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Chicago Funny Business

Chicago. Economics skit based on Shakespeare’s Julius Caesar. Friedland, Niskanen, Oi. Ca. 1960-61

 

Future generations of economics graduate students and junior faculty, having been raised in a world of TikTok and able to bring the tools of sound and image processing to their media productions, will probably find the following sixty-some year old Chicago economics skit dull reading. Even the curator of Economics in the Rear-view Mirror, a veteran of this art-form from M.I.T. in the mid-1970s [cf. Analysis in Wonderland, Wizard of E-52-383c, Casablank], finds this Chicago artifact in need of a major revise-and-resubmit. But we transcribe our artifacts as we find them, with minor editorial revisions to improve formatting, corrections for obvious misspellings, and annotations that have become necessary due to the passage of time. Material in square brackets (in italics) have been added to the transcription.

For those who wish to compare the skit with the text of Julius Caesar by Shakespeare. 

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About the authors

Claire E. Friedland

1929. Born 20 November in New York City.
1951. B.A. Queens College, City University of New York. Phi Beta Kappa.
1955. M.A. University of Chicago.
1957-59. Statistical analyst, Federal Reserve Bank of Chicago.
1959-71. Research Economist, University of Chicago (research assistant to George Stigler).

See: Chicago’s Hidden Figure: A Chat with Claire Friedland on her Work with George Stigler. Promarket (website), November 22, 2017.

William A. Niskanen

1933. Born 13 March in Bend Oregon.
1954. A.B. Harvard University.
1955. M.A. University of Chicago.
1962. Ph.D. University of Chicago. Thesis: The Demand for Alcoholic Beverages.
1957-61. Defense policy analyst at RAND.
1962-64. Director of special studies in the Office of the Secretary of Defense.
1964-70. Director of Program Analysis Division at the Institute for Defense Analyses.
1970-1972. Assistant director for evaluation of the Office of Management and Budget.
1972-75. Professor of economics at the University of California, Berkeley.
1975-80. Chief economist of Ford Motor Company.
1980-81. Professor in the Graduate School of Management, UCLA
1981-85. Member of the Council of Economic Advisers.
1985-2008. Chairman of the board of directors, Cato Institute.
2008-11.  Chairman emeritus, Cato Institute.
2011. Died October 26 in Washington, D.C.

See: William A. Niskanen, A Life Well Lived (Cato Institute, 2012). Above screen-shot is from that memorial presentation.

Walter Yasuo Oi

1952 UCLA Yearbook Portrait

1929. Born July 1 in Los Angeles, CA.
1952. B.S. UCLA.
1954. M.A. UCLA.
1958-62. Research Economist, Northwestern University.
1961. Ph.D. University of Chicago. Thesis: Labor as a Quasi-Fixed Factor of Production.
1962-67. University of Washington
1967-. Professor, Graduate School of Management, University of Rochester.
1993. Elected a Fellow of the American Academy of Arts and Sciences.
1995. Named Distinguished Fellow of the American Economic Association.
2000. Received the Secretary of Defense Medal for Outstanding Public Service.
2013. Died December 24 in Brighton, N.Y.

Image Source: University of California Los Angeles. Yearbook Southern Campus, 1952, p. 176.

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[Opening] Song to the tune of
“Jamaican Farewell“.

Prelims are done,

‘Tis a night for fun,

Don’t let worries

upset your equilibrium.

The faculty’s here,

They’re drinkin’ the beer,

The price of the liquor

For them is too dear.

On our play

We’ll soon raise up the curtain

You may judge it

true false or uncertain
[Note: a good chunk of the canonical prelim exam at Chicago featured questions having this format: example ]

Ficticious characters are in this scene

They bear no resemblance to Human bein’s.

Let the liquor flow

get on with the show,

Don’t let the faculty get out the door

They want to go home

to their little babes

To see if they’ve finished

with the prelim. grades.

_____________________

BRAVE OLD WORLD

A Tragic Comedy in Three Acts by the Adam Smithsonian Players.

by
Clare [sic] E. Friedland, William A. Niskanen,
& Walter Y. Oi

Cast of Characters:

Julius Freemarket [Milton Friedman]: Popular leader of Marshallia and Head of the Ministry of Money.

Capt. Marc Caganthony [Phillip Cagan]: Freemarket’s first lieutenant and pilot of the plane.

Llaius Mysticus: [The initials happen to match Lloyd Metzler. The double “Ll” is the give-away.] A soothsayer, and prophet of things to come.

Gregaryous Wrecker [Gary Becker]: A dope peddler.

A. Sovereign Consumer [Representative Graduate Student]: Exerciser of the right of free choice and beneficiary of the fruits of capitalism.

Carlos Cassius [Perhaps a reference to Carl F. Christ?]: Proprietor of the “Do it Yourself, Ph.D. Components” shop. A leading citizen of the community.

H. Greggo Brutus [H. Gregg Lewis]: Seller of Ph.D.’s New and Used, also a leading member of the business community.

G. Dale Jolly [D. Gale Johnson]: The Key Resource Person of the Ministry of Money.

Sancho Humbugger: Former brainchild of the Chicagocrats. [probably played by Marto A. Ballesteros, Chicago Ph.D. 1957].

Act I: Bliss

Narrator: The scene takes place in the brave old world of 1894 — or some permutation thereof.

If this scene seems utopian, a slight word of explanation may be in order.

In an attempt to conform to the justice and impartiality of the marketplace, a new electoral system has been inaugurated, according to which one dollar equals one vote. Thus, the Chicagocrats (with the aid of John D. [Rockefeller] & sundry other foundations) have become the majority party and a new regime has been established based upon the principle of free enterprise, in which Julius Freemarket has become the popular leader of the entire stationary state of Marshallia. All artificial market restrictions and evidences of paternalism, such as child labor laws, pure food and drug acts and compulsory sewage disposal, have been abolished; and in response to price incentives of the purest kind, we find many new industries flourishing in the marketplace.

The scene opens as we find Julius Freemarket, together with his trusted lieutenant Marc Caganthony, taking their morning constitutional — as all important people must — observing the well oiled functioning of the competitive mechanism.

_______________

Enter Freemarket and Caganthony

_______________

Free: Isn’t it wonderful that all is in static equilibrium?

Cagant: Yes, it certainly is.

Free: Except, of course, those things which are in moving equilibrium.

Cagant: Yes, of course.

_______________

Enter soothsayer, Llaius Mysticus

_______________

Llaius: Julius! Julius!

Free: Ha! Who calls? I hear a tongue shriller than all music calling “Julius!”. Speak, Freemarket is turned to hear.

_______________

Llaius comes up to Freemarket and tugs at sleeve.

_______________

Llaius: Beware the Ides of March.

_______________

Freemarket, turning to Caganthony

_______________

Free: What man is that?

Cagant: A soothsayer bids you beware the Ides of March.

Free: It is only Llaius Mysticus. He is a dreamer, a dreary prophet of gloom and doom. He has no empirical basis for his prophesies. Let us leave him and visit with Gregaryous Wrecker.

_______________

Enter Gregaryous Wrecker, singing “I’m an Old Dope Peddler”
[Tom Lehrer song (1953), Lyrics, Performance]
Upon completion of song, enter A. Sovereign Consumer (coded “Cons.”)

_______________

Cons.: (in hushed tone) Psst,…psst…hey buddy.

Free: Don’t be bashful young man. Just step right up there and tell the gentleman what you want. There’s nothing to be afraid of now. The dollar’s almighty.

Cons.: What’s today’s price on king-sized, filter tipped, Tiajuana marijuana?…Fresh ones.

Wreck: Current price is one dollar,… but March futures are fifty cents.

Cons.: Yeah? So high?

Wreck: Well, you see, the idea is this. We’ve got the phenonmener [sic] that the stuff has become a teenage fad, ever since the kids found out Alvis Regs-ley [Elvis Presley] is a user.

[Almost the same word “phenomener” appears in the Tom Lehrer song “Don’t Major in Physics”. Lyrics, Backstory.

…More often a king weds a commoner
Than a physicist makes a housewife,
For they only are versed in phenomener
⁠That have nothing to do with real life.

….

I like physics and my girl does not.
I tried showing her my apparatus,
But a blank smile was all that I got.
She asked me why I was in Physics,
⁠And advised me to transfer to Ec,
And whenever I tried to talk Physics,
All she wanted to do was to neck! ]

Cons.: You got anything cheaper?

Wreck: Well, advertised brands, like Tiajuana Marijuana sell for a few cents more than cheaper substitutes, but they’re worth it for the prestige.

Cons.: Prestige hell! I’ll have plenty of that when I get my Ph.D. Give me the cheap one.

_______________

Exit, Gregaryous Wrecker, as A. Sovereign Consumer moves from that booth to the booth of Carlos Cassius who is found on the telephone.

