In Memoriam: Earl Thompson

earlEarl Thompson, economist: born October 15, 1938; Assistant Professor, Stanford University 1962-1965, Assistant Professor UCLA 1965-1969, Associate Professor, UCLA 1969-1973; Professor, Department of Economics, UCLA 1973-2010; married 1961 Velma Montoya (one son); died Los Angeles 29 July 2010.

Thompson was an idiosyncratic but brilliant thinker, and his death marks the end of an era for UCLA: Thompson is the last of the economists brought to UCLA by Armen Alchian in the 1960s to create the famed UCLA school of economics.

Thompson's interests in economics were broad ranging. In recent years his goal was to provide an integrated theory of the vital institutions of society - a theory that tied together historical events with economic theory and politics. The basic elements of the theory were outlined in his 2001 book with Charles Hickson. The entire theory was to appear in the three volumes entitled A Reconstruction of Economics.

Thompson did not set out to be an economist. His ambition until his early twenties was to be a professional baseball player. Fortunately for us he fell to injury, so instead became an academic. He attended UCLA as an undergraduate where he studied under Armen Alchian who turned him towards economics, and while in his younger years he had been an indifferent student, he graduated with Honors in 1958. He attended the London School of Economics, then returned to Harvard for his Ph.D. under the supervision of R. Meyer, becoming Harvard's youngest Ph.D. in Economics in 1961. His first longterm position was as an assistant professor at Stanford University. In 1965 he moved back to Los Angeles to UCLA, where he spent the bulk of his career.

Over that career Thompson published more than 40 articles, many in the top academic journals. He wrote on topics ranging from monetary theory to welfare economics. Always his focus was on the winners and losers from economic policy. In monetary theory he was profoundly skeptical of the influence of bankers on monetary policy - as we have recently been reminded, bankers look out for bankers' interests, not the interests of the rest of us. As recently as March, Thompson was writing in the explaining why the banker driven bailout and stimulus policies might benefit bankers, but would be of little use to the rest of us.

Thompson was also cognizant of the universal desire for monopoly. He was one of the first to point to collusion between unions and firms - unions are not subject to anti-trust laws. He gathered substantial evidence that in the coal industry strikes served to raise prices and increase profits by restricting output.

One of Thompson's most significant theoretical contributions was in the area of public finance. Conventional wisdom among economists is that taxing capital is a poor idea. Thompson pointed out that national defense is one of the primary functions of government - and the beneficiaries are largely the owners of capital. Far from an inefficient drag on the economy, he argued, capital taxes are effectively a user fee, charging those that benefit the most from defense for its cost. That democratic institutions seemed to have found the right solution where economists had not made a profound impression on him.

Thompson made major theoretical contributions to the study of commitment in games - arguing that it has an empirical significance that is underplayed by economists and game theorists. In doing so, he demonstrated a formal mathematical version of what is sometimes known as the Coase Theorem: that without frictions an economy attains desirable outcomes even in the absence of competition. Where other economists focused on markets, Thompson focused on the evolution of democratic political institutions, arguing that the democratic process tended to bring forth efficient policy compromises.

Thompson loved to work with students, although occasionally his classes met at odd times, such as Sunday afternoons. Many of his students became coauthors and lifelong friends.

In the early 1980s, while his wife Velma Montoya served in the Reagan White House, Thompson spent a year at the Federal Trade Commission in Washington. This gave him an opportunity to comment on and influence public policy: although a theorist Thompson had an enormously practical side and cared deeply about people and policy.

Thompson received numerous grants and awards to support his research, including from the UCLA Institute for Government and Public Affairs; the Ford Foundation; the Eli Lilly Foundation; the American Petroleum Institute; the Koch Foundation; the Foundation for Research in Economics and Education; and the National Science Foundation.

