econ434notes5

econ434notes5 - History of Economic Doctrines Session 5 The...

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History of Economic Doctrines Session 5 The Emergence of Ideas and the Evolution of Intellectual History “New Ideas” are often merely old wine in new bottles. Example: The “Laffer curve” suggests that high tax rates may so discourage productive efforts that less tax revenue is collected than if tax rates were substantially lower. The Laffer curve was named for Arthur Laffer, formerly Chief Economist of President Nixon’s Treasury Department, by Wall Street Journal columnist Jude Wanniski. Laffer drew the curve on a napkin to illustrate the concept when Representative Dick Cheney, Wanniski, and Laffer were dining at a Washington DC restaurant in 1974. Laffer’s assertion that the U.S. was on the right-hand side of the curve became a major assumption underpinning “supply-side” economic policies. Point? The concepts underpinning the Laffer curve have been traced back to some hieroglyphic writings of advisers to Egyptian pharaohs. Stigler’s law: Nobel Prize winner G EORGE S TIGLER once observed that when economic laws or principles are attributed to particular people, (e.g., the Laffer curve), the person so attributed is seldom if ever the person who originally expressed the concept. This observation has become known as “Stigler’s Law, which naturally raises the question, “Who was the first thinker to assert Stigler’s Law?” Economics Prior to Adam Smith Early China
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Guan Zhong (? – 645 BC), an advisor to Chinese Emperor Qi, identified shortages as an explanation for rising prices, and abundance as an explanation for declining prices. Guan favored government efforts to stabilize prices by buying when prices were falling, and selling when prices were rising. Government would perform the function of modern day speculators. Guan also urged the emperor to conduct a regular population census to ascertain total population and the various numbers of people pursuing different occupations in China. Ancient Greece Zeno (≈490BCE - ?) and other “stoic” philosophers: The world of ideas is the proper focus of humankind. People should live simply and try to understand the world through logic ( logos ). Protagoras
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econ434notes5 - History of Economic Doctrines Session 5 The...

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