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Sharyl Attkisson — Stonewalled — Videos

Posted on March 18, 2017. Filed under: American History, Blogroll, Books, Central Intelligence Agency (CIA), College, Computers, Computers, Documentary, Education, External Hard Drives, Faith, Family, Federal Bureau of Investigation (FBI), Federal Bureau of Investigation (FBI), Federal Government, government, government spending, history, Law, liberty, Links, Literacy, Mobile Phones, National Security Agency (NSA), National Security Agency (NSA_, Non-Fiction, Philosophy, Political Correctness, Politics, Presidential Candidates, Psychology, Rants, Raves, Raymond Thomas Pronk, Regulations, Security, Spying, Strategy, Success, Talk Radio, Technology, Terrorism, Video, War, Wealth, Weapons, Wisdom, Work, Writing | Tags: , , , , , , , , , , |

Image result for Sharyl Attkisson -- Stonewalled

Sharyl Attkisson: Presidents CAN authorize ILLEGAL surveillance and nobody would ever know!

Sharyl Attkisson Talks “Stonewalled”

Sharyl Attkisson: CBS Had Hidden Clip of Obama Contradicitng Himself on the 2012 Benghazi Attack

Malzberg | Sharyl Attkisson to discuss her new book “Stonewalled” | Part 1

[youtube-https://www.youtube.com/watch?v=OjAoVEhlrPc]

Malzberg | Sharyl Attkisson to discuss her new book “Stonewalled” | Part 2

Sharyl Attkisson: why she left CBS

 

Sharyl Attkisson

From Wikipedia, the free encyclopedia
Sharyl Attkisson
AttkissonB52.jpg

Attkisson on USAF B-52 in 1999, one of the first journalists to fly on a combat mission over Kosovo
Born January 26, 1961 (age 56)
Sarasota, Florida, United States
Education University of Florida
Occupation Writer, journalist, television correspondent
Website sharylattkisson.com

Sharyl Attkisson (born January 26, 1961)[1] is an American author and host of the weekly Sunday public affairs program Full Measure with Sharyl Attkisson, which airs on television stations operated by the Sinclair Broadcast Group.[2] She was formerly an investigative correspondent in the Washington bureau for CBS News. She had also substituted as anchor for the CBS Evening News. She resigned from CBS News on March 10, 2014 after 21 years with the network. Her book Stonewalled reached number 3 on New York Times e-book non-fiction best seller list in November 2014[3] and number 5 on The New York Times combined print and e-book non-fiction best-seller list the same week.[4]

Contents

 [show] 

Early life

Attkisson was born in 1961 in Sarasota, Florida.[5] Her step-father is an orthopedic surgeon, and her brother is an emergency room physician. Attkisson graduated from the University of Florida with a degree in broadcast journalism in 1982.[6]

Career

Attkisson began her broadcast journalism career in 1982, aged 22, as a reporter at WUFT-TV, the PBS station in Gainesville, Florida. She later worked as an anchor and reporter at WTVX-TV Fort Pierce/West Palm Beach, Florida from 1982–1985, WBNS-TV, the CBS affiliate in Columbus, Ohio from 1985–86, and WTVT Tampa, Florida (1986–1990).[7]

1990s

From 1990–1993, Attkisson was an anchor for CNN, and also served as a key anchor for CBS space exploration coverage in 1993.[8] Attkisson left CNN in 1993,[9] moving to CBS, where she anchored the television news broadcast CBS News Up to the Minute and became an investigative correspondent based in Washington, D.C.[7]

She served on the University of Florida‘s Journalism College Advisory Board (1993–1997) and was its chair in 1996.[7] The University gave her an Outstanding Achievement Award in 1997. From 1997 to 2003, Attkisson simultaneously hosted CBS News Up to the Minute and the PBS health-news magazine HealthWeek.[10]

2000s

Attkisson received an Investigative Reporters and Editors (I.R.E.) Finalist award for Dangerous Drugs in 2000.[11] In 2001, Attkisson received an Investigative Emmy Award nomination for Firestone Tire Fiasco from the National Academy of Television Arts and Sciences.[12]

In 2002, she co-authored a college textbook, Writing Right for Broadcast and Internet News; later that same year she won an Emmy Award for her Investigative Journalism about the American Red Cross.[7] The award was presented in New York City on September 10, 2002.[13] Attkisson was part of the CBS News team that received RTNDA-Edward R. Murrow Awards in 2005 for Overall Excellence.[11]

In 2006, Attkisson served as Capitol Hill correspondent for CBS,[14] as one of a small number of female anchors covering the 2006 midterms.[15] Attkisson was part of the CBS News team that received RTNDA-Edward R. Murrow Awards in 2008 for Overall Excellence.[11]

In 2008, Attkisson reported that a claim by Hillary Clinton to have dodged sniper fire in Bosnia was unfounded: Clinton’s trip to Bosnia was risky, Attkisson said, but no real bullets were dodged. Attkisson was on the trip with Clinton.[16] The day after Attkisson’s report on the CBS Evening News, Clinton admitted there was no sniper fire and said she “misspoke.” [17][18]In 2009, Attkisson won an Investigative Emmy Award for Business and Financial Reporting for her exclusive reports on the Troubled Asset Relief Program (TARP) and the bank bailout.[11] The award was presented on December 7 at Fordham University‘s Lincoln Center Campus in New York City.[19]

2010s[edit]

Attkisson returned to the University of Florida as a keynote speaker at the College of Journalism and Communications in 2010.[6] That same year, she received an Emmy Award nomination for her investigations into members of Congress, and she also received a 2010 Emmy Award nomination for her investigation into waste of tax dollars.[20] In July 2011, Attkisson was nominated for an Emmy Award for her Follow the Money investigations into Congressional travel to the Copenhagen climate summit, and problems with aid to Haiti earthquake victims.[11][21]

In 2011, Paul Offit criticized Attkisson’s reporting on vaccines in his book Deadly Choices as “damning by association” and lacking sufficient evidence.[22] Dr. Offit has been criticized for providing false information about Attkisson and his vaccine industry ties. [23] Attkisson has been identified in the medical literature as using problematic rhetorical tactics that “imply that because there is no conclusive answer to certain problems, vaccines remain a plausible culprit.”[24] Attkisson’s reporting was cited favorably in a letter to the New England Journal of Medicine by neurosurgeon Jon Poling who wrote that Offit had “misrepresented” the case of Hannah Poling v. HHS, and that Offit’s remarks on the case were “not evidence based.”[25]

In 2012, CBS News accepted an Investigative Reporting Award given to Attkisson’s reporting on ATF’s Fast and Furious gunwalker controversy. The award was from Accuracy in Media, a non-profit news media watchdog group, and was presented at a Conservative Political Action Conference.[26]

In June 2012, Attkisson’s investigative reporting for the Gunwalker story also won the CBS Evening News the Radio and Television News Directors Association’s National Edward R. Murrow Award for Excellence in Video Investigative Reporting. The award was presented October 8, 2012 in New York City.[27] In July 2012, Attkisson’s Gunwalker: Fast and Furious reporting received an Emmy Award[28]

On March 10, 2014, Attkisson resigned from CBS News.[29] She stated that the parting was “amicable”.[30] Politico reported that according to sources within CBS there had been tensions leading to “months of hard-fought negotiations” – that Attkisson had been frustrated over what she perceived to be the network’s liberal bias and lack of dedication to investigative reporting, as well as issues she had with the network’s corporate partners, while some[who?] within the network saw her reporting as agenda-driven and doubted her impartiality.[30]

Later that year came the release of her New York Times Best Seller, Stonewalled: One Reporter’s Fight for Truth Against the Forces of Obstruction, Intimidation, and Harassment in Obama’s Washington (Harpers),[4] in which she accused CBS of protecting the Obama administration by not giving enough coverage to such stories as the 2012 Benghazi attack and slow initial enrollments under Obamacare.[31]

In February 2015, Attkisson gave a TEDx talk at the University of Nevada. In the talk, she said that astroturfing was swaying public opinion, legislation and media outlets.[32]

Report of Attkisson’s computer being hacked[edit]

In May 2013, while still employed at CBS, Attkisson alleged that her personal and work computers had been “compromised” for more than two years.[33] CBS News stated that it had investigated her work computer and found evidence of multiple unauthorized accesses by a third party in late 2012.[34] The U.S. Department of Justice denied any involvement.[35] In her 2014 book, she alleged that her personal computer was hacked with keystroke logging spyware, enabling an intruder to read all her e-mail messages and gain access to the passwords for her financial accounts.[36]

In late January 2015, Attkisson appeared before the Senate Judiciary Committee[37] during a confirmation hearing for Loretta Lynch, President Obama’s nominee to replace outgoing Attorney General Eric Holder. Attkisson’s testimony concentrated on the Justice Department under Holder and was not related to Lynch’s qualifications.[by whom?] As part of her appearance in front of that committee, a report by the Office of Inspector General (OIG) was released[38] stating that “their investigation was not able to substantiate… allegations that Attkisson’s computers were subject to remote intrusions by the FBI, other government personnel, or otherwise” and the deletion seen in Attkinsson’s video “appeared to be caused by the backspace key being stuck, rather than a remote intrusion”.[39][40][41] “CBS News told the OIG that they did not conduct any analysis on her personal computer.”[42]

In February 2015, The Washington Examiner clarified that the OIG did not examine Attkisson’s compromised CBS News computer,[42] the OIG only inspected Attkisson’s personal devices.[43]

In March 2015, Attkisson and her family filed a suit against Holder, Patrick R. Donahoe and unnamed agents of the US Department of Justice, the US Postal Service and the United States in the Superior Court of the District of Columbia claiming to have been subject to illegal surveillance activities.[44][45]

Personal life[edit]

Attkisson has reached third-degree black belt in taekwondo.[5] She is married and has a daughter.[46]

References[edit]

  1. Jump up^ Gill, Kay (2007). Who, a Directory of Prominent People. Omnigraphics. ISBN 9780780808096. Retrieved December 4, 2012.
  2. Jump up^ Erik Wemple (April 22, 2015). “Sinclair Broadcast Group to launch Sunday show hosted by Sharyl Attkisson”. The Washington Post. Nash Holdings LLC. Retrieved November 22, 2015.
  3. Jump up^ “NYT Best Seller List”. The New York Times. Retrieved August 8, 2016.
  4. ^ Jump up to:a b “Best Sellers: Combined Print & E-Book Nonfiction”. The New York Times]]. November 23, 2014. Retrieved November 4, 2015.
  5. ^ Jump up to:a b “Sharyl Attkisson, Investigative Correspondent”. CBS. Archived from the original on November 21, 2013. Retrieved June 29, 2011.
  6. ^ Jump up to:a b “21st Century Newsroom”. University of Florida. Retrieved June 29, 2011.
  7. ^ Jump up to:a b c d “Sharyl Attkisson full biography”. CBS Interactive. Archived from the original on August 16, 2013. Retrieved November 28, 2012.
  8. Jump up^ Hogan, Alfred. “Televising the Space Age: A descriptive chronology of CBS News special coverage of space exploration from 1957 to 2003” (PDF). University of Maryland. p. 260. Retrieved June 29, 2011.
  9. Jump up^ “TV Notes”. Pittsburgh Post-Gazette. May 28, 1993. p. 42. Retrieved June 29, 2011.
  10. Jump up^ “Sharyl Attkisson–About This Person”. The New York Times. The New York Times Company. Retrieved June 29, 2011.
  11. ^ Jump up to:a b c d e “Sharyl Attkisson profile”. CBS News. Archived from the original on November 19, 2013. Retrieved August 30, 2012.
  12. Jump up^ “The 22nd Annual News and Documentary Emmy Award Nominees Announced by the National Academy of Television Arts and Sciences” (PDF). National Academy of Television Arts and Sciences. July 19, 2001. Archived from the original (PDF) on December 29, 2014. Retrieved December 29, 2014. Correspondent Sharyl Attkisson
  13. Jump up^ “23rd Annua; News & Documentary Emmy Awards – With Prominent 9/11 Coverage”. Emmyonline.org. Archived from the original on November 23, 2010. Retrieved August 30, 2012.
  14. Jump up^ “Sharyl Attkisson Is Named Cbs News Capitol Hill Correspondent”. CBS Corporation. Retrieved June 25, 2014.
  15. Jump up^ Stanley, Alessandra (November 8, 2006). “Election Coverage Still a Men’s Club”. The New York Times. The New York Times Company. Retrieved June 29, 2011.
  16. Jump up^ “Video shows tarmac welcome, no snipers”. Tampa Bay Times. March 25, 2008. Retrieved November 1, 2014.
  17. Jump up^ “Clinton says she “misspoke’ about dodging sniper fire”. NYT.com. New York Times. Retrieved November 7, 2016.
  18. Jump up^ “Clinton say she “misspoke” about sniper fire”. CNN.com. CNN. Retrieved November 7, 2016.
  19. Jump up^ “7th Annual Business & Financial Emmy Awards – Nominations”. Emmyonline.org. Retrieved August 30, 2012.
  20. Jump up^ “Full List of Nominations for the 2010 News and Documentary Emmy Awards: Television Industry news, TV ratings, analysis, celebrity event photos”. TVWeek. Retrieved June 25, 2014.
  21. Jump up^ Attkisson 2011 Emmy nomination, emmyonline.tv; accessed October 28, 2014.
  22. Jump up^ Offit, Paul (2011). Deadly Choices: How the Anti-Vaccine Movement Threatens Us All. ISBN 0465023568.
  23. Jump up^ “Corrections for April 18”. Orange County Register. Retrieved November 28, 2016.
  24. Jump up^ Kata, Anna (28 May 2012). “Anti-vaccine activists, Web 2.0, and the postmodern paradigm – An overview of tactics and tropes used online by the anti-vaccination movement”. Vaccine. 30 (25): 3778–3779. doi:10.1016/j.vaccine.2011.11.112.
  25. Jump up^ Poling, Jon (7 August 2008). “Vaccines and Autism Revisited”. NEJM. 359 (10): 655–656. doi:10.1056/NEJMc086269.
  26. Jump up^ “Loesch, Attkisson to receive AIM awards”. Politico. February 7, 2012. Retrieved February 10, 2012.
  27. Jump up^ “2012 National Edward R. Murrow Award Winners”. Radio Television Digital News Association. Retrieved June 13, 2012.
  28. Jump up^ “33rd Annual News & Documentary Emmy Awards nominations” (PDF). Emmyonline.tv. Retrieved August 30, 2012.
  29. Jump up^ Macneal, Caitlin (March 10, 2014). “CBS Investigative Reporter Sharyl Attkisson Resigns From Network”. Talking Points Memo. Retrieved March 11, 2014.
  30. ^ Jump up to:a b Byers, Dylan (March 10, 2014). “Sharyl Attkisson resigns from CBS News”. Politico. Retrieved March 11, 2014.
  31. Jump up^ Smith, Kyle (October 25, 2014), “Ex-CBS reporter’s book reveals how liberal media protects Obama”, New York Post, retrieved November 3, 2014
  32. Jump up^ “Astroturf and manipulation of media messages”. YouTube.com. TEDxUniversityofNevada. February 6, 2015. Retrieved December 4, 2015.
  33. Jump up^ Mirkinson, Jack (May 21, 2013). “CBS’ Sharyl Attkisson: My Computers Were Compromised, ‘Could Be Some Relationship’ To DOJ Scandals”. The Huffington Post. Retrieved November 1, 2014.
  34. Jump up^ “CBS News Confirms Sharyl Attkisson’s Computer Breached”. The Huffington Post. June 14, 2013. Retrieved November 1, 2014.
  35. Jump up^ “Sharyl Attkisson’s Computer Not Compromised, DOJ Says”. The Huffington Post. May 22, 2013. Retrieved November 1, 2014.
  36. Jump up^ Smith, Kyle; Golding, Bruce (October 27, 2014), “Ex-CBS reporter: Government agency bugged my computer”, New York Post, retrieved October 28, 2014
  37. Jump up^ “Why is Sharyl Attkisson testifying at Loretta Lynch’s confirmation hearing?”. Washington Post.
  38. Jump up^ “DOJ OIG Report – Sharyl Attkisson”. scribd.com.
  39. Jump up^ Hattem, Julian. “Watchdog: Attkisson wasn’t hacked, had ‘delete’ key stuck”. TheHill. Retrieved 2016-04-05.
  40. Jump up^ Groch-Begley, Hannah; Strupp, Joe (October 31, 2014). “Computer Security Experts: Attkisson Video Of Purported “Hacking” Likely Just A Stuck Backspace Key”. Media Matters for America. Retrieved January 5, 2015.
  41. Jump up^ Fisher, Max (October 31, 2014). “The video of Sharyl Attkisson getting “hacked” actually just shows a stuck delete key”. Vox. Retrieved November 2, 2014.
  42. ^ Jump up to:a b “Media Matters report on Attkisson claims”. Media Matters for America. January 29, 2015.
  43. Jump up^ T. Becket Adams (February 3, 2015). “Sharyl Attkisson: What was left out of reports on hacking”. The Washington Examiner. Retrieved 22 November 2015. The IG did not rule out computer intrusions. It did not substantiate but neither did it rule out.
  44. Jump up^ Attkisson sues government over computer intrusions, Washington Post; Retrieved March 6, 2015.
  45. Jump up^ Editorial Opinion re Attkisson, Washington Post; Retrieved March 6, 2015.
  46. Jump up^ “Attkisson biography”. Televisionnewscenter.org. Retrieved March 11, 2014.

External links[edit]

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Three Years Behind The Curve Too Late Federal Open Market Committee (FOMC) Increases Target Federal Funds Rate to .75-1.0% — Financial Repression of Savers Slowly Continues — Videos

Posted on March 15, 2017. Filed under: American History, Articles, Banking, Blogroll, Books, Business, College, Communications, Congress, conservatives, Constitution, Corruption, Crisis, Documentary, Economics, Education, Employment, Faith, Family, Federal Government, Federal Government Budget, Fiscal Policy, Food, Foreign Policy, Freedom, government, government spending, history, History of Economic Thought, Language, liberty, Life, Links, Literacy, Macroeconomics, media, Monetary Policy, Money, Movies, Non-Fiction, People, Philosophy, Photos, Police, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Sociology, Speech, Strategy, Television, Trade Policiy, Tutorials, Video, Water, Wealth, Welfare, Wisdom, Work, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , |

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50 YEAR OLD CARTOON PREDICTS THE FUTURE !!! NWO !!!

Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy

March 15, 2017, 1:00 PM CDT March 15, 2017, 5:02 PM CDT
  • Policy makers still project three total rate hikes for 2017
  • FOMC sticks with ‘gradual’ plan for removing accommodation

Fed Raises Benchmark Lending Rate a Quarter Point

Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation.

Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshootingits 2 percent goal and that it intended to keep its policy accommodative for “some time.”

“The simple message is the economy’s doing well. We have confidence in the robustness of the economy and its resilience to shocks,” she said.

As a result, the Fed is sticking with its policy of gradually raising interest rates, Yellen said. In their first forecasts in three months, Fed policy makers penciled in two more quarter-point rate increases this year and three in 2018, unchanged from their projections in December.

Today’s decision “does not represent a reassessment of the economic outlook or of the appropriate course for monetary policy,” the Fed chief said.

Speculation of a more aggressive Fed had mounted in recent days after a host of central bank officials, including Yellen herself, went out of their way to telegraph to financial markets that a rate hike was imminent. The expectations were further fueled by news of rising inflation.

Stocks Advance

Stocks rose and bond yields fell as investors viewed the statement from the Federal Open Market Committee and Yellen’s remarks afterward as a sign that the Fed isn’t in a hurry to remove monetary stimulus. The FOMC raised the target range for the federal funds rate to 0.75 percent to 1 percent, as expected, but Yellen’s lack of urgency to snuff out inflation was a surprise.

R.J. Gallo, a fixed-income investment manager at Federated Investors in Pittsburgh, said the chorus of Fed speakers before this meeting led investors to expect a move up in the number of projected rate hikes this year, and even upgrades by Fed officials in the levels of inflation and growth they anticipated.

None of that materialized.

“You didn’t get any of those things,” Gallo said, which explains why Treasury yields quickly dropped after the Fed released the FOMC statement and a new set of economic projections. “The expectation that Fed was getting more hawkish had to come out of the market.”

The U.S. economy has mostly met the central bank’s goals of full employment and stable prices, and may get further support if President Donald Trump delivers promised fiscal stimulus. Investor and business confidence has soared since Trump won the presidency in November, buoyed by his vows to cut taxes, lift infrastructure spending and ease regulations.

Still, the data don’t show an economy that’s heating up rapidly — a point Yellen herself made after the third rate hike since the 2007-2009 recession ended. In fact, the economy may have “more room to run,” she said.

Stronger business and consumer confidence hasn’t yet translated into increased investment and spending, said Yellen.

“It’s uncertain just how much sentiment actually impacts spending decisions, and I wouldn’t say at this point that I have seen hard evidence of any change in spending decisions,” said the Fed Chair. “Most of the business people that we’ve talked to also have a wait-and-see attitude.”

Retail sales in February grew at the slowest pace since August, a government report showed earlier Wednesday. The Atlanta Fed’s model for GDP predicts an expansion of 0.9 percent in the first quarter, less than a third the pace Trump is aiming for.

Fiscal Stimulus

Asked about the potential for a fiscal boost, Yellen made clear the Fed is still waiting for more concrete policy plans to emerge from the Trump administration before adapting monetary policy in reaction.

“There is great uncertainty about the timing, the size and the character of policy changes that may be put in place,” Yellen said. “I don’t think that’s a decision or set of decisions that we need to make until we know more about what policy changes will go into effect.”

Yellen disputed suggestions that the Fed was on a collision course with the Trump administration over its plans to foster faster economic growth through tax cuts and deregulation. “We would welcome stronger economic growth in the context of price stability,” she said.

She said she had met Trump briefly and had gotten together a couple of times with Treasury Secretary Steven Mnuchin to discuss the economy and financial regulation.

Further underscoring their lack of urgency, Fed officials repeated a commitment to maintain their balance-sheet reinvestment policy until rate increases were well under way. Yellen said officials had discussed the process of reducing the balance sheet gradually, but had made no decisions and would continue to debate the topic.

Policy makers forecast inflation will reach 1.9 percent in the fourth quarter this year, and 2 percent in both 2018 and 2019, according to quarterly median estimates released with the FOMC statement. The Fed’s preferred measure of inflation rose 1.9 percent in the 12 months through January, just shy of its target.

Yellen pointed out, though, that core inflation continues to run somewhat further below 2 percent. That rate, which strips out food and energy costs, stood at 1.7 percent in January. The Fed’s new forecast for the core rate at the end of this year edged up to 1.9 percent, from 1.8 percent in December.

“The committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal,” the Fed said. Discussing the word symmetric in the statement, Yellen said during her press conference that the Fed was not shooting to push inflation over 2 percent but recognized that it could temporarily go above it. Two percent is a target, she reiterated, not a ceiling.

https://www.bloomberg.com/news/articles/2017-03-15/fed-raises-benchmark-rate-as-inflation-approaches-2-target

Changes in the federal funds rate will always affect the U.S. dollar. When the Federal Reserve increases the federal funds rate, it normally reduces inflationary pressure and works to appreciate the dollar.

Since June 2006, however, the Fed has maintained a federal funds rate of close to 0%. In the wake of the 2008 financial crisis, the federal funds rate fluctuated between 0-0.25%, and is now 0.75%.

The Fed used this monetary policy to help achieve maximum employment and stable prices. Now that the 2008 financial crisis has largely subsided, the Fed will look to increase interest rates to continue to achieve employment and to stabilize prices.

Inflation of the U.S. Dollar

The best way to achieve full employment and stable prices is to set the inflation rate of the dollar at 2%. In 2011, the Fed officially adopted a 2% annual increase in the price index for personal consumption expenditures as its target. When the economy is weak, inflation naturally falls; when the economy is strong, rising wages increase inflation. Keeping inflation at a growth rate of 2% helps the economy grow at a healthy rate.

Adjustments to the federal funds rate can also affect inflation in the United States. The Fed controls the economy by increasing interest rates when the economy is growing too fast. This encourages people to save more and spend less, reducing inflationary pressure. Conversely, when the economy is in a recession or growing too slowly, the Fed reduces interest rates to stimulate spending, which increases inflation.

During the 2008 financial crisis, the low federal funds rate should have increased inflation. Over this period, the federal funds rate was set near 0%, which encouraged spending and would normally increase inflation.

However, inflation is still well below the 2% target, which is contrary to the normal effects of low interest rates. The Fed cites one-off factors, such as falling oil prices and the strengthening dollar, as the reasons why inflation has remained low in a low interest environment.

The Fed believes that these factors will eventually fade and that inflation will increase above the target 2%. To prevent this eventual increase in inflation, hiking the federal funds rate reduces inflationary pressure and cause inflation of the dollar to remain around 2%.

Appreciation of the U.S. Dollar

Increases in the federal funds rate also result in a strengthening of the U.S. dollar. Other ways that the dollar can appreciate include increases in average wages and increases in overall consumption. However, although jobs are being created, wage rates are stagnant.

Without an increase in wage rates to go along with a strengthening job market, consumption won’t increase enough to sustain economic growth. Additionally, consumption remains subdued due to the fact that the labor force participation rate was close to its 35-year low in 2015. The Fed has kept interest rates low because a lower federal funds rate supports business expansions, which leads to more jobs and higher consumption. This has all worked to keep appreciation of the U.S. dollar low.

However, the U.S. is ahead of the other developed markets in terms of its economic recovery. Although the Fed raises rates cautiously, the U.S. could see higher interest rates before the other developed economies.

Overall, under normal economic conditions, increases in the federal funds rate reduce inflation and increase the appreciation of the U.S. dollar.

http://www.investopedia.com/articles/investing/101215/how-fed-fund-rate-hikes-affect-us-dollar.asp

Financial repression

From Wikipedia, the free encyclopedia
Not to be confused with economic repression, a type of political repression.

Financial repression refers to “policies that result in savers earning returns below the rate of inflation” in order to allow banks to “provide cheap loans to companies and governments, reducing the burden of repayments”.[1] It can be particularly effective at liquidating government debt denominated in domestic currency.[2] It can also lead to a large expansions in debt “to levels evoking comparisons with the excesses that generated Japan’s lost decade and the Asian financial crisis” in 1997.[1]

The term was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon[3][4] in order to “disparage growth-inhibiting policies in emerging markets“.

Mechanism

Financial repression consists of the following:[5]

  1. Explicit or indirect capping of interest rates, such as on government debt and deposit rates (e.g., Regulation Q).
  2. Government ownership or control of domestic banks and financial institutions with barriers that limit other institutions from entering the market.
  3. High reserve requirements.
  4. Creation or maintenance of a captive domestic market for government debt, achieved by requiring banks to hold government debt via capital requirements, or by prohibiting or disincentivising alternatives.
  5. Government restrictions on the transfer of assets abroad through the imposition of capital controls.

These measures allow governments to issue debt at lower interest rates. A low nominal interest rate can reduce debt servicing costs, while negative real interest rates erodes the real value of government debt.[5] Thus, financial repression is most successful in liquidating debts when accompanied by inflation and can be considered a form of taxation,[6] or alternatively a form of debasement.[7]

The size of the financial repression tax for 24 emerging markets from 1974 to 1987. Their results showed that financial repression exceeded 2% of GDP for seven countries, and greater than 3% for five countries. For five countries (India, Mexico, Pakistan, Sri Lanka, and Zimbabwe) it represented approximately 20% of tax revenue. In the case of Mexico financial repression was 6% of GDP, or 40% of tax revenue.[8]

Financial repression is categorized as “macroprudential regulation“—i.e., government efforts to “ensure the health of an entire financial system.[2]

Examples

After World War II

Financial repression “played an important role in reducing debt-to-GDP ratios after World War II” by keeping real interest rates for government debt below 1% for two-thirds of the time between 1945 and 1980, the United States was able to “inflate away” the large debt (122% of GDP) left over from the Great Depression and World War II.[2] In the UK, government debt declined from 216% of GDP in 1945 to 138% ten years later in 1955.[9]

China

China‘s economic growth has been attributed to financial repression thanks to “low returns on savings and the cheap loans that it makes possible”. This has allowed China to rely on savings-financed investments for economic growth. However, because low returns also dampens consumer spending, household expenditures account for “a smaller share of GDP in China than in any other major economy”.[1] However, as of December 2014, the People’s Bank of China “started to undo decades of financial repression” and the government now allows Chinese savers to collect up to a 3.3% return on one-year deposits. At China’s 1.6% inflation rate, this is a “high real-interest rate compared to other major economies”.[1]

After the 2008 economic recession

In a 2011 NBER working paper, Carmen Reinhart and Maria Belen Sbrancia speculate on a possible return by governments to this form of debt reduction in order to deal with high debt levels following the 2008 economic crisis.[5]

“To get access to capital, Austria has restricted capital flows to foreign subsidiaries in central and eastern Europe. Select pension funds have also been transferred to governments in France, Portugal, Ireland and Hungary, enabling them to re-allocate toward sovereign bonds.”[10]

Criticism

Critics[who?] argue that if this view was true, investors (i.e., capital-seeking parties) would be inclined to demand capital in large quantities and would be buying capital goods from this capital. This high demand for capital goods would certainly lead to inflation and thus the central banks would be forced to raise interest rates again. As a boom pepped by low interest rates fails to appear these days in industrialized countries, this is a sign that the low interest rates seem to be necessary to ensure an equilibrium on the capital market, thus to balance capital-supply—i.e., savers—on one side and capital-demand—i.e., investors and the government—on the other. This view argues that interest rates would be even lower if it were not for the high government debt ratio (i.e., capital demand from the government).

Free-market economists argue that financial repression crowds out private-sector investment, thus undermining growth. On the other hand, “postwar politicians clearly decided this was a price worth paying to cut debt and avoid outright default or draconian spending cuts. And the longer the gridlock over fiscal reform rumbles on, the greater the chance that ‘repression’ comes to be seen as the least of all evils”.[11]

Also, financial repression has been called a “stealth tax” that “rewards debtors and punishes savers—especially retirees” because their investments will no longer generate the expected return, which is income for retirees.[10][12] “One of the main goals of financial repression is to keep nominal interest rates lower than they would be in more competitive markets. Other things equal, this reduces the government’s interest expenses for a given stock of debt and contributes to deficit reduction. However, when financial repression produces negative real interest rates (nominal rates below the inflation rate), it reduces or liquidates existing debts and becomes the equivalent of a tax—a transfer from creditors (savers) to borrowers, including the government.”[2]

See also

Reform:

General:

References

  1. ^ Jump up to:a b c d “China Savers Prioritized Over Banks by PBOC”. Bloomberg. November 25, 2014.
  2. ^ Jump up to:a b c d Carmen M. Reinhart, Jacob F. Kirkegaard, and M. Belen Sbrancia, “Financial Repression Redux”, IMF Finance and Development, June 2011, p. 22-26
  3. Jump up^ Shaw, Edward S. Financial Deepening in Economic Development. New York: Oxford University Press, 1973
  4. Jump up^ McKinnon, Ronald I. Money and Capital in Economic Development. Washington, D.C.: Brookings Institution, 1973
  5. ^ Jump up to:a b c Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt”, IMF, 2011, p. 19
  6. Jump up^ Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly. Princeton and Oxford: Princeton University Press, 2008, p. 143
  7. Jump up^ Bill Gross, “The Caine Mutiny Part 2”, PIMCO
  8. Jump up^ Giovannini, Alberto and de Melo, Martha, “Government Revenue from Financial Repression”, The American Economic Review, Vol. 83, No. 4 Sep. 1993 (pp. 953-963)
  9. Jump up^ “The great repression”. The Economist. 16 June 2011.
  10. ^ Jump up to:a b “Financial Repression 101”. Allianz Global Investors. Retrieved 2 December 2014.
  11. Jump up^ Gillian Tett, “Policymakers learn a new and alarming catchphrase”, Financial Times, May 9, 2011
  12. Jump up^ Amerman, Daniel (September 12, 2011). “The 2nd Edge of Modern Financial Repression: Manipulating Inflation Indexes to Steal from Retirees & Public Wor

https://en.wikipedia.org/wiki/Financial_repression

Federal funds rate

From Wikipedia, the free encyclopedia

10 year treasury compared to the Federal Funds Rate

Federal funds rate and capacity utilization in manufacturing.

In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions’ reserve requirements. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets.[1][2]

The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

The Federal Reserve uses open market operations to influence the supply of money in the U.S. economy[3] to make the federal funds effective rate follow the federal funds target rate.