Earl Thompson was an eccentric in an age of conformity. He kept odd hours: he was alone in his office in Bunche Hall at 4:31 AM on January 17, 1994 when the Northridge earthquake hit, where he found himself unharmed but covered with fallen books. He loved muscle cars, dressed as if the 1950s were just yesterday, and always had a sneaky grin on his face. He will be missed by his colleagues, his students, his friends and his family.

by David K. Levine

In Memoriam to Dr. Earl A. Thompson

There will be Funeral and Grave Site services for Emeritus Professor E.A.
Thompson Saturday August 7th at Noon PM. The location is Forest Lawn Hollywood
Hills:6300 Forest Lawn Drive. Los Angeles, CA. 90068.

We are slated to congregate in Old North Church AKA The Old Red Church.  (If
you do opt to attend, please arrive a few minutes before 12 O¹Clock PM as The
North Church is embedded in the middle of the complex.)

These services will be followed by an informal gathering/luncheon at the
Thompson family home in the Hollywood Hills. All students, administrators,
faculty and friends are openly invited to attend both events to share your
time and thoughts with the Thompson Family, and more importantly one another.
He would have wanted you all there.

No donations will be necessary. Sunglasses optional.

-Bret L. Thompson & Velma Montoya Thompson Ph.D.

Shared Memories and Condolences

September 13, 2010

From Charles Rowley

"I first met Earl Thompson in 1974, when I visited UCLA to present a paper on Virginia Public Choice.

As a scholar of public choice, I was in regular contact with Earl from the time that I migrated to George Mason University in 1983. I met him at meetings of the Public Choice Society, commented on his always interesting presentations, and conversed with him in the hallways.  As Editor of Public Choice, I read and accepted several of his papers for publication. As an outside assessor, I strongly recommended him for promotion to a Special Professorship at UCLA just a few years ago.

As the magnificent Armen Alchian economics program - of which he was an integral part - slowly dis-integrated and disappeared under pressure from young Turks who were intellectually unfitted to follow in the shoes of those who had hired them, as the Great Men - Armen Alchian, Harold Demsetz, Alex Leijonhufud, Jack Hirshleifer, et al - were sidelined and removed from graduate instruction by callow youth, Earl must have felt increasingly isolated. But he never showed his dismay. Always he would appear, lean and tanned, in jeans and red jacket, sunglasses on his forehead, perpetually smiling, secure in the knowledge that he was right, and that his younger colleagues were wrong.

As a scholar of Virginia Political Economy, I was not easily impressed by notions that political systems are economically efficient. But if anyone could get close, it would be Earl, not those circling around the Chicago School.  He was blessed with a brilliant and original mind, enormous energy and great charm. He never appeared to age. I shall never forget him or the once-great School to which he belonged!"

August 16, 2010

From Birgitta Swedenborg

"I was saddened to hear of Earl's sudden passing and want to offer my sincere condolences to Velma and their son (whom I've only seen as a baby). I'll never forget Earl. In the fall of 1966, my first quarter at UCLA, I took Econ 202A from Earl, then a very young and vibrant professor. In his first lecture he told us to forget everything we had learned in macro before that day. Inspired by Axel Leijonhufvud's still unpublished manuscript on Keynenesian Economics and the Economics of Keynes he was going to lay out an entirely new macro theory. Unfortunately, my undergraduate training in Sweden had left me totally unprepared for his informal style of teaching. Fortunately, Axel's manuscript became available shortly before the final exam. Earl's class set the stage for the three fantastic years I spent as a graduate student at UCLA Econ Department. Years later, at a UCLA get-together in Washington, D.C. in the early 1980s, I saw Earl again. Earl looked at me and said: "I remember you young..." I had obviously changed. But Earl looked the same. The same happy grin. The same wild, red jacket. Earl stayed young and vibrant and I'll always remember him that way."

August 14, 2010

From Bill Layher

"As an antitrust staff economist at the FTC's Bureau of Economics when Professor Thompson spent a year there as a consultant during the early 1980s, I was fortunate to spend a good deal of time running my cases past Earl to benefit from his insights in sorting out the crucial facts and understanding the theoretical issues. After hours, and from time to time in subsequent years, I was even more fortunate to benefit from discussions with Earl about his theories on other matters, economic and otherwise. He was always generous with his time and patient with someone who was not always quick to understand (in some instances, ever to understand). I can only hope that he benefited to some extent from bouncing his ideas off me, while I gained immeasurably in learning new and unconventional ways of interpreting how the world operates. What impressed me most about Earl was not that he had unique critiques and counter theories to so much of the conventional economic, social, and political wisdom, but that he freely disclosed and acknowledged aspects of his own theories that he considered weak or incomplete, ever seeking to tighten his theories, develop them further, and meld them into a comprehensive scheme. He was one of the most influential persons in my life, and I suspect this may be true of others as well."

