Herbert Stein

• Born: August 27, 1916
• Birthplace: Detroit, Michigan
• Died: September 8, 1999
• Place of death: Washington, D. C.

Economist

A prolific researcher and writer, Stein had the ability to explain complex economic matters in simple language. He served, among other important government positions, as chairman of the Council of Economic Advisors under President Richard Nixon.

Early Life

Herbert Stein (HUR-burt stin) was born in Detroit, Michigan, but he moved to New York City while a teenager. His father, who had immigrated from Eastern Europe, was a production-line worker at Ford Motor Company at the time of Stein’s birth. Graduating from high school during the Great Depression, Stein was fortunate enough to win a scholarship to Williams College in Massachusetts. He graduated as a Phi Beta Kappa from Williams in 1935 when he was nineteen years of age.

Following graduation, Stein moved to Washington, D.C., where he worked for a variety of federal agencies, including the Office of War Mobilization and the War Production Board. He then moved to the University of Chicago, where he worked on his Ph.D. in economics under such notable economists as Frank Knight and Henry C. Simons. He received his Ph.D. in 1958 at the age of forty-two. Under Simon’s tutelage, Stein became interested in the government’s role in the economy. During World War II, he served in the U.S. Navy and won the Pabst Post-War Employment Competition, which provided him with a sizable cash prize and propelled him to a place of distinction in economics circles.

Life’s Work

Stein worked for twenty-two years for an economic research organization known as the Committee for Economic Development. During that period he often spoke on the importance of built-in stabilizers as a macroeconomic tool. He also worked as a senior fellow at the Brookings Institution in Washington and with the American Enterprise Institute. In 1969, Stein was appointed by President Richard Nixon to the Council of Economic Advisors and in 1972 became chairman. He was a supporter of the economic policy devised by John Maynard Keynes, and he convinced others of the need to use deficits to stimulate the economy.

In 1974, Stein joined the economics faculty at the University of Virginia, where he remained for a decade until his retirement. The book for which he is most famous was The Fiscal Revolution in America (1969). That volume explained how America’s federal budget changed between 1928 and 1963. A sequel to his 1969 volume came out in 1984, carrying the history of America’s economic policy as shown in its budgets through the early 1980’s. He also wrote many other books over his career. Since he could explain complex economic phenomena in a simple language, his books were popular with general readers and as supplemental readings in college classrooms.

Unlike many in Washington, Stein was able to see both sides of most situations and could explain the issues from all angles of an argument. He was well respected by his peers and in 1984 was elected president of the Southern Economic Association. Although Washington economists were often criticized for the errors they made in their prognostications, Stein defended his fellow scholars by pointing out that the economists may not have been exactly accurate, but they did a far better job than the politicians who were setting America’s economic policy.

Stein’s son, Ben Stein, is also an economist and is best known as a television game show host, a newspaper columnist, and an actor, having appeared in films such as Ferris Bueller’s Day Off (1986). Stein also had a daughter, Rachel Stein Epstein, a writer. Stein was married to his wife, Mildred, for sixty-one years, and he died of a heart attack in 1999 at the age of eighty-three.

Significance

Stein was a macroeconomist, or a political economist, who understood the federal budgetary process and was able to interpret the meaning of budget changes. His astute observations of the political scene, as it was influenced by economics, were shared with his students, his readers, and the politicians with whom he worked. He made political changes understandable because he explained them with reference to the underlying economic causes. He explained and clarified macroeconomic issues at a level where they could be understood by the average citizen.

Bibliography

Breit, William. “In Memoriam: Herbert Stein.” Southern Economic Journal, April, 2000. Tribute to Stein written shortly after his death.

Stein, Benjamin, and Herbert Stein. On the Brink: A Novel. New York: Ballantine Books, 1978. Incorporates aspects of macroeconomics to explain an Arab oil embargo and inflation.

Stein, Herbert. The Fiscal Revolution in America. Chicago: University of Chicago Press, 1969. Stein’s classic macroeconomic work shows how the federal budget influenced the American economy between 1928 and 1963.

‗‗‗‗‗‗‗. The Illustrated Guide to the American Economy. 3d ed. Washington, D.C.: AEI Press, 2000. Stein’s last book, it provides clear explanations of macroeconomic phenomena.

‗‗‗‗‗‗‗. Presidential Economics: The Making of Economic Policy from Roosevelt to Reagan and Beyond. 3d ed. Washington, D.C.: American Enterprise Institute for Public Policy Research, 1994. A continuation of Stein’s 1969 volume about the impact of economics on government fiscal policy. The third edition includes some additional essays written after the original volume.

‗‗‗‗‗‗‗. What I Think: Essays on Economics, Politics, and Life. Washington, D.C.: American Enterprise Institute for Public Policy Research, 1998. Includes witty personal observations about the American economy, the federal budget, and tax policy.

Stein, Herbert, and Joseph A. Pechman. Essays in Federal Taxation. New York: Committee for Economic Development, 1959. This volume, coauthored with one of the foremost tax policy analysts of the century, was developed for the congressional Committee on Ways and Means. It shows Stein’s thoughts as they relate to the tax side of fiscal policy.