Reflections on 4 Decades of Economics Forecasting
Real Vision Interview
During which he will discuss his career and market views, covering everything from the Cuban Missile Crisis, Chinese Shuttle Diplomacy to the Grexit.
Harald B. Malmgren
Former advisor to the Secretary of Defense. Under President Johnson, he became the first Assistant US Trade Representative. He left his position as a highly regarded advisor to the US government and taught at some of the TOP universities in the USA. As a research associate, he worked with the Nobel Prize winner Thomas Schelling and completed his PhD with summa cum laude. President Nixon subsequently appointed him the Principal Deputy US Trade Representative, with rank of Ambassador. In this role he served as chief US trade negotiator under Presidents Nixon and Ford. In 1975 Malmgren left government service, and was appointed Woodrow Wilson Fellow at the Smithsonian Institution. During his lengthy career in the private-sector, Malmgren authored numerous peer-reviewed scholarly articles. In 1998, he co-founded the Cordell Hull Institute with former Secretary of State Lawrence Eagleburger.
HARALD B. MALMGREN, scholar, Ambassador, international negotiator, senior aide to US Congress and four US Presidents, advisor to many foreign leaders and CEOs of financial institutions and corporate businesses, and frequent author of articles and papers on global economic, political, and security affairs.
EducationMalmgren initially studied Physics at Rensselaer Polytechnic Institute, 1953-54. Offered a full scholarship to Yale, he transferred to study economics, where he also became Research Assistant to Nobel Laureate Professor Thomas Schelling (during Schelling’s authorship of The Strategy of Conflict, the historically important introduction of game theory into economics and the social sciences). In 1956 he was selected as Yale Scholar of the House for his senior year, graduating B.A summa cum laude from Yale University in 1957, and awarded Yale's Howland Fellowship for study and travel abroad.
Upon graduation from Yale Malmgren was invited by the Warden of Queen’s College to study at Oxford University 1957-58. In autumn of 1959 he moved to Harvard on invitation from the Dean of Graduate Studies, but returned to Oxford on his appointment as Student of Nuffield College, Oxford University, 1959-61 and Fellow of the Social Science Research Council, 1959-61. At Oxford he studied under Professor Sir John Hicks and was ultimately awarded the degree of Doctor of Philosophy from Oxford University in early 1962. Among his other personal teachers at Yale, Harvard, and Oxford were Nobel Laureates Thomas C. Schelling, James Tobin, Sir James Meade, Lawrence Klein, Vassily Leontief, Tjalling Koopmans, and of course Sir John Hicks who became Nobel Laureate in 1972. During his graduate studies he also had close interaction with Sir Roy Harrod, Sir Donald McDougall, Ian M.D. Little, Friedrich von Hayek, Nicholas Kaldor, Sir Dennis Robertson, Joan Robinson, Ray Vernon, Charles Kindleberger, Albert. O. Hirschman, and Nobel Laureates Gunnar Myrdal, Ronald Coase, Kenneth Arrow, and his close friends and fellows graduate students at Oxford, noted economists Jagdish Bhagwati, Luigi Passinetti, and Manmohan Singh (subsequently Minister of Finance, and then Prime Minister of India).
Scholarly AchievementsDuring graduate studies at Oxford, Malmgren was inspired by the historically important debate on markets vs. central planning between Ludwig von Mises and Oscar Lange, and by his subsequent personal interaction with Friedrich von Hayek and Oskar Lange. While writing his Doctoral thesis, Malmgren authored several theoretical papers which were published in major academic journals, including an historically notable academic paper, "Information, Expectations, and the Theory of the Firm," Quarterly Journal of Economics, 1961. This paper was in later years recognized as the first deep exploration of information and transaction costs in the functioning of economic and managerial organizations, anticipating decades earlier the later writings of such Nobel Laureates as Herbert Simon, Oliver Williamson, and Joseph Stiglitz. It was republished in several collections of historically significant papers in economic science, including The Theory of the Firm, The International Library of Critical Writings in Economics, Mark Casson, Edward Elgar Publishing, 1996, and The International Library of the New Institutional Economics, Claude Menard, Edward Elgar, 2004
This latter 2004 compendium of advances in institutional economics was composed of seven-volumes of historically important essays, in which Malmgren’s 1961 paper was positioned chronologically as one of the first four classical foundation pieces underlying this emerging field of inquiry:
1. Bernard Mandeville (1732), ‘The Grumbling Hive: or, Knaves turn’d Honest’
2. Adam Smith (1776), ‘Of the Division of Labour’, ‘Of the Principle Which Gives Occasion to the Division of Labour’ and ‘That the Division of Labour is Limited by the Extent of the Market’
3. R.H. Coase (1937), ‘The Nature of the Firm’
4. H.B. Malmgren (1961), ‘Information, Expectations and the Theory of the Firm’
Malmgren’s paper was positioned in this 7-volume compendium as the bridge between these earliest serious inquiries into the rationale and functioning of economic organizations and subsequent generations of papers from 1962 to 2004 by several Nobel Laureates and some 150 other historically important academic writers in economics, organization theory, institutional economics, information theory, business law, and other academic fields of inquiry.
