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general freedom individual achievement responsibility tax policy

Plotting Progress

The prestige of the Nobel Peace Prize has been tarnished by some more-​than-​dubious awards, in our time … Henry Kissinger and Barack Obama, most obviously.

Same goes for the Bank of Sweden’s knock-​off “Memorial” prize for economics.

But, according to David R. Henderson, this week’s Nobel nod to Scottish-​born Angus Deaton, for his “analysis of consumption, poverty and welfare,” is “a fine pick.”

Deaton is, writes Henderson, “an important chronicler of the market’s abilities to create wealth and improve society.”

While it is all the rage, these days, to complain about increasing inequality, Deaton has been instrumental in showing that wealth, health and welfare have increased as poverty, worldwide, has decreased.

And this has been largely the result of markets. Not big government programs.

Deaton, Henderson tells us, “believes that the approximately $5 trillion given by governments of rich countries to poor countries over the past 50 years has undercut good governance by making poor countries’ leaders less accountable to their own citizens.”

ABC News seconds Henderson’s account:

In his 2013 book, The Great Escape, Deaton expressed skepticism about the effectiveness of international aid programs in addressing poverty.… China and India have lifted tens of millions of people out of poverty despite receiving relatively little aid money. Yet at the same time, poverty has remained entrenched in many African countries that have received substantial sums.

Peter G. Klein, at mises​.org, identifies a deeper insight by the latest Nobel economist: “aggregate measures of consumption and inequality conceal important differences among individuals.” This explains why Deaton came to his other (controversial) conclusions: he never took his eye off the real player in market life, the individual.

This is Common Sense. I’m Paul Jacob.


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Angus Deaton, Nobel Prize, Economics, The Great Escape, Inequality, collage, photomontage, JGill, Paul Jacob, Common Sense

 

Categories
free trade & free markets general freedom ideological culture individual achievement

Two Legacies

Two great economists died this month.

Anna Schwartz, co-​author with Milton Friedman of the classic A Monetary History of the United States, 1867 – 1960, passed away last Thursday, at age 96. For reasons known only to a few Swedes, she did not receive the Nobel along with her more famous research partner.Anna Schwartz and Elinor Ostrom

Elinor Ostrom, on the other hand, who died about two weeks earlier, at age 78, did manage to nab a Nobel.

While Mrs. Schwartz may not have received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, she had received the more popular honor of being dubbed “the high priestess of monetarism.” She knew more about the history of banking and finance than just about anyone. Tellingly, her intellectual odyssey didn’t stop when she reached retirement age.

In recent years, she attacked the politically popular notion that bailouts are a good idea during economic downturns. She also came out against the reappointment of Ben Bernanke as Fed chairman, and argued that government was the main instigator of the 2008 financial bust.

She knew how to make waves.

Elinor Ostrom focused her work not on finance but on the problems associated with managing common-​use resources. She found that government regulations tended to mismanage resources, while individuals and communities better negotiated creative and effective solutions to problems that previous economists deemed insoluble without government.

Like Anna Schwartz, she was much more than an armchair theorist. She didn’t merely draw equations on a blackboard and pontificate on how necessary it is for “government” to “fix it.” The evidence — which they collected — is in, government most often is the problem that must itself be fixed.

This is Common Sense. I’m Paul Jacob.