David R. Henderson  

Biography of Edmund Phelps

PRINT
Nuclear Iran Bet Update... An even greater stagnation...

In The Concise Encyclopedia of Economics, I have bios of all of the winners of the Nobel Prize in economics through 2004, technically the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. But there have been a lot of winners since then and this year I have started to catch up. As the bios are posted, I will highlight them one by one. My goal is to be all caught up by sometime next summer, which will mean posting an average of more than one a month. There will also be a few bios of important economists who did not win the prize. One is the late Gordon Tullock.

One of the new bios is of Edmund S. Phelps, who won the prize in 2006. Here is an excerpt:

Edmund S. Phelps is difficult to categorize politically. On the one hand, he decries the lack of dynamism in Europe and wants European governments to deregulate their economies. On the other, he believes that low-end jobs do not pay enough and wants the government to subsidize such jobs. He understands that the minimum wage prices people out of labor markets, resulting in "idleness, deprivation, drugs and crime." So, in his 1997 book, Rewarding Work: How to Restore Participation and Self-Support to Free Enterprise, he advocated a vast subsidy program that would have cost $125 billion in 1997 dollars, a substantial 1.5% of that year's GDP.

Among Phelps's other contributions, two stand out. The first is on dynamism and entrepreneurship. In Mass Flourishing: How Grassroots Innovation Creates Jobs, Challenge, and Change, Phelps argues that a competitive innovative economy is good, not just for consumers, as joseph schumpeter argued (see creative destruction), but also for workers and producers. In Phelps's view, a dynamic competitive economy helps humans to flourish. Phelps worries that the U.S. economy has become as sclerotic and corporatist as European economies. What is needed for dynamism, he argues, is not just a good amount of economic freedom but also individualism.

The second is on population. In 1968, long before Julian Simon popularized the idea that population growth is good, Phelps made the same argument: The more people there are, the more ideas are developed, and ideas, once developed, can be transferred to others at almost no cost. He wrote: "One can hardly imagine, I think, how poor we would be today were it not for the rapid population growth of the past to which we owe the enormous number of technological advances enjoyed today. . . . If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process."


I thank Brink Lindsey and Tyler Cowen for taking a look, and commenting on, the bio.




COMMENTS (8 to date)
MikeP writes:
If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis...

Important safety tip: Do not begin halving population size while the entire population is in the Garden of Eden.

ThomasH writes:

Phelps sounds pretty easy to categorize: liberal.

MikeP writes:
If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process.

Interestingly, I would not do it because it would roughly* halve the total utility of the world.

* I'm presuming those who would prefer half the number of people around them are countered by those who would prefer not to halve the probability of Mozart. But we should be able to agree, regardless of the possibilities of interpersonal utility comparisons, that half the people perceive an awful lot less total utility by any measure than all the people. Certainly even Phelps should be more fearful of losing himself in the process than of losing Mozart in the process.

Neal writes:

Halving the population may reduce the chances well below 50% of a Mozart rising from the masses The chances could be closer to nil.

There may be an minimal chance at a Mozart being produced because of the decrease in leisure time of the population with more menial labor forced upon the masses. There would be fewer musical influences to spur creativity. There'd be fewer art patrons. Lesser wealth would open a Mozart to creative options,

Lee Waaks writes:

He understands that the minimum wage prices people out of labor markets, resulting in "idleness, deprivation, drugs and crime."

I have been emphasizing the potential crime aspect when I debate the minimum wage. I'm not sure these costs are counted when people talk about the costs of the MW. How do we balance the costs of those who experience the terror and losses due to crime with those who receive a boost in wages?

TMC writes:

ThomasH:

-deregulate their economies.

-low-end jobs do not pay enough and wants the government to subsidize such jobs. But...

-He understands that the minimum wage prices people out of labor markets, resulting in "idleness, deprivation, drugs and crime. (Almost suggesting EITC)

- dynamism and entrepreneurship

- Pro population growth

A little lower case l liberal maybe; upper case l definately not.

Brian writes:

"One can hardly imagine, I think, how poor we would be today were it not for the rapid population growth of the past to which we owe the enormous number of technological advances enjoyed today. . . . If I could re-do the history of the world, halving population size each year from the beginning of time on some random basis, I would not do it for fear of losing Mozart in the process."

While it is welcome to see Phelps appreciate the value of population growth, he does not seem to really understand why it's valuable. First, given that the Mozarts and Shakespeares and Newtons of the world came along when the population was much lower, it's not clear why he thinks lowering the population would keep such folks from existing. Second, the real power of population growth is the vast expansion of available trading partners for each person. In a relatively free-market economy, this effect causes not GDP but PER CAPITA GDP to increase at the same rate as the population. That is, greater population causes everyone to get richer by that same amount, on average. This is a much more important and positive impact of population growth than anything that comes from having more high-achieving geniuses.

Scott D writes:

The chance of Mozart existing would be far less than 50%. Assume away the fact that a person's particular DNA is unlikely to occur given the astronomically high possible number of combinations and let's pretend that a given man and woman will produce the exact same kids, regardless of when, where and how conception happens. Removing half the population at random would also change the composition of half of all surviving male/female pairings, since half of those mates disappeared. So in the next generation, there would be 25% of the original population and 25% of people who would not have otherwise existed, with the other 50% vanished. Continue forward, with only 12.5% of the previous pairings occurring. Pretty soon, the entire population that would have existed is replaced by new, different people. Mozart wouldn't stand a chance.

Comments for this entry have been closed
Return to top