_______________

Cass.: “Do it Yourself, Ph.D. Components”, … Carlos Cassius speaking. Well, I’ve got simple and multiple regressions, higher r-squares are a bit more expensive. I’ve got a sale on permanent and transitory variables (in an aside to audience) I stole these out of Speedy Read’s [“speed reading” is implicit, one may suppose. The gendered pronoun makes it clear that Margaret Reid was being referred to] wastebasket when she wasn’t looking——— Oh! You’re at Haskell High. [Perhaps a reference to “Haskell Hall”?] Well then, I’ve got some spurious correlations here, ——— very cheap———I lose money on every one of these, but I make it up in the volume. … No, we can’t guaranty that you’ll pass your thesis seminar with these. (pause) Alright, thank you very much for calling. (turns to consumer). What can I do for you?

Cons.: Wow! I see you got a new jomping [sic] point. I’ll take it.

Cass.: Well, that ought to just about complete your set.

_______________

A. Sovereign Consumer moves away from Cassius’s desk to that of H. Greggo Brutus, who is found on the telephone.

_______________

Brutus: This is Greggo Brutus speaking … “Labor Exchange, Ph.D.’s new and used”.

Well, I’ve got a Ph.D. in physics for $2,000, and one in economics from Cambridge for $3,000. (pause) What? … you’ve got only $350? Well, the best I can do for you then, is a Masters degree in planning. (pause) Very fine, I’ll have Mrs. Jones send it out to you first thing in the morning.

(in an aside to audience) Great Jupiter! Here comes another one of those Israelis. Every time I sell one of them a degree, I begin to worry about my job. [Possibly a reference to Zvi Griliches (Ph.D., 1957)?]

(to consumer) Good morning.

Cons.: I want to buy a Chicago Ph.D.

Brutus: I have one here that I’m selling for a customer named Frank Fright, [Frank Knight] who’s decided to give it up and go into Hindu Philosophy. It’s a little old, but I can throw in his endowed chair, and 400 of his reprints, at a price that’s a bargain for the set.

Cons.: A tie in sale? You’re nothing but a reactionary. … a throwback to the old regime. (As he walks off) Heretic! Subversive! Thief!

Brutus: (reflectively) Could it be possible, that I, H. Greggo Brutus have been throwing sand into the wheels of the competitive machine? Perhaps, I have erred ——— yes he is right. Oh those Israelis, they see through everything.

Act II — Scene I

Props: table, chair, blackboard, sign: “Freemarket Watches You”.

From George Orwell’s dystopian novel 1984, film version (1956)

Nar: So…, life in Marshallia goes merrily on its way.

Guided by the velvet glove of the invisible iron hand and watched by Freemarket’s careful eye, consumers happily go around computing their marginal utilities, and entrepreneurs are rocking happily in the cradle of competitive equilibrium.

Freemarket has preserved only one authority from the government of the decadent Past — the Ministry of Money. This Ministry is really quite harmless, as its activities are entirely financed out of the secular rate of growth of the money supply. As the only equipment of the Authority consists of a printing press and an airplane [by the end of the 1960s Friedman’s metaphor had morphed into one using helicopters], the costs are in any case quite meagre.

We now visit the Headquarters (and sole office) of the Ministry in a tower at Halfway Airport [“Midway” was the actual name of Chicago’s airport], to see Freemarket’s weekly meeting with his Key Resource Person, G. Dale Jolly, Time: Morning, March 1.

Free: Everything in equilibrium today as usual, Jolly?

Jolly: (Laughs) I have a catastrophe to report, sir.

Free: Catastrophe? Impossible! We’ve purged all the reactionary elements, smoothed all the frictions, removed all the controls, dissolved the rigidities, exiled all the labor organizers, and turned Harvard Yard [Note: the “competition” in Cambridge Mass was still Harvard and not M.I.T.] into a parking lot.

Jolly: It’s the price index, Freemarket; remember, you told me never to take my eyes off the price index.

Free: Of course; this is the variable we chose to stabilize as a guide to our monetary policy. (aside) See my JPE article of 1951, reprinted in my Essays in Negative Economics [reference to Friedman’s “Essays in Positive Economics” (1953)], only $5.75, at the bookstore.

Jolly: See for yourself: The Multivac [a fictional supercomputer that was to appear in over a dozen Isaac Asimov science fiction stories] shows that wholesale prices have dropped 20 points in the last week.

Free: A random-transitory-stochastic type shock, no doubt. Nothing to worry about. What is the money supply, Jolly?

Jolly: (Laughing) I think I lost the series, sir. It was either lost or stolen; in this section of Chicago you can’t be sure which.

Free: You lost the whole series?

Jolly: Not all of it. Some of the data is…

Free: (Quickly) You mean “data are”

Jolly: Data is, are, (we didn’t use such fancy language down on the farm), not all missing.

Free: This poses a serious problem. Capt. Caganthony, what do the rules state for this situation?

Cagant: (typically thumbing through phone book) Rule 412, Section A2 states that 80,000 assorted $10, $20, and $50 bills be dropped in a Latin Square design [see the Wikipedia article, probably application in statistics] over each city of over one million population.

Jolly: (Leaving) I won’t rest until I find the lost money data, sir. (Exit)

Free: Marc, the loss of that money series is quite serious, but I trust Jolly.

Let me have men about me that are fat;
Sleek-headed men and such as sleep of nights,
Blond Cassius, for example, has a lean and hungry look.
He thinks too much: such men are dangerous.

Cagant: Fear Cassius not, Freemarket, he’s not dangerous.

Free: Would he were fatter.

Such men as he be never at hear’ts [sic] ease
While they behold models better than their own.

Cagant: But the rules, the rules!

Free: Oh yes, the rules. Your watch should read 0800, Capt. Caganthony. Release the money over Chicago at exactly 0900 hours and over the other specified cities at subsequent 3-hour intervals.

Cagant: Roger, and off. (Exits, runs askew, whirring like a plane.)

_______________

Sound effects: Wagner’s Ride of the Valkyries.

_______________

Act II — Scene 2

Props: Table, chair, candle lit on table.

Nar: Let your eyes now adjust to the darkness of a cellar at the home of H. Greggo Brutus. The time, the evening of March 14.

_______________

On stage, Brutus. Enter Cassius.

_______________

Brut: How now Cassius. How goes the night?

Cass: (Shaking money from his coat) Did I go thru a tempest dropping money? This disturbed sky is not to walk in. But worst of all, paper has risen so high in price, due to this mad money-printing that I am forced to run my correlations on the backs of twenty dollar bills.

Brut: This glut of currency is slowing the chariots on the streets. Jolly reports it is smothering the crops. Who knows what adverse expectations it may cause in the marketplace.

Cass: All was prosperous until the ministry of money was moved to action. And now prices fall all the more as each new planeload of manna falls. It is as though the fundamental equation might contain some fundamental flaw.

Brut: Speak not such heresy in my house Cassius. Freemarket is a true and noble Marshallian. Did he not refuse the title of Supreme Bureaucrat when it was offered him by Cagananthony? I am certain he will be swayed from this policy when Jolly finds the lost money series and he sees the extreme to which he has gone.

Cass: Why must he sit in his airport tower and wait upon the money series? Is the error of his ways not obvious to every Marshallian who but looks about him? Brutus, think not that Freemarket is above the weaknesses of ordinary men. Did I not swim with him in the Tiber the other day and see him nearly carried away by the foam? So it is with this new power with which he seems drunk. Has not our noble sage, Frank Fright [Knight], warned us that “Power corrupts and absolute power corrupts, absolutely”? [Knight clearly was quoting Lord Acton (1889)]

Brut: There is truth in what you say. Freemarket promised us an economy free of all government interference. (Did he not condemn Adam Smith for suggesting that a state might build roads and schools and provide for the common defense?) Yet he insisted on this one ministry which would harmlessly follow a set of prescribed rules. And now he blindly follows his model and his rules, we know not where. Perhaps he has started us on the dreaded Road to Serfdom. [Homage à Hayek (1944)]

Cass: Then you are with us Brutus. I have moved already some of the noblest-minded Marshallians to undergo with me a plan. But there is none among us who is schooled in planning anymore.

Brut: Wait? …approach Sancho Humbugger, the brain-child of the Chicagocrats before Freemarket’s victory! He was suspected of deviationist tendencies and exiled to some southern outpost.

_______________

Enter Sancho, to Latin tune, wearing a huge sombrero and serape.

_______________

Sanche: Ole! (with wide sweep of hand)

Cass: Sancho! You’ve been away too long. Was it hot down there?

San: No, Chile.

Brut: Time enough later for such nonsense. Sancho, how do you happen to be in Marshallia?

San: Well, I was on this luxury airliner, see, when I starts up a conversation with this dame sitting next to me see. It seems she’s a white sox fan like me, see. (She wuz wit some slob who just made a killing selling cheap paper to the Marshallian Ministry of Money.) And she tells me how going from Professor to Bureaucrat was too much for Freemarket, and so he’s dropping this dough like mad. So I thought I’d take a hop to Marshallia and see if I could do something to help maybe.

