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William Vickrey Quotes

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About William Vickrey

William Vickrey, a Nobel laureate in Economic Sciences, was born on April 14, 1914, in Montreal, Canada. Raised primarily in the United States, he developed an early interest in mathematics and economics, which would become the cornerstone of his extraordinary career. Vickrey attended Harvard University, where he earned a Bachelor's degree in Mathematics in 1935. He later pursued a Ph.D. in Economics from Columbia University, which he completed in 1940. His academic journey was marked by significant influences, including John von Neumann and Kenneth Arrow, who were contemporaries at the same institution. Vickrey's career spanned over five decades, with his most notable contributions coming in the fields of auction theory and game theory. In 1961, he published a groundbreaking paper titled "Counterspeculation, Auctions, and Competitive Sealed Tenders," where he introduced the Vickrey auction, also known as the second-price auction or sealed-bid auction with a reserve price. This concept was later applied in various real-world scenarios, such as the Google AdWords bidding system. In 1996, Vickrey was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to game theory and its relation to economics analysis. His work on auction theory provided a solid foundation for the analysis of economic mechanisms and their implementation in practical settings. Throughout his life, William Vickrey remained a prolific researcher, authoring numerous articles and books that continue to shape modern economic thought. He passed away on July 10, 1996, but his legacy endures as one of the most influential economists of the 20th century.

Interpretations of Popular Quotes

"Capitalism without failed firms would not function."

This quote by William Vickrey suggests that failure is an inherent part of a healthy capitalist system. Firms that fail are those that have not been able to compete effectively, innovate, or meet market demands. This process of natural selection allows for the survival of stronger, more efficient businesses and fosters continuous improvement and progress in the marketplace. Failure thus acts as a catalyst for growth and innovation within capitalism, ensuring that resources are allocated efficiently towards profitable ventures and discouraging inefficiency.

"Markets work when markets compete."

The quote "Markets work when markets compete" by William Vickrey highlights the importance of competition in a market system. It suggests that an effective, efficient, and fair market is characterized by multiple entities (companies, traders, etc.) vying for customers or resources. This competition drives innovation, improves quality, and encourages price sensitivity, ultimately benefiting consumers. In a monopolistic or oligopolistic environment with limited competition, the market may fail to serve consumer interests optimally due to lack of motivation to improve products or services. Therefore, this quote emphasizes the need for a competitive market structure to ensure markets function effectively and deliver societal benefits.

"It is difficult to believe that a competitive equilibrium can exist in which all prices are flexible but the price of risk capital."

This quote by William Vickrey implies that it's challenging to imagine a competitive market equilibrium where all prices, including commodities and services, can adjust freely, but the cost of risk capital (investment for uncertain returns) remains fixed. In other words, he is suggesting that the flexible pricing system doesn't apply equally to all assets, including those carrying an element of risk, such as investments in stocks or bonds. This observation highlights the complexities of financial markets and underscores the importance of understanding risk-return tradeoffs when making investment decisions.

"To the extent that you try to design a system where nobody can game it, you end up with a very stupid system."

This quote by William Vickrey implies that designing a system without the possibility for manipulation or exploitation will result in a system that is overly simplistic and lacks adaptability. In other words, if a system is so complex that it can't be influenced or gamed, then it may become too rigid to effectively respond to the dynamic nature of human behavior and societal needs. Striking a balance between complexity and vulnerability is essential in creating an effective, functional, and resilient system.

"The primary cause of the inefficiencies in the economy is the lack of true knowledge of opportunity costs by the economic decision makers."

This quote by William Vickrey highlights a critical challenge in economics: the inability of decision-makers to fully comprehend the opportunity cost, or what could be given up to attain a certain outcome. In essence, when decisions are made without considering all potential alternatives, economic inefficiencies arise due to suboptimal choices. This lack of awareness can lead to wasted resources and missed opportunities for growth and progress. Awareness and understanding of opportunity costs are essential for making informed economic decisions that maximize overall benefits to society.

Balancing a nominal budget will solve nothing, and attempting to achieve such a spurious balance will produce much mischief.

- William Vickrey

Will, Mischief, Attempting, Budget

Deficits do not in themselves produce inflation, nor does a balanced budget assure a stable price level.

- William Vickrey

Level, Produce, Deficits, Budget

It's insane to try to balance the budget.

- William Vickrey

Balance, Try, Insane, Budget

The insane pursuit of the holy grail of a balanced budget in the end is going to drive the economy into a depression.

- William Vickrey

Pursuit, Holy, Going, Budget

The nominal budget is a poor indicator of the impact of government outlays and revenues.

- William Vickrey

Government, Poor, Indicator, Budget

There is no real justification for a requirement that a budget of any sort should be balanced, except as a rallying point for those who seek to hamstring government.

- William Vickrey

Real, Requirement, Rallying, Budget

The great increase in longevity has produced a surge in the desire to accumulate assets for retirement. It has outpaced the ability of the private sector to produce assets, so we need a larger government debt.

- William Vickrey

Desire, Private, Larger, Longevity

Larger deficits are necessary and proper means to mitigate unemployment as the far greater evil in terms of human welfare.

- William Vickrey

Necessary, Larger, Means, Greater Evil

Practically, the desirable situation ought to be one in which any reasonably responsible person willing to accept available employment can find a job paying a living wage within 48 hours.

- William Vickrey

Living, Hours, Which, Reasonably

Don't you think you're just rearranging deck chairs on the Titanic?

- William Vickrey

Think, Titanic, Rearranging, Chairs

Firms would be given initial entitlements to gross markup on the basis of past performance. These entitlements would be transferable and a market in them would be developed.

- William Vickrey

Given, Gross, Initial, Entitlement

Nearly all educational expenditure should be considered a capital outlay, whether it provides a future return in the form of enhanced taxable income or in terms of an enhanced quality of life.

- William Vickrey

Income, Capital, Expenditure, Taxable

If unemployment could be brought down to say 2 percent at the cost of an assured steady rate of inflation of 10 percent per year, or even 20 percent, this would be a good bargain.

- William Vickrey

Year, Cost, Brought, Assured

The supply-side effect of a restrictive monetary policy is likely to be perverse, in that high interest rates enter into costs and thus exert inflationary pressure.

- William Vickrey

Costs, Likely, Monetary, Restrictive

I define genuine full employment as a situation where there are at least as many job openings as there are persons seeking employment, probably calling for a rate of unemployment, as currently measured, of between 1 and 2 percent.

- William Vickrey

Measured, Least, Many, Employment

There is no reason inherent in the real resources available to us why we cannot move rapidly within the next two or three years to a state of genuine full employment.

- William Vickrey

Reason, Next, Move, Employment

Increasingly prices are set by sellers to raise their prices without a loss of sales sufficient to wipe out the gain.

- William Vickrey

Without, Set, Increasingly, Wipe

Currently a level of unemployment of 7 percent or more seems to be required to keep inflation from accelerating, a level quite unacceptable as a permanent situation.

- William Vickrey

More, Level, Unacceptable, Unemployment

This paper was one of my digressions into abstract economics.

- William Vickrey

Economics, Paper, Abstract

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