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Patrick Luciani: Who is the greatest economist of all time?

Commentary

In the latest Hub book review, Patrick Luciani reviews GOAT: Who is the Greatest Economist of all Time and Why Does it Matter? by Tyler Cowen (2023) which assesses the cases of some of the top economists in history to determine who can lay claim to being the greatest among them.

Who is the greatest of all time, or the GOAT, among economists? It’s a fascinating question but an odd one as well. One would think that the greatest would depend on one’s political stance. Tyler Cowen, a well-known professor of economics, best-selling author, podcaster, polymath, and co-founder of the highly successful Marginal Revolution website, has released a 350-page book, available for free online, that tries to answer the question. It was his COVID lockdown book that kept the inveterate traveller busy at home. 

When I started reading, I was hooked. It was fascinating getting a refresher about critical economic ideas but also the personalities behind them. Every page carried new information. Cowen achieved the impossible, turning the history of economic thought into a page-turner, bringing to life the ideas of six economists who have shaped the world we live in. 

Cowen lays down a few criteria for a proper evaluation to get past the problem of political bias. Any candidate for the GOAT prize must be original, of great historical importance, a carrier of essential ideas, and know lots of micro and macro theory and empirics. Finally, any candidate must not be “too wrong” on the “substance of issues.” In other words, you might be a great thinker, but if your ideas can’t survive the test of time, you’re off the list. 

The shortlist of great economists who get their own chapters are Milton Friedman, F. A. Hayek, John Maynard Keynes, John Stuart Mill, Thomas Malthus, and—no explanation needed here—Adam Smith. The surprise is that Karl Marx didn’t make the final six. For all his fame and disruptive influence, the 1917 Russian Revolution made him famous, not his economic intelligence. 

Another surprising omission was Paul Samuelson, the first American to win the Nobel Prize in economics. His 1948 textbook Economics has gone through 16 editions and sold over four million copies. That book has educated more students of economics than any before or since. Samuelson was a brilliant economic modeller and was primarily responsible for bringing deep math to the science of modern economics. But according to Cowen, Paul Samuelson didn’t understand economics

Here’s some evidence: Samuelson got the Soviet Union wrong. He insisted that the Soviets would catch up and overtake the United States and believed a socialist command economy could “function and even thrive.” Samuelson also got the 1970s and ’80s recessions wrong and insisted that wage and price controls were the way to fight inflation. Despite his brilliance, Samuelson’s arrogance stopped him from considering that the Chicago school under Milton Friedman might be on to something. 

Here’s a summary of Cowen’s final six. 

Friedrich August Hayek

As a fan of Austrian economics, Tyler Cowen claims that Hayek’s three best articles are superior and more important than the top five articles of any other economist. High praise, without a doubt. Hayek argued that knowledge of how the economy works doesn’t reside in the minds of policy experts but is dispersed as “bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.” 

The message is that we can never fully know that “knowledge.” And we weren’t going to find that knowledge with sophisticated econometrics. Therefore, allocating resources by economic planners to solve economic problems is doomed to fail. The best we can do is “find the best decentralized mechanism for improving opportunities.” That insight has changed how we think about economics today, with profound implications for growth and prosperity. One weakness was Hayek’s skepticism about modelling or deep data analysis to address economic problems. 

John Maynard Keynes

Keynes certainly meets most, if not all, of Cowen’s criteria. There’s no question that Keynes was the most attractive economic thinker of the lot. He’s the one that Cowen would choose to spend time with because his world went beyond economics and into the arts and diplomacy. Keynes was a man of culture as a member of the Bloomsbury Group with Virginia Woolf and E.M. Forester, who pursued his varied sexual relationships with “true ardour,” which made him stand out from the crowd of boring bureaucrats and professors. 

As an economist after the Second World War, his influence on international and domestic policy was enormous and unimaginable without him. Great as he was, Cowen tells us he wasn’t that good an economist. His famous book, The General Theory, “is riddled with microeconomic mistakes and ambiguities, such as confusion between movements of curves and shifts along curves.” He had poor terminology, was unclear about elasticities, and confused average and marginal rates. 

According to Cowen, Keynes never nails microeconomics. By those standards, Keynes would have flunked an intermediate microeconomics exam. Keynes was a big-picture guy who never quite saw the deep complexity of an economy, and his simple models couldn’t solve messy real-world problems. Keynes was also an avid supporter of eugenics, an antisemite. He also suggested in his German translation of his General Theory (yes, Cowen also reads German) that his investment theory was closer “with totalitarianism than with laissez-faire.” 