August 9, 2010

From Ron Silerman

"My name is Ron Silverman, and I was shocked to hear of Earl's passing. In Jr. High and Hamilton High School, we spent practically every day after school and on weekends playing baseball. We both dreamed of becoming professional baseball players. He was my buddy, and best of friends. After graduation, we seemed to lose contact with one another, but I will never forget those magical times that were so special to us. I went to USC, and Earl went to UCLA. We both played college ball, but we were not of major league caliber. Looking back on those years, baseball was our life. Luckily for all of Earl's students, he became a professor and friend to all of his many students, and co-workers. About 5 years ago, I contacted Earl to talk about old times, and to get together for lunch or dinner. It just didn't work out for his schedule. I will always regret not being able to see him. I knew his parents, sister, and can honestly say that those years were very special to me. I would like Mrs. Thompson to contact me so that I can tell her what a wonderful friend he was. "

August 9, 2010

From Daniel F. Leach

"I was shocked and saddened to learn just today of Earl Thompson’s sudden death. I would like to offer my condolences to Velma, Brett, and the rest of the Thompson family. Notice of his death has brought back memories of him and marathon late-night discussions in his office. Earl was a brilliant, creative thinker and a nice guy who we’re all going to sorely miss.

Earl Thompson Vignettes
1.    At a party in the early 1970s, Earl enraging UCLA’s radical economists (yes, we had some) in arguing that the Vietnam War was efficient (or something like that).

2.    Earl coming to his public finance class at the beginning of the tenth and last week, telling us to forget the first nine weeks of the course since the lectures were wrong.

3.    Harold Demsetz, in his IO class, asking us about Earl’s paper, ‘The Perfectly Competitive Production of Collective Goods.’ ‘If anyone understands this paper, please explain it to me.’

4.    Earl dismissing Milton Friedman as a ‘clever Marshallian.’

5.    Earl convincing me that airline pilots should be regulated because of a ‘death externality.’ Now that I am at the FAA, I can at long last use that argument."

August 5, 2010

From Ruben Vassolo

" I was a student in Earl’s Macro Economic Theory (Economics 102) course at UCLA. I spent more time in his office than in his class. Sure we talked economics, but we also covered many other topics, including sports, professions, ethics, relationships and world affairs. Earl was very generous with his heart and time especially when he had bigger fish to fry than this snot-nosed undergrad. More often than not, I left Earl’s office trying to figure out what he had said. His ideas were so original I had to stretch my young mind to understand them. At times, it was tempting to argue with Earl, but this could not be done intelligently without understanding his position. And, this was no easy task. The mere process of trying to understand him helped shape my analytical skills. As if understanding his ideas weren’t challenging enough, Earl invited Professor Batchelder, Baker Ostrin and me to his home a couple of times to play basketball. He had a lethal outside shot and often schooled me on the court even more so than he did in the classroom. As a former competitive baseball player, sports meant a whole lot to Earl. I remember confiding some troubles to him. Earl’s reply was they stemmed from my “sports personality.” I nodded but walked away wondering, once again, what he meant. Though I still don’t know exactly what he meant, I was relieved when he later disclosed that he also had one. I last saw Earl a few months ago. He looked Bob Dylanesque cruising in his powder blue Lincoln Continental past the busy corner of Franklin and Fuller Avenues (near Runyon Canyon). I thought about screaming his name but I couldn’t. It was just too cool to see him breezing by in his mean machine without a care in the world."