Cass: Sancho, you must construct a plan for us to restore the price index to its former level, by any devious means, even (ugh?) Public Works, so as to stop the exercise of Freemarket’s excessive power with (Stage whisper) countervailing power.
[Clear reference to Galbraith’s American Capitalism: The Theory of Countervailing power (1952)]
Our whole way of life rests on your shoulders, Sancho.

San: You need a plan eh? I get the picture. Let’s see now.
(Paces nervously, mumbling, grabs for pencil & paper, scribbles furiously.)
I’ve got it! This is our action! We’re home!

_______________

All join in huddle.

_______________

Brut: (emerging) Do so; and let no man abide this deed but we the doers.

Act II — Scene III

Props: telephone, table, chair, sign (askew)

Nar: More men than these are disturbed on this troubled eve.

Free: (Alone, tired, slowly walking the room.)

Nor heaven, nor earth have been at peace tonight. That phone has screamed at each hour of the clock. (phone rings)
Jolly? What? The second derivative of prices is now falling? Oh, well, I’ll merely follow rule 205 next. Go bid the Multivac do present calculate and bring me its clanking opinion of success.
(picks up phone again.)
Capto Caganthony? He’s asleep? (With amazement and anger.) Give him this urgent message: “Another plane.” No, that’s all. He’ll know what to do.

Act III — Scene I

Props: Desk, chair, sign, blackboard.

Nar: The ides of March are come…but not gone. And, as we shall see, the events of the early day are false portent of the fate which for Freemarket lay.

_______________

Freemarket sits at desk, chin in hands, brooding.
Capt. Caganthony is at stage left and rear. Enter Jolly, whistling “Whistle as you work”. [From the Disney Film “Snow White and the Seven Dwarfs” (1937)]

_______________

Jolly: Tra, la, la, la, la, la, la (Whistles again.)

Free: Jolly, this is no time for glee; look, now my hair has started to fall out. [merely gratuitous bald-shaming of Friedman]

Jolly: (Laughing) But I’ve found it! Under my tractor seat cushion!

Free: My hair?

Jolly: No, that’s been gone too long. I found the lost money data.

Free: Thank Jupiter. Oh, Jolly, I could kiss you. Now all our troubles are over.  Did you hear that, Marc, he’s found it. I knew I could trust you, Jolly.

Cagant: Now all our troubles are over. (In a monotone)

Free: (To Jolly) Tell me, did you put the data through the Multivac?

Jolly: Yes I did. But there are some strange results. (Laughing) Prices are still falling in all the cities on which money was dropped. But there has been a phenomenal reflation in the backward river valleys of the South and West.

Free: Are you certain?

Jolly: Yes, if my assumptions are true.

Free: That’s irrelevant. Just the facts, Jolly, just the facts. [Probably an indirect homage à Sgt. Joe Friday from the then popular radio/TV series Dragnet]

Jolly: (Laughing) Of course, Freemarket, Just the facts. There are disturbing signs that the permanent component of the income of farm laborers has increased substantially.

Free: Impossible, my book is not published yet. Those cotton pickers will be buying Ph.D.’s next. (To Cagant) Marc, are you sure you dropped the money only in large metropolitan areas?

Cagant: (Monotone) Your instructions were carried out explicitly, so help me Mints. [Friedman’s old Chicago teacher in money matters, Lloyd Mints]

Free: (To himself, disturbed) The money must have been dropped in the wrong place. Marc, when was your last eye check?

Cagant: Why, when I worked for the National Bureau.

Free: That explains it, they hire anybody. Come, Marc, sit here.

_______________

Cagant is blindfolded, turned away from blackboard toward audience.

_______________

Free: Now, as I write these symbols on the board, read them back to me. [as if reading a chart in an eye examination]

Cagant: Delta, Gamma, Beta, Alpha (Freemarket smiles), X, G, M=KPZ. (Freemarket actually writes M=KPY)

Free: Z? (Angrily) Not Z…Y!

Cagant: Why? [punning on “Y” and “Why” sounding alike] I don’t know. I saw Z as in Z. I said, Zed. [perhaps just a silly rhyme “said”/“Zed”]

Free: (Calmly) Don’t repeat yourself, Marc. Let’s go over this last line again.

Cagant: M= KPZ

Free: Now, Marc, you don’t really want to go back to the National Bureau, do you? You know what these symbols are.

Cagant: You look at Y, I look at Z. Utility preferences differ, you know.

Free: (In a rage) This is a matter of doctrine, not of consumer choice!

Cagant: (Angrily) Under the new free-market system, this is a matter to be settled in the market place, not by a government decree.

_______________

Cagan [sic] stalks out agrily.

_______________

Free: (Upset) Jolly, the fundamental Truth of the Fundamental Equation has been questioned Call the Chamber of Chaos into session — I need reassurance.

Jolly: Stand firm, Freemarket these men are fallible; (in a shocked tone) they could even utter a non-sequitur! (Exit)

_______________

Enter Cassius, Brutus, and Humbugger

_______________

All except Free: Hail, Freemarket, Hail. You called for us?

Free: Yes, come in, Cassius, come in, noble Brutus. Ah, worthy Humbugger is with you. Good. Let me put our problem in my own terms.

Sancho: (Aside to Cassius and Brutus) Our cause is dead if he does.

Cass: (Quickly) No, glorious Freemarket, we know the problem and we know its cause. Pray hear friend Sancho speak for us.

San: Witness, noble Freemarket, how, with these quick strokes, if

(Writing on blackboard, allowing audience to see)

I = I*
G = G*
C = a + bY
and
Y = C+ I + G
then we’re home!

Free: Great Jupiter, is this the Keynes’ mutiny [punning Herman Wouk’s novel The Caine Mutiny (1952)]? This is heresy!

San:     Heresy or no,

We have this to show,
Prices still fall in Chicago.
But in the West and South, on my advice,
Migrant workers have picked up quite a slice
Of permanent income; the rest don’t rhyme so nice.

Free: (Sharply) Doesn’t rhyme as nicely. Your grammar is abominable, Sancho.

San:     By organizing unions to boost their wages,

By building dams to water their crops,
Income increased first by stages,
And then by leaps, and bounds, and hops.

Free: (in fury) Damn! Damn! Damn!

San:     Yes Freemarket.

It is Dams we built this day.
And thru these public works disaster did allay.

Free:    I must warn thee, Sancho.

These symbols and your reasoning
Might fire the blood of ordinary men,
And turn pre-ordinance and first decree
into the law of children.

(Sternly)

Thy model, and thyself, by decree, are banished.
Know all, Freemarket doth not wrong, nor
without cause will he be satisfied.

Cass: I, Cassius, do beg enfranchisement of Sancho’s model.

Free:

I could be well moved if I were as you.
If I could pray to move, prayers would move me.
But I am as constant as velocity

(Becoming emotional)

Of whose true fixed and resting quality
There is no variable in the literature.
Cassius, stand you with Humbugger?

_______________

Cassius walks in front of Freemarket to stand beside Sancho, and remains silent.

_______________

Free:    (Disturbed)

Good Brutus, when all is said and done
Stand you with models with equations four,
Or with the Fundamental One?

_______________

Brutus silently joins Cassius and Sancho.

 _______________

Et tu, Brute! Then die, Freemarket, die!

_______________

Freemarket clutches at sign, pulls it down, and collapses on table.
The whole cast gathers around the table on which Freemarket lies, as an audience for the following speech:

_______________

Cagant:

Friends, Marshallians, Chicagocrats, lend me your ears.
I come to bury Freemarket, not to praise him.
The models that men build live after them,
Their meaning oft interred in their books.
So let it be with Freemarket.

All (including MAB): [almost certainly, Marto A. Ballesteros]

How many ages hence
Shall this our lofty scene be acted o’er
In states unborn and accents yet unknown.

Source: Harvard University Archives. Papers of Zvi Griliches, Box 129, Folder “Faculty skits, ca. 1960s.

Image Sources: The Tusculum portrait, possibly the only surviving sculpture of Caesar made during his lifetime, now housed at the Archaeological Museum in  Turin, Italy.
Milton Friedman portrait: Hoover Institution.

_______________

Note on Marto A. Ballesteros identification for “MAB”

Fellow 1957—Asst Prof. 1960 at the University of Chicago according to the 1969 AEA Directory of Members.

Publications

Argentine Agriculture, 1908-1954: A Study in Growth and Decline By Marto A. Ballesteros (University of Chicago, 1958). (PhD thesis)

Ballesteros, Marto A. Desarrollo agrícola chileno, 1910-1955. Santiago: Pontificia Universidad Católica de Chile, Facultad de Ciencias Económicas y Sociales,1965. p. 7-40.

Newspaper Accounts

The Peninsula Times Tribune (13 Sep 1957). Marriage to Jill Sidnell Geer of Los Altos. Off to Chile to live for one year. His parents are from Madrid, his undergraduate studies were at the University of Madrid, MA and PhD at the University of Chicago. Just received his doctorate in economics from the University of Chicago, Junior fellow at the Center for Advanced Study in the Behavioral Sciences for a year  1956-57.

