The Pattern of Normal Politics, 1870-1914: An Outtake from "Slouching Towards Utopia?: An Economic History of the Long 20th Century, 1870-2016"
Left-wing avowedly socialist—parties in pre-World War I Europe wanted, for the present, only weak tea. The Socialist Party of Germany’s Erfurt and Gotha programs seek things like: universal male and female suffrage; the secret ballot, proportional representation and an end to gerrymandering; annual government budgets; elected local administrators and judges; the right to bear arms; free public schools and colleges; free legal assistance; abolition of the death penalty; free medical care including midwifery; public burial insurance; progressive income and property taxes; a progressive inheritance tax; a 36-hour minimum weekend; an occupational safety and health administration; equal status for domestic and agricultural workers; and a national takeover of unemployment and disability insurance “with decisive participation by the workers in its administration”. Rather white bread, no? Even their declared intention that:
the German Social Democratic Party… fights… every manner of exploitation and oppression, whether directed against a class, party, sex, or race...
would raise few eyebrows today, in western Europe at least.
But there was also:
- “By every lawful means to bring about a free state and a socialistic society, to effect the destruction of the iron law of wages by doing away with the system of wage labor…”
- “The transformation of the capitalist private ownership of the means of production—land and soil, pits and mines, raw materials, tools, machines, means of transportation—into social property and the transformation of the production of goods into socialist production carried on by and for society…”
- “This… emancipation… [is] of the entire human race…. But it can only be the work of the working class, because all other classes… have as their common goal the preservation of the foundations of contemporary society…”
There was a tension here.
Let us talk about the rise of socialism, as background to the rise of really existing socialism—the system that lived behind what Winston Churchill called the Iron Curtain from 1917-1991, that shook the world, and that in the end turned out to be far, far, far from the brightest light on the tree of humanity’s good ideas.
Let us very briefly race through history—moral, intellectual, political, and social—from the year -350 to the year 1917, when Lenin and his Bolshevik Communist Party staged their coup in Russia.
There was a profound shift from the belief in “divine right” and “natural order” as the fundamental grounding for an unequal society to enlightenment values—that human institutions should be rationally designed on the basis of a rational understanding of human psychology in order to attain the greatest good of the greatest number, and thus that inequality is not given by the gods or by the requirements of nature, but rather is a thing to be allowed to the extent that it incentivizes cooperation and industry and thus enriches us all.
Back in the century of the -300s, Aristotle had taken it for granted that a good society was only possible if the society allowed for philosophy. And philosophy was only possible if you had a leisured upper class. And a leisured upper class was possible only with large scale-unfree labor—serfdom, or its harsher cousin slavery. Thus it was and thus it would always, be unless and until humans obtained the fantasy technologies of the mythical Golden Age...
I confess I am positively unmanned by the every-three-days doubling of reported cases and deaths here in the United States. I had thought that we would see true cases doubling every seven days. And back when reported cases started doubling every three days, I was encouraged, because I thought it meant that we were catching up on testing, and so getting closer to detecting the bulk of the symptomatic cases.
But now it looks like that was wrong: reported cases were doubling every three days because true cases were doubling every three days—that is what deaths tell us was happening to true cases up until three weeks ago. The lack of case curve-bending makes me think that testing is not improving. It makes me think that reported cases are doubling every three days because true cases are doubling every three days.
That means that the Trump administration has only 40% as much time to get its ass in gear as I thought it did.
And that means the chances it will are very very low indeed:
I must confess it had never occurred to me back when China shut down Wuhan that we would simply not test everyone who presented with symptoms—and then backtrace their contacts. It is really looking now as though China—even with its authoritarian blindness fumbling of the intitial response (see Zeynep Tufekci: https://www.theatlantic.com/technology/archive/2020/02/coronavirus-and-blindness-authoritarianism/606922/ is going to be studied in the future as a positive model of public health in the 21st century, while the Trump Administration’s reaction—currently on track as the worst in the world in handling coronavirus <https://www.evernote.com/l/AAFzPq9AJoFHFr_nrTPi1QyseD8WSAe0y00B/image.png>—will be studied in the future as a negative example: Brad DeLong: The Trump Administration’s Epic COVID-19 Failure https://www.bradford-delong.com/2020/03/the-trump-administrations-epic-covid-19-failure-project-syndicate.html: 'As officials at the US Centers for Disease Control and other public-health bodies surely must have recognized, asymptomatic transmission means that the standard method of quarantining symptomatic travelers when they cross national (or provincial) borders is insufficient. It also means that we have known for almost two months that we were playing a long game against the virus. With its spread more or less inevitable, the primary task was always to reduce the pace of community transmission as much as possible, so that health-care systems would not be overwhelmed before a vaccine could be developed, tested, and deployed. In the long game against a contagious virus, how to mitigate transmission is no secret. In Singapore, which has largely contained the outbreak within its borders, all travelers from abroad have been required to self-quarantine for 14 days, regardless of whether they have symptoms. In Japan, South Korea, and other countries, testing for COVID-19 has been conducted on a massive scale. These are the measures that responsible governments take. You test as many people as you can, and when you locate areas of community transmission, you lock them down. At the same time, you build a database of all those who have already developed immunity and thus may safely resume their normal routine...
