AMERICAN MONETARY INSTITUTE
PO. Box 601, Valatie, NY, 12184
ami@taconic.net
A foundation dedicated to the study of monetary history, theory and reform.
Stephen Zarlenga, Director.
William Vickrey, 1996 Nobel Laureate in economics, issued the following press release just days before his death, a week or so after he received the Nobel Prize: (reproduced as issued, all emphasis added)
"DEFICIT REDUCTION COSTS JOB
"Each $10 billion of deficit reduction means 100,000 more unemployed.The "deficit" consists mainly of the excess of outlays that are disposable income to recipients over taxes and other payments out of disposable income.
$10 billion less of deficit means $10 billion less of disposable income, and $8 billion or more of a reduction in purchases and sales in the private sector.
$8 billion less of sales means ultimately $8 billion less in production and a loss of at least 100,000 jobs.
A balanced labor market, in which there are as many unfilled openings as there are unemployed seeking work, is far more important than a balance in some figures concocted in the Congressional Budget Office.
Achieving a balanced labor market would largely eliminate "welfare as we know it." Government would be downsized.
A balanced labor market need not entail exacerbated inflation, but even if it did, ten percent steady inflation with one percent unemployment would be a prosperous economy.
Unemployment as a prophylactic against inflation is a remedy far worse than the problematic disease.
Alexander Hamilton once wrote that a national debt, if it be not excessive, would be a national blessing. In today's demographic and technological circumstances, a debt growing in proportion to, or slightly faster than, the GDP, so as to fill the growing gap between desired provision for retirement and the ability of the private sector to supply assets, is not merely a blessing but a prerequisite for a prosperous economy. With full employment, reduced needs for welfare payments and increased tax revenues, meeting debt service would be no problem.
When can we be weaned from the mindless devout pursuit of the Holy Grail of the balanced budget, a quest urged most assiduously by those in little danger of suffering from the proposed austerity?
William Vickrey
Columbia University
October 5, 1996"
Professor Vickrey suffered a fatal heart attack on October 9, 1996.