Suresh Naidu: The Slack Wire: Substitutes or Complements: Marx and Brad and Me: "Since Brad Delong has attributed some thoughts on Marx to me...
...and I have gotten some emails inquiring whether or not I did say them, I thought it would be useful to publicly air what I understand to be the context. Brad has been a mentor and advisor for 10 years now, and is one of the very few economists broad and open enough to know anything about what Marx wrote. I have met very few other people in mainstream economics departments who cared enough to read Marx, let alone enough to assign the Communist Manifesto and Wage Labor and Capital in a mandatory first-year economics Ph.D. course (even I don’t do that).
Vladimir Lenin: The Second Congress of the Communist International: Report on the International Situation and the Fundamental Tasks of the Communist International: July 19, 1920:
(An ovation breaks out. All present rise to their feet and applaud. The speaker tries to begin, but the applause and cries in all languages continue. The ovation does not abate.) Comrades, the theses on the questions of the fundamental tasks of the Communist International have been published in all languages and contain nothing that is materially new (particularly to the Russian comrades). That is because, in a considerable measure, they extend several of the main features of our revolutionary experience and the lessons of our revolutionary movement to a number of Western countries, to Western Europe. My report will therefore deal at greater length, if in brief outline, with the first part of my subject, namely, the international situation.
Over at the Washington Center for Equitable Growth: One from the left that I like:
Jedediah Purdy: To Have and Have Not: "Piketty recommends a small, progressive global tax on capital to draw down big fortunes and press back against r > g. He admits this idea won’t get much traction at present, but recommends it as a... measure of what would be worth doing and how far we have to go to get there. It’s an excellent idea, but it also shows the limits of Piketty’s argument. He has no theory of how the economy works that can replace the optimistic theories that his numbers devastate. Numbers — powerful ones, to be sure — are what he has.... Without a theory of how the economy produces and allocates value, we can’t know whether r > g will hold into the future. This is essential to whether Piketty can answer his critics, who have argued that we shouldn’t worry much... [because other economic forces will] blunt r > g. Piketty doesn’t really have an answer to these challenges, other than the weight of the historical numbers....
"We should grope toward a more general theory of capitalism by getting more systematic about two recurrent themes in Piketty’s work: a) power matters and b) the division of income between capital and labor is one of the most important questions.... The period of shared growth in the mid-20th century was not just the aftermath of war and depression. It was also the apex of organized labor’s power in Europe and North America....
"Piketty shows that capitalism’s attractive moral claims — that it can make everyone better off while respecting their freedom — deserve much less respect under our increasingly 'pure' markets than in the mixed economies that dominated the North Atlantic countries in the mid-20th century. It took a strong and mobilized left to build those societies. It may be that capitalism can remain tolerable only under constant political and moral pressure from the left, when the alternative of democratic socialism is genuinely on the table.... Reading Piketty gives one an acute sense of how much we have lost with the long waning of real political economy, especially the radical kind.... Ideas need movements, as movements need ideas. We’ve been short on both..." READ MOAR
Sponsored by the Berkeley Economic History Laboratory and the Blum Center for Developing Economies
Paper: April 2014 Draft
Over at the Washington Center for Equitable Growth: As Thomas Piketty Day at the University of California at Berkeley comes to an end, we eat Hawaiian poke and sausage-stuffed mushrooms catered from the truly excellent Assemble, and watch the sunset over the Golden Gate from the back patio of the Gourinchas/Fourcade palazzino. We muse on the extent to which Thomas Piketty's patterns of movement for the rate of profit r minus the economy's growth rate g are at bottom patterns of changing land valuation, with the fall of European agriculture as a source of wealth and the rise of urban location as the source of wealth.
What was supposed to be a 20-person economics departmental seminar turned into a 400-person public lecture extravaganza--we really should have made him give two talks at least...
