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Columbia professor Edmund Phelps, 2006 Nobel laureate in economics, died last week. Ned Phelps won the Nobel in part for disabusing the supposed permanent tradeoff between inflation and the rate of unemployment. Real people would catch on, Phelps explained, and adjust expectations accordingly. Formulas did not account for the short and long-term reactions by real people. Over time, unemployment graduates to its “natural rate”—a concept Phelps first described and a term coined by Milton Friedman a year later.
For the past several decades, Phelps developed a theory of how workers as well as entrepreneurs flourish within an open framework of dynamic capitalism that gives people ample room to overcome authentic challenges in their own ways. This individual resourcefulness can’t thrive under stifling bureaucratic and corporatist structures.
In this podcast discussion with the Niskanen Center’s Geoff Kabaservice, Philip Howard offers qualified approval of the Abundance movement that he in some ways anticipated by decades. But he insists that the pruning of excessive rules and procedures must also be accompanied by restoring a role for human judgement: “It’s not simply having less to comply with. It’s actually re-empowering everybody — the teacher in the classroom, the principal, the head of the school, whoever it happens to be — empowering them to do what’s right.”
By the same token, he criticizes Elon Musk’s DOGE initiative for focusing on cutting the things government does but squandering the opportunity to change how the government does things: “There was not even a pretense that they had an idea about how things would work better the day after DOGE.”
Common Good Chair Philip K. Howard’s new book, Not Accountable: Rethinking the Constitutionality of Public Employee Unions, will be published by Rodin Books on January 24. In the book, he argues that public employee unions have undermined democratic governance and should be unconstitutional. Constitutional government can’t work when elected leaders lose control over public operating machinery.