Fred Gruen
Encyclopedia
Fred Henry George Gruen (14 June 1921, Vienna - 29 October 1997) was an Australia
n economist
, an early and influential voice in favour of free trade
and tariff reductions in the 1960s and 1970s.
in 1936 on the £200 legacy of an uncle to receive an English education at Herne Bay College. It was a good time for someone of Jewish descent to be leaving Austria. His father Willy, a heavy smoker, died of lung cancer while he was at school in England and his mother Marianne (née Zwack) was engulfed in the Holocaust being taken first to Theresienstadt and thence to Auschwitz after which she was not seen again.
Fred Gruen was unsure of what to do with himself after leaving high school. With consequences that would ramify at the end of his life, he worked for some time for a printer. In the same speech in which he promised to "fight on the beaches" Churchill
announced widespread internment. "I know there are a great many people affected by the orders which we have made who are the passionate enemies of Nazi Germany. I am very sorry for them, but we cannot, at the present time and under the present stress, draw all the distinctions which we should like to do." Gruen was one such.
He was interned and shipped to Australia in the Dunera, a boat that became famous for the talent it brought to Australia and for the unpleasantness with which its human cargo was treated. They encountered a more relaxed attitude in Australia – one guard summing up the character of the 'friendly enemy aliens' and famously asking one of them to hold his rifle while he lit a cigarette. Still, they were transported to a camp in Hay
, a remote town in NSW. Both on the boat trip to Australia and thence at Hay, Gruen benefited from the ubiquity of highly educated fellow inmates from musicians to philosophers of considerable standing in Europe. These people became mentors and Miss Margaret Read (later Mrs Margaret Holmes
) of the Student Christian Movement assisted Gruen and others in accessing books and other University resources for study.
Gruen graduated from the University of Melbourne
though, given the difficulty he experienced studying – either in the camp or in war service (on one occasion not knowing if he would receive permission to sit the exam until two months before it was held) Gruen described the results he achieved as mediocre.
After the war he married Ann Margaret Darvall in May 1947. Commencing work as a graduate at the NSW Department of Agriculture it became clear to him that he could not get adequate training in Australia. So the couple went to the United States. He studied there for two years, first at the University of Wisconsin–Madison
and then at the University of Chicago
; five members of that university's economics department present at the time would go on to win the Nobel Prize in Economics. Though he completed the examinations for his PhD
Gruen did not finish the degree as the intensity of his study led to a serious thyroid
condition. Without drugs that had been developed shortly before then, the condition would have been life threatening. However it was successfully treated and its only legacy for the rest of his life was the exemplary balance Gruen kept in his life. He worked hard and productively, but not obsessively for the rest of his life.
(ANU) for five years under T.W Swan (of Solow-Swan growth model fame) and thence to Monash University
to become Professor of Agricultural Economics in 1964.
Gruen's achievements in nine years at Monash include leading a major long range forecasting study on Australian agriculture funded by the US Department of Agriculture. Though John Freebairn subsequently tested its price projections for 1970 and found them "neither significantly more or less accurate than the naïve model price forecasts" the study achieved worthwhile technical advances which later contributed to the building of Australia's ORANI model mostly at Monash University.
compensation' debate in the late 1960s. The arguments were taken up in the 1970s generating considerable professional interest and controversy. Gruen pointed to the way in which tariffs for manufactures imposed costs on export industries, particularly agricultural industries. As an early and strong advocate of lower levels of industry assistance, Gruen's point was not to advocate additional assistance for farmers so much as to challenge the idea that farmers might have low levels of assistance removed before manufactures had higher levels of assistance removed. He caviled at the "attitude . . . that anything any farm pressure group asked for was ipso facto unjustifiable". Gruen then commissioned Professor Peter Lloyd to write the survey of Australian economics of protection which would survey the tariff compensation debate. Lloyd had been one of Gruen's main opponents in the tariff compensation debate and his survey argued that the case for tariff compensation had been overstated – including in a Green Paper on Rural Policy in 1974 of which Gruen was a co-signatory. Gruen later agreed with Lloyd's analysis on the point.
Gruen also published a theoretical curiosity with Max Corden in 1970 "A tariff that worsens the terms of trade", though it was focused on a specific policy problem.
In response to growing unease at Monash University, Gruen attempted to engage with the more reasonable student radicals and set up complaints mechanisms. When those mechanisms sometimes found against his colleagues, his faculty became - unsurprisingly - less congenial to him and so, when he was offered a chair at the ANU in late 1971, he "accepted with alacrity".
