Should-Read: David Anderson: A BFD that Passed amongst the Chaos: "Repeal and Replace or Repeal and Delay and Pray is dead...
Why can't "fiscal conservatives" ever man up and take responsibility for their actions and their lives?
When you try to starve the government, sometimes you succeed--and then things that need to be done don't get done. Shame on the LA Time for publishing this.
Outsourced to Kevin Drum:
Kevin Drum: Blame Oroville on "Fiscal Conservatives": "Victor Davis Hanson is a native Californian who hates California because it's become too brown and too liberal...
Lisa Blades and Eric Chaney (2013): The Feudal Revolution and Europe’s Rise: Political Divergence of the Christian West and the Muslim World before 1500 CE <http://scholar.harvard.edu/files/chaney/files/feudalrevolutionfinal.pdf>: "We document a divergence in the duration of rule for monarchs...
...in Western Europe and the Islamic world beginning in the medieval period. While leadership tenures in the two regions were similar in the 8th century, Christian kings became increasingly long lived compared to Muslim sultans.
Robert Brenner (1979): Agrarian Class Structure and Economic Development in Pre-Industrial Europe, Past & Present 70 (Feb.), pp. 30-75 <http://www.jstor.org/stable/650345>
Suresh Naidu and Noam Yuchtman (2013): Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain, American Economic Review 103 (February): 107–144 <https://www.aeaweb.org/articles.php?doi=10.1257/aer.103.1.107>
Degrees of "Freedom"
Should-Read: Tirthankar Roy: Were Indian Famines ‘Natural’ Or ‘Manmade’?: "I review the theories of Indian famines and suggest that a mainly geographical account...
What Is to Be Explained?: Three Things
Origins of Modern Economic Growth
Dave Donaldson (2016): Railroads of the Raj: Estimating the Impact of Transportation Infrastructure American Economic Review <http://www.nber.org/papers/w16487.pdf>
How large are the benefits of transportation infrastructure projects, and what explains these benefits? This paper uses archival data from colonial India to investigate the impact of India’s vast railroad network. Guided by four results from a general equilibrium trade model, I find that railroads: (1) decreased trade costs and interregional price gaps; (2) increased interregional and international trade; (3) increased real in- come levels; and (4), that a sufficient statistic for the effect of railroads on welfare in the model accounts for virtually all of the observed reduced-form impact of railroads on real income in the data.
Should-Read: Joachim Voth and I both focused on how Tsarist industrialization was hindered by monopoly power in manufacturing, and on the absence of a special bonus for the Stalinist construction of a heavy industrial sector in Magnitogorsk and elsewhere very far in the interior. The destruction of monopoly power via planning--along with the destruction of the peasant-collective barriers to mobility--was a big plus that largely offset the inefficiencies of central planning. The creation of a heavy industrial complex in Magnitogorsk was a priceless asset for the world come World War II.
Anton Cheremukhin et al. (2013): Was Stalin Necessary for Russia’s Economic Development?: "We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913...
Robert C. Allen (2003): Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution (Princeton: Princeton University Press: 0691144311) <http://amzn.to/2kpLZd2>
The Big Question:
Was the Soviet Union an Asian economy, (like) a Latin American economy, a (central or western) European economy, or a settler-frontier economy?
If it was an Asian economy, than it did well on economic growth--even though horribly (save in comparison to Maoist China, the Khmer Rouge, and the Korean Hereditary Dictatorship of the God-Kings Kim) in terms of societal well being.
If it was a Latin American economy, it did OK in terms of economic growth--Allen says "good", but I think he overstates his case: "OK".
If it was a (central or western) European economy, it did very badly--badly enough to prompt its bloodless overthrow.
If it was a settler-frontier economy, its badness attains world-historical levels.
I reject Allen's conclusions, largely because of the regression-discontinuity study I did in the middle of the 1990s:
The discontinuity between the countries on the left and the countries on the right is simply where Stalin's (or Mao's, or Giap's) armies stopped. The communist countries were, as of the moment that the Iron Curtain collapsed, missing 88% of their prosperity as measured by what seems and seemed to be the most natural yardstick.
February 13, 2017 at 02:46 PM in Berkeley, Books, Economics: Growth, Economics: History, Economics: Inequality, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (5)
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Doug Staiger and James Stock (1997): Instrumental Variables Regression with Weak Instruments
Morgan Kelly and Cormac Ó Gráda (2016): Adam Smith, Watch Prices, and the Industrial Revolution
Robert Solow (1974): The Economics of Resources or the Resources of Economics: The American Economic Review, Vol. 64, No. 2, Papers and Proceedings of the Eighty-sixth Annual Meeting of the American Economic Association. (May, 1974), pp. 1-14:
Harold Hotelling (1931): The Economics of Exhaustible Resources Journal of Political Economy
William W. Freehling (1990): The Road to Disunion: Secessionists at Bay, 1776-1854 (New York: Oxford University Press: 0195058143) <http://amzn.to/2jTYTon>: "Kentucky, while not as southern as Virginia, was more western...