This morning's Daily Piketty brings two especially interesting things: a very nice interview from Matt Yglesias, and PEG pointing out that a Benjamin Disraeli-style conservative would see Piketty as an ally pointing the way to how to successfully implement a market economy that was a genuine opportunity society:
One thing I had not fully realized before yesterday: READ MOAR
Over at the Washington Center for Equitable Growth: It's Piketty Day here at Berkeley. So let me note that Robert Solow has another good Piketty review:
Robert Solow: 'Capital in the Twenty-First Century' by Thomas Piketty, Reviewed: "Inequality... has been worsening...
the widening gap between the rich and the rest.... A rational and effective policy for dealing with it... will have to rest on an understanding of the causes... the erosion of the real minimum wage; the decay of labor unions and collective bargaining; globalization and intensified competition from low-wage workers in poor countries; technological changes and shifts in demand that eliminate mid-level jobs.... Each of these candidate causes seems to capture a bit of the truth. But even taken together they do not seem to provide a thoroughly satisfactory picture.... They do not speak to the really dramatic issue: the tendency for the very top incomes—the “1 percent”—to pull away from the rest of society. Second, they seem a little adventitious, accidental; whereas a forty-year trend common to the advanced economies of the United States, Europe, and Japan would be more likely to rest on some deeper forces.... READ MOAR
Over at the WCEG: Dirk Hanson: Drowning in Light: "William D. Nordhaus calculated that the average citizen of Babylon would have had to work a total of 41 hours to buy enough lamp oil to equal a 75-watt light bulb burning for one hour.
At the time of the American Revolution, a colonial would have been able to purchase the same amount of light, in the form of candles, for about five hour’s worth of work. And by 1992, the average American, using compact fluorescents, could earn the same amount of light in less than one second....>Jeff Tsao... and his coworkers at Sandia have concluded that “the result of increases in luminous efficacy has been an increase in demand for energy used for lighting that nearly exactly offsets the efficiency gains—essentially a 100% rebound in energy use.”... Tsao calculates that, as a result, light represents a constant fraction of per capita gross domestic product (GDP) over time; the world has been spending 0.72 percent of its GDP for light for 300 years now... READ MOAR
Mark Thoma: Economist's View: Empirical Methods and Progress in Macroeconomics: Empirical Methods and Progress in Macroeconomics
The blow-up over the Reinhart-Rogoff results reminds me of a point I’ve been meaning to make about our ability to use empirical methods to make progress in macroeconomics. This isn't about the computational mistakes that Reinhart and Rogoff made, though those are certainly important, especially in small samples, it's about the quantity and quality of the data we use to draw important conclusions in macroeconomics.
Ryan Avent: Inequality: "Capital" and Its Discontents | The Economist: "Mr Piketty's magnum opus is certainly not without its weaknesses...
...but the quality of the criticism it has attracted provides a sense of the strength of the argument he makes. Consider Clive Crook....
There's a persistent tension between the limits of the data he presents and the grandiosity of the conclusions he draws.
The line doubles as a pleasingly apt description of Mr Crook's review. He is unhappy.... Why... doesn't Mr Piketty say that r must be significantly above g to generate the expected divergence, Mr Crook complains.... You don't even have to read hundreds of pages to get the qualification Mr Crook wants; you can start with the page on which r>g is first mentioned:
If, moreover, the rate of return on capital remains significantly above the growth rate for an extended period of time (which is more likely when the growth rate is low, though not automatic), then the risk of divergence in the distribution of wealth is very high....
If you only read the book's conclusion you could miss these details, but who would do that? Mr Crook then goes on to present his evidence:
The trouble is, he also shows that capital-to-output ratios in Britain and France in the 18th and 19th centuries, when r exceeded g by very wide margins, were stable, not rising inexorably....
Mr Piketty is not arguing that r>g means that rising inequality is inevitable. Indeed, that is close to the precise opposite of his argument, which is that r>g is a force for divergence.... If charts of stable capital-income ratios in the 19th century provided a devastating rebuttal to his story, Mr Piketty would not have included them so prominently.... I think he must have imagined that readers would look at the text around them as well....