Mechanism

Financial Institutions are obligated by law to maintain certain levels of reserves, either as reserves with the Fed or as vault cash. The level of these reserves is determined by the outstanding assets and liabilities of each depository institution, as well as by the Fed itself, but is typically 10%[4] of the total value of the bank’s demand accounts (depending on bank size). In the range of $9.3 million to $43.9 million, for transaction deposits (checking accounts, NOWs, and other deposits that can be used to make payments) the reserve requirement in 2007-2008 was 3 percent of the end-of-the-day daily average amount held over a two-week period. Transaction deposits over $43.9 million held at the same depository institution carried a 10 percent reserve requirement.

For example, assume a particular U.S. depository institution, in the normal course of business, issues a loan. This dispenses money and decreases the ratio of bank reserves to money loaned. If its reserve ratio drops below the legally required minimum, it must add to its reserves to remain compliant with Federal Reserve regulations. The bank can borrow the requisite funds from another bank that has a surplus in its account with the Fed. The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The nominal rate is a target set by the governors of the Federal Reserve, which they enforce by open market operations and adjusting the interest paid on required and excess reserve balances. That nominal rate is almost always what is meant by the media referring to the Federal Reserve “changing interest rates.” The actual federal funds rate generally lies within a range of that target rate, as the Federal Reserve cannot set an exact value through open market operations.

Another way banks can borrow funds to keep up their required reserves is by taking a loan from the Federal Reserve itself at the discount window. These loans are subject to audit by the Fed, and the discount rate is usually higher than the federal funds rate. Confusion between these two kinds of loans often leads to confusion between the federal funds rate and the discount rate. Another difference is that while the Fed cannot set an exact federal funds rate, it does set the specific discount rate.

The federal funds rate target is decided by the governors at Federal Open Market Committee (FOMC) meetings. The FOMC members will either increase, decrease, or leave the rate unchanged depending on the meeting’s agenda and the economic conditions of the U.S. It is possible to infer the market expectations of the FOMC decisions at future meetings from the Chicago Board of Trade (CBOT) Fed Funds futures contracts, and these probabilities are widely reported in the financial media.

Applications

Interbank borrowing is essentially a way for banks to quickly raise money. For example, a bank may want to finance a major industrial effort but may not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate.

Raising the federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely.[5] This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

By setting a higher discount rate the Federal Bank discourages banks from requisitioning funds from the Federal Bank, yet positions itself as a lender of last resort.

Comparison with LIBOR

Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:

  • The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
  • The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies’ securities).[6]
  • LIBOR is based on a questionnaire where a selection of banks guess the rates at which they could borrow money from other banks.
  • LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.[7]

Predictions by the market

Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures (traded on the Chicago Board of Trade) can be used to infer the market’s expectations of future Fed policy changes. Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike. One set of such implied probabilities is published by the Cleveland Fed.

Historical rates

As of December 16, 2008, the most recent change the FOMC has made to the funds target rate is a 75 to 100 basis point cut from 1.0% to a range of zero to 0.25%. According to Jack A. Ablin, chief investment officer at Harris Private Bank, one reason for this unprecedented move of having a range, rather than a specific rate, was because a rate of 0% could have had problematic implications for money market funds, whose fees could then outpace yields.[8] This followed the 50 basis point cut on October 29, 2008, and the unusually large 75 basis point cut made during a special January 22, 2008 meeting, as well as a 50 basis point cut on January 30, 2008, a 75 basis point cut on March 18, 2008, and a 50 basis point cut on October 8, 2008.[9]

Federal funds rate history and recessions.png

Explanation of federal funds rate decisions

When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, price normally falls. The price here is the interest rate (cost of money) and specifically refers to the Federal Funds Rate. Conversely, when the Committee wishes to increase the Fed Funds Rate, they will instruct the Desk Manager to sell government securities, thereby taking the money they earn on the proceeds of those sales out of circulation and reducing the money supply. When supply is taken away and everything else remains constant, price (or in this case interest rates) will normally rise.[10]

The Federal Reserve has responded to a potential slow-down by lowering the target federal funds rate during recessions and other periods of lower growth. In fact, the Committee’s lowering has recently predated recessions,[9] in order to stimulate the economy and cushion the fall. Reducing the Fed Funds Rate makes money cheaper, allowing an influx of credit into the economy through all types of loans.

The charts linked below show the relation between S&P 500 and interest rates.

  • July 13, 1990 — Sept 4, 1992: 8.00%–3.00% (Includes 1990–1991 recession)[11][12]
  • Feb 1, 1995 — Nov 17, 1998: 6.00–4.75 [13][14][15]
  • May 16, 2000 — June 25, 2003: 6.50–1.00 (Includes 2001 recession)[16][17][18]
  • June 29, 2006 — (Oct. 29 2008): 5.25–1.00[19]
  • Dec 16, 2008 — 0.0–0.25[20]
  • Dec 16, 2015 — 0.25-0.50[21]
  • Dec 14, 2016 — 0.50-0.75[22]
  • Mar 15, 2017 — 0.75-1.00[23]

Bill Gross of PIMCO suggested that in the prior 15 years ending in 2007, in each instance where the fed funds rate was higher than the nominal GDP growth rate, assets such as stocks and/or housing fell.[24]

See also

References

  1. Jump up^ “Fedpoints: Federal Funds”. Federal Reserve Bank of New York. August 2007. Retrieved 2 October 2011.
  2. Jump up^ “The Implementation of Monetary Policy”. The Federal Reserve System: Purposes & Functions (PDF). Washington, D.C.: Federal Reserve Board. 24 August 2011. p. 4. Retrieved 2 October 2011.
  3. Jump up^ “Monetary Policy, Open Market Operations”. Federal Reserve Bank. 2008-01-30. Retrieved 2008-01-30.
  4. Jump up^ “Reserve Requirements”. Board of Governors of The Federal Reserve System. December 16, 2015.
  5. Jump up^ “Fed funds rate”. Bankrate, Inc. March 2016.
  6. Jump up^ Cheryl L. Edwards (November 1997). Gerard Sinzdak. “Open Market Operations in the 1990s” (PDF). Federal Reserve Bulletin (PDF).
  7. Jump up^ “BBA LIBOR – Frequently asked questions”. British Bankers’ Association. March 21, 2006. Archived from the original on 2007-02-16.
  8. Jump up^ “4:56 p.m. US-Closing Stocks”. Associated Press. December 16, 2008.[dead link]
  9. ^ Jump up to:a b “Historical Changes of the Target Federal Funds and Discount Rates, 1971 to present”. New York Federal Reserve Branch. February 19, 2010. Archived from the original on December 21, 2008.
  10. Jump up^ David Waring (2008-02-19). “An Explanation of How The Fed Moves Interest Rates”. InformedTrades.com. Archived from the original on 2015-05-05. Retrieved 2009-07-20.
  11. Jump up^ “$SPX 1990-06-12 1992-10-04 (rate drop chart)”. StockCharts.com.
  12. Jump up^ “$SPX 1992-08-04 1995-03-01 (rate rise chart)”. StockCharts.com.
  13. Jump up^ “$SPX 1995-01-01 1997-01-01 (rate drop chart)”. StockCharts.com.
  14. Jump up^ “$SPX 1996-12-01 1998-10-17 (rate drop chart)”. StockCharts.com.
  15. Jump up^ “$SPX 1998-09-17 2000-06-16 (rate rise chart)”. StockCharts.com.
  16. Jump up^ “$SPX 2000-04-16 2002-01-01 (rate drop chart)”. StockCharts.com.
  17. Jump up^ “$SPX 2002-01-01 2003-07-25 (rate drop chart)”. StockCharts.com.
  18. Jump up^ “$SPX 2003-06-25 2006-06-29 (rate rise chart)”. StockCharts.com.
  19. Jump up^ “$SPX 2006-06-29 2008-06-01 (rate drop chart)”. StockCharts.com.
  20. Jump up^ “Press Release”. Board of Governors of The Federal Reserve System. December 16, 2008.
  21. Jump up^ “Open Market Operations”. Board of Governors of The Federal Reserve System. December 16, 2015.
  22. Jump up^ “Decisions Regarding Monetary Policy Implementation”. Board of Governors of The Federal Reserve System.
  23. Jump up^ Cox, Jeff (2017-03-15). “Fed raises rates at March meeting”. CNBC. Retrieved 2017-03-15.
  24. Jump up^ Shaw, Richard (January 7, 2007). “The Bond Yield Curve as an Economic Crystal Ball”. Retrieved 3 April 2011.

External links

https://en.wikipedia.org/wiki/Federal_funds_rate

Monetary policy of the United States

From Wikipedia, the free encyclopedia
  (Redirected from U.S. monetary policy)
United States M2 money supply
% change in money supply
Money supply changes monthly basis

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply.

In the United States, the Federal Reserve is in charge of monetary policy, and implements it primarily by performing operations that influence short-term interest rates.

Money supply[edit]

Main article: Money supply

The money supply has different components, generally broken down into “narrow” and “broad” money, reflecting the different degrees of liquidity (‘spendability’) of each different type, as broader forms of money can be converted into narrow forms of money (or may be readily accepted as money by others, such as personal checks).[1]

For example, demand deposits are technically promises to pay on demand, while savings deposits are promises to pay subject to some withdrawal restrictions, and Certificates of Deposit are promises to pay only at certain specified dates; each can be converted into money, but “narrow” forms of money can be converted more readily. The Federal Reserve directly controls only the most narrow form of money, physical cash outstanding along with the reserves of banks throughout the country (known as M0 or the monetary base); the Federal Reserve indirectly influences the supply of other types of money.[1]

Broad money includes money held in deposit balances in banks and other forms created in the financial system. Basic economics also teaches that the money supply shrinks when loans are repaid;[2][3] however, the money supply will not necessarily decrease depending on the creation of new loans and other effects. Other than loans, investment activities of commercial banks and the Federal Reserve also increase and decrease the money supply.[4] Discussion of “money” often confuses the different measures and may lead to misguided commentary on monetary policy and misunderstandings of policy discussions.[5]

Structure of modern US institutions[edit]

Federal Reserve[edit]

Monetary policy in the US is determined and implemented by the US Federal Reserve System, commonly referred to as the Federal Reserve. Established in 1913 by the Federal Reserve Act to provide central banking functions,[6] the Federal Reserve System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations;[7][8][9] they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors.

The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C.[10] It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official with regard to actions on the money supply,[11]and its methods of funding also preserve independence. The Governors are nominated by the President of the United States, and nominations must be confirmed by the U.S. Senate.[12]

The presidents of the Federal Reserve Banks are nominated by each bank’s respective Board of Directors, but must also be approved by the Board of Governors of the Federal Reserve. The Chairman of the Federal Reserve Board is generally considered to have the most important position, followed by the president of the Federal Reserve Bank of New York.[12] The Federal Reserve System is primarily funded by interest collected on their portfolio of securities from the US Treasury, and the Fed has broad discretion in drafting its own budget,[13] but, historically, nearly all the interest the Federal Reserve collects is rebated to the government each year.[14]

The Federal Reserve has three main mechanisms for manipulating the money supply. It can buy or sell treasury securities. Selling securities has the effect of reducing the monetary base (because it accepts money in return for purchase of securities), taking that money out of circulation. Purchasing treasury securities increases the monetary base (because it pays out hard currency in exchange for accepting securities). Secondly, the discount rate can be changed. And finally, the Federal Reserve can adjust the reserve requirement, which can affect the money multiplier; the reserve requirement is adjusted only infrequently, and was last adjusted in 1992.[15]

In practice, the Federal Reserve uses open market operations to influence short-term interest rates, which is the primary tool of monetary policy. The federal funds rate, for which the Federal Open Market Committee announces a target on a regular basis, reflects one of the key rates for interbank lending. Open market operations change the supply of reserve balances, and the federal funds rate is sensitive to these operations.[16]

In theory, the Federal Reserve has unlimited capacity to influence this rate, and although the federal funds rate is set by banks borrowing and lending funds to each other, the federal funds rate generally stays within a limited range above and below the target (as participants are aware of the Fed’s power to influence this rate).

Assuming a closed economy, where foreign capital or trade does not affect the money supply, when money supply increases, interest rates go down. Businesses and consumers have a lower cost of capital and can increase spending and capital improvement projects. This encourages short-term growth. Conversely, when the money supply falls, interest rates go up, increasing the cost of capital and leading to more conservative spending and investment. The Federal reserve increases interest rates to combat Inflation.

U.S. Treasury[edit]

Private commercial banks[edit]

When money is deposited in a bank, it can then be lent out to another person. If the initial deposit was $100 and the bank lends out $100 to another customer the money supply has increased by $100. However, because the depositor can ask for the money back, banks have to maintain minimum reserves to service customer needs. If the reserve requirement is 10% then, in the earlier example, the bank can lend $90 and thus the money supply increases by only $90. The reserve requirement therefore acts as a limit on this multiplier effect. Because the reserve requirement only applies to the more narrow forms of money creation (corresponding to M1), but does not apply to certain types of deposits (such as time deposits), reserve requirements play a limited role in monetary policy.[17]

Money creation[edit]

Main article: Money creation

Currently, the US government maintains over US$800 billion in cash money (primarily Federal Reserve Notes) in circulation throughout the world,[18][19] up from a sum of less than $30 billion in 1959. Below is an outline of the process which is currently used to control the amount of money in the economy. The amount of money in circulation generally increases to accommodate money demanded by the growth of the country’s production. The process of money creation usually goes as follows:

  1. Banks go through their daily transactions. Of the total money deposited at banks, significant and predictable proportions often remain deposited, and may be referred to as “core deposits.” Banks use the bulk of “non-moving” money (their stable or “core” deposit base) by loaning it out.[20] Banks have a legal obligation to keep a certain fraction of bank deposit money on-hand at all times.[21]
  2. In order to raise additional money to cover excess spending, Congress increases the size of the National Debt by issuing securities typically in the form of a Treasury Bond[22] (see United States Treasury security). It offers the Treasury security for sale, and someone pays cash to the government in exchange. Banks are often the purchasers of these securities, and these securities currently play a crucial role in the process.
  3. The 12-person Federal Open Market Committee, which consists of the heads of the Federal Reserve System (the seven Federal governors and five bank presidents), meets eight times a year to determine how they would like to influence the economy.[23] They create a plan called the country’s “monetary policy” which sets targets for things such as interest rates.[24]
  4. Every business day, the Federal Reserve System engages in Open market operations.[25] If the Federal Reserve wants to increase the money supply, it will buy securities (such as U.S. Treasury Bonds) anonymously from banks in exchange for dollars. If the Federal Reserve wants to decrease the money supply, it will sell securities to the banks in exchange for dollars, taking those dollars out of circulation.[26][27] When the Federal Reserve makes a purchase, it credits the seller’s reserve account (with the Federal Reserve). The money that it deposits into the seller’s account is not transferred from any existing funds, therefore it is at this point that the Federal Reserve has created High-powered money.
  5. By means of open market operations, the Federal Reserve affects the free reserves of commercial banks in the country.[28] Anna Schwartz explains that “if the Federal Reserve increases reserves, a single bank can make loans up to the amount of its excess reserves, creating an equal amount of deposits”.[26][27][29]
  6. Since banks have more free reserves, they may loan out the money, because holding the money would amount to accepting the cost of foregone interest[28][30] When a loan is granted, a person is generally granted the money by adding to the balance on their bank account.[31]
  7. This is how the Federal Reserve’s high-powered money is multiplied into a larger amount of broad money, through bank loans; as written in a particular case study, “as banks increase or decrease loans, the nation’s (broad) money supply increases or decreases.”[3] Once granted these additional funds, the recipient has the option to withdraw physical currency (dollar bills and coins) from the bank, which will reduce the amount of money available for further on-lending (and money creation) in the banking system.[32]
  8. In many cases, account-holders will request cash withdrawals, so banks must keep a supply of cash handy. When they believe they need more cash than they have on hand, banks can make requests for cash with the Federal Reserve. In turn, the Federal Reserve examines these requests and places an order for printed money with the US Treasury Department.[33] The Treasury Department sends these requests to the Bureau of Engraving and Printing (to make dollar bills) and the Bureau of the Mint (to stamp the coins).
  9. The U.S. Treasury sells this newly printed money to the Federal Reserve for the cost of printing.[citation needed] This is about 6 cents per bill for any denomination.[34] Aside from printing costs, the Federal Reserve must pledge collateral (typically government securities such as Treasury bonds) to put new money, which does not replace old notes, into circulation.[35]This printed cash can then be distributed to banks, as needed.

Though the Federal Reserve authorizes and distributes the currency printed by the Treasury (the primary component of the narrow monetary base), the broad money supply is primarily created by commercial banks through the money multiplier mechanism.[29][31][36][37] One textbook summarizes the process as follows:

“The Fed” controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made …[38]

This type of money is convertible into cash when depositors request cash withdrawals, which will require banks to limit or reduce their lending.[39][32] The vast majority of the broad money supply throughout the world represents current outstanding loans of banks to various debtors.[38][40][41] A very small amount of U.S. currency still exists as “United States Notes“, which have no meaningful economic difference from Federal Reserve notes in their usage, although they departed significantly in their method of issuance into circulation. The currency distributed by the Federal Reserve has been given the official designation of “Federal Reserve Notes.”[42]

Significant effects[edit]

Main article: Monetary policy

In 2005, the Federal Reserve held approximately 9% of the national debt[43] as assets against the liability of printed money. In previous periods, the Federal Reserve has used other debt instruments, such as debt securities issued by private corporations. During periods when the national debt of the United States has declined significantly (such as happened in fiscal years 1999 and 2000), monetary policy and financial markets experts have studied the practical implications of having “too little” government debt: both the Federal Reserve and financial markets use the price information, yield curve and the so-called risk free rate extensively.[44]

Experts are hopeful that other assets could take the place of National Debt as the base asset to back Federal Reserve notes, and Alan Greenspan, long the head of the Federal Reserve, has been quoted as saying, “I am confident that U.S. financial markets, which are the most innovative and efficient in the world, can readily adapt to a paydown of Treasury debt by creating private alternatives with many of the attributes that market participants value in Treasury securities.”[45] In principle, the government could still issue debt securities in significant quantities while having no net debt, and significant quantities of government debt securities are also held by other government agencies.

Although the U.S. government receives income overall from seigniorage, there are costs associated with maintaining the money supply.[41][46] Leading ecological economist and steady-state theorist Herman Daly, claims that “over 95% of our [broad] money supply [in the United States] is created by the private banking system (demand deposits) and bears interest as a condition of its existence,”[41] a conclusion drawn from the Federal Reserve’s ultimate dependence on increased activity in fractional reserve lending when it exercises open market operations.[47]Economist Eric Miller criticizes Daly’s logic because money is created in the banking system in response to demand for the money,[48] which justifies cost.[citation needed]

Thus, use of expansionary open market operations typically generates more debt in the private sector of society (in the form of additional bank deposits).[49] The private banking system charges interest to borrowers as a cost to borrow the money.[3][31][50] The interest costs are borne by those that have borrowed,[3][31] and without this borrowing, open market operations would be unsuccessful in maintaining the broad money supply,[30] though alternative implementations of monetary policy could be used. Depositors of funds in the banking system are paid interest on their savings (or provided other services, such as checking account privileges or physical security for their “cash”), as compensation for “lending” their funds to the bank.

Increases (or contractions) of the money supply corresponds to growth (or contraction) in interest-bearing debt in the country.[3][30][41] The concepts involved in monetary policy may be widely misunderstood in the general public, as evidenced by the volume of literature on topics such as “Federal Reserve conspiracy” and “Federal Reserve fraud.”[51]

Uncertainties

A few of the uncertainties involved in monetary policy decision making are described by the federal reserve:[52]

  • While these policy choices seem reasonably straightforward, monetary policy makers routinely face certain notable uncertainties. First, the actual position of the economy and growth in aggregate demand at any time are only partially known, as key information on spending, production, and prices becomes available only with a lag. Therefore, policy makers must rely on estimates of these economic variables when assessing the appropriate course of policy, aware that they could act on the basis of misleading information. Second, exactly how a given adjustment in the federal funds rate will affect growth in aggregate demand—in terms of both the overall magnitude and the timing of its impact—is never certain. Economic models can provide rules of thumb for how the economy will respond, but these rules of thumb are subject to statistical error. Third, the growth in aggregate supply, often called the growth in potential output, cannot be measured with certainty.
  • In practice, as previously noted, monetary policy makers do not have up-to-the-minute information on the state of the economy and prices. Useful information is limited not only by lags in the collection and availability of key data but also by later revisions, which can alter the picture considerably. Therefore, although monetary policy makers will eventually be able to offset the effects that adverse demand shocks have on the economy, it will be some time before the shock is fully recognized and—given the lag between a policy action and the effect of the action on aggregate demand—an even longer time before it is countered. Add to this the uncertainty about how the economy will respond to an easing or tightening of policy of a given magnitude, and it is not hard to see how the economy and prices can depart from a desired path for a period of time.
  • The statutory goals of maximum employment and stable prices are easier to achieve if the public understands those goals and believes that the Federal Reserve will take effective measures to achieve them.
  • Although the goals of monetary policy are clearly spelled out in law, the means to achieve those goals are not. Changes in the FOMC’s target federal funds rate take some time to affect the economy and prices, and it is often far from obvious whether a selected level of the federal funds rate will achieve those goals.

Opinions of the Federal Reserve

The Federal Reserve is lauded by some economists, while being the target of scathing criticism by other economists, legislators, and sometimes members of the general public. The former Chairman of the Federal Reserve Board, Ben Bernanke, is one of the leading academic critics of the Federal Reserve’s policies during the Great Depression.[53]

Achievements

One of the functions of a central bank is to facilitate the transfer of funds through the economy, and the Federal Reserve System is largely responsible for the efficiency in the banking sector. There have also been specific instances which put the Federal Reserve in the spotlight of public attention. For instance, after the stock market crash in 1987, the actions of the Fed are generally believed to have aided in recovery. Also, the Federal Reserve is credited for easing tensions in the business sector with the reassurances given following the 9/11 terrorist attacks on the United States.[54]

Criticisms

The Federal Reserve has been the target of various criticisms, involving: accountability, effectiveness, opacity, inadequate banking regulation, and potential market distortion. Federal Reserve policy has also been criticized for directly and indirectly benefiting large banks instead of consumers. For example, regarding the Federal Reserve’s response to the 2007–2010 financial crisis, Nobel laureate Joseph Stiglitz explained how the U.S. Federal Reserve was implementing another monetary policy —creating currency— as a method to combat the liquidity trap.[55]

By creating $600 billion and inserting this directly into banks the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. However, banks instead were spending the money in more profitable areas by investing internationally in emerging markets. Banks were also investing in foreign currencies which Stiglitz and others point out may lead to currency wars while China redirects its currency holdings away from the United States.[56]

Auditing

The Federal Reserve is subject to different requirements for transparency and audits than other government agencies, which its supporters claim is another element of the Fed’s independence. Although the Federal Reserve has been required by law to publish independently audited financial statements since 1999, the Federal Reserve is not audited in the same way as other government agencies. Some confusion can arise because there are many types of audits, including: investigative or fraud audits; and financial audits, which are audits of accounting statements; there are also compliance, operational, and information system audits.

The Federal Reserve’s annual financial statements are audited by an outside auditor. Similar to other government agencies, the Federal Reserve maintains an Office of the Inspector General, whose mandate includes conducting and supervising “independent and objective audits, investigations, inspections, evaluations, and other reviews of Board programs and operations.”[57] The Inspector General’s audits and reviews are available on the Federal Reserve’s website.[58][59]

The Government Accountability Office (GAO) has the power to conduct audits, subject to certain areas of operations that are excluded from GAO audits; other areas may be audited at specific Congressional request, and have included bank supervision, government securities activities, and payment system activities.[60][61] The GAO is specifically restricted any authority over monetary policy transactions;[60] the New York Times reported in 1989 that “such transactions are now shielded from outside audit, although the Fed influences interest rates through the purchase of hundreds of billions of dollars in Treasury securities.”[62] As mentioned above, it was in 1999 that the law governing the Federal Reserve was amended to formalize the already-existing annual practice of ordering independent audits of financial statements for the Federal Reserve Banks and the Board;[63] the GAO’s restrictions on auditing monetary policy continued, however.[61]

Congressional oversight on monetary policy operations, foreign transactions, and the FOMC operations is exercised through the requirement for reports and through semi-annual monetary policy hearings.[61] Scholars have conceded that the hearings did not prove an effective means of increasing oversight of the Federal Reserve, perhaps because “Congresspersons prefer to bash an autonomous and secretive Fed for economic misfortune rather than to share the responsibility for that misfortune with a fully accountable Central Bank,” although the Federal Reserve has also consistently lobbied to maintain its independence and freedom of operation.[64]

Fulfillment of wider economic goals

By law, the goals of the Fed’s monetary policy are: high employment, sustainable growth, and stable prices.[65]

Critics say that monetary policy in the United States has not achieved consistent success in meeting the goals that have been delegated to the Federal Reserve System by Congress. Congress began to review more options with regard to macroeconomic influence beginning in 1946 (after World War II), with the Federal Reserve receiving specific mandates in 1977 (after the country suffered a period of stagflation).

Throughout the period of the Federal Reserve following the mandates, the relative weight given to each of these goals has changed, depending on political developments.[citation needed] In particular, the theories of Keynesianism and monetarism have had great influence on both the theory and implementation of monetary policy, and the “prevailing wisdom” or consensus view of the economic and financial communities has changed over the years.[66]

  • Elastic currency (magnitude of the money multiplier): the success of monetary policy is dependent on the ability to strongly influence the supply of money available to the citizens. If a currency is highly “elastic” (that is, has a higher money multiplier, corresponding to a tendency of the financial system to create more broad money for a given quantity of base money), plans to expand the money supply and accommodate growth are easier to implement. Low elasticity was one of many factors that contributed to the depth of the Great Depression: as banks cut lending, the money multiplier fell, and at the same time the Federal Reserve constricted the monetary base. The depression of the late 1920s is generally regarded as being the worst in the country’s history, and the Federal Reserve has been criticized for monetary policy which worsened the depression.[67] Partly to alleviate problems related to the depression, the United States transitioned from a gold standard and now uses a fiat currency; elasticity is believed to have been increased greatly.[68]

The value of $1 over time, in 1776 dollars.[70]

  • Stable prices – While some economists would regard any consistent inflation as a sign of unstable prices,[71] policymakers could be satisfied with 1 or 2%;[72] the consensus of “price stability” constituting long-run inflation of 1-2% is, however, a relatively recent development, and a change that has occurred at other central banks throughout the world. Inflation has averaged a 4.22% increase annually following the mandates applied in 1977; historic inflation since the establishment of the Federal Reserve in 1913 has averaged 3.4%.[73] In contrast, some research indicates that average inflation for the 250 years before the system was near zero percent, though there were likely sharper upward and downward spikes in that timeframe as compared with more recent times.[74] Central banks in some other countries, notably the German Bundesbank, had considerably better records of achieving price stability drawing on experience from the two episodes of hyperinflation and economic collapse under the country’s previous central bank.

Inflation worldwide has fallen significantly since former Federal Reserve Chairman Paul Volcker began his tenure in 1979, a period which has been called the Great Moderation; some commentators attribute this to improved monetary policy worldwide, particularly in the Organisation for Economic Co-operation and Development.[75][76]BusinessWeek notes that inflation has been relatively low since mid-1980s[77] and it was during this time that Volcker wrote (in 1995), “It is a sobering fact that the prominence of central banks [such as the Federal Reserve] in this century has coincided with a general tendency towards more inflation, not less. By and large, if the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.'”.

  • Sustainable growth – The growth of the economy may not be sustainable as the ability for households to save money has been on an overall decline[78] and household debt is consistently rising.[79]

Cause of The Great Depression

Money supply decreased significantly between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs

Monetarists who believe that the Great Depression started as an ordinary recession but significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression.

Public confusion

The Federal Reserve has established a library of information on their websites, however, many experts have spoken about the general level of public confusion that still exists on the subject of the economy; this lack of understanding of macroeconomic questions and monetary policy, however, exists in other countries as well. Critics of the Fed widely regard the system as being “opaque“, and one of the Fed’s most vehement opponents of his time, Congressman Louis T. McFadden, even went so far as to say that “Every effort has been made by the Federal Reserve Board to conceal its powers….”[80]

There are, on the other hand, many economists who support the need for an independent central banking authority, and some have established websites that aim to clear up confusion about the economy and the Federal Reserve’s operations. The Federal Reserve website itself publishes various information and instructional materials for a variety of audiences.

Criticism of government interference

Some economists, especially those belonging to the heterodox Austrian School, criticize the idea of even establishing monetary policy, believing that it distorts investment. Friedrich Hayek won the Nobel Prize for his elaboration of the Austrian business cycle theory.

Briefly, the theory holds that an artificial injection of credit, from a source such as a central bank like the Federal Reserve, sends false signals to entrepreneurs to engage in long-term investments due to a favorably low interest rate. However, the surge of investments undertaken represents an artificial boom, or bubble, because the low interest rate was achieved by an artificial expansion of the money supply and not by savings. Hence, the pool of real savings and resources have not increased and do not justify the investments undertaken.

These investments, which are more appropriately called “malinvestments”, are realized to be unsustainable when the artificial credit spigot is shut off and interest rates rise. The malinvestments and unsustainable projects are liquidated, which is the recession. The theory demonstrates that the problem is the artificial boom which causes the malinvestments in the first place, made possible by an artificial injection of credit not from savings.

According to Austrian economics, without government intervention, interest rates will always be an equilibrium between the time-preferences of borrowers and savers, and this equilibrium is simply distorted by government intervention. This distortion, in their view, is the cause of the business cycle. Some Austrian economists—but by no means all—also support full reserve banking, a hypothetical financial/banking system where banks may not lend deposits. Others may advocate free banking, whereby the government abstains from any interference in what individuals may choose to use as money or the extent to which banks create money through the deposit and lending cycle.

Reserve requirement

The Federal Reserve regulates banking, and one regulation under its direct control is the reserve requirement which dictates how much money banks must keep in reserves, as compared to its demand deposits. Banks use their observation that the majority of deposits are not requested by the account holders at the same time.

Currently, the Federal Reserve requires that banks keep 10% of their deposits on hand.[81] Some countries have no nationally mandated reserve requirements—banks use their own resources to determine what to hold in reserve, however their lending is typically constrained by other regulations.[82] Other factors being equal, lower reserve percentages increases the possibility of Bank runs, such as the widespread runs of 1931. Low reserve requirements also allow for larger expansions of the money supply by actions of commercial banks—currently the private banking system has created much of the broad money supply of US dollars through lending activity. Monetary policy reform calling for 100% reserves has been advocated by economists such as: Irving Fisher,[83] Frank Knight,[84] many ecological economists along with economists of the Chicago School and Austrian School. Despite calls for reform, the nearly universal practice of fractional-reserve banking has remained in the United States.

Criticism of private sector involvement

Historically and to the present day, various social and political movements (such as social credit) have criticized the involvement of the private sector in “creating money”, claiming that only the government should have the power to “make money”. Some proponents also support full reserve banking or other non-orthodox approaches to monetary policy. Various terminology may be used, including “debt money”, which may have emotive or political connotations. These are generally considered to be akin to conspiracy theories by mainstream economists and ignored in academic literature on monetary policy.

See also

https://en.wikipedia.org/wiki/Monetary_policy_of_the_United_States

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Non-accelarating Inflation Rate of Unemployment (NAIRU) — Phillips Curve — Money and Inflation — No Real Tradeoff Between Price Increases and Unemployment Rate In The Long Run — States and Nations Cutting Taxes Resulted In Higher Growth and Lower Unemployment — Videos

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NAIRU

From Wikipedia, the free encyclopedia

NAIRU is an acronym for non-accelerating inflation rate of unemployment,[1] and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the “natural rate of unemployment” concept,[2][3][4] which was proposed earlier by Milton Friedman.[5]

Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.

Contents

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Origins

An early form of NAIRU is found in the work of Abba P. Lerner (Lerner 1951, Chapter 14), who referred to it as “low full employment” attained via the expansion of aggregate demand, in contrast with the “high full employment” which adds incomes policies (wage and price controls) to demand stimulation.

The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for number of industrialised countries with more or less mixed economies. This correlation (previously seen for the U.S. by Irving Fisher) persuaded some analysts that it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government’s role to seek a point on the trade-off between unemployment and inflation which matched a domestic social consensus.

During the 1970s in the United States and several other industrialized countries, Phillips curve analysis became less popular, because inflation rose at the same time that unemployment rose (see stagflation).

Worse, as far as many economists were concerned, was that the Phillips curve had little or no theoretical basis. Critics of this analysis (such as Milton Friedman and Edmund Phelps) argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and a nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level – the “natural rate” or NAIRU.[6]

The natural rate hypothesis

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including frictional unemployment associated with individuals changing jobs and possibly classical unemployment arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labour market institutions. Unexpected inflation might allow unemployment to fall below the natural rate by temporarily depressing real wages, but this effect would dissipate once expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained.

