July 21, 2015

A Scholar's Scholar Retires

Donald J. Boudreaux

Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
Summary

Bob is one of our greatest living scholars. Specializing in economic history, Bob's first major work is his 1976 book, “Competition and Coercion.” In it, Bob documents the many ways that economic competition — including people's ability to move from place to place — enabled blacks to improve their economic situation after the Civil War. These improvements came despite the bigotry that then reigned in the South — and despite the activities of government.

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My dear friends Bob and Elizabeth Higgs will soon move from Louisiana to a remote corner of Mexico. Bob says that visits north of the border will be few. The Higgses plan to retire away from it all with a completeness that few of us dare to attempt.

Bob is one of our greatest living scholars. Specializing in economic history, Bob's first major work is his 1976 book, “Competition and Coercion.” In it, Bob documents the many ways that economic competition — including people's ability to move from place to place — enabled blacks to improve their economic situation after the Civil War. These improvements came despite the bigotry that then reigned in the South — and despite the activities of government.

As summarized by the late Nobel laureate economist Robert Fogel in his review of Bob's book, “Those who seized control of the state machinery not only disenfranchised the blacks, but used their political power to transfer income from blacks to whites, to restrict blacks' access to such public institutions as schools and hospitals, to restrict the occupational mobility of blacks, and to bar them from certain occupations ... . While such coercion restricted the rate of black economic progress, it did not prevent it. Higgs concludes that the forces of competition proved strong enough to check the forces of coercion and made possible a fairly rapid rate of economic improvement.”

Competition in the market is the best friend that disfavored people can have. Not so the state.

Bob's most famous book is his 1987 study, “Crisis and Leviathan.” With a mastery of historical details, Bob explained that government's growth is fueled in part by crises — whether real, exaggerated or illusory. The other part of the fuel for government's growth is an ideology that demands government intervention during troubling times. As people's trust in markets and voluntary action weakens and as their faith in government strengthens, politicians grab more power. And when the country escapes each crisis, politicians seize credit for the salvation even when, as during the Great Depression, politicians' actions actually worsened the situation.

Another of Bob's key contributions is his identification of the role of “regime uncertainty.” Regime uncertainty exists when investors worry that, as Bob describes it, “private property rights in their capital and the income it yields will be attenuated further by government action.”

Bob first used regime uncertainty to explain the length of the Great Depression. In the early 1930s, President Herbert Hoover — responding to the slowing economy following the stock-market crash — launched the government into unprecedented heights of activity. FDR followed with even more interventions. These interventions frightened entrepreneurs and investors. And the fright was made worse by the intellectual climate that then regarded socialism as being inevitable. The insecurity that these developments injected into the U.S. economy kept it greatly depressed for more than a decade. Not until the less radical Truman replaced the increasingly radical Roosevelt and the less interventionist Republicans took Congress in 1946 from the Democrats did the economic climate once again encourage enough entrepreneurial activity to promote growth.

No summary can capture the depth, breadth and wisdom of Bob's work. But I hope that I've at least sparked interest in some readers to encourage them to read Bob's contributions directly.