Mr Crook rather uncharitably questions the motivations of those more taken with the book. He writes:
As I worked through the book, I became preoccupied with another gap: the one between the findings Piketty explains cautiously and statements such as, "The consequences for the long-term dynamics of the wealth distribution are potentially terrifying." Piketty's terror at rising inequality is an important data point for the reader. It has perhaps influenced his judgment and his tendentious reading of his own evidence. It could also explain why the book has been greeted with such erotic intensity....
It seems to me that Mr Crook has revealed more about his own priors than those of Mr Piketty's fans. "Terrifying" seems to me to be an accurate description of a society in which the top 10% of individuals own 90% of the wealth. Mr Crook scoffs.... That brings us to the most important of Mr Crook's criticisms: that it is living standards which actually matter.... Even if the book had nothing to say about growth, this would be an odd criticism.... What Mr Crook seems not to understand is that we also care about it because we care about living standards... high levels and concentrations of capital have not been a necessary or sufficient condition for rapid growth... have often sowed the seeds for political backlash... detrimental to long-run growth. His argument is that the living standards of many people around the rich world are now unnecessarily low, because of the nonchalance with which elites have approached distributional issues.... His argument is that economic growth that concentrates benefits on a small group of people will probably not be tolerated as fair, even if living standards among the masses are not completely stagnant.
It is an argument that is powerful and well-supported by the data—and extremely relevant today, whether or not one thinks inequality qualifies as the defining issue of the era. That, it seems to me, is why the book has been received as it has.
Over at the Washignton Center for Equitable Growth: The slides from the talks I was giving as 2008 turned into 2009. The huge hole in them is the lack on my part of any consideration of the possibility that we might not do what was necessary--that we might fail to use fiscal and banking policy on a large-enough scale to rebalance aggregate demand at full employment in a short-run of two to three years...
I simply assumed that the political and economic logic would work together: the political logic was that all incumbents of whatever party were at grave risk in the next election if unemployment was still high in 2010 and even more so in 2012, and that the economic logic behind using expansionary fiscal policy to get spending up to potential output was crystal-clear. I thought it obvious:
These all seemed to me to be barely worth noting, or not even worth noting.
Silly me... READ MOAR
Please join the Economic Policy Institute and the Washington Center for Equitable Growth: "for a presentation by Thomas Piketty...
...economist from the Paris School of Economics and ground-breaking researcher on income inequality—of the findings in his new book, Capital in the Twenty-First Century.
His presentation will be followed by a panel discussion moderated by Heather Boushey, Executive Director and Chief Economist of the Washington Center for Equitable Growth, with Josh Bivens, Research and Policy Director of the Economic Policy Institute, Robert M. Solow, Professor Emeritus at the Massachusetts Institute of Technology and Betsey Stevenson, Member of the White House Council of Economic Advisers, serving as discussants.
When: Tuesday, April 15, 2014 from 9:30 AM to 11:00 AM (EDT)
Where: 1333 H St NW; Suite 300, East Tower; Washington, DC 20005...
Dean Baker: Are Investors Less Confused About Real and Nominal Interest Rates Than They Were 40 Years Ago?: "Brad DeLong picks up on Paul Krugman's column...
...and questions whether the top one percent of the income distribution (or top 0.01 percent) really have much to fear from higher inflation. Brad concludes that they don't, but that they think they do. He says:
The top 0.01% were impoverished by the 1970s as a whole. But they have not been enriched by the post 2008 era. What they have gained via a higher capitalization via low safe interest rates has been offset by what they have lost as a result of depressed profits, depressed by a low level of economic activity, a depression which has not been completely offset by downward pressure on wages. The top 0.01% would not be poorer absolutely (although they would be poorer relatively) in a high-pressure higher-inflation economy. But they think they would be…"
I'm not sure about Brad's story here.