Milton Friedman

 Although without the charisma of Keynes, Friedman has all the ingredients of a GOAT. His scholarship is, without a doubt, Nobel Prize-level stuff, a prize he won in 1976. His historical study of the Monetary History of the United States, with Anna Schwartz, was a landmark in helping us understand the Great Depression. In the real world, he also led the reforms against the military draft and supported floating exchange rate policies that have proven essentially correct. He seems vindicated in advocating vouchers to improve public school education levels and advocated a negative income tax to help the poor, an idea now picked up by the Left. He has also influenced the Federal Reserve’s attention to money supply and prices. He has spread the gospel on the values of freedom and free market principles, along with his macroeconomic ideas, which are on par with Keynes’s influence. Cowen’s criticism seems to centre on Friedman’s position that economic problems are easy to resolve and simple to understand. He had little time for government programs to help the poor and blamed the state for the poverty that existed. Cowen was also miffed by Friedman’s attack on complex modelling, insisting that their predictive value counts even if the assumptions aren’t realistic. 

Malthus and Mill

I admit I was surprised to see Thomas Malthus and John Stuart Mill as among the six best economists on Tyler Cowen’s list. I never considered them economists in the strictest sense. If Cowen says they belong, they belong. 

On Malthus, I would have thought his prediction that population growth would always outstrip food production and lead to widespread famine has proven to be one the biggest gaffs in economic thinking. He completely missed the boat on the role of agricultural innovation and technology. But Cowen reminds us that Malthus was right for 99 percent of human history, and we shouldn’t be too hard on him because he missed that one percent. Today, Malthus’s ideas have worked their way into how we think about environmental sustainability. The word “Malthusian” is part of our vocabulary when we talk about protecting the earth and husbanding its resources. For that, Thomas Malthus deserves a place in the top six. 

Cowen also gives high praise to John Stuart Mill, better known as a political philosopher than an economist, though his economic writing is extensive. He regards Mill’s The Subjection of Women, which is not usually considered a book on economics, as “an excellent tract on women and the economics of gender and discrimination” and campaigned strongly for complete legal equality for women. Mill knew more economics than anyone in his time and was “all-encompassing in a way that no other GOAT contender can claim.” According to Cowen, Mill’s argument for liberty relied much on economic concepts such as “decentralization, anti-paternalism, and externalities,” ideas developed decades before Hayek and Friedman. However, it was strange to learn that Mill, who was a utilitarian first and a progressive second, favoured capital punishment and argued as much. Cowen holds high admiration for Mill’s learning and broad education and considers him the most profound thinker of them all. 

 Adam Smith

I would have guessed that Adam Smith would walk away with the top prize as the greatest of all time. Or is he? His contributions to economic theory are well-known even by non-economists, such as his articulation of the division of labour, economies of scale, and how a free-market system based on self-interest drives the betterment of society by an unplanned “invisible hand.” He saw the deep flaws in mercantilism and understood the power of open trade to advance national wealth and how the price system transfers information to increase or decrease production. 

Cowen reminds us that his thinking went beyond these concepts to argue that the division of labour also applies to national defence and the necessity for countries to protect their liberty and prosperity with well-trained standing armies. Smith’s two books, The Wealth of Nations and Theory of Moral Sentiments, together stress the need for individuals to break from “being excessively narrow, short-sighted, and obsessed with local information.” Here, Smith parts ways with Socrates, who saw teaching as the duty of elites, while Adam Smith saw a role for state subsidies to support the study of sciences and philosophy for everyone. Smith was a wide-ranging thinker beyond his reputation as an economist. 

The verdict

So, who is the GOAT? 

In the final chapter, Cowen summarizes the pros and cons of the six finalists. Without looking at the last section, my bet was on Milton Friedman. Cowen takes us on a journey of economic ideas without coming down on anyone as the Greatest Economist of all Time. However, he chose—to my surprise—John Stuart Mill as his informal winner and was his clear favourite as a thinker. Consolation prizes go to Milton Friedman as the best economist and Adam Smith as the most original and foundational economist.

Tyler Cowen ends by lamenting that we will never see the likes of these thinkers again because the scholarship of economics has fundamentally changed. Economists are now smarter and better trained but are no longer the “carriers of ideas.” Instead, they have become clever testers of hypotheses. Long gone are the thinkers who can imagine beyond their specialized fields. Pity.  

Israel must ‘hit back as hard as it can’: David Frum on the Israel-Hamas conflict, 100 days in

Commentary

It has now been 100 days since the surprise terrorist attack on Israel by Hamas. Since October 7th, Israel has launched a military operation into Gaza that remains ongoing, and risks of wider regional escalation grow.

The Hub’s editor-at-large Sean Speer spoke with leading author, journalist, and thinker David Frum on October 7th to get his immediate reaction to the unfolding events. Here, they return to their conversation to discuss the state of the ongoing conflict, how the world’s response has evolved since the initial attack, and what we can expect to happen over the next 100 days.

