Biography of Edmund Phelps
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.