic Role of Women” in the 1973 Annual Report of the CEA and for which I did all the tabulations and number-crunching at a time when research assistants at the Council had Wang calculators on their desks that were tethered to an “electronic package” with a data hose but that did possess the virtue of calculating logarithms (!) with a single keystroke. My bosses were sufficiently satisfied with my work that I was invited back for the Summer of 1973.

My time at the Council coincided not just with the Watergate scandal but also with some of the episode of wage-and-price controls. When concerned citizens wrote to the Council of Economic Advisers, their letters would be passed down the pecking order and most often landed on the desk of an intern to draft a polite, Econ 1 response. One of the women interns, came through the office in a rant because when she consulted Paul Samuelson’s Economics for some boiler-plate about shortages and price controls to include in a letter, she found a not untypical Samuelsonian wisecrack “Of course, there are always a few women and cranks, longer on intuition than brains, who blame their troubles on the mechanism of rationing itself rather than on the shortage.” Even though I was not even aware that I would be going to MIT myself a little more than a year later, I instinctively wanted to protect my hero, figuring my colleague consulted an old edition and times-have-changed-for-the-better. A nice thing about the Council of Economic Advisers is that it had economists of all generations in residence so that in a matter of no time we had multiple editions in which we could seek and then compare the offending passages. Indeed my intuition was correct, by the 1970 edition “women and cranks” was softened to “cranky customers” but to our procrastinating horror we discovered that the earliest edition referred to “women and soap-box orators” that was only later changed to the somewhat more offensive “women and cranks”.

Not long after this serendipitous discovery of Paul Samuelson’s personal journey in matters of gender awareness, I heard that Herbert Stein and Marina von Neumann Whitman were to testify before the Joint Economic Committee of the U.S. Congress in a set of hearings devoted to the “Economic Problems of Women” and that no less an economist than Paul Samuelson was to testify as well. I quickly wrote up a memo to my boss, June O’Neill, suggesting that perhaps this would be a cute opening remark for Marina Whitman, albeit at Samuelson’s expense, illustrating the gradual rise in consciousness of economists with respect to women’s issues.

Today’s posting includes the relevant part of Marina von Neumann Whitman’s testimony where the input from my memo can be seen. (Thank you for the memory FRASER!)

I was slightly disappointed when I read Paul Samuelson’s printed testimony, because he led off with a remark to the effect that “I am surprised, given the magnitude of the economic problems facing the United States, that the President’s Council of Economic Advisers would have the time to go back to uncover my past errors.” That statement did not get recorded in the official transcript however. My memory of his facial expression at the time was of unamused to slightly irritated. Later as a graduate student I never did have the courage to ask Samuelson if he remembered that particular moment in the hearing much less confess to my complicity.

My feeble attempt at a reparation for even providing the backstory to this Samuelson anecdote rather than mercifully allowing it to remain in the obscurity of a transcript from a JEC hearing is to place into my blog record a few paragraphs from near the end of Samuelson’s spoken testimony.

In today’s summer of the American white-male’s discontent Samuelson’s casual remarks about the differences in labor market experiences of men and women seem quite prescient. 

_______________________________

 

ECONOMIC PROBLEMS OF WOMEN

Tuesday, July 10, 1973.

Congress of the United States,
Joint Economic Committee,
Washington, D.C.

 

The committee met, pursuant to notice, at 10:12 a.m., in room S-407, the Capitol Building, Hon. Martha W. Griffiths (member of the committee) presiding.

Present: Representative Griffiths and Widnall.

[…]

Mrs. Whitman. […] In fact, this fourth chapter of the 1973 Economic Report of the President represents the first time that the report of the Council of Economic Advisers has directed considerable attention to the economic problems of women. The formation of the Advisory Committee on the Economic Role of Women is another first for the Council. The economics profession has been slow in developing expertise on the special problems of women; and Federal data sources have only begun to tailor surveys so that they can yield appropriate statistics about women. One role of the Committee is to fill in some of the deficiencies and expertise on this subject for the Council. The association of the Committee with the Council provides a channel through which the interests of women are represented in economic policy decisions.

Indeed, we are glad to observe that finally women and economics are being included in the same breath without a knowing wink by the male economist. One sign of this is the change in a passage found in various editions of Professor Paul Samuelson’s well-known economics textbook. Lamenting the popular reaction to the results of rationing, Professor Samuelson wrote in his first edition (1948):

Of course, there are always a few women and soapbox orators, who are longer on intuition than brains and who blame their troubles on the mechanism of rationing itself rather than on the shortage.

In the seventh edition (1967), we find soapbox orders dropped and the sentence is changed to:

Of course, there are always a few women and cranks, longer on intuition than brains, who blame their troubles on the mechanism of rationing itself rather than on the shortage.

By the liberated eighth edition (1970) he writes:

Of course, there are always some cranky customers, longer on intuition than brains, who blame their troubles on the mechanism of rationing itself rather than on the shortage.

