Economist, May 10, 2014 (II)

choi

Free exchange | The Great Trailblazer. Economists everywhere should mourn the passing of Gary Becker.
www.economist.com/news/finance-a ... r-great-trailblazer
(Mr Becker died on May 3)

two consecutive paragraphs:
“Not content with studying the world’s economies, he was the first prominent economist to apply economic tools to all aspects of life. His revelation was the sort that seems obvious only in hindsight: that people are often purposeful and rational in their decisions, whether they are changing jobs, taking drugs or divorcing their spouses. This insight, and the work that followed from it, earned him a Nobel prize in 1992.
“At the heart of Mr Becker’s work was the view that ‘individuals maximise welfare as they conceive it.’ Welfare need not mean income; it could derive from the pleasure of altruism or the thrill of deviancy. But critically, this thesis implied that people respond to incentives—a realisation that opened the door to insights across the whole range of human activity.
Note:
(a) “No less an eminence than Milton Friedman declared in 2001 that Mr Becker was ‘the greatest social scientist who has lived and worked in the last half-century.’”

eminence (n): “one that is eminent, prominent, or lofty”
www.merriam-webster.com/dictionary/eminence
(b) Gary Becker (1930-2014; earned a BA at Princeton University in 1951, and a PhD at the University of Chicago in 1955 with thesis titled The Economics of Racial Discrimination; taught at Columbia University from 1957 to 1968, and then returned to the University of Chicago (1968-2014))

(c) “In South Africa, with a far higher proportion of blacks, discrimination brought much larger reductions in incomes across the economy.”
(i) In his Nobel Lecture, at p 40, two consecutive paragraphs explained why--though he did not explain how--apartheid had been unsustainable.

“When the majority is very large compared to the minority - in the United States whites are nine times as numerous and have much more human and physical capital per capita than blacks - market discrimination by the majority hardly lowers their incomes, but may greatly reduce the incomes of the minority. However, when minority members are a sizable fraction of the total, discrimination by the majority injures them as well.

“This proposition can be illustrated with an analysis of discrimination in South Africa, where blacks are four to five times as numerous as whites. Discrimination against blacks has also significantly hurt whites, although some white groups have benefitted (see Becker [1971, pages 30 - 31], and Hutt [1964]). Its sizable cost to whites suggests why apartheid and other blatant forms of Afrikaaner discrimination eventually broke down.

(ii) FW de Klerk
en.wikipedia.org/wiki/F._W._de_Klerk
(1936- ; section 1 Background and early career: surname origin and meaning; S Africa president 1989-1994; sharing Nobel Peace Prize in 1993 with Nelson Mandela)

started dismantling apartheid in 1989.

(d) “His book on the subject, ‘The Economics of Discrimination,’ became the foundation for subsequent research.”

Gary S Becker, The Economics of Discrimination. University of Chicago Press (1957; 1971, 2nd ed)

(e) Regarding crime and punishment.
(i) Gary S Becker, Nobel Lecture: The Economic Way of Looking at Life. Nobel Prize, Dec 9, 1992.
www.nobelprize.org/nobel_prizes/ ... /becker-lecture.pdf
(page 39: “The following sections illustrate the economic approach with four very different subjects. To understand discrimination against minorities, it is necessary to widen preferences to accommodate prejudice and hatred of particular groups. The economic analysis of crime incorporates into rational behavior illegal and other antisocial actions. The human capital approach considers how the productivity of people in market and non-market situations is changed by investments in education, skills, and knowledge. The
economic approach to the family interprets marriage, divorce, fertility, and relations among family members through the lens of utility-maximizing forward-looking behavior”)

Please only read section 3 Crime and Punishment, pp 41-43, where on p 42 “rent-seeking” was broached.
(ii) Economics A-Z Terms Beginning With R. Economist, undated.
www.economist.com/economics-a-to-z/r
(A) Please read definitions of “Rent” (definition 2, about “factor of production,” fits the bill of “rent seeking”) and “Rent-seeking.”
(B) I did read Gordon Tullock, The Welfare Costs of Tariffs, Monopolies, and Theft. Western Economic Journal, 5: 224–232, which did not mention the term “rent-seeking.” Rather the paper developed the concept.
(C) The term “rent -seeking” was coined in
Anne O Krueger, The Political Economy of the Rent-Seeking Society. American Economic Review, 64: 291–303 (1974).