August 4, 2010

From Babak Baboo:

"My first quarter at UCLA, I took ECON 152 with Earl Thompson. I knew UCLA was a great place, and having Thompson as my first econ professor confirmed that. He was an intellectual and open-minded professor. He was brave, and spoke his mind. Often times, he was criticized by his colleagues or students. His ideas were sometimes radical, and encouraged me to think critically. Rest in peace."

August 3, 2010

From Don Norman

"Earl was an original.   The first course I took from him was Econ 100A.  I don’t know if I will ever feel the excitement I did when, in the last lecture, he tied the entire course together, showing how the competitive equilibrium is Pareto efficient.   I walked out of class feeling as if the secret of the universe had been revealed.  In graduate school, he would stop by if a group of us was sitting outside of Bunche Hall (it would  have been late in the day of course) and start discussing something he was thinking about.  I was always struck by the originality of his thinking and his unconventional way of viewing the world.  I last saw him in the late-90s at an WEA meeting.  He was the same as ever, except that he was wearing an Armani suit and looked every bit like a real hipster.  He still had, of course, his impish grin.  Just as he did in my graduate school days, he launched into a discourse on something he had been thinking about.    It is good that there are people like Earl who are so different.  I know he will be missed by those of us who were fortunate to have had him as a teacher."

August 2, 2010

From Nyle Kardatzke:


"I am attaching a scan of a photo of Earl Thompson that was taken by department secretary Lorraine Grams in 1974. Lorraine took a number of wonderful black and white photos of the faculty at that time, including this very expressive picture of Earl Thompson. When I entered graduate school at UCLA in fall 1967 I had a limited background in economics, so one of the first courses I took was intermediate microeconomics from Professor Thompson. I was an insecure, earnest student so I took copious notes on the material with which he filled the blackboard each day. (Yes, the board was black and Earl used actual chalk.) He would breeze into class with his hands in his pockets and act surprised that he was supposed to give a lecture. Then he would remind us of where we were in the previous meeting and, without notes, quickly fill the board with detailed diagrams and notations on consumer choice and market equilibria. It appeared to me that some of the undergraduates in the class thought that Earl's casual opening moments, rather than the exposition that followed, were the real thing and they didn't take notes. I feared for them at exam time. That course was an invaluable introduction that prepared me well for Professor Hirshleifer's graduate price theory course the next year. In other encounters with Earl Thompson I always found him inventive, challenging, sometimes perplexing, and always stimulating. He will be greatly missed."

August 1, 2010

From Can Cao:

"Professor Thompson, one of the very few professors whose classes were worth attending, left this world in a hurry. It seems like yesterday that we were exchanging emails debating about the implications of the 2008 economic crash, the gold standard, etc. An independent thinking economist who never ceased to challenge conventional wisdom and inspire his students with thought-provoking theories both about economics and life. A professor who came to lectures in cowboy boots and sunglasses. Professor Thompson is truly revolutionary and one of a kind, both inside and out. A rarity among college intellectuals. He will be missed."

August 1, 2010

Angela Ni:

"I was struck still when I heard about the sudden news. It is a great pity to lose such a respectable professor and I feel I am lucky to be the last student of Professor Thompson. Last year, Professor Thompson gave me a chance to be an exchange PhD student and enjoy his theories. He had many interesting theories, such as "hero theory," "develop trap," "growth miracle". The first theory he taught me formally is "hero theory". It tells us that children always regard their fathers to be their heroes because they can argue with their mothers who give the more restrictions. Professor Thompson liked using this theory to test every one and he worked out most of the answers. Professor Thompson had amazing passion for studying Economics and worked very hard although he kept an odd schedule. He said there are many ideology cartels in modern Economics and he wanted to rebuild the system of Economics. I enjoyed talking with him very much and I could always learn something new from him. Sometimes I could not understand or accept his ideas at the beginning but later when I chew his ideas, I started to admire his logic and views. Furthermore, he loved his hometown, Los Angeles very much so that he came back to UCLA and enjoyed the games of Lakers and Dodgers. He is not only my advisor but also my good friend because of his kindness. He would like to give a hand to every one who is in need. When I was in China, he offered me a lot of advice about life and research. When I first met him in his office, I said UCLA was big and I was easy to get lost. Then, he printed a map of UCLA for me and told me some information about international students' registration. He also taught me some English and corrected my accent as well. Since I am going to be graduated soon, Professor Thompson even gave me some useful suggestions for my future career. I appreciate all his help and I had wished to take a photo with him in his office at the last meeting. But this wish remains unfulfilled for ever. Now that he is living in another world, I believe he is still watching us, smiling."

