Memories of Armen Alchian
Arman Alchien is one of those economists–like Wicksteed–that I would read a lot more of, if I were on a deserted island. (That’s a compliment to them, and a criticism of myself.) He recently died, as most of you know, and so a lot of people who knew him were giving their appreciations. One of the more interesting ones for Austrians was from David R. Henderson, because he gave a Hayek anecdote as a bonus.
The mourning von Pepe reminded me that I reviewed a fantastic paper by Alchian and Benjamin Klein, arguing that asset prices should be included in the measure of price inflation. (I’d like to say that von Pepe only brought that paper to my attention after my ill-fated wager, but no, he had been telling me to read it for a while.)
On the other hand, I thought Alchian missed the boat entirely in an argument he gave about bank reserves. (Again, von Pepe reminded me of that post, which I had completely forgotten involved Alchian.)
On asset prices, came across a very interesting Bloomberg piece today on Bernanke, asset bubbles, and rumblings of worry among Fed members.
http://www.bloomberg.com/news/2013-02-22/bernanke-said-to-minimize-asset-bubble-concern-at-meeting.html
Nice catch on that article Jordan. We will likely need this for the historical record and liquidity is sloshing around all kinds of assets.
Thanks Bob for the nice note on Armen Alchian. I really liked his inflation in assets article. I wonder if Prof. Henderson will stop by and comment. I think that paper was published while he was in grad school at UCLA and it would be interesting to hear any memories of seminar presentations or if it caused a buzz in the Department.
@von Pepe,
I do recall that it caused a buzz. Alchian talked about it one day in class. I still remember his succinct characterization of the idea of bringing in asset prices: “We’re measuring cost of living and maybe we should measure the cost of life.”
Wow, I love that line! Thank you Professor.
Bob “We also should include today’s prices for buying claims to future flows of consumption.”
I don’t think anything could be clearer to me.