...Kentuckians suffered from the usual western problem: too much land, not enough laborers. Slavery, prime solution to labor shortages deeper in the Southwest, could never be as widespread in Kentucky’s cooler climes. A low percentage of slaves arguably intensified the labor shortage, for potential white settlers preferred free Ohio, immediately to Kentucky’s north.
Ernest Gellner (1990): The Collapse of the Eastern European Marxist Faith
This is a passage from the 1990 Tanner Lectures series: Ernest Gellner (1990): The Civil and the Sacred analyzing the collapse of the Eastern European Marxist faith to which Vladimir Lenin had played St. Paul to Karl Marx as Jesus.
What is "civil society"? What does it do that is useful for a society?
What happens to a modern industrial economy if there is no "civil society"?
Why did the Eastern European Marxist belief system contain the idea that when it was in power it could survive without--indeed, needed to do away with--"civil society"?
What does Gellner mean by his claim that the Eastern European Marxist belief system was at bottom a middle class, a "bourgeois", idea--a reflection of the beliefs of the middle class in combination with their social and economic position?
Gellner divides really-existing socialism--the Eastern European Marxist faith in power--into five epochs: Origin, Terror, Thaw, Squalor, and Collapse. Why did Lenin's and Stalin's (and Mao's) rule-by-terror not weaken, but actually strengthen the belief system?
Most faiths survive empirical disconfirmation. Jesus Christ does not return while people who have known St. Paul are still alive. YHWH with a mighty hand and an outstretched arm does not raise up an Anointed One from the House of David to reestablish his and Solomon's kingdom. And yet the faiths thrive... Why was the Eastern European Marxist faith different from these others?
Gellner's analysis does not seem to apply at all to the vicissitudes of Marxism and the Communist Party in China--to "socialism with Chinese characteristics". I cannot ask you to provide answers as to why what Gellner lays out as the apparently-inescapable process of dissolution and decay followed by collapse of the Eastern European Marxist faith did not happen in China. But do think hard about it: understanding why the historical trajectories have been so different is one of the most important and most mysterious historical questions of our time.
Read not just the excerpted passage at http://www.bradford-delong.com/2017/02/weekend-reading-from-ernest-gellner-1990-the-civil-and-the-sacred.html, but the whole Tanner Lecture at http://tannerlectures.utah.edu/_documents/a-to-z/g/Gellner_91.pdf!
From Ernest Gellner (1990): The Civil and the Sacred: "This... characterization of the south- easterly Muslim neighbor of Atlantic civilization... makes a neat contrast to the Marxist eastern one...
...there, we witness a virtually total erosion of faith, combined with a strong, in many cases passionate, yearning for Civil Society. In fact, the present vogue of the term originates precisely in the politico-intellectual life and turbulence of that region.
Project Syndicate: Trade Deals and Alternative Facts: BERKELEY – In a long recent Vox essay outlining my thinking about US President Donald Trump’s emerging trade policy, I pointed out that a “bad” trade deal such as the North American Free Trade Agreement is responsible for only a vanishingly small fraction of lost US manufacturing jobs over the past 30 years. Just 0.1 percentage points of the 21.4 percentage-point decline in the employment share of manufacturing during this period is attributable to NAFTA, enacted in December 1993.
A half-century ago, the US economy supplied an abundance of manufacturing jobs to a workforce that was well equipped to fill them. Those opportunities have dried up. This is a significant problem: a BIGLY problem. But anyone who claims that the collapse of US manufacturing employment resulted from “bad” trade deals like NAFTA is playing the fool. Read MOAR at Project Syndicate
Joshua Gans: "The Rotman School of Management, University of Toronto...
...is offering to help scholars and students impacted on by the new US immigration restrictions. We would like to hear from anyone who:
Robert Gordon (2014): “The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections”, NBER Working Paper No. 19895 (February) http://www.nber.org/papers/w19895
Stephen Broadberry (2013): Accounting for the Great Divergence <http://www.lse.ac.uk/economicHistory/workingPapers/2013/WP184.pdf>
Robert C. Allen (2011): “Why the Industrial Revolution Was British: Commerce, Induced Invention and the Scientific Revolution,” Economic History Review 64, pp. 357-384. http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0289.2010.00532.x/pdf
Britain's (and Holland's) Uniquely High Real Wages:
Michael Kremer (1993): "Population Growth and Technological Change: One Million B.C. to 1990", Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://www.jstor.org/stable/2118405
Kremer's Model: 2HABt1:
Every time I start thinking about Thomas Jefferson, I get distracted by the family psychodrama—and by the plight of the Hemings family—and by the fact that TJ named one of his sons by Sally Hemings, born at the start of Jefferson's second term as president, "Madison".