The analysis supporting the natural rate hypothesis was controversial, and empirical evidence suggested that the natural rate varied over time in ways that could not easily be explained by changes in labor market structures. As a result, the “natural rate” terminology was largely supplanted by that of the NAIRU, which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time.

Properties

If {\displaystyle U*}U* is the NAIRU and {\displaystyle U}U is the actual unemployment rate, the theory says that:

if {\displaystyle U<U*}U<U* for a few years, inflationary expectations rise, so that the inflation rate tends to increase;
if {\displaystyle U>U*}U>U* for a few years, inflationary expectations fall, so that the inflation rate tends to slow (there is disinflation); and
if {\displaystyle U=U*}U=U*, the inflation rate tends to stay the same, unless there is an exogenous shock.

Okun’s law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called “natural” rate of unemployment, real gross domestic product is reduced by 2% to 3%.

Criticism

The NAIRU analysis assumes that if inflation increases, workers and employers can create contracts that take into account expectations of higher inflation and agree on a level of wage inflation that matches the expected level of price inflation to maintain constant real wages. Therefore, the analysis requires inflation to accelerate to maintain low unemployment. However, this argument implicitly assumes that workers and employers cannot contract to incorporate accelerating inflation into wage expectations, but there is no clear justification for assuming that expectations or contract structures are limited in this way aside from the fact that such wage arrangements are not commonly observed.

The NAIRU analysis is especially problematic if the Phillips curve displays hysteresis, that is, if episodes of high unemployment raise the NAIRU.[7] This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed.

Others, such as Abba Lerner (1951, 1967) and Hyman Minsky (1965) have argued that a similar effect can be achieved without the human costs of unemployment via a job guarantee, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating-inflation-buffer employment ratio).[8]

Relationship to other economic theories

Most economists do not see the NAIRU theory as explaining all inflation. Instead, it is possible to move along a short run Phillips Curve (even though the NAIRU theory says that this curve shifts in the longer run) so that unemployment can rise or fall due to changes in inflation. Exogenous supply-shock inflation is also possible, as with the “energy crises” of the 1970s or the credit crunch of the early 21st century.

The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level). There is, for instance, no theoretical basis for predicting the NAIRU. Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment. Monetary policy, they maintain, should aim instead at stabilizing the inflation rate.

Naming

The NAIRU, non-accelerating inflation rate of unemployment, is actually misnamed. It is the price level that is accelerating (or decelerating), not the inflation rate. The inflation rate is just changing, not accelerating.[9]

See also

References

  1. Jump up^ Coe, David T, Nominal Wages. The NAIRU and Wage Flexibility. (PDF), Organisation for Economic Co-operation and Development
  2. Jump up^ Modigliani, Franco; Papademos, Lucas (1975). “Targets for Monetary Policy in the Coming Year”. Brookings Papers on Economic Activity. The Brookings Institution. 1975 (1): 141–165. doi:10.2307/2534063. JSTOR 2534063.
  3. Jump up^ Robert M. Solow, Modigliani and Monetarism, p. 6.
  4. Jump up^ Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origins, Development and Current State. Cheltenham: E. Elgar. p. 187. ISBN 1-84376-394-X.
  5. Jump up^ Friedman, Milton (1968). “The Role of Monetary Policy”. American Economic Review. 58 (1): 1–17. JSTOR 1831652.
  6. Jump up^ Hoover, Kevin D, “Phillips Curve”, The Concise Encyclopedia of Economics, The Library of Economics and Liberty, retrieved 16 July 2007
  7. Jump up^ Ball, Laurence (2009), Hysteresis in Unemployment: Old and New Evidence (PDF)
  8. Jump up^ William Mitchell, J. Muysken (2008), Full employment abandoned: shifting sands and policy failures, Edward Elgar Publishing, ISBN 1-85898-507-2
  9. Jump up^ Case, K.E. and Fair, R.C. and Oster, S.M. (2016). Principles of Macroeconomics. Pearson. ISBN 9780133023671.

Further reading

External links

https://en.wikipedia.org/wiki/NAIRU

Phillips curve

From Wikipedia, the free encyclopedia
For the Phillips curve in supernova astrophysics, see Phillips relationship.

The Phillips curve is a single-equation empirical model, named after A. W. Phillips, describing a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.

While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.[1] In 1968, Milton Friedman asserted that the Phillips curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment.[2][3] Friedman then correctly predicted that, in the 1973–75 recession, both inflation and unemployment would increase.[3] The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.[4] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of moneysupply measures such as the MZM (“money zero maturity”) velocity,[5] which is affected by unemployment in the short but not the long term.[6]

Contents

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History

Rate of Change of Wages against Unemployment, United Kingdom 1913–1948 from Phillips (1958)

William Phillips, a New Zealand born economist, wrote a paper in 1958 titled The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, which was published in the quarterly journal Economica.[7] In the paper Phillips describes how he observed an inverse relationship between money wage changes and unemployment in the British economy over the period examined. Similar patterns were found in other countries and in 1960 Paul Samuelson and Robert Solow took Phillips’ work and made explicit the link between inflation and unemployment: when inflation was high, unemployment was low, and vice versa.[8]

In the 1920s, an American economist Irving Fisher noted this kind of Phillips curve relationship. However, Phillips’ original curve described the behavior of money wages.[9]

In the years following Phillips’ 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment.[citation needed] One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates.[citation needed] Economist James Forder argues that this view is historically false and that neither economists nor governments took that view and that the ‘Phillips curve myth’ was an invention of the 1970s.[10]

Since 1974, seven Nobel Prizes have been given to economists for, among other things, work critical of some variations of the Phillips curve. Some of this criticism is based on the United States’ experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[11]

Stagflation

In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman.[citation needed] Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed eight years after Samuelson and Solow [1960] who wrote ” All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price and unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way.”[8] As Samuelson and Solow had argued 8 years earlier, he argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates. This result implies that over the longer-run there is no trade-off between inflation and unemployment. This implication is significant for practical reasons because it implies that central banks should not set employment targets above the natural rate.[1]

More recent research has shown that there is a moderate trade-off between low-levels of inflation and unemployment. Work by George Akerlof, William Dickens, and George Perry,[12]implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when inflation is three percent, than a wage cut of one percent when the inflation rate is zero.

Today

U.S. Inflation and Unemployment 1/2000 to 4/2013

Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[6] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92. There is no single curve that will fit the data, but there are three rough aggregations—1955–71, 1974–84, and 1985–92—each of which shows a general, downwards slope, but at three very different levels with the shifts occurring abruptly. The data for 1953–54 and 1972–73 do not group easily, and a more formal analysis posits up to five groups/curves over the period.[1]

But still today, modified forms of the Phillips Curve that take inflationary expectations into account remain influential. The theory goes under several names, with some variation in its details, but all modern versions distinguish between short-run and long-run effects on unemployment. Modern Phillips curve models include both a short-run Phillips Curve and a long-run Phillips Curve. This is because in the short run, there is generally an inverse relationship between inflation and the unemployment rate; as illustrated in the downward sloping short-run Phillips curve. In the long run, that relationship breaks down and the economy eventually returns to the natural rate of unemployment regardless of the inflation rate.[13]

The “short-run Phillips curve” is also called the “expectations-augmented Phillips curve”, since it shifts up when inflationary expectations rise, Edmund Phelps and Milton Friedman argued. In the long run, this implies that monetary policy cannot affect unemployment, which adjusts back to its “natural rate“, also called the “NAIRU” or “long-run Phillips curve”. However, this long-run “neutrality” of monetary policy does allow for short run fluctuations and the ability of the monetary authority to temporarily decrease unemployment by increasing permanent inflation, and vice versa. The popular textbook of Blanchard gives a textbook presentation of the expectations-augmented Phillips curve.[14]

An equation like the expectations-augmented Phillips curve also appears in many recent New Keynesiandynamic stochastic general equilibrium models. In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the “New Keynesian Phillips curve.” Like the expectations-augmented Phillips curve, the New Keynesian Phillips curve implies that increased inflation can lower unemployment temporarily, but cannot lower it permanently. Two influential papers that incorporate a New Keynesian Phillips curve are Clarida, Galí, and Gertler (1999),[15] and Blanchard and Galí (2007).[16]

Mathematics

There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr.

The traditional Phillips curve

The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.

Money wage determination

The traditional Phillips curve story starts with a wage Phillips Curve, of the sort described by A.W. Phillips himself. This describes the rate of growth of money wages (gW). Here and below, the operator g is the equivalent of “the percentage rate of growth of” the variable that follows.

{\displaystyle gW=gW^{T}-f(U)}gW=gW^{{T}}-f(U)

The “money wage rate” (W) is shorthand for total money wage costs per production employee, including benefits and payroll taxes. The focus is on only production workers’ money wages, because (as discussed below) these costs are crucial to pricing decisions by the firms.

This equation tells us that the growth of money wages rises with the trend rate of growth of money wages (indicated by the superscript “T”) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of money-wage increases by unemployment is shown by the negative sign in the equation above.

There are several possible stories behind this equation. A major one is that money wages are set by bilateral negotiations under partial bilateral monopoly: as the unemployment rate rises, all else constant worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.

During the 1970s, this story had to be modified, because (as the late Abba Lerner had suggested in the 1940s) workers try to keep up with inflation. Since the 1970s, the equation has been changed to introduce the role of inflationary expectations (or the expected inflation rate, gPex). This produces the expectations-augmented wage Phillips curve:

{\displaystyle gW=gW^{T}-f(U)+\lambda .gP^{ex}.}gW=gW^{{T}}-f(U)+\lambda .gP^{{ex}}.

The introduction of inflationary expectations into the equation implies that actual inflation can feed back into inflationary expectations and thus cause further inflation. The late economist James Tobin dubbed the last term “inflationary inertia,” because in the current period, inflation exists which represents an inflationary impulse left over from the past.

It also involved much more than expectations, including the price-wage spiral. In this spiral, employers try to protect profits by raising their prices and employees try to keep up with inflation to protect their real wages. This process can feed on itself, becoming a self-fulfilling prophecy.

The parameter λ (which is presumed constant during any time period) represents the degree to which employees can gain money wage increases to keep up with expected inflation, preventing a fall in expected real wages. It is usually assumed that this parameter equals unity in the long run.

In addition, the function f() was modified to introduce the idea of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) or what’s sometimes called the “natural” rate of unemployment or the inflation-threshold unemployment rate:

[1] gW = gWTf(UU*) + λ·gPex.

Here, U* is the NAIRU. As discussed below, if U < U*, inflation tends to accelerate. Similarly, if U > U*, inflation tends to slow. It is assumed that f(0) = 0, so that when U = U*, the f term drops out of the equation.

In equation [1], the roles of gWT and gPex seem to be redundant, playing much the same role. However, assuming that λ is equal to unity, it can be seen that they are not. If the trend rate of growth of money wages equals zero, then the case where U equals U* implies that gW equals expected inflation. That is, expected real wages are constant.

In any reasonable economy, however, having constant expected real wages could only be consistent with actual real wages that are constant over the long haul. This does not fit with economic experience in the U.S. or any other major industrial country. Even though real wages have not risen much in recent years, there have been important increases over the decades.

An alternative is to assume that the trend rate of growth of money wages equals the trend rate of growth of average labor productivity (Z). That is:

[2] gWT = gZT.

Under assumption [2], when U equals U* and λ equals unity, expected real wages would increase with labor productivity. This would be consistent with an economy in which actual real wages increase with labor productivity. Deviations of real-wage trends from those of labor productivity might be explained by reference to other variables in the model.

Pricing decisions

Next, there is price behavior. The standard assumption is that markets are imperfectly competitive, where most businesses have some power to set prices. So the model assumes that the average business sets a unit price (P) as a mark-up (M) over the unit labor cost in production measured at a standard rate of capacity utilization (say, at 90 percent use of plant and equipment) and then adds in the unit materials cost.

The standardization involves later ignoring deviations from the trend in labor productivity. For example, assume that the growth of labor productivity is the same as that in the trend and that current productivity equals its trend value:

gZ = gZT and Z = ZT.

The markup reflects both the firm’s degree of market power and the extent to which overhead costs have to be paid. Put another way, all else equal, M rises with the firm’s power to set prices or with a rise of overhead costs relative to total costs.

So pricing follows this equation:

P = M × (unit labor cost) + (unit materials cost)
= M × (total production employment cost)/(quantity of output) + UMC.

UMC is unit raw materials cost (total raw materials costs divided by total output). So the equation can be restated as:

P = M × (production employment cost per worker)/(output per production employee) + UMC.

This equation can again be stated as:

P = M×(average money wage)/(production labor productivity) + UMC
= M×(W/Z) + UMC.

Now, assume that both the average price/cost mark-up (M) and UMC are constant. On the other hand, labor productivity grows, as before. Thus, an equation determining the price inflation rate (gP) is:

gP = gWgZT.

Price[edit]

Then, combined with the wage Phillips curve [equation 1] and the assumption made above about the trend behavior of money wages [equation 2], this price-inflation equation gives us a simple expectations-augmented price Phillips curve:

gP = −f(UU*) + λ·gPex.

Some assume that we can simply add in gUMC, the rate of growth of UMC, in order to represent the role of supply shocks (of the sort that plagued the U.S. during the 1970s). This produces a standard short-term Phillips curve:

gP = −f(UU*) + λ·gPex + gUMC.

Economist Robert J. Gordon has called this the “Triangle Model” because it explains short-run inflationary behavior by three factors: demand inflation (due to low unemployment), supply-shock inflation (gUMC), and inflationary expectations or inertial inflation.

In the long run, it is assumed, inflationary expectations catch up with and equal actual inflation so that gP = gPex. This represents the long-term equilibrium of expectations adjustment. Part of this adjustment may involve the adaptation of expectations to the experience with actual inflation. Another might involve guesses made by people in the economy based on other evidence. (The latter idea gave us the notion of so-called rational expectations.)

Expectational equilibrium gives us the long-term Phillips curve. First, with λ less than unity:

gP = [1/(1 − λ)]·(−f(UU*) + gUMC).

This is nothing but a steeper version of the short-run Phillips curve above. Inflation rises as unemployment falls, while this connection is stronger. That is, a low unemployment rate (less than U*) will be associated with a higher inflation rate in the long run than in the short run. This occurs because the actual higher-inflation situation seen in the short run feeds back to raise inflationary expectations, which in turn raises the inflation rate further. Similarly, at high unemployment rates (greater than U*) lead to low inflation rates. These in turn encourage lower inflationary expectations, so that inflation itself drops again.

This logic goes further if λ is equal to unity, i.e., if workers are able to protect their wages completely from expected inflation, even in the short run. Now, the Triangle Model equation becomes:

f(UU*) = gUMC.

If we further assume (as seems reasonable) that there are no long-term supply shocks, this can be simplified to become:

f(UU*) = 0 which implies that U = U*.

All of the assumptions imply that in the long run, there is only one possible unemployment rate, U* at any one time. This uniqueness explains why some call this unemployment rate “natural.”

To truly understand and criticize the uniqueness of U*, a more sophisticated and realistic model is needed. For example, we might introduce the idea that workers in different sectors push for money wage increases that are similar to those in other sectors. Or we might make the model even more realistic. One important place to look is at the determination of the mark-up, M.

New classical version

The Phillips curve equation can be derived from the (short-run) Lucas aggregate supply function. The Lucas approach is very different from that the traditional view. Instead of starting with empirical data, he started with a classical economic model following very simple economic principles.

Start with the aggregate supply function:

{\displaystyle Y=Y_{n}+a(P-P_{e})\,}Y=Y_{n}+a(P-P_{e})\,

where Y is log value of the actual output, Yn is log value of the “natural” level of output, a is a positive constant, P is log value of the actual price level, and Pe is log value of the expected price level. Lucas assumes that Yn has a unique value.

Note that this equation indicates that when expectations of future inflation (or, more correctly, the future price level) are totally accurate, the last term drops out, so that actual output equals the so-called “natural” level of real GDP. This means that in the Lucas aggregate supply curve, the only reason why actual real GDP should deviate from potential—and the actual unemployment rate should deviate from the “natural” rate—is because of incorrect expectations of what is going to happen with prices in the future. (The idea has been expressed first by Keynes, General Theory, Chapter 20 section III paragraph 4).

This differs from other views of the Phillips curve, in which the failure to attain the “natural” level of output can be due to the imperfection or incompleteness of markets, the stickiness of prices, and the like. In the non-Lucas view, incorrect expectations can contribute to aggregate demand failure, but they are not the only cause. To the “new Classical” followers of Lucas, markets are presumed to be perfect and always attain equilibrium (given inflationary expectations).

We re-arrange the equation into:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}}P=P_{e}+{\frac {Y-Y_{n}}{a}}

Next we add unexpected exogenous shocks to the world supply v:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}+v}P=P_{e}+{\frac {Y-Y_{n}}{a}}+v

Subtracting last year’s price levels P−1 will give us inflation rates, because

{\displaystyle P-P_{-1}\ \approx \pi }P-P_{{-1}}\ \approx \pi

and

{\displaystyle P_{e}-P_{-1}\ \approx \pi _{e}}P_{e}-P_{{-1}}\ \approx \pi _{e}

where π and πe are the inflation and expected inflation respectively.

There is also a negative relationship between output and unemployment (as expressed by Okun’s law). Therefore, using

{\displaystyle {\frac {Y-Y_{n}}{a}}=-b(U-U_{n})}{\frac {Y-Y_{n}}{a}}=-b(U-U_{n})

where b is a positive constant, U is unemployment, and Un is the natural rate of unemployment or NAIRU, we arrive at the final form of the short-run Phillips curve:

{\displaystyle \pi =\pi _{e}-b(U-U_{n})+v\,}\pi =\pi _{e}-b(U-U_{n})+v\,

This equation, plotting inflation rate π against unemployment U gives the downward-sloping curve in the diagram that characterises the Phillips curve.

New Keynesian version

The New Keynesian Phillips curve was originally derived by Roberts in 1995,[17] and since been used in most state-of-the-art New Keynesian DSGE models like the one of Clarida, Galí, and Gertler (2000).[18][19]

{\displaystyle \pi _{t}=\beta E_{t}[\pi _{t+1}]+\kappa y_{t}}\pi _{{t}}=\beta E_{{t}}[\pi _{{t+1}}]+\kappa y_{{t}}

where {\displaystyle \kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}}\kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}. The current expectations of next period’s inflation are incorporated as {\displaystyle \beta E_{t}[\pi _{t+1}]}\beta E_{{t}}[\pi _{{t+1}}]

NAIRU and rational expectations

Short-Run Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU)

In the 1970s, new theories, such as rational expectations and the NAIRU (non-accelerating inflation rate of unemployment) arose to explain how stagflation could occur. The latter theory, also known as the “natural rate of unemployment“, distinguished between the “short-term” Phillips curve and the “long-term” one. The short-term Phillips Curve looked like a normal Phillips Curve, but shifted in the long run as expectations changed. In the long run, only a single rate of unemployment (the NAIRU or “natural” rate) was consistent with a stable inflation rate. The long-run Phillips Curve was thus vertical, so there was no trade-off between inflation and unemployment. Edmund Phelps won the Nobel Prize in Economics in 2006 in part for this. However, the expectations argument was in fact very widely understood before his work on it.[20]

In the diagram, the long-run Phillips curve is the vertical red line. The NAIRU theory says that when unemployment is at the rate defined by this line, inflation will be stable. However, in the short-run policymakers will face an inflation-unemployment rate tradeoff marked by the “Initial Short-Run Phillips Curve” in the graph. Policymakers can therefore reduce the unemployment rate temporarily, moving from point A to point B through expansionary policy. However, according to the NAIRU, exploiting this short-run tradeoff will raise inflation expectations, shifting the short-run curve rightward to the “New Short-Run Phillips Curve” and moving the point of equilibrium from B to C. Thus the reduction in unemployment below the “Natural Rate” will be temporary, and lead only to higher inflation in the long run.

Since the short-run curve shifts outward due to the attempt to reduce unemployment, the expansionary policy ultimately worsens the exploitable tradeoff between unemployment and inflation. That is, it results in more inflation at each short-run unemployment rate. The name “NAIRU” arises because with actual unemployment below it, inflation accelerates, while with unemployment above it, inflation decelerates. With the actual rate equal to it, inflation is stable, neither accelerating nor decelerating. One practical use of this model was to provide an explanation for stagflation, which confounded the traditional Phillips curve.

The rational expectations theory said that expectations of inflation were equal to what actually happened, with some minor and temporary errors. This in turn suggested that the short-run period was so short that it was non-existent: any effort to reduce unemployment below the NAIRU, for example, would immediately cause inflationary expectations to rise and thus imply that the policy would fail. Unemployment would never deviate from the NAIRU except due to random and transitory mistakes in developing expectations about future inflation rates. In this perspective, any deviation of the actual unemployment rate from the NAIRU was an illusion.

However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late 1990s, the actual unemployment rate fell below 4% of the labor force, much lower than almost all estimates of the NAIRU. But inflation stayed very moderate rather than accelerating. So, just as the Phillips curve had become a subject of debate, so did the NAIRU.

Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is set ahead of time, determined independently of demand conditions. The experience of the 1990s suggests that this assumption cannot be sustained.

Theoretical questions

The Phillips curve started as an empirical observation in search of a theoretical explanation.[citation needed] Specifically, the Phillips curve tried to determine whether the inflation-unemployment link was causal or simply correlational. There are several major explanations of the short-term Phillips curve regularity.

To Milton Friedman there is a short-term correlation between inflation shocks and employment. When an inflationary surprise occurs, workers are fooled into accepting lower pay because they do not see the fall in real wages right away. Firms hire them because they see the inflation as allowing higher profits for given nominal wages. This is a movement along the Phillips curve as with change A. Eventually, workers discover that real wages have fallen, so they push for higher money wages. This causes the Phillips curve to shift upward and to the right, as with B. Some research underlines that some implicit and serious assumptions are actually in the background of the Friedmanian Phillips curve. This information asymmetry and a special pattern of flexibility of prices and wages are both necessary if one wants to maintain the mechanism told by Friedman. However, as it is argued, these presumptions remain completely unrevealed and theoretically ungrounded by Friedman.[21]

Economists such as Milton Friedman and Edmund Phelps reject this theory because it implies that workers suffer from money illusion. According to them, rational workers would only react to real wages, that is, inflation adjusted wages. However, one of the characteristics of a modern industrial economy is that workers do not encounter their employers in an atomized and perfect market. They operate in a complex combination of imperfect markets, monopolies, monopsonies, labor unions, and other institutions. In many cases, they may lack the bargaining power to act on their expectations, no matter how rational they are, or their perceptions, no matter how free of money illusion they are. It is not that high inflation causes low unemployment (as in Milton Friedman’s theory) as much as vice versa: Low unemployment raises worker bargaining power, allowing them to successfully push for higher nominal wages. To protect profits, employers raise prices.

Similarly, built-in inflation is not simply a matter of subjective “inflationary expectations” but also reflects the fact that high inflation can gather momentum and continue beyond the time when it was started, due to the objective price/wage spiral.

However, other economists, like Jeffrey Herbener, argue that price is market-determined and competitive firms cannot simply raise prices.[citation needed] They reject the Phillips curve entirely, concluding that unemployment’s influence is only a small portion of a much larger inflation picture that includes prices of raw materials, intermediate goods, cost of raising capital, worker productivity, land, and other factors.

Gordon’s triangle model

Robert J. Gordon of Northwestern University has analyzed the Phillips curve to produce what he calls the triangle model, in which the actual inflation rate is determined by the sum of

  1. demand pull or short-term Phillips curve inflation,
  2. cost push or supply shocks, and
  3. built-in inflation.

The last reflects inflationary expectations and the price/wage spiral. Supply shocks and changes in built-in inflation are the main factors shifting the short-run Phillips Curve and changing the trade-off. In this theory, it is not only inflationary expectations that can cause stagflation. For example, the steep climb of oil prices during the 1970s could have this result.

Changes in built-in inflation follow the partial-adjustment logic behind most theories of the NAIRU:

  1. Low unemployment encourages high inflation, as with the simple Phillips curve. But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate. (This is with shift B in the diagram.)
  2. High unemployment encourages low inflation, again as with a simple Phillips curve. But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price/wage spiral slow. This shifts the short-run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate.

In between these two lies the NAIRU, where the Phillips curve does not have any inherent tendency to shift, so that the inflation rate is stable. However, there seems to be a range in the middle between “high” and “low” where built-in inflation stays stable. The ends of this “non-accelerating inflation range of unemployment rates” change over time.

Joke article

In 2008, Gregor Smith published a joke article in the prestigious Journal of Money, Credit and Banking titled “Japan’s Phillips Curve Looks Like Japan”. This article points out the uncanny resemblance between Japan’s Phillips curve and the country’s geographic shape.[22]

See also

References

  1. ^ Jump up to:a b c Chang, R. (1997) “Is Low Unemployment Inflationary?” Federal Reserve Bank of Atlanta Economic Review 1Q97:4-13
  2. Jump up^ Friedman, Milton (1968). “The role of monetary policy”. American Economic Review. 68 (1): 1–17. JSTOR 1831652.
  3. ^ Jump up to:a b Phelan, John (23 October 2012). “Milton Friedman and the rise and fall of the Phillips Curve”. thecommentator.com. Retrieved September 29, 2014.
  4. Jump up^ “Phillips Curve: The Concise Encyclopedia of Economics – Library of Economics and Liberty”.
  5. Jump up^ “Velocity of MZM Money Stock”. 22 December 2016.
  6. ^ Jump up to:a b Oliver Hossfeld (2010) “US Money Demand, Monetary Overhang, and Inflation Prediction” International Network for Economic Research working paper no. 2010.4
  7. Jump up^ Phillips, A. W. (1958). “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861-1957”. Economica. 25 (100): 283–299. doi:10.1111/j.1468-0335.1958.tb00003.x.
  8. ^ Jump up to:a b Samuelson, Paul A.; Solow, Robert M. (1960). “Analytical Aspects of Anti-Inflation Policy”. American Economic Review. 50 (2): 177–194. JSTOR 1815021.
  9. Jump up^ Fisher, Irving (1973). “I discovered the Phillips curve: ‘A statistical relation between unemployment and price changes'”. Journal of Political Economy. The University of Chicago Press. 81 (2): 496–502. doi:10.1086/260048. JSTOR 1830534. Reprinted from 1926 edition of International Labour Review.
  10. Jump up^ Forder, James (2014). Macroeconomics and the Phillips Curve Myth. Oxford University Press. ISBN 978-0-19-968365-9.
  11. Jump up^ Domitrovic, Brain (10 October 2011). “The Economics Nobel Goes to Sargent & Sims: Attackers of the Phillips Curve”. Forbes.com. Retrieved 12 October 2011.
  12. Jump up^ Akerlof, George A.; Dickens, William T.; Perry, George L. (2000). “Near-Rational Wage and Price Setting and the Long-Run Phillips Curve”. Brookings Papers on Economic Activity. 2000 (1): 1–60.
  13. Jump up^ Jacob, Reed (2016). “AP Macroeconomics Review: Phillips Curve”. APEconReview.com.
  14. Jump up^ Blanchard, Olivier (2000). Macroeconomics (Second ed.). Prentice Hall. pp. 149–55. ISBN 0-13-013306-X.
  15. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (1999). “The science of monetary policy: a New-Keynesian perspective”. Journal of Economic Literature. American Economic Association. 37 (4): 1661–1707. doi:10.1257/jel.37.4.1661. JSTOR 2565488.
  16. Jump up^ Blanchard, Olivier; Galí, Jordi (2007). “Real Wage Rigidities and the New Keynesian Model”. Journal of Money, Credit, and Banking. 39 (s1): 35–65. doi:10.1111/j.1538-4616.2007.00015.x.
  17. Jump up^ Roberts, John M. (1995). “New Keynesian Economics and the Phillips Curve”. Journal of Money, Credit and Banking. 27 (4): 975–984. JSTOR 2077783.
  18. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (2000). “Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory”. The Quarterly Journal of Economics. 115 (1): 147–180. doi:10.1162/003355300554692.
  19. Jump up^ Romer, David (2012). “Dynamic Stochastic General Equilibrium Models of Fluctuation”. Advanced Macroeconomics. New York: McGraw-Hill Irwin. pp. 312–364. ISBN 978-0-07-351137-5.
  20. Jump up^ Forder, James (2010). “The historical place of the ‘Friedman-Phelps’ expectations critique”. European Journal of the History of Economic Thought. 17 (3): 493–511. doi:10.1080/09672560903114875.
  21. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  22. Jump up^ Smith, Gregor W. (1 September 2008). “Japan’s Phillips Curve Looks Like Japan”. 40 (6): 1325–1326. doi:10.1111/j.1538-4616.2008.00160.x – via Wiley Online Library.

Further reading

External links

https://en.wikipedia.org/wiki/Phillips_curve

Milton Friedman

From Wikipedia, the free encyclopedia
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Milton Friedman
Portrait of Milton Friedman.jpg

Friedman in 2004
Born July 31, 1912
Brooklyn, New York, U.S.
Died November 16, 2006 (aged 94)
San Francisco, California, U.S.
Nationality American
Spouse(s) Rose Friedman
Institution
School or
tradition
Chicago School
Alma mater
Doctoral
advisor
Simon Kuznets
Doctoral
students
Phillip Cagan
Harry Markowitz
Lester G. Telser[1]
David I. Meiselman
Neil Wallace
Miguel Sidrauski
Influences
Influenced
Contributions
Awards
Information at IDEAS / RePEc
Signature
Milton friedman signature.svg
Notes

Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.[4] With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago’s Department of Economics, Law School, and Graduate School of Business from the 1940s onward. Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel, Thomas Sowell,[5] and Robert Lucas, Jr.[6]

Friedman’s challenges to what he later called “naive Keynesian” theory[7] began with his 1950s reinterpretation of the consumption function. In the 1960s, he became the main advocate opposing Keynesian government policies,[8] and described his approach (along with mainstream economics) as using “Keynesian language and apparatus” yet rejecting its “initial” conclusions.[9] He theorized that there existed a “natural” rate of unemployment, and argued that employment above this rate would cause inflation to accelerate.[10] He argued that the Phillips curve was, in the long run, vertical at the “natural rate” and predicted what would come to be known as stagflation.[11] Friedman promoted an alternative macroeconomic viewpoint known as “monetarism“, and argued that a steady, small expansion of the money supply was the preferred policy.[12] His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve’s response to the global financial crisis of 2007–08.[13]

Friedman was an advisor to Republican U.S. President Ronald Reagan[14] and Conservative British Prime Minister Margaret Thatcher.[15] His political philosophy extolled the virtues of a free market economic system with minimal intervention. He once stated that his role in eliminating U.S. conscription was his proudest accomplishment. In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and school vouchers.[16] His support for school choice led him to found the Friedman Foundation for Educational Choice, later renamed EdChoice.[17]

Milton Friedman’s works include many monographs, books, scholarly articles, papers, magazine columns, television programs, and lectures, and cover a broad range of economic topics and public policy issues. His books and essays have had an international influence, including in former communist states.[18][19][20][21] A survey of economists ranked Friedman as the second-most popular economist of the twentieth century after John Maynard Keynes,[22] and The Economist described him as “the most influential economist of the second half of the 20th century … possibly of all of it”.[23]

Contents

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Early life

Friedman was born in Brooklyn, New York on July 31, 1912. His parents, Sára Ethel (née Landau) and Jenő Saul Friedman,[24] were Jewish immigrants from Beregszász in Carpathian Ruthenia, Kingdom of Hungary (now Berehove in Ukraine). They both worked as dry goods merchants. Shortly after Milton’s birth, the family relocated to Rahway, New Jersey. In his early teens, Friedman was injured in a car accident, which scarred his upper lip.[25] A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday.[26][27]

In 1932, Friedman graduated from Rutgers University, where he specialized in mathematics and economics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression.

After graduating from Rutgers, Friedman was offered two scholarships to do graduate work—one in mathematics at Brown University and the other in economics at the University of Chicago.[28] Friedman chose the latter, thus earning a Master of Arts degree in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During the 1933–1934 academic year he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz, who was then working on Theory and Measurement of Demand. That year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis.[29]

Public service

Friedman was initially unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, where Franklin D. Roosevelt‘s New Deal was “a lifesaver” for many young economists.[30] At this stage, Friedman said that he and his wife “regarded the job-creation programs such as the WPA, CCC, and PWA appropriate responses to the critical situation,” but not “the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration.”[31] Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was “the wrong cure for the wrong disease,” arguing that the money supply should simply have been expanded, instead of contracted.[32] Later, Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960, which argued that the Great Depression was caused by a severe monetary contraction due to banking crises and poor policy on the part of the Federal Reserve.[33]

During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.