Shortly afterward, following the election of the first Labor
Government in twenty three years under the leadership of Gough Whitlam
, Gruen was approached by the Head of the Department of the Prime Minister and Cabinet to become a special consultant to the Department to enable it to provide economic advice that was independent of the Federal Treasury. He accepted the position, though did so on a part-time basis to enable him to also fulfill duties at the ANU.
In 1973 with Australia experiencing sharply rising inflation
and strong current account
surpluses, Gruen proposed a 25 percent across the board tariff cut, which was adopted by the Whitlam government. Gruen regarded this as his greatest achievement and it is probably the policy he is best known for.
Gruen was an academic entrepreneur initiating important projects such as a series of reviews of Australian economics, a survey of the Australian economy by the Brookings Institution and the foundation of the Centre for Economic Policy Research. His talents were particularly well suited to identifying and motivating talent and to attracting it to the Centre. As an administrator, he was responsible for hiring and encouraging many of Australia's best-known academic economists. Many were somewhat to the left of centre, though few trenchantly so, but for Gruen one's position on the political spectrum was never a pre-requisite. Indeed he was a great believer in people having their ideological world view challenged. He hired Bob Gregory, Bruce Chapman, John Quiggin
, Steve Dowrick and Cathy Baird all of whom were exceptionally talented, productive and sensible.
The Hawke
Government sought informal advice from Gruen from time to time and asked him to participate in several inquiries into economic policy matters. His greatest achievement was the unanimity of purpose he brought to a large group of people from very different walks of life comprising a committee to advise Government on the design of the assets test for government benefits. Under Gruen's chairmanship the committee unanimously recommended that the test not exempt the family home from the assets test, though this advice proved too radical for the Government and the family home has been exempted from the assets test ever since.
joked about Gruen's retirement, about the improved stature of economics in response to recent economic difficulties and about the resignation of John Stone
from his position as Secretary to the Federal Treasury to become a politician with the right of centre National Party
. "When I first entered public life in Australia no one particularly noticed if economists retired and still less, no one particularly cared how they spent their retirement. Now of course, everybody notices and everybody cares."
Gruen remained at the ANU in an emeritus position and continued working at his usual pace writing many articles, and helping others with their work.
In 1996 he was diagnosed with bladder cancer
. His doctor asked if he had ever worked with aniline dyes. Though his time in England had saved him from the Nazis, his brief stint at the printers was probably responsible for the cancer. Despite surgery and chemotherapy
he died at the age of 76 in room 76 of the John James Hospital in Canberra.
A a memorial to celebrate his life, his son Nicholas
pointed to the following passage. In describing Gruen's fellow Austrian – composer Josef Haydn – it uncannily summarised Gruen's qualities and even his two minor physical ailments.
e must have been a very nice man to know. A person of singularly sweet, kind disposition, he made virtually no enemies. . . . He was even-tempered, industrious, generous, had a good sense of humour . . . enjoyed good health except for some eye trouble and rheumatism . . .. He [had] good common sense. He had integrity and intellectual honesty - the kind of honesty that could allow him to say, when Mozart's name came up 'My friends often flatter me about my talent, but he was far above me'. He liked to dress well.
Gruen's final legacy to Australian economics is probably his two sons. David Gruen has forged a successful career as a professional economist at the Reserve Bank of Australia and then as a senior official at the Federal Treasury
. Nicholas Gruen was an architect in the 1980s of the widely admired Button Car Plan - a plan for transition Australia's car industry to a regime of lower tariffs and higher export orientation - and has since advised the Business Council of Australia
and the Productivity Commission
as well as authoring reports for the Committee for Economic Development of Australia
.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
, an early and influential voice in favour of free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
and tariff reductions in the 1960s and 1970s.
Early life and education
Born Fritz Heinz Georg Grün and known as 'Heinzie' during his boyhood, he left ViennaVienna
Vienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
in 1936 on the £200 legacy of an uncle to receive an English education at Herne Bay College. It was a good time for someone of Jewish descent to be leaving Austria. His father Willy, a heavy smoker, died of lung cancer while he was at school in England and his mother Marianne (née Zwack) was engulfed in the Holocaust being taken first to Theresienstadt and thence to Auschwitz after which she was not seen again.
Fred Gruen was unsure of what to do with himself after leaving high school. With consequences that would ramify at the end of his life, he worked for some time for a printer. In the same speech in which he promised to "fight on the beaches" Churchill
Winston Churchill
Sir Winston Leonard Spencer-Churchill, was a predominantly Conservative British politician and statesman known for his leadership of the United Kingdom during the Second World War. He is widely regarded as one of the greatest wartime leaders of the century and served as Prime Minister twice...
announced widespread internment. "I know there are a great many people affected by the orders which we have made who are the passionate enemies of Nazi Germany. I am very sorry for them, but we cannot, at the present time and under the present stress, draw all the distinctions which we should like to do." Gruen was one such.
He was interned and shipped to Australia in the Dunera, a boat that became famous for the talent it brought to Australia and for the unpleasantness with which its human cargo was treated. They encountered a more relaxed attitude in Australia – one guard summing up the character of the 'friendly enemy aliens' and famously asking one of them to hold his rifle while he lit a cigarette. Still, they were transported to a camp in Hay
Hay, New South Wales
Hay is a town in the western Riverina region of south western New South Wales , Australia. It is the administrative centre of Hay Shire Local Government Area and the centre of a prosperous and productive agricultural district on the wide Hay Plains....
, a remote town in NSW. Both on the boat trip to Australia and thence at Hay, Gruen benefited from the ubiquity of highly educated fellow inmates from musicians to philosophers of considerable standing in Europe. These people became mentors and Miss Margaret Read (later Mrs Margaret Holmes
Margaret Holmes
Margaret Joan Holmes , AM was an Australian peace activist, particularly during the Vietnam War and as part of the Anglican Pacifist Fellowship...
) of the Student Christian Movement assisted Gruen and others in accessing books and other University resources for study.
Gruen graduated from the University of Melbourne
University of Melbourne
The University of Melbourne is a public university located in Melbourne, Victoria. Founded in 1853, it is the second oldest university in Australia and the oldest in Victoria...
though, given the difficulty he experienced studying – either in the camp or in war service (on one occasion not knowing if he would receive permission to sit the exam until two months before it was held) Gruen described the results he achieved as mediocre.
After the war he married Ann Margaret Darvall in May 1947. Commencing work as a graduate at the NSW Department of Agriculture it became clear to him that he could not get adequate training in Australia. So the couple went to the United States. He studied there for two years, first at the University of Wisconsin–Madison
University of Wisconsin–Madison
The University of Wisconsin–Madison is a public research university located in Madison, Wisconsin, United States. Founded in 1848, UW–Madison is the flagship campus of the University of Wisconsin System. It became a land-grant institution in 1866...
and then at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
; five members of that university's economics department present at the time would go on to win the Nobel Prize in Economics. Though he completed the examinations for his PhD
PHD
PHD may refer to:*Ph.D., a doctorate of philosophy*Ph.D. , a 1980s British group*PHD finger, a protein sequence*PHD Mountain Software, an outdoor clothing and equipment company*PhD Docbook renderer, an XML renderer...
Gruen did not finish the degree as the intensity of his study led to a serious thyroid
Thyroid
The thyroid gland or simply, the thyroid , in vertebrate anatomy, is one of the largest endocrine glands. The thyroid gland is found in the neck, below the thyroid cartilage...
condition. Without drugs that had been developed shortly before then, the condition would have been life threatening. However it was successfully treated and its only legacy for the rest of his life was the exemplary balance Gruen kept in his life. He worked hard and productively, but not obsessively for the rest of his life.
Career beginnings
Returning to Australia he worked for 12 years in the NSW Department of Agriculture where he met, assisted and was assisted by many young people who later made their marks in agricultural and other areas of economics. His sons David and Nicholas were born in August 1954 and April 1957 respectively. In 1959 he moved to a research position at the Australian National UniversityAustralian National University
The Australian National University is a teaching and research university located in the Australian capital, Canberra.As of 2009, the ANU employs 3,945 administrative staff who teach approximately 10,000 undergraduates, and 7,500 postgraduate students...
(ANU) for five years under T.W Swan (of Solow-Swan growth model fame) and thence to Monash University
Monash University
Monash University is a public university based in Melbourne, Victoria. It was founded in 1958 and is the second oldest university in the state. Monash is a member of Australia's Group of Eight and the ASAIHL....
to become Professor of Agricultural Economics in 1964.