So by 1970 “women” had disappeared from that rather slighting reference.

We have asked to insert into the record chapter 4 of the 1973 economic report. I would like here simply to talk about a few highlights of the chapter and primarily to report on some additional information and analysis that we have been able to acquire and develop since the economic report…

[…]

Source: United States. Congress. Ninety-Third Congress, First Session. Joint Economic Committee. Economic Problems of Women: Hearings, Part 1 (July 10, 11, and 12, 1973), p. 33.

[…]

Representative Widnall.  Mr. Samuelson, you infer in your statement and in your chapter on discrimination in the new edition of your textbook that the economic problems of women are due to “confinement to a limited group of industries and occupations within those industries.”

Could you explain what other factors you theorize to be significant in creating the female-male differential in that field?

Mr. Samuelson. We have learned about some of the detailed studies that are made to break down the different factors that explain an obviously large differential. It seems to me that these studies are excellent, the studies done by the Council of Economic Advisors, in comparison with earlier councils. It seems to me that we need more of them. But they must not have a soporific effect upon us, because, as in the case of all discrimination, there is a self-fulfilling and a self-perpetuating circle involved in discrimination. Women have less experience than men, and therefore you explain away the differential. But you have to ask yourself. “Why is the world run in such a way that the women get less experience for the good jobs?” A white male apparently is what all of Darwinian evolution has set out to create. Out of the slime came DNA, and then a backbone or something of a backbone was created, and then humans came down from the trees, and all this to create a white male. For, by census analysis of my colleague, Prof. Robert Hall, the only group who get automatic advances with age in the community, let’s say, after the age of 25, 27, 29, are white males. Women don’t get it, whether they are white or black. Black men don’t get it.

There is little good reason for a woman to have continuity in the labor force. She is given a rotten job by and large; then she leaves; and when she comes back, she again gets a rotten job. For a man, it is usually different. Only this last recession was a recession which hit MIT graduates and other professionals. As my suburban neighbors said while they were polishing their cars, why it’s people like us who have been thrown out of work. For a long time prior to that, all they had done was go through the coffee breaks and funeral by funeral move up the promotion and salary ladder. Now, that does not happen to the rest of the community. That is why, when I do an analysis of wage variance, or when Prof. Mincer does it, we pick up these same facts of discrimination once again, yes, women lack capital. The curse of the poor is their poverty. They lack human capital. Human capital is the ability to earn a large amount of money. And if you haven’t got it, you don’t earn a large amount of money. These are all attitude conditioned.

Let me give an example. It used to be said – I don’t know what the full truth was – that Jews had a bad occupational outlook in engineering. There was said to be great discrimination against them. There were very few Jews in engineering. And it was said, they are really not fitted for it. They don’t like work for pay, they like to be their own boss, probably lending money at high interest rates, and other such nonsense. And then a great change came. After World War II, in contrast to after World War I, go out to Route 128, or to Pasadena or the bay area, or Seattle, and you find that suddenly these people who previously had no human capital in that engineering-science line, no wish for it, no proclivity, no talent, they turned out to be, I would say, well represented in any random sample.

Attitude becomes self-reinforcing, and the statistics then prove for you what you already know, if you understand the attitudes involved.

So we are only talking about the visible peak of the iceberg of custom and discrimination. There have to be great changes. A 1-year change in legislation of course is only the beginning of a very long process.

 

Source: United States. Congress. Ninety-Third Congress, First Session. Joint Economic Committee. Economic Problems of Women: Hearings, Part 1 (July 10, 11, and 12, 1973), pp. 66-67.

_______________________________

 Addendum from a 1964 Oral History regarding the Council of Economic Advisers &c.

Thanks to a tip from Paul Samuelson’s biographer, Roger Backhouse, we have the following Samuelson quote that is probably as much a wise-crack aimed at a President who would appear to have confused home-economics with economics as it is an example of the way even liberal M.I.T. economists expressed themselves in the men’s locker-room. 

Samuelson. “…President Johnson made some reference to how a consumer-minded woman might be a good member of the Federal Reserve. Do you remember that, at one of the press conferences that he had? It seemed to me that in the first place one of the big issues will always be whether there will be undue concern over inflation. Women are very estimable but the Federal Reserve is not necessarily the best place for them and a consumer-minded woman would not be what the economists would generally…” [Samuelson was cut off here and the interview moved to a different topic]

Source:  Council of Economic Advisers Oral History Interview (Interviewer: Joseph Pechman. Interviewed: Walter Heller, Kermit Gordon, James Tobin, Gardner Ackley, Paul Samuelson)–JFK#1, August 1, 1964, pp. 365-6.

Categories
Economists Funny Business M.I.T.

MIT. Franco Modigliani as Santa Claus. 1975

On the left, the future blogmeister of Economics in the Rear-view Mirror. On the right, the future Nobel laureate in economics…Franco Modigliani. MIT, E52, December 1975.