The Political Economist

Douglass C. North , one of the greatest economists of our time, a Nobel prize winner responsible for reinventing institutional economics, died this week at the age of 95. His passing follows those of other notable institutional and political economists in the past few years, such as Elinor Ostrom , James Buchanan , Ronald Coase , and his Nobel co-recipient Robert Fogel, all champions of the new approach to examining economic interactions, and all, just like North, with groundbreaking contributions to the field. Together with Olivier Williamson and Ronald Coase, he was attributed as the pivotal co-founder of the  New Institutional Economics school of thought , a school of thought I personally favor and advocate.  Out of all academics North arguably led the most exciting life. He was a navigator for the US Merchant Marines during WWII, a passionate photographer, a deep-sea fisherman, an heir to an insurance fortune, a pilot (he had his own plane), a ranch owner, fancied...

It is with great sorrow to report the news that one of the greatest minds in human history died yesterday in a car crash  with his wife while they were returning home from an airport. John Forbes Nash Jr., to most widely known as one of the founders of cooperative game theory whose life story was captured by the 2001 film "A Beautiful Mind" , is truly one of the greatest mathematicians of all time. His contributions in the field of game theory revolutionized the way we think about economics today, in addition to a whole number of fields - from evolutionary biology to mathematics, from computer science to political science.  John Nash was born in 1928 in Bluefield, West Virgina. Even as a child he showed great potential and was taking advanced math courses in a local community college on his final year of high school. In 1945 he enrolled an undergraduate mathematics major at the Carnegie Institute of Technology (today Carnegie Mellon). He graduated in 1948 obtaining b...

More than a decade after Mancur Olson , and almost two years after James Buchanan and Elinor Ostrom , another champion of public choice theory has passed away , at the modest age of 92. Gordon Tullock , together with James Buchanan (both pictured below), founded the public choice school of economics, or as they saw it "the theory of politics without romance". Their legacy still remains the single most influential theory that explains how politics interacts with economics, and how one cannot fully grasp all the economic phenomena and outcomes without understanding the logic of politics. This is Tullock's (and Buchanan's) by far the biggest contribution to economics and even more so to political science. They taught us that politicians should be modeled and observed the same way market agents are modeled and observed; driven by self-interest and self-preservation. Before public choice theory governments were always modeled exogenously as a 'social planner'...

One of the world's most influential economists, Nobel laureate Gary Becker has passed away this week at the age of 84. Becker was a professor at the University of Chicago, Department of Economics and Sociology. He was an active economics blogger with his last post dating from only two months ago. He held the blog together with his friend and colleague Richard Posner, also a professor at the University of Chicago. It was a very good blog and I for one will surely miss his insightful posts.  "My teachers taught me that economics was not a game played by clever academics, but a serious subject that helped us understand the real world we lived in." Becker received the Nobel prize in economics in 1992 for “having extended the domain of economic theory to aspects of human behavior which had previously been dealt with—if at all—by other social science disciplines such as sociology, demography and criminology.” Essentially he introduced economic thinking and reasoni...

Yesterday, at the incredible age of 103, one of the greatest minds of our time, Nobel prize winner and emeritus professor at University of Chicago Law School  Ronald Coase has passed away.  His contributions as well as his influence to the economic science are monumental. His groundbreaking research has set the stage for a joint field of law and economics, and has also influenced the new institutional revolution in addition to a number of other fields and areas of research in economic theory. It would be unfair to say he only made two major contributions since both of these (written 23 years apart from one another) not only won him the Nobel prize, but have continued to influence the economic science ever since. The first was his 1937 paper "The Nature of the Firm"  (downloadable) where he introduced the concept of transaction costs in microeconomic analysis. He believed that firms exists because they economize on transaction costs - costs like market entry, acquir...

Margaret Thatcher , one of the greatest political leaders in the 20th century, has passed away earlier today at the age of 87. In the words of UK PM David Cameron , "today we lost a great leader, a great Prime Minister and a great Briton".  Source: The Telegraph Out of the many kind words expressed for her today, I particularly enjoyed the one from Nick Robinson at the BBC:  "As prime minister, she was determined to repair the country's finances by reducing the role of the state and boosting the free market. Cutting inflation was central to the government's purpose and it soon introduced a radical budget of tax and spending cuts.  Bills were introduced to curb union militancy , privatise state industries and allow council home owners to buy their houses .  Millions of people who previously had little or no stake in the economy found themselves being able to own their houses and buy shares in the former state-owned businesses . New monetary p...

The Economist's Free Exchange column has a very good eulogy for the late Nobel-prize winning James Buchanan, entitled the Voice for Public Choice . I suggest you read the whole thing.  Here's a particularly good excerpt from the follow-up text : "Public choice suggests that politicians are influenced by the incentives around them and aren't simply members of a priestly class dedicated to advancement of the public interest. That, of course, means that swapping one set of politicians for another without changing the institutional incentives will have a minimal effect on governing behaviour. Not no effect, of course; different parties are in hock to different interest groups. But the op-ed pages of America overflow with demands that politician x behave better or party y pay less attention to interest group z. Ultimately, if you're unhappy with the outcomes of political business as usual you need to reflect on and argue for reform of the underlying institutional,...