I wonder what Jemmy Madison thought of that, and whether Jefferson told him personally that he had done so...
January 31, 2017 at 06:09 AM in Economics: History, Economics: Inequality, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Science: Cognitive, Streams: (Tuesday) Hoisted from Archives, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (6)
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Notes: Hayek and the "Shut Up and Be Grateful You Were Even Born!" Argument: Archive Entry: I have long been of the opinion that Friedrich von Hayek saw more deeply into why the market economy is so productive--the use of knowledge in society, competition as a discovery procedure, et cetera--than neoclassical economics, with its Welfare Theorems that under appropriate conditions the competitive market equilibrium (a) is Pareto-Optimal or (b) maximizes a social welfare function that is the sum of individual utilities in which each individual's weight is the inverse of their marginal utility of income.
At Milken Review: Helicopter Money: When Zero Just Isn't Low Enough: If you pay much attention to the chattering classes — those who chatter about economics, anyway — you've probably run across the colorful term "helicopter money." At root, the concept is disarmingly simple. It's money created at the discretion of the Federal Reserve (or any central bank) that could be used to increase purchasing power in times of recession. But the controversy over helicopter money (formally, money-financed fiscal policy) is hardly straightforward... Read MOAR at Milken Review
Should-Read: Neil Cummins: Longevity and the Rise of the West: Lifespans of the European Elite, 800-1800: "From the age at death of 121,524 European nobles from 800 to 1800...
Robert Reich (2015): Saving Capitalism: For the Many, Not the Few (New York: Knopf: 0385350570) http://amzn.to/29Viz6w
Can This Capitalism Be Saved?: Robert Reich in his Saving Capitalism: For the Many, Not the Few http://amzn.to/29Viz6w wants to remind us Americans of our strong record of “expanding the circle of prosperity when capitalism gets off track.” We have in our past no fewer than four times built up countervailing power to curb the ability of those controlling last generation’s wealth and this generation’s politics to tune institutions, property rights, and policy to their station.
Jacob Hacker and Paul Pierson (2016): American Amnesia: How the War on Government Led Us to Forget What Made America Prosper (New York: Simon and Schuster: 1451667825) http://amzn.to/29ZTpPq
The Loss of Pragmatic Can-Do America: Hacker and Pierson's thesis runs exactly parallel to the thesis of Steven S. Cohen and my Concrete Economics: The Hamilton Approach to Economic Growth and Policy http://amzn.to/2a9xzfg.
Adair Turner (2015) Between Debt and the Devil: Money, Credit, and Fixing Global Finance (Princeton: Princeton University Press: 0691169640) http://amzn.to/29ZT6UM
The Devil We Sort of Know: Adair Turner's book http://amzn.to/29VqW1z has, I believe, at its core an argument that I trace to John Maynard Keynes : that we are approaching the age of the euthanasia of the rentier.
Robert J. Gordon (2016): The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (Princeton: Princeton University Press: 0691147728) http://amzn.to/29VimjK
Barry Eichengreen (2008): Globalizing Capital: A History of the International Monetary System (Princeton: Princeton University Press: 0691139377) http://amzn.to/2kG1v57
Chapter 1: Introduction: Six Questions:
For almost my entire adult life--since I was a sophomore, IIRC--I have thought that the key social theorist for our age is neither Marx nor Mill nor Toqueville nor Weber nor Durkheim, but rather John Maynard Keynes. Now I think, I am slowly swinging around to thinking that the key social theorist is Karl Polanyi. The problem is that Polanyi writes so damnably badly--a fault he shares with, among others, Hyman Minsky. Just as Charlie Kindleberger is a much better Minsky than Minsky is, we need a much better Polanyi than Polanyi...
The biggest weasel-phrase--the biggest phrase that is not part of an argument, but rather a placeholder for the fact that I strongly believe that an argument here is needed but have not (yet) thought (my position on) it through (to my satisfaction)--is "proper nurturing of communities of engineering practice".