Gruen's achievements in nine years at Monash include leading a major long range forecasting study on Australian agriculture funded by the US Department of Agriculture. Though John Freebairn subsequently tested its price projections for 1970 and found them "neither significantly more or less accurate than the naïve model price forecasts" the study achieved worthwhile technical advances which later contributed to the building of Australia's ORANI model mostly at Monash University.
Contribution to the tariff debate
Probably the most influential paper Gruen wrote during this period was never published. It set off the Australian 'tariffTariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
compensation' debate in the late 1960s. The arguments were taken up in the 1970s generating considerable professional interest and controversy. Gruen pointed to the way in which tariffs for manufactures imposed costs on export industries, particularly agricultural industries. As an early and strong advocate of lower levels of industry assistance, Gruen's point was not to advocate additional assistance for farmers so much as to challenge the idea that farmers might have low levels of assistance removed before manufactures had higher levels of assistance removed. He caviled at the "attitude . . . that anything any farm pressure group asked for was ipso facto unjustifiable". Gruen then commissioned Professor Peter Lloyd to write the survey of Australian economics of protection which would survey the tariff compensation debate. Lloyd had been one of Gruen's main opponents in the tariff compensation debate and his survey argued that the case for tariff compensation had been overstated – including in a Green Paper on Rural Policy in 1974 of which Gruen was a co-signatory. Gruen later agreed with Lloyd's analysis on the point.
Gruen also published a theoretical curiosity with Max Corden in 1970 "A tariff that worsens the terms of trade", though it was focused on a specific policy problem.
In response to growing unease at Monash University, Gruen attempted to engage with the more reasonable student radicals and set up complaints mechanisms. When those mechanisms sometimes found against his colleagues, his faculty became - unsurprisingly - less congenial to him and so, when he was offered a chair at the ANU in late 1971, he "accepted with alacrity".
Shortly afterward, following the election of the first Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
Government in twenty three years under the leadership of Gough Whitlam
Gough Whitlam
Edward Gough Whitlam, AC, QC , known as Gough Whitlam , served as the 21st Prime Minister of Australia. Whitlam led the Australian Labor Party to power at the 1972 election and retained government at the 1974 election, before being dismissed by Governor-General Sir John Kerr at the climax of the...
, Gruen was approached by the Head of the Department of the Prime Minister and Cabinet to become a special consultant to the Department to enable it to provide economic advice that was independent of the Federal Treasury. He accepted the position, though did so on a part-time basis to enable him to also fulfill duties at the ANU.
In 1973 with Australia experiencing sharply rising inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and strong current account
Current account
In economics, the current account is one of the two primary components of the balance of payments, the other being the capital account. The current account is the sum of the balance of trade , net factor income and net transfer payments .The current account balance is one of two major...
surpluses, Gruen proposed a 25 percent across the board tariff cut, which was adopted by the Whitlam government. Gruen regarded this as his greatest achievement and it is probably the policy he is best known for.
Post-advisory career
In August 1975 he informed the Prime Minister's Department of his desire to return to the ANU full time and he made the move in March 1976 remaining at the ANU as professor and then as professor emeritus for the rest of his life.Gruen was an academic entrepreneur initiating important projects such as a series of reviews of Australian economics, a survey of the Australian economy by the Brookings Institution and the foundation of the Centre for Economic Policy Research. His talents were particularly well suited to identifying and motivating talent and to attracting it to the Centre. As an administrator, he was responsible for hiring and encouraging many of Australia's best-known academic economists. Many were somewhat to the left of centre, though few trenchantly so, but for Gruen one's position on the political spectrum was never a pre-requisite. Indeed he was a great believer in people having their ideological world view challenged. He hired Bob Gregory, Bruce Chapman, John Quiggin
John Quiggin
John Quiggin is an Australian economist and professor at the University of Queensland. Quiggin studied at the Australian National University, obtaining bachelor's degrees in Arts and Economics in 1978 and 1980 respectively, and completing a master's degree in Economics in 1984. Quiggin was awarded...
, Steve Dowrick and Cathy Baird all of whom were exceptionally talented, productive and sensible.
The Hawke
Bob Hawke
Robert James Lee "Bob" Hawke AC GCL was the 23rd Prime Minister of Australia from March 1983 to December 1991 and therefore longest serving Australian Labor Party Prime Minister....
