Welcome, Luigi Zingales
By David Henderson
Starting this week and for the next few months, Econlog will have a guest blogger, Luigi Zingales. Professor Zingales is the Robert C. McCormack Professor of Entrepreneurship and Finance and the David G. Booth Faculty Fellow. We have not met personally, but I’m a fan of his recent book, A Capitalism for the People. Here’s an excerpt from my forthcoming review of his book:
When Milton Friedman retired from the University of Chicago in 1977, I feared that the school would become more focused on technical economics and lose the passionate pro-free-market edge that Friedman represented. To some extent, it has. Also, I wondered who in the next generation would replace him. Although many of us aspire to “be like Milton,” unfortunately no one can replace Friedman’s exquisite mix of technical expertise, ability to write clearly for the public (much of which he owed to his editor and wife, Rose Friedman), and warm openness in debate.
Still, as we economists like to say, there are substitutes for everything and everybody. In some important respects, one substitute for the late Milton Friedman is Luigi Zingales. Zingales, an immigrant from Italy, is an economics professor in the University of Chicago’s Graduate School of Business, a strong technical economist and a passionate defender of free markets. He’s also an excellent writer. A case in point is his latest book, A Capitalism for the People. In it, he makes a case for freer markets and warns people in his adopted country not to go the way of the country he left. He sees disturbing signs that the United States is going in that direction. Thus the book’s subtitle: “Recapturing the Lost Genius of American Prosperity.” Zingales brings a refreshing touch to many of the issues he discusses, especially the ethics of the market and the dangers of cronyism. He draws on his own and others’ scholarly research, plus his detailed knowledge of financial markets, to make his case for freer markets more than just a theoretical one. Zingales also has an ability to turn a telling metaphor.
“No man is a prophet in his own land” goes the saying, and one reason why Zingales’ message is fresh is that, coming from a country with a great deal of cronyism, he sees just how stultifying cronyism can be. Zingales contrasts Italian cronyism with U.S. meritocracy. He points out that the way to get ahead in Italy is to “carry the bag” of an established person. Even emergency-room doctors are chosen, he writes, based mainly on political affiliation rather than on skill. By contrast, in the United States, many more people get ahead based on their merit. Zingales tells the story of a young colleague walking in the rain with a senior professor. The senior professor told the junior one, “In Europe, the young assistant professors carry the umbrella for the senior ones.” The young professor shot back, “Why don’t you go to Europe?”