Going through the big Vox piece <http://www.vox.com/the-big-idea/2017/1/24/14363148/trade-deals-nafta-wto-china-job-loss-trump> I find it in four places:
Robert Allen (2011): Global Economic History: A Very Short Introduction (New York: Oxford), chapter 5 http://amzn.to/2iloEx6
Robert Allen (2011): Global Economic History: A Very Short Introduction, chapter 6 http://amzn.to/2iloEx6
Robert Allen (2011): Global Economic History: A Very Short Introduction, chapter 7 http://amzn.to/2iloEx6
Robert Allen (2011): Global Economic History: A Very Short Introduction (New York: Oxford), chapter 8 http://amzn.to/2iloEx6
Robert Allen (2011): Global Economic History: A Very Short Introduction (New York: Oxford), chapter 9 http://amzn.to/2iloEx6
Robert Allen (2011): Global Economic History: A Very Short Introduction (New York: Oxford), Epilogue http://amzn.to/2iloEx6
Guillaume Daudin et al.: Globalization 1870-1914 <http://tinyurl.com/dl20161210g>
To much of the industrial world—especially to those engaged in commerce, trade, and enterprise—World War I seemed impossible to imagine beforehand, and like a bad dream as it happened. The British economist John Maynard Keynes, one of those who saw the war as a previously-unimaginable horror, was afterwards to write of the pre-World War I upper-class inhabitant of London:
for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages...
And he wrote, the upper-class Londoner saw:
Patrick O'Brien (1982): European Economic Development: The Contribution of the Periphery: "Throughout the early modern era connexions between economies (even within states) remained weak, tenuous, and liable to interruption...
...Except for a restricted range of examples, growth, stagnation, and decay everywhere in Western Europe can be explained mainly by reference to endogeneous forces. The "world economy", such as it was, hardly impinged. If these speculations are correct, then for the economic growth of the core, the periphery was peripheral...
O'Brien's piece is a critique of a large strand of 1970s literature about how exploitation not of internal western European populations but of people outside of Western Europe--Amerindians, mestizo and other inhabitants of the Americas, Asians, and Africans--was the driving force behind the accumulation of capital and the growth of Western Europe from 1500 well into the post-1750 Industrial Revolution era. O'Brien's point is that this argument was always innumerate: trans-oceanic trade flows were simply too small to matter in any simplistic way in which more resources flowing to the elite produce significantly faster economic development. I think his case is air-tight. If you want to draw significant causal links between trans-oceanic exploration, trade, conquest, and exploitation on the one hand and Western European growth after 1500 on the other, you need to tell a much more sophisticated and less simplistic story.
Lant Pritchett (1997): Divergence, Bigtime http://tinyurl.com/dl20161210e
The main purpose of Pritchett is to document "divergence." There is one group of countries--broadly, the (extended) North Atlantic--in which growth rates have been substantial and have been inversely related to GDP per capita at the start of the long twentieth century around 1870. But other countries follow a different pattern: what are now called emerging-market economies even though they started with lower incomes than North Atlantic economies have grown more slowly, making their relative position today far worse than it was 140 years ago.
Lant Pritchett (1997): Divergence, Bigtime, Journal of Economic Perspectives 111:3 (Summer), pp. 3-17 http://www.jstor.org/stable/2138181
Let's go through the argument:
Standard measures tell us that real wages in the North Atlantic grew at an average rate of 1%/year in the 19th century and 2%/year in the 20th century.
But let's look at the price of light: it suggests that growth has been much faster:
A wax candle emits 13 lumens, a 100-watt filament bulb emits 1300 lumens.
Must-Read: This does not seem to me to be terribly helpful. Dani Rodrik says, apropos of NAFTA:
That is all true. But in today's context it seems to me to be... a very partial truth... a somewhat truthy truth... unhelpful. In my view he should, instead, have written:
And, most important, Dani should not have allowed his readers to keep their illusion that NAFTA is responsible for any appreciable part of the decline in the manufacturing employment share:
Dani Rodrik: What Did NAFTA Really Do?: "The overall efficiency gains are quite small...
IAMA economist Brad DeLong, an economist to be found at http://bradford-delong.com and @delong, a Berkeley professor and a former Clinton administration official. I am here to talk about why Trump's trade policies are highly likely to be disastrous failures—the normal result of a moron singularity.
But ask me anything.
http://www.reddit/com/r/IAmA: I Am A, where the mundane becomes fascinating and the outrageous suddenly seems normal: Brad DeLong 2017-01-28 4 PM PDT
Looking Forward to Four Years During Which Most if Not All of America's Potential for Human Progress Is Likely to Be Wasted
With each passing day Donald Trump looks more and more like Silvio Berlusconi: bunga-bunga governance, with a number of unlikely and unforeseen disasters and a major drag on the country--except in states where his policies are neutralized.
Nevertheless, remember: WE ARE WITH HER!
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