Allan H. Meltzer seems to be everywhere. One week, he's talking about the economic crisis on National Public Radio. Then he's off to NewsHour with Jim Lehrer criticizing a government bailout, before fielding questions from a journalist from Hamburg.
"What do you think about this being the end of capitalism?" the German reporter asks the Carnegie Mellon University economist.
"I think that is the stupidest question I have heard in 40 years of talking to journalists," he replies.
Meltzer, esteemed economist at the Tepper School of Business, has never been afraid to say exactly what he thinks. The Depression-era kid who grew up wondering about the big economic questions of the day is now the 80-year-old sage pontificating on the big economic questions of the day. The nearly unprecedented financial meltdown that descended on the nation like a black cloud last fall has made Meltzer an in-demand economist. After all, everyone has been fretting about their 401(k)s and housing prices. Meltzer makes himself available to the media for his economic views, but he refuses to spread panic in our 24-hour-news society, where he who shrieks loudest often wins.
"There is a lot of fear-mongering going on," he says. "It's bad, but not as bad as people make it out."
After living through more than eight decades of economic ups and downs, he has plenty of perspective:
Well, I've listened to governments tell me for 40 years that there was a crisis, and the world was going to fall apart if we didn't do this or that.
—Meltzer's comment on NewsHour with Jim Lehrer, while arguing against the government's $700 billion bailout
If you passed him on the street, you might not notice Meltzer, a thin, sprightly man who peers at the world through round, wire-frame glasses. The minute he opens his mouth, though, speaking in a deliberate and slightly raspy voice, people listen, especially treasury officials, politicians, and world economists.
It's said that weather forecasters salivate over the big snow storm. But this economist isn't relishing the current economic crisis, even if it has made him more popular—at cocktail parties, at economic conferences, and in newsrooms. The libertarian economist is optimistic that the market will sort itself out, even with the meddling by politicians. Optimism, he says, is just his temperament, not his economic training. Then, he flashes a sly smile and says, "I am an optimist in the sense that I think the worst will happen later."
I think there are a lot of people who are spreading doom and gloom much more than necessary.
—Meltzer's comment on NPR, while arguing for tax credit for homebuyers
Meltzer—who is mentioned in the same breath with conservative monetary economist icons Milton Friedman and Karl Brunner—has been a fixture at Carnegie Mellon for 50 years. He lives a few blocks from campus in a condo with his wife of 58 years, Marilyn, a fiber artist who has shown her art internationally. He beams with pride when he points out his dining room walnut table, which she designed after finding the tree and having it cut down, the grain showing through the asymmetrical table design. "The legs are made from the same tree," he says. Art, to Meltzer, like economics, is in the creative details.
As for the rest of the Meltzers' condo, big windows allow sweeping views of Carnegie Mellon, where he still teaches a course in capitalism to Tepper graduate students. His reach goes far beyond his condo's view, as office photos of him with presidents and other luminaries attest. His career has taken him from Democratic and Republican White Houses—he served under John F. Kennedy and Ronald Reagan—to congressional committees to the Ivy Tower, where he developed economic models, to eventually the history stacks.
He spent 14 years writing about the history of the Federal Reserve. He never thought it would take quite that long, "God forbid," but he is not someone to give up halfway. The first award-winning volume, A History of the Federal Reserve, Volume 1: 1913—1951 (University of Chicago Press, 2002) was an extensive 800 pages. The second volume, to be released by the same press later this year, is an even more extensive 1,400 pages.
In an era when many economists focus narrowly on applied mathematics, Meltzer stands out from the pack for undertaking such an ambitious project—culling diaries and reconstructing history, says Charles Calomiris, the Henry Kaufman Professor of Financial Institutions at Columbia University Graduate School of Business. "How many economists could sit down and write a properly constructed history of an institution?" Calomiris says. "Most of them have never even read one. You don't find economists who are real intellectuals like Allan."
The publisher asked me whether I wanted to call it 'THE' History of the Federal Reserve. I said that was a bit too much for me, so 'A' History is fine.
—Meltzer quoted in The Region, a banking and policy issues magazine
His ferocious work ethic was honed during his childhood in Boston during the Depression. His father, George, was a successful entrepreneur and a born salesman. During the '30s and '40s, he owned automobile dealerships and sold Cadillacs, LaSalles, and Pontiacs after establishing the first car wash in Boston. He was such a go-getter that when someone robbed the car wash, a cash business, the entrepreneur chased the thief down Commonwealth Avenue, tackling him. The police not only gave George Meltzer his money back but also rewarded him with some money from the thief. "He turned a profit," his son says, letting out a hearty laugh, shattering for a moment his economist's reserve. Meltzer was eight years old when he read in the newspaper about his father's burglar-tackling heroics.
His mother died when he was five, so his grandmother, Celia, an immigrant from Lithuania, raised him and his sister. He beams when he talks about his grandmother—a smart, resourceful, strong woman who clearly put her imprint on the smart, resourceful, strong charge. "She was 200 percent American," he says. "She didn't think of herself as Lithuanian." She told him America was a great country if you worked hard. She worked hard, developing a salve for healing infections that she sold to drug manufacturers, a business that was successful until it closed during the Great Depression.
