Adam Smith Lives!

George Stigler on Guaranteed Annual Income?

A couple of days ago, my friend, Evelyn Forget, wrote to the History of Economics list about the history of the negative income tax (guaranteed annual income) idea.  Evelyn is a fine historian of economic thought who also works on the economics of healthcare at the University of Manitoba.  Her query has stimuated some interesting responses on the list.  Perhaps most interesting, was this one by Dan Hammond:

It is well known that Milton Friedman argued for a negative income tax in Capitalism and Freedom (1962). But I recently came across a similar suggestion by George Stigler in "The Economics of Minimum Wage Legislation," AER 36 (June 1946). Stigler wrote, "There is great
attractiveness in the proposal that we extend the personal income tax to the lowest income brackets with negative rates in these brackets" p. 365.

This was news to me!  I asked my co-author, David Levy -- Stigler's graduate student -- and was surprised to get the answer: "No! Really!" from him.  If David doen'st know this, I figure not many others do.  So I decided to post this, another sort of debunking.  Sometimes we don't fully know even our immediate teachers, let alone the more distant past.

 

Mistaken Representations of the Past

I was a student of Sam Hollander at the University of Toronto.  Many of you will know that Sam has spent a great deal of energy convincing the profession that we have a largely mistaken interpretation of Ricardo and Malthus.  He's now working on Marx and I look forward to that (as well as his Say) with great interest.

So it'll come as no surprise that I like "debunking", research that corrects persistent mistakes or misrepresentations of our past in economics.  I also think it's important to reflect on the fact that the past is contested.  David Levy's Dismal Science is another example; we have a series at Econlib that makes the case with the wonderful title, "The Secret History of the Dismal Science."  We're now trying to make the case that Malthus has been horribly misrepresented in the secondary literature.

Here's a different example of this sort of thing.  It comes from my friend, Steve Medema, who recently told the History of Economics Executive:

I am pleased to be able to tell you that the Columbia Journalism
Review is now publishing commentary on the history of economic thought.
But it is better than just this; they seem committed to publishing
ideas that contain new and far-reaching insights that will
fundamentally alter the character of scholarship in our field. I will
quote from the December 2005 issue to give you a taste:

   1. We are informed by the author that Gary Becker is "in the
monetarist Milton Friedman mold."
   2. We are told that "law and economics" is "an extension of the
Friedman philosophy that seeks to explain behavior and mediate disputes
according to economic rules."

The full text is at  http://www.cjr.org/issues/2005/6/Giuffo.asp.

I'm interested in additional examples; at some point I'd like to have a day of debunking at the Summer Institute for the Preservation of the History of Economic Thought. Of course, finding the mistakes is one thing; convincing people of them is another; explaining them is yet another.

Hayek's Road to Serfdom 60 years after

The European Journal of Political Economy has just published a special collection of linked papers on Hayek's Road to Serfdom, 60 Years After.  (Linked collections of history of economic thought papers seem to be appearing more frequently than they used to.  I've enjoyed being part of several such collections and these days I always propose paper sessions rather than papers at conferences.)

Here's the abstract of the paper by David Levy at GMU, Andrew Farrant (now at Dickinson College) and myself. 

This paper re-examines Hayek's Road to Serfdom in historical context. Of particular interest is Hayek's claim that “left” and “right” socialism of the 1930s had much in common. In making this argument, Hayek held that all socialism implied planning at the expense of consumer sovereignty. We first agree to plan, but if we are then unable to agree on its contents, someone imposes a specific course of action on us. Hayek was strenuously opposed at the time by Abba Lerner and E.F.M. Durbin, who held that we can conceptualize, and perhaps put into place, a sort of socialism which yields to the will of consumer preferences.

There are also wonderful pieces by Ali Khan and Ed McPhail.  Both have presented at the GMU Summer Institute for the Preservation of the History of Economic Thought.  But there's more:  terrific comments by Pete Boettke, Bruce Caldwell and Dave Colander and a reply by David, myself and Andrew.  All makes for very good reading.  Our piece has some good pictures; I'll post them here before long.

We're not done.  At the 2006 ASSAs, we're having a session on Buchanan, Hayek, and the Constitutional Order.  Ali Khan, David and I, and Pete Boettke will present.  Bruce Caldwell will comment.  This promises to be a terrific session as long as David Levy and I get the paper written...!

Amsterdam

We're back.  Kail Padgitt did a terrific job presenting our experimental work on leadership.  The audience got the point:  what we've got is a result that shows language attached to humans does better than language pure and simple.  And they got the historical point regarding homogeneity.  The comment I liked best was this:  "This is the most important work being discussed in this building today".  Ok, so I'm biased.  But since it came unprompted from someone other than David or Kail, I was happy to hear it.

The highlight of our trip?  Dinner at Deirdre McCloskey's club.  David Levy kindly took these photos of the 3 of us.  The bike is a marvel -- it folds up so Deirdre can take it on the train to Rotterdam.  The locks (2) (more bikes are stolen each week than purchased in Amsterdam, she tells us) are incredible.