Over at the Washington Center for Equitable Growth: When I look at Thomas Piketty's big book, I see one thing that he failed to do that I think he really should have done. A large part of the book is about the contrast between "r", the rate of return on wealth, and "g" the growth rate of the economy. However, there are four different r's. And in his book he failed to distinguish between them.
The four different r's are:
The real interest rate at which metropolitan governments can borrow: call this r1.
The real interest rate that is the actual average return on wealthin the society and economy: call this r2.
The real interest rate that is the average risky net rate of accumulation--what capital receives, minus the risk of confiscation or destruction or taxation, plus appreciation in valuation multiples, minus what is spent in order to keep the world in the appropriate social position: call this r3.
A measure of the extent to which capital and wealth serve as an effective claim on income independent of how much capital there is--a standardized measure of what the society and economy's return on wealth would be at some standardized ratio of wealth to annual income: say, 4: call this ρ.
These four r's are very different animals. READ MOAR
I am very sorry that I am missing this:
But I am very glad I am attending this:
Jack Greenberg: "Pursuing the Dreams of Brown and the Civil Rights Act": Pierson Auditorium, UMKC
Over at the Washington Center for Equitable Growth: Oligarchy and Monetary Policy: I Confess That I Do Not Understand...
Why do the top 0.01% think they want a depressed real economy and low inflation?
Back before World War I there were many very rich people with nominal assets: nominal bonds and real estate rented out for very long term at fixed nominal rents. As a result, they had to clear an immediate financial interest in hard money: low inflation. But after World War I, everybody realizes the risk of holding a heavily nominal-weighted portfolio in a fiat-money world subject to bouts of large inflation. Since 1920 the super-rich are almost as likely to be net nominal borrowers as net nominal debtors. And for anyone with a portfolio predominantly in real assets, the benefits of a high-pressure economy via higher profits and higher growth greatly outweigh any residual negative loading on higher inflation. READ MOAR
My decade-old thoughts on Piketty issues...
Bequests: An Historical Perspective: Hoisted from the Archives from Eleven Years Ago: So I've finally put to bed a sketch of how the relative economic importance of bequests has changed over the past five centuries. The more I think about it, the more I think that the central points--the stunning decline in the relative importance of inherited wealth with the coming of modern economic growth, and the way in which America initially defined itself as hostile to inheritance for equality of opportunity's sake--are very important. Thus I find myself frustrated: I think I have important things to say, but I don't think I've said them as well as they deserve.
Practically every major aspect of our system of inheritance today is less than two hundred and fifty years old. Two hundred and fifty years ago, inheritance proceeded through primogeniture--as if those leaving bequests cared not for the well-being of their descendants but only for the wealth and power of the lineage head. Before the industrial revolution, inheritance played an overwhelming and crucial role in wealth accumulation and wealth distribution that it does not play today.
Migration to the New World was accompanied by a rapid shift in the perception of the purpose of inheritance as the old patterns failed to flourish in a land-rich, rapidly-growing frontier-settler economy. By the start of the twentieth century inherited wealth was regarded with suspicion in America, with even some of the richest calling for estate taxes to keep the rich from diverting the public trust of their fortunes into the pockets of their descendants. Thus the coming of social democracy to America brought with it high statutory rates of tax on large estates, which nevertheless did not raise a great deal of revenue.
Now we may be seeing another turn of the wheel, for if history teaches anything it is that even those elements of inheritance that we think of as most deeply embedded in fundamental human desires and economic laws are remarkably mutable over the centuries.
I have long thought that Marx's fixation on the labor theory of value made his technical economic analyses of little worth. Marx was dead certain for ontological reasons that exchange-value was created by human socially-necessary labor time and by that alone, and that after its creation exchange-value could be transferred and redistributed but never enlarged or diminished. Thus he vanished into the swamp, the dark waters closed over his head, and was never seen again.