During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service.[34][35] From 1941 to 1943 Friedman worked on wartime tax policy for the Federal Government, as an advisor to senior officials of the United States Department of the Treasury. As a Treasury spokesman during 1942 he advocated a Keynesian policy of taxation. He helped to invent the payroll withholding tax system, since the federal government badly needed money in order to fight the war.[36] He later said, “I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.”[37]

Academic career

Early years

In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war.[38] In 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of World War II working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments.[38][39]

In 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at the University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his son, David D. Friedman was born.

University of Chicago

In 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he contributed to the establishment of an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago school of economics.

At that time, Arthur F. Burns, who was then the head of the National Bureau of Economic Research, asked Friedman to rejoin the Bureau’s staff. He accepted the invitation, and assumed responsibility for the Bureau’s inquiry into the role of money in the business cycle. As a result, he initiated the “Workshop in Money and Banking” (the “Chicago Workshop”), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.

Friedman spent the 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn) and an anti-Keynesian minority (headed by Dennis Robertson). Friedman speculated that he was invited to the fellowship, because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people.[40] From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days’ issues for about a half-hour at a time.[41][42]

Friedman was an economic adviser to Republican presidential candidate Barry Goldwater during 1964.

Personal life

Retirement

In 1977, at the age of 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco where he became a visiting scholar at the Federal Reserve Bank of San Francisco. From 1977 on, he was affiliated with the Hoover Institution at Stanford University. During the same year, Friedman was approached by the Free To Choose Network and asked to create a television program presenting his economic and social philosophy.

The Friedmans worked on this project for the next three years, and during 1980, the ten-part series, titled Free to Choose, was broadcast by the Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman), also titled Free To Choose, was the bestselling nonfiction book of 1980 and has since been translated into 14 foreign languages.

Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign, and then served on the President’s Economic Policy Advisory Board for the rest of the Reagan Administration. Ebenstein says Friedman was “the ‘guru’ of the Reagan administration.”[43] In 1988 he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom. Milton Friedman is known now as one of the most influential economists of the 20th century.[44][45] Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments. He was also for many years a Trustee of the Philadelphia Society.[46][47][48]

Later life

According to a 2007 article in Commentary magazine, his “parents were moderately observant [Jews], but Friedman, after an intense burst of childhood piety, rejected religion altogether.”[49] He described himself as an agnostic.[50] Friedman wrote extensively of his life and experiences, especially in 1998 in his memoirs with his wife Rose, titled Two Lucky People.

Death

Friedman died of heart failure at the age of 94 years in San Francisco on November 16, 2006.[51] He was still a working economist performing original economic research; his last column was published in The Wall Street Journal the day after his death.[52] He was survived by his wife (who died on August 18, 2009) and their two children, David, known for the anarcho-capitalist book The Machinery of Freedom, and Janet.

Scholarly contributions

Economics

Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further; however, Friedman’s contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of the United States, 1867–1960 (1963), which was an examination of the role of the money supply and economic activity in the U.S. history. A striking conclusion of their research regarded the way in which money supply fluctuations contribute to economic fluctuations. Several regression studies with David Meiselman during the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing, but largely untested, view on their relative importance. Friedman’s empirical research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level.

Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base’s growth rate. He famously used the analogy of “dropping money out of a helicopter.”,[53] in order to avoid dealing with money injection mechanisms and other factors that would overcomplicate his models.

Friedman’s arguments were designed to counter the popular concept of cost-push inflation, that the increased general price level at the time was the result of increases in the price of oil, or increases in wages; as he wrote,

Inflation is always and everywhere a monetary phenomenon.

— Milton Friedman, 1963.[54]

Friedman rejected the use of fiscal policy as a tool of demand management; and he held that the government’s role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression, which he termed the Great Contraction, arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve.

The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.

— Milton Friedman, Two Lucky People, 233[55]

Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates. His close friend George Stigler explained, “As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations, a newer approach developed by Robert Lucas, also at the University of Chicago.”[56] The relationship between Friedman and Lucas, or new classical macroeconomics as a whole, was highly complex. The Friedmanian Phillips curve was an interesting starting point for Lucas, but he soon realized that the solution provided by Friedman was not quite satisfactory. Lucas elaborated a new approach in which rational expectations were presumed instead of the Friedmanian adaptive expectations. Due to this reformulation, the story in which the theory of the new classical Phillips curve was embedded radically changed. This modification, however, had a significant effect on Friedman’s own approach, so, as a result, the theory of the Friedmanian Phillips curve also changed.[57] Moreover, new classical Neil Wallace, who was a graduate student at the University of Chicago between 1960 and 1963, regarded Friedman’s theoretical courses as a mess.[58] This evaluation clearly indicates the broken relationship between Friedmanian monetarism and new classical macroeconomics.

Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.[59] This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to increase later to balance public finances. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps, with the insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labor market.

Friedman’s essay “The Methodology of Positive Economics” (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction. That is, students should measure the accuracy of its predictions, rather than the ‘soundness of its assumptions’. His argument was part of an ongoing debate among such statisticians as Jerzy Neyman, Leonard Savage, and Ronald Fisher.[60]

Statistics

One of his most famous contributions to statistics is sequential sampling. Friedman did statistical work at the Division of War Research at Columbia, where he and his colleagues came up with the technique. It later became, in the words of The New Palgrave Dictionary of Economics, “the standard analysis of quality control inspection”. The dictionary adds, “Like many of Friedman’s contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that however is a measure of his genius.”[61]

Public policy positions

Federal Reserve

Due to its poor performance,[62] Friedman believed that the Federal Reserve Board should be abolished.[63][64] Friedman was deeply critical about Federal Reserve policies, even during the so-called ‘Volcker shock’ that was labelled ‘monetarist.’[65] He further believed that if the money supply was to be centrally controlled (as by the Federal Reserve System) that the preferable way to do it would be with a mechanical system that would keep the quantity of money increasing at a steady rate.

Exchange rates

Friedman was a strong advocate for floating exchange rates throughout the entire Bretton-Woods period. He argued that a flexible exchange rate would make external adjustment possible and allow countries to avoid Balance of Payments crises. He saw fixed exchange rates as an undesirable form of government intervention. The case was articulated in an influential 1953 paper, “The Case for Flexible Exchange Rates”, at a time, when most commentators regarded the possibility of floating exchange rates as a fantasy.[66][67]

School choice

In his 1955 article “The Role of Government in Education”[68] Friedman proposed supplementing publicly operated schools with privately run but publicly funded schools through a system of school vouchers.[69] Reforms similar to those proposed in the article were implemented in, for example, Chile in 1981 and Sweden in 1992.[70] In 1996, Friedman, together with his wife, founded the Friedman Foundation for Educational Choice to advocate school choice and vouchers. In 2016, the Friedman Foundation changed its name to EdChoice to honor the Friedmans’ desire to have the educational choice movement live on without their names attached to it after their deaths.[17]

Conscription

While Walter Oi is credited with establishing the economic basis for a volunteer military, Milton Friedman was a proponent, stating that the draft was “inconsistent with a free society.”[71][72] In Capitalism and Freedom, he argued that conscription is inequitable and arbitrary, preventing young men from shaping their lives as they see fit.[73] During the Nixon administration he headed the committee to research a conversion to paid/volunteer armed force. He would later state that his role in eliminating the conscription in the United States was his proudest accomplishment.[12] Friedman did, however, believe a nation could compel military training as a reserve in case of war time.[73]

Foreign policy

Biographer Lanny Ebenstein noted a drift over time in Friedman’s views from an interventionist to a more cautious foreign policy.[74] He supported US involvement in the Second World War and initially supported a hard line against Communism, but moderated over time.[74] He opposed the Gulf War and the Iraq War.[74] In a spring 2006 interview, Friedman said that the USA’s stature in the world had been eroded by the Iraq War, but that it might be improved if Iraq were to become a peaceful independent country.[75]

Libertarianism and the Republican Party

He served as a member of President Reagan’s Economic Policy Advisory Board starting at 1981. In 1988, he received the Presidential Medal of Freedom and the National Medal of Science. He said that he was a libertarian philosophically, but a member of the U.S. Republican Party for the sake of “expediency” (“I am a libertarian with a small ‘l’ and a Republican with a capital ‘R.’ And I am a Republican with a capital ‘R’ on grounds of expediency, not on principle.”) But, he said, “I think the term classical liberal is also equally applicable. I don’t really care very much what I’m called. I’m much more interested in having people thinking about the ideas, rather than the person.”[76]

Public goods and monopoly

Friedman was supportive of the state provision of some public goods that private businesses are not considered as being able to provide. However, he argued that many of the services performed by government could be performed better by the private sector. Above all, if some public goods are provided by the state, he believed that they should not be a legal monopoly where private competition is prohibited; for example, he wrote:

There is no way to justify our present public monopoly of the post office. It may be argued that the carrying of mail is a technical monopoly and that a government monopoly is the least of evils. Along these lines, one could perhaps justify a government post office, but not the present law, which makes it illegal for anybody else to carry the mail. If the delivery of mail is a technical monopoly, no one else will be able to succeed in competition with the government. If it is not, there is no reason why the government should be engaged in it. The only way to find out is to leave other people free to enter.

— Milton Friedman, Friedman, Milton & Rose D. Capitalism and Freedom, University of Chicago Press, 1982, p. 29

Social security, welfare programs, and negative income tax

After 1960 Friedman attacked Social Security from a free market view stating that it had created welfare dependency.[77]

Friedman proposed that if there had to be a welfare system of any kind, he would replace the existing U.S. welfare system with a negative income tax, a progressive tax system in which the poor receive a basic living income from the government.[78] According to the New York Times, Friedman’s views in this regard were grounded in a belief that while “market forces … accomplish wonderful things”, they “cannot ensure a distribution of income that enables all citizens to meet basic economic needs”.[78]

Drug policy

Friedman also supported libertarian policies such as legalization of drugs and prostitution. During 2005, Friedman and more than 500 other economists advocated discussions regarding the economic benefits of the legalization of marijuana.[79]

Gay rights

Friedman was also a supporter of gay rights.[80][81] He never specifically supported same-sex marriage, instead saying “I do not believe there should be any discrimination against gays.”[81]

Economic freedom

Michael Walker of the Fraser Institute and Friedman hosted a series of conferences from 1986 to 1994. The goal was to create a clear definition of economic freedom and a method for measuring it. Eventually this resulted in the first report on worldwide economic freedom, Economic Freedom in the World.[82] This annual report has since provided data for numerous peer-reviewed studies and has influenced policy in several nations.

Along with sixteen other distinguished economists he opposed the Copyright Term Extension Act and filed an amicus brief in Eldred v. Ashcroft.[83] He supported the inclusion of the word “no-brainer” in the brief.[84]

Friedman argued for stronger basic legal (constitutional) protection of economic rights and freedoms to further promote industrial-commercial growth and prosperity and buttress democracy and freedom and the rule of law generally in society.[85]

Honors, recognition, and influence

George H. Nash, a leading historian of American conservatism, says that by, “the end of the 1960s he was probably the most highly regarded and influential conservative scholar in the country, and one of the few with an international reputation.”[86] Friedman allowed the libertarian Cato Institute to use his name for its biannual Milton Friedman Prize for Advancing Liberty beginning in 2001. A Friedman Prize was given to the late British economist Peter Bauer in 2002, Peruvian economist Hernando de Soto in 2004, Mart Laar, former Estonian Prime Minister in 2006 and a young Venezuelan student Yon Goicoechea in 2008. His wife Rose, sister of Aaron Director, with whom he initiated the Friedman Foundation for Educational Choice, served on the international selection committee.[87][88] Friedman was also a recipient of the Nobel Prize in Economics.

Upon Friedman’s death, Harvard President Lawrence Summers called him “The Great Liberator” saying “… any honest Democrat will admit that we are now all Friedmanites.” He said Friedman’s great popular contribution was “in convincing people of the importance of allowing free markets to operate.”[89]

In 2013 Stephen Moore, a member of the editorial forward of the Wall Street Journal said, “Quoting the most-revered champion of free-market economics since Adam Smith has become a little like quoting the Bible.” He adds, “There are sometimes multiple and conflicting interpretations.”[90]

Nobel Memorial Prize in Economic Sciences

Friedman won the Nobel Memorial Prize in Economic Sciences, the sole recipient for 1976, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”[4]

Hong Kong

Friedman once said, “If you want to see capitalism in action, go to Hong Kong.”[91] He wrote in 1990 that the Hong Kong economy was perhaps the best example of a free market economy.[92]

One month before his death, he wrote the article “Hong Kong Wrong – What would Cowperthwaite say?” in the Wall Street Journal, criticizing Donald Tsang, the Chief Executive of Hong Kong, for abandoning “positive noninterventionism.”[93] Tsang later said he was merely changing the slogan to “big market, small government,” where small government is defined as less than 20% of GDP. In a debate between Tsang and his rival, Alan Leong, before the 2007 Chief Executive election, Leong introduced the topic and jokingly accused Tsang of angering Friedman to death.

Chile

Main articles: Miracle of Chile and Chicago Boys

During 1975, two years after the military coup that brought military dictator President Augusto Pinochet to power and ended the government of Salvador Allende, the economy of Chile experienced a severe crisis. Friedman and Arnold Harberger accepted an invitation of a private Chilean foundation to visit Chile and speak on principles of economic freedom.[94] He spent seven days in Chile giving a series of lectures at the Universidad Católica de Chile and the (National) University of Chile. One of the lectures was entitled “The Fragility of Freedom” and according to Friedman, “dealt with precisely the threat to freedom from a centralized military government.”[95]

In an April 21, 1975, letter to Pinochet, Friedman considered the “key economic problems of Chile are clearly … inflation and the promotion of a healthy social market economy“.[96] He stated that “There is only one way to end inflation: by drastically reducing the rate of increase of the quantity of money …” and that “… cutting government spending is by far and away the most desirable way to reduce the fiscal deficit, because it … strengthens the private sector thereby laying the foundations for healthy economic growth”.[96] As to how rapidly inflation should be ended, Friedman felt that “for Chile where inflation is raging at 10–20% a month … gradualism is not feasible. It would involve so painful an operation over so long a period that the patient would not survive.” Choosing “a brief period of higher unemployment…” was the lesser evil.. and that “the experience of Germany, … of Brazil …, of the post-war adjustment in the U.S. … all argue for shock treatment“. In the letter Friedman recommended to deliver the shock approach with “… a package to eliminate the surprise and to relieve acute distress” and “… for definiteness let me sketch the contents of a package proposal … to be taken as illustrative” although his knowledge of Chile was “too limited to enable [him] to be precise or comprehensive”. He listed a “sample proposal” of 8 monetary and fiscal measures including “the removal of as many as obstacles as possible that now hinder the private market. For example, suspend … the present law against discharging employees”. He closed, stating “Such a shock program could end inflation in months”. His letter suggested that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes.

Sergio de Castro, a Chilean Chicago School graduate, became the nation’s Minister of Finance in 1975. During his six-year tenure, foreign investment increased, restrictions were placed on striking and labor unions, and GDP rose yearly.[97] A foreign exchange program was created between the Catholic University of Chile and the University of Chicago. Many other Chicago School alumni were appointed government posts during and after the Pinochet years; others taught its economic doctrine at Chilean universities. They became known as the Chicago Boys.[98]

Friedman did not criticize Pinochet’s dictatorship at the time, nor the assassinations, illegal imprisonments, torture, or other atrocities that were well known by then.[99] In 1976 Friedman defended his unofficial adviser position with: “I do not consider it as evil for an economist to render technical economic advice to the Chilean Government, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean Government to help end a medical plague.”[100]

Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet’s rule and to the eventual transition to a democratic government during 1990. That idea is included in Capitalism and Freedom, in which he declared that economic freedom is not only desirable in itself but is also a necessary condition for political freedom. In his 1980 documentary Free to Choose, he said the following: “Chile is not a politically free system, and I do not condone the system. But the people there are freer than the people in Communist societies because government plays a smaller role. … The conditions of the people in the past few years has been getting better and not worse. They would be still better to get rid of the junta and to be able to have a free democratic system.”[101][102] In 1984, Friedman stated that he has “never refrained from criticizing the political system in Chile.”[95] In 1991 he said: “I have nothing good to say about the political regime that Pinochet imposed. It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free market regime designed by principled believers in a free market. […] In Chile, the drive for political freedom, that was generated by economic freedom and the resulting economic success, ultimately resulted in a referendum that introduced political democracy. Now, at long last, Chile has all three things: political freedom, human freedom and economic freedom. Chile will continue to be an interesting experiment to watch to see whether it can keep all three or whether, now that it has political freedom,that political freedom will tend to be used to destroy or reduce economic freedom.”[103] He stressed that the lectures he gave in Chile were the same lectures he later gave in China and other socialist states.[104]

During the 2000 PBS documentary The Commanding Heights (based on the book), Friedman continued to argue that “free markets would undermine [Pinochet’s] political centralization and political control.”,[105][106] and that criticism over his role in Chile missed his main contention that freer markets resulted in freer people, and that Chile’s unfree economy had caused the military government. Friedman advocated for free markets which undermined “political centralization and political control”.[107]

Iceland

Friedman visited Iceland during the autumn of 1984, met with important Icelanders and gave a lecture at the University of Iceland on the “tyranny of the status quo.” He participated in a lively television debate on August 31, 1984 with socialist intellectuals, including Ólafur Ragnar Grímsson, who later became the president of Iceland.[108] When they complained that a fee was charged for attending his lecture at the University and that, hitherto, lectures by visiting scholars had been free-of-charge, Friedman replied that previous lectures had not been free-of-charge in a meaningful sense: lectures always have related costs. What mattered was whether attendees or non-attendees covered those costs. Friedman thought that it was fairer that only those who attended paid. In this discussion Friedman also stated that he did not receive any money for delivering that lecture.

Estonia

Although Friedman never visited Estonia, his book Free to Choose exercised a great influence on that nation’s then 32-year-old prime minister, Mart Laar, who has claimed that it was the only book on economics he had read before taking office. Laar’s reforms are often credited with responsibility for transforming Estonia from an impoverished Soviet Republic to the “Baltic Tiger.” A prime element of Laar’s program was introduction of the flat tax. Laar won the 2006 Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.[109]

United Kingdom

After 1950 Friedman was frequently invited to lecture in Britain, and by the 1970s his ideas had gained widespread attention in conservative circles. For example, he was a regular speaker at the Institute of Economic Affairs (IEA), a libertarian think tank. Conservative politician Margaret Thatcher closely followed IEA programs and ideas, and met Friedman there in 1978. He also strongly influenced Keith Joseph, who became Thatcher’s senior advisor on economic affairs, as well as Alan Walters and Patrick Minford, two other key advisers. Major newspapers, including the Daily Telegraph, The Times, and The Financial Times all promulgated Friedman’s monetarist ideas to British decision-makers. Friedman’s ideas strongly influenced Thatcher and her allies when she became Prime Minister in 1979.[110][111]

Criticism

Econometrician David Hendry criticized part of Friedman’s and Anna Schwartz’s 1982 Monetary Trends.[112] When asked about it during an interview with Icelandic TV in 1984,[113] Friedman said that the criticism referred to a different problem from that which he and Schwartz had tackled, and hence was irrelevant,[114] and pointed out the lack of consequential peer review amongst econometricians on Hendry’s work.[115] In 2006, Hendry said that Friedman was guilty of “serious errors” of misunderstanding that meant “the t-ratios he reported for UK money demand were overstated by nearly 100 per cent”, and said that, in a paper published in 1991 with Neil Ericsson,[116] he had refuted “almost every empirical claim […] made about UK money demand” by Friedman and Schwartz.[117] A 2004 paper updated and confirmed the validity of the Hendry–Ericsson findings through 2000.[118]

Although Keynesian Nobel laureate Paul Krugman praised Friedman as a “great economist and a great man” after Friedman’s death in 2006, and acknowledged his many, widely accepted contributions to empirical economics, Krugman had been, and remains, a prominent critic of Friedman. Krugman has written that “he slipped all too easily into claiming both that markets always work and that only markets work. It’s extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.”[119]

In her book The Shock Doctrine, author and social activist Naomi Klein criticized Friedman’s economic liberalism, identifying it with the principles that guided the economic restructuring that followed the military coups in countries such as Chile and Indonesia. Based on their assessments of the extent to which what she describes as neoliberal policies contributed to income disparities and inequality, both Klein and Noam Chomsky have suggested that the primary role of what they describe as neoliberalism was as an ideological cover for capital accumulation by multinational corporations.[120]

Visit to Chile

Because of his involvement with the Pinochet government, there were international protests when Friedman was awarded the Nobel Prize in 1976.[121] Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip[122] he took to Chile during March 1975 (less than two years after the coup that deposed President Salvador Allende). Friedman answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation, and met with officials, including Augusto Pinochet, while in Chile.[123]

Chilean economist Orlando Letelier asserted that Pinochet’s dictatorship resorted to oppression because of popular opposition to Chicago School policies in Chile.[124] After a 1991 speech on drug legalisation, Friedman answered a question on his involvement with the Pinochet regime, saying that he was never an advisor to Pinochet (also mentioned in his 1984 Iceland interview[95]), but that a group of his students at the University of Chicago were involved in Chile’s economic reforms. Friedman credited these reforms with high levels of economic growth and with the establishment of democracy that has subsequently occurred in Chile.[125][126] In October 1988, after returning from a lecture tour of China during which he had met with Zhao Ziyang, Friedman wrote to The Stanford Daily asking if he should anticipate a similar “avalanche of protests for having been willing to give advice to so evil a government? And if not, why not?”[127]

Capitalism and Freedom

Capitalism and Freedom is a seminal work by Friedman. In the book, Friedman talks about the need to move to a classically liberal society, that free markets would help nations and individuals in the long-run and fix the efficiency problems currently faced by the United States and other major countries of the 1950s and 1960s. He goes through the chapters specifying a specific issue in each respective chapter from the role of government and money supply to social welfare programs to a special chapter on occupational licensure. Friedman concludes Capitalism and Freedom with his “classical liberal” stance, that government should stay out of matters that do not need and should only involve itself when absolutely necessary for the survival of its people and the country. He recounts how the best of a country’s abilities come from its free markets while its failures come from government intervention.[77]

Selected bibliography

  • A Theory of the Consumption Function (1957)
  • A Program for Monetary Stability (Fordham University Press, 1960) 110 pp. online version
  • Capitalism and Freedom (1962), highly influential series of essays that established Friedman’s position on major issues of public policy excerpts
  • A Monetary History of the United States, 1867–1960, with Anna J. Schwartz, 1963; part 3 reprinted as The Great Contraction
  • “The Role of Monetary Policy.” American Economic Review, Vol. 58, No. 1 (Mar., 1968), pp. 1–17 JSTOR presidential address to American Economics Association
  • “Inflation and Unemployment: Nobel lecture”, 1977, Journal of Political Economy. Vol. 85, pp. 451–72. JSTOR
  • Free to Choose: A personal statement, with Rose Friedman, (1980), highly influential restatement of policy views
  • The Essence of Friedman, essays edited by Kurt R. Leube, (1987) (ISBN 0-8179-8662-6)
  • Two Lucky People: Memoirs (with Rose Friedman) ISBN 0-226-26414-9 (1998) excerpt and text search
  • Milton Friedman on Economics: Selected Papers by Milton Friedman, edited by Gary S. Becker (2008)
  • An Interview with Milton Friedman, John B. Taylor (2001). Macroeconomic Dynamics, 5, pp 101–31

See also

Notes

  1. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 89.
  2. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  3. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  4. ^ Jump up to:a b “Milton Friedman on nobelprize.org”. Nobel Prize. 1976. Retrieved February 20, 2008.
  5. Jump up^ Thomas Sowell (2016-09-16). A Personal Odyssey. Free Press. p. 320. ISBN 0743215087.
  6. Jump up^ The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business
  7. Jump up^ “Milton Friedman”. Commanding Heights. PBS. October 1, 2000. Retrieved September 19, 2011.
  8. Jump up^ Milton Friedman—Economist as Public Intellectual
  9. Jump up^ Mark Skousen (2009-02-28). The Making of Modern Economics: The Lives and Ideas of the Great Thinkers. M.E. Sharpe. p. 407. ISBN 0-7656-2227-0.
  10. Jump up^ Among macroeconomists, the “natural” rate has been increasingly replaced by James Tobin‘s NAIRU, the non-accelerating inflation rate of unemployment, which is seen as having fewer normative connotations.
  11. Jump up^ Nobel prize winner Paul Krugman stated that, “In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment … dubbed ‘stagflation.” Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995) p. 43 online
  12. ^ Jump up to:a b Doherty, Brian (June 1, 1995). “Best of Both Worlds”. Reason Magazine. Retrieved October 24, 2009
  13. Jump up^ Edward Nelson, “Friedman’s Monetary Economics in Practice,” Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, April 13, 2011. Nelson stated, “in important respects, the overall monetary and financial policy response to the crisis can be viewed as Friedman’s monetary economics in practice.” and “Friedman’s recommendations for responding to a financial crisis largely lined up with the principal financial and monetary policy measures taken since 2007.” Nelson, “Review,” in Journal of Economic Literature (Dec, 2012) 50#4 pp. 1106–09
  14. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  15. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  16. Jump up^ Milton Friedman (1912–2006)
  17. ^ Jump up to:a b Sullivan, Maureen (July 30, 2016). “Milton Friedman’s Name Disappears From Foundation, But His School-Choice Beliefs Live On”. Forbes. Retrieved 14 September 2016.
  18. Jump up^ “Capitalism and Friedman” (editorial), The Wall Street Journal November 17, 2006
  19. Jump up^ Václav Klaus (January 29, 2007). “Remarks at Milton Friedman Memorial Service”. Retrieved August 22, 2008.
  20. Jump up^ Johan Norberg, Defaming Milton Friedman: Naomi Klein’s disastrous yet popular polemic against the great free market economist, Reason Magazine, Washington, D.C., Oct. 2008
  21. Jump up^ Friedman 1999, p. 506
  22. Jump up^ Davis, William L, Bob Figgins, David Hedengren, and Daniel B. Klein. “Economic Professors’ Favorite Economic Thinkers, Journals, and Blogs”, Econ Journal Watch 8(2): 126–46, May 2011.
  23. Jump up^ “Milton Friedman, a giant among economists”. The Economist. November 23, 2006. Retrieved February 20, 2008.
  24. Jump up^ “Who’s who in American Jewry”. 1980.
  25. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) p. 10; Milton & Rose Friedman, Two Lucky People. Memoirs, Chicago 1998, p. 22.
  26. Jump up^ Eamonn Butler, Milton Friedman (2011) ch 1
  27. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) pp. 5–12
  28. Jump up^ “Milton Friedman and his start in economics”. Young America’s Foundation. August 2006. Retrieved March 12, 2012.
  29. Jump up^ Ebenstein, Milton Friedman: a biography (2007) pp. 13–30
  30. Jump up^ Feeney, Mark (November 16, 2006). “Nobel laureate economist Milton Friedman dies at 94”. The Boston Globe. Retrieved February 20, 2008.
  31. Jump up^ Friedman 1999, p. 59
  32. Jump up^ “Right from the Start? What Milton Friedman can teach progressives.” (PDF). J. Bradford DeLong. Retrieved February 20, 2008.
  33. Jump up^ Bernanke 2004, p. 7
  34. Jump up^ Friedman 1999, p. 42
  35. Jump up^ Friedman 1999, pp. 84–85
  36. Jump up^ Milton Friedman; Rose D. Friedman (1999). Two Lucky People: Memoirs. University of Chicago Press. pp. 122–23. ISBN 9780226264158.
  37. Jump up^ Doherty, Brian (June 1995). “Best of Both Worlds”. Reason. Retrieved July 28, 2010.
  38. ^ Jump up to:a b “Milton Friedman Biography – Academy of Achievement”. Achievement.org. Retrieved 2014-04-22.
  39. Jump up^ Philip Mirowski (2002). Machine Dreams: Economics Becomes a Cyborg Science. Cambridge University Press. pp. 202–03. ISBN 9780521775267.
  40. Jump up^ CATO, “Letter from Washington,” National Review, September 19, 1980, Vol. 32 Issue 19, p. 1119
  41. Jump up^ Rose and Milton Friedman
  42. Jump up^ Inventory of the Paul A. Samuelson Papers, 1933–2010 and undated | Finding Aids | Rubenstein Library
  43. Jump up^ Ebenstein (2007). Milton Friedman: A Biography. p. 208.
  44. Jump up^ “Milton Friedman: An enduring legacy”. The Economist. November 17, 2006. Retrieved February 20, 2008.
  45. Jump up^ Sullivan, Patricia (November 17, 2006). “Economist Touted Laissez-Faire Policy”. The Washington Post. Retrieved February 20, 2008.
  46. Jump up^ Milton Friedman – Biography | Cato Institute
  47. Jump up^ Trustees
  48. Jump up^ Milton Friedman
  49. Jump up^ Lanny Ebenstein, Milton Friedman, Commentary, May 2007, p. 286.
  50. Jump up^ Asman, David (November 16, 2006). “‘Your World’ Interview With Economist Milton Friedman”. Fox News. Retrieved August 2, 2011.
  51. Jump up^ Christie, Jim (November 16, 2006). “Free market economist Milton Friedman dead at 94”. Reuters. Retrieved February 20, 2008.
  52. Jump up^ Peter Robinson (2008-10-17). “What Would Milton Friedman Say?”. forbes.com. Retrieved 2014-12-13.
  53. Jump up^ Optimum Quantity of Money. Aldine Publishing Company. 1969. p. 4.
  54. Jump up^ Friedman, Milton. Inflation: Causes and Consequences. New York: Asia Publishing House.
  55. Jump up^ “Milton Friedman: END THE FED”. Themoneymasters.com. Retrieved 2014-04-22.
  56. Jump up^ Friedman, Milton (1969). Memoirs of an Unregulated Economist. Aldine Publishing Company. p. 4.
  57. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  58. Jump up^ Kevin Hoover; Warren Young (2011). Rational Expectations – Retrospect and Prospect (PDF). Durham: Center for the History of Political Economy at Duke University.
  59. Jump up^ “Charlie Rose Show”. December 26, 2005. Missing or empty |series= (help)
  60. Jump up^ David Teira, “Milton Friedman, the Statistical Methodologist,” History of Political Economy (2007) 39#3 pp. 511–27,
  61. Jump up^ The Life and Times of Milton Friedman – Remembering the 20th century’s most influential libertarian
  62. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “There in no institution in the US that has such a high public standing and such a poor record of performance” “It’s done more harm than good”
  63. Jump up^ “My first preference would be to abolish the Federal Reserve” on YouTube
  64. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “I have long been in favor of abolishing it.”
  65. Jump up^ Reichart Alexandre & Abdelkader Slifi (2016). ‘The Influence of Monetarism on Federal Reserve Policy during the 1980s.’ Cahiers d’économie Politique/Papers in Political Economy, (1), pp. 107–50. https://www.cairn.info/revue-cahiers-d-economie-politique-2016-1-page-107.htm
  66. Jump up^ [1]
  67. Jump up^ [2]
  68. Jump up^ Friedman, Milton (1955). Solo, Robert A., ed. “The Role of Government in Education,” as printed in the book Economics and the Public Interest (PDF). Rutgers University Press. pp. 123–144.
  69. Jump up^ Leonard Ross and Richard Zeckhauser (December 1970). “Review: Education Vouchers”. The Yale Law Journal. 80 (2): 451–61. doi:10.2307/795126. JSTOR 795126.
  70. Jump up^ Martin Carnoy (August 1998). “National Voucher Plans in Chile and Sweden: Did Privatization Reforms Make for Better Education?”. Comparative Education Review. 42 (3): 309–37. doi:10.1086/447510. JSTOR 1189163.
  71. Jump up^ Milton Friedman (1991). The War on Drugs. America’s Drug Forum.
  72. Jump up^ Rostker, Bernard (2006). I Want You!: The Evolution of the All-Volunteer Force. Rand Corporation. p. 4. ISBN 978-0-8330-3895-1.
  73. ^ Jump up to:a b Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. p. 36.
  74. ^ Jump up to:a b c Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. pp. 231–32. ISBN 978-0-230-60409-4.
  75. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. p. 243. ISBN 978-0-230-60409-4.
  76. Jump up^ Friedman and Freedom. Queen’s Journal. Archived from the original on August 11, 2006. Retrieved February 20, 2008., Interview with Peter Jaworski. The Journal, Queen’s University, March 15, 2002 – Issue 37, Volume 129
  77. ^ Jump up to:a b Milton Friedman; Rose D. Friedman (1962). Capitalism and Freedom: Fortieth Anniversary Edition. U. of Chicago Press. ISBN 9780226264189.
  78. ^ Jump up to:a b Frank, Robert H (2006-11-23). “The Other Milton Friedman: A Conservative With a Social Welfare Program”. New York Times. The New York Times.
  79. Jump up^ “An open letter”. Prohibition Costs. Retrieved November 9, 2012.
  80. Jump up^ “Milton Friedman”. Liberal Democratic Party (Australia). Retrieved February 19, 2013.
  81. ^ Jump up to:a b Alan O. Ebenstein, Milton Friedman: A Biography (2007) p. 228
  82. Jump up^ “Economic Freedom of the World project”. Fraser Institute. Retrieved 16 February 2016.
  83. Jump up^ “In the Supreme Court of the United States” (PDF). Harvard Law School. Retrieved February 20, 2008.
  84. Jump up^ Lessig, Lawrence (November 19, 2006). “only if the word ‘no-brainer’ appears in it somewhere: RIP Milton Friedman (Lessig Blog)”. Lessig.org. Retrieved April 2, 2013.
  85. Jump up^ “A New British Bill of Rights: The Case For”. ISR Online Guide. Retrieved 16 February 2016.
  86. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 260.
  87. Jump up^ Selection Committee Announced for the 2008 Milton Friedman Prize for Advancing Liberty,” Cato Institute, September 5, 2007. Accessed 4 January 2014.
  88. Jump up^ Milton Friedman Prize page at Cato Institute website. Accessed 5 January 2014.
  89. Jump up^ Summers, Larry (November 19, 2006). “The Great Liberator”. The New York Times.
  90. Jump up^ Stephen Moore, What Would Milton Friedman Say?” Wall Street Journal, May 30, 2013 p. A13
  91. Jump up^ Ingdahl, Waldemar (March 22, 2007). “Real Virtuality”. The American. Retrieved February 20, 2008.
  92. Jump up^ Friedman, Milton; Friedman, Rose (1990). Free to Choose: A Personal Statement. Harvest Books. p. 34. ISBN 0-15-633460-7.
  93. Jump up^ Friedman, Milton (October 6, 2006). “Dr. Milton Friedman”. Opinion Journal. Retrieved February 20, 2008.
  94. Jump up^ Letter from Arnold Harberger to Stig Ramel as reprinted in the Wall Street Journal 12/10/1976, and in Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 598–99. Accessible at books.google.com
  95. ^ Jump up to:a b c Milton Friedman (August 31, 1984). Iceland Television Debate (Flash Video) (Television production). Reykjavík: Icelandic State Television. Event occurs at 009:48:00. Retrieved June 27, 2010.
  96. ^ Jump up to:a b [http:// Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 591–93. Letter from Friedman to Pinochet, April 21, 1975.]
  97. Jump up^ Mask II, William Ray (May 2013). The Great Chilean Recovery: Assigning Responsibility For The Chilean Miracle(s) (Thesis). California State University, Fresno.
  98. Jump up^ “Chile and the “Chicago Boys””. The Hoover Institution. Stanford University. Retrieved 20 June 2014.
  99. Jump up^ O’Shaughnessy, Hugh (December 11, 2006). “General Augusto Pinochet”. The Independent. Retrieved February 20, 2008.
  100. Jump up^ Newsweek of June 14, 1976
  101. Jump up^ “Free to Choose Vol. 5”. Archived from the original on February 9, 2008. Retrieved February 20, 2008.
  102. Jump up^ Frances Fox Piven vs. Milton Friedman, Thomas Sowell, debate, 1980, YouTube.
  103. Jump up^ The Smith Center: Milton Friedman’s lecture, “Economic Freedom, Human Freedom, Political Freedom”, by Milton Friedman, delivered November 1, 1991.
  104. Jump up^ Friedman 1999, pp. 600–01
  105. Jump up^ “Interview with Jeffery Sachs on the “Miracle of Chile””. PBS. Retrieved February 20, 2008.
  106. Jump up^ “Commanding Heights: Milton Friedman”. PBS. Retrieved December 29, 2008.
  107. Jump up^ “Milton Friedman interview”. PBS. Retrieved February 20, 2008.
  108. Jump up^ Friedman, Milton; Grímsson, Ólafur Ragnar. Milton Friedman on Icelandic State Television in 1984.
  109. Jump up^ “Mart Laar”. Cato Institute. Retrieved February 20, 2008.
  110. Jump up^ John F. Lyons (2013). America in the British Imagination: 1945 to the Present. Palgrave Macmillan. p. 102.
  111. Jump up^ Subroto Roy & John Clarke, eds., Margaret Thatcher’s Revolution: How it Happened and What it Meant (Continuum 2005)
  112. Jump up^ David F. Hendry; Neil R. Ericsson (October 1983). “Assertion without Empirical Basis: An Econometric Appraisal of ‘Monetary Trends in … the United Kingdom’ by Milton Friedman and Anna Schwartz,” in Monetary Trends in the United Kingdom, Bank of England Panel of Academic Consultants, Panel Paper No. 22, pp. 45–101.See also Federal Reserve International Finance Discussion Paper No. 270 (December 1985), which is a revised and shortened version of Hendry–Ericsson 1983.
  113. Jump up^ “M.Friedman – Iceland TV (1984)”. YouTube. Retrieved 16 February 2016.
  114. Jump up^ van Steven Moore, CMA (1984-08-31). “Milton Friedman – Iceland 2 of 8”. YouTube. Retrieved 2014-04-22.
  115. Jump up^ J. Daniel Hammond (2005). Theory and Measurement: Causality Issues in Milton Friedman’s Monetary Economics. Cambridge U.P. pp. 193–99.
  116. Jump up^ David F. Hendry; Neil R. Ericsson (July 1989). “An Econometric Analysis of UK Money Demand in Monetary Trends in the United States and the United Kingdom by Milton Friedman and Anna J. Schwartz” (PDF). International Finance Discussion Papers: 355. Federal Reserve. Retrieved 2 August 2013.
  117. Jump up^ Hendry, David F. (25 April 2013). “Friedman’s t-ratios were overstated by nearly 100%”. ft.com. Retrieved 1 May 2013.
  118. Jump up^ Escribano, Alvaro (2004). “Nonlinear error correction: The case of money demand in the United Kingdom (1878–2000)” (PDF). Macroeconomic Dynamics. 8 (1): 76–116. doi:10.1017/S1365100503030013.
    Escribano’s approach had already been recognized by Friedman, Schwartz, Hendry et al. (p. 14 of the pdf) as yielding significant improvements over previous money demand equations.
  119. Jump up^ The New York Review of Books, Who Was Milton Friedman?, February 15, 2007
  120. Jump up^ Noam Chomsky (1999). Profit Over People: Neoliberalism and Global Order. New York, NY: Seven Stories Press.
  121. Jump up^ Feldman, Burton (2000). “Chapter 9: The Economics Memorial Prize”. The Nobel Prize: A History of Genius, Controversy, and Prestige. New York: Arcade Publishing. p. 350. ISBN 1-55970-537-X.
  122. Jump up^ O’Shaughnessy, Hugh (11 December 2006). “General Augusto Pinochet”. The Independent.
  123. Jump up^ Friedman, Milton; Friedman, Rose D. “Two Lucky People: One Week in Stockholm”. Hoover Digest: Research and Opinion on Public Policy. 1998 (4).
  124. Jump up^ Orlando Letelier, “Economic Freedom’s Awful Toll”, The Nation, August 28, 1976.
  125. Jump up^ The Drug War as a Socialist Enterprise, Milton Friedman, From: Friedman & Szasz on Liberty and Drugs, edited and with a Preface by Arnold S. Trebach and Kevin B. Zeese. Washington, D.C.: The Drug Policy Foundation, 1992.
  126. Jump up^ YouTube clip: Milton Friedman – Pinochet and Chile
  127. Jump up^ Friedman, Milton; Friedman, Rose D. Two Lucky People: Memoirs. University of Chicago Press. ISBN 9780226264158. Retrieved 18 October 2016.

