Allan H. Meltzer (; February 6, 1928 – May 8, 2017) was an American
economist
An economist is a professional and practitioner in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...
and Allan H. Meltzer Professor of Political Economy at
Carnegie Mellon University's
Tepper School of Business
The Tepper School of Business is the business school of Carnegie Mellon University. It is located in the university's campus in Pittsburgh, Pennsylvania, US.
The school offers degrees from the undergraduate through doctoral levels, in addition ...
and Institute for Politics and Strategy in
Pittsburgh
Pittsburgh ( ) is a city in the Commonwealth of Pennsylvania, United States, and the county seat of Allegheny County. It is the most populous city in both Allegheny County and Western Pennsylvania, the second-most populous city in Pennsylva ...
,
Pennsylvania
Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
. Meltzer specialized on studying
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
and the US
Federal Reserve System
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, and authored several academic papers and books on the development and applications of monetary policy, and about the history of
central bank
A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union,
and oversees their commercial banking system. In contrast to a commercial bank, a central b ...
ing in the US. Together with
Karl Brunner, he created the
Shadow Open Market Committee
The Shadow Open Market Committee (SOMC) is an independent group of economists, first organized in 1973 by Professors Karl Brunner, from the University of Rochester, and Allan Meltzer, from Carnegie Mellon University, to provide a monetarist alter ...
: a
monetarist council that deeply criticized the
Federal Open Market Committee
The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System (the Fed), is charged under United States law with overseeing the nation's open market operations (e.g., the Fed's buying and selling of United States Treas ...
.
Meltzer originated the aphorism "Capitalism without failure is like religion without sin. It doesn't work." That is, guarding companies from failure "removes the dynamic process that makes stockholders responsible for losses and disciplines managers who make mistakes."
Career
He was born in 1928
Boston, Massachusetts. Meltzer received his
A.B.
Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four yea ...
and
M.A.
A Master of Arts ( la, Magister Artium or ''Artium Magister''; abbreviated MA, M.A., AM, or A.M.) is the holder of a master's degree awarded by universities in many countries. The degree is usually contrasted with that of Master of Science. Tho ...
degrees from
Duke University in 1948 and 1955, respectively. He earned his
Ph.D.
A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is ...
degree from
UCLA
The University of California, Los Angeles (UCLA) is a public land-grant research university in Los Angeles, California. UCLA's academic roots were established in 1881 as a teachers college then known as the southern branch of the California ...
in 1958 under supervision of
Karl Brunner. He became an associate professor at Carnegie Mellon the following year.
Meltzer served, from 1973 to 1999, as the Chair of the
Shadow Open Market Committee
The Shadow Open Market Committee (SOMC) is an independent group of economists, first organized in 1973 by Professors Karl Brunner, from the University of Rochester, and Allan Meltzer, from Carnegie Mellon University, to provide a monetarist alter ...
, a group of economists, academics, and bankers that met to critique the actions of the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
's
Federal Open Market Committee
The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System (the Fed), is charged under United States law with overseeing the nation's open market operations (e.g., the Fed's buying and selling of United States Treas ...
. He served as an Acting Member of the
Council of Economic Advisors
The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. The CEA provides much of the empirical resea ...
in 1988–89 at the end of the
Ronald Reagan administration. He was a visiting scholar at the
American Enterprise Institute
The American Enterprise Institute for Public Policy Research, known simply as the American Enterprise Institute (AEI), is a center-right Washington, D.C.–based think tank that researches government, politics, economics, and social welfare. A ...
.
Meltzer was the first ever recipient of the AEI's
Irving Kristol
Irving Kristol (; January 22, 1920 – September 18, 2009) was an American journalist who was dubbed the "godfather of neoconservatism". As a founder, editor, and contributor to various magazines, he played an influential role in the intellectual ...
award in 2003. He was honored at the award dinner by
President George W. Bush
George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
, who remarked "I know I'm not the featured speaker; I'm just a warm-up act for Allan Meltzer."
Meltzer was the Chairman of the Congressionally-mandated
International Financial Institution Advisory Commission The International Financial Institution Advisory Commission, also known as the Meltzer Commission — named for its chair, Professor Allan Meltzer — was established by the United States Congress in November 1998 "to recommend future US policy tow ...
, known as the
Meltzer Commission. The Commission's majority report (2000) proposed changes to the operations of the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
and especially to those of the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, which the majority recommended should withdraw from lending to "middle income countries". Four (out of 5) Commission members nominated by the then-minority Congressional Democrats filed a dissent from the majority's recommendations (Bergsten, Huber, Levinson and Torres), though one of the four (Huber) both voted for the majority report and joined the dissent. The official vote tally in favor was thus recorded as 8 to 3. Controversy over the majority's arguments and recommendations continued after the report's publication: critics, including
David de Ferranti
Results for Development (R4D) is a global nonprofit strategy consulting organization."
Regions and countries
Results for Development is active in more than 55 countries.
History
Founded in 2008 by David de Ferranti, who served with the World Ba ...
, a former Vice President at the World Bank, argued inter alia that the majority's report reflected ideological preconceptions rather than any demonstrated understanding of how the World Bank actually works, including the extensive complementarities between World Bank programs and private sector investment in developing countries. The Commission's report is defended by Meltzer's chief advisor
Adam Lerrick and critiqued by de Ferranti in their respective chapters in an edited volume published by the Center for Global Development and fully accessible on the web
The report's recommendations were not adopted by subsequent U.S. administrations of either party.
Meltzer was critical of the Federal Reserve's decision to rescue the leading bond-insurer AIG when it did so in 2008: "these disasters should be headed off early, or should be left to the marketplace to settle."
[ ] In turn, the Fed's decision ''not'' to rescue Lehman Brothers was one which, at the time, Meltzer appeared to applaud. Contrasting it with the AIG rescue, he commented: "I would say we ought to look at Lehman Brothers. They let Lehman Brothers fail. Within a few days, just a few days, Barclays was there buying up some of Lehman's assets..."
A year later, however, Meltzer expressed a more critical view of the Fed's handling of the Lehman case: "After 30 years of bailing out almost all large financial firms, the Fed made the horrendous mistake of changing its policy in the midst of a recession... Allowing Lehman to fail without warning is one of the worst blunders in Federal Reserve history..."
["What Happened to the 'Depression'?" Allan H. Meltzer, ''Wall Street Journal'', September 1, 2009]
/ref>
In May 2009, Meltzer warned that "the enormous increase in bank reserves—caused by the Fed’s purchases of bonds and mortgages—will surely bring on severe inflation if allowed to remain." Four years after Meltzer's comment, with the Fed's quantitative easing
Quantitative easing (QE) is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary pol ...
program still continuing, US inflation as measured by the consumer price index (CPI-U) was running at a year-on-year rate of 1.4%, while expected inflation over a 10-year period, as estimated by the Cleveland Federal Reserve, was running at around 1.6%. Meltzer's argument that nobody had expected the lack of inflation has been challenged by Paul Krugman
Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was ...
.
Meltzer's study '' A History of the Federal Reserve'' is considered the most comprehensive history of the central bank. Volume I covers the years from the creation of the Fed in 1913 until the accord with the Treasury in 1951. Volume II Book 1 covers the years from the accord in 1951 until 1969, and Volume II Book 2 discusses the period from 1970 until the end of the Great Inflation in the mid-1980s.
Meltzer served as president of the Mont Pelerin Society
The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
for the 2012–2014 term. Meltzer has opposed US adoption of a "cap and trade
Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants. The concept is also known as cap and trade (CAT) or emissions trading scheme (ETS). Carbon emission t ...
" scheme for carbon emissions, designed to help combat global climate change
In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
.
Publications
* , including his work with Swiss economist Karl Brunner.
* Karl Brunner and Allan H. Meltzer (1993). ''Money and the Economy: Issues in Monetary Analysis'', Cambridge.
Description
and chapter previews,
pp. ix
x.
* Allan H. Meltzer (2001). ''A History of the Federal Reserve, Volume 1: 1913–1951'',
Description.
* _____ (2003). "What Future for the IMF and the World Bank?," Quarterly International Economics Report'', July .
* _____ (2006
"An Appreciation: Milton Friedman, 1912–2006,"
''On the Issues'', AEI Online.
* _____ (2009) ''A History of the Federal Reserve, Volume 2, Book 1, 1951–1969'',
* _____ (2009) ''A History of the Federal Reserve, Volume 2, Book 2, 1970–1985'',
* _____ (2012)
Why Capitalism?
', Oxford. Author's writeup of the book in http://themontrealreview.com/2009/Why-Capitalism.php
Allan H. Meltzer and Scott F. Richard (1981)
"A Rational Theory of the Size of Government,"
''Journal of Political Economy'', 89(5), pp. 914–927
Abstract.
References
External links
Interview
with Meltzer from the Minnesota Fed's webpage
on PBS's Think Tank program
Source documents
for Meltzer's A History of the Federal Reserve, Volumes I and II, at the FRASER Fraser may refer to:
Places Antarctica
* Fraser Point, South Orkney Islands
Australia
* Fraser, Australian Capital Territory, a suburb in the Canberra district of Belconnen
* Division of Fraser (Australian Capital Territory), a former federal e ...
historical documents site of the Federal Reserve Bank of St. Louis
interview on National Public Radio's broadcast of September 26. 2008
*
{{DEFAULTSORT:Meltzer, Allan
1928 births
2017 deaths
Monetary economists
Macroeconomists
Monetarists
History of the Federal Reserve System
Carnegie Mellon University faculty
Writers from Boston
20th-century American Jews
Distinguished Fellows of the American Economic Association
Historians from Massachusetts
Economists from Massachusetts
21st-century American Jews
Member of the Mont Pelerin Society