Robert Solow (Nobel ’87) is thought within the economics occupation for conceptualizing the broad strategies of learning financial progress which can be nonetheless used as we speak. I additionally consider him as one of the crucial gifted expositors of technical financial points. When attending the annual conferences of the American Financial Affiliation some years again, if I used to be doubtful as to which of many periods to attend, I might simply choose the one the place Solow was presenting or commenting. He’s 98 now. Steven Levitt is maybe best-known in widespread tradition because the creator of Freakonomics (written with Steven Dubner), a 2005 e book which achieved the unlikely standing of being a best-seller written about educational analysis papers in economics. Contained in the economics occupation, Levitt is called remarkably artistic at developing with empirical approaches that provide believable (if generally additionally extremely debatable) solutions to a big selection of questions.
The Freakonomics best-seller morphed right into a weblog, further books by Levitt and Dubner, podcasts, and interviews. Levitt not too long ago interviews Solow, who’s considered one of his graduate faculty professors, in “Ninety-Eight Years of Financial Knowledge” (June 23, 2023, https://freakonomics.com/podcast/ninety-eight-years-of-economic-wisdom/). You’ll be able to pay attention for an hour, or learn the transcript. Listed below are a couple of of the feedback from Solow that particularly caught my consideration:
What’s the actual problem of a zero-growth economic system?
[T]listed here are, nevertheless, lots of people, within the occupation and out of doors the occupation, who suppose {that a} trendy, industrial, capitalist economic system can’t exist with out rising. … So, I need to think about an economic system like ours and take into consideration what it will be like if it had been stationary, if it weren’t rising and never shrinking, however simply fastened at no matter dimension we’re speaking about. The very first thing that must be true is that the inhabitants is fixed. Now, I need to make one other assumption, think about that there’s no innovation occurring. There are not any new merchandise, no new industries, nothing like that. The economic system is simply stationary. It simply repeats itself. …
I feel the vital factor to understand is that there isn’t any legislation of economics, no ideas of economics, that say that such an economic system couldn’t exist and be wholesome. It’s not written wherever that for a capitalist economic system, it’s develop or die. That’s simply not true. The one glitch that would happen on this stationary state is that the inhabitants needs to extend its wealth by saving, despite the fact that the economic system is stationary, however we are able to’t let that saving get into funding as a result of if the saving goes into constructing new factories, constructing new buildings, no matter, that strikes us out of the stationary state into progress. However there’s a simple resolution to that: the federal government satisfies the general public’s want to accumulate by operating a deficit and promoting them bonds and utilizing the proceeds to not construct new roads, or construct new something, however to placed on lovely fireworks shows, great concert events, possibly annual dramatic festivals like the traditional Athenians. That state of affairs might merely go on perpetually.
Now I come to the rub that I don’t suppose most individuals take into consideration: this non-growing economic system has, as I mentioned, no new industries, no new merchandise, nothing like that. That may’t be good for social mobility. What I’m afraid of is that in such an economic system, the identical good jobs and excessive standing occupations would repeat themselves 12 months after 12 months. And the individuals who have these jobs would groom their kids to comply with of their footsteps. And that sort of society would are usually a hereditary oligarchy. And that’s not good. So if I had been attempting to result in — for the sake of keeping off local weather change, for the sake of preserving the atmosphere — a non-growth economic system, what I might be serious about is the way you present for social mobility, the way you present for the youngsters of comparatively poor dad and mom to turn into comparatively higher off whereas a few of the kids of comparatively well-off dad and mom fall within the revenue distribution. That’s the laborious half. There’s nothing in my background to make me a specialist in how to try this, however I can see that it will be a extremely significant issue.
On a lesson from rising up through the Nice Melancholy:
I used to be 6 years outdated in 1930 and I used to be 16-years-old in 1940. So I grew up throughout the entire of the Melancholy. Now, we weren’t an impoverished household. My father all the time had work, though he needed to take jobs he didn’t like. However, from listening to my dad and mom’ dialog, it was clear to me that the final feeling of not understanding the place the following greenback is coming from, the final feeling of insecurity was the dominant factor of their dialog. That’s principally what they talked about. One among their buddies was a highschool instructor of math, Mr. Ginsburg. Earlier than the Melancholy, all of them pitied Lou Ginsburg as a result of he didn’t earn very a lot cash. By the Nineteen Thirties, they envied him as a result of he had a secure and safe job. So one of many issues I obtained out of being a Melancholy little one was the significance of financial safety. And it has made a distinction as a result of I’ve all the time balked at notions in regards to the effectivity of the labor market, which quantity to imposing uncertainty on employees. I feel any understanding of the labor market has to take account of the truth that folks actually care — it’s actually vital to them to have a sense of security, of safety. I nonetheless suppose that. It doesn’t match so simply into commonplace economics textbooks, however it’s one of many issues I realized from rising up within the Melancholy.
How Solow selected economics as an undergraduate main, upon getting back from the Military after World Warfare II:
I turned 18 in 1942 and I went again to Harvard School to begin my junior 12 months. I began at age 16. So there I’m in September, possibly early October, 1942, sitting in a course on the psychology of persona. It wasn’t a foul course. I used to be taking it as a result of my advisor, whom I revered rather a lot, advised me to take it. So I’m taking this course and, like the great little boy that I’m, I’m busy taking notes. And hastily it hit me: I can’t sit right here three days per week, taking notes on the psychology of persona, when in all probability crucial occasion of my lifetime is going down 3,000 miles away in Europe. I simply can’t try this. So, I waited until the category ended, nonetheless busily taking notes. I packed up my ballpoint pen and my pocket book, and I walked out the door. I walked one block to Harvard Sq.. I paid my nickel and obtained into the subway. Bought out at Park Road, the place I knew there was an Military recruiting workplace, and I joined the Military. I assumed it was rather more vital to beat Hitler than to take notes in programs.
So three years later, we’ve crushed Hitler, and in 1945, I’ve obtained to inform Harvard School I’m going to be again in September as a junior to complete up. So I referred to as the school workplace on a phone they usually mentioned the factor to do is to get a transcript of your freshman and sophomore 12 months, and take it to the headquarters of your main division. So I mentioned to my spouse, “I don’t have a significant division. I’ve simply been screwing round taking programs, principally within the social sciences,” And I mentioned to her, “You majored in economics, didn’t you?” And she or he mentioned, “Sure I did.” I mentioned, “Was it attention-grabbing?” And she or he mentioned, “Sure, it was.” I mentioned, “Oh, what the hell? Let’s give it a strive.”