Organizations and Markets

Yoram Barzel’s Tribute to Doug North

29 November 2015 at 11:54 pm Peter G. Klein 3 comments

A guest post by Yoram Barzel.

Doug North, Some Reminiscences

| By Yoram Barzel |

By the time I arrived at the University of Washington in 1961, Doug had been there for a decade, and he stayed for two more. Moving from one Washington (the University of Washington in Seattle) to another Washington (Washington University in St. Louis) is confusing. Most people associate Doug’s career with Washington University in St. Louis, but it was in Seattle that he did the bulk of the work for which he won the Nobel Prize. His work is well known, and I focus on other aspects of his career and on personal memories.

Doug got his PhD from Berkeley, and he was the first to admit that he hadn’t learned much there. Throughout his time in Seattle, when he needed advice when it came to economic analysis, he asked for it with great humility. Doug had a keen sense regarding which individuals to listen to, and it seems to me that this ability was a major contributor to his productiveness.

The most prominent colleague to provide that advice was the late Don Gordon. Don is not well known, but he was great economist and the intellectual leader of the department. He cherished Doug’s great wisdom. Don persuaded Doug that the right way to do economic research was by testing hypotheses based on sound economic reasoning, and suggested to Doug to apply these in his economic history research; an almost revolutionary approach at the time. Equally revolutionary was Doug’s requirement of his doctoral students to acquire these tools. Doug and Don became close colleagues and intellectual allies and remained lifetime friends.

The tools that Don recommended weren’t in great supply at the UW economics department at that time, and Doug and Don fought hard in an essentially hostile environment to ensure that new hires would possess these skills. By the late 1950s they won the fight, most likely because Doug was an extremely skilled fighter.

Intellectually Doug and Don belonged to the Chicago school. Doug and Don realized that they must hire odd balls and minorities, including women, before that became fashionable, as there was not a great chance of getting top reputable people. A most prominent early hire was Walter Oi, who was Nisei and blind and a great economist.

In the mid-1960s, after losing Don and Walter, Doug became chairman. He showed great imagination in hiring highly original economists. Among other thing, this required the consent of deans, and Doug was a master in getting consent.

One of his great coups was hiring Steve Cheung, a very high return, and, especially to the chairman, a very high maintenance cost individual. Much of Doug’s understanding of institutions was due to Steve’s influence, part of it acquired when Doug sat on one of Steve’s classes.

Another high return and high cost economist Doug hired was Levis Kochin.

Getting unconventional top people also applied to students. Doug recognized one high-return but also a high-cost student — Chris Hall. Chris was offered an assistantship, and among other things, Doug saw to it that Chris, in spite of his resistance to formal requirements, would get a PhD.

The fact that all these and some others individuals were critical to Doug’s economic arguments just didn’t faze him; he was willing to listen to and to learn from anybody.

Doug had a strong influence on the atmosphere in the department, and among other things, made it exciting. The two strongest groups in the department, well recognized in the profession, were in property rights and in economic history. Both groups had significant mass. This was substantially due to Doug’s effort both in retaining existing faculty and in recruiting. He also made sure that substantial contributors were provided with favorable working environment. Both groups engaged in continuous lively discussions, and both generated streams of publications. Mostly due to Doug’s own interests and persuasion, the two groups interacted strongly. Umbeck’s study of the 1849 California gold rush is one notable result of this interaction.

Under Doug’s chairmanship, department meetings were rare. And I don’t believe he ever participated in meetings of department chairs. His departmental decisions were not always based on intensive research, but they were made quickly and decisively and by and largely, well taken.

Doug’s departure as chairman after a dozen years at that position came when some faculty members complained to the dean that he was playing favorites. Doug didn’t particularly appreciate his declining role, and when the university offered him early retirement, he went shopping for a new job, and took the one offered by Washington University. (Not very smart of the UW to offer him “early retirement.”) Steve likewise didn’t like being marginalized, and he took a chair position that was offered to him at Hong Kong University. With these departures, the department’s prominent standing in the fields of economic history and property rights almost ceased, and the high-teens ranking of the department was lost as well.

Remembering Doug, his remarkable professional contributions are mingled in my mind with many fond memories of our friendship. One of the first questions Doug asked me after I arrived here was “what do you intend to accomplish in your career?” He must have known what he intended to accomplish, and he succeeded in spades.

I actually never saw Doug engaging in research. I used to come in around 10am, and by then Doug, an early riser, was done with his research, which he worked on at home. The rest of the day he spent on small talk, lengthy lunches, and discussing economics, but very little on administration.

Once he held a housewarming party at his new and at the time luxurious house. At the party he introduced the guests to the game of Labyrinth. He declared that if by the time the party was over, anybody who would be able to get the ball through the entire maze would get his house. I did (after stretching the party). But I didn’t get the house.

He introduced me to his sports car and to his airplane. That airplane ride was the first time I was flown in a small airplane. He also introduced me to a strange local pastime, digging for razor clams.

I collaborated with Doug twice on consulting projects while he was at UW. In the first one we determined for the State of Washington how much gasoline was used off the road, in order to divert the tax collected on that gasoline to recreation and for boat facilities. Our results differed by a factor of three from the received wisdom. We discovered that the received wisdom was a study submitted to the U.S. Congress. It turned out that a lobbyist for the boating industry had prepared that study, and its findings there were greatly inflated. At a State of Washington hearing, Doug displayed his presentation skills, and even more his fighting skills. In the presentation he put out some bait by saying that by being in the ivory tower, we might have been out of touch with what was going on in the real world. The lobbyist who had written the congressional study was the next presenter. He took the bait and questioned our “ivory tower” findings, stating that they differed from those in a study that had been made for Congress. Doug interrupted him in mid-presentation and asked: “who did that study?” The lobbyist tried to ignore the question, but Doug persisted and repeated the question again and again. All of a sudden the lobbyist looked at his watch and said: “I must catch a plane,” collected his papers, and departed in the middle of his own presentation. Not surprisingly, our study was accepted without further questioning.

Our second consulting job was with lawyers, and it led to a wine story. After our job was over, a lawyer in the case asked me if he could bring me (or rather smuggle for me) a case of wine from San Francisco, where he was going by private plane. At the time, state-run stores were the only legal wine sellers in the State of Washington and they had a meager selection. I knew nothing about wine, and Doug gave me advice as to what to get. It turned out to be $5 per bottle of wine, which I thought was steep, especially as I didn’t think it was better than the $1 wine I was drinking then. A couple of years later I asked Doug if he wanted to buy from me the remaining nine or ten bottles. He lost interest in the proposition when it turned out that by then they were selling for $40. We continued to consume the wine slowly. In September 1993 I was invited to give a talk in Washington University the following November. As usual, I was invited to stay with Doug and his wife Elizabeth. In October it was announced that Doug won the Nobel Prize. To congratulate him, when I came for the talk, I gave him the one remaining bottle of that wine. Later on he told me that the wine was selling at $500.

I overlapped with Doug at the University of Washington for some three decades. Naturally our interactions declined with the geographic separation after he moved to St. Louis, but the friendship endured. Acquiring him as a close friend and treasured colleague was extremely rewarding. I will miss him badly.

Entry filed under: Business/Economic History, Institutions, New Institutional Economics, People.