References

  • Bernanke, Ben (2004). Essays on the Great Depression. Princeton University Press. ISBN 0-691-11820-5
  • Butler, Eamonn (2011). Milton Friedman. Harriman Economic Essentials.
  • Ebenstein, Alan O. (2007). Milton Friedman: a biography.
  • Friedman, Milton (1999). Two Lucky People: Memoirs. University of Chicago Press. ISBN 0-226-26415-7.
  • Wood, John Cunningham, and Ronald N. Wood, ed. (1990), Milton Friedman: Critical Assessments, v. 3. Scroll to chapter-preview links. Routledge.

Further reading

External links

Free to Choose (original series) https://www.youtube.com/watch?v=f1Fj5tzuYBE

Videos

Robert Mundell

From Wikipedia, the free encyclopedia
Robert Mundell
Rmundell.jpg
Born October 24, 1932 (age 84)
Kingston, Ontario, Canada
Nationality Canadian
Institution Johns Hopkins University (1959–61, 1997–98, 2000–01)
University of Chicago (1965–72)
Graduate Institute of International Studies in Geneva, Switzerland (1965–75) [1]
University of Waterloo (1972–74)
McGill University (1989–1990)[2]
Columbia University (1974 – present)
Chinese University of Hong Kong (2009 – present)
Field Monetary economics
School or
tradition
Supply-side economics
Alma mater London School of Economics
UBC Vancouver School of Economics
University of Washington
Massachusetts Institute of Technology
University of Waterloo
Doctoral
advisor
Charles Kindleberger[3]
Doctoral
students
Jacob A. Frenkel
Rudi Dornbusch[4]
Carmen Reinhart[5]
Influences Ludwig Von Mises
Influenced Arthur Laffer
Jude Wanniski
Michael Mussa
Contributions Mundell–Fleming model
Optimum currency areas
Research on the gold standard
Awards Nobel Memorial Prize in Economics (1999)
Information at IDEAS / RePEc

Robert Alexander Mundell, CC (born October 24, 1932) is a Nobel Prize-winning Canadian economist. Currently, he is a professor of economics at Columbia University and the Chinese University of Hong Kong.

He received the Nobel Memorial Prize in Economics in 1999 for his pioneering work in monetary dynamics and optimum currency areas. Mundell is known as the “father”[6] of the Euro, as he laid the groundwork for its introduction through this work and helped to start the movement known as supply-side economics. Mundell is also known for the Mundell–Fleming model and Mundell–Tobin effect.

Background

Mundell was born in Kingston, Ontario, Canada. He earned his BA in Economics at the University of British Columbia in Vancouver, Canada, and his MA at the University of Washington in Seattle. After studying at the University of British Columbia and at The London School of Economics in 1956,[7] he then attended the Massachusetts Institute of Technology (MIT), where he obtained his PhD in Economics in 1956. In 2006 Mundell earned an honorary Doctor of Laws degree from the University of Waterloo in Canada.[8] He was Professor of Economics and Editor of the Journal of Political Economy at the University of Chicago from 1965 to 1972, Chairman of the Department of Economics at the University of Waterloo 1972 to 1974 and since 1974 he was Professor of Economics at Columbia University.[9] He also held the post of Repap Professor of Economics at McGill University.[10][11]

Career

Since 1974 he has been a professor in the Economics department at Columbia University; since 2001 he has held Columbia’s highest academic rank – University Professor. After completing his post-doctoral fellowship at the University of Chicago in 1957, he began teaching economics at Stanford University, and then Paul H. Nitze School of Advanced International Studies at Johns Hopkins University during 1959–1961.[2] In 1961, he went on to staff the International Monetary Fund. Mundell returned to academics as professor of economics at the University of Chicago from 1966 to 1971, and then served as professor during summers at the Graduate Institute of International Studies in Geneva until 1975. In 1989, he was appointed to the post of Repap Professor of Economics at McGill University.,[10][11] In the 1970s, he laid the groundwork for the introduction of the euro through his pioneering work in monetary dynamics and optimum currency forms for which he won the 1999 Nobel Prize in Economics. During this time he continued to serve as an economic adviser to the United Nations, the IMF, the World Bank, the European Commission, the Federal Reserve Board, the United States Department of Treasury and the governments of Canada and other countries. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong.

Among his major contributions are:

Awards

Mundell was awarded the Guggenheim Fellowship in 1971 and the Nobel Memorial Prize in Economics in 1999. In 2002 he was made a Companion of the Order of Canada.

In 1992, Mundell received the Docteur Honoris Causa from the University of Paris. Mundell’s honorary professorships and fellowships were from Brookings Institution, the University of Chicago, the University of Southern California, McGill University, the University of Pennsylvania, the Bologna Center and Renmin University of China. He became a fellow of the American Academy of Arts and Sciences in 1998. In June 2005 he was awarded the Global Economics Prize World Economics Institute in Kiel, Germany and in September 2005 he was made a Cavaliere di Gran Croce del Reale Ordine del Merito sotto il Titolo di San Ludovico by Principe Don Carlo Ugo di Borbone Parma.

The Mundell International University of Entrepreneurship in the Zhongguancun district of Beijing, People’s Republic of China is named in his honor.

International monetary flows

Mundell is best known in politics for his support of tax cuts and supply-side economics; however, in economics it is for his work on currency areas[12] and international exchange rates[13] that he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel by the Bank of Sweden (Sveriges Riksbank). Nevertheless, supply-side economics featured prominently in his Bank of Sweden prize speech.

In the 1960s, Canada, of which Mundell is a native, floated its exchange: this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930s “Stockholm School” successfully lobbied Sweden to leave the gold standard.

In 1962, along with Marcus Fleming, he co-authored the Mundell–Fleming model of exchange rates, and noted that it was impossible to have domestic autonomy, fixed exchange rates, and free capital flows: no more than two of those objectives could be met. The model is, in effect, an extension of the IS/LM model applied to currency rates.

According to Mundell’s analysis:

  • Discipline under the Bretton Woods system was more due to the US Federal Reserve than to the discipline of gold.
  • Demand side fiscal policy would be ineffective in restraining central banks under a floating exchange rate system.
  • Single currency zones relied, therefore, on similar levels of price stability, where a single monetary policy would suffice for all.

His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counterpoint over this issue between Mundell and Milton Friedman.[14]

This work later led to the creation of the euro and his prediction that leaving the Bretton Woods system would lead to “stagflation” so long as highly progressive income tax rates applied. In 1974, he advocated a drastic tax reduction and a flattening of income tax rates.

Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denies the need for a fixed gold based currency or currency board[citation needed] (he still often recommends this as a policy in hyperinflationary environments) and he is both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can come about only by a positive balance of payments.

In 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, and much of Asia would look towards the yen.[15] Such predictions have proved highly inaccurate.

Nobel Prize winner

Mundell won the Nobel Memorial Prize in Economic Science in 1999 and gave as his prize lecture a speech titled “A Reconsideration of the Twentieth Century”. According to the Nobel Prize Committee, he got the honor for “his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas”.

Mundell concluded in that lecture that “the international monetary system depends only on the power configuration of the countries that make it up”. He divided the entire twentieth century into three parts by different periods of time:

  • The first third of the century, from its beginning to the Great Depression of the 1930s, economics was dominated by the confrontation of the Federal Reserve System with the gold standard.
  • The second third of the century was from World War II to 1973, when the international monetary system was dominated by fixing the price of gold with the US dollar.
  • The last third of the century started with the destruction of the old monetary system due to the problem of inflation.

With the destruction of the old monetary system, a new international monetary system was finally founded. Controlling inflation by each country became a main topic during this era.

Television appearances

Mundell has appeared on CBS‘s Late Show with David Letterman. His first appearance was on October 17, 2002[16] where he gave The Top 10 List on “Ways My Life has Changed Since Winning the Nobel Prize.” In March 2004[17] he told “You might be a redneck” jokes followed in May 2004[18] with “Yo Mama” jokes. In September 2004[19] he appeared again, this time to read excerpts from Paris Hilton‘s memoir at random moments throughout the show. In November 2005[20] he told a series of Rodney Dangerfield‘s jokes. On February 7, 2006[21] he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Mundell also appeared on Bloomberg Television many times.

Mundell has also appeared on China Central Television‘s popular Lecture Room series. Professor Mundell was also a special guest making the ceremonial first move in Game Five of the 2010 World Chess Championship between Viswanathan Anand and Veselin Topalov.

Mundell started the Pearl Spring Chess Tournament, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen.

See also

References

  1. Jump up^ http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1999/mundell-bio.html
  2. ^ Jump up to:a b Nobel Prize Winners from Johns Hopkins University
  3. Jump up^ Essays in the theory of international capital movementspage 3. Retrieved September 12, 2016.
  4. Jump up^ RUDI DORNBUSCH by Stanley Fischer – Project Syndicate
  5. Jump up^ Warsh, David (November 1, 2009). “What The Woman Lived”. Economic Principals. Retrieved October 17, 2016.
  6. Jump up^ “Mr. Mundell, known as the father of the euro”[dead link]
  7. Jump up^ “Robert Mundell – Nobel Prize Winners – Key facts – About LSE – Home”. .lse.ac.uk. March 13, 2009. Retrieved January 1, 2012.
  8. Jump up^ [1]
  9. Jump up^ http://www.polyu.edu.hk/iao/nobel2009/mundell_bio.pdf
  10. ^ Jump up to:a b “Robert A. Mundell – Biography”. Nobelprize.org. Retrieved January 1, 2012.
  11. ^ Jump up to:a b “Biography | The Works of Robert Mundell”. Robertmundell.net. Retrieved January 1, 2012.
  12. Jump up^ A Theory of Optimum Currency Areas; The American Economic Review, Vol. 51, No. 4, pp. 657–665, 1961
  13. Jump up^ Capital Mobility, and Stabilization Policy under Fixed and Flexible Exchange Rates; Revue Canadienne d’Economique et de Science Politique, Vol. 29, No. 4, pp. 475–485, 1963
  14. Jump up^ “Mundell-Friedman debate” (PDF). Retrieved January 1, 2012.
  15. Jump up^ Mark Milner and Charlotte Denny (January 14, 2000). “The new endangered species | Business”. London: The Guardian. Retrieved January 1, 2012.
  16. Jump up^ show #1891 Archived August 15, 2006, at the Wayback Machine.
  17. Jump up^ show #2144 Archived October 17, 2006, at the Wayback Machine.
  18. Jump up^ show #2162 Archived May 16, 2006, at the Wayback Machine.
  19. Jump up^ show # 2238 Archived February 23, 2006, at the Wayback Machine.
  20. Jump up^ show #2466 Archived December 15, 2005, at the Wayback Machine.
  21. Jump up^ show #2505 Archived May 16, 2006, at the Wayback Machine.

External links

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George Orwell — Videos

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George Orwell

From Wikipedia, the free encyclopedia
George Orwell
A photo showing the head and shoulders of a middle-aged man with black hair and a slim moustache.

Orwell’s press card portrait, 1943
Born Eric Arthur Blair
25 June 1903
Motihari, Bengal Presidency, British India
(now East Champaran, Bihar, India)
Died 21 January 1950 (aged 46)
University College Hospital, London, England, United Kingdom
Resting place Sutton Courtenay, Oxfordshire, England, United Kingdom
Pen name George Orwell
Occupation Novelist, essayist, journalist, critic
Alma mater Eton College
Genre Dystopia, roman à clef, satire
Subject Anti-fascism, anti-Stalinism, democratic socialism, literary criticism, news, polemic
Notable works Animal Farm
Nineteen Eighty-Four
Years active 1928–1950
Spouse Eileen O’Shaughnessy
(m. 1935; her death 1945)
Sonia Brownell
(m. 1949; his death 1950)

Signature Eric Blair ("George Orwell")

Eric Arthur Blair (25 June 1903 – 21 January 1950),[1] better known by the pen name George Orwell, was an English novelist, essayist, journalist, and critic. His work is marked by lucid prose, awareness of social injustice, opposition to totalitarianism, and outspoken support of democratic socialism.[2][3]

Orwell wrote literary criticism, poetry, fiction, and polemical journalism. He is best known for the allegorical novella Animal Farm (1945) and the dystopian novel Nineteen Eighty-Four (1949). His non-fiction works, including The Road to Wigan Pier (1937), documenting his experience of working class life in the north of England, and Homage to Catalonia (1938), an account of his experiences in the Spanish Civil War, are widely acclaimed, as are his essays on politics, literature, language, and culture. In 2008, The Times ranked him second on a list of “The 50 greatest British writers since 1945”.[4]

Orwell’s work continues to influence popular and political culture, and the term Orwellian – descriptive of totalitarian or authoritarian social practices – has entered the language together with many of his neologisms, including cold war, Big Brother, Thought Police, Room 101, memory hole, newspeak, doublethink, and thoughtcrime.[5]

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Life

Early years

Blair family home at Shiplake, Oxfordshire

Eric Arthur Blair was born on 25 June 1903, in Motihari, Bengal Presidency (present-day Bihar), in British India.[6] His great-grandfather Charles Blair was a wealthy country gentleman in Dorset who married Lady Mary Fane, daughter of the Earl of Westmorland, and had income as an absentee landlord of plantations in Jamaica.[7] His grandfather, Thomas Richard Arthur Blair, was a clergyman.[8] Although the gentility passed down the generations, the prosperity did not; Eric Blair described his family as “lower-upper-middle class“.[9] His father, Richard Walmesley Blair, worked in the Opium Department of the Indian Civil Service.[10] His mother, Ida Mabel Blair (née Limouzin), grew up in Moulmein, Burma, where her French father was involved in speculative ventures.[7] Eric had two sisters: Marjorie, five years older, and Avril, five years younger. When Eric was one year old, his mother took him and his sister to England.[11][n 1] His birthplace and ancestral house in Motihari has been declared a protected monument of historical importance.[12]

In 1904, Ida Blair settled with her children at Henley-on-Thames in Oxfordshire. Eric was brought up in the company of his mother and sisters, and apart from a brief visit in mid-1907,[13] they did not see the husband and father Richard Blair until 1912.[8] His mother’s diary from 1905 describes a lively round of social activity and artistic interests.

Before the First World War, the family moved to Shiplake, Oxfordshire where Eric became friendly with the Buddicom family, especially their daughter Jacintha. When they first met, he was standing on his head in a field. On being asked why, he said, “You are noticed more if you stand on your head than if you are right way up.”[14] Jacintha and Eric read and wrote poetry, and dreamed of becoming famous writers. He said that he might write a book in the style of H. G. Wells‘s A Modern Utopia. During this period, he also enjoyed shooting, fishing and birdwatching with Jacintha’s brother and sister.[14]

Playing fields at St. Cyprian’s. Blair’s time at the school inspired his essay “Such, Such Were the Joys“.

At the age of five, Eric was sent as a day-boy to a convent school in Henley-on-Thames, which Marjorie also attended. It was a Roman Catholic convent run by French Ursuline nuns, who had been exiled from France after religious education was banned in 1903.[15] His mother wanted him to have a public school education, but his family could not afford the fees, and he needed to earn a scholarship. Ida Blair’s brother Charles Limouzin recommended St Cyprian’s School, Eastbourne, East Sussex.[8] Limouzin, who was a proficient golfer, knew of the school and its headmaster through the Royal Eastbourne Golf Club, where he won several competitions in 1903 and 1904.[16] The headmaster undertook to help Blair to win a scholarship, and made a private financial arrangement that allowed Blair’s parents to pay only half the normal fees. In September 1911 Eric arrived at St Cyprian’s. He boarded at the school for the next five years, returning home only for school holidays. He knew nothing of the reduced fees, although he “soon recognised that he was from a poorer home”.[17] Blair hated the school[18] and many years later wrote an essay “Such, Such Were the Joys“, published posthumously, based on his time there. At St. Cyprian’s, Blair first met Cyril Connolly, who became a writer. Many years later, as the editor of Horizon, Connolly published several of Orwell’s essays.

While at St Cyprian’s, Blair wrote two poems that were published in the Henley and South Oxfordshire Standard.[19][20] He came second to Connolly in the Harrow History Prize, had his work praised by the school’s external examiner, and earned scholarships to Wellington and Eton. But inclusion on the Eton scholarship roll did not guarantee a place, and none was immediately available for Blair. He chose to stay at St Cyprian’s until December 1916, in case a place at Eton became available.[8]

In January, Blair took up the place at Wellington, where he spent the Spring term. In May 1917 a place became available as a King’s Scholar at Eton. He remained at Eton until December 1921, when he left midway between his 18th and 19th birthday. Wellington was “beastly”, Orwell told his childhood friend Jacintha Buddicom, but he said he was “interested and happy” at Eton.[21] His principal tutor was A. S. F. Gow, Fellow of Trinity College, Cambridge, who also gave him advice later in his career.[8] Blair was briefly taught French by Aldous Huxley. Stephen Runciman, who was at Eton with Blair, noted that he and his contemporaries appreciated Huxley’s linguistic flair.[22] Cyril Connolly followed Blair to Eton, but because they were in separate years, they did not associate with each other.[23]

Blair’s academic performance reports suggest that he neglected his academic studies,[22] but during his time at Eton he worked with Roger Mynors to produce a College magazine, The Election Times, joined in the production of other publications – College Days and Bubble and Squeak – and participated in the Eton Wall Game. His parents could not afford to send him to a university without another scholarship, and they concluded from his poor results that he would not be able to win one. Runciman noted that he had a romantic idea about the East,[22] and the family decided that Blair should join the Imperial Police, the precursor of the Indian Police Service. For this he had to pass an entrance examination. His father had retired to Southwold, Suffolk, by this time; Blair was enrolled at a crammer there called Craighurst, and brushed up on his Classics, English, and History. He passed the entrance exam, coming seventh out of the 26 candidates who exceeded the pass mark.[8][24]

Policing in Burma

Blair pictured in a passport photo during his Burma years

Blair’s maternal grandmother lived at Moulmein, so he chose a posting in Burma. In October 1922 he sailed on board SS Herefordshire via the Suez Canal and Ceylon to join the Indian Imperial Police in Burma. A month later, he arrived at Rangoon and travelled to the police training school in Mandalay. After a short posting at Maymyo, Burma’s principal hill station, he was posted to the frontier outpost of Myaungmya in the Irrawaddy Delta at the beginning of 1924.

Working as an imperial policeman gave him considerable responsibility while most of his contemporaries were still at university in England. When he was posted farther east in the Delta to Twante as a sub-divisional officer, he was responsible for the security of some 200,000 people. At the end of 1924, he was promoted to Assistant District Superintendent and posted to Syriam, closer to Rangoon. Syriam had the refinery of the Burmah Oil Company, “the surrounding land a barren waste, all vegetation killed off by the fumes of sulphur dioxide pouring out day and night from the stacks of the refinery.” But the town was near Rangoon, a cosmopolitan seaport, and Blair went into the city as often as he could, “to browse in a bookshop; to eat well-cooked food; to get away from the boring routine of police life”.[25] In September 1925 he went to Insein, the home of Insein Prison, the second largest jail in Burma. In Insein, he had “long talks on every conceivable subject” with Elisa Maria Langford-Rae (who later married Kazi Lhendup Dorjee). She noted his “sense of utter fairness in minutest details”.[26]

British Club in Katha (in Orwell’s time, it occupied only the ground floor)

In April 1926 he moved to Moulmein, where his maternal grandmother lived. At the end of that year, he was assigned to Katha in Upper Burma, where he contracted dengue fever in 1927. Entitled to a leave in England that year, he was allowed to return in July due to his illness. While on leave in England and on holiday with his family in Cornwall in September 1927, he reappraised his life. Deciding against returning to Burma, he resigned from the Indian Imperial Police to become a writer. He drew on his experiences in the Burma police for the novel Burmese Days (1934) and the essays “A Hanging” (1931) and “Shooting an Elephant” (1936).

In Burma, Blair acquired a reputation as an outsider. He spent much of his time alone, reading or pursuing non-pukka activities, such as attending the churches of the Karen ethnic group. A colleague, Roger Beadon, recalled (in a 1969 recording for the BBC) that Blair was fast to learn the language and that before he left Burma, “was able to speak fluently with Burmese priests in ‘very high-flown Burmese.'”[27] Blair made changes to his appearance in Burma that remained for the rest of his life. “While in Burma, he acquired a moustache similar to those worn by officers of the British regiments stationed there. [He] also acquired some tattoos; on each knuckle he had a small untidy blue circle. Many Burmese living in rural areas still sport tattoos like this – they are believed to protect against bullets and snake bites.”[28] Later, he wrote that he felt guilty about his role in the work of empire and he “began to look more closely at his own country and saw that England also had its oppressed …”

London and Paris

Blair’s 1927 lodgings in Portobello Road, London

In England, he settled back in the family home at Southwold, renewing acquaintance with local friends and attending an Old Etonian dinner. He visited his old tutor Gow at Cambridge for advice on becoming a writer.[29] In 1927 he moved to London.[30] Ruth Pitter, a family acquaintance, helped him find lodgings, and by the end of 1927 he had moved into rooms in Portobello Road;[31] a blue plaque commemorates his residence there.[32] Pitter’s involvement in the move “would have lent it a reassuring respectability in Mrs Blair’s eyes.” Pitter had a sympathetic interest in Blair’s writing, pointed out weaknesses in his poetry, and advised him to write about what he knew. In fact he decided to write of “certain aspects of the present that he set out to know” and “ventured into the East End of London – the first of the occasional sorties he would make to discover for himself the world of poverty and the down-and-outers who inhabit it. He had found a subject. These sorties, explorations, expeditions, tours or immersions were made intermittently over a period of five years.”[33]

In imitation of Jack London, whose writing he admired (particularly The People of the Abyss), Blair started to explore the poorer parts of London. On his first outing he set out to Limehouse Causeway, spending his first night in a common lodging house, possibly George Levy’s ‘kip’. For a while he “went native” in his own country, dressing like a tramp, adopting the name P. S. Burton and making no concessions to middle-class mores and expectations; he recorded his experiences of the low life for use in “The Spike“, his first published essay in English, and in the second half of his first book, Down and Out in Paris and London (1933).

Rue du Pot de Fer, on the Left Bank, in the 5th arrondissement, where Blair lived in Paris

In early 1928 he moved to Paris. He lived in the rue du Pot de Fer, a working class district in the 5th Arrondissement.[8] His aunt Nellie Limouzin also lived in Paris and gave him social and, when necessary, financial support. He began to write novels, including an early version of Burmese Days, but nothing else survives from that period.[8] He was more successful as a journalist and published articles in Monde, a political/literary journal edited by Henri Barbusse (his first article as a professional writer, “La Censure en Angleterre”, appeared in that journal on 6 October 1928); G. K.’s Weekly, where his first article to appear in England, “A Farthing Newspaper”, was printed on 29 December 1928;[34] and Le Progrès Civique (founded by the left-wing coalition Le Cartel des Gauches). Three pieces appeared in successive weeks in Le Progrès Civique: discussing unemployment, a day in the life of a tramp, and the beggars of London, respectively. “In one or another of its destructive forms, poverty was to become his obsessive subject – at the heart of almost everything he wrote until Homage to Catalonia.”[35]

He fell seriously ill in February 1929 and was taken to the Hôpital Cochin in the 14th arrondissement, a free hospital where medical students were trained. His experiences there were the basis of his essay “How the Poor Die“, published in 1946. He chose not to identify the hospital, and indeed was deliberately misleading about its location. Shortly afterwards, he had all his money stolen from his lodging house. Whether through necessity or to collect material, he undertook menial jobs like dishwashing in a fashionable hotel on the rue de Rivoli, which he later described in Down and Out in Paris and London. In August 1929, he sent a copy of “The Spike” to John Middleton Murry‘s New Adelphi magazine in London. The magazine was edited by Max Plowman and Sir Richard Rees, and Plowman accepted the work for publication.

Southwold

Southwold – North Parade

In December 1929, after nearly two years in Paris, Blair returned to England and went directly to his parents’ house in Southwold, which remained his base for the next five years. The family was well established in the town and his sister Avril was running a tea-house there. He became acquainted with many local people, including Brenda Salkeld, the clergyman’s daughter who worked as a gym-teacher at St Felix Girls’ School, Southwold. Although Salkeld rejected his offer of marriage, she remained a friend and regular correspondent for many years. He also renewed friendships with older friends, such as Dennis Collings, whose girlfriend Eleanor Jacques was also to play a part in his life.[8]

In early 1930 he stayed briefly in Bramley, Leeds, with his sister Marjorie and her husband Humphrey Dakin, who was as unappreciative of Blair as when they knew each other as children. Blair was writing reviews for Adelphi and acting as a private tutor to a disabled child at Southwold. He then became tutor to three young brothers, one of whom, Richard Peters, later became a distinguished academic.[36] “His history in these years is marked by dualities and contrasts. There is Blair leading a respectable, outwardly eventless life at his parents’ house in Southwold, writing; then in contrast, there is Blair as Burton (the name he used in his down-and-out episodes) in search of experience in the kips and spikes, in the East End, on the road, and in the hop fields of Kent.”[37] He went painting and bathing on the beach, and there he met Mabel and Francis Fierz, who later influenced his career. Over the next year he visited them in London, often meeting their friend Max Plowman. He also often stayed at the homes of Ruth Pitter and Richard Rees, where he could “change” for his sporadic tramping expeditions. One of his jobs was domestic work at a lodgings for half a crown (two shillings and sixpence, or one-eighth of a pound) a day.[38]

Blair now contributed regularly to Adelphi, with “A Hanging” appearing in August 1931. From August to September 1931 his explorations of poverty continued, and, like the protagonist of A Clergyman’s Daughter, he followed the East End tradition of working in the Kent hop fields. He kept a diary about his experiences there. Afterwards, he lodged in the Tooley Street kip, but could not stand it for long, and with financial help from his parents moved to Windsor Street, where he stayed until Christmas. “Hop Picking”, by Eric Blair, appeared in the October 1931 issue of New Statesman, whose editorial staff included his old friend Cyril Connolly. Mabel Fierz put him in contact with Leonard Moore, who became his literary agent.