The 1961 paper and his Doctoral Dissertation were also given central attention in a recent historical analysis of the hundred years’ evolution of Oxford University economics and business studies from Alfred Marshall (1890’s) to the establishment of the Said School of Business at Oxford (1990’s) [Lise Arena, From Economics of the Firm to Business Studies at Oxford: An Intellectual History (1890s-1990s)]
On the occasion of his retirement from the Drummond Professorship of Economics at Oxford, an essay by Malmgren (“Information and Period Analysis in Economic Decisions”) was included in a 1968 festschrift of papers of world recognized economists, including favorite students of Hicks, published as Value Capital and Growth, J.N. Wolfe, University of Edinburgh Press, 1968, four years before Sir John Hicks was made Nobel Laureate.
During years of government service and later consultancy roles, Malmgren continued to write numerous peer-reviewed and popular articles in economics, military-security issues, agriculture, tax policy, technological change, geopolitics and other areas of contemporary public controversy. (Select bibliography being assembled at https://independent.academia.edu/HaraldMalmgren )
CareerAt the start of his academic career Malmgren was appointed to the Galen Stone Joint Chair in Mathematical Economics in the Department of Engineering and in the College of Arts and Sciences, Cornell University, serving 1961-62. At Cornell, he was fortunate to befriend and become inspired by Professor Hans Bethe, of Manhattan Project fame, and popularly known among physicists as the most important scientific problem solver of the Twentieth Century.
In the summer of 1962 senior White House and Defense Department officials urged him to join the Administration of President John F. Kennedy. He moved to Washington, DC to join the Institute for Defense Analyses (advisers to the Office of the Secretary of Defense), serving as Head of the Economics Group and as Head of the Economics Group of the U.S. Joint Chiefs of Staff, Weapons Systems Evaluation Group (WSEG), in the Pentagon. He was known at that time as one of Defense Secretary McNamara's "Whiz Kids."
In late 1964 he was asked by the President's National Security Adviser to join senior staff of the Office of the US Trade Representative (USTR), Executive Office of the President. Initially he served as senior economist and Executive Assistant to the US Trade Representative, Christian Herter (formerly Secretary of State, Governor of Massachusetts, and Member of Congress). In 1965 he was appointed as the first U.S. Assistant Special Representative for Trade Negotiations. After resigning from USTR in mid-1969, he became Director of Research at the Overseas Development Council, 1969-71, and Special Adviser to Senator Abraham Ribicoff and the Senate Finance Committee, 1970-71.
In late 1971 President Nixon asked Malmgren to serve as a special adviser on international economic policy, and in early 1972 he asked him to return to full time public service as Principal Deputy US Trade Representative, with the rank of Ambassador, to function as chief US trade negotiator. He served in this role until mid-1975 when he resigned for family reasons.
In early 1972 Malmgren was designated by President Nixon to be the first US official to call for the creation of a Transpacific economic cooperation organization. In 1973 at the behest of President Nixon and French President Pompidou, Malmgren worked directly with French Finance Minister Valery Giscard d’Estaing to devise, and subsequently launch the Tokyo Round of world trade negotiations.
In 1974 Malmgren personally worked interactively with Senate Finance Committee Chairman Russell Long and Senator Herman Talmadge to draft the historically innovative “fast track trade negotiations” provision which became embodied in the Trade Act of 1974 – the first major revision of US trade law since the Reciprocal Trade Agreements Act of 1934. When President Ford took office in 1974 he was also asked to add to his activities the role of special adviser on global economic and security issues to President Ford and to William Seidman, Assistant to the President for Economic Affairs.
Subsequently he was appointed as a Fellow of the Woodrow Wilson International Center for Scholars, Smithsonian Institution, 1975-76, and as an adviser to the Senate Finance Committee, 1976. In 1976-77 He returned to teaching as Professor of Business and Public Management at George Washington University.
From the late 1970’s and early 1980’s he also became close friends with economics notables Sir Harry Johnson and Tadeusz Rybczynski, co-Members of the Board of Trustees of the Trade Policy Research Center, London; and he traveled and lectured with Herman Khan (physicist and Author of Thermonuclear War, Thinking about the Unthinkable, etc.) in the US, Asia and Europe.