The Galion Inquirer (23 Sep 1957) that “[Balesteros] will be doing research and teaching in economics at the Universidad Catolica de Chile, Centro De Investigaciones Economicas, Santiago, Chile, under sponsorship of the University of Chicago and the International Cooperation Administration of the U.S. Government”.

Miami Herald (8 Apr 1965), “Dr. Marto Ballesteros, chief of the Pan American Union’s public finance unit”.

Categories
Economists NBER

NBER. Oral History Interviews with 8 researchers. Goldin, 2001-2003

The 2023 recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, Professor Claudia Goldin of Harvard University, has contributed to the history of modern economics through her series of eight interviews with senior economists whose careers have been intrically woven into the historical fabric of the National Bureau of Economic Research.

In other news, Professor Goldin has been named to the Economics in the Rear-view Mirror’s “Economists Wearing Jewelry” Hall of Fame.

______________________

Interview with Claudia Goldin (2004)

Source: Federal Reserve Bank of Minneapolis, The Region (September 1, 2004). Interviewer: Douglas Clement, editor.

______________________

Oral History Interviews with Claudia Goldin

Gary Becker (August 5, 2003)

Richard Easterlin  (March 15, 2002)

Milton Friedman (August 16, 2002)

Victor Fuchs (March 18, 2002)

Robert Lipsey (August 8, 2001)

Anna Schwartz (November 19, 2001)

Victor Zarnowitz (December 11, 2001)

Jacob Mincer  (July 26, 2002)

Cf. History page of the National Bureau of Economic Research.

Categories
Chicago Exam Questions

Chicago. Final exam for Price Theory (B). Friedman. Winter quarter 1964

The spirit of Chicago’s boot-camp training in price theory with Milton Friedman as canonical drill  instructor is captured in the examination transcribed below. 

Trivial observation: Questions 9 through 11 are based on a fictional monopoly Gimcrack Company that appears to be a homage to the old song “Jim Crack Corn” (a.k.a. “Blue tail Fly”). One can imagine the American graduate students hearing the voice of the folk singer Burl Ives rendering the tune as they attempted to answer the questions.

*  *  *  *  *  *  *  *  *  *

Some other exams for the second quarter of graduate price theory at Chicago from this period have been previously posted:

December 16, 1959 (Friedman); December 1960 (Friedman?); February 10/March 15, 1965 (Griliches); December 1965 (Telser)

___________________________

ECONOMICS 301
FINAL EXAM — Winter, 1964

M. Friedman
March 19, 1964

I. [25 Points] Indicate whether each of the following statements is true (T), false (F), or uncertain (U) and state briefly (on this paper) the reason for your answer.

  1. The elasticity of a straight line demand curve varies from point to point.
  2. In the long run, demand has no influence on the price of the product of a competitive industry that uses no specialized resources.
  3. Marginal revenue is always greater than average revenue when average revenue is rising as quantity increases.

[4. and 5.] Assume that the government is going to purchase a predetermined quantity of rice for foreign relief and that it is considering making its purchases (a) directly from the growers of rice, or (b) through the regular dealer on the grain exchange. Assume also that there are no other governmental actions affecting rise growing or marketing.

  1. The price to the domestic consumer of rice that remains will be higher in case (a) than in case (b).
  2. The price received by the farmer for the rice that remains will be higher in case (a) than in case (b).
  1. An “inferior” good is one such that a larger quantity is demanded at a high than at a low price.
  2. If the quantity of Y increases and the quantity of X decreases in such a way as to keep total utility constant, then the rate of substitution of Y for X is independent of the quantity of X.
  3. The income of the farmers raising corn increases when the price of corn rises. The rise in income is the “income effect of the rise in price.”

[9., 10., 11.] The Gimcrack Company is a monopoly, selling in two distinct markets. Transportation costs between the two markets can be neglected.

  1. The company will always charge the same price for gimcracks in the two markets.
  2. The company will sell such quantities in the two markets as will make the elasticities of demand the same in the two markets.
  3. The company will sell such quantities in the two markets as will make marginal revenue the same in the two markets.

II. [25 Points] Fill in the blanks in the following questions.

  1. Consider three demand curves for commodity X: A for given money income and other prices; B, for given apparent real income in Slutsky’s sense; C, for given real income in Hick’s sense. Let all three curves go through the point (po , xo)
    If X is a superior good, then for a price lower than p0, the quantity demanded will be larger for_____ than for _____. (Insert A, B, C, in correct spaces.)
    If X is an inferior good, then for a price lower than p0, the quantity demanded will be larger for _____ than for _____.
    Suppose p0 = $5, X0 = $20, the corresponding money income $1, 000, and the income elasticity of demand for X is 2. Suppose that at a price $4, the quantity demanded on curve A is 25. Then the income compensation required to pass from A to B is $_____ (be sure to indicate sign of change) and the quantity demanded on curve B is _____.
  2. Blank is indifferent whether he wagers $1 at even-money that a coin he regards as fair will come up heads. He is eager to wager $1 against $3 (i.e., he pays $1 if he loses, receives $3 if he wins) that heads will come up twice in two successive throws of this coin. (He regards the throws as independent and so the chances of two successive heads as one in four.) Let the utility of his income if he loses $1 be 100; if he wins $1, 101. Then the utility to him of his present income can be taken to be _____ (insert a number); the utility to his present income plus $3 _____ (insert the most accurate statement the evidence permits).

III. [25 Points.] Find the mistakes (there are at least six) in the accompanying diagram showing long run and short run marginal and average cost curves for an individual firm, and explain the general principle corresponding to each particular mistake.

[NOTE: The answer to question III has been transcribed and posted with the Friedman’s December 16, 1959 exam for Economics 301.]

IV. [25 Points] Consider two alternative taxes imposed on a commodity: (a) a specific tax of T dollars per unit sold: (b) an ad valorem tax of t per cent of the price of the product.
Assume that the commodity is produced and sold under strictly competitive conditions and that the price inclusive of tax when the tax of T is imposed is P0. (i) Prove graphically that an ad valorem tax of t – T/P0will result in the same equilibrium price. (ii) Suppose a tax rate slightly greater than t – T/P0 is imposed. Under what conditions, if any, is it certain that the revenue will increase? (iii) Decrease?
Assume alternatively that the commodity is produced and sold by a monopoly. Suppose that, when a specific tax of T is imposed, the monopolist chose to sell at a price (inclusive of tax) of P1. Suppose now, an ad valorem tax of t – T/P1 is imposed. (iv) Will the monopolist’s optimum price be P1? If not, will it be higher? or lower? Prove your answer.

V. [20 Points] When someone offers a cigarette to pipe-puffing Surgeon General Luther Terry, he always grabs it. “Every one I accept I tear up,” he says. “That way there’s one less cigarette.” (Time, February 7, 1964).
Analyze the economics of the Surgeon General’s policy. In doing so, assume of course, that a substantial class of people with similar beliefs behave the same way, so the effect is at least potentially appreciable. Would it contribute to his objective of reducing smoking? If so, through what channels?

___________________________

PROBLEM
for
ECONOMICS 301
Winter Quarter, 1964

Analyze the business practice discussed in the accompanying excerpt from a Wall Street Journal story of December 4 1963.

Under what circumstances, if any would you expect such a practice to be in the self-interest of the participating companies? How would you suggest testing your explanation?

Source: Hoover Institution Archives. Milton Friedman Papers. Box 77. Folder: University of Chicago, Econ. 301.

Image Source: Detail from picture of Milton Friedman (November 1957) at the Center for Advanced Study in the Behavioral Sciences, Stanford. University of Chicago Photographic Archive, pf1-06234, Hanna Holborn Gray Special Collections Research Center, University of Chicago Library.

Categories
Chicago Economists Funny Business

Chicago. The School of Chicago 1972 by Roger Vaughan (Ph.D. 1977). IDs by Gordon, McCloskey & Grossbard

The 1500th artifact added to Economics in the Rear-view Mirror deserves to be a celebratory post for visitors. For this honor I have chosen a  pastiche drawn by a Chicago economics graduate student in 1972. Roger Vaughan (Ph.D. 1977) was the principal, if not only, illustrator for the student-produced satirical publication P.H.A.R.T., an issue of which has been transcribed for an earlier post.

I first saw a copy of Roger Vaughan’s reworking of Raphael’s “School of Athens” added to a photo from a Tweet of a few years back. At that time it did not occur to me to engage in a serious search for the backstory to the drawing. And yet, serendipity turned out to be kind to me when, on a visit to the Harvard Archives last year, I stumbled upon a folded, mint-condition copy of  Vaughan’s “The School of Chicago 1972” in the papers of Zvi Griliches. Of course I had this masterpiece of economics funny business copied and it now has pride of place in my home study.