August 1, 2010

From Ken Heyer:

"Like all who knew and loved him, I was shocked to learn earlier today of Earl's passing. Earl was the most independent and creative thinker I was fortunate enough to know while I was a graduate student at UCLA in the late 70s and early '80s. What I'll remember most about him was his striking and refreshing independence of thought. Earl's fearlessness and enthusiasm for challenging conventional wisdom, and for pushing joyfully in whichever directions his tremendous intellect led him, were almost unique in academia, where far too many are far too comfortable working within the confines of already accepted thought. There was much about Professor Thompson that I never fully understood--some of his more exotic theories, of course, and most memorably his unusual preference for playing basketball in shorts and black socks. Upon reflection, knowing Earl the latter was most likely a carefully considered strategy to gain an advantage by keeping his opponents at a psychological disadvantage. With much sadness, though appreciation for having been fortunate enough to have known him."

August 1, 2010

From Tommie Lo:

"I encountered Professor Thompson when I was the Departmental Scholar in 2008 which I had a chance to register his graduate class on Public Finance. The class went totally unexpected as Professor Thompson's ideas about capital taxation, wartime finance, gold standard and efficiency of democracy and government were bizarre but fascinating to me. Soon after the first few weeks of classes, I decided to work with him for my undergraduate honor thesis; and it provided some unforgettable memories and scholarly experience I could ever have. The meeting time of economics discussions with Professor Thompson have never been normal as he would invite me to continue the thesis discussion after his 3-hour lecture on Friday late afternoon, and it was another 3 to 4 hours of lecture at his office; sometimes, he might want to have the discussion in the late evening and the one-to-one lectures would not end until midnight. At that time, I felt very tired, and sometimes slept during the meeting with him; though, he didn't want to end his conversation early, instead, he would invite me to try his herbal tea, and the discussion continued. I am currently continuing my postgraduate study in economic history in the United Kingdom; though this is not the place he suggested me to stay for PhD, he still wrote me a very impressive reference to guarantee my place here in London. Professor Thompson has always been so considerate and being so friendly with his students. I was planning a trip back to Los Angeles in the winter to show him my dissertation; now, it's a bit late. All in all, I hope Professor Thompson would rest in peace; and his determination to seek economic explanations and unorthodox ideas will definitely influence me to pursue excellence in the future academic career."

August 1, 2010

From Christine Frank:

"What!!! I just can’t believe this. It was just like yesterday when I would do his test and Earl had a way of making the test interesting. And when he found out that I could do it in different colors WOW that started a new era for him. I would find him most of the time in his office either relaxing after a long class and studying up on the next one or he was at the library or gone to see Velma. I would look forward to having lunch with him and David Levine every year that we would have after the long year, it was wonderful. He will be greatly missed. My condolences to the family. "

July 31, 2010

From Stephen Cauley:

"I entered the Ph.D. program in 1966, primarily because I wanted to avoid the draft. My first quarter at UCLA my professors were Earl and Jack H. Such a combination! Earl's intellectual interests were contagious and have been instrumental throughout my professional. career. Something that many people do not realize is the extent of Earl's kindness. I have been very fortunate to have known Earl."

July 31, 2010

From Chao Qi:

"Until now, I still can not believe it really happened. We have just talked on the phone last Friday and planed to meet this Friday. How can the horrible news tell me that the meeting has been cancelled by God. I am a visiting student following Professor Thompson. But he is much more than just an advisor; he is a family to my husband and me. Everyone knows about his outstanding academic achievements, nevertheless the knowledge and inspiration is just one small part I got from him. He guided me not only how to be a good thinker but also how to be a better and happier person. He got me know that life may always push me over but that can never be the reason to give up. He talked with my husband and me about his theory on bilateral monopoly to let us know how to have a healthier marriage. He taught me how to arrange a healthier diet for my families. We had so much fun together. He passed on his love for baseball to us. He showed us so many good restaurants to try. He took us to places to experience the American lifestyle….. It is just like yesterday that we were yelling for Lakers together! It seems that I can still see his typical smile on his face! Outside his office, I feel like he may show up every minute, with jeans and boots like a rock star as usual, telling me he has never left just gets late again. I can not believe he left in such a hurry even without saying goodbye! He is my first advisor in the United States, and I know, for sure, he will always be there affecting my whole life."