Eric Rauchway: Going off gold and the basis for Bretton Woods http://emlab.berkeley.edu/users/webfac/eichengreen/e211_sp14/rauchway_econ211_3-31-14.pdf: "Experience is teaching us a counterintuitive lesson: the way to control leads away from stability.
Aim at growth - moderate growth in safer quarters, even if it means a bit of inflation and debt - and we will achieve stability. It is a lesson that our predecessors learned in the Great Depression, and which led them to establish the Bretton Woods system for precisely those purposes. The essential feature of Bretton Woods was a conditional commitment to exchange stability - with conditionality as essential as stability. The commitment was predicated on the Depression-begotten recognition that monetary stability took a back seat to the promotion of widespread prosperity.
Over at the New York Times Room for Debate:
I have long thought that Marx's fixation on the labor theory of value made his technical economic analyses of little worth. Marx was dead certain for ontological reasons that exchange-value was created by human socially-necessary labor time and by that alone, and that after its creation exchange-value could be transferred and redistributed but never enlarged or diminished. Thus he vanished into the swamp, the dark waters closed over his head, and was never seen again. READ MOAR at the Equitablog
Over at the Washington Center for Equitable Growth: Dialogue: Eleven (so Far) Worthwhile Reviews of and Reflections on Thomas Piketty’s “Capital in the Twenty-First Century”: Wednesday Focus: March 26, 2014
Piketty’s Triumph: Three expert takes on Capital in the Twenty-First Century, French economist Thomas Piketty's data-driven magnum opus on inequality....
Jacob S. Hacker and Paul Pierson: "A Tocqueville for Today: "When Alexis de Tocqueville visited America in the early 1830s, the aspect of the new republic that most stimulated him was its remarkable social equality.
“America, then, exhibits in her social state an extraordinary phenomenon,” Tocqueville marveled. “Men are there seen on a greater equality in point of fortune and intellect … than in any other country of the world, or in any age of which history has preserved the remembrance.”
Comment on: James Stock and Mark Watson (2003), "Has the Business Cycle Changed?" http://www.kansascityfed.org/Publicat/sympos/2003/pdf/Stock-Watson.0902.2003.pdf
J. Bradford DeLong: James Stock and Mark Watson's paper challenges things that I thought I knew, and tells me that I am going to have to rethink a bunch of issues--going to have to mark my beliefs to market anew once again.
To the extent that there has been a conventional wisdom among economic historians, the extraordinary moderation of the business cycle--the reduction in the size of swings in the unemployment rate, and in the variance of annual output growth--has been due to very important learning about how to better conduct monetary policy. Christina Romer has been the most powerful advocate of this line of narrative. And this has been what I have taught my students over the past several years.
Over at the Washington Center for Equitable Growth: The Social Insurance State, Economic Problems of the North Atlantic, Redistribution, and the Lesser Depression: Monday Focus: March 10, 2014: Back in the 1970s and 1980s I was told over and over again–by pundits, right-of-center politicians, political scientists, and not a few economists–that the source of the North Atlantic’s economic problems play in its overly-democratic politics.
The argument went more-or-less like this:
Some voters want goodies; other voters want low taxes; politician satisfy them by expanding programs and cutting taxes, producing debt. The debt must either be amortized through high taxes that discourage investment and entrepreneurship or through printing money which produces inflation and also deranges the price system and slows growth.
Thus, I was told over and over again, the economic problems of the north Atlantic in the 1970s and 1980s–the productivity growth slowdown in the inflation of the 1970s–were the result of an overly-large welfare state produced by an overly-democratic government. Both of these, the argument went, needed to be fixed.
This never seemed to me to make quantitative sense… READ MORE
George Gordon, Lord Byron: Debate on the 1812 Frame Breaking Act: "My Lords...