He wasn't poor during the Depression. His grandmother and her husband owned a two-family house where his father lived, too. But he saw economic ruin everywhere. His grandmother didn't have to tell him about the importance of charity. She would feed people who showed up hungry at the back door. All of the economic turmoil made a huge impression on him. Why did it happen? Could it happen again? How could the country prevent such chaos?
Today, he gets annoyed with comparisons between the current economic crisis and the Great Depression. How can you possibly compare unemployment of less than eight percent to unemployment of 25 percent? Back then, when people lost their jobs, there was no safety net, no welfare state, no unemployment office. The displaced worker in the 1930s had to try to eke out survival. Meltzer enrolled at Duke University, originally planning to become a lawyer. But he found himself wanting to deal more with fixing societal ills, so he considered sociology. He found, though, that the field was less analytical than economics, a discipline where he could still consider policy issues that impacted all of society. Eventually, he earned a bachelor's in economics from Duke in 1948, and then a master's (1955), and a PhD at UCLA in 1958.
People who talk about this being the Great Depression are either scare-mongers or don't know what they are talking about.
—Meltzer quoted in the Dallas Morning News
One thing led to another. "Your life takes hold of you," he says. "You write a paper or two in a particular area, and pretty soon people think you know something about it. You get invited to talk about it."
As a young man, he was a liberal, supporting Henry A. Wallace, the left-leaning presidential candidate of the Progressive Party in 1948. Meltzer became more conservative as the years passed, and he applied economics to real-life problems. He became more disillusioned with leftist solutions. "There is an old saying, 'If you are not a socialist by the time you are 20, you have no heart. If you are still a socialist by the time you are 30, you have no head.'"
He has never been shy about pointing out inconvenient truths. Calomiris likens him to the little boy who says the emperor has no clothes. But Calomiris adds that unlike the little boy, Meltzer advocates reform. Brunner once said that Meltzer argues "in the style of a machine gunne—with sharply pointed and rapid duster shots."
In 1973, he made a name for himself as a reformer when he and Brunner co-founded The Shadow Open Market Committee to combat the price and wage controls implemented by President Nixon. The watchdog group, modeled after the British Loyal Opposition, was considered radical in its day as the economists pounded their message to the public. They argued relentlessly against price controls and in favor of controlling the growth of money as a way of controlling inflation. "We helped end big inflation," he says.
In 1998, as head of the International Financial Institution Advisory Commission, known as the Meltzer Commission, he took on the World Bank and International Monetary Fund, criticizing them as bloated bureaucracies. "The World Bank has operated for 50 years, and it is just getting around to doing the simplest thing to prevent malaria—bed nets. Why? Because it is a big bureaucratic organization."
And now, he is the economist who is going against the grain of doomsday and saying the sky isn't falling. This recession, too, will pass. Although he conceded that the government had to do something to jumpstart the worsening economy last fall, he criticized it for being reactive and not formulating a real policy. The government helped Bear Stearns when it foundered but let Lehman Brothers go into bankruptcy. "The uncertainty makes things worse. They never say what they are going to do in a crisis." At age 80, Meltzer doesn't push himself quite as hard as he once did. He recently declined a TV interview to be on a Canadian daily morning show at 7 a.m. "I don't get up at 7 a.m. Never. Now that I am on the older side, sleep is terribly important."
Even so, his life is not most people's idea of an octogenarian winding down. Most mornings, he gets up at 8:30 a.m., drinks his coffee, reads The Wall Street Journal, before going through some 50 new emails in his inbox. Then, the father of three and grandfather of eight exercises in the gym of his condo on the days it doesn't conflict with his Tepper classes.
When asked if he is a tough teacher, he says, "I have no idea." He is a well-respected one as evidenced by holding the professorship—The Allan H. Meltzer University Professor of Political Economy. That honor means he can teach and study whatever he wants&mddash;complete freedom—or the freedom, he quips, "to work yourself to death."
I don't want to join a debate about different ways of picking the public's pocket.
—Meltzer's comment on NewsHour with Jim Lehrer
He has been a fixture at the university for the past half-century but received "time off for good behavior," taking leaves to study at the Hoover Institution, Belgrade, the Bank of Japan, and on and on. There was a lot of good behavior. His bibliography is 30 pages long and growing with the economic conferences, speaking engagement invitations, and interview requests. His message doesn't deviate too much:
"It's hard to say this, because people are so down. But we have lived, in my adult life, in a period of the greatest improvement in people's living standards. People complain. But gee, if you compare 1980s to the present, we have had three of the longest expansions in the history of the United States."
Cristina Rouvalis, an award-winning former newspaper reporter, is a Pittsburgh-based freelance writer.
Watch Video: Allan H. Meltzer, The Allan H. Meltzer University Professor of Political Economy, and Marvin Goodfriend, Professor of Economics; Chairman, The Gailliot Center for Public Policy, are featured in this one-hour video Q&A covering historical and modern-day economic matters