July 31, 2010

From Clan Thompson Society:

"Please convey our condolences to Earl Thompson's family. "

July 30, 2010

From T. Jon Williams ('87):

"My condolences to Earl's family and his many close friends. Profs Riley and Levine were young teachers when I went through the PhD program in the mid-80s. My relationship with Earl was as a fresh-faced student who knew diddly about theoretical economics. Earl was a fascinating conversationalist and unlike some, he listened closely to even uninformed views and offered his own which were always thoughtful, but took some reflection to fully understand. I was the person who hauled the keg of beer into the department for beer busts. Earl missed very few of these. During one of those sessions or the many off campus parties he joined, he convinced me that a government subsidy which pays for cancer research and hence lowers the ultimate cost of smoking, encourages smoking. Only Earl could truly argue such a point and he did. He was a very welcoming personality with a unique intellect. "

July 30,2 2010

From Jernej Copic:

"I am currently away, may I say unfortunately. Earl was a very dear friend and mentor to me; the last time I saw him we drove from the department in his ‘69 to a bar on Sunset and talked about Economics (broad as the subjects with him could be) over food and beer until closing time. Earl, vital, brilliant, his own, humorous, uncompromising, and yes: ultimately immensely positive... I am very shocked and saddened by this news. I will miss Earl very much, and thank you for the beautiful email about him."

July 30, 2010

From John Riley:

"I am still in shock. How could someone still so vibrant, so curious, so youthful, so committed, so energetic have suddenly died? I talked to Velma today ( Jack Hirshleifer and I both served on her dissertation committee almost 35 years ago.) Of course Velma and their son Brett are deeply in shock. Still we managed some good reminiscing about days long ago. One early memory is Earl as our “gunner” on the econ faculty Intramural basketball team. All the other teams were undergrads but we did quite well with Earl sinking long shots (still only 2 points on those days.) The rest of us would work the ball in, throw it out to Earl and rush for the basket looking for a rebound.Earl was also the star of the annual faculty grad student basketball game. My memory may have failed me but I think the faculty may have won a few times! Earl was a key player in the department in my “Earl-y” years, definitely someone that the faculty relied upon when it came to evaluating theorists. He looked at his economic surroundings in unusual ways but always appreciated a good argument even if the model was not the one he thought should be used. He was often referred to as “crazy Earl” but (almost) always with considerable affection. He had an ultimately very optimistic view of life. Somehow contractual relations and power would adapt until the outcome was optimal. "

July 29, 2010

From Roger Farmer:

"Yesterday evening marked the passing of a friend and colleague. Earl Thompson passed away while working in his office. Earl was a great example of an economics tradition that UCLA has long nurtured. Independent, smart, and highly individual, he saw the world in his own way. Always ready to talk about economics he was an inspiration to his friends, colleagues and students. Earl was the author of over forty articles. Along with Charlie Hickson, he coauthored a remarkable book, Ideology and the Evolution of Vital Institutions, that outlined Earl's vision of the development of capitalist democracies as adaptive adjustments to the social environment. In the words of Armen Alchian, "Thompson-Hickson ... provide a healthy antidote to intellectual arrogance. The reliance on a God -- or rationally designed -- path of events is replaced by a competitively evolving filter of pragmatic experimental events... And yet, quite unique to their process, ideas and intellectuals themselves evolve and, through their effects on vital institutions, play a critical role in the rise and fall of dominant states". Earl is survived by his wife Velma Montoya and their son Bret. He will be sorely missed by friends, family and all of us at UCLA."