The subject now submitted to your Lordships, for the first time, though new to the House, is, by no means, new to the country. I believe it had occupied the serious thoughts of all descriptions of persons long before its introduction to the notice of that Legislature whose interference alone could be of real service. As a person in some degree connected with the suffering county, though a stranger, not only to this House in general, but to almost every individual whose attention I presume to solicit, I must claim some portion of your Lordships' indulgence, whilst I offer a few observations on a question in which I confess myself deeply interested.
C. Northcote Parkinson was the first to identify the phenomenon of "injelitance"--the jealousy that the less-than-competent feel for the capable.
Here we have a classic case from the anthropologists at Savage Mind, who are both positively green with envy at Jared Diamond's ability to make interesting arguments in a striking and comprehensible way, and also remarkably incompetent at critique.
Over at the Washington Center for Equitable Growth: I Am Sorry. What Was Tim Geithner Looking at in January 2008?: Saturday Focus: February 22, 2014: "Steven Perlberg:
Tim Geithner January 2008 FOMC Minutes: “The World Is Still Looking Pretty Good”: “In January 2008–right as the U.S. economy entered a recession–the former Federal Reserve Vice Chairman (and later Treasury Secretary) was still very optimistic….
You know, we have the implausible kind of Goldilocks view of the world, which is it’s going to be a little slower, taking some of the edge off inflation risk, without being so slow that it’s going to amplify downside risks to growth in the United States. That may be too optimistic, but the world still is looking pretty good. Central banks in a lot of places are starting to soften their link to the dollar so that they can get more freedom to direct monetary policy to respond to inflation pressure. That’s a good thing. U.S. external imbalances are adjusting at a pace well ahead of expectations. That’s all good, I think. As many people pointed out, the fact that we don’t have a lot of imbalances outside of housing coming into this slowdown is helpful. There’s a little sign of incipient optimism on the productivity outlook or maybe a little less pessimism that we’re in a much slower structural productivity growth outlook than before. The market is building an expectation for housing prices that is very, very steep. That could be a source of darkness or strength, but some people are starting to call the bottom ahead, and that’s the first time. It has been a long time since we’ve seen any sense that maybe the turn is ahead. It seems unlikely, but maybe they’re right. In the financial markets, I think it is true that there is some sign that the process of repair is starting. Having said that, though, I think it is quite dark still out there…. Like everyone else, we have revised down our growth forecast. We expect very little growth, if any, in the first half of the year before policy starts to bring growth back up to potential....
What was he looking at in January 2008 to say that? READ MORE
This has always struck me as a very bad translation of what Marx is trying to say--that in the German it is infinitely more powerful and effective than what we have here.
Does anybody know of--has anybody made--a better translation?
This sphere that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.
On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the “Free-trader Vulgaris” with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but--a hiding.
Over at the Washington Center for Equitable Growth: How Key Was the Seventeenth-Eighteenth Century Commercial Revolution to the Eighteenth-Nineteenth Century Constitutional-Government Revolution?:
I have been thinking about Mauricio Drelichman and Hans-Joachim Voth’s Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II. And I just finished ranting about all this over breakfast at Rick and Ann’s to the patient, good-humored, and extremely intelligent Joachim Voth.
So it is only fair that I inflict on the rest of the world what I inflicted on him:
Dugald Stewart: Account of the Life and Writings of Adam Smith:
Adam Smith, author of the Inquiry into the Nature and Causes of the Wealth of Nations, was the son of Adam Smith, comptroller of the customs at Kirkaldy, and of Margaret Douglas, daughter of Mr Douglas of Strathenry. He was the only child of the marriage, and was born at Kirkaldy on the 5th of June 1723, a few months after the death of his father. His constitution during infancy was infirm and sickly... but it produced no unfavourable effects on his temper or his dispositions.... Among these companions of his earliest years, Mr Smith soon attracted notice, by his passion for books, and by the extraordinary powers of his memory. The weakness of his bodily constitution prevented him from partaking in their more active amusements; but he was much beloved by them on account of his temper, which, though warm, was to an uncommon degree friendly and generous. Even then he was remarkable for those habits which remained with him through life, of speaking to himself when alone, and of absence in company. From the grammar–school of Kirkaldy, he was sent, in 1737, to the university of Glasgow, where he remained till 1740, when he went to Baliol college, Oxford, as an exhibitioner on Snell’s foundation.
