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Former 'Chicago Boy' Deirdre McCloskey, Transgender Economist Extraordinaire

Deirdre McCloskey, an acclaimed professor and former University of Chicago protégé of Milton Friedman, stunned the academic world with a sex change in 1995. But that's just one interesting part of a woman now focused on a more "human&

McCloskey during a recent lecture in Germany
McCloskey during a recent lecture in Germany
Emmanuel Garessus

WEIMAR – Deirdre McCloskey is as fascinating as she is complex. For starters, she used to be named Donald, a father of two who – in 1995 at the age of 53 – decided to become a woman. McCloskey is also an award-winning author and economist, a former "Chicago Boy" who worked for several years alongside the famous free-market guru Milton Friedman.

The professor has since written a book on her experience. Crossing: A Memoir was cited as the "Notable Book of the Year" by the New York Times. Although her sex change did not affect her career, McCloskey writes about how it did end up separating her from her family.

But today, with the world facing an economic crisis of the past half-century, our focus will be squarely related to her unique professional story. The tall, elegant lady with the dark, slightly veiled voice will be 70 next September. She is a scientist by training, as well as an expert in mathematics, economics and theology. She has rubbed shoulders with an impressive number of Nobel laureates, and also happens to be a prolific essayist. Nowadays she teaches economics, history, English and communication at the University of Illinois at Chicago.

McCloskey considers herself part of the "economic ethics' current. For this "Christian liberal," there is nothing more erroneous than to limit mankind to the mere maximization of utility. McCloskey believes many more dimensions, often far more meaningful, affect our daily choices.

We've chosen a good location for such a philosophical conversation: Weimar, Germany, a cultural city entirely devoted to Goethe and Friedrich Schiller. Deirdre McCloskey is the guest of honor at a meeting organized by the Walter Eucken Institute in Freiburg and the Friedrich Hayek Gesellschaft.

The name of the hotel where I meet her has a strange ring to it --the Frauenplan, near the Goethehaus. It's 7:30 a.m., a bit late for breakfast, but we are presented with a large continental breakfast buffet in the cozy atmosphere of a small but opulent room. The building is reminiscent of Thomas Mann's Buddenbrooks. This very "19th century" setting is perfect for a chat with the author of Bourgeois Dignity; Why Economics Cannot Explain the Modern World. At 570 pages, this is the second part of a six-volume series that sets out to explain the history of capitalism.

A prolific writer, McCloskey is also an inexhaustible orator. Which means the breakfast goes on for ages. Once she is done with another interview, our conversation resumes during lunch, before a copious plat du jour - red cabbage, roast potatoes and roast beef in a heavy sauce.

Her book deciphers the reasons why per capita income has been multiplied by 16 over the past two centuries (by 100 if we include gains in quality), going from roughly 2.5 to 40 euros per day. Hers is an interesting theory: Prosperity is not obtained through investment, but through the innovation made ​​possible by a change in rhetoric and values. In McCloskey's opinion, what matters is the whole society's attitude towards innovation. "The liberal ideas of dignity and liberty have created a favorable climate for innovation that has benefited billions of people," she says.

Let me innovate, and do not steal from me if I become successful -- and in the long run, it will make everyone richer. Such is the explanation of the bourgeois revolution. The first statue of an engineer, James Watt, erected in 1834 in London, has a strong historical value. The language also changed at that time. The definition of justice became "the ability to honor a contract." According to McCloskey, this is a far cry from the social approach of income redistribution we can hear today.

Chain-drinking coffees, McCloskey talks about her recent meeting in Spain with a group of "Indignados." She chats as readily with them as she does with Tea Party representatives. "The two agree on one point: they're both targeting lobbying groups trying to protect their own interests," she says. The economist also criticizes the American "military-industrial complex," which sucks up public funds, and calls for the complete withdrawal of U.S. forces on a global level, in the Middle East and Europe alike: "We entered Germany 70 years ago. It is high time we left the country, don't you think?"

McCloskey does not share the pessimistic visions of people ready to call every recession "the final crisis of capitalism." And besides, the same critics are unable to explain the steep rise of living standards over the last century, for which we can thank innovation. Actually, she prefers the term innovation to capitalism. Capitalism implies the fact that prosperity has come from the accumulation of labor and capital as well as from greater efficiency. It turns a blind eye both to the discovery process, which Friedrich Hayek studied, and to the change in rhetorics.

The professor admits that middle class incomes have stagnated in Western countries over the past few years. But "no one can deny the explosion of incomes in the long run, or the progress in medicine and education."

The great lesson the last 20 years have taught us, she says, is not that the middle class is stagnating in the West, but that India and China are finding their way out of poverty through their acceptance of "bourgeois virtues of dignity and liberty." Pessimists are wrong to focus on the decline of the West, she says. The West is not getting poorer. Emerging countries, rather, are getting richer. Besides, as a historian, she says she is very optimistic about the future.

McCloskey has not always been a liberal. When she was 14, she was an anarcho-communist; at age 19, a Keynesian. When she was 30, she breathed in free-market theories from Milton Friedman and the Chicago School; at age 48, she got closer to the Austrian liberal school and Friedrich Hayek. Finally, at age 68, she coined the term "humanomics," the economy of the human.

McCloskey spends the rest of the afternoon explaining why 95% of the work of economists is useless. This is a theme she explored at great length in a book she published in 2008 on "the cult of statistical significance."

"We need to know whether globalization creates jobs and how many, or if minimum wages destroy jobs and how many. But what we do not need is qualitative theorems and statistical significance," she says. "With statistics, you can show what you want. You can just as easily prove that capitalism is good or bad."

Deirdre McCloskey encourages her students to combine engineering and literature studies, and thus participate in the progress of humanomics, an economy that makes sense. You can analyze what it means for that person in Spain to be unemployed, but also why he is indignado.

Read more from Le Temps in French

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