Friday, May 16, 2008

Charles P. McQuaid: The School that Changed the World

Charles McQuaid is President and Chief Investment Officer
Columbia Wanger Asset Management. This essay is part of the investor quarterly newsletter.
The School that Changed the World

Chicago is known for a lot of things. Yes, this city’s ability to stuff ballot boxes and pizzas is legendary, but the number of Nobel Prize winners who have hailed from the University of Chicago is one of Chicago’s greatest distinctions. The university’s faculty, students and researchers have been awarded 81 Nobel Prizes, nearly tying first-place Cambridge University, which has 82.

The University of Chicago holds a remarkable 40% share of the Nobel Prizes awarded in economics to date. The great thinkers who received these awards, and those who influenced them, helped trigger a world-wide shift towards capitalism, resulting in enhanced prosperity and freedom around the globe. These are the men and women of the “Chicago School.”

The Chicago School
Between the Great Depression and the 1970s, many in government and academia believed that increasingly centralized economic planning was inevitable. Much of the world was subjected to Communism, Socialism, or other sorts of command economies. Government in the United States grew rapidly during this period, as did regulation of businesses. During this time, William F. Buckley was not the only one who stood athwart history and yelled, “Stop!”

Starting in the 1950s, mentions of a “Chicago School” began to emerge referring to the economists, business researchers, lawyers and sociologists from the University of Chicago who disagreed with the “more government” thinking of the time. In the first written reference to the Chicago School, found in a handbook on the history of economic thought, members of the Chicago School were described as follows:
Libertarians all, they preferred rules to authorities and the impersonal forces of the market to their deliberate direction, and they viewed with alarm the increasing scope of governmental activities in the economic sphere.


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