Professor of Economics Richard Grossman is having an eventful few months: his second book is coming out this October, and he was recently awarded a Guggenheim fellowship for his research in economic history. Grossman has been teaching at Wesleyan since 2001; prior to that, he held numerous teaching positions at other institutions, worked in the Department of State’s Bureau of Economic and Business Affairs, and, in the 1980s, attended Harvard University, where he discovered his interest in economics.
“I was interested in a lot of things,” Grossman recalled. “I was interested in history; I was interested in government; I was interested in politics. At some point, it dawned on me that this was a nice way of being able to be involved in all of them. It seemed like a good way to be a social scientist; to be able to access a lot of different areas.”
Grossman graduated magna cum laude from Harvard in 1982. He then attended the London School of Economics, where he received a Master of Science in economic history, before returning to Harvard for a Master of Arts and PhD. He has been teaching since 1993 but did not always know that he would work in academia.
“I thought I would go work for the government, or I might be a financial journalist or something,” he said. “It didn’t occur to me that I was going to end up teaching.”
Indeed, Grossman spent two years working at the State Department, where he worked on matters pertaining to the European, Canadian, and Israeli economies. Ultimately, however, he realized that he missed university life.
“At some point, I actually had a student from George Washington [University] come over, who had a question about something I knew something about,” Grossman said. “I remember seeing the student and thinking, ‘I forgot it’s kind of enjoyable having students’—because I had taught as a graduate. ‘This is kind of fun.’”
Teaching also offered Grossman more freedom to explore his own academic interests.
“I thought that going into university teaching was a really good way to teach, which I enjoy, and to be able to write and think about those things that I want to write and think about, unlike the State Department, which would say, ‘Do a memo on this,’” Grossman explained. “I valued being able to write and think about the things that I wanted to write and think about.”
Grossman came to Wesleyan in part because of his special interest in economic history. Professor Emeritus of Economics Stanley Lebergott, who passed away in 2009, had recently retired, and the University was looking to hire another faculty member with a focus on economic history. Chester D. Hubbard Professor of Economics and Social Sciences, Emeritus Michael Lovell reached out to someone at Harvard who was involved with the Office of Career Services and wound up hiring Grossman.
Despite his specialty in economic history, Grossman teaches across the board in the Economics Department. This semester, for example, he is teaching “Introduction to Economics” and “Macroeconomic Analysis.” Grossman explained that while teaching ECON 101 is a vastly different experience from teaching a small seminar, it can be equally enjoyable, if not more so.
“You have a lot of students who haven’t seen any economics before, and you present something, and you can see the light bulbs go off,” Grossman said. “It’s high energy. If you just stand there and look at them, they may fall asleep.”
Grossman’s upcoming book focuses on financial crises, which relates in many ways to what he teaches in “Macroeconomic Analysis.” He said that it is exciting to lead a class focusing on this special area of interest, but that this comes with its own difficulties.
“The financial crises have shown that we don’t know quite as much as we thought we did,” Grossman said. “It’s a challenge to present stuff and say, ‘This is the stuff from the theory that’s still useful, and here’s the stuff that we used to teach, but these are the things that we think are wrong with it now, and we haven’t quite figured out what’s going on next.’”
The book, “WRONG: Nine Economic Policy Disasters and What We Can Learn From Them,” is intended to be accessible to a general audience. Grossman addresses three contemporary disasters (the subprime crisis, Japan’s lost decade, and the Euro crisis), three from the interwar period (the British return to the gold standard, the Smoot-Hawley tariff, and the reparations that the Allies assessed on Germany after World War I), and three from before the wars (the Navigation Acts, the United States’ decision not to establish a central bank, and the British approach to the Irish famine).
“Every event is unique, and there is no universal playbook, but the main theme that I find is that when policy makers make their decisions based on ideology instead of rigorous economic analysis, they go wrong,” Grossman said.
For example, Grossman offered, Americans for Tax Reform in Congress recently signed a pledge saying that they would never vote to raise taxes.
“Never is a very long time, and to say that you would never do this under any circumstances—there’s no economic rationale,” he explained. “That, I think, is ideology; that’s not economics. There’s nothing in economics that supports that.”
With that book just about wrapped up, Grossman can now focus on new research—facilitated, of course, by the Guggenheim fellowship. The fellowship is awarded through two annual competitions for scholars; according to its website, the Guggenheim Foundation receives between 3500 and 4000 applications and awards approximately 200 fellowships each year. Grossman is one of several Wesleyan faculty members who have received the fellowship in recent years.
Grossman hopes to use the fellowship to further his research into the evolution of banking regulation, and plans to work closely with Associate Professor of Economics Masami Imai.
“When economists try to explain why regulation is a certain way—why banks have to have a certain minimum amount of capital—it turns out that every country in every state in the United States has slightly different rules about how banks can operate, which is kind of interesting,” Grossman said. “The question is, why do they have different rules?”
Grossman also plans to return to Israel, where he spent his first sabbatical from Wesleyan as a visiting faculty member at the Hebrew University of Jerusalem in 1994. This time, he plans to look at some of Israel’s state-owned resources and investigate the effect of its economic history on certain industries.
“I guess the question is the history effect,” Grossman said. “It’s kind of fun. I’m looking forward to it. I haven’t figured it all out yet. I wrote this very nice proposal, and I’ve got all these ideas, and my concern is I want to get as much of it done as possible in the time available.”