Nobel Laureate William Vickrey: Stockholm Seminar

Article excerpt

Economics requires a "big tent," one large enough to house many elements of wide diversity. The occupants will have an enormous range of high skills. William Vickrey used his exceptional abilities to work on many frontiers of the profession.

My life has included at least casual acquaintance with many, probably most, of the recipients of the Nobel Memorial Prize in Economic Science. I have some, albeit sadly inadequate, familiarity with their work. The coverage is indeed extensive. One outstanding feature of Professor Vickrey's body of achievements is the number and diversity of subjects to which he made major contributions.

One thinks of social choice, counterspeculation, auctions, marginal utility measurement, welfare (human well-being--not the American usage of aid to the poor), taxation (income averaging, death duties, capital gains, progression), marginal cost pricing, public utility charges, airline overbooking, subway fares (revenue and non-revenue effects), urban affairs, use of land rents as a means of financing government, paying for city services, macroeconomics (inflation control, fuller employment), government debt--one's amazement and admiration keep rising. And there are more-always, I believe, rated highly by experts!

Vickrey's collection in Public Economics consists of essays on twenty-six subjects. There is theory in the abstract sense: An application to the realities of life, e.g., reducing the time (the human life) lost when idling in avoidable traffic congestion! For him, "knowledge for what?" was a challenge. He believed that economic knowledge could help human beings get more out of life. Improvements can be made in institutions, in the framework of economic, political, and social structures--not a sweeping restructuring in an engineering sense but change in specific elements of taxation, of transportation pricing, and so on! But he was not unwilling to propose change on a broad scale--as in his plan to prevent inflation.

He and I were friends and associates for sixty-one years, from graduate school days that began in 1935, through service in the U.S. Treasury during World War II, as colleagues on the faculty at Columbia University for almost half a century, as members of innumerable professional and civic associations, and as social friends. (I can still see him in August 1996, explaining to uncomprehending non-economist guests at my house how the growth of government debt could be--he believed would be--a good thing!)

In recent years he became increasingly articulate in condemning "our" toleration of unemployment. The "our" includes the community in general, government policy makers, and professional economists. His presidential address for the American Economic Association concentrated on (un)employment but, as he told me, "it went over as would a lead balloon." He was saying, in substance and probably in about these words, "the vast majority of us who have more or less satisfactory jobs or secure retirement should bestir ourselves to improve conditions for the less fortunate." He reminded us repeatedly of the waste of human idleness. A (lay, a week, a year, a life lost cannot be recovered. All of us know this. But, Professor Vickrey would say, "Economists should do more." (The epitome of normative economics!) Most of us can give reasons why things are not better. He knew them all, I believe. He was, really, very learned. He attended seminars, meetings, lectures, and conferences at Columbia and around the world. He was both sophisticated and simple--and far from satisfied with our achievements as a useful profession!

In the United States, and perhaps elsewhere, a large gap separates the general public's understanding of the way the economy works and the realities of economic processes. …