David Warsh: High-powered economists but the boat trip was the best part

Lindau Island, in Bavaria.

It began as a bootstrap adventure:  a pair of physicians, practicing in a Bavarian backwater, recognized the extent of damage to German science that had occurred since 1933 when the Nazis took over.  Four years after World War II had ended, students’ isolation from the international conversation about the frontiers of medical knowledge was still nearly complete.

So Gustave Parade and Franz Karl Hein made a pitch to the city fathers of Lindau, a late-medieval island in a beautiful lake, occupied since the war by the French army, with a casino willing to underwrite a “medical science convention.”

On another island, at the other end of the lake (the third-largest in Europe, known as the Bodensee or Lake Constance), was a member of the Swedish royal family, a grandson of the king. Mr. Lennart Bernadotte was looking for ways to make ends meet.

Swedes had been roaming around southern Germany since the Thirty Year’s War; but a 23-year-old Bernadotte had been given the island of Mainau only in 1932, by his maternal grandmother, the daughter of a German grand duke, as a wedding present, of sorts.

He had married a commoner without royal consent, so lost his princely title, and needed to get out of Stockholm with his wife. Bernadotte had spent the war in Sweden, but he returned to Mainau afterwards, wondering how to make a go of it.  He agreed to the use of his name to appeal to Nobel laureates to travel to Lindau to meet with German science students.

Parade and Heim hardly knew who among European laureates in medicine and physiology were still alive, much less how to reach them. But somehow they managed to put together a successful meeting of around 200 students with seven laureates (including one, William Murphy, from as far away as Boston), who gave lectures on whatever topic they pleased. The first conference was followed by a similar meeting of chemistry laureates the next year.

A boat trip to Mainau Island, an arboretum since the mid-18th Century, was part of the program from the start. Punctuated by a picnic, it offered an opportunity to mix and mingle on the last day of the week.

For 30 years, the Nobel Foundation refused to have anything to do with the meetings.  By the ’80s, however, it had become clear that the meetings had evolved a successful method.  Laureates were eager to come for “family reunions”; they were glad to meet with students to “inspire, motivate and connect.” Most were too polite to mention it, but often the young scientists they met weren’t all that inspiring themselves. The meetings were virtually unknown outside of Germany, and almost any West German student who asked could attend. East Germans stopped coming after 1964.

Bernadotte meanwhile, divorced in 1971, remarried and added five more children to the four from his first marriage.  He had been re-ennobled by Luxembourg, as Count of Wisbourg, in 1951. With his children, he had turned his island into a major tourist attraction, its botanic garden booking a million visitors a year. But at the other end of the lake, the Lindau Laureate Meetings were still living hand-to-mouth well into the ’90s.

That changed when a management consultant signed on to write a plan for strategic development. Wolfgang Schürer, an economist, had already established one successful international meeting – the International Management Symposium (today the St. Gallen Symposium). Over the next 15 years (he retired from the Lindau meetings last year), he organized another, a story laid out in Science at First Hand, by Ralph Burmester, originally produced for the fiftieth anniversary and updated twice since.

Schürer recommended casting the net for students far more widely than before, essentially around the world; and selecting them more carefully, from nominations forwarded by their home institutions.  He advocated for opening a professional meeting office. He successfully raised funds from a wide variety of corporate and government sponsors, beginning with a landmark 10-year grant from the Swiss pharmaceutical giant Novartis.

He pressed, too for adding a meeting to the summer calendar for prize laureates in economic sciences, first awarded in 1969, a new Nobel Prize in everything but name. (Officially it’s the Swedish Central Bank Prize in Economic Sciences in Memory of Alfred Nobel.)   The first such meeting, anchored by Robert Solow, was held in 2004; and so enthusiastic were its guests and funders that they tried it again for a time at two year-intervals.

The Sixth Annual Lindau Meeting on Economic Sciences concluded a week ago, 16 laureates (a 17th  forgot his passport!) and 233 up-and-comers from 66 countries.  Most groups self-segregate, and apparently Nobel economists are no exception. In general, laureates identified in their post-Nobel career mainly as authors (at least in my mind) stayed away: Not there were Joseph Stiglitz, Paul Krugman, Robert Shiller, Angus Deaton, Daniel Kahneman, George Akerlof, Edmund Phelps, and Michael Spence.

The 16 who showed up were all in some degree still trying to influence economics from the inside. Some celebrated teachers were absent (Alvin Roth, also an author, and Eugene Fama come to mind). Incipient authors were among those who were present. Jean Tirole has a new book appearing this month, Economics for the Common Good.  But, in general, the sample reflected the different agendas to which economics laureates devote themselves after their new-found fame: continue to work in the field, or seek to persuade a lay audience.

Thus one day that Daniel McFadden lectured on “Foundations of Welfare Economics’’; Peter Diamond on “Good Pension Design’’; Robert Aumann on “Mechanism Design: Why Consciousness Evolved’’; Sir James Mirrlees on “Bounded Rationality and Economic Policy’’; and Roger Myerson on “Local Agency Cost of Political Centralization’’.

The next day Lars Peter Hansen lectured on “Wrestling with Uncertainty in Climate Economic Models’’; Bengt Holmström on “Debt and Money Markets’’; Finn Kydland on “Innovation, Capital Formation, and Economic Policy’’; Edward Prescott on “Fiat Value in the Theory of Value’’; Christopher Sims on “The Myth of the Stand-alone Central Bank’’; Sir Christopher Pissarides on “Work in the Age of Robots’’.

And on the day after that, James Heckman lectured on “Unordered Monotonicity’’, Myron Scholes on “The Evolution of Investment Management’’; Oliver Hart on “Should a Company Pursue Shareholder Value’’; Tirole on “Moral Reasoning, Markets and Organizations’’; and Eric Maskin on “A Better Way to Choose Presidents’’.  Vernon Smith, turned aside by passport difficulties, would have spoken on Adam Smith on “Conduct and Rules: Trust Games, Emergence of Property, Wealth Creation’’.

Afternoons, laureates divided up and presided over nine “master classes,” sessions in which students took turns presenting ten-minute talks on their work in exchange for comments for the front row.

Between times there were three panel discussions of which the last, on inequality, was the best.

It was an exhilarating experience for those who were there. In my judgment, nothing was said that was particularly newsworthy, including Mario Draghi’s keynote speech – at least nothing that won’t take a good deal more shoe leather to turn into an item.

The boat trip is still the best part.

David Warsh, a veteran financial and political journalist, is proprietor of economicprincipals.com, where this first ran.