Henry C. Simons
| Henry Calvert Simmons | |
|---|---|
| Born |
October 9, 1899 Virden, Illinois |
| Died | June 19, 1946 (aged 46) |
| Nationality | United States |
| Field | Economics |
| School or tradition |
Chicago School of Economics |
| Influences | Frank H. Knight |
| Influenced | Milton Friedman, Gordon Tullock, Hyman Minsky, George Stigler |
Henry Calvert Simons (October 9, 1899 – June 19, 1946) was an American economist at the University of Chicago. A protogé of Frank Knight, his anti-trust and monetarist models influenced the Chicago school of economics.
Simons is noted for a definition of economic income, developed in common with Robert M. Haig, known as the Haig–Simons equation; this definition of income has strongly influenced the modern American tax structure.
In one of his better known essays, A Positive Program for Laissez Faire (1934) Simons set out a program of reform to bring private enterprise back to life during the Great Depression.
Eliminate all forms of monopolistic market power, to include the breakup of large oligopolistic corporations and application of anti-trust laws to labor unions. A Federal incorporation law could be used to limit corporation size and where technology required giant firms for reasons of low cost production the Federal government should own and operate them... Promote economic stability by reform of the monetary system and establishment of stable rules for monetary policy... Reform the tax system and promote equity through income tax... Abolish all tariffs... Limit waste by restricting advertising and other wasteful merchandising practices.
Henry Simons argued for changing the financial architecture of the United States to make monetary policy more effective and mitigate periodic cycles of inflation and deflation. The goal of changing the "monetary rules of the game" in this way was to "prevent… the affliction of extreme industrial fluctuations"—in other words, the business cycle.
According to Simons, financial disturbances in the economy are perpetuated by "extreme alternations of hoarding and dishoarding" of money. Short-term obligations (loans) issued by banks and corporations effectively create "abundant (fiat) money substitutes during booms". When demand becomes sluggish, a sector of the economy undergoes a shrinkage, or the economy as a whole begins to lapse into depression, "hopeless efforts at liquidation" of the secondary monies, or "fire sales," result.
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