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
The epic story of the West is the development in the 19th century of a mass prosperity the world had never seen and its near-disappearance in one nation after another in the 20th.
The difficulties of many European countries derive from their corporatism: state projects serving cronies and vast social protection programmes, both run by elites. These surged in the 1970s and 1980s.
A modern economy is marked by the feasibility of endogenous change: Modernization brings myriad arrangements from expanded property rights to company law and financial institutions.
America's peak years of indigenous innovation ran from the 1820s to the 1960s. There were a few financial panics and two depressions, to be sure. But in this period, a frenzy of creative activity, economic competition and rapid growth in national income provided widening economic inclusion, rising wages for all, and engaging careers for most.
The level of dynamism is a matter of how fertile the country is in coming up with innovative ideas having prospects of profitability, how adept it is at identifying and nourishing the ideas with the best prospects, and how prepared it is in evaluating and trying out the new products and methods that are launched onto the market.
The main cause of Europe's deep fall - the losses of inclusion, job satisfaction and wage growth - is the devastating slowdown of productivity that began in the late 1990s and struck large swaths of the continent. It holds down the growth of wages rates, and it depresses employment.
The Keynesian belief that 'demand' is always at the root of underemployment and slow growth is a fallacy.
In Greece, Italy and, to a lesser extent, France, unsustainable tax cuts and spending sprees added to households' estimates of their private wealth relative to their wage income.
In countries operating a largely capitalist system, there does not appear to be a wide understanding among its actors and overseers of either its advantages or its hazards.