This document provides summaries of 5 famous economists: Adam Smith, Thomas Malthus, John Maynard Keynes, Arthur Laffer. It outlines their main economic theories and models, accomplishments, famous writings, and key quotes. Adam Smith is known for his theory of the invisible hand and laissez-faire economics. Thomas Malthus theorized about population growth outstripping food supply. John Maynard Keynes advocated for government intervention to manage demand. Arthur Laffer introduced the Laffer curve about tax rates and government revenue.

1. Famous Economists of the Past
By Arti Bhalani and Annie Kwon

2. Adam Smith
1723-1790

3. Theories
• Concluded that collectively the individuals in society,
each acting in his or her own self-interest, manage to
produce and purchase the goods and services that they
as a society require. He called the mechanism by which
this self-regulation occurs “the invisible hand.”
• Essentially, the butcher, the baker, and the candlestick
maker individually go about their business. Each
produces the amount of meat, bread, and candlesticks
he judges to be correct. Each buys the amount of meat,
bread, and candlesticks that his household needs. And all
of this happens without their consulting one another or
without all the king's men telling them how much to
produce. In other words, it's the free market economy in
action.

4. Accomplishments
• Laissez-faire economics
• Wrote what is considered the “Bible of
capitalism” – The Wealth of Nations
– foundation of classic economics
– Details the first system of political economy
• Introduced three main concepts that contributed
to the development of the free market principle
– Division of labor
– Pursuit of self-interest
– Freedom of trade

5. Quotes
• “No society can surely be flourishing and happy, of which the
far greater part of the members are poor and miserable.”
• “It is not from the benevolence of the butcher, the brewer, or
the baker that we expect our dinner, but from their regard to
their own interest.”
• “The real tragedy of the poor is the poverty of their
aspirations.”
• “Man is an animal that makes bargains: no other animal does
this - no dog exchanges bones with another.”
• “Labour was the first price, the original purchase - money that
was paid for all things. It was not by gold or by silver, but by
labour, that all wealth of the world was originally purchased.”

6. Famous Writings
• Theory of Moral Sentiments (1759)
• Essays on Philosophical Subjects (1759)
• An Inquiry into the Nature and Causes of
the Wealth of Nations (1776)

7. Economic Model

8. Thomas Malthus
1766-1834

9. Theories
• Malthus took into account two main assumptions:
-Food is an essential component for human existence.
-Humans have the basic urge to multiply.
• When unchecked, population would grow at such a high rate
that it would outstrip food supply. According to him, disease,
food shortage and death due to starvation, were nature's way
to control population.
-Proposed adopting measures like infanticide, abortion,
delay in marriage, and celibacy to check population growth
• “Vicious cycle" of population growth and its effects.

10. Accomplishments
• Malthus' ideas of overpopulation and the
death it caused was one of the main pieces
that helped shaped the idea of natural
selection.
• Introduced “positive checks” on the
population, such as celibacy and birth control.

11. Quotes
• “The power of population is indefinitely greater than the
power in the earth to produce subsistence for man.”
• “The superior power of population cannot be checked
without producing misery or vice.”
• “The rich, by unfair combinations, contribute frequently
to prolong a season of distress among the poor.”
• “The constant effort towards population, which is found
even in the most vicious societies, increases the number
of people before the means of subsistence are
increased.”

12. Famous Writings
• An Essay on the Principle of Population (1798)
• The Present High Price of Provisions (1800)
• Observations on the Effects of the Corn Laws
(1814)
• Principles of Political Economy (1820)

13. Economic Model

14. John Maynard Keynes
1883-1946

15. Theories
• Challenged classical economic ideas
- He argued that a slump was simply a
short-run problem stemming from a lack of
demand.
- balance budget in the medium term, not
in the short run
• The government should actively intervene in
the economy to manage the level of demand.
- demand management policies

16. Accomplishments
• Founder of Keynesian economics
– approach to economic policy that favors using
the government's power to spend, tax, and
borrow to keep the economy stable and growing.
• Prompted new practices as well as new theories in
the world of economic policy.
• Played a key role in the founding of the
International Monetary Fund and in other political
economic measures taken at the end of World War
II.

17. Quotes
• “The avoidance of taxes is the only intellectual
pursuit that still carries any reward.”
• “The difficulty lies not so much in developing new
ideas as in escaping from old ones.”
• “Capitalism is the astounding belief that the most
wickedest of men will do the most wickedest of
things for the greatest good of everyone.”
• “Successful investing is anticipating the
anticipations of others.”

18. Famous Writings
• The Economic Consequences of Peace (1919)
• A Treatise on Probability (1921)
• A Treatise on Money (1930)
• The General Theory of Employment, Interest,
and Money

19. Economic Model

20. Arthur Laffer
1940-present

21. Theories
• Propounded the idea that lowering tax
rates could result in higher revenues.
– higher tax rates become strong disincentives
against earning (and/or declaring) taxable income.
• Supply-side economic theories, which held
that reductions in federal taxes on businesses
and individuals would lead to
increased economic growth and in the long
run to increased government revenue.

22. Accomplishments
• Laffer drew the famous Laffer curve, which showed that
starting from a zero tax rate, increases in tax rates will
increase the government’s tax revenue; at some point,
however, when the rates become high enough, further
increases in tax rates will decrease revenue.
• Laffer’s theory, and the evidence subsequently
gathered by others, caused economists to examine
more closely the incentive effect of taxes.
• President Ronald Reagan was thought to have based
his 1981 economic plan on the idea that cuts in
marginal tax rates would increase tax revenues.

23. Quotes
• “We are having the single worst recovery the U.S. has
had since the Great Depression. I don't care how you
measure it. The East Coast knows it. The West Coast
knows it. North, South, old, young, everyone knows
it's the worst recovery since the Great Depression.”
• “And you can't have a prosperous economy when the
government is way overspending, raising tax rates,
printing too much money, over regulating and
restricting free trade. It just can't be done.”
• “And just remember, every dollar we spend on
outsourcing is spent on U.S. goods or invested back
in the U.S. market. That's accounting.”

24. Famous Writings
• "The Laffer Curve: Past, Present, and Future," Heritage Foundation
Backgrounder #1765 (1 June 2004).
• "The Tax Threat to Prosperity", Wall Street Journal (January 25,
2008).
• "The Age of Prosperity Is Over", Wall Street Journal (October 27,
2008).
• (with Stephen Moore) "Soak the Rich, Lose the Rich“, Wall Street
Journal (May 19, 2009).
• "Get Ready for Inflation and Higher Interest Rates", Wall Street
Journal (June 11, 2009)
• "The Prognosis for National Health Insurance: A Colorado
Perspective, Independence Institute (August 2009)
• "Taxes, Depression, and Our Current Troubles", Wall Street
Journal (September 22, 2009)

25. Economic Model

26. Vocabulary
• Cyclical Unemployment: Changes in unemployment
attributed to cyclical behavior in economic activity.
• Gross Investment: Investment that includes additions to
the capital stock as well a the replacement of
depreciated capital.
• Inflation: An increase in the price level over some
defined time period.
• M2 : A broad money supply measure that includes
currency, demand deposits, and the value of time
deposits.
• Non-Durable Goods: Goods that tend to be immediately
consumed or deliver consumption services over a short
period of time.