At this time Jonathan Cape rejected A Scullion’s Diary, the first version of Down and Out. On the advice of Richard Rees, he offered it to Faber and Faber, but their editorial director, T. S. Eliot, also rejected it. Blair ended the year by deliberately getting himself arrested,[39] so that he could experience Christmas in prison, but the authorities did not regard his “drunk and disorderly” behaviour as imprisonable, and he returned home to Southwold after two days in a police cell.

Teaching career

In April 1932 Blair became a teacher at The Hawthorns High School, a school for boys in Hayes, West London. This was a small school offering private schooling for children of local tradesmen and shopkeepers, and had only 14 or 16 boys aged between ten and sixteen, and one other master.[40] While at the school he became friendly with the curate of the local parish church and became involved with activities there. Mabel Fierz had pursued matters with Moore, and at the end of June 1932, Moore told Blair that Victor Gollancz was prepared to publish A Scullion’s Diary for a £40 advance, through his recently founded publishing house, Victor Gollancz Ltd, which was an outlet for radical and socialist works.

At the end of the summer term in 1932, Blair returned to Southwold, where his parents had used a legacy to buy their own home. Blair and his sister Avril spent the holidays making the house habitable while he also worked on Burmese Days.[41] He was also spending time with Eleanor Jacques, but her attachment to Dennis Collings remained an obstacle to his hopes of a more serious relationship.

The pen name “George Orwell” was inspired by the River Orwell in the English county of Suffolk[42]

“Clink”, an essay describing his failed attempt to get sent to prison, appeared in the August 1932 number of Adelphi. He returned to teaching at Hayes and prepared for the publication of his book, now known as Down and Out in Paris and London. He wished to publish under a different name to avoid any embarrassment to his family over his time as a “tramp”.[43] In a letter to Moore (dated 15 November 1932), he left the choice of pseudonym to Moore and to Gollancz. Four days later, he wrote to Moore, suggesting the pseudonyms P. S. Burton (a name he used when tramping), Kenneth Miles, George Orwell, and H. Lewis Allways.[44] He finally adopted the nom de plume George Orwell because, as he told Eleanor Jacques, “It is a good round English name.” Down and Out in Paris and London was published on 9 January 1933, as Orwell continued to work on Burmese Days. Down and Out was successful and was next published by Harper & Brothers in New York.

In mid-1933 Blair left Hawthorns to become a teacher at Frays College, in Uxbridge, Middlesex. This was a much larger establishment with 200 pupils and a full complement of staff. He acquired a motorcycle and took trips through the surrounding countryside. On one of these expeditions he became soaked and caught a chill that developed into pneumonia. He was taken to Uxbridge Cottage Hospital, where for a time his life was believed to be in danger. When he was discharged in January 1934, he returned to Southwold to convalesce and, supported by his parents, never returned to teaching.

He was disappointed when Gollancz turned down Burmese Days, mainly on the grounds of potential suits for libel, but Harper were prepared to publish it in the United States. Meanwhile, Blair started work on the novel A Clergyman’s Daughter, drawing upon his life as a teacher and on life in Southwold. Eleanor Jacques was now married and had gone to Singapore and Brenda Salkield had left for Ireland, so Blair was relatively isolated in Southwold – working on the allotments, walking alone and spending time with his father. Eventually in October, after sending A Clergyman’s Daughter to Moore, he left for London to take a job that had been found for him by his aunt Nellie Limouzin.

Hampstead

Orwell’s former home at 77 Parliament Hill, Hampstead, London

This job was as a part-time assistant in Booklovers’ Corner, a second-hand bookshop in Hampstead run by Francis and Myfanwy Westrope, who were friends of Nellie Limouzin in the Esperanto movement. The Westropes were friendly and provided him with comfortable accommodation at Warwick Mansions, Pond Street. He was sharing the job with Jon Kimche, who also lived with the Westropes. Blair worked at the shop in the afternoons and had his mornings free to write and his evenings free to socialise. These experiences provided background for the novel Keep the Aspidistra Flying (1936). As well as the various guests of the Westropes, he was able to enjoy the company of Richard Rees and the Adelphi writers and Mabel Fierz. The Westropes and Kimche were members of the Independent Labour Party, although at this time Blair was not seriously politically active. He was writing for the Adelphi and preparing A Clergyman’s Daughter and Burmese Days for publication.

At the beginning of 1935 he had to move out of Warwick Mansions, and Mabel Fierz found him a flat in Parliament Hill. A Clergyman’s Daughter was published on 11 March 1935. In early 1935 Blair met his future wife Eileen O’Shaughnessy, when his landlady, Rosalind Obermeyer, who was studying for a master’s degree in psychology at University College London, invited some of her fellow students to a party. One of these students, Elizaveta Fen, a biographer and future translator of Chekhov, recalled Orwell and his friend Richard Rees “draped” at the fireplace, looking, she thought, “moth-eaten and prematurely aged.”[45] Around this time, Blair had started to write reviews for the New English Weekly.

Orwell’s time as a bookseller is commemorated with this plaque in Hampstead

In June, Burmese Days was published and Cyril Connolly’s review in the New Statesman prompted Orwell (as he then became known) to re-establish contact with his old friend. In August, he moved into a flat in Kentish Town, which he shared with Michael Sayers and Rayner Heppenstall. The relationship was sometimes awkward and Orwell and Heppenstall even came to blows, though they remained friends and later worked together on BBC broadcasts.[46] Orwell was now working on Keep the Aspidistra Flying, and also tried unsuccessfully to write a serial for the News Chronicle. By October 1935 his flatmates had moved out and he was struggling to pay the rent on his own. He remained until the end of January 1936, when he stopped working at Booklovers’ Corner.

The Road to Wigan Pier

At this time, Victor Gollancz suggested Orwell spend a short time investigating social conditions in economically depressed northern England.[n 2] Two years earlier J. B. Priestley had written about England north of the Trent, sparking an interest in reportage. The depression had also introduced a number of working-class writers from the North of England to the reading public.

On 31 January 1936, Orwell set out by public transport and on foot, reaching Manchester via Coventry, Stafford, the Potteries and Macclesfield. Arriving in Manchester after the banks had closed, he had to stay in a common lodging-house. The next day he picked up a list of contacts sent by Richard Rees. One of these, the trade union official Frank Meade, suggested Wigan, where Orwell spent February staying in dirty lodgings over a tripe shop. At Wigan, he visited many homes to see how people lived, took detailed notes of housing conditions and wages earned, went down Bryn Hall coal mine, and used the local public library to consult public health records and reports on working conditions in mines.

During this time, he was distracted by concerns about style and possible libel in Keep the Aspidistra Flying. He made a quick visit to Liverpool and during March, stayed in south Yorkshire, spending time in Sheffield and Barnsley. As well as visiting mines, including Grimethorpe, and observing social conditions, he attended meetings of the Communist Party and of Oswald Mosley – “his speech the usual claptrap – The blame for everything was put upon mysterious international gangs of Jews” – where he saw the tactics of the Blackshirts – “one is liable to get both a hammering and a fine for asking a question which Mosley finds it difficult to answer.”[48] He also made visits to his sister at Headingley, during which he visited the Brontë Parsonage at Haworth, where he was “chiefly impressed by a pair of Charlotte Brontë‘s cloth-topped boots, very small, with square toes and lacing up at the sides.”[49]

A former warehouse at Wigan Pier is named after Orwell

No 2 Kits Lane, Wallington, Hertfordshire. Orwell’s residence c. 1936–1940

The result of his journeys through the north was The Road to Wigan Pier, published by Gollancz for the Left Book Club in 1937. The first half of the book documents his social investigations of Lancashire and Yorkshire, including an evocative description of working life in the coal mines. The second half is a long essay on his upbringing and the development of his political conscience, which includes an argument for Socialism (although he goes to lengths to balance the concerns and goals of Socialism with the barriers it faced from the movement’s own advocates at the time, such as ‘priggish’ and ‘dull’ Socialist intellectuals, and ‘proletarian’ Socialists with little grasp of the actual ideology). Gollancz feared the second half would offend readers and added a disculpatory preface to the book while Orwell was in Spain.

Orwell needed somewhere he could concentrate on writing his book, and once again help was provided by Aunt Nellie, who was living at Wallington, Hertfordshire in a very small 16th-century cottage called the “Stores”. Wallington was a tiny village 35 miles north of London, and the cottage had almost no modern facilities. Orwell took over the tenancy and moved in on 2 April 1936.[50] He started work on The Road to Wigan Pier by the end of April, but also spent hours working on the garden and testing the possibility of reopening the Stores as a village shop. Keep the Aspidistra Flying was published by Gollancz on 20 April 1936. On 4 August Orwell gave a talk at the Adelphi Summer School held at Langham, entitled An Outsider Sees the Distressed Areas; others who spoke at the school included John Strachey, Max Plowman, Karl Polanyi and Reinhold Niebuhr.

Orwell’s research for The Road to Wigan Pier led to him being placed under surveillance by the Special Branch from 1936, for 12 years, until one year before the publication of Nineteen Eighty-Four.[51]

Orwell married Eileen O’Shaughnessy on 9 June 1936. Shortly afterwards, the political crisis began in Spain and Orwell followed developments there closely. At the end of the year, concerned by Francisco Franco‘s military uprising, (supported by Nazi Germany, Fascist Italy and local groups such as Falange), Orwell decided to go to Spain to take part in the Spanish Civil War on the Republican side. Under the erroneous impression that he needed papers from some left-wing organisation to cross the frontier, on John Strachey‘s recommendation he applied unsuccessfully to Harry Pollitt, leader of the British Communist Party. Pollitt was suspicious of Orwell’s political reliability; he asked him whether he would undertake to join the International Brigade and advised him to get a safe-conduct from the Spanish Embassy in Paris.[52] Not wishing to commit himself until he had seen the situation in situ, Orwell instead used his Independent Labour Party contacts to get a letter of introduction to John McNair in Barcelona.

The Spanish Civil War

The square in Barcelona renamed in Orwell’s honour

Orwell set out for Spain on about 23 December 1936, dining with Henry Miller in Paris on the way. The American writer told Orwell that going to fight in the Civil War out of some sense of obligation or guilt was ‘sheer stupidity,’ and that the Englishman’s ideas ‘about combating Fascism, defending democracy, etc., etc., were all baloney.’[53] A few days later, in Barcelona, Orwell met John McNair of the Independent Labour Party (ILP) Office who quoted him: “I’ve come to fight against Fascism”.[54] Orwell stepped into a complex political situation in Catalonia. The Republican government was supported by a number of factions with conflicting aims, including the Workers’ Party of Marxist Unification (POUM – Partido Obrero de Unificación Marxista), the anarcho-syndicalist Confederación Nacional del Trabajo (CNT) and the Unified Socialist Party of Catalonia (a wing of the Spanish Communist Party, which was backed by Soviet arms and aid). The ILP was linked to the POUM so Orwell joined the POUM.

After a time at the Lenin Barracks in Barcelona he was sent to the relatively quiet Aragon Front under Georges Kopp. By January 1937 he was at Alcubierre 1,500 feet (460 m) above sea level, in the depth of winter. There was very little military action, and Orwell was shocked by the lack of munitions, food, and firewood, and other extreme deprivations.[55] Orwell, with his Cadet Corps and police training, was quickly made a corporal. On the arrival of a British ILP Contingent about three weeks later, Orwell and the other English militiaman, Williams, were sent with them to Monte Oscuro. The newly arrived ILP contingent included Bob Smillie, Bob Edwards, Stafford Cottman and Jack Branthwaite. The unit was then sent on to Huesca.

Meanwhile, back in England, Eileen had been handling the issues relating to the publication of The Road to Wigan Pier before setting out for Spain herself, leaving Nellie Limouzin to look after The Stores. Eileen volunteered for a post in John McNair’s office and with the help of Georges Kopp paid visits to her husband, bringing him English tea, chocolate, and cigars.[56] Orwell had to spend some days in hospital with a poisoned hand[57] and had most of his possessions stolen by the staff. He returned to the front and saw some action in a night attack on the Nationalist trenches where he chased an enemy soldier with a bayonet and bombed an enemy rifle position.

In April, Orwell returned to Barcelona.[57] Wanting to be sent to the Madrid front, which meant he “must join the International Column”, he approached a Communist friend attached to the Spanish Medical Aid and explained his case. “Although he did not think much of the Communists, Orwell was still ready to treat them as friends and allies. That would soon change.”[58] This was the time of the Barcelona May Days and Orwell was caught up in the factional fighting. He spent much of the time on a roof, with a stack of novels, but encountered Jon Kimche from his Hampstead days during the stay. The subsequent campaign of lies and distortion carried out by the Communist press,[59] in which the POUM was accused of collaborating with the fascists, had a dramatic effect on Orwell. Instead of joining the International Brigades as he had intended, he decided to return to the Aragon Front. Once the May fighting was over, he was approached by a Communist friend who asked if he still intended transferring to the International Brigades. Orwell expressed surprise that they should still want him, because according to the Communist press he was a fascist.[60] “No one who was in Barcelona then, or for months later, will forget the horrible atmosphere produced by fear, suspicion, hatred, censored newspapers, crammed jails, enormous food queues and prowling gangs of armed men.”[61]

After his return to the front, he was wounded in the throat by a sniper’s bullet. At 6 ft 2 in (1.88 m) Orwell was considerably taller than the Spanish fighters[62] and had been warned against standing against the trench parapet. Unable to speak, and with blood pouring from his mouth, Orwell was carried on a stretcher to Siétamo, loaded on an ambulance and after a bumpy journey via Barbastro arrived at the hospital at Lérida. He recovered sufficiently to get up and on 27 May 1937 was sent on to Tarragona and two days later to a POUM sanatorium in the suburbs of Barcelona. The bullet had missed his main artery by the barest margin and his voice was barely audible. It had been such a clean shot that the wound immediately went through the process of cauterisation. He received electrotherapy treatment and was declared medically unfit for service.[63]

By the middle of June the political situation in Barcelona had deteriorated and the POUM – painted by the pro-Soviet Communists as a Trotskyist organisation – was outlawed and under attack. The Communist line was that the POUM were “objectively” Fascist, hindering the Republican cause. “A particularly nasty poster appeared, showing a head with a POUM mask being ripped off to reveal a Swastika-covered face beneath.”[64] Members, including Kopp, were arrested and others were in hiding. Orwell and his wife were under threat and had to lie low,[n 3] although they broke cover to try to help Kopp.

Finally with their passports in order, they escaped from Spain by train, diverting to Banyuls-sur-Mer for a short stay before returning to England. In the first week of July 1937 Orwell arrived back at Wallington; on 13 July 1937 a deposition was presented to the Tribunal for Espionage & High Treason, Valencia, charging the Orwells with “rabid Trotskyism“, and being agents of the POUM.[65] The trial of the leaders of the POUM and of Orwell (in his absence) took place in Barcelona in October and November 1938. Observing events from French Morocco, Orwell wrote that they were ” – only a by-product of the Russian Trotskyist trials and from the start every kind of lie, including flagrant absurdities, has been circulated in the Communist press.”[66] Orwell’s experiences in the Spanish Civil War gave rise to Homage to Catalonia (1938).

Rest and recuperation

Laurence O’Shaughnessy’s former home, the large house on the corner, 24 Crooms Hill, Greenwich, London[67]

Orwell returned to England in June 1937, and stayed at the O’Shaughnessy home at Greenwich. He found his views on the Spanish Civil War out of favour. Kingsley Martin rejected two of his works and Gollancz was equally cautious. At the same time, the communist Daily Worker was running an attack on The Road to Wigan Pier, misquoting Orwell as saying “the working classes smell”; a letter to Gollancz from Orwell threatening libel action brought a stop to this. Orwell was also able to find a more sympathetic publisher for his views in Frederic Warburg of Secker & Warburg. Orwell returned to Wallington, which he found in disarray after his absence. He acquired goats, a rooster he called “Henry Ford”, and a poodle puppy he called “Marx”[68][69][70] and settled down to animal husbandry and writing Homage to Catalonia.

There were thoughts of going to India to work on the Pioneer, a newspaper in Lucknow, but by March 1938 Orwell’s health had deteriorated. He was admitted to Preston Hall Sanatorium at Aylesford, Kent, a British Legion hospital for ex-servicemen to which his brother-in-law Laurence O’Shaughnessy was attached. He was thought initially to be suffering from tuberculosis and stayed in the sanatorium until September. A stream of visitors came to see him including Common, Heppenstall, Plowman and Cyril Connolly. Connolly brought with him Stephen Spender, a cause of some embarrassment as Orwell had referred to Spender as a “pansy friend” some time earlier. Homage to Catalonia was published by Secker & Warburg and was a commercial flop. In the latter part of his stay at the clinic Orwell was able to go for walks in the countryside and study nature.

The novelist L. H. Myers secretly funded a trip to French Morocco for half a year for Orwell to avoid the English winter and recover his health. The Orwells set out in September 1938 via Gibraltar and Tangier to avoid Spanish Morocco and arrived at Marrakech. They rented a villa on the road to Casablanca and during that time Orwell wrote Coming Up for Air. They arrived back in England on 30 March 1939 and Coming Up for Air was published in June. Orwell spent time in Wallington and Southwold working on a Dickens essay and it was in July 1939 that Orwell’s father, Richard Blair, died.

Second World War and Animal Farm

At the outbreak of the Second World War, Orwell’s wife Eileen started working in the Censorship Department of the Ministry of Information in central London, staying during the week with her family in Greenwich. Orwell also submitted his name to the Central Register for war work, but nothing transpired. “They won’t have me in the army, at any rate at present, because of my lungs”, Orwell told Geoffrey Gorer. He returned to Wallington, and in late 1939 he wrote material for his first collection of essays, Inside the Whale. For the next year he was occupied writing reviews for plays, films and books for The Listener, Time and Tide and New Adelphi. On 29 March 1940 his long association with Tribune began[71] with a review of a sergeant’s account of Napoleon‘s retreat from Moscow. At the beginning of 1940, the first edition of Connolly’s Horizon appeared, and this provided a new outlet for Orwell’s work as well as new literary contacts. In May the Orwells took lease of a flat in London at Dorset Chambers, Chagford Street, Marylebone. It was the time of the Dunkirk evacuation and the death in France of Eileen’s brother Lawrence caused her considerable grief and long-term depression. Throughout this period Orwell kept a wartime diary.

Orwell was declared “unfit for any kind of military service” by the Medical Board in June, but soon afterwards found an opportunity to become involved in war activities by joining the Home Guard. He shared Tom Wintringham‘s socialist vision for the Home Guard as a revolutionary People’s Militia. His lecture notes for instructing platoon members include advice on street fighting, field fortifications, and the use of mortars of various kinds. Sergeant Orwell managed to recruit Frederic Warburg to his unit. During the Battle of Britain he used to spend weekends with Warburg and his new Zionist friend, Tosco Fyvel, at Warburg’s house at Twyford, Berkshire. At Wallington he worked on “England Your England” and in London wrote reviews for various periodicals. Visiting Eileen’s family in Greenwich brought him face-to-face with the effects of the blitz on East London. In mid-1940, Warburg, Fyvel and Orwell planned Searchlight Books. Eleven volumes eventually appeared, of which Orwell’s The Lion and the Unicorn: Socialism and the English Genius, published on 19 February 1941, was the first.[72]

Early in 1941 he started writing for the American Partisan Review which linked Orwell with The New York Intellectuals, like him anti-Stalinist, but committed to staying on the Left,[73] and contributed to Gollancz anthology The Betrayal of the Left, written in the light of the Molotov–Ribbentrop Pact (although Orwell referred to it as the Russo-German Pact and the Hitler-Stalin Pact[74]). He also applied unsuccessfully for a job at the Air Ministry. Meanwhile, he was still writing reviews of books and plays and at this time met the novelist Anthony Powell. He also took part in a few radio broadcasts for the Eastern Service of the BBC. In March the Orwells moved to a seventh-floor flat at Langford Court, St John’s Wood, while at Wallington Orwell was “digging for victory” by planting potatoes.

One could not have a better example of the moral and emotional shallowness of our time, than the fact that we are now all more or less pro Stalin. This disgusting murderer is temporarily on our side, and so the purges, etc., are suddenly forgotten.

— George Orwell, in his war-time diary, 3 July 1941[75]

In August 1941, Orwell finally obtained “war work” when he was taken on full-time by the BBC’s Eastern Service. He supervised cultural broadcasts to India to counter propaganda from Nazi Germany designed to undermine Imperial links. This was Orwell’s first experience of the rigid conformity of life in an office, and it gave him an opportunity to create cultural programmes with contributions from T. S. Eliot, Dylan Thomas, E. M. Forster, Ahmed Ali, Mulk Raj Anand, and William Empson among others.

At the end of August he had a dinner with H. G. Wells which degenerated into a row because Wells had taken offence at observations Orwell made about him in a Horizon article. In October Orwell had a bout of bronchitis and the illness recurred frequently. David Astor was looking for a provocative contributor for The Observer and invited Orwell to write for him – the first article appearing in March 1942. In early 1942 Eileen changed jobs to work at the Ministry of Food and in mid-1942 the Orwells moved to a larger flat, a ground floor and basement, 10a Mortimer Crescent in Maida Vale/Kilburn – “the kind of lower-middle-class ambience that Orwell thought was London at its best.” Around the same time Orwell’s mother and sister Avril, who had found work in a sheet-metal factory behind Kings Cross Station, moved into a flat close to George and Eileen.[76]

Orwell at the BBC in 1941. Despite having spoken on many broadcasts, no recordings of Orwell’s voice are known to survive.[77][78][79]

At the BBC, Orwell introduced Voice, a literary programme for his Indian broadcasts, and by now was leading an active social life with literary friends, particularly on the political left. Late in 1942, he started writing regularly for the left-wing weekly Tribune[80]:306[81]:441 directed by Labour MPs Aneurin Bevan and George Strauss. In March 1943 Orwell’s mother died and around the same time he told Moore he was starting work on a new book, which turned out to be Animal Farm.

In September 1943, Orwell resigned from the BBC post that he had occupied for two years.[82]:352 His resignation followed a report confirming his fears that few Indians listened to the broadcasts,[83] but he was also keen to concentrate on writing Animal Farm. Just six days before his last day of service, on 24 November 1943, his adaptation of the fairy tale, Hans Christian Andersen‘s The Emperor’s New Clothes was broadcast. It was a genre in which he was greatly interested and which appeared on Animal Farms title-page.[84] At this time he also resigned from the Home Guard on medical grounds.[85]

In November 1943, Orwell was appointed literary editor at Tribune, where his assistant was his old friend Jon Kimche. Orwell was on staff until early 1945, writing over 80 book reviews[86] and on 3 December 1943 started his regular personal column, “As I Please“, usually addressing three or four subjects in each.[87] He was still writing reviews for other magazines, including Partisan Review, Horizon, and the New York Nation and becoming a respected pundit among left-wing circles but also a close friend of people on the right such as Powell, Astor and Malcolm Muggeridge. By April 1944 Animal Farm was ready for publication. Gollancz refused to publish it, considering it an attack on the Soviet regime which was a crucial ally in the war. A similar fate was met from other publishers (including T. S. Eliot at Faber and Faber) until Jonathan Cape agreed to take it.

In May the Orwells had the opportunity to adopt a child, thanks to the contacts of Eileen’s sister Gwen O’Shaughnessy, then a doctor in Newcastle upon Tyne. In June a V-1 flying bomb struck Mortimer Crescent and the Orwells had to find somewhere else to live. Orwell had to scrabble around in the rubble for his collection of books, which he had finally managed to transfer from Wallington, carting them away in a wheelbarrow.

Another bombshell was Cape’s reversal of his plan to publish Animal Farm. The decision followed his personal visit to Peter Smollett, an official at the Ministry of Information. Smollett was later identified as a Soviet agent.[88][89]

The Orwells spent some time in the North East, near Carlton, County Durham, dealing with matters in the adoption of a boy whom they named Richard Horatio Blair.[90] By September 1944 they had set up home in Islington, at 27b Canonbury Square.[91] Baby Richard joined them there, and Eileen gave up her work at the Ministry of Food to look after her family. Secker & Warburg had agreed to publish Animal Farm, planned for the following March, although it did not appear in print until August 1945. By February 1945 David Astor had invited Orwell to become a war correspondent for the Observer. Orwell had been looking for the opportunity throughout the war, but his failed medical reports prevented him from being allowed anywhere near action. He went to Paris after the liberation of France and to Cologne once it had been occupied by the Allies.

It was while he was there that Eileen went into hospital for a hysterectomy and died under anaesthetic on 29 March 1945. She had not given Orwell much notice about this operation because of worries about the cost and because she expected to make a speedy recovery. Orwell returned home for a while and then went back to Europe. He returned finally to London to cover the 1945 general election at the beginning of July. Animal Farm: A Fairy Story was published in Britain on 17 August 1945, and a year later in the US, on 26 August 1946.

Jura and Nineteen Eighty-Four

Animal Farm struck a particular resonance in the post-war climate and its worldwide success made Orwell a sought-after figure.

For the next four years Orwell mixed journalistic work – mainly for Tribune, The Observer and the Manchester Evening News, though he also contributed to many small-circulation political and literary magazines – with writing his best-known work, Nineteen Eighty-Four, which was published in 1949.

Barnhill on the Isle of Jura off the west coast of Scotland

In the year following Eileen’s death he published around 130 articles and a selection of his Critical Essays, while remaining active in various political lobbying campaigns. He employed a housekeeper, Susan Watson, to look after his adopted son at the Islington flat, which visitors now described as “bleak”. In September he spent a fortnight on the island of Jura in the Inner Hebrides and saw it as a place to escape from the hassle of London literary life. David Astor was instrumental in arranging a place for Orwell on Jura.[92] Astor’s family owned Scottish estates in the area and a fellow Old Etonian Robin Fletcher had a property on the island. In late 1945 and early 1946 Orwell made several hopeless and unwelcome marriage proposals to younger women, including Celia Kirwan (who was later to become Arthur Koestler‘s sister-in-law), Ann Popham who happened to live in the same block of flats and Sonia Brownell, one of Connolly’s coterie at the Horizon office. Orwell suffered a tubercular haemorrhage in February 1946 but disguised his illness. In 1945 or early 1946, while still living at Canonbury Square, Orwell wrote an article on “British Cookery”, complete with recipes, commissioned by the British Council. Given the post-war shortages, both parties agreed not to publish it.[93] His sister Marjorie died of kidney disease in May and shortly after, on 22 May 1946, Orwell set off to live on the Isle of Jura.

Barnhill[94] was an abandoned farmhouse with outbuildings near the northern end of the island, situated at the end of a five-mile (8 km), heavily rutted track from Ardlussa, where the owners lived. Conditions at the farmhouse were primitive but the natural history and the challenge of improving the place appealed to Orwell. His sister Avril accompanied him there and young novelist Paul Potts made up the party. In July Susan Watson arrived with Orwell’s son Richard. Tensions developed and Potts departed after one of his manuscripts was used to light the fire. Orwell meanwhile set to work on Nineteen Eighty-Four. Later Susan Watson’s boyfriend David Holbrook arrived. A fan of Orwell since school days, he found the reality very different, with Orwell hostile and disagreeable probably because of Holbrook’s membership of the Communist Party.[95] Susan Watson could no longer stand being with Avril and she and her boyfriend left.

Orwell returned to London in late 1946 and picked up his literary journalism again. Now a well-known writer, he was swamped with work. Apart from a visit to Jura in the new year he stayed in London for one of the coldest British winters on record and with such a national shortage of fuel that he burnt his furniture and his child’s toys. The heavy smog in the days before the Clean Air Act 1956 did little to help his health about which he was reticent, keeping clear of medical attention. Meanwhile, he had to cope with rival claims of publishers Gollancz and Warburg for publishing rights. About this time he co-edited a collection titled British Pamphleteers with Reginald Reynolds. As a result of the success of Animal Farm, Orwell was expecting a large bill from the Inland Revenue and he contacted a firm of accountants of which the senior partner was Jack Harrison. The firm advised Orwell to establish a company to own his copyright and to receive his royalties and set up a “service agreement” so that he could draw a salary. Such a company “George Orwell Productions Ltd” (GOP Ltd) was set up on 12 September 1947 although the service agreement was not then put into effect. Jack Harrison left the details at this stage to junior colleagues.[96]

Orwell left London for Jura on 10 April 1947.[8] In July he ended the lease on the Wallington cottage.[97] Back on Jura he worked on Nineteen Eighty-Four and made good progress. During that time his sister’s family visited, and Orwell led a disastrous boating expedition, on 19 August,[98] which nearly led to loss of life whilst trying to cross the notorious gulf of Corryvreckan and gave him a soaking which was not good for his health. In December a chest specialist was summoned from Glasgow who pronounced Orwell seriously ill and a week before Christmas 1947 he was in Hairmyres Hospital in East Kilbride, then a small village in the countryside, on the outskirts of Glasgow. Tuberculosis was diagnosed and the request for permission to import streptomycin to treat Orwell went as far as Aneurin Bevan, then Minister of Health. David Astor helped with supply and payment and Orwell began his course of streptomycin on 19 or 20 February 1948.[99] By the end of July 1948 Orwell was able to return to Jura and by December he had finished the manuscript of Nineteen Eighty-Four. In January 1949, in a very weak condition, he set off for a sanatorium at Cranham, Gloucestershire, escorted by Richard Rees.

The sanatorium at Cranham consisted of a series of small wooden chalets or huts in a remote part of the Cotswolds near Stroud. Visitors were shocked by Orwell’s appearance and concerned by the short-comings and ineffectiveness of the treatment. Friends were worried about his finances, but by now he was comparatively well-off. He was writing to many of his friends, including Jacintha Buddicom, who had “rediscovered” him, and in March 1949, was visited by Celia Kirwan. Kirwan had just started working for a Foreign Office unit, the Information Research Department, set up by the Labour government to publish anti-communist propaganda, and Orwell gave her a list of people he considered to be unsuitable as IRD authors because of their pro-communist leanings. Orwell’s list, not published until 2003, consisted mainly of writers but also included actors and Labour MPs.[88][100] Orwell received more streptomycin treatment and improved slightly. In June 1949 Nineteen Eighty-Four was published to immediate critical and popular acclaim.

Final months and death

University College Hospital in London where Orwell died

Orwell’s health had continued to decline since the diagnosis of tuberculosis in December 1947. In mid-1949, he courted Sonia Brownell, and they announced their engagement in September, shortly before he was removed to University College Hospital in London. Sonia took charge of Orwell’s affairs and attended him diligently in the hospital, causing concern to some old friends such as Muggeridge. In September 1949, Orwell invited his accountant Harrison to visit him in hospital, and Harrison claimed that Orwell then asked him to become director of GOP Ltd and to manage the company, but there was no independent witness.[96] Orwell’s wedding took place in the hospital room on 13 October 1949, with David Astor as best man.[101] Orwell was in decline and visited by an assortment of visitors including Muggeridge, Connolly, Lucian Freud, Stephen Spender, Evelyn Waugh, Paul Potts, Anthony Powell, and his Eton tutor Anthony Gow.[8] Plans to go to the Swiss Alps were mooted. Further meetings were held with his accountant, at which Harrison and Mr and Mrs Blair were confirmed as directors of the company, and at which Harrison claimed that the “service agreement” was executed, giving copyright to the company.[96] Orwell’s health was in decline again by Christmas. On the evening of 20 January 1950, Potts visited Orwell and slipped away on finding him asleep. Jack Harrison visited later and claimed that Orwell gave him 25% of the company.[96] Early on the morning of 21 January, an artery burst in Orwell’s lungs, killing him at age 46.[102]

Orwell had requested to be buried in accordance with the Anglican rite in the graveyard of the closest church to wherever he happened to die. The graveyards in central London had no space, and fearing that he might have to be cremated against his wishes, his widow appealed to his friends to see whether any of them knew of a church with space in its graveyard.