A few identifications of the figures seen in “The School of Chicago 1972” are obvious (e.g. Milton Friedman and George Stigler, duh) and others could be identified from other Vaughan caricatures that likewise are found in Griliches’ papers (e.g. Marc Nerlove, Stan Fischer, and Robert J. Gordon). Still, most of the renderings remained unidentified. My first idea was to seek out the artist himself, but alas I could only confirm that he had passed in October 2021. The next idea was to seek a living eye-witness to the Chicago economics department of a half-century ago. Here I was luckier, the Stanley G. Harris Professor in the Social Sciences at Northwestern University, Robert J. Gordon, responded to my inquiry almost immediately and as quickly forwarded my request for further information to Distinguished Professor of Economics, History, English, and Communication at the University of Illinois at Chicago, Deirdre McCloskey, for her confirmation and further commentary. Following the initial posting of this artifact, Professor Shoshana Grossbard of San Diego State University spotted a few misspelled names (mea culpa), but, more importantly, was able to identify Margaret Reid by her beret(!).We can all be grateful to these colleagues for their identifications provided below. There remains one unidentified man in the back-row standing to George Stigler’s left plus a couple of yet-to-be identified graduate students. Peeps, Economic in the Rear-view Mirror needs your help! You can leave comments at the end of this post.

___________________________________

About the artist, Roger Vaughan

From his 1981 AEA Biographical Listing, p. 421

Vaughan, Roger J, 421 Hudson St., Apt. 406, New York, NY 10014. Birth Yr: 1946

Degrees: B.A., U. of Oxford, 1968; M.A., Simon Fraser U., 1970; Ph.D. U. of Chicago, 1977. Prin. Cur. Position: Dep.Dir., Off. Of Develop. Planning, State of New York, 1980-

Concurrent/Past Positions: Econ., Citibank, 1978-80; Econ. The Rand Corp. 1974-78. Research: Urban Policy, finance, taxation training.

Roger J. Vaughan’s Rand Reports,
1974-1980

• The Urban Impacts of Federal Policies: Vol. 1, Overview 1980
• Federal Activities in Urban Economic Development 1979
• Recent Contributions to the Urban Policy Debate 1979
• The Urban Impacts of Federal Policies: Vol. 4, Population and Residential Location 1979
• Assessment of Countercyclical Public Works and Public Service Employment Programs. 1978
• Regional Cycles and Employment Effects of Public Works Investments. 1977
• The Urban Impacts of Federal Policies: Vol. 2, Economic Development 1977
• The value of urban open space 1977
• The Economics of Urban Blight. 1976
• Getting People to Parks. 1976
• Public Works as a Countercyclical Device: A Review of the Issues 1976
• The Use of Subsidies in the Production of Cultural Services. 1976
• The Application of Economic Analysis to the Planning and Development of the Delaware Water Gap National Recreation Area. 1975
• The Economics of Expressway Noise Pollution Abatement. 1975
• The Economics of Recreation: A Survey. 1974

Source: Rand Reports. Published Research by Author, Roger J. Vaughan.

Sage. Research Methods.

Communicating Social Science Research to Policymakers
By: Roger J. Vaughan & Terry F. Buss
Published: 1998
DOI: https://dx.doi.org/10.4135/9781412983686

___________________________________

Raphael’s Scuola di Atene (1509-1511)

For some explanation of what we see in the original, cf. “The Story Behind Raphael’s Masterpiece ‘The School of Athens'” by Jessica Stewart at the Modern Met Website.

___________________________________

Roger Vaughan’s Pastiche

Open the image in a new window to see a larger image

Source: Harvard University Archives. Papers of Zvi Griliches, Box 129. Folder “Posters, ca. 1960s-1970s”.

Background

The statues standing in the upper alcove are of the President and Vice-President of the United States, Richard M. Nixon (holding a lyre, a sweet visual pun) and Spiro T. Agnew (with the pennant “Effete Snobs”, abridged from his description of self-characterized intellectuals as an “effete core of impudent snobs” in his  “Generation Gap” speech given in New Orleans on October 19th, 1969.)

“1126” refers to the street address of the Social Science Research Building, 1126 E. 59th St.

“MV=PT” inscribed in the center of the dome is the Equation of Exchange (cf. Irving Fisher’s The Purchasing Power of Money). Cf. at the left of the back-row of Chicago economists, Arnold Zellner is carrying papers with “MV=PY“. Milton Friedman’s vanity license plates on his red cadillac used “MV=PQ” for the Equation of Exchange. Everyone seems to have agreed on the notational virtues of “M”, “V”, and “P”. Does anyone know whether there was any substantive reason for differences regarding the choice of “T”, “Y”, and “Q” for the final term?

Economics in the Rear-view Mirror comment: Though his arm is blocking part of the equation, Zellner is clearly displaying the equation of exchange, MV = PY.

Deirdre McCloskey’s comment: “Underneath Nixon is Marc Nerlove pointing into the ear, by the way of insult, of Hans Theil the great Dutch econometrician (the four great econometricians at Chicago, which had included Zvi Griliches, who had just moved to Harvard, hated each other).”

Economics in the Rear-view Mirror comment: Robert J. Gordon served as an editor of the Journal of Political Economy (J.P.E.) from 1971-1973.

Economics in the Rear-view Mirror comment: Stigler’s position corresponds to that of Aristotle’s in Raphael’s fresco. There Aristotle holds a copy of his own Nicomachean Ethics. Stigler is seen here holding a book by [Adam] Smith, presumably Wealth of Nations.

Deirdre McCloskey’s comment: “George Tolley [is] in a garbage can because he did urban economics (Vaughan was his student).”

Shoshana Grossbard’s comment: “[Margaret Reid]…not only [wore] the dark beret, but also [has] her hair in a bun, under the beret. that was her typical look. She and I attended Becker’s workshop in applications of economics in the years 1974-76.”

And guess what a casual search just turned up…

Margaret Gilpin Reid, professor emeritus of Home Economics and Economics

Source:  University of Chicago Photographic Archive, apf1-07052, Hanna Holborn Gray Special Collections Research Center, University of Chicago Library.

Economics in the Rear-view Mirror’s comment: On the high-resolution hard-copy hanging on my study wall, the beret looks sort of like an ink blot and I regreted that imperfection. But now, thanks to Shoshana Grossbard’s careful observation combined with her memory of Reid’s “typical look” and an archival sighting of said beret, I am convinced and grateful that we now have another positive identification!

Deirdre McCloskey’s comment: “D. Gale Johnson…has a pitchfork because he was an agricultural economist. ”

Deirdre McCloskey’s comment: Ted Schultz […] is pointing down to say “This is where the true Chicago School is, where I am!”.

Foreground

The identification of Robert F. Pollard was made by Roger Vaughan’s work and life partner, Anna Nechai.

 

Deirdre McCloskey’s comment: “…Dick Zecher [is] sticking his finger through an IBM card because he was in charge of the Department’s mainframe computer access.”

Another visual pun: Harry Johnson is portrayed writing on a literal Edgeworth-Bowley-box, a two-dimensional representation of allocations that could be Pareto efficient exchange equilibria. The two tradeable goods are measured in Edgeworth and Bowley units, respectively.

Deirdre McCloskey’s comment: “Mary Jean Bowman, one of two tenured women in a small department; she did educational and demographic economics.  The other woman was Margaret Reid, the inventor of household economics…”

The triangle seen in the previous detail is Arnold Harberger’s measure of deadweight loss (efficiency cost resulting from a natural or policy induced distortion of markets).  See Robert J. Gordon’s historical photo of Al Harberger stripping down to reveal himself as “Triangleman” ca. December 1970. In Raphael’s fresco Harberger’s place was that of Euclid.

Robert  J. Gordon’s comment: “I think the bearded student is Dan Wisecarver”

Robert  J. Gordon’s comment: “The woman holding the ball is Carolyn Mosby, the head of the department staff.”

 

 

 

 

 

Categories
Chicago Policy Suggested Reading

Chicago. Governmental Price Fixing Reading List. Friedman, 1972

President Richard Nixon’s peacetime wage and price controls were less than a year old when Milton Friedman used the teachable moment to discuss “governmental price fixing” in a course of his at the University of Chicago.

______________________________

Spring, 1972

Economics 496
Selected Topics in Contemporary Economic Problems
Dr. M. Friedman

Reading List

General Note: The special topic that will be considered this semester is governmental price fixing. We shall examine three general categories of price fixing: fixing of prices of specific commodities or services; general price and wage controls; fixing of exchange rates. The basic theoretical tools required to analyze these problems have presumably been studied in courses in price theory, monetary theory, and income and employment theory but will be reviewed in class lectures. This reading list therefore covers mostly applied material.

I. Fixing of Specific Prices

HD1761
H6

 Houthakker, Hendrik, Economics Policy for the Farm Sector, American Enterprise Institute, 1967

HD1761
P13

 Paarlberg, Don, American Farm Policy, Wiley, 1964

HB171.5
A34
1967

 Alchian, A. & Allen, W., University Economics, pp. 92-99, 402-404

HD4918
P47

 Peterson, J. M. & Stewart, C T. Employment Effects of Minimum Wage Rate, American Enterprise Institute, 1969

HD4918
F74

 Friedman, M. & Brozen, Y. The Minimum Wage Rate, Who Really Pays?

HC106.5
B83

 Burns Arthur F., The Management of Prosperity, pp. 45-48

 

II. General Wage and Price Controls

Campbell, Colin (ed.), Wage Price Controls in World War Il, U.S. and Germany, American Enterprise Institute

HB
B24
H1

 Ullman, I. & Flanagan, R. J. Wage-Restraints: Study of Incomes Policies in Western Europe, University of California Press, 1971

HC106.5
S435

 Shultz, G. P. & Aliber, R. Z. (eds.), Guidelines, Informal Controls, and the Market Place, University of Chicago Press

HB236
A3
G3

 Galbraith, J. K., A Theory of Price Control. Harvard University Press, Cambridge 1952

HB236
U5H35

 Hardy, C. O., Wartime Control of Prices, Washington, Brookings Institute, 1940
Wallis, W. A., How to Ration Consumers’ Goods and Control Their Prices, American Economic Review, Sept. 1942, pp. 501-512
Gorter, W. & Hildebrand, G. H., “Is Price Control Really Necessary?”  American Economic Review, March 1951, pp. 77-81

III. Control of Exchange Rates

HG3883
U7 F7

 Friedman, M. & Roosa, R. L., The Balance of Payments: Free vs. Fixed Exchange Rates

HB33
F7

 Friedman, M., “The Case for Flexible Exchange Rates,” Essays in Positive Economics, University of Chicago Press

HG538
F856

 Friedman, M., Dollars and Deficits

HG3821
A66

 Halm, G. (ed.), Approaches to Greater Flexibility of Exchange Rates, Princeton University Press, 1970

Source: Hoover Institution Archives. Milton Friedman Papers. Box 78, Folder 5 “University of Chicago, Econ. 496”.

Image Source:  Milton Friedman (undated) from University of Chicago Photographic Archive, apf1-06231, Special Collections Research Center, University of Chicago Library.

Categories
Chicago Funny Business

Chicago. Economics Christmas Skit Material, 1969

While no date is given for the following two pages, we can be confident that the material was prepared and one presumes performed at the Chicago Economics Department Christmas Party of 1969. Photos from the December 1970 Christmas party have been posted by Robert J. Gordon–they do not correspond to the texts below.

The events of campus unrest at Columbia, Cornell, Harvard and San Francisco State referred to all took place 1968-69, so the earliest possible date for this skit would have been in December 1969.

I have added the “true” lyrics to the chosen tunes as well as links to videos with the corresponding melodies for readers who wish to try their luck in the privacy of their own offices. Replication probably requires a cocktail or two to establish the appropriate a-critical mood. 

Your sober scribe was not particularly amused. OK, maybe the lighting, costuming, and orchestral arrangements were fantastic–hard to know. I pity though the poor future historians of present economics who will have to deal with audio and video evidence and not just the written record. 

________________________

SONGS FOR SKIT

University of Chicago
Economics Department
Skit Song Lyrics

“The Merry Minuet
(They’re rioting in Africa…)
https://youtu.be/L8-BI89mb9A
They’re rioting at C’lumbia

La La La La La La La

They’re shooting up Cornell

La La La La La

They’re plowin’ up ole Harvard Yard

La La La La La La La

And Hiyakowa’s catching hell.

La La La La La

Academia is festering with strife and discord

The faculty hate students cause they’re paranoid

But we can be certain and brimming with cheer

That none of this nonsense will ever happen here.

 They’re rioting in Africa
They’re starving in Spain
There’s hurricanes in Florida
And Texas needs rain
The whole world is festering with unhappy souls
The French hate the Germans,
the Germans hate the Poles
Italians hate Yugoslavs,
South Africans hate the Dutch
And I don’t like anybody very much
But we can be thankful and tranquil and proud
That Man’s been endowed with the mushroom shaped cloud
And we know for certain that some lovely day
Some one will set the spark off and we will all be blown away
They’re rioting in Africa
There’s strife in Iran
What nature doesn’t do to us
Will be done by our fellow man!

 

University of Chicago
Economics Department
Skit Song Lyrics

 Santa Claus is Coming to Town
https://youtu.be/HSmsq2iq4bQ
You’d better watch out
You’d better not strike
You’d better not riot
I’m (or We’re) telling you why
The National Guard is coming to town.
They know what you’ve been smoking
They know when you’ve been bad
They know when you’ve been sitting-in
So get out…do you understand!!
They’re making a list
And checking it twice
They’re going to find out
Whose [sic] Commie or nice
The National Guard is coming to town.		 Oh! You better watch out
You better not cry
You better not pout
I’m telling you why
Santa Claus is coming to town
He sees you when you’re sleeping
He knows when you’re awake
He knows if you’ve been bad or good
So be good for goodness sake!
He’s making a list
Checking it twice
Gonna find out
Who’s naughty or nice
Santa Claus is coming to town

 

 

University of Chicago
Economics Department
Skit Song Lyrics

 On Top of Old Smokey
https://youtu.be/P51eCjKN2Kw
On top of a mountain
In central Vermont
Resides Milton Friedman
Of wisdom the fount.
The scene is idyllic
On that mountain peak
But here in Chicago
The outlook is bleak.
Since Telser to Belgium
Has decided to roam,
Just Zecher and Gorden [sic]
Are left here at home.
No thesis prospectus
Are we able to give
Faculty all neglect us
As their prerogative.
Heed our ultimatum
Before it’s too late
Move the MONEY workshop
To the Green Mountain State.		 On top of old smokey
all covered with snow
I lost my true lover
for courting too slow
For courting’s a pleasure
and parting’s a grief
And a false hearted lover
is worse than a thief
For a thief will just rob you
and take all you save
But a false hearted lover
will lead you to the grave
And the grave will decay you
and turn you to dust
Not one girl in a hundred
a poor boy can trust
They’ll hug you and kiss you
and tell you more lies
Than cross lines on a railroad
or stars in the skies
So come all your maidens
and listen to me
Never place your affections
on a green willow tree
For the leaves they will wither
and the roots they will die
You’ll all be forsaken
and never know why.

 

 

University of Chicago
Economics Department
Skit Song Lyrics

Mickey Mouse Club Song
https://youtu.be/x4C_lUy58Rw
Who’s the leader of the club
That’s made for you and me
M-i-l-t-o-n Da Da Da Da De[e]
Uncle Miltie,
Uncle Miltie
Forever let us sing his praises high
[…high, high, high]
He’s the man with just one theory
When others must use two
M-i-l-t-o-n Da Da Da Da Do[o]
Milt the Stilt (Paul the Small)
Milt the Stilt (Paul the Small)
In our hearts we know which one is  right […] [right, right, right]
Velocity is constant
The Phillips curve’s a fraud
M-i-l-t-o-n Da Da Da Da Da[w]
Money matters,
money matters
As long as prices
do not rise too fast.
What’s the purpose of the club
That’s made for you and I
U of C Ph.D. M-O-N-E-Y
Permanent Income,
Permanent income
It makes it all worthwhile, or so they[…]
[…]say. [say, say, say]
Rules and not discretion
And let me tell you why
M-I-L-T-O-N  M-O-N-E-Y		 Who’s the leader of the club
That’s made for you and me
M-I-C-K-E-Y M-O-U-S-E
Hey! there, Hi! there, Ho! there
You’re as welcome as can be
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse! (Donald Duck)
Mickey Mouse! (Donald Duck)
Forever let us hold our banner
High! High! High! High!
Come along and sing the song
And join the jamboree!
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse club
Mickey Mouse club
We’ll have fun
We’ll meet new faces
We’ll do things and
We’ll go places
We’re marching all around the world
Who’s the leader of the club
That’s made for you and me
M-I-C-K-E-Y M-O-U-S-E
Hey! there, Hi! there, Ho! there
You’re as welcome as can be
M-I-C-K-E-Y M-O-U-S-E
Mickey Mouse! (Donald Duck)
Mickey Mouse! (Donald Duck)
Forever let us hold our banner
High! High! High! High!
Come along and sing a song
And join the jamboree!
M-I-C-K-E-Y M-O-U-S-E(yay Mickey)
(yay Mickey)
(yay Mickey Mouse Club!)

 

 

University of Chicago
Economics Department
Skit Song Lyric

 

O Tannenbaum (O Christmas Tree)

https://youtu.be/27JleM39TPY
Now that we’ve lost our faculties
To real world positions
We can observe to ascertain
What were their life ambitions
Lester Telser for his amusement
Investigated advertisement
So now we find him having fun
On the avenue called Madison.
Those who had taught development
Have left to form a settlement
With Harberger as President
An economist in residence
With [Larry] Sjastaad in an advisory task
They’re sure to find their golden path
And on their farms up with the sun
Are Teddy Schultz and Gale Johnson.
Bob Fogel has aspired to be
The president of the Santa Fee
Gregg Lewis we all should know
Leads the AFL and CIO
And Friedman’s gone up to Ely
To found his university
Big Harry with his knife so free
Now runs a toothpick factory.

[Handwritten addition:]

Uzawa + Mundell have gone to instigate at the Sorbonne
And [Erwin] Diewert is a lumberjack
Up near the straits of Mackinac

Geo. T who’s of urban fame [George S. Tolley]
Has taken over Lindsay’s game [NYC mayor]
And since there is no more faculty
We’ve all enrolled at MIT.

