Last night’s introduction to the first annual NEC Herbert Stein Memorial Lecture.
I am in D.C. with Alex to speak at a gathering of the National Economists Club. My father helped to found it decades ago and was the first President of it. Now the Club has started the Herbert Stein Memorial Lecture, to be an annual event. The main speaker at tonight’s soiree is Dr. Edmund Phelps, a Nobelist in Economics at Columbia University. I am the warm up, and my topic is “My Father, Herbert Stein.” This is what I said. The “Bob” I refer to is the kind Bob Graboyes, outgoing President.
Bob, Dr. Phelps, fellow economists, thank you very much for having this event and allowing me to speak. My father would have been extremely happy to have the first speech in this series given by a man of the eminence and brilliance of Professor Phelps.
Let me tell you about my father, Herbert Stein. My Pop was born August 27, 1916 in Detroit. His father, who had emigrated from Russia as a small child, then run away from home in New York to be a Cavalry soldier in the U.S. Army, who had fought in the jungles of the Philippines against the Aguinaldo insurrection, was an auto worker at Ford Motor. He was a skilled tool and die maker, not an easy job.
My grandfather then did similar work at GE in Schenectady but was unemployed through most of the Great Depression.
My father was an astonishing prodigy, At 15, he entered Williams College, the finest small college in America, without any money but a small stipend, alone, and extremely shy.
He worked his way through school in a variety of odd jobs. The longest lasting one was as a dishwasher in the basement kitchen of a fraternity that did not admit Jews or blacks. He worked next to a black man from the town with whom he became a close friend, rare in those days.
When I asked him many years later if he felt furious about working over a hot sink at a frat house where Jews were not admitted, he said, “Not at all. I was just happy to be able to attend such a fine college in the midst of the worst depression there has ever been. I was grateful for the job.” My father loved Williams College dearly. But that isn’t the point of the story. The point is that he realized at an early age what was important and productive and what was a waste of time and thought.
After Williams, where he greatly benefited from the friendship of a young economics prof named Taylor Ostrander, my father studied at the University of Chicago graduate school in economics. It was a school of stars. He had as teachers Frank Knight and Jacob Viner, and as classmates and/or friends, Milton Friedman, Rose Director Friedman, and Aaron Director — immense names in economics.
He also met my mother, a fine economist in her own right, Mildred Fishman, who had come to Chicago from Barnard. They were married in 1937.
After Chicago, he worked at the FDIC here in Washington, and then at the War Production Board, and then in the U.S. Navy. In the latter phase of the war, as victory appeared certain, there was concern that the U.S. might slip back into what had seemed from 1929 to 1941 to be a permanent Depression. The Pabst Brewing Company sponsored a contest among the nation’s economists to write a short essay about how to avoid such a fate and instead go into lasting peacetime prosperity.
All of the biggest names in economics entered the contest. My father, at age 28, an unknown Ensign in the U.S. Navy, submitted a 1500-word essay and won the first prize, which was the then spectacular sum of $25,000 — most of which he paid in wartime income tax.
His ideas in the essay were basic but very well written: free markets, variable fiscal policy for stimulation of demand and subduing inflation when needed, care for the least well off, and an aggressive anti-trust policy — which seemed much more important then than it does now.
At the end of the war, a group of extremely high up businessmen started a group to work on policy proposals to keep the U.S. prosperous and not go back into Depression. They needed a research staff to collect their ideas, explain to them how economics worked, and then put the ideas into a coherent, easy to read form.
They chose my father for that job — first, vice Research Director for the Committee for Economic Development, then research director. The CED put forth a number of extremely well-regarded papers on health care, trade, defense, education, labor relations, many other subjects. They were almost all written by my father.
After a time, he wanted a change, although he was always extremely happy with the relationships he formed with business leaders at the CED.
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