George Orwell’s grave in Sutton Courtenay, Oxfordshire

David Astor lived in Sutton Courtenay, Oxfordshire, and arranged for Orwell to be interred in All Saints’ Churchyard there.[103] Orwell’s gravestone bears the simple epitaph: “Here lies Eric Arthur Blair, born June 25th 1903, died January 21st 1950”; no mention is made on the gravestone of his more famous pen name.

Orwell’s son, Richard Horatio Blair, was brought up by Orwell’s sister Avril. He maintains a public profile as patron of the Orwell Society.[104] He gives interviews about the few memories he has of his father.

In 1979, Sonia Brownell brought a High Court action against Harrison, who had in the meantime transferred 75% of the company’s voting stock to himself and had dissipated much of the value of the company. She was considered to have a strong case, but was becoming increasingly ill and eventually was persuaded to settle out of court on 2 November 1980. She died on 11 December 1980, aged 62.[96]

Literary career and legacy

During most of his career, Orwell was best known for his journalism, in essays, reviews, columns in newspapers and magazines and in his books of reportage: Down and Out in Paris and London (describing a period of poverty in these cities), The Road to Wigan Pier (describing the living conditions of the poor in northern England, and class division generally) and Homage to Catalonia. According to Irving Howe, Orwell was “the best English essayist since Hazlitt, perhaps since Dr Johnson.”[105]

Modern readers are more often introduced to Orwell as a novelist, particularly through his enormously successful titles Animal Farm and Nineteen Eighty-Four. The former is often thought to reflect degeneration in the Soviet Union after the Russian Revolution and the rise of Stalinism; the latter, life under totalitarian rule. Nineteen Eighty-Four is often compared to Brave New World by Aldous Huxley; both are powerful dystopian novels warning of a future world where the state machine exerts complete control over social life. In 1984, Nineteen Eighty-Four and Ray Bradbury‘s Fahrenheit 451 were honoured with the Prometheus Award for their contributions to dystopian literature. In 2011 he received it again for Animal Farm.

Coming Up for Air, his last novel before World War II is the most “English” of his novels; alarms of war mingle with images of idyllic Thames-side Edwardian childhood of protagonist George Bowling. The novel is pessimistic; industrialism and capitalism have killed the best of Old England, and there were great, new external threats. In homely terms, Bowling posits the totalitarian hypotheses of Borkenau, Orwell, Silone and Koestler: “Old Hitler’s something different. So’s Joe Stalin. They aren’t like these chaps in the old days who crucified people and chopped their heads off and so forth, just for the fun of it … They’re something quite new – something that’s never been heard of before”.

Literary influences

In an autobiographical piece that Orwell sent to the editors of Twentieth Century Authors in 1940, he wrote: “The writers I care about most and never grow tired of are: Shakespeare, Swift, Fielding, Dickens, Charles Reade, Flaubert and, among modern writers, James Joyce, T. S. Eliot and D. H. Lawrence. But I believe the modern writer who has influenced me most is W. Somerset Maugham, whom I admire immensely for his power of telling a story straightforwardly and without frills.” Elsewhere, Orwell strongly praised the works of Jack London, especially his book The Road. Orwell’s investigation of poverty in The Road to Wigan Pier strongly resembles that of Jack London’s The People of the Abyss, in which the American journalist disguises himself as an out-of-work sailor to investigate the lives of the poor in London. In his essay “Politics vs. Literature: An Examination of Gulliver’s Travels” (1946) Orwell wrote: “If I had to make a list of six books which were to be preserved when all others were destroyed, I would certainly put Gulliver’s Travels among them.”

Other writers admired by Orwell included: Ralph Waldo Emerson, George Gissing, Graham Greene, Herman Melville, Henry Miller, Tobias Smollett, Mark Twain, Joseph Conrad and Yevgeny Zamyatin.[106] He was both an admirer and a critic of Rudyard Kipling,[107][108] praising Kipling as a gifted writer and a “good bad poet” whose work is “spurious” and “morally insensitive and aesthetically disgusting,” but undeniably seductive and able to speak to certain aspects of reality more effectively than more enlightened authors.[109] He had a similarly ambivalent attitude to G. K. Chesterton, whom he regarded as a writer of considerable talent who had chosen to devote himself to “Roman Catholic propaganda”.[110]

Orwell as literary critic

Throughout his life Orwell continually supported himself as a book reviewer, writing works so long and sophisticated they have had an influence on literary criticism. He wrote in the conclusion to his 1940 essay on Charles Dickens,

When one reads any strongly individual piece of writing, one has the impression of seeing a face somewhere behind the page. It is not necessarily the actual face of the writer. I feel this very strongly with Swift, with Defoe, with Fielding, Stendhal, Thackeray, Flaubert, though in several cases I do not know what these people looked like and do not want to know. What one sees is the face that the writer ought to have. Well, in the case of Dickens I see a face that is not quite the face of Dickens’s photographs, though it resembles it. It is the face of a man of about forty, with a small beard and a high colour. He is laughing, with a touch of anger in his laughter, but no triumph, no malignity. It is the face of a man who is always fighting against something, but who fights in the open and is not frightened, the face of a man who is generously angry – in other words, of a nineteenth-century liberal, a free intelligence, a type hated with equal hatred by all the smelly little orthodoxies which are now contending for our souls.

George Woodcock suggested that the last two sentences characterised Orwell as much as his subject.[111]

Orwell wrote a critique of George Bernard Shaw‘s play Arms and the Man. He considered this Shaw’s best play and the most likely to remain socially relevant, because of its theme that war is not, generally speaking, a glorious romantic adventure. His 1945 essay In Defense of P.G. Wodehouse contains an amusing assessment of his writing and also argues that his broadcasts from Germany (during the war) did not really make him a traitor. He accused The Ministry of Information of exaggerating Wodehouse’s actions for propaganda purposes.

Reception and evaluations of Orwell’s works

Arthur Koestler mentioned Orwell’s “uncompromising intellectual honesty [which] made him appear almost inhuman at times.”[112] Ben Wattenberg stated: “Orwell’s writing pierced intellectual hypocrisy wherever he found it.”[113] According to historian Piers Brendon, “Orwell was the saint of common decency who would in earlier days, said his BBC boss Rushbrook Williams, ‘have been either canonised – or burnt at the stake'”.[114] Raymond Williams in Politics and Letters: Interviews with New Left Review describes Orwell as a “successful impersonation of a plain man who bumps into experience in an unmediated way and tells the truth about it.”[115] Christopher Norris declared that Orwell’s “homespun empiricist outlook – his assumption that the truth was just there to be told in a straightforward common-sense way – now seems not merely naïve but culpably self-deluding”.[116] The American scholar Scott Lucas has described Orwell[117] as an enemy of the Left. John Newsinger has argued[118] that Lucas could only do this by portraying “all of Orwell’s attacks on Stalinism [-] as if they were attacks on socialism, despite Orwell’s continued insistence that they were not.”

Orwell’s work has taken a prominent place in the school literature curriculum in England,[119] with Animal Farm a regular examination topic at the end of secondary education (GCSE), and Nineteen Eighty-Four a topic for subsequent examinations below university level (A Levels). Alan Brown noted that this brings to the forefront questions about the political content of teaching practices. Study aids, in particular with potted biographies, might be seen to help propagate the Orwell myth so that as an embodiment of human values he is presented as a “trustworthy guide”, while examination questions sometimes suggest a “right ways of answering” in line with the myth.[120][clarification needed]

Historian John Rodden stated: “John Podhoretz did claim that if Orwell were alive today, he’d be standing with the neo-conservatives and against the Left. And the question arises, to what extent can you even begin to predict the political positions of somebody who’s been dead three decades and more by that time?”[113]

In Orwell’s Victory, Christopher Hitchens argues, “In answer to the accusation of inconsistency Orwell as a writer was forever taking his own temperature. In other words, here was someone who never stopped testing and adjusting his intelligence”.[121]

John Rodden points out the “undeniable conservative features in the Orwell physiognomy” and remarks on how “to some extent Orwell facilitated the kinds of uses and abuses by the Right that his name has been put to. In other ways there has been the politics of selective quotation.”[113] Rodden refers to the essay “Why I Write“, in which Orwell refers to the Spanish Civil War as being his “watershed political experience”, saying “The Spanish War and other events in 1936–37, turned the scale. Thereafter I knew where I stood. Every line of serious work that I have written since 1936 has been written directly or indirectly against totalitarianism and for Democratic Socialism as I understand it.” (emphasis in original)[113] Rodden goes on to explain how, during the McCarthy era, the introduction to the Signet edition of Animal Farm, which sold more than 20 million copies, makes use of “the politics of ellipsis”:

If the book itself, Animal Farm, had left any doubt of the matter, Orwell dispelled it in his essay Why I Write: ‘Every line of serious work that I’ve written since 1936 has been written directly or indirectly against Totalitarianism … dot, dot, dot, dot.’ “For Democratic Socialism” is vaporised, just like Winston Smith did it at the Ministry of Truth, and that’s very much what happened at the beginning of the McCarthy era and just continued, Orwell being selectively quoted.[113]

Fyvel wrote about Orwell: “His crucial experience … was his struggle to turn himself into a writer, one which led through long periods of poverty, failure and humiliation, and about which he has written almost nothing directly. The sweat and agony was less in the slum-life than in the effort to turn the experience into literature.”[122][123]

In October 2015 Finlay Publisher, for the Orwell Society, published George Orwell ‘The Complete Poetry’, compiled and presented by Dione Venables.[124]

Influence on language and writing

In his essay “Politics and the English Language” (1946), Orwell wrote about the importance of precise and clear language, arguing that vague writing can be used as a powerful tool of political manipulation because it shapes the way we think. In that essay, Orwell provides six rules for writers:

  1. Never use a metaphor, simile or other figure of speech which you are used to seeing in print.
  2. Never use a long word where a short one will do.
  3. If it is possible to cut a word out, always cut it out.
  4. Never use the passive where you can use the active.
  5. Never use a foreign phrase, a scientific word or a jargon word if you can think of an everyday English equivalent.
  6. Break any of these rules sooner than say anything outright barbarous.[125]

Andrew N. Rubin argues, “Orwell claimed that we should be attentive to how the use of language has limited our capacity for critical thought just as we should be equally concerned with the ways in which dominant modes of thinking have reshaped the very language that we use.”[126]

The adjective Orwellian connotes an attitude and a policy of control by propaganda, surveillance, misinformation, denial of truth, and manipulation of the past. In Nineteen Eighty-Four Orwell described a totalitarian government that controlled thought by controlling language, making certain ideas literally unthinkable. Several words and phrases from Nineteen Eighty-Four have entered popular language. Newspeak is a simplified and obfuscatory language designed to make independent thought impossible. Doublethink means holding two contradictory beliefs simultaneously. The Thought Police are those who suppress all dissenting opinion. Prolefeed is homogenised, manufactured superficial literature, film and music, used to control and indoctrinate the populace through docility. Big Brother is a supreme dictator who watches everyone.

Orwell may have been the first to use the term cold war to refer to the state of tension between powers in the Western Bloc and the Eastern Bloc that followed the Second World War, in his essay, “You and the Atom Bomb”, published in Tribune, 19 October 1945. He wrote:

We may be heading not for general breakdown but for an epoch as horribly stable as the slave empires of antiquity. James Burnham‘s theory has been much discussed, but few people have yet considered its ideological implications – this is, the kind of world-view, the kind of beliefs, and the social structure that would probably prevail in a State which was at once unconquerable and in a permanent state of ‘cold war’ with its neighbours.[127]

Museum

In 2014 it was announced that Orwell’s birthplace, a bungalow in Motihari, Bihar, in India would become the world’s first Orwell museum.[10][128]

Modern Culture

In 2014 a play written by playwright Joe Sutton titled Orwell in America was first performed. It is a fictitious account of Orwell doing a book tour in America (something he never did in his lifetime). It moved to Off-Broadway in 2016.[129]

Personal life

Childhood

Jacintha Buddicom‘s account Eric & Us provides an insight into Blair’s childhood.[130] She quoted his sister Avril that “he was essentially an aloof, undemonstrative person” and said herself of his friendship with the Buddicoms: “I do not think he needed any other friends beyond the schoolfriend he occasionally and appreciatively referred to as ‘CC'”. She could not recall his having schoolfriends to stay and exchange visits as her brother Prosper often did in holidays.[131] Cyril Connolly provides an account of Blair as a child in Enemies of Promise.[23] Years later, Blair mordantly recalled his prep school in the essay “Such, Such Were the Joys“, claiming among other things that he “was made to study like a dog” to earn a scholarship, which he alleged was solely to enhance the school’s prestige with parents. Jacintha Buddicom repudiated Orwell’s schoolboy misery described in the essay, stating that “he was a specially happy child”. She noted that he did not like his name, because it reminded him of a book he greatly disliked – Eric, or, Little by Little, a Victorian boys’ school story.[132]

Connolly remarked of him as a schoolboy, “The remarkable thing about Orwell was that alone among the boys he was an intellectual and not a parrot for he thought for himself”.[23] At Eton, John Vaughan Wilkes, his former headmaster’s son recalled, “… he was extremely argumentative – about anything – and criticising the masters and criticising the other boys … We enjoyed arguing with him. He would generally win the arguments – or think he had anyhow.”[133] Roger Mynors concurs: “Endless arguments about all sorts of things, in which he was one of the great leaders. He was one of those boys who thought for himself …”[134]

Blair liked to carry out practical jokes. Buddicom recalls him swinging from the luggage rack in a railway carriage like an orangutan to frighten a woman passenger out of the compartment.[14] At Eton he played tricks on John Crace, his Master in College, among which was to enter a spoof advertisement in a College magazine implying pederasty.[135] Gow, his tutor, said he “made himself as big a nuisance as he could” and “was a very unattractive boy”.[136] Later Blair was expelled from the crammer at Southwold for sending a dead rat as a birthday present to the town surveyor.[137] In one of his As I Please essays he refers to a protracted joke when he answered an advertisement for a woman who claimed a cure for obesity.[138]

Blair had an interest in natural history which stemmed from his childhood. In letters from school he wrote about caterpillars and butterflies,[139] and Buddicom recalls his keen interest in ornithology. He also enjoyed fishing and shooting rabbits, and conducting experiments as in cooking a hedgehog[14] or shooting down a jackdaw from the Eton roof to dissect it.[134] His zeal for scientific experiments extended to explosives – again Buddicom recalls a cook giving notice because of the noise. Later in Southwold his sister Avril recalled him blowing up the garden. When teaching he enthused his students with his nature-rambles both at Southwold[140] and Hayes.[141] His adult diaries are permeated with his observations on nature.

Relationships and marriage

Buddicom and Blair lost touch shortly after he went to Burma, and she became unsympathetic towards him. She wrote that it was because of the letters he wrote complaining about his life, but an addendum to Eric & Us by Venables reveals that he may have lost her sympathy through an incident which was, at best, a clumsy attempt at seduction.[14]

Mabel Fierz, who later became Blair’s confidante, said: “He used to say the one thing he wished in this world was that he’d been attractive to women. He liked women and had many girlfriends I think in Burma. He had a girl in Southwold and another girl in London. He was rather a womaniser, yet he was afraid he wasn’t attractive.”[142]

Brenda Salkield (Southwold) preferred friendship to any deeper relationship and maintained a correspondence with Blair for many years, particularly as a sounding board for his ideas. She wrote: “He was a great letter writer. Endless letters, and I mean when he wrote you a letter he wrote pages.”[22] His correspondence with Eleanor Jacques (London) was more prosaic, dwelling on a closer relationship and referring to past rendezvous or planning future ones in London and Burnham Beeches.[143]

When Orwell was in the sanatorium in Kent, his wife’s friend Lydia Jackson visited. He invited her for a walk and out of sight “an awkward situation arose.”[144] Jackson was to be the most critical of Orwell’s marriage to Eileen O’Shaughnessy, but their later correspondence hints at a complicity. Eileen at the time was more concerned about Orwell’s closeness to Brenda Salkield. Orwell had an affair with his secretary at Tribune which caused Eileen much distress, and others have been mooted. In a letter to Ann Popham he wrote: “I was sometimes unfaithful to Eileen, and I also treated her badly, and I think she treated me badly, too, at times, but it was a real marriage, in the sense that we had been through awful struggles together and she understood all about my work, etc.”[145]Similarly he suggested to Celia Kirwan that they had both been unfaithful.[146] There are several testaments that it was a well-matched and happy marriage.[147][148][149]

Blair was very lonely after Eileen’s death, and desperate for a wife, both as companion for himself and as mother for Richard. He proposed marriage to four women, including Celia Kirwan, and eventually Sonia Brownell accepted.[150] Orwell had met her when she was assistant to Cyril Connolly, at Horizon literary magazine.[151] They were married on 13 October 1949, only three months before Orwell’s death. Some maintain that Sonia was the model for Julia in Nineteen Eighty-Four.

Religious views

Orwell regularly participated in the social and civic life of the church, and yet was an atheist, both critical of religious doctrine and of religious organisations. He attended Holy Communion at the Church of England regularly,[152] and makes allusions to Anglican rites in his book A Clergyman’s Daughter. He was extremely well-read in Biblical literature and could quote lengthy passages from the Book of Common Prayer from memory.[153] However, his forensic knowledge of the Bible came coupled with unsparing criticism of its philosophy, and as an adult he could not bring himself to believe in its tenets. He said clearly in part V of his essay, “Such, Such Were the Joys“: “Till about the age of fourteen I believed in God, and believed that the accounts given of him were true. But I was well aware that I did not love him.”[154] Of his regular Church attendance, he said: “It seems rather mean to go to HC [Holy Communion] when one doesn’t believe, but I have passed myself off for pious & there is nothing for it but to keep up with the deception.”[155]Despite this, he had two Anglican marriages and left instructions for an Anglican funeral.[156] Orwell directly contrasted Christianity with secular humanism in his essay “Lear, Tolstoy and the Fool“, finding the latter philosophy more palatable and less “self-interested.” Literary critic James Wood wrote that in the struggle, as he saw it, between Christianity and humanism, “Orwell was on the humanist side, of course—basically an unmetaphysical, English version of Camus’s philosophy of perpetual godless struggle.”[157]

Orwell’s writing was often explicitly critical of religion, and Christianity in particular. He found the church to be a “selfish … church of the landed gentry” with its establishment “out of touch” with the majority of its communicants and altogether a pernicious influence on public life.[158] In their 1972 study, The Unknown Orwell, the writers Peter Stansky and William Abrahams noted that at Eton Blair displayed a “sceptical attitude” to Christian belief.[159] Crick observed that Orwell displayed “a pronounced anti-Catholicism”.[160] Evelyn Waugh, writing in 1946, acknowledged Orwell’s high moral sense and respect for justice but believed “he seems never to have been touched at any point by a conception of religious thought and life.”[161] His contradictory and sometimes ambiguous views about the social benefits of religious affiliation mirrored the dichotomies between his public and private lives: Stephen Ingle wrote that it was as if the writer George Orwell “vaunted” his unbelief while Eric Blair the individual retained “a deeply ingrained religiosity”. Ingle later noted that Orwell did not accept the existence of an afterlife, believing in the finality of death while living and advocating a moral code based on Judeo-Christian beliefs.[162][163]

Political views

Orwell liked to provoke arguments by challenging the status quo, but he was also a traditionalist with a love of old English values. He criticised and satirised, from the inside, the various social milieux in which he found himself – provincial town life in A Clergyman’s Daughter; middle-class pretension in Keep the Aspidistra Flying; preparatory schools in “Such, Such Were the Joys”; colonialism in Burmese Days, and some socialist groups in The Road to Wigan Pier. In his Adelphi days he described himself as a “Toryanarchist.”[164][165]

In 1928, Orwell began his career as a professional writer in Paris at a journal owned by the French Communist Henri Barbusse. His first article, “La Censure en Angleterre“, was an attempt to account for the ‘extraordinary and illogical’ moral censorship of plays and novels then practised in Britain. His own explanation was that the rise of the “puritan middle class,” who had stricter morals than the aristocracy, tightened the rules of censorship in the 19th century. Orwell’s first published article in his home country, “A Farthing Newspaper”, was a critique of the new French daily the Ami de Peuple. This paper was sold much more cheaply than most others, and was intended for ordinary people to read. Orwell pointed out that its proprietor François Coty also owned the right-wing dailies Le Figaro and Le Gaulois, which the Ami de Peuple was supposedly competing against. Orwell suggested that cheap newspapers were no more than a vehicle for advertising and anti-leftist propaganda, and predicted the world might soon see free newspapers which would drive legitimate dailies out of business.[166]

The Spanish Civil War played the most important part in defining Orwell’s socialism. He wrote to Cyril Connolly from Barcelona on 8 June 1937: “I have seen wonderful things and at last really believe in Socialism, which I never did before.”[167][168] Having witnessed the success of the anarcho-syndicalist communities, for example in Anarchist Catalonia, and the subsequent brutal suppression of the anarcho-syndicalists, anti-Stalin communist parties and revolutionaries by the Soviet Union-backed Communists, Orwell returned from Catalonia a staunch anti-Stalinist and joined the Independent Labour Party, his card being issued on 13 June 1938.[169] Although he was never a Trotskyist, he was strongly influenced by the Trotskyist and anarchist critiques of the Soviet regime, and by the anarchists’ emphasis on individual freedom. In Part 2 of The Road to Wigan Pier, published by the Left Book Club, Orwell stated: “a real Socialist is one who wishes – not merely conceives it as desirable, but actively wishes – to see tyranny overthrown.” Orwell stated in “Why I Write” (1946): “Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism, as I understand it.”[170] Orwell was a proponent of a federal socialist Europe, a position outlined in his 1947 essay “Toward European Unity,” which first appeared in Partisan Review. According to biographer John Newsinger,

the other crucial dimension to Orwell’s socialism was his recognition that the Soviet Union was not socialist. Unlike many on the left, instead of abandoning socialism once he discovered the full horror of Stalinist rule in the Soviet Union, Orwell abandoned the Soviet Union and instead remained a socialist – indeed he became more committed to the socialist cause than ever.”[60]

In his 1938 essay “Why I joined the Independent Labour Party,” published in the ILP-affiliated New Leader, Orwell wrote:

For some years past I have managed to make the capitalist class pay me several pounds a week for writing books against capitalism. But I do not delude myself that this state of affairs is going to last forever … the only régime which, in the long run, will dare to permit freedom of speech is a Socialist régime. If Fascism triumphs I am finished as a writer – that is to say, finished in my only effective capacity. That of itself would be a sufficient reason for joining a Socialist party.[171]

Towards the end of the essay, he wrote: “I do not mean I have lost all faith in the Labour Party. My most earnest hope is that the Labour Party will win a clear majority in the next General Election.”[172]

Orwell was opposed to rearmament against Nazi Germany – but he changed his view after the Molotov-Ribbentrop Pact and the outbreak of the war. He left the ILP because of its opposition to the war and adopted a political position of “revolutionary patriotism”. In December 1940 he wrote in Tribune (the Labour left’s weekly): “We are in a strange period of history in which a revolutionary has to be a patriot and a patriot has to be a revolutionary.” During the war, Orwell was highly critical of the popular idea that an Anglo-Soviet alliance would be the basis of a post-war world of peace and prosperity. In 1942, commenting on journalist E. H. Carr‘s pro-Soviet views, Orwell stated: “all the appeasers, e.g. Professor E. H. Carr, have switched their allegiance from Hitler to Stalin.”[173]

On anarchism, Orwell wrote in The Road to Wigan Pier: “I worked out an anarchistic theory that all government is evil, that the punishment always does more harm than the crime and the people can be trusted to behave decently if you will only let them alone.” He continued and argued that “it is always necessary to protect peaceful people from violence. In any state of society where crime can be profitable you have got to have a harsh criminal law and administer it ruthlessly.”

In his reply (dated 15 November 1943) to an invitation from the Duchess of Atholl to speak for the British League for European Freedom, he stated that he did not agree with their objectives. He admitted that what they said was “more truthful than the lying propaganda found in most of the press” but added that he could not “associate himself with an essentially Conservative body” that claimed to “defend democracy in Europe” but had “nothing to say about British imperialism.” His closing paragraph stated: “I belong to the Left and must work inside it, much as I hate Russian totalitarianism and its poisonous influence in this country.”[174]

Orwell joined the staff of Tribune as literary editor, and from then until his death, was a left-wing (though hardly orthodox) Labour-supporting democratic socialist.[175] On 1 September 1944, about the Warsaw uprising, Orwell expressed in Tribune his hostility against the influence of the alliance with the USSR over the allies: “Do remember that dishonesty and cowardice always have to be paid for. Do not imagine that for years on end you can make yourself the boot-licking propagandist of the sovietic regime, or any other regime, and then suddenly return to honesty and reason. Once a whore, always a whore.” According to Newsinger, although Orwell “was always critical of the 1945–51 Labour government’s moderation, his support for it began to pull him to the right politically. This did not lead him to embrace conservatism, imperialism or reaction, but to defend, albeit critically, Labour reformism.”[176] Between 1945 and 1947, with A. J. Ayer and Bertrand Russell, he contributed a series of articles and essays to Polemic, a short-lived British “Magazine of Philosophy, Psychology, and Aesthetics” edited by the ex-Communist Humphrey Slater.[177][178]

Writing in early 1945 a long essay titled “Antisemitism in Britain,” for the Contemporary Jewish Record, Orwell stated that anti-Semitism was on the increase in Britain, and that it was “irrational and will not yield to arguments.” He argued that it would be useful to discover why anti-Semites could “swallow such absurdities on one particular subject while remaining sane on others.”[179] He wrote: “For quite six years the English admirers of Hitler contrived not to learn of the existence of Dachau and Buchenwald. … Many English people have heard almost nothing about the extermination of German and Polish Jews during the present war. Their own anti-Semitism has caused this vast crime to bounce off their consciousness.”[180] In Nineteen Eighty-Four, written shortly after the war, Orwell portrayed the Party as enlisting anti-Semitic passions against their enemy, Goldstein.

Orwell publicly defended P.G. Wodehouse against charges of being a Nazi sympathiser – occasioned by his agreement to do some broadcasts over the German radio in 1941 – a defence based on Wodehouse’s lack of interest in and ignorance of politics.[181]

Special Branch, the intelligence division of the Metropolitan Police, maintained a file on Orwell for more than 20 years of his life. The dossier, published by The National Archives, states that, according to one investigator, Orwell had “advanced Communist views and several of his Indian friends say that they have often seen him at Communist meetings.” MI5, the intelligence department of the Home Office, noted: “It is evident from his recent writings – ‘The Lion and the Unicorn’ – and his contribution to Gollancz’s symposium The Betrayal of the Left that he does not hold with the Communist Party nor they with him.”[182]

Social interactions

Orwell was noted for very close and enduring friendships with a few friends, but these were generally people with a similar background or with a similar level of literary ability. Ungregarious, he was out of place in a crowd and his discomfort was exacerbated when he was outside his own class. Though representing himself as a spokesman for the common man, he often appeared out of place with real working people. His brother-in-law Humphrey Dakin, a “Hail fellow, well met” type, who took him to a local pub in Leeds, said that he was told by the landlord: “Don’t bring that bugger in here again.”[183] Adrian Fierz commented “He wasn’t interested in racing or greyhounds or pub crawling or shove ha’penny. He just did not have much in common with people who did not share his intellectual interests.”[184] Awkwardness attended many of his encounters with working-class representatives, as with Pollitt and McNair,[185] but his courtesy and good manners were often commented on. Jack Common observed on meeting him for the first time, “Right away manners, and more than manners – breeding – showed through.”[186]

In his tramping days, he did domestic work for a time. His extreme politeness was recalled by a member of the family he worked for; she declared that the family referred to him as “Laurel” after the film comedian.[38] With his gangling figure and awkwardness, Orwell’s friends often saw him as a figure of fun. Geoffrey Gorer commented “He was awfully likely to knock things off tables, trip over things. I mean, he was a gangling, physically badly co-ordinated young man. I think his feeling [was] that even the inanimate world was against him …”[187] When he shared a flat with Heppenstall and Sayer, he was treated in a patronising manner by the younger men.[188] At the BBC, in the 1940s, “everybody would pull his leg,”[189] and Spender described him as having real entertainment value “like, as I say, watching a Charlie Chaplin movie.”[190] A friend of Eileen’s reminisced about her tolerance and humour, often at Orwell’s expense.[148] Psychiatrist Michael Fitzgerald has speculated that Orwell’s social and physical awkwardness, limited interests and monotone voice were the result of Asperger syndrome.[191]

One biography of Orwell accused him of having had an authoritarian streak.[192] In Burma, he struck out at a Burmese boy who, while “fooling around” with his friends, had “accidentally bumped into him” at a station, resulting in Orwell falling “heavily” down some stairs.[193] One of his former pupils recalled being beaten so hard he could not sit down for a week.[194] When sharing a flat with Orwell, Heppenstall came home late one night in an advanced stage of loud inebriation. The upshot was that Heppenstall ended up with a bloody nose and was locked in a room. When he complained, Orwell hit him across the legs with a shooting stick and Heppenstall then had to defend himself with a chair. Years later, after Orwell’s death, Heppenstall wrote a dramatic account of the incident called “The Shooting Stick”[195] and Mabel Fierz confirmed that Heppenstall came to her in a sorry state the following day.[196]

Orwell got on well with young people. The pupil he beat considered him the best of teachers, and the young recruits in Barcelona tried to drink him under the table – though without success. His nephew recalled Uncle Eric laughing louder than anyone in the cinema at a Charlie Chaplin film.[147]

In the wake of his most famous works, he attracted many uncritical hangers-on, but many others who sought him found him aloof and even dull. With his soft voice, he was sometimes shouted down or excluded from discussions.[197] At this time, he was severely ill; it was wartime or the austerity period after it; during the war his wife suffered from depression; and after her death he was lonely and unhappy. In addition to that, he always lived frugally and seemed unable to care for himself properly. As a result of all this, people found his circumstances bleak.[198] Some, like Michael Ayrton, called him “Gloomy George,” but others developed the idea that he was a “secular saint.”

Although Orwell was frequently heard on the BBC for panel discussion and one-man broadcasts, no recorded copy of his voice is known to exist.[199]

Lifestyle

“By putting the tea in first and stirring as one pours, one can exactly regulate the amount of milk, whereas one is likely to put in too much milk if one does it the other way round”

– One of Orwell’s eleven rules for making tea from his essay “A Nice Cup of Tea“, appearing in the London Evening Standard, 12 January 1946.[200]

Orwell was a heavy smoker, who rolled his own cigarettes from strong shag tobacco, despite his bronchial condition. His penchant for the rugged life often took him to cold and damp situations, both in the long term, as in Catalonia and Jura, and short term, for example, motorcycling in the rain and suffering a shipwreck. Described by The Economist as “perhaps the 20th century’s best chronicler of English culture“,[201] Orwell considered fish and chips, association football, the pub, strong tea, cut price chocolate, the movies, and radio among the chief comforts for the working class.[202] Orwell enjoyed strong tea – he had Fortnum & Mason‘s tea brought to him in Catalonia.[8] His 1946 essay, “A Nice Cup of Tea“, appeared in the London Evening Standard article on how to make tea, with Orwell writing, “tea is one of the mainstays of civilisation in this country and causes violent disputes over how it should be made”, with the main issue being whether to put tea in the cup first and add the milk afterward, or the other way round, on which he states, “in every family in Britain there are probably two schools of thought on the subject”.[203] He appreciated English beer, taken regularly and moderately, despised drinkers of lager[204] and wrote about an imagined, ideal British pub in his 1946 English Standard article, “The Moon Under Water“.[205] Not as particular about food, he enjoyed the wartime “Victory Pie”[206] and extolled canteen food at the BBC.[189] He preferred traditional English dishes, such as roast beef and kippers.[207] Reports of his Islington days refer to the cosy afternoon tea table.[208]

His dress sense was unpredictable and usually casual.[209] In Southwold, he had the best cloth from the local tailor[210] but was equally happy in his tramping outfit. His attire in the Spanish Civil War, along with his size-12 boots, was a source of amusement.[211][212]David Astor described him as looking like a prep school master,[213] while according to the Special Branch dossier, Orwell’s tendency to dress “in Bohemian fashion” revealed that the author was “a Communist”.[214]

Orwell’s confusing approach to matters of social decorum – on the one hand expecting a working-class guest to dress for dinner,[215] and on the other, slurping tea out of a saucer at the BBC canteen[216] – helped stoke his reputation as an English eccentric.

