April 17, 2021

Robert A. Mundell, a Father of the Euro and Reaganomics, Dies at 88

Robert Alexander Mundell was born on Oct. 24, 1932, in Kingston, Ontario, and spent his first 13 years living on a farm and attending a one-room schoolhouse with about a dozen other pupils. His father, William Campbell Mundell, was a military officer; his mother, Lila Teresa (Hamilton) Mundell, was a vivacious heiress who had to give up the family’s castle because she could not afford the back taxes, Professor Mundell once recalled.

When his father retired from teaching at the Royal Military College after the end of World War II, the Mundells moved to British Columbia, where Robert (known as Bob throughout the economics world) found what he called a “cult of rugged individuality” that helped nurture his laissez-faire economic views.

But far as they were from the power centers of the nation and the world, western Canadians were not immune to the economic turmoil of the postwar era. While the United States, after a brief recession, was thriving, Europe and Japan were dependent largely on American investment and materials to rebuild, amassing large trade deficits with the United States. In 1949, Great Britain, hoping to make its own exports more competitive, devalued the pound by 30 percent against the dollar, leading other European countries to follow suit.

Canada, caught in the middle between its role in the British Commonwealth and its trading dependence on its large neighbor to the south, also devalued, but by a lesser amount. A year later, indirectly admitting that it had made a mistake, the government in Ottawa allowed the Canadian dollar to float. That put the country in a situation unlike any other major economy at the time; the postwar Bretton Woods system had kept most currencies fixed against the dollar. Bob Mundell, a high school senior already gifted in math, was puzzled by it all.

“I asked my high school teacher what the devaluation meant, and he gave me such a contorted and hopeless explanation that it piqued my curiosity,” he recalled in 1998. “The newspapers carried such a jumbled discussion.”

Professor Mundell first studied economics and Slavonic studies at the University of British Columbia before winning a scholarship to the University of Washington. Wanting to continue his study with some of the best economists in the world, he headed to the Massachusetts Institute of Technology to earn his Ph.D., taking only three classes and completing the work on his thesis while studying at the London School of Economics.

Article source: https://www.nytimes.com/2021/04/05/business/economy/robert-mundell-dead.html

Speak Your Mind