Role in U.S. Foreign Policy Debate, 1962 to the PresentWhile at the Institute for Defense Analyses and the Weapons Systems Evaluation Group of the Joint Chiefs of Staff he wrote several classified papers on thermonuclear war, NATO defenses, and US anti-missile technologies, and an unclassified paper on battlefield deployment of forces on the NATO central front, "A Forward-Pause Defense for Europe," Orbis (University of Pennsylvania), fall, 1964. This article on history and contemporary relevance of static vs. fixed defense strategies generated much attention in the US Military and was reprinted in Military Review, Professional of the U.S. Army, United States Army Command and General Staff College, Fort Leavenworth, May, 1965.
In 1972 in conjunction with The Atlantic Council Malmgren published International Economic Peacekeeping in Phase II, Quadrangle/NY Times, which provided an outline of what the next phase of world trade negotiations should encompass, techniques and modalities for conducting such negotiations, and the special challenges for organization of national governments in addressing the international interaction of national laws, policies and regulatory practices. This book was published in Japanese as The New International Round in 1973. It was also utilized by many governments in Europe, Asia, and Latin America in the 1970s and 1980s as a manual for world trade deliberations.
During the subsequent years of his business and financial consultancies, Malmgren also wrote numerous papers, articles, and chapters for publications of The National Academy of Science, The National Academy, The Royal Academy (UK), Royal Academy of Science (Sweden), Foreign Affairs, Foreign Policy, Europa Archiv, and his works have been frequently been translated into Japanese, Chinese, German, Korean, and Spanish. He has made numerous presentations to Congressional Committees, Presidential Commissions, and Congressional and parliamentary conferences in Asia and Central Europe.
In the world of American jurisprudence Malmgren was called as the closing expert witness in the historic breakup of AT&T in U.S vs. AT&T, presided by Judge Harold Greene. His exposition of the historic background and Congressional intent of key provisions of the Trade Act of 1974 (M.J. Marks and H.B. Malmgren, “Negotiating Nontariff Distortions to Trade,” Law and Policy in International Business, Georgetown University, Vol.7, No.2, 1975 was cited by the Supreme Court of the United States as explanatory basis of its historically significant trade policy determination in Zenith vs. US Treasury, 1978 [Zenith Radio Corporation v.United States, 437 U.S. 443(1978)].
Malmgren is currently Contributing Editor to The International Economy and Second Line of Defense (www.SLDInfo.com).
Professional ActivitiesIn 1977 he founded the Malmgren Group (international economic consultancy and advisory services on corporate and financial strategies to several CEOs of major US and foreign corporations and banks, and consultancy services to the European Union Commission), and in 1979 also founded the UK company, Malmgren, Golt & Kingston Ltd., 1979 to 1995, consultants to multinational companies, financial institutions, and the Commission of the European Union on European business and regulatory affairs. He continues today as President of Malmgren Global LLC, advisers to global financial institutions and sovereign wealth funds, and as special adviser to WS Wealth Management (Registered Investment Advisers).
In recent decades Malmgren has served as strategist and risk advisor to many CEOs, CFOs, and CIOs in some of the world’s biggest sovereign wealth funds, banks, insurers, asset managers, electronic trading platforms, stock exchanges, automotive and electronics manufacturers, and computer services enterprises in Asia, Europe and North America. He has also been asked to brief many boards of directors.
In the mid-1980s former Japanese Prime Minister Takeo Fukuda asked Malmgren to serve as policy adviser to the Interaction Council, the independent association of former heads of government of all nations, he continued in this role with Fukuda’s successor Interaction Council Chairman Helmut Schmidt, former Chancellor of Germany.
Since the late 1960’s Malmgren also acted as an adviser to Several Presidential Commissions, Special Adviser to the OECD Secretary General, the OECD's Wise Men's Group on Global Economic and Financial Reform, the Secretary General of the UN Conference on Trade & Development, and to several Heads of Government and other political leaders in Europe and Asia. He was also Co-Founder with Former Secretary of State Lawrence Eagleburger of the Cordell Hull Institute in 1998, serving as its Chairman until 2008.
Most recently he and Robert Rubin, former US Secretary of the Treasury were asked to appear jointly to provide a briefing on global economic and security issues to the Commandant of the US Marine Corps and his General Staff (all of his 3- and4-star generals) in a joint meeting at Camp Lejeune.
Currently, Malmgren is closely interactive with his internationally recognized daughter, Dr. Pippa Malmgren, and her consultancy and advisory firm in London, the DRPM Group.
Born in Boston in July, 1935, Malmgren has 6 children and one grandchild. Harald Malmgren, the international Chess Grand Master of the last century with the same name, was his father’s brother.
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Harald Malmgren is a renknowned commentator who has been briefing boards, investment committees and government leaders around the world since the 1970s. He is also a writer and media commentator. His core subjects include the US and global economic outlook, trade policy and financial market issues, the linkages between economics and strategic security issues. He has a special interest in automated and High Frequency Trading and the problem of financial market "herding" and has written on these since the 1960s.
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