A Nobel for New York

[10 October 2006 - New York Sun Editorial] It's hard to think of a more delightful and satisfying piece of news than word that the Nobel prize in economics has gone to Columbia University's Edmund "Ned" Phelps. He and his wife Viviana are not only wonderful individuals, as we learned on several occasions in the past few years, but in a career spanning more than four decades, there are few economic puzzles to which Mr. Phelps has not turned his intellect. He earned the prize for his work on the particular problems lying at the intersection of monetary policy, inflation control, and employment, but for the past few years he has been speaking regularly about the importance of that quality, which almost defines the city where he and Viviana have made their home — "dynamism." ... So he began dusting off von Mises, Hayek, and Schumpeter and presenting them to modern economists. We have the sense that Hayek would have been thrilled; twice, in the years before his death, he told us, between his pinches of snuff, of the importance of understanding precisely the nature of the choice between socialism and capitalism. This is no doubt how Mr. Phelps latched onto the importance of "dynamism," which can be defined loosely as the qualities in a country's economic system that create work, allow talent to shine, and encourage creative problem solving. Mr. Phelps has recognized that America's dynamism has been the key to its economic success, while many European countries have stalled for lack of it. More