Government sought informal advice from Gruen from time to time and asked him to participate in several inquiries into economic policy matters. His greatest achievement was the unanimity of purpose he brought to a large group of people from very different walks of life comprising a committee to advise Government on the design of the assets test for government benefits. Under Gruen's chairmanship the committee unanimously recommended that the test not exempt the family home from the assets test, though this advice proved too radical for the Government and the family home has been exempted from the assets test ever since.
Retirement and legacy
At Gruen's testimonial dinner in 1986 former Prime Minister Gough WhitlamGough Whitlam
Edward Gough Whitlam, AC, QC , known as Gough Whitlam , served as the 21st Prime Minister of Australia. Whitlam led the Australian Labor Party to power at the 1972 election and retained government at the 1974 election, before being dismissed by Governor-General Sir John Kerr at the climax of the...
joked about Gruen's retirement, about the improved stature of economics in response to recent economic difficulties and about the resignation of John Stone
John Stone (Australian politician)
John Owen Stone is a former Australian politician. He served as Secretary to the Treasury between 1979 and 1984,and as a Senator for Queensland representing the National Party from 1987 to 1990.-Biography:John Stone was born in 1929...
from his position as Secretary to the Federal Treasury to become a politician with the right of centre National Party
National Party of Australia
The National Party of Australia is an Australian political party.Traditionally representing graziers, farmers and rural voters generally, it began as the The Country Party, but adopted the name The National Country Party in 1975, changed to The National Party of Australia in 1982. The party is...
. "When I first entered public life in Australia no one particularly noticed if economists retired and still less, no one particularly cared how they spent their retirement. Now of course, everybody notices and everybody cares."
Gruen remained at the ANU in an emeritus position and continued working at his usual pace writing many articles, and helping others with their work.
In 1996 he was diagnosed with bladder cancer
Bladder cancer
Bladder cancer is any of several types of malignant growths of the urinary bladder. It is a disease in which abnormal cells multiply without control in the bladder. The bladder is a hollow, muscular organ that stores urine; it is located in the pelvis...
. His doctor asked if he had ever worked with aniline dyes. Though his time in England had saved him from the Nazis, his brief stint at the printers was probably responsible for the cancer. Despite surgery and chemotherapy
Chemotherapy
Chemotherapy is the treatment of cancer with an antineoplastic drug or with a combination of such drugs into a standardized treatment regimen....
he died at the age of 76 in room 76 of the John James Hospital in Canberra.
A a memorial to celebrate his life, his son Nicholas
Nicholas Gruen
Nicholas John Gruen Nicholas John Gruen Nicholas John Gruen (22 April 1957 in Beacon Hill, New South Wales is a prominent Australian economist and commentator on Web 2.0 and the CEO of Lateral Economics and Chairman of Kaggle, Peach Financial and Online Opinion...
pointed to the following passage. In describing Gruen's fellow Austrian – composer Josef Haydn – it uncannily summarised Gruen's qualities and even his two minor physical ailments.
e must have been a very nice man to know. A person of singularly sweet, kind disposition, he made virtually no enemies. . . . He was even-tempered, industrious, generous, had a good sense of humour . . . enjoyed good health except for some eye trouble and rheumatism . . .. He [had] good common sense. He had integrity and intellectual honesty - the kind of honesty that could allow him to say, when Mozart's name came up 'My friends often flatter me about my talent, but he was far above me'. He liked to dress well.
Gruen's final legacy to Australian economics is probably his two sons. David Gruen has forged a successful career as a professional economist at the Reserve Bank of Australia and then as a senior official at the Federal Treasury
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
. Nicholas Gruen was an architect in the 1980s of the widely admired Button Car Plan - a plan for transition Australia's car industry to a regime of lower tariffs and higher export orientation - and has since advised the Business Council of Australia
Business Council of Australia
The Business Council of Australia represents the chief executives of approximately 100 large Australian corporations. It was formed in 1983 by the merger of the Business Roundtable - a spin-off of the Committee for Economic Development of Australia - and the Australian Industry Development...
and the Productivity Commission
Productivity Commission
The Productivity Commission is the Australian Government's principal review and advisory body on microeconomic policy and regulation. It is an independent statutory authority in the Treasury Portfolio and responds to references from the Treasurer...
as well as authoring reports for the Committee for Economic Development of Australia
Committee for Economic Development of Australia
is an independent, bipartisan, non-profit forum and think tank. Its expressed aim is to "promote national economic development in a sustainable and socially balanced way." Sydney Morning Herald economics editor Ross Gittins has described CEDA as seeking to "inform the public debate without lobbying"...
.