 O Christmas Tree, O Christmas tree,
How lovely are your branches!
O Christmas Tree, O Christmas tree,
How lovely are your branches!
Not only green in summer’s heat,
But also winter’s snow and sleet.
O Christmas tree, O Christmas tree,
How lovely are your branches!
O Christmas Tree, O Christmas tree,
Of all the trees most lovely;
O Christmas Tree, O Christmas tree,
Of all the trees most lovely.
Each year you bring to us delight
With brightly shining Christmas light!
O Christmas Tree, O Christmas tree,
Of all the trees most lovely.
O Christmas Tree, O Christmas tree,
We learn from all your beauty;
O Christmas Tree, O Christmas tree,
We learn from all your beauty. 

 

Your bright green leaves with festive cheer,
Give hope and strength throughout the year.
O Christmas Tree, O Christmas tree,
We learn from all your beauty.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Some dialogue:

Opening scene, faculty seated around a table, one member is reading a newspaper:

One faculty member: (reading newspaper, shakes head) The students are revolting!

(All concur)

Another member: But thank God—ah I mean Milton—that we’re at Chicago. Our students are well behaved, well ordered, normal, continuous and homothetic.

Another: (questioning) But how do you know about their sex lives?

(Pause for a few seconds, for all the uproarious laughter, then break into song—“They’re rioting at Columbia….” [See above].)

(After song, and during, students enter, their spokesman present list of demands to Stigler).

Student spokesman: We’ve come to present our nonnegotiable demand schedule for reform in the department.

(All faculty in shock and dismay)

We have decided to bring the free market economy into the university. Therefore:

(1) We demand that prelim grades be bought and sold freely—thereby bringing greater efficiency into the production of economists.

(2) We demand the immediate return of all industrial organization exams from the public enterprise post office.

And (3) We demand the removal of all artificial floors and ceilings in the Department.

Stigler: (unrolls list of demands and exclaims) Heck—we’re saved. Your demand schedule is upward sloping (a pause)

(turns sheet of paper to audience)

And therefore nonexistent.

(All faculty sigh in relief)

 

Source: Harvard University Archives, Papers of Zvi Griliches, Box 129, Folder “Faculty skits, ca. 1960s”.

 

Categories
Chicago Exam Questions

Chicago. Price Theory (B). Final Exam Questions. Friedman, December 1959

 

Along with the exam questions and answers transcribed below, Milton Friedman’s papers include the official course registration list together with his hand-written grades that were calculated based on the results of this exam and a problem set. During the autumn quarter of 1959 thirty students were enrolled in Friedman’s course with two students receiving incompletes. For the remaining 28 students 2 A’s, 10 B’s, 10 C’s, 5 D’s and 1 F grades were awarded. The two A grades went to Arthur Lionel Broida (1963 economics Ph.D. “Liqudity as a Variable in Monetary Analysis”) and Charles N. Tingley [probably Charles Nicholas Tingley, Yale 1957. Worked for Humble Oil and Refining Company  at the time of his marriage to Cary Clift MacFadden in 1964].

______________________________

ECONOMICS 301
[Price Theory B]
Final Examination
December 16, 1959

  1. [30 points total] The accompanying graph gives a set of consumption indifference curves for two commodities or services each of which for some range of quantities and in combination with some amounts of the other is capable of being either a “good” or a “bad” (a “product” or a “factor”) like books and bookshelves, or cutting the grass and playing the piano (either of which may be “labor” or “play”). Of the curves drawn, I1 corresponds to the lowest level of utility. Answer this question on this paper, wherever relevant filling in the blanks.

    1. [3 points] What is the interpretation to be placed on point B? [Answer: Bliss]
    2. [8 points total; 2 points each] Mark of I1 into four sectors [Answers circled on figure] according as

(1) _____both X and Y are “goods”
(2) _____X is a “good” and Y is a “bad”
(3) _____X is a “bad” and Y is a “good”
(4) _____X and Y are both “bads”

Use letters to designate the dividing points between the sectors and enter the description of each sector in the proper place above. [Answer: see X’s used in figure]

    1. Budget lines AC and A´C´ are the usual type which supposes that the consumer must pay for both products and has a fixed sum to spend on both.

(1) [1 point] The consumer’s optimum position for A´C´ is [Answer: D´].
(2) [4 points] The consumer’s optimum position for AC is [Answer: B].

    1. On budget lines EF and GH, one of the commodities is something the consumer must pay for (it is a “product” and has a positive price), the other is something he gets paid to accept (it is a “factor” and has a negative price). In addition for both lines, the consumer has a fixed sum derived from some other source to spend.

(1) [2 points] For EF [Answer: Y] is the product; [Answer: X] is the factor.
(2) [2 points] For GH [Answer: X] is the product; [Answer: Y] is the factor.

    1. For OK also one commodity is a product and one is a factor but there is no additional source of expenditures and hence no way from the line itself to know which is which. However, it does make a difference to the optimum position which is which.

(1) [2 points] If X is a factor and Y a product, then the optimum point is [Answer: B].
(2) [2 points] If Y is a factor and X a product, then the optimum point is [Answer: K].
(3) [5 points] Can you suggest a simple graphical way of distinguishing the two cases? [Answer: Shading areas].

  1. [30 points] Find the mistakes (there are at least six) in the accompanying diagram showing long and short run marginal and average cost curves, and explain the general principle corresponding to each particular mistake.

[Answers: (1)SRMC ≠ SRAC at minimum; (2) SRAC < LRAC; (3) SRMC ≠ LRMC where SRAC = LRAC; (4) SRMC < SRAC when SRAC rising; (5) SRMC < LRMC when to left of point of tangency of SRAC and LRAC; (6) LRAC> LRMC when LRAC rising or LRMC ≠ LRAC when LRAC max).]

  1. [24 points] Define briefly the following terms [3 points each]:
    1. Marginal revenue
    2. Fixed cost
    3. Income elasticity
    4. Profit
    5. Production function
    6. Diminishing returns
    7. Inferior good
    8. Luxury
  2. [30 points] Discuss the following quotations:
    1. (from a newspaper story) “The Sun Rose Bar and Grill…advertised ‘the largest glass of beer in the city for five cents’ and did a tremendous business in eight-ounce glasses of beer as soon as the public realized it was no April Fool proposition…
      ‘If enough of us do this’ said…one of the proprietors, ‘the brewers will have to cut prices!’”.
    2. (from a newspaper story) “Domestic producers of oil contend that unrestricted imports hurt them not only because they swell the supply, but because a barrel of foreign crude costs about $1 less than a comparable barrel of U.S. crude.”
    3. “All of this is to say, of course, that in practice what we have to reckon with is not a unique marginal cost for a given level of output, but a complex of marginal costs, each of which is pertinent to a particular period of time. As a longer period of time is considered, more of the ‘fixed factors’ become variable. Because of this greater flexibility in the production process, long-run marginal cost will generally be less than short-run marginal costs.” A. Bergson in A Survey of Contemporary Economics.

 

Source: Hoover Institution Archives. Milton Friedman Papers, Box 77, Folder 2: “University of Chicago, Econ. 301”.

Image Source: Detail from picture of Milton Friedman at the Center for Advanced Study in the Behavioral Sciences, Stanford. University of Chicago Photographic Archive, pf1-06234, Hanna Holborn Gray Special Collections Research Center, University of Chicago Library.

Categories
Chicago Funny Business

Chicago. Lyrics to “The Law (of Diminishing Disciples)”. By Anonymous, 1960’s?

One can only presume that the following song was sung to a doggeralized version of the inspiring hymn “I shall not be moved”, though I am unable to fit the Chicago lyrics to the tunes used for any of these classic covers:

Dream Team version:  Jerry Lee Lewis, Elvis Presley, Carl Perkins and (probably not) Johnny Cash

The civil rights version (The Freedom Singers)

The union version (Pete Seeger and Chorus)

Perhaps someone is still alive who knows who penned this masterpiece of economics irony?  Asking for generations of economists yet unborn as well as for all the boomers and beyond still among us.

________________

THE LAW

(Anonymous, U. of Chicago)

I

In the days of old
And in every land
Economics was free
And supply meant demand

Adam Smith propounded it
No one has confounded it
Praise be to our theory
We shall not be moved

There were no unions
All men were bossed
Marginal output
Met marginal cost

Ricardo repeated it
No one defeated it
Praise be to our theory
We shall not be moved

The utilities moved
In harmonious flow
Through natural channels
To where they should go

Marshall repolished it
No one demolished it
Praise be to our theory
We shall not be noved

Marginal product is
The perfect gauge
For capital’s gain
And the worker’s wage

Douglas computed it
No one refuted it
Praise be to our theory
We shall not be moved

There were no barriers
And no controls
The system created
And reached its own goals

Friedman restated it
No one deflated it
Praise be to our theory
We shall not be moved

The weavers wove
The spinners spun
They always had jobs
In the very long run

Smith propounded it
No one confounded it
Ricardo repeated it
No one defeated it
Marshall repolished it
No one demolished it
Douglas computed it
No one refuted it
Friedman restated it
No one deflated it
Praise be to our theory
We shall not be moved

II

These man were thinkers
Deep and profound
Their assumptions well based
Their logic sound

Their laws have developed
In several stages
Are now well-grounded
Will live through the ages

But as they develop
From leader to follower
The thinking becomes
Just a little bit hollower

If one looks at history
From beginning to end
Within it there is
This secular trend:

In the earlier men
Originality burns
But the neo’s are met
With smaller returns

This function descends
From great things to trifles
This is The Law
Of diminishing disciples.