SEAN SPEER: When we exchanged the day of Hamas’s attack, you said that Israel’s allies should permit it to execute a military campaign to essentially neutralize Hamas as a threat. After 100 days, how would you assess the response from the United States, Europe, and others? Are they following your advice?

DAVID FRUM: The Biden administration has shown magnificent solidarity with Israel. In the past, the U.S. always imposed strict time limits upon Israeli responses to Palestinian terrorist atrocities. This time, the Biden administration has allowed Israel the scope and time it needed, providing important assistance along the way. Unfortunately, Congress—and especially the Republican majority in the House of Representatives—has not shown the same solidarity. House Republicans have blockaded a defence supplemental that would have provided aid to Ukraine and Israel, plus $14 billion for border security. Some are blockading under the influence of Donald Trump’s pro-Russia, anti-Ukraine animus. Others are just playing crass politics.

The attitude of the European Union and the United Kingdom has been nearly equally impressive. High German officials have visited Israel and pledged their support for Israel’s right to defend itself. Fabricated anti-Israel TikTok propaganda videos may influence some young people. Mercifully, they exert much less influence upon major democratic governments.

The bad news is the problem of security against violent attacks and intimidation by antisemitic mobs and individuals inside Western countries. In the U.S., U.K., and EU, this threat is real, worsening, and—to date—poorly policed.

SEAN SPEER: What do you think about Canada’s response over the past 100 days? To what extent is Canada offside its key allies in terms of supporting Israel’s right to defend itself and what do you think explains that divergence?

DAVID FRUM: Canada under the leadership of Justin Trudeau has steered a middle course between doing the right thing and kowtowing to terrorists. The government of Canada has condemned both terrorism against Israel and Israel’s self-defence against terrorism.

When Canadian Jewish populations are harassed or fire-bombed or shot at, the government seems incapable of straightforward statements of solidarity with those who have been harassed, fire-bombed, and shot at. The first priority of Canadian police forces is not to serve and protect populations but to minimize trouble and inconvenience for themselves.

The government’s stated motive is to oppose both antisemitism and Islamophobia. Ironically, the unwillingness to act against bad acts by anti-Israel actors is actually stoking anti-Muslim feeling. Recent polls show that the number of Canadians who regard Islam as a bad influence on Canadian society has jumped over the past 24 months, as many Canadians blame all Muslims for the outrageous actions of a very few.

This government’s real motive appears, as usual, to be panicky dread of bad poll numbers—and appeasement of its NDP coalition partners who could at any time bring this prime minister’s career to an end.

SEAN SPEER: At this stage, how do you think Israel should define success for its military campaign? And do you worry at all that there is a gap growing between how Israel defines it and how the U.S. and other allies define it?

DAVID FRUM: May I object to this concept of “defining success” as applied to existential fights like those of Israel against Hamas and Ukraine against Russia? The concept is not always useless. When the United States and partners strike the Iranian-backed pirates in the Red Sea, then in that case the concept makes sense. Did the piracy stop? Success. Did it continue? Failure.

But when a democratic society is attacked by an aggressor bent on mass destruction, it just has to fight back as best it can. Israel cannot restore life to its murdered citizens, cannot uninflect the trauma of victims of sexual violence. There’s no “success” available here. All it can do is hit back as hard as it can, as long as it can, to restore deterrence as best it can.

SEAN SPEER: What in your mind are the broad contours of a post-conflict plan for Gaza? What is the role of Israel, the Arab states, and the broader international community? How do we create the conditions for greater prosperity and security in Gaza?

DAVID FRUM: I have proposed ideas on Twitter, but here I want to sound a different note in response to the final sentence of this question. Asking what “we” can do in Gaza is exactly the question that has brought the region and the world to this tragic impasse. What are the Gazans going to do? How are they going to shift from a project of hate and destruction to a project of nation-building and reconciliation with neighbours? Maybe it’s time to cease treating Gazans as the world’s special-education class and to put the onus for self-improvement upon the Gazans themselves?

SEAN SPEER: What should we look for over the next 100 days to judge the progress towards a sustainable resolution to the conflict and a path forward for Israelis and Palestinians?

DAVID FRUM: Milestones ahead: Release or liberation of Israeli hostages. Death or exile of the hostage-takers. Cessation of aggression not only against Israel from Gaza and Hezbollah-held Lebanon but also against world shipping by Iranian proxies. Accelerating flows of humanitarian aid to civilian populations in Gaza.

Beyond those immediate items, it is past time to resume reinvigorating better governance inside the Palestinian Authority on the West Bank—and then restoring PA police authority inside Gaza. Any final settlement between Israel and the Palestinians has been set back a long time by Hamas’s horrifying aggression. But in the end, Israel and the PA have to be partners in building better lives for all the people who live in the ancient land so sacred to three great religions.