Edmund Phelps
Edmund Phelps
Edmund Strother Phelps, Jr.is an American economist and the winner of the 2006 Nobel Memorial Prize in Economic Sciences. Early in his career he became renowned for his research at Yale's Cowles Foundation in the first half of the 1960s on the sources of economic growth. His demonstration of the Golden Rule savings rate, a concept first devised by John von Neumann and Maurice Allais, started a wave of research on how much a nation ought to spend on present...
NationalityAmerican
ProfessionEconomist
Date of Birth26 July 1933
CountryUnited States of America
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Entrepreneurs' willingness to innovate or just to invest - and thus create new jobs - is driven by their 'animal spirits,' as they decide whether to leap into the void.
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Mass prosperity came with the mass innovation that sprung up in 1815 in Britain, soon after in America, and later in Germany and France: It brought sustained growth to these nations - also to nations with entrepreneurs willing and able to copy the innovations.
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The 1920s and 1930s were a period of sensational productivity growth: new products were springing up all over the place, and most of those new products and new methods were developed by people who started their own companies.
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Some economists believe that the Greeks' work ethic and thrift can pull them through. But the classical virtues can do nothing to offset the dearth of innovation that plagues the economy.
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One reason why upturns follow downturns is that downturns tend to overshoot. People get panicky, they're afraid to stay the course, so they start selling. The other thing is that I think, as entrepreneurs keep on waiting to produce new things, that there's an accumulation of as-yet-unexploited new ideas that keeps mounting up.
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With less competition to fear, companies are emboldened to raise their mark-ups and profits. That lifts share prices and thus the wealth of already wealthy shareholders.
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Unemployment determination in a modern economy was the main subject area of my research from the mid-1960s to the end of the 1970s and again from the mid-1980s to the early 1990s.
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Unemployment rates tend to rise and fall in roughly equal proportion at all rungs of the ladder, and that happened between 1973 and 1985.
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When public spending in the form of transfer payments makes various services and benefits free of charge, work is discouraged. Yet it is precisely Social Security that legislators fear to cut.
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What brought mass innovation to a nation was not scientific advances - its own or others' - but 'economic dynamism': the desire and the space to innovate.
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Without being aware, I think I was being indoctrinated into what was called Vitalism, the idea that what makes life worth living, the good life, consists of accepting challenges, solving problems, discovery, personal growth, personal change.
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You have little representation of young black men in the business sector, so you have children growing up in disadvantaged neighborhoods who don't hear discussions at the dinner table about what goes on in business. It's almost as if we have two nations.
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Those of us born into vitalist and expressionist cultures must hope that governments will draw back from shutting down the modernist project of exploring, experimenting, and imagining - of voyaging into the unknown - that has been essential for rewarding lives.
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To pump up consumer or government demand would force interest rates up and asset prices down, possibly by enough to destroy more jobs than are created.