Views on homosexuality

Orwell was openly homophobic, at a time when such prejudice was not uncommon. Speaking at the 2003 George Orwell Centenary Conference, Daphne Patai said: “Of course he was homophobic. That has nothing to do with his relations with his homosexual friends. Certainly he had a negative attitude and a certain kind of anxiety, a denigrating attitude towards homosexuality. That is definitely the case. I think his writing reflects that quite fully.”[217]

Orwell used the homophobic epithets “Nancy” and “pansy” as terms of abuse, notably in his expressions of contempt for what he called the “pansy Left”, and “nancy poets”, i.e. left-wing homosexual or bisexual writers and intellectuals such as Stephen Spender and W. H. Auden.[218] The protagonist of Keep the Aspidistra Flying, Gordon Comstock, conducts an internal critique of his customers when working in a bookshop, and there is an extended passage of several pages in which he concentrates on a homosexual male customer, and sneers at him for his “Nancy” characteristics, including a lisp, which he identifies in detail, with some disgust.[219] Dr Thomas S Veale, in The Banality of Virtue: A Multifaceted view of George Orwell as champion of the common man, refers to Orwell’s “homophobia most probably based on the perceived weakness of homosexuals and their preferences’ betrayal of the natural order”. Stephen Spender, however, “thought Orwell’s occasional homophobic outbursts were part of his rebellion against the public school”.[220]

Biographies of Orwell

Orwell’s will requested that no biography of him be written, and his widow Sonia Brownell repelled every attempt by those who tried to persuade her to let them write about him. Various recollections and interpretations were published in the 1950s and ’60s, but Sonia saw the 1968 Collected Works[138] as the record of his life. She did appoint Malcolm Muggeridge as official biographer, but later biographers have seen this as deliberate spoiling as Muggeridge eventually gave up the work.[221] In 1972, two American authors, Peter Stansky and William Abrahams,[222] produced The Unknown Orwell, an unauthorised account of his early years that lacked any support or contribution from Sonia Brownell.

Sonia Brownell then commissioned Bernard Crick, a left-wing professor of politics at the University of London, to complete a biography and asked Orwell’s friends to co-operate.[223] Crick collated a considerable amount of material in his work, which was published in 1980,[82] but his questioning of the factual accuracy of Orwell’s first-person writings led to conflict with Brownell, and she tried to suppress the book. Crick concentrated on the facts of Orwell’s life rather than his character, and presented primarily a political perspective on Orwell’s life and work.[224]

After Sonia Brownell’s death, other works on Orwell were published in the 1980s, with 1984 being a particularly fruitful year for Orwelliana. These included collections of reminiscences by Coppard and Crick[137] and Stephen Wadhams.[22]

In 1991, Michael Shelden, an American professor of literature, published a biography.[26] More concerned with the literary nature of Orwell’s work, he sought explanations for Orwell’s character and treated his first-person writings as autobiographical. Shelden introduced new information that sought to build on Crick’s work.[223] Shelden speculated that Orwell possessed an obsessive belief in his failure and inadequacy.

Peter Davison‘s publication of the Complete Works of George Orwell, completed in 2000,[225] made most of the Orwell Archive accessible to the public. Jeffrey Meyers, a prolific American biographer, was first to take advantage of this and published a book in 2001[226] that investigated the darker side of Orwell and questioned his saintly image.[223] Why Orwell Matters (released in the UK as Orwell’s Victory) was published by Christopher Hitchens in 2002.[227]

In 2003, the centenary of Orwell’s birth resulted in biographies by Gordon Bowker[228] and D. J. Taylor, both academics and writers in the United Kingdom. Taylor notes the stage management which surrounds much of Orwell’s behaviour,[8] and Bowker highlights the essential sense of decency which he considers to have been Orwell’s main motivation.[229][230]

Ancestry

Bibliography

Main article: George Orwell bibliography

Novels

Nonfiction

https://en.wikipedia.org/wiki/George_Orwell

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American Conservative Union CPAC 2017 — Videos

Posted on February 26, 2017. Filed under: American History, Blogroll, College, Congress, conservatives, Constitution, Economics, Education, Employment, Federal Government, Foreign Policy, Freedom, Friends, government, government spending, Health Care, Heroes, history, Illegal, Immigration, Law, Legal, liberty, Life, Links, Literacy, media, Obamacare, People, Philosophy, Photos, Politics, Religious, Security, Speech, Video, War, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , |

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Image result for cpac 2017  Trump Speech at CPAC 2017 (FULL) | ABC News

 CPAC 2017 – Dr. Larry Arnn

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CPAC 2017 – Vice President Mike Pence’s full #CPAC Speech #CPAC2017

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CPAC 2017 – When did World War III Begin? Part B

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CPAC 2017 – Wayne LaPierre, NRA

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Dore Gold — Hatred’s Kingdom: How Saudi Arabia Supports the New Global Terrorism — Videos

Posted on February 22, 2017. Filed under: American History, Articles, Blogroll, Books, Corruption, Crime, Crisis, Education, Faith, Family, Foreign Policy, Freedom, government spending, history, Islam, Law, liberty, Life, Links, Money, Non-Fiction, People, Philosophy, Photos, Politics, Press, Rants, Raves, Religious, Terrorism, Video, Wahhabism, War, Wisdom, Writing | Tags: , , , , |

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Book | Hatred’s Kingdom: How Saudi Arabia Supports the New Global Terrorism

Wahhabism

From Wikipedia, the free encyclopedia

Wahhabism (Arabic: الوهابية‎‎, al-Wahhābiya(h)) or Wahhabi mission[1] (/wəˈhɑːbi, wɑː/;[2] Arabic: الدعوة الوهابية‎‎, ad-Da’wa al-Wahhābiya(h) ) is a sect,[3][4][5][6] religious movement or branch of Islam.[7][8][9][10] It has been variously described as “ultraconservative”,[11] “austere”,[7] “fundamentalist”,[12] or “puritan(ical)”[13][14] and as an Islamic “reform movement” to restore “pure monotheistic worship” (tawhid) by devotees,[15] and as a “deviant sectarian movement”,[15] “vile sect”[16] and a distortion of Islam by its opponents.[7][17] The term Wahhabi(ism) is often used polemically and adherents commonly reject its use, preferring to be called Salafi or muwahhid.[18][19][20] The movement emphasises the principle oftawhid[21] (the “uniqueness” and “unity” of God).[22] It claims its principal influences to be Ahmad ibn Hanbal (780–855) and Ibn Taymiyyah (1263–1328), both belonging to the Hanbalischool,[23] although the extent of their actual influence upon the tenets of the movement has been contested.[24][25]

Wahhabism is named after an eighteenth-century preacher and activist, Muhammad ibn Abd al-Wahhab (1703–1792).[26] He started a reform movement in the remote, sparsely populated region of Najd,[27] advocating a purging of such widespread Sunni practices as the intercession of saints, and the visitation to their tombs, both of which were practiced all over the Islamic world, but which he considered idolatry (shirk), impurities and innovations in Islam (Bid’ah).[9][22] Eventually he formed a pact with a local leader Muhammad bin Saudoffering political obedience and promising that protection and propagation of the Wahhabi movement mean “power and glory” and rule of “lands and men.”[28]

The alliance between followers of ibn Abd al-Wahhab and Muhammad bin Saud’s successors (the House of Saud) proved to be a durable one. The House of Saud continued to maintain its politico-religious alliance with the Wahhabi sect through the waxing and waning of its own political fortunes over the next 150 years, through to its eventual proclamation of the Kingdom of Saudi Arabia in 1932, and then afterwards, on into modern times. Today Ibn Abd Al-Wahhab’s teachings are the official, state-sponsored form of Sunni Islam[7][29] in Saudi Arabia.[30] With the help of funding from Saudi petroleum exports[31] (and other factors[32]), the movement underwent “explosive growth” beginning in the 1970s and now has worldwide influence.[7] The US State Department has estimated that over the past four decades Riyadh has invested more than $10bn (£6bn) into charitable foundations in an attempt to replace mainstream Sunni Islam with the harsh intolerance of its Wahhabism.[33]

The “boundaries” of Wahhabism have been called “difficult to pinpoint”,[34] but in contemporary usage, the terms Wahhabi and Salafi are often used interchangeably, and they are considered to be movements with different roots that have merged since the 1960s.[35][36][37] However, Wahhabism has also been called “a particular orientation within Salafism”,[38] or an ultra-conservative, Saudi brand of Salafism.[39][40] Estimates of the number of adherents to Wahhabism vary, with one source (Mehrdad Izady) giving a figure of fewer than 5 million Wahhabis in the Persian Gulf region (compared to 28.5 million Sunnis and 89 million Shia).[30][41]

The majority of mainstream Sunni and Shia Muslims worldwide strongly disagree with the interpretation of Wahhabism and consider it a “vile sect”.[16] Islamic scholars, including those from the Al-Azhar University, regularly denounce Wahhabism with terms such as “Satanic faith”.[16] Wahhabism has been accused of being “a source of global terrorism”,[42][43]inspiring the ideology of the Islamic State of Iraq and the Levant (ISIL),[44] and for causing disunity in Muslim communities by labelling Muslims who disagreed with the Wahhabi definition of monotheism as apostates[45] (takfir) and justifying their killing.[46][47][48] It has also been criticized for the destruction of historic shrines of saints, mausoleums, and other Muslim and non-Muslim buildings and artifacts.[49][50][51]

Definitions and etymology

Definitions

Some definitions or uses of the term Wahhabi Islam include:

  • “a corpus of doctrines”, and “a set of attitudes and behavior, derived from the teachings of a particularly severe religious reformist who lived in central Arabia in the mid-eighteenth century” (Gilles Kepel)[52]
  • “pure Islam” (David Commins, paraphrasing supporters’ definition),[17] that does not deviate from Sharia law in any way and should be called Islam and not Wahhabism. (King Salman bin Abdul Aziz, the King of the Saudi Arabia)[53]
  • “a misguided creed that fosters intolerance, promotes simplistic theology, and restricts Islam’s capacity for adaption to diverse and shifting circumstances” (David Commins, paraphrasing opponents’ definition)[17]
  • “a conservative reform movement … the creed upon which the kingdom of Saudi Arabia was founded, and [which] has influenced Islamic movements worldwide” (Encyclopedia of Islam and the Muslim world)[54]
  • “a sect dominant in Saudi Arabia and Qatar” with footholds in “India, Africa, and elsewhere”, with a “steadfastly fundamentalist interpretation of Islam in the tradition of Ibn Hanbal” (Cyril Glasse)[21]
  • an “eighteenth-century reformist/revivalist movement for sociomoral reconstruction of society”, “founded by Muhammad ibn Abd al-Wahhab” (Oxford Dictionary of Islam).[55]
  • originally a “literal revivification” of Islamic principles that ignored the spiritual side of Islam, that “rose on the wings of enthusiasm апd longing and then sank down into the lowlands of pharisaic self-righteousness” after gaining power and losing its “longing and humility” (Muhammad Asad)[56]
  • “a political trend” within Islam that “has been adopted for power-sharing purposes”, but cannot be called a sect because “It has no special practices, nor special rites, and no special interpretation of religion that differ from the main body of Sunni Islam” (Abdallah Al Obeid, the former dean of the Islamic University of Medina and member of the Saudi Consultative Council)[34]
  • “the true salafist movement”. Starting out as a theological reform movement, it had “the goal of calling (da’wa) people to restore the ‘real’ meaning of tawhid (oneness of God or monotheism) and to disregard and deconstruct ‘traditional’ disciplines and practices that evolved in Islamic history such as theology and jurisprudence and the traditions of visiting tombs and shrines of venerated individuals.” (Ahmad Moussalli)[57]
  • a term used by opponents of Salafism in hopes of besmirching that movement by suggesting foreign influence and “conjuring up images of Saudi Arabia”. The term is “most frequently used in countries where Salafis are a small minority” of the Muslim community but “have made recent inroads” in “converting” the local population to Salafism. (Quintan Wiktorowicz)[18]
  • a blanket term used inaccurately to refer to “any Islamic movement that has an apparent tendency toward misogyny, militantism, extremism, or strict and literal interpretation of the Quran and hadith” (Natana J. DeLong-Bas)[58]

Etymology

According to Saudi writer Abdul Aziz Qassim and others, it was the Ottomans who “first labelled Abdul Wahhab’s school of Islam in Saudi Arabia as Wahhabism”. The British also adopted it and expanded its use in the Middle East.[59]

Naming controversy: Wahhabis, Muwahhidun, and Salafis

Wahhabis do not like – or at least did not like – the term. Ibn Abd-Al-Wahhab was averse to the elevation of scholars and other individuals, including using a person’s name to label an Islamic school.[18][46][60]

According to Robert Lacey “the Wahhabis have always disliked the name customarily given to them” and preferred to be called Muwahhidun (Unitarians).[61] Another preferred term was simply “Muslims” since their creed is “pure Islam”.[62] However, critics complain these terms imply non-Wahhabis are not monotheists or Muslims,[62][63] and the English translation of that term causes confusion with the Christian denomination (Unitarian Universalism).

Other terms Wahhabis have been said to use and/or prefer include ahl al-hadith (“people of hadith”), Salafi Da’wa or al-da’wa ila al-tawhid[64] (“Salafi preaching” or “preaching of monotheism”, for the school rather than the adherents) or Ahl ul-Sunna wal Jama’a (“people of the tradition of Muhammad and the consensus of the Ummah”),[38] Ahl al-Sunnah (“People of the Sunna”),[65] or “the reform or Salafi movement of the Sheikh” (the sheikh being ibn Abdul-Wahhab).[66] Early Salafis referred to themselves simply as “Muslims”, believing the neighboring Ottoman Caliphate was al-dawlah al-kufriyya (a heretical nation) and its self-professed Muslim inhabitants actually non-Muslim.[45][67][68][69] The prominent 20th-century Muslim scholar Nasiruddin Albani, who considered himself “of the Salaf,” referred to Muhammad ibn Abd al-Wahhab‘s activities as “Najdi da’wah.”[70]

Many, such as writer Quinton Wiktorowicz, urge use of the term Salafi, maintaining that “one would be hard pressed to find individuals who refer to themselves as Wahhabis or organizations that use ‘Wahhabi’ in their title, or refer to their ideology in this manner (unless they are speaking to a Western audience that is unfamiliar with Islamic terminology, and even then usage is limited and often appears as ‘Salafi/Wahhabi’).”[18] A New York Timesjournalist writes that Saudis “abhor” the term Wahhabism, “feeling it sets them apart and contradicts the notion that Islam is a monolithic faith.”[71] Saudi King Salman bin Abdulaziz Al Saud for example has attacked the term as “a doctrine that doesn’t exist here (Saudi Arabia)” and challenged users of the term to locate any “deviance of the form of Islam practiced in Saudi Arabia from the teachings of the Quran and Prophetic Hadiths“.[72][73] Ingrid Mattsonargues that, “‘Wahhbism’ is not a sect. It is a social movement that began 200 years ago to rid Islam of rigid cultural practices that had (been) acquired over the centuries.”[74]

On the other hand, according to authors at Global Security and Library of Congress the term is now commonplace and used even by Wahhabi scholars in the Najd,[9][75] a region often called the “heartland” of Wahhabism.[76]Journalist Karen House calls Salafi, “a more politically correct term” for Wahhabi.[77]

In any case, according to Lacey, none of the other terms have caught on, and so like the Christian Quakers, Wahhabis have “remained known by the name first assigned to them by their detractors.”[61]

Wahhabis and Salafis

Many scholars and critics distinguish between Wahhabi and Salafi. According to American scholar Christopher M. Blanchard,[78] Wahhabism refers to “a conservative Islamic creed centered in and emanating from Saudi Arabia,” while Salafiyya is “a more general puritanical Islamic movement that has developed independently at various times and in various places in the Islamic world.”[46]

However, many call Wahhabism a more strict, Saudi form of Salafi.[79][80] Wahhabism is the Saudi version of Salafism, according to Mark Durie, who states Saudi leaders “are active and diligent” using their considerable financial resources “in funding and promoting Salafism all around the world.”[81] Ahmad Moussalli tends to agree Wahhabism is a subset of Salafism, saying “As a rule, all Wahhabis are salafists, but not all salafists are Wahhabis”.[57]

Hamid Algar lists three “elements” Wahhabism and Salafism had in common.

  1. above all disdain for all developments subsequent to al-Salaf al-Salih (the first two or three generations of Islam),
  2. the rejection of Sufism, and
  3. the abandonment of consistent adherence to one of the four or five Sunni Madhhabs (schools of fiqh).

And “two important and interrelated features” that distinguished Salafis from the Wahhabis:

  1. a reliance on attempts at persuasion rather than coercion in order to rally other Muslims to their cause; and
  2. an informed awareness of the political and socio-economic crises confronting the Muslim world.[82]

Hamid Algar and another critic, Khaled Abou El Fadl, argue Saudi oil-export funding “co-opted” the “symbolism and language of Salafism”, during the 1960s and 70s, making them practically indistinguishable by the 1970s,[83]and now the two ideologies have “melded”. Abou El Fadl believes Wahhabism rebranded itself as Salafism knowing it could not “spread in the modern Muslim world” as Wahhabism.[35]

History

The Wahhabi mission started as a revivalist movement in the remote, arid region of Najd. With the collapse of the Ottoman Empire after World War I, the Al Saud dynasty, and with it Wahhabism, spread to the holy cities of Meccaand Medina. After the discovery of petroleum near the Persian Gulf in 1939, it had access to oil export revenues, revenue that grew to billions of dollars. This money – spent on books, media, schools, universities, mosques, scholarships, fellowships, lucrative jobs for journalists, academics and Islamic scholars – gave Wahhabism a “preeminent position of strength” in Islam around the world.[84]

In the country of Wahhabism’s founding – and by far the largest and most powerful country where it is the state religion – Wahhabi ulama gained control over education, law, public morality and religious institutions in the 20th century, while permitting as a “trade-off” doctrinally objectionable actions such as the import of modern technology and communications, and dealings with non-Muslims, for the sake of the consolidation of the power of its political guardian, the Al Saud dynasty.[85]

However, in the last couple of decades of the twentieth century several crises worked to erode Wahhabi “credibility” in Saudi Arabia and the rest of the Muslim world – the November 1979 seizure of the Grand Mosque by militants; the deployment of US troops in Saudi during the 1991 Gulf War against Iraq; and the 9/11 2001 al-Qaeda attacks on New York and Washington.[86]

In each case the Wahhabi establishment was called on to support the dynasty’s efforts to suppress religious dissent – and in each case it did[86] – exposing its dependence on the Saudi dynasty and its often unpopular policies.[87][88]

In the West, the end of the Cold War and the anti-communist alliance with conservative, religious Saudi Arabia, and the 9/11 attacks created enormous distrust towards the kingdom and especially its official religion.[89]

Muhammad ibn Abd-al-Wahhab

The founder of Wahhabism, Mohammad ibn Abd-al-Wahhab, was born around 1702-03 in the small oasis town of ‘Uyayna in the Najd region, in what is now central Saudi Arabia.[90] He studied in Basra,[91] in what is now Iraq, and possibly Mecca and Medina while there to perform Hajj, before returning to his home town of ‘Uyayna in 1740. There he worked to spread the call (da’wa) for what he believed was a restoration of true monotheistic worship (Tawhid).[92]

The “pivotal idea” of Ibn Abd al-Wahhab’s teaching was that people who called themselves Muslims but who participated in alleged innovations were not just misguided or committing a sin, but were “outside the pale of Islam altogether,” as were Muslims who disagreed with his definition. [93]

This included not just lax, unlettered, nomadic Bedu, but Shia, Sunnis such as the Ottomans.[94] Such infidels were not to be killed outright, but to be given a chance to repent first.[95] With the support of the ruler of the town – Uthman ibn Mu’ammar – he carried out some of his religious reforms in ‘Uyayna, including the demolition of the tomb of Zayd ibn al-Khattab, one of the Sahaba (companions) of the prophet Muhammad, and the stoning to death of an adulterous woman. However, a more powerful chief (Sulaiman ibn Muhammad ibn Ghurayr) pressured Uthman ibn Mu’ammar to expel him from ‘Uyayna.[citation needed]

Alliance with the House of Saud

Further information:

1744–1818

The Kingdom of Saudi Arabia after unification in 1932

The ruler of nearby town, Muhammad ibn Saud, invited ibn ‘Abd al-Wahhab to join him, and in 1744 a pact was made between the two. [96] Ibn Saud would protect and propagate the doctrines of the Wahhabi mission, while ibn Abdul Wahhab “would support the ruler, supplying him with ‘glory and power.'” Whoever championed his message, ibn Abdul Wahhab promised, “will, by means of it, rule the lands and men.” [28] Ibn Saud would abandon un-Sharia taxation of local harvests, and in return God might compensate him with booty from conquest and sharia compliant taxes that would exceed what he gave up.[97] The alliance between the Wahhabi mission and Al Saud family has “endured for more than two and half centuries,” surviving defeat and collapse.[96][98] The two families have intermarried multiple times over the years and in today’s Saudi Arabia, the minister of religion is always a member of the Al ash-Sheikh family, i.e., a descendent of Ibn Abdul Wahhab.[99]

According to most sources, Ibn Abd al-Wahhab declared jihad against neighboring tribes, whose practices of praying to saints, making pilgrimages to tombs and special mosques, he believed to be the work of idolaters/unbelievers.[47][63][95][100]

One academic disputes this. According to Natana DeLong-Bas, Ibn Abd al-Wahhab was restrained in urging fighting with perceived unbelievers, preferring to preach and persuade rather than attack.[101] [102][103] It was only after the death of Muhammad bin Saud in 1765 that, according to DeLong-Bas, Muhammad bin Saud’s son and successor, Abdul-Aziz bin Muhammad, used a “convert or die” approach to expand his domain,[104] and when Wahhabis adopted the takfir ideas of Ibn Taymiyya.[105]

However, various scholars, including Simon Ross Valentine, have strongly rejected such a view of Wahhab, arguing that “the image of Abd’al-Wahhab presented by DeLong-Bas is to be seen for what it is, namely a re-writing of history that flies in the face of historical fact”.[106] Conquest expanded through the Arabian Peninsula until it conquered Mecca and Medina the early 19th century.[107][108] It was at this time, according to DeLong-Bas, that Wahhabis embraced the ideas of Ibn Taymiyya, which allow self-professed Muslim who do not follow Islamic law to be declared non-Muslims – to justify their warring and conquering the Muslim Sharifs of Hijaz.[105]

One of their most noteworthy and controversial attacks was on Karbala in 1802. There, according to a Wahhabi chronicler `Uthman b. `Abdullah b. Bishr: “The Muslims” – as the Wahhabis referred to themselves, not feeling the need to distinguish themselves from other Muslims, since they did not believe them to be Muslims –

scaled the walls, entered the city … and killed the majority of its people in the markets and in their homes. [They] destroyed the dome placed over the grave of al-Husayn [and took] whatever they found inside the dome and its surroundings … the grille surrounding the tomb which was encrusted with emeralds, rubies, and other jewels … different types of property, weapons, clothing, carpets, gold, silver, precious copies of the Qur’an.”[109][110]

Wahhabis also massacred the male population and enslaved the women and children of the city of Ta’if in Hejaz in 1803.[111]

Saud bin Abdul-Aziz bin Muhammad bin Saud managed to establish his rule over southeastern Syria between 1803 and 1812. However, Egyptian forces acting under the Ottoman Empire and led by Ibrahim Pasha, were eventually successful in counterattacking in a campaign starting from 1811.[112] In 1818 they defeated Al-Saud, leveling the capital Diriyah, executing the Al-Saud emir, exiling the emirate’s political and religious leadership,[98][113] and otherwise unsuccessfully attempted to stamp out not just the House of Saud but the Wahhabi mission as well.[114] A second, smaller Saudi state (Emirate of Nejd) lasted from 1819–1891. Its borders being within Najd, Wahhabism was protected from further Ottoman or Egyptian campaigns by the Najd’s isolation, lack of valuable resources, and that era’s limited communication and transportation.[115]

By the 1880s, at least among townsmen if not Bedouin, Wahhabi strict monotheistic doctrine had become the native religious culture of the Najd.[116]

Abdul-Aziz Ibn Saud

Ibn Saud, the first king of Saudi Arabia

Further information: History of Saudi Arabia

In 1901, Abdul-Aziz Ibn Saud, a fifth generation descendent of Muhammad ibn Saud,[117] began a military campaign that led to the conquest of much of the Arabian peninsula and the founding of present-day Saudi Arabia, after the collapse of the Ottoman Empire.[118] The result that safeguarded the vision of Islam-based on the tenets of Islam as preached by Muhammad ibn Abd al-Wahhabwas not bloodless, as 40,000 public executions and 350,000 amputations were carried out during its course, according to some estimates.[119][120][121][122]

Under the reign of Abdul-Aziz, “political considerations trumped religious idealism” favored by pious Wahhabis. His political and military success gave the Wahhabi ulama control over religious institutions with jurisdiction over considerable territory, and in later years Wahhabi ideas formed the basis of the rules and laws concerning social affairs, and shaped the kingdom’s judicial and educational policies.[123] But protests from Wahhabi ulama were overridden when it came to consolidating power in Hijaz and al-Hasa, avoiding clashes with the great power of the region (Britain), adopting modern technology, establishing a simple governmental administrative framework, or signing an oil concession with the U.S. [124] The Wahhabi ulama also issued a fatwa affirming that “only the ruler could declare a jihad”[125] (a violation of Ibn Abd al-Wahhab’s teaching according to DeLong-Bas.[102])

As the realm of Wahhabism expanded under Ibn Saud into areas of Shiite (Al-Hasa, conquered in 1913) and pluralistic Muslim tradition (Hejaz, conquered in 1924–25), Wahhabis pressed for forced conversion of Shia and an eradication of (what they saw as) idolatry. Ibn Saud sought “a more relaxed approach”.[126]

In al-Hasa, efforts to stop the observance of Shia religious holidays and replace teaching and preaching duties of Shia clerics with Wahhabi, lasted only a year.[127]

In Mecca and Jeddah (in Hejaz) prohibition of tobacco, alcohol, playing cards and listening to music on the phonograph was looser than in Najd. Over the objections of Wahhabi ulama, Ibn Saud permitted both the driving of automobiles and the attendance of Shia at hajj.[128]

Enforcement of the commanding right and forbidding wrong, such as enforcing prayer observance and separation of the sexes, developed a prominent place during the second Saudi emirate, and in 1926 a formal committee for enforcement was founded in Mecca.[21][129] [130]

While Wahhabi warriors swore loyalty to monarchs of Al Saud, there was one major rebellion. King Abdul-Aziz put down rebelling Ikhwan – nomadic tribesmen turned Wahhabi warriors who opposed his “introducing such innovations as telephones, automobiles, and the telegraph” and his “sending his son to a country of unbelievers (Egypt)”. [131] Britain had aided Abdul-Aziz, and when the Ikhwan attacked the British protectorates of Transjordan,Iraq and Kuwait, as a continuation of jihad to expand the Wahhabist realm, Abdul-Aziz struck, killing hundreds before the rebels surrendered in 1929.[132]

Connection with the outside

Before Abdul-Aziz, during most of the second half of the 19th century, there was a strong aversion in Wahhabi lands to mixing with “idolaters” (which included most of the Muslim world). Voluntary contact was considered by Wahhabi clerics to be at least a sin, and if one enjoyed the company of idolaters, and “approved of their religion”, an act of unbelief.[133] Travel outside the pale of Najd to the Ottoman lands “was tightly controlled, if not prohibited altogether”.[134]

Over the course of its history, however, Wahhabism has become more accommodating towards the outside world.[135] In the late 1800s, Wahhabis found Muslims with at least similar beliefs – first with Ahl-i Hadith in India,[136]and later with Islamic revivalists in Arab states (one being Mahmud Sahiri al-Alusi in Baghdad).[137] The revivalists and Wahhabis shared a common interest in Ibn Taymiyya‘s thought, the permissibility of ijtihad, and the need to purify worship practices of innovation.[138] In the 1920s, Rashid Rida, a pioneer Salafist whose periodical al-Manar was widely read in the Muslim world, published an “anthology of Wahhabi treatises,” and a work praising the Ibn Saud as “the savior of the Haramayn [the two holy cities] and a practitioner of authentic Islamic rule”.[139][140]

In a bid “to join the Muslim mainstream and to erase the reputation of extreme sectarianism associated with the Ikhwan,” in 1926 Ibn Saud convened a Muslim congress of representatives of Muslim governments and popular associations.[141] By the early 1950s, the “pressures” on Ibn Saud of controlling the regions of Hejaz and al-Hasa – “outside the Wahhabi heartland” – and of “navigating the currents of regional politics” “punctured the seal” between the Wahhabi heartland and the “land of idolatry” outside.[142][143]

A major current in regional politics at that time was secular nationalism, which, with Gamal Abdul Nasser, was sweeping the Arab world. To combat it, Wahhabi missionary outreach worked closely with Saudi foreign policy initiatives. In May 1962, a conference in Mecca organized by Saudis discussed ways to combat secularism and socialism. In its wake, the World Muslim League was established.[144] To propagate Islam and “repel inimical trends and dogmas”, the League opened branch offices around the globe.[145] It developed closer association between Wahhabis and leading Salafis, and made common cause with the Islamic revivalist Muslim Brotherhood, Ahl-i Hadith and the Jamaat-i Islami, combating Sufism and “innovative” popular religious practices[144] and rejecting the West and Western “ways which were so deleterious of Muslim piety and values.”[146] Missionaries were sent to West Africa, where the League funded schools, distributed religious literature, and gave scholarships to attend Saudi religious universities. One result was the Izala Society which fought Sufism in Nigeria, Chad, Niger, and Cameroon.[147]

An event that had a great effect on Wahhabism in Saudi Arabia[148] was the “infiltration of the transnationalist revival movement” in the form of thousands of pious, Islamist Arab Muslim Brotherhood refugees from Egypt following Nasser’s clampdown on the brotherhood[149] (and also from similar nationalist clampdowns in Iraq[150] and Syria[151]), to help staff the new school system of (the largely illiterate) Kingdom.[152]

The Brotherhood’s Islamist ideology differed from the more conservative Wahhabism which preached loyal obedience to the king. The Brotherhood dealt in what one author (Robert Lacey) called “change-promoting concepts” like social justice, and anticolonialism, and gave “a radical, but still apparently safe, religious twist” to the Wahhabi values Saudi students “had absorbed in childhood”. With the Brotherhood’s “hands-on, radical Islam”, jihad became a “practical possibility today”, not just part of history.[153]

The Brethren were ordered by the Saudi clergy and government not to attempt to proselytize or otherwise get involved in religious doctrinal matters within the Kingdom, but nonetheless “took control” of Saudi Arabia’s intellectual life” by publishing books and participating in discussion circles and salons held by princes.[154] In time they took leading roles in key governmental ministries,[155] and had influence on education curriculum.[156] An Islamic university in Medina created in 1961 to train – mostly non-Saudi – proselytizers to Wahhabism,[157] became “a haven” for Muslim Brother refugees from Egypt.[158] The Brothers’ ideas eventually spread throughout the kingdom and had great effect on Wahhabism – although observers differ as to whether this was by “undermining” it[148][159] or “blending” with it.[160][161]

Growth

In the 1950s and 60s within Saudi Arabia, the Wahhabi ulama maintained their hold on religious law courts, and presided over the creation of Islamic universities and a public school system which gave students “a heavy dose of religious instruction”.[162] Outside of Saudi the Wahhabi ulama became “less combative” toward the rest of the Muslim world. In confronting the challenge of the West, Wahhabi doctrine “served well” for many Muslims as a “platform” and “gained converts beyond the peninsula.”[162][163]

A number of reasons have been given for this success. The growth in popularity and strength of both Arab nationalism (although Wahhabis opposed any form of nationalism as an ideology, Saudis were Arabs, and their enemy the Ottoman caliphate was ethnically Turkish),[32] and Islamic reform (specifically reform by following the example of those first three generations of Muslims known as the Salaf);[32] the destruction of the Ottoman Empire which sponsored their most effective critics;[164] the destruction of another rival, the Khilafa in Hejaz, in 1925.[32]

Not least in importance was the money Saudi Arabia earned from exporting oil.[84]

Petroleum export era

See also: Petro-Islam

The pumping and export of oil from Saudi Arabia started during World War II, and its earnings helped fund religious activities in the 1950s and 60s. But it was the 1973 oil crisis and quadrupling in the price of oil that both increased the kingdom’s wealth astronomically and enhanced its prestige by demonstrating its international power as a leader of OPEC. By 1980, Saudi Arabia was earning every three days the income from oil it had taken a year to earn before the embargo.[165] Tens of billions of US dollars of this money were spent on books, media, schools, scholarships for students (from primary to post-graduate), fellowships and subsidies to reward journalists, academics and Islamic scholars, the building of hundreds of Islamic centers and universities, and over one thousand schools and one thousand mosques.