Could "reopening America for business" on Easter backfire? Oh, yes it could. Oh, it definitely could backfire: BIGTIME.
The experience so far is that, in a society not undertaking social distancing, coronavirus cases double in a little less than five days—grow 100-fold in a month. If, say, the virus has been largely suppressed and only 10000 in the U.S. have it Easter week, then after the u.S. is opened up 1 million will have it on May 15, and then 100 million on June 15, at which point the epidemic will have pretty much run its course. But from May 1 to June 15 hospitals will have been overwhelmed. The likely death rate will have been not 1% but 6%. 5 million additional Americans will have died.
In return we will have produced an extra $1 trillion of stuff.
That's a tradeoff of $200K per life, which is not a good tradeoff to aim at making.
And, while it could be better, it could be much worse...
The right way to do it is to lockdown while we test, test, test, test, test:
- Test a random-sample panel of 10000 Americans weekly to get a handle on the progress of the disease.
- Test everyone for antibodies.
- Let those who have had the disease and so are no immune go back to work—after testing to make sure that they are immune.
- Indeed, draft those who have recovered to be hospital orderlies and nurses.
- Make decisions based on knowledge of where the epidemic is in the community, and tune quarantine, social distancing, and shutdown measures to those appropriate given where the epidemic is.
But we do not know where the epidemic is.
And because we are not testing on a sufficient scale, we will not know when and if the virus is truly on the run until a month after the peak, when deaths start dropping. And even then we will not know how much the virus is on the run.
And removing social distancing before the virus is thoroughly on the run means that the virus comes roaring back.
Once the virus is thoroughly on the run, then normal public health measures can handle it:
- Test, test, test.
- Test patients presenting with symptoms.
- Trace and test their contacts. Do what Japan and Singapore did—close to the epicenter in Wuhan, yet still with true caseloads lower than one in ten thousand.
- Test those crossing borders, symptomatic or not.
- Test those moving from city to city via air.
- Test a random sample on the interstates, to see how much virus is leaking from place to place that way.
- Test a random sample of the population to see whether and how much the disease was established, and then test another one.
Wherever community transmission becomes reestablished, apply the Wuhan lockdown for at least three weeks, so the caseload could be diminished enough so that contact tracing could be resumed.
Build up a database of those who tested positive and are presumably now immune so that they can be on the frontlines of treatment and contact with those possibly newly infected, and reopen the economy by putting them in the jobs that have high human contact and thus high virus transmission rates.
Jim Stock at Harvard has lots of good ideas and has thought a lot about how to do the Hunker Down. He is actually the person I would be asking how to do this—very smart, and has thought hard over the past month about it.
My view, however, is that right now we are scr--ed AF.
It is the end of March. The United States has tested only 500,000 people. There is no nationwide random sample time series. An awful lot of symptomatic people were not tested, and were instead sent back into the community. By the metric of the speed of growth of reported cases since the establishment of the virus dated to the hundredth first-reported case, the U.S. has performed worst of any country: worse than Italy, worse than Spain, worse (we think) than Iran. The 105,000 cases reported as of the evening of Fr Mar 27 are just the tip of the iceberg. From 1700 currently reported deaths so far in the United States, we might guess that there were between 60 and 170 thousand cases active at the start of March, which have grown to between 600 thousand and 2.5 million new cases, with perhaps the same number coming in the next week.
But we really do not know where we are.
We have not imposed the Wuhan lockdown.
If we had imposed the Wuhan lockdown, then three weeks after the lockdown had been imposed, the Hunker Down could start to be relaxed. Then, if we had enough testing capacity, we could start to relax knowing how much and where we could do so without the virus roaring back. Public health could then do its normal job: testing a random sample, testing all those symptomatic, tracing contacts, quarantining, and so keeping the spread slow enough that the health care system is not overwhelