Anna Schwartz and Andrew Sarris, RIP

Two people just passed away who had a big impact on my worldview.

Anna Schwartz co-authored with Milton Friedman The Monetary History of the US:  1867-1960.   I bought the book when I was a teenager, and have read it many times (although I don’t recall ever finishing it.)  It’s almost certainly the most influential book on macro history ever written, and I view it as a model of how to do research in economic history.  The footnotes alone are better than most books.  That’s not to say there aren’t any flaws—I studied the role of gold in the Great Depression partly because I felt they paid too little attention to that issue.

You’d think that younger researchers would try to emulate Friedman and Schwartz, but I don’t see many doing that.  Instead, much more technically sophisticated studies get done, but for some odd reason people don’t find them anywhere near as persuasive as the Monetary History.  I recall Robert Lucas telling our class that the Monetary History was what convinced him that monetary shocks were the primary cause of business cycles.  I’m pretty sure Bernanke feels the same way.

Co-incidently, Anna Schwartz was the referee when I sent my Depression manuscript to Cambridge University Press many years ago.

When I was at the University of Chicago I saw a lot of films—particularly in my second and third years, when my studying slacked off.  I recall that a film pass for 80 films cost $8 from Doc films—Law school films were more expensive, maybe a dollar a film.  I had almost no money and no social life (and no TV) back then, so it was cheap entertainment.  The 80 would be shown in a single quarter–three months.  Sometimes I saw a film almost every night of the week, mostly old American films, but some foreign films as well.

I recall once when they showed “Strangers on a Train” they had Andrew Sarris speak to the audience after the film was over.  He asked what happened right after the shoes of the two characters touched while sitting on the train.  I looked around the big auditorium, wondering why no one was raising their hand.  Normally I don’t speak out in those situations, but I finally raised my hand and pointed out that the next scene was the train switching onto a sidetrack, viewed from the front of the train.  Then there was a bit of discussion of the symbolism.

At some point I realized that I watch films and other people listen to them, or more accurately listen to the dialogue and watch the acting.  For me, film is a series of visual images.  As I got older I began to enjoy those “boring” European and Asian art films, the ones with almost no dialogue or plot.

Sarris popularized the “auteur” theory in America.  I suppose that appeals more to people like me, who see the art of film in terms of a series of visual images.  Those who like good acting and dialogue would naturally see film as more of a collaborative venture, not something produced by a single author.  And even I sometimes wonder whether the auteur approach overlooks great cinematographers like Christopher Doyle.

Of course there’s no right or wrong answer here, it all depends on how your brain is wired.

Update:  Lars Christensen has a nice obituary for Anna Schwartz.



36 Responses to “Anna Schwartz and Andrew Sarris, RIP”

  1. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 19:30

    “When I was at the University of Chicago I saw a lot of films””particularly in my second and third years, when my studying slacked off. I recall that a film pass for 80 films cost $8 from Doc films””Law school films were more expensive, maybe a dollar a film. I had almost no money and no social life (and no TV) back then, so it was cheap entertainment. The 80 would be shown in a single quarter-three months. Sometimes I saw a film almost every night of the week, mostly old American films, but some foreign films as well.”

    Wow, it sounds a little like my time at Chicago, except that I bought passes for Law School films and saw Doc films only as they appealed to me. I don’t recall how much a Law School pass cost when I was there (the 1980s) but it wasn’t much. Law School showed classic American films exclusively. Doc was much more eclectic. I attended a film almost every evening.

    I also used to attend films at the Foreign Student Association (FSA). That’s were I first saw Aparajitu and Smultronstället.

  2. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 19:34

    Excuse me, Aparajita.

  3. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 19:38

    The third times the charm: Aparajito. (I’m running out of vowels.) I could try and say I’m Bengali spelling impaired but that would be technically incorrect.

  4. Gravatar of Bill Ellis Bill Ellis
    22. June 2012 at 19:48

    Nice post.

  5. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 20:04

    From Lars’ post:
    “Somewhat unfairly Anna Schwartz never got the full recognition for her work that she deserved. How the Nobel Prize committee never awarded her the Nobel Prize in economics will forever be a puzzle.

    It is a testimony to her hard work and intellect that she continued to work with Michael Bordo and Owen Humpage on a project on the history of government intervention in currency markets after breaking a hip in 2009 and having a stroke (See here and here).

    While I did not agree with her analysis of the Great Recession – exactly because I agree with her analysis of the Great Depression – I will forever think of Anna Schwartz as one of the greatest monetary historians with an amazing intellect.”

    I have to bring this up for two reasons.

    First, late in life she became a Neo-Austrian, and presented her newfound views as being representative of the sort of analysis that she did with Friedman in the Monetary History, which of course is false, as you noted here:


  6. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 20:13


    Second, the fact she did work with Bordo is interesting because I recently read and critiqued one of his papers:

    Does Inequality Lead to a Financial Crisis?
    – Michael Bordo and Christopher Meissner

    “The recent global crisis has sparked interest in the relationship between income inequality, credit booms, and financial crises. Rajan (2010) and Kumhof and Rancière (2011) propose that rising inequality led to a credit boom and eventually to a financial crisis in the US in the first decade of the 21st century as it did in the 1920s. Data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships. Credit booms heighten the probability of a banking crisis, but we find no evidence that a rise in top income shares leads to credit booms. Instead, low interest rates and economic expansions are the only two robust determinants of credit booms in our data set. Anecdotal evidence from US experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality, credit, crisis nexus. Rather, it points back to a familiar boom-bust pattern of declines in interest rates, strong growth, rising credit, asset price booms and crises.”

    The biggest problem I have is with the authors’ claim that nominal interest rates tell us anything about the stance of monetary policy. Money supply has a far better correlation with nominal GDP and that’s the variable (M2) they find has no correlation with credit.

    The period in question (1920-2008) experienced a significant period of inflation across the developed world peaking in the 1970s and early 1980s. Many countries experienced accelerating rates of growth in nominal GDP despite very high (double digit) short term interest rates.

    A better measure would be real interest rates. This is why it is so provocative that the authors state that regressions using real rates instead of nominal rates were estimated and found to be robust. If so why not show these results? They would be much more convincing. (I suspect that they may have interfered with the author’s larger message that there is no relationship between inequality and credit.)

    But more important still, real rates themselves are not an especially good measure of monetary policy stance. Real rates have to be compared to the Wicksellian rate. One way of addressing this would be to compute Taylor Rule residuals. But for this we would need estimates of potential GDP for these countries over this period.

    A far simpler approach would be to simply use nominal GDP as a proxy for monetary policy stance, since it is the one important nominal variable that the monetary authorities have the most control over. Nominal GDP is far easier to estimate than real GDP because the latter requires some estimate of the price level.


  7. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 20:22


    In the final analysis, the chief reason to doubt the authors’ conclusions concerning debt and monetary policy stance is that it totally contradicts prior research in which more sophisticated measures of that stance and of leverage were used for the US over a similar period, namely:

    Fisher Dynamics in Household Debt: The Case of the United States, 1929-2011
    By J. W. Mason and Arjun Jayadev

    “We examine the importance of what we term `Fisher dynamics’- the mechanical effects of changes in interest rates, growth rates and inflation rates on debt levels independent of borrowing -for the evolution of household debt in the U.S. over a long time horizon (1929- 2011). Adapting a standard decomposition of public debt to household sector debt, we show that these factors have been important in explaining rising debt levels, especially between 1980 and 2000. We identify and describe three broad regimes in the growth of household debt and several shorter episodes, distinguished by the distinct roles played Fisher dynamics and borrowing behavior in the evolution of household debt. We then provide some counterfactual trajectories of debt burdens that suggest how important financial changes beginning around 1980 have been in contributing to household debt, independent of any changes in household behavior. Specifically, if average rates of growth, inflation and interest remained the same after 1980 as before 1980, household debt burdens in 2011 would have been roughly the same as they were in the early 1950s,despite the sharp increase in borrowing in the early 2000s. We then discuss the difficulties involved in deleveraging. Under scenarios involving even substantial reductions in household expenditure, returning to debt levels of the 1980s could take decades. If lower private leverage is a condition of acceptable growth, then in the absence of a substantial fall in interest rates relative to growth rates, large-scale debt forgiveness of some form may be unavoidable.”

    The authors’ chief finding is that tight monetary policy is important in explaining the growth in US household sector debt levels over 1980-2000.

    So, unfortunately, the fact that she worked with Bordo towards the end, even further discredits her in my eyes.

  8. Gravatar of Lars Christensen Lars Christensen
    22. June 2012 at 20:31

    Mark, I my obituary I on purpose did not write too much about her views of the Great Recession – I don’t think this is the time to look for conflicts. I believe she was (mostly) wrong on the analysis of the Great Recession. However, I do not believe she fundamentally changed her views. She remained a monetarist to her death. Furthermore, I would say that I certainly was of the view that monetary policy had become too easy in certain countries PRIOR to the Great Recession. That view might have coloured her view of the causes of the Great Recession.

    In terms of Michael Bordo – I think he is an excellent monetary historian and have the greatest respect for his work even though I am not always in agreement with him either.

    It goes without saying that I fully agree with your view that nominal interest rates is telling basically nothing about the stance of monetary policy.

  9. Gravatar of Philip George Philip George
    22. June 2012 at 21:07

    Wonder what Friedman and Schwartz would have made of this graph.

    It’s constructed by taking M1, adding sweeps and subtracting total commercial and industrial loans at all commercial banks, January 1959 to May 2012.

  10. Gravatar of Saturos Saturos
    22. June 2012 at 21:33

    At some point I realized that I watch films and other people listen to them, or more accurately listen to the dialogue and watch the acting. For me, film is a series of visual images.

    Well, we can’t all be aesthetes with respect to everything – though I do think most everyone is an aesthete with respect to something. (Now I’m remembering my gym teacher, who insisted that everyone had to be good at some sport…)

    Mark, it would be Aparajita in the standard romanization of Sanskrit, and often how Bengali words are also transliterated. The title “Aparajito” is an attempt (often essayed) to convey a more Bengali pronunciation, though it falls short (it’s more like, Aw-paw-RA-jee-to (dental “t”) ). I’m afraid I’m one of those who found the Apu Trilogy not moving so much as dreadfully boring. This despite being a Bengali myself, who is well familiar (relatively speaking) with Bengali village life. I’m going against decades of cultural tradition by not worshipping Satyajit Ray’s films – essentially an apostate. (I also don’t think that much of Satyajit Ray’s work, even his better untranslated stuff. Don’t let the other Bengalis find out. Or any Indians, for that matter.)

  11. Gravatar of Mark A. Sadowski Mark A. Sadowski
    22. June 2012 at 21:34

    I knew beforehand that some might feel uncomfortable bringing this up. But frankly I felt uncomfortable not doing so. I do believe a careful reading of the “Monetary History,” and her more recent writings, reveals she fundamentally changed her views, and I’ll leave it at that.

  12. Gravatar of Saturos Saturos
    22. June 2012 at 21:40

    Sorry, I meant “Rabindranath Tagore‘s work, even his better untranslated stuff”.

    Scott has already said the unpleasant but necessary things about Schwartz, he didn’t repeat himself:

  13. Gravatar of Larry Larry
    22. June 2012 at 23:37

    I regard Scott’s appreciation of “visual” films, and films from SK and JP as being a symptom of his larger perspective. Still struggling to interpret that.

    I think most people struggle to impose “story lines” on everything from movies to political campaigns. Without a storyline, we (but probably not Scott) get lost. Thus, a compelling story line for NGDPLT will accelerate its acceptance.

  14. Gravatar of Saturos Saturos
    23. June 2012 at 02:28

    Glasner puts it pointedly:

    If Scott is right, then Bernanke has only one honorable course of action: to resign and to explain that he cannot continue to serve as Fed Chairman, presiding over, and complicit in, a policy that he knows is mistaken and leading us to disaster.

  15. Gravatar of Jim Jim
    23. June 2012 at 04:18

    What happened to your Depression manuscript?

  16. Gravatar of ssumner ssumner
    23. June 2012 at 05:49

    Mark, Seems like we had similar experiences at the UC.

    I’m surprised that they cite the 1920s, because interest rates weren’t low during that decade, at least in real terms. And I agree that NGDP is better than interest rates–at least if they were claiming interest rates were an indicator of the stance of monetary policy.

    I’m also puzzled by the comment that lower leverage might be a pre-condition for growth. Why would those variables be related?

    But I wouldn’t be too hard on what someone did in their 90s.

    Lars, I agree with your comments on both Schwartz and Bordo.

    Saturos, You said;

    “Well, we can’t all be aesthetes with respect to everything”

    That’s right, which explains my poor taste in music.

    I have seen 4 or 5 Ray films and regard him as an excellent director, although he’s not one of my favs. The third film in the Apu trilogy (forget the name) seemed like a masterpiece to me.

    Mark, There’s no doubt in my mind that she became somewhat more Austrian in recent years—but then so did about 90% of conservatives.

    Larry, Good point. The Great Recession is sort of imposing a story line on NGDPLT. It makes the advantages seem obvious, much is the way that the collapse of the money supply in the early 1930s made Friedman’s preferred policy seem attractive.

    Saturos, I find it hard to believe inflation expectations are negative. I’ll take a look.

    Jim, Still being revised, hope to have the revisions done in a week or so.

  17. Gravatar of Arthur Arthur
    23. June 2012 at 06:23

    Great post.

    It’s kind of a metaphor of itself.

  18. Gravatar of Steve Steve
    23. June 2012 at 06:26

    “I bought the book when I was a teenager”

    So there’s a little bit of Evan Soltas in you?

  19. Gravatar of RobertD RobertD
    23. June 2012 at 06:36

    Scott, would you say that Reinhart and Rogoff’s “This Time is Different” has successfully emulated “The Monetary History of the US”?

    Also, I don’t think there is anything wrong with you and Lars highlighting where you all think her ideas veered off course at this time. If I remember correctly, she was one of the bigger names calling for Bernanke to step down after QE. But the basis for her arguments were not very convincing and seemed display a rather outdated view what monetary policy should look like.

  20. Gravatar of Steve Steve
    23. June 2012 at 07:11

    Good journalism from Bloomberg:

    “Federal Reserve Chairman Ben S. Bernanke has repeatedly warned lawmakers that a fiscal cliff threatens the economy. Now he’s created a precipice of his own.”

    Vincent Reinhart: “”They create their own monetary cliff to match the fiscal cliff,” said Reinhart, former head of the Fed board’s Division of Monetary Affairs. ”

    Ethan Harris: “”The Fed has repeatedly underestimated how fragile the economy is,” said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. Policy makers are “being a little too optimistic that all they need to do is nudge the economy back on course and then they can stop.””

    “”Right now, there’s a guessing game about when the Fed intervenes,” he said. Announcing an open-ended program conditional on the economy’s health “would reduce the uncertainty around what the Fed’s objectives are.””

  21. Gravatar of Mike Sax Mike Sax
    23. June 2012 at 07:19

    Yes, I thought of you when I heard about it. The one thing that Anna Schwartz and Friedman had was the good forutne of a long life.

    Keynes alas died so young. Freidman was able to spend many years developing his ideas after his magnum opus as it were-Monetary History.

    Keynes didn’t have many years and even fewer healthy ones after he completed General Theory. And what he did have left was devoted to the pratical concerns of creating the Brettwon Woods system.

    Who knows where he might have gone had he lived-Friedman once claimed Keynes would have become a Monetarist. I don’t know about that but it’s interesting.

    But certainly I wish Ms. Schwartz peace and appreciate all her contributions.

  22. Gravatar of Mike Sax Mike Sax
    23. June 2012 at 11:13

    Anyone want to make a couple of bucks? Then go to this chick’s wevbsite and click “like” next to my comments

    you’d be doing me a real solid!

  23. Gravatar of W. Peden W. Peden
    23. June 2012 at 11:32

    Mike Sax,

    I would hypothesise that all great macroeconomists tend towards the same general position as they get older: some unsettled ground near the well-ploughed fields of monetarism and Keynesianism. That happened to Irving Fisher, Milton Friedman, Mogdilani, Hayek and (it seems) today’s Robert Lucas. You can pick moments where those economists say very, very different things, but it’s much harder to find disagreements in their later work.

    I suspect that Keynes would have gone in the same direction: closer to monetarism, but not a full-on k-percenter, just like Friedman moved away from k-percenter monetarism in his later years and Mogdilani accepted the monetarist version of the Phillips curve in his later years.

  24. Gravatar of Justin Justin
    23. June 2012 at 14:28

    Are you a fan of silent films? Any favorites? I’m looking for some good ones on Netflix.

  25. Gravatar of Major_Freedom Major_Freedom
    23. June 2012 at 15:59

    Mike Sax:

    Keynes may have died early, but in his later life, he converted to laissez-faire:

    “I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.” – J.M. Keynes, 10 days before he died.

    Unfortunately, it was too late. Keynes not only removed the concept of markets (the invisible hand) from economic thinking, he also set economic thinking back centuries, to ancient mercantilist fallacies, a notable one being the fallacy that economies can only prosper by the King retaining gold within the country borders.

    This fallacy was refuted by Adam Smith hundreds of years prior, but Keynes re-introduced it with a new dress with enough muddleheadedness that he convinced the majority of economists during his time, who themselves were rather empty on knowledge because of their rejection of the entire classical economics, due to the labor theory of value being refuted. Most economists unfortunately dropped all of classical economics, and threw the baby out with the bath water, so to speak, even though much of classical economics was still right. So they could not conclusively refute Keynes, and the rest is history.

    If Keynes lived to an old age, then his conversion to capitalism might have led to him writing a new treatise (much like he drastically changed his view between his “Treatise on Money” and “The General Theory”.

    Thus, it can be reasonably argued that had Keynes lived longer, there would have been no Keynesianism, and we’d all be far wealthier than we are now.

  26. Gravatar of Jon Moen Jon Moen
    23. June 2012 at 17:30

    I noticed on the Columbia Univ. Econ department’s website that Philip Cagan died last week.

  27. Gravatar of Mark A. Sadowski Mark A. Sadowski
    23. June 2012 at 20:59

    Phillip David Cagan, author and scholar in the field of macroeconomics, Professor Emeritus at Columbia University, and beloved father, passed away peacefully on June 15th, aged 85, in Palo Alto, California. He made significant contributions to the field of economic science, most notably to monetary economics and the study of inflation.

    Prof. Cagan published over 100 books, journals, reviews, reports and pamphlets. His Ph.D. dissertation, “The Monetary Dynamics of Hyperinflation,” published as the leading chapter in the volume “Studies in the Quantity Theory of Money” (University of Chicago Press, 1956), was immediately acclaimed as a classic, and has continued to be a staple of reading lists of courses in monetary economics for more than 50 years. It remains the definitive study of the problem of hyperinflation, the definitions and concepts of which provide the starting point for all subsequent work on this problem.

    There’s been absolutely no mention of this in the news which is sad since he was considered a possible Nobel Prize candidate.

  28. Gravatar of Major_Freedom Major_Freedom
    23. June 2012 at 21:59

    I recall Robert Lucas telling our class that the Monetary History was what convinced him that monetary shocks were the primary cause of business cycles. I’m pretty sure Bernanke feels the same way.

    It’s a shame that a book so rich in data and information, contained so little in the way of the politics and who’s who behind the formation of the Fed, and it’s even more unfortunate that the book’s main lasting legacy has been to convince the majority of economists to believe in a false history of the causes of the Great Depression.

    Cole and O’Hanian for example have shown it was FDR’S New Deal that turned what would have been a recession, into a prolonged depression.

    The numerous bank failures and monetary deflation were definitely a part of the correction, but if wage rates could have fallen to the new lower demand for labor, then unemployment would have been a short term problem.

    The Fed did try very hard to re-inflate, but the banks and the people hoarded a substantial quantity of the new money, which at least contributed to the correction process in some respects.

  29. Gravatar of Major_Freedom Major_Freedom
    23. June 2012 at 22:52

    Other than that HUGE problem, Schwartz (and Friedman) on non-monetary matters have made incredible contributions to free market ideas.

    I wish Schwartz would have went on Phil Donahue along with Friedman. It would have been awesome to see Schwartz armed with data, and Friedman armed with theory, make the commie apologist Donahue squirm even more.

  30. Gravatar of ssumner ssumner
    24. June 2012 at 05:20

    Thanks Arthur.

    Steve, He’s so far ahead of where I was it’s ridiculous.

    Robert D. I haven’t read it.

    Steve, Those are good quotes.

    Mike Sax, He would have become a conservative Keynesian, not a monetarist.

    Justin, I like the silent comedies best, especially Buster Keaton. Chaplin is also great. There are lots of other great silent films, but I have a bad memory. Check out those by great sound directors like Lang and Hitchcock.

    Mark, That’s too bad, Thanks for letting me know.

    MF, Even a post like this has to be desecrated with your idiotic nonsense.

  31. Gravatar of Saturos Saturos
    24. June 2012 at 06:51

    Well, we can’t all be aesthetes with respect to everything

    I should amend that – you can’t be an aesthete with respect to everything. Unless you’re Tyler Cowen. Or this guy:

  32. Gravatar of Declan Declan
    24. June 2012 at 19:49

    “You’d think that younger researchers would try to emulate Friedman and Schwartz, but I don’t see many doing that. Instead, much more technically sophisticated studies get done, . . .”

    I assume the implied question is purely rhetorical.

    “Still being revised, hope to have the revisions done in a week or so.”

    Brilliant, make sure you announce when it is coming out!

  33. Gravatar of J Mann J Mann
    25. June 2012 at 05:05

    Over at EconTalk, Russ Roberts regularly says that Monetary History is the only time in his life he has ever seen anyone convince anyone of anything using data. It’s part of a larger skepticism he regularly expresses about using complex data analysis, but he always carves out an exception for Friedman and Schwartz.

  34. Gravatar of Major_Freedom Major_Freedom
    25. June 2012 at 12:14

    MF, Even a post like this has to be desecrated with your idiotic nonsense.


    What “desecration”? What “idiotic nonsense”?

    I was respectful, informative, and fair.

    You can disagree with it, but it doesn’t make it a desecration or idiotic.

  35. Gravatar of ssumner ssumner
    25. June 2012 at 18:17

    Saturos, Is that guy independently wealthy?

    Declan, I’m not sure, i guess on one level I know why and on another I don’t. Obviously I’m not like most economists.

    J Mann, That’s a good point.

  36. Gravatar of RIP Anna Schwartz | Last Men and OverMen RIP Anna Schwartz | Last Men and OverMen
    23. April 2017 at 12:36

    […] […]

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