George Stigler Quotes (1911-1991)

“It is a fair reading of The Road to Serfdom to say that forty years more of the march toward socialism would lead to major losses of the political and economic freedom of individuals. Yet in those forty years we have seen that continuous expansion of the state in Sweden and England, even in Canada and the United States, without consequences for personal freedom so dire as those he predicted.”

“Early in my professional life, I found that many areas of economics attracted me. I started working and publishing in price theory by 1938. In 1946, I published an early work on linear programming (The Cost of Subsistence) which solved the problem only approximately; George Dantzig soon presented the exact solution. In the 1940s, I began empirical work on price theory, starting with a test of the kinked oligopoly demand curve theory of rigid prices.”

“The first and the purest demand of society is for scientific knowledge: knowledge of how the economic system works. Knowledge of the consequences of economic actions. Knowledge of the causes of unemployment, of the effects of various taxes, of the sources of income inequality. Whether one is a conservative or a radical, a protectionist or a free trader, a cosmopolitan or a nationalist, a churchman or a heathen, it is useful to know the causes and consequences of economic phenomena.”

“The Principle of Legitimacy tells us that the sum of these deadweight losses is less than the legislature's estimate of the gains from the redistribution of income, but Legitimacy does not tell us that these are desirable transfers, i.e, that one dollar taken from the general consumer and given to a well-paid employee of the merchant marine constitutes a net increase in the utility of the nation. If I challenge this interpretation, all that I will be doing is asserting that George Stigler's tastes are not those of the Congress, and who, besides myself, cares about that? Indeed, even I have become reconciled to the fact that American society does not fully share my preferences.”

“The minimum wage provisions of the Fair Labor Standards act of 1938 have been repealed by inflation. Many voices are now taking up the cry for a higher minimum, say, of 60 to 75 cents per hour. Economists have not been very outspoken on this type of legislation. It is my fundamental thesis that they can and should be outspoken, and singularly agreed. The popular objective of minimum wage legislation-the elimination of extreme poverty-is not seriously debatable. The important questions are rather (1) Does such legislation diminish poverty? (2) Are there efficient alternatives? The answers are, if I am not mistaken, unusually definite for questions of economic policy. If this is so, these answers should be given.”

“The last of Smith’s regrettable failures is one for which he is overwhelmingly famous – the Division of labor. How can it be that the famous opening chapters of his book, and the pin factory he gave immortality, can be considered a failure? Are they not cited as often as any passages in all economics? Indeed, over the generations they are. The failure is different: almost no one used or now uses theory of Division of labor, for the excellent reason that there is scarcely such a theory. … there is no standard, operable theory to describe what Smith argued to be the mainspring of economic progress. Smith gave the Division of labor an immensely convincing presentation – it seems to me as persuasive a case for the power of specialization today as it appeared to Smith. Yet there is no evidence, so far as I know, of any serious advance in theory of the subject since his time, and specialization is not an integral part of the modern theory of production, which may well be an explanation for the fact that the modern theory of economies of scale is little more than a set of alternative possibilities.”

“The last of Smith’s regrettable failures is one for which he is overwhelmingly famous – the division of labor. How can it be that the famous opening chapters of his book, and the pin factory he gave immortality, can be considered a failure? Are they not cited as often as any passages in all economics? Indeed, over the generations they are. The failure is different: almost no one used or now uses theory of division of labor, for the excellent reason that there is scarcely such a theory. … there is no standard, operable theory to describe what Smith argued to be the mainspring of economic progress. Smith gave the division of labor an immensely convincing presentation – it seems to me as persuasive a case for the power of specialization today as it appeared to Smith. Yet there is no evidence, so far as I know, of any serious advance in theory of the subject since his time, and specialization is not an integral part of the modern theory of production, which may well be an explanation for the fact that the modern theory of economies of scale is little more than a set of alternative possibilities.”

“In the 1930s economics appeared to be a little different at the University of Chicago than elsewhere, but the same statement could be made about most major universities. Frank Knight was skeptical of the moral and intellectual content of political behavior and particularly hostile to central economic planning, but he was also severely critical of the ethical basis of a competitive economy. No doctrinaire defender of private enterprise would find him a source of strength. Henry Simons had preached a form of laissez-faire in his famous 1934 pamphlet A Positive Program for Laissez Faire, but what a form! He proposed nationalization of basic industries … [and] urged an extremely egalitarian policy in the taxation of income and detailed regulation of business practices … Much of his program was almost as harmonious with socialism as with private-enterprise capitalism.… Jacob Viner, the other major figure, had nineteenth-century liberal tastes, but rebelled against simplified or “extreme” positions. The rest of the faculty were highly varied in their policy preferences: Paul Douglas favored a large economic role for the state; Simeon Leland was a traditionalist in taxation; Henry Millis was an old-fashioned labor economist; Lloyd Mints wrote only on central bank policy; Henry Schultz stuck to his mathematical and statistical knitting; and Oskar Lange was a socialist.”

“Mrs. Hayek, I want you each day in the future to address your husband and inquire what his progress has been in what I consider to be one of the most interesting and intriguing fields, the evolution of the work of scholars.”

“Of all economists, Lord Keynes was most sensitive to the conditions of the next moment—he was a Geiger counter of future headlines. This was a most extraordinary gift, and it may have extraordinary consequences for his theories.”

“George’s most distinctive contributions to the Chicago school involved studies of the actual effects of government regulations, such as in the electric utility and financial sectors.”

“I recall an incident involving the late George Stigler at a conference in Spain in the 1980s. Hearing that I had written a book on reason and natural law, Stigler started to ridicule reason, going so far as to say that there is as much reason in a monkey's antics as in any human act. At that point I asked him whether he was trying to tell me something about how he wrote his books; he gave me a blank stare and stormed out of the room.”