Source: Harvard University Archives, Papers of Zvi Griliches, Box 129, Folder “Faculty skits, ca. 1960s”.

Categories
Chicago Funny Business

Chicago. West Side Story Number from an economics skit, ca. 1962

These parody lyrics come from pages of University of Chicago economics skits from the 1960s that had been saved by Zvi Griliches and that can be consulted now in the Zvi Griliches papers collection in the Harvard University Archives. The reason we can date this artifact with confidence is because the following children’s rhyme almost immediately follows “Please Mr. Harry Johnson” featured below.

(To the tune of „Mary had a Little Lamb“)

Harvard School has gone away, gone away, gone away
Harvard School has gone away
To Washington D.C.

MIT has joined them too, joined them too, joined them too
MIT has joined them too
Advising Kennedy

Link to the film version of the original “Dear Officer Krupke” from West Side Story.

Also worth noting: that the students’ friend for learning price theory instead of relying on George Stigler’s book was Richard Leftwich’s The Price System and Resource Allocation (incidentally the same textbook was assigned for the microeconomics semester (Fall semester) of Early Concentration Economics my freshman year at Yale 1969-70).

________________________________

(To the tune of “Dear Officer Krupke” from West Side Story)
[ca. 1962]

Please Mr. Harry Johnson
It’s easy to explain
They told me Keynes was silly
And Hansen just a pain
Velocity is the main thing
And interest a passing stress
Leapin’ lizards, that why I’m a mess.

Chorus: 

Gee Prof. Johnson
we’re very upset
we never had the love that every child ought to get
we ain’t no delinquents, we’re misunderstood
deep down inside us there is good
there is good
there is good
like inside of each of us there’s good.

Oh Mr. Bailey listen
You’ve got to understand
All my life they’ve taught me
Investment lacks demand
No body ever told me
to buy a foot of land
Crawlin’ catfish, that’s why I’ve been canned.

(Repeat Chorus till last three lines)

Hear oh Mr. Friedman
I want make it clear
Always I’ve considered
Children sweet and dear
No one ever told me
Of production they’re a tool
Gosh almighty that’s why I’m a fool.

(Repeat Chorus minus last three lines)

Oh Mr. Metzler hear me
It’s simple to conceive
The BB schedule threw me
The CC did deceive
With your Keynesian leanings
I really couldn‘t cope
Goodness gracious, that’s why I’m a dope.

(Repeat Chorus…)

Dear Professor David
Please lend to us an ear
All these expectations
The present did make queer
The future was the present
The present—there was none
Really truly, that’s why I’m so dumb

 (Repeat Chorus…)

Dear Sweet Professor Stigler
We all have read your book
The fun is in the footnotes
At which we love to look
But we go back to Leftwich
For Economic sense
Heaven help me, that‘s why I‘m so dense.

(Repeat Chorus…)

Now to conclude my story
I’d like to say tonight
Why it’s so very difficult
for us to be alright
Whatever one pronounces
The others say “it’s rot”
Mama mia that’s why I’m a sot.

Dear muddled department – we’re very upset
(rest of chorus…)

Source: Harvard University Archives, Papers of Zvi Griliches, Box 129, Folder “Faculty skits, ca. 1960s”.

Image Source: Random undocumented discovery in the internet.

Categories
Chicago Exam Questions

Chicago. Final exam from Economics 301 (Price Theory), Autumn Quarter 1960

The following exam comes from a graduate course in the price theory and distribution sequence at the University of Chicago taught in the Autumn quarter of 1960. This copy was found in Milton Friedman’s papers at the Hoover Institution Archives in the folder “Econ. 301” which also includes exams from 1959 and 1964 that can be attributed to Friedman. Still, I am not yet certain who was the author of the exam questions for autumn 1960. More than likely it was indeed Milton Friedman, but this needs to be checked.

_________________________

Economics 301
Final Examination
December, 1960

I.  Indicate which alternatives, if any, are correct or fill in the indicated blanks. Where you think it required, briefly justify your answer.

  1. Marginal revenue (a) cannot (b) may (c) must rise as output increases.
  2. A monopolized product initially sells for $1. A tax is imposed on the product. A tax of t cents per unit will reduce marginal revenue at the pre-tax output (a) more, (b) less, (c) the same amount, (d) sometimes more sometimes less than a tax of t per cent.
  3. In the preceding example, the imposition of a tax of t cents will lead the monopolist to reduce output (a) more, (b) less, (c) the same amount, (d) sometimes more sometimes less than a tax of t per cent.
  4. A reduction in demand for a product is followed by a rise in quantity sold despite no change in conditions of supply. It follows that the product is being produced (a) in a competitive industry with increasing returns, (b) in a competitive industry with external diseconomies, (c) by a monopolist, (d) this result is impossible under any of the preceding conditions.
  5. Assume that the government has been supporting the price of wheat by buying any wheat offered to it at its support price. Suppose it abandons the program. In the new position of long period equilibrium the total amount received by producers will rise (a) only if the market demand for wheat is inelastic in the range between the support and new price, (b) only if the market demand for wheat is elastic in this range, (c) whatever the demand elasticity, (d) under no circumstances.
  6. An individual buys four commodities, W, X, Y, and Z, currently spending one-quarter of his income on each. The income elasticity of W and X are 2; of Y, 1. The income elasticity of Z is _________?
  7. Consider three demand curves for commodity X: A, for given money income and other prices; B for given apparent real income in Slutsky’s sense; C, for given real income in Hicks’ sense. Let all three curves go through the point (po, xo). If X is a superior good, then for a price higher than po, the quantity demanded will be larger for ____ than for ____ than for ____ (Insert A, B, C, in correct spaces).
  8. Suppose po = $2, xo = 40, the corresponding money income is $200, and the income elasticity of demand for x is unity. Suppose that at a price of $2.50, the quantity demanded on Curve A is 20. Then the income compensation required to pass from A to B is $ _____ (be sure to indicate sign of change) and the quantity demanded on curve B is _____.
  9. If long run average cost (LRAC) equals short run average cost (SRAC) at an output on the falling segment of the LRAC curve then short run marginal cost (SRMC) (a) exceeds, (b) equals, (c) is less than long run marginal cost (LRMC) at that output.
  10. If LRAC is rising and less than SRAC, then SRMC is (a) rising, (b) falling, (c) greater than SRAC, (d) less than SRAC.
  11. In a discussion of the World Series last fall, Jones offered to take either side of a bet with Smith involving a payment of $2 by one party if the Pirates won, of $1 if the Yankees did. It follows that Jones’ estimate of the probability that the Yankees would win is _____ and that his utility function of income is (a) concave upward, (b) linear, (c) concave downward, (d) not concave upward, (e) not concave downward.
  12. Alternatively, Jones refuses to take either side of the preceding bet but offered to take either side of a bet involving a payment of $200 by one party if the Pirates won or of $100 if the Yankees did. This behavior (a) contradicts or (b) is consistent with the expected utility hypothesis.

II. Translate the following quotations into economics and discuss:

  1. “Costs are down partly because contractors expanded their equipment to get ready for the Federal Government’s enlarged program. But it was cut back in 1959. … Some contractors needed work to pay for their expensive equipment, and they began making low bids, often at cost, to get the work. They complain bitterly about the price-chopping competition.” (Time, Dec. 12, 1960)
  2. “Most foods will be much more abundant and a bit cheaper in 1959 than they were this year [1958]. This optimistic forecast was made by the Agriculture Department which warned, however, that retail price cuts won’t be as deep as the prospect of plenty would seem to indicate. Higher marketing and processing costs, officials explained, will partly offset the expected decline in food prices at the farm.”

III. A consumer in a three commodity market buys the following quantities at the following prices:

Situation Price of Commodity Quantity of Commodity
X Y Z X Y Z
A 1 1 1 1 2 5
B 1 1 2 7 0 0
C 3 2 1 0 7 0

Prove that this behavior is consistent with his having constant tastes and an ordinal utility index.

IV. State briefly what seem to you the central features of Chamberlin’s analysis of monopolistic competition and Stigler’s criticism of the analysis.

Source: Hoover Institution Archives. Milton Friedman Papers. Box 77, Folder 2 “University of Chicago, Econ. 301”.

Image Source: Social Science Research Building. University of Chicago Photographic Archive, apf2-07490, Special Collections Research Center, University of Chicago Library.