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Remembering Allan Meltzer


Remembering Allan Meltzer

May 11, 2017

This article originally appeared on Investor's Business Daily.

Allan Meltzer, who died on Monday at the age of 89, was the leading monetary policy economist of his generation, a professor at Carnegie Mellon University, and the author of a three-volume history of the Federal Reserve.

At the American Enterprise Institute in the 1990s, as the assistant to President Christopher DeMuth and later as a resident scholar, it was my good fortune that I was given the office next door to Allan.

I had that office for eight years, and certainly learned more economics from him than I learned in graduate school.

Allan, then in his 60s, would drive from Pittsburgh to Washington, D.C., and back again every week to spend time working at AEI. He explained that it was easier than flying.

We have all met people who have no time for their juniors. Allan was not one of those. He was never too busy to talk about economic issues of the time, and not just about monetary policy. He never considered himself more intelligent than the rest of us — even though he was.

Allan gave us advice on the stock market — stick to the S&P 500 index funds, which also reflect international markets, because U.S. firms invest overseas. He reportedly remortgaged his house when Ronald Reagan became president and put the funds in the stock market.

Allan was particularly interested in my work on explaining the wage gap between men and women.

At the time I was working on the first edition of my book, "Women's Figures: An Illustrated Guide to the Economic Progress of Women in America." Last September he invited me to give a paper on the wage gap at the Mont Pelerin Society meetings in Miami.

Allan had a wonderful marriage to Marilyn. At the AEI annual dinners, which used to be held in the Washington Hilton hotel and feature a 45-minute lecture, Allan and Marilyn were the stars of the dance floor. Their apartment in Pittsburgh, designed by Marilyn, was full of pictures of their children and grandchildren.

In recent years Allan was concerned about the Fed's accommodative monetary policy. He said that such broad expansions had always ended in inflation, and warned about the misallocation of assets caused by the continually low interest rates.

He was also worried about high levels of government debt leading to higher taxes in the future and crowding out private investment.

While at the Hoover Institution, Allan's main project was a series of seminars on Regulation and the Rule of Law which examined the growth in the administrative state, and the extent to which regulators circumvent legislators by taking matters into their own hands.

I was privileged to attend the last conference in the series, on March 10 at Hoover. The work will carry on under the able leadership of Columbia University's Charles Calomiris and Stanford University's Michael McConnell.

I reached Charles as he was boarding a plane in Kansas City. He told me, "Allan had faith in ideas and human beings and democracy. Many times I wanted to give up the policy business.

"But Allan told me that our job is to think and come up with good ideas and put them on the shelf for when the political process is ready to listen. At some point people will need the ideas."

Allan's last article for the Hoover Institution was on the reasons for the Democrats' failure to get more voter support. Allan wrote:

"Why are voters rejecting the (Democratic) party's programs and candidates at many levels?

"I believe there are two related reasons. First, the United States is a right-of-center republic that moves to the left mainly in crises. Second, a central, dominant idea is popular sovereignty. Our Founding Fathers vested sovereignty in the voters, meaning voters choose legislators to carry out the programs that voters want. Voters make major decisions by electing representatives who enact their ideas into laws. This is the basis of a government of laws and not of individuals."

He concluded by reiterating the need for true free speech on campus, calling on universities to expose students to a variety of views, rather than sheltering them from views with which they might disagree.

Even while in intensive care in the hospital, Allan kept on writing. The search for the right answer, irrespective of the fashions of the time, inspired Allan until the end. He will be truly missed, and it is up to all of us to carry on his work.

Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter here.

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