When Harvard president Drew Faust, a historian, overruled her economics department in the spring of 2008 and passed up the chance to hire the husband-and-wife team of Christina and David Romer, certain compensations were set in train.
Christina Romer became chairman of President Barack Obama’s Council of Economic Advisers. The University of California at Berkeley got to keep the Romers. (David Romer is author of a leading graduate macroeconomics text.)
The Harvard economics department was permitted to hire as part-time visiting professor, Stanley Engerman, of the University of Rochester, the most distinguished economic historian in the country, not counting Nobel laureate Robert Fogel, his research partner on their landmark study of the economics of slavery before the US Civil War, Time On the Cross.
And Engerman, in turn, acquired at least one more distinguished student. Among the couple hundred undergraduates who each year took his course on economics of sports and entertainment was Jeremy Lin, the former Harvard point guard who elevated his way to stardom last winter as player for the New York Knicks, before a knee injury interrupted his career.
Last week Harvard announced that Engerman would return fulltime to Rochester. The final ripples from the affair ran their course.
In retrospect, it appears that Ms. Romer’s appointment was a casualty, not just of in-fighting in the Harvard department, as widely surmised at the time, but also of the outside opinions of leading experts in other universities, routinely solicited by the Dean of Arts as Sciences as part of the process of review – in this case, from economic historians.
Her appointment apparently was explicitly to replace economic historian Jeffrey Williamson, who was retiring. Some of those consulted held that Romer was more of a macroeconomist than an historian (her specialty is fiscal and monetary policy during the Great Depression).
That the offer presumably had been planned at a time when economist Lawrence Summers was still president of Harvard; and that economist N. Gregory Mankiw, of Harvard, and David Romer had been best man to one another at their respective weddings twenty- five years before), may have made the decision to overrule the department slightly easier.
Whatever was the case, Christy Romer’s government service during the crisis tipped the Berkeley prof into the policy/public intellectual camp once and for all. The episode presumably will come to be seen as less wounding to both Romer and Faust, now that the credibility of each, as policy adviser and university president, has been established.
That when times were flush the Harvard economists sought to hire another historian is the important thing. Labor historian Claudia Goldin has stature and plenty of research steam, though a term as president-elect of the American Economic Association will slow her down. Political scientist James Robinson, co-author with Daron Acemoglu, of the Massachusetts Institute of Technology, of Why Nations Fail, a popular trade book, teaches some economics courses, though he’s in Harvard’s Government Department. Economics just tenured Nathan Nunn, an expert on Africa and the Columbian exchange, rather than lose him to Stanford.
But Williamson retired in 2008, David Landes is emeritus, Alfred Chandler died in 2007, before he could share in the Oliver Williamson/Elinor Ostrom Nobel Prize; and Fogel, a big draw at Harvard for half a dozen years in 1970s, long ago returned to the University of Chicago, where he began a whole new line of work. The old days, when Alexander Gerschenkron sent the likes of Paul David and Deirdre MCloskey out into the world, are a dim memory. (Harvard historian Niall Ferguson offers no instruction in economics).
This was the gap that Engerman was designed, not so much to redress as to signal. For a few years he would serve as a badge on the institutional sleeve. For one thing, the message of Time on the Cross had been close to the heart of Harvard. Fogel had received the Nobel; the citation that accompanied Engerman’s election as Distinguished Fellow of the AEA in 2005 put it this way: “Their conclusion served to underscore the magnitude of the achievement of the Abolitionists, whose moral crusade triumphed over a wealthy and powerful slave economy, not a weak and failing one.” For another, as co-editor of the three-volume Cambridge Economic History of the United States, Engerman had mastered the borderlands. He had published with more than thirty co-authors over the course of his career, evenly divided between economists and historians.
By all accounts Engerman, 76, gave good value. There was the surprising success of the undergraduate course, and the famous weekly meetings of the Economic History Workshop. He edited a volume of his papers with the late Kenneth Sokoloff, Economic Development in the Americas Since 1500, and finished several short essays, including a tentative definition of slavery for the United Nations.
Harvard, having spent heavily to acquire public finance specialist Raj Chetty from Berkeley (but having failed to attract labor economist David Card), is now losing market designer Alvin Roth, on everyone’s shortlist of prospective Nobel Prize winners, to Stanford. Harvard’s department is still among the best four or five in the world, but competes for the best students in macro with MIT and Princeton, and the inability to make new senior hires is beginning to show. The university is suffering from having overspent.
Sokoloff, had he lived, might have helped solve the problem in economic history; so might have Robert Allen, another Harvard-trained specialist ensconced at Oxford University. Harvard has three good young economic historians coming up: Eric Chaney, with a background in Middle-Eastern history; Richard Hornbeck, an environmental historian; and newly-hired Melissa Dell (with a timeout for the Society of Fellows).
There are better history departments than Harvard, but historically, none better than Harvard economics at advancing the cause of history. The department needs another senior figure. It will be interesting to see what the university does.
There was never much doubt that there was something profoundly wrong with the banking industry as it emerged from the Crisis of 2007-09. The question was what to do about it. The Safe Banking Bill, introduced by Sen. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del), and designed to set formulaic limits on size, never had a chance. The Dodd-Frank Act that eventuated ducked the issue altogether.
Now the $2 billion loss suffered by JP Morgan Chase has brought the issue back to the fore.
The best approach almost certainly will involve a new system of bank charters designed to force financial institutions to decide what to pursue broad lines of business and to sell off others. The Morgan Chase fiasco will gain more attention for those thinking seriously about the issue, starting with the irrepressible Edward Kane.