William Baumol: A Famous Economist - Essay Example

William Baumol – A Famous Economist William Baumol is a famous American Economist. He has been teaching in the Princeton University for many years. Baumol is very much committed towards his work. In the field of economics, he has made many contributions. According to Griffith, he gave many economic theories and models, which may include Theory of Contestable Markets, the Baumol-Tobin Model of Transactions Demand for Money, Baumol’s Cost Disease, Baumol’s Sales Revenue Maximization and Piguo Taxes (Griffith 1; World People 9). He has also done a deep research on the topic of environmental economics. His writings on different microeconomics topics are very famous. He wrote nearly about eighty-five books and several hundred journal articles. Different new researchers in the field of economics use all of his research publications. The major focus of all his writings is the factors, which actually affect the economy and the labor market in different intensity and directions. In order to give respect to all his contributions in the field of economics, he was nominated for the award of Nobel Prize in the year 2003 (Griffiths 2). His contributions are not only limited or we can say confined to the field of economics rather he also give his experienced opinion in some finance theories thus giving value to the field of finance. His major contributions in the field of finance are the focus on efficiency of capital markets, portfolio theory and the most important is capital budgeting techniques. All of these topics are included in the list of most important pillars of the field of finance (Griffiths 2). In addition to economics and finance, he also makes his interest in the field of business and entrepreneurship. In 2006, the famous American Economic Association honors his contribution by putting a full session by his name in the annual meeting. He presented nearly twelve research papers on the topic of business and entrepreneurship in that annual meeting of American Economic Association (Moffat 2). Baumol received Global Award for Entrepreneurship Research in 2003 (Moffat 2). Even the famous British magazine The Economist has also published an article on his whole life and all his contributions in different fields of life. His book The Micro Theory of Innovative Entrepreneurship got a huge fame and immense popularity in the businesspersons who were interested in the creativity and innovation (Moffat 2). One can imagine the worth of William Baumol by the count of his ten honorary degrees, Presidency of the American Economic Association and membership in The National Academy of Science (Crouch 2). William Baumol is famous for his pricing models. Most of the students are inspired by his work. He always says that educating the younger generation is just like a labor-intensive process, which actually requires a high amount of resources and cost. Based on all his teachings, writings and contributions in many fields of life, he was the most suitable and deserving person to win the Nobel Prize in 2003 (Crouch 2). William Baumol is not famous for any one or two big ideas rather he gave many of the innovative ideas in the fields of economics, finance and entrepreneurship. All his innovative and creative contributions are enough to make him a most deserving person to win the Nobel Prize. In addition, he was selected to be a nomination for the winner of Nobel Prize in 2003. Nobel Prize is a top most award or the honor of the field of economics. People who got this award or we can say prize in the past, are worth like William Baumol. All the capable people who win Nobel Prize usually got it on any specific contribution to any one specific field. Here we can say the bad luck for William Baumol that the panel of jury to decide the Nobel Prize would not select Baumol for the prize. The reason behind his rejection was that he is not concerned with any specific field. All the past winners are devoted to their own particular fields but in case of Baumol, we can witness his contributions in the fields of finance, economics and entrepreneurship. However, all the people were against this decision but the rules to declare Nobel Prize are strict and they may not able to go against them. Including his major contributions in the areas of finance, economics and business, there are many other fields where he give recommendations and people utilize those advises and thus took advantage of them (Henrekson 3). He also acts as a major consultant for the wide number of companies operating in the United States in different industries. His consultancy services are not just confined to the boundaries of the United States of America rather they also reach many other states and geographical areas. In some countries, not only private firms but the Government agencies also take advantage of his intellect and the experience. In the fields of telecommunication and the electric utility, major policies are formed because of his recommendations (Henrekson 3). His teaching career is also of nearly twenty years in the same institute. Many of the researchers have translated his books in different languages so that people can take advantage of his writings easily (Henrekson 3). In the field of economics, Baumol worked a lot on the cost matter. All of his cost work was named as the Baumol’s disease (Nordhaus 3). The phenomenon of Baumol’s disease was described in the era of 1960 and onward years. It includes the detail of effect of the raise in the salaries of the persons whose growth is constant. Contrary to those people, the other were the persons whose salaries increase just according to the growth of their productivity. It means that the salaries of both parties increase irrespective of their increased, constant or decreased output productivity. This may cause a raise in the cost for the management of the company because they are paying high in the head of labor cost but the productivity is still at the same point. William Baumol explained this effect in his research and also focused its effects on the overall economy (Nordhaus 3). William Baumol gives the concept of creativity and innovation in the field of business and entrepreneurship. The reason for his contribution is that these entrepreneurs are included in the list of those factors who actually affect the economic growth of any country. Therefore, there should be a development in this area so that the effect on the economic growth can be positive. Now the both fields of economics and entrepreneurship are integrated and thus related to each other. Baumol’s Micro Theory of Innovative Entrepreneurship actually provides the structure or the framework to get the businesses into the main stream of the economic growth. Baumol aimed to formulate the activities of these entrepreneurs in the form of structured and standard models. Baumol also differentiate entrepreneurs as the one who want the innovation in his business in order to look different in the market or industry. Contrary to this concept, the old entrepreneur is the one who is interested in the launch of his new business or venture regardless of the existence of the same business in the market. This basic difference changes the whole effect on the economic growth. In short words, we can say that William Baumol is included in the list of those persons who revolutionized different fields just because of their researches and the contributions. The history shows that how different fields including economics, commerce, business, finance, telecommunication and many others have taken the advantage of his teachings, writings and sometimes even just recommendations. Here it is to clarify that teachings and writings are always based on long and deep researches but recommendations are always based on personal experiences because they are the true advises. In response to his hard work, the world is also giving him appreciation, honors and awards. If we talk about the world’s most precious, award i.e. Nobel Prize than surely we can say that this time luck did not support William Baumol. Reference List: Crouch, Colin, ‘William Baumol; Good and Bad Capitalism’, A Journal of Social Democracy, Volume 16, No 3 Griffiths, Mark, Kickul, Jill & Bacq, Sophie, ‘A Dialogue with William Baumol; Insights on Entrepreneurship Theory and Education’, Academia.edu, July 3, 2012, Web July 6, 2014. Henrekson, Magnus & Eliasson, Gunnar, ‘William Baumol’s Contributions to The Field of Entrepreneurship and Small Business Research’, Global Award for Entrepreneurship Research, January 2, 2010 Moffat, Mike, ‘William Baumol’, About Economics, January 2, 2013, Web July 6, 2014 Nordhaus, William, ‘Baumol’s Disease; A Macroeconomic Perspective’, The National Bureau of Economic Research, May 3, 2006, Web July 6, 2014 World People. "World Peoples Blog: WORLD-WIDE ASIAN-EURASIAN HUMAN RIGHTS FORUM." . World Peoples Blog, 26 May 2008. Web. 7 July 2014. . Read More