Dr Maclaine of the Hague, who was a fellow–student of Mr Smith’s at Glasgow, told me some years ago, that his favourite pursuits while at that university were mathematics and natural philosophy....
"The central role of beer taxes had revolved around the attractive combination of ease of collection (at a small number of breweries) and inelastic demand. But consumer behavior changed after the mid-seventeenth century as distiller spirits... tea and coffee.... The milling tax rose as the beer tax fell..."
No paper, just notes--a not-very-successful attempt to deliver on my promise to Larry Summers to think about "secular stagnation" issues. What I think economists need to be thinking about if we are semi-permanently in a world in which demand for safe assets is very high, trust in the private-sector ability to create and guarantee such assets is very low, and inflation remains low...
The LRB says:
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In the London Review of Books:
Ferdinand Mount: reviews ‘Memoirs of Walter Bagehot’ by Frank Prochaska · LRB 6 February 2014: "There used to be a room in the National Portrait Gallery devoted to portraits of late Victorian sages by G.F. Watts. Inspissated in that painter’s incurably muddy tones, they peered out from behind straggly beards and whiskers with sad, rheumy eyes – Matthew Arnold, Carlyle, Swinburne, William Morris, Leslie Stephen, Tennyson – giving off a steamy despair.
They had heard the melancholy long withdrawing roar of faith, and they did not like the sound of it. Today relegated to a wall in a side room, these literary men seem to take second billing to the wall where the giants of Victorian science are gathered – Darwin, Huxley and Lyall, each whiskered too but each with an unmistakable half-smile playing about his lips. There’s not much doubt which is the winning side.
John Maynard Keynes: Letter to Roy Harrod, July 4, 1938:
Tilton, Firle, Lewes.
4 July 1938
My dear Roy,
There is no doubt that your Presidential Address [to the British Economic Associaton] which I have sent to the printer [for the next issue of the Economic Journal], is very interesting; and it will provoke plenty of thought. Indeed it is much the best Presidential Address for many years. I am very glad to print it in full; but I would remind you that it will take considerably over an hour to read at a reasonable pace.
Introduction to Economic History: Economics 210A
Brad DeLong (firstname.lastname@example.org OH M 1-2 W 11-12) and Barry Eichengreen (email@example.com OH Tu 1-3)
Spring 2014; University of California, Berkeley; Wednesday 1:00-3:00 p.m.; 597 Evans Hall
Readings are available either on the web or, where there exists no web-based copy, at Graduate Services (http://www.lib.berkeley.edu/doemoff/grad/index.html) at 208 Doe Library. Access to readings available through JSTOR and other proprietary sources may require you to log on through a university-recognized computer and enter your Calnet ID. There can be high demand for the readings on reserve at peak times, and the library can make available only limited numbers of copies. In past years some students have found it useful to purchase some of the books from which material is assigned through their favorite online book seller and to assemble the materials for reproduction at a local copy shop.
Weekly Memo Question: Mar 5: Manhattan Island today has a population density of 70,000 people per square mile. The United States today has an average population density of 100 people per square mile--about the same as the global average in a world in which Asia has 200, Europe 130, Australia/Oceania 10, and Antarctica 0. Pick one paper. What do you think of the reasons it gives, implicitly or explicitly, for our tendency to agglomerate?
Weekly Memo Question: Feb 26: If we were at Chicago, by now you would have been taught to excess that externalities are rare and that government attempts to correct for them via Pigovian or regulatory means are destined to do more harm than good. But we are here at Berkeley--where serious interdependence and externality are everywhere, and where there is not a market that does not need either a large Pigovian tax or bounty somewhere or that does not need very skillful and well-designed regulation to come as close as possible to assigning property rights in order to cut the animal at the joints. What in the two papers this week leaves you suspicious of the Berkeley point of view?
Weekly Memo Question: Feb 19: Adam Smith confidently asserted that slavery was uneconomic--that in commercial society, manumission was the road to higher productivity because the carrot of working for yourself is much more efficient than the stick of being whipped by others. Was Smith right? If you conclude that he was right, does that mean that slavery is in general on the road to its natural extinction? And why is unfree labor such a common institution?
Weekly Memo Question: Feb 12: Economics tends to view growth as a continuous and diffuse process: if one firm does not solve the problem of how to efficiently utilize resources, others will and drive the first out of business; if one technological vein plays itself out, energy will focus on others. The papers this week argue either that unique institutions and technologies matter a lot or that they do not. What kinds of evidence not presented in this week's reading might lead you to come down on one side or the other?
Weekly Memo Question: Feb 5: Maxine Berg and Pat Hudson write that the "historiography of the industrial revolution in England has moved away from viewing the late eighteenth and early nineteenth centuries as a unique turning point in economic and social development." Whether or not it has, do the papers this week make you think that economic historians should move away from viewing the British Industrial Revolution as the axis upon which global economic history turns, or not?
Weekly Memo Question: Jan 29: The January 22 class painted a picture of an economic world in which (a) total factor productivity growth was very slow, and (b) as a result the overwhelming effect of technological progress was to increase human numbers rather than raise standards of living above bare subsistence. This week we read three pieces--Marx, Acemoglu et al., and Allen--all arguing that very important things were happening in northwestern Europe in 1500-1800 to raise the rate of total factor productivity growth. Pick one paper. Do you think it makes a convincing case? Taking as background January 22's class, how much of a difference in the global economic trend do you think that paper's factors by themselves could have made?
To: Students enrolled in Econ 210a: Introduction to Economic History
From: Brad DeLong firstname.lastname@example.org
Subject: First Class on January 22, 2014
Date: January 19, 2014
Before you show up in Evans 597 at 1 PM on Wednesday, January 22, do the reading:
January 22. The Malthusian Economy (Feudalism and Manorialism; Gilds and Trade) (DeLong)
- Robert M. Solow (1985), "Economic History and Economics", American Economic Review 75:2 (May), pp. 328-331 http://www.jstor.org/stable/1805620
- Kenneth J. Arrow (1985), "Maine and Texas", American Economic Review 75:2 (May), pp. 320-323 http://www.jstor.org/stable/1805618
- Rick Steckel (2008), "Biological Measures of the Standard of Living", Journal of Economic Perspectives 22:1 (Winter), pp. 129-52 http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.129
- Thomas Malthus (1798), An Essay on the Principle of Population, Chapters 1-2, pp.1-11, Electronic Scholarly Publishing Project, 1998. http://www.esp.org/books/malthus/population/malthus.pdf
- Gregory Clark (2007), A Farewell to Alms: A Brief Economic History of the World, Chapter 2, “The Logic of the Malthusian Economy,” pp. 19-39 and Chapter 3, “Living Standards,” pp. 40-70. Princeton: Princeton University Press. On reserve at Graduate Services. An earlier draft (not preferred) is available at http://tinyurl.com/dl20090112e (chapter 2) and >http://tinyurl.com/dl20090112j> (chapter 3)
- Moses Finley (1965), "Technical Innovation and Economic Progress in the Ancient World", Economic History Review NS 18:1, pp. 29-45 http://www.jstor.org/stable/2591872
Winter Break Reading: Before you show up here in the spring for Econ 2, please:
Yes, there will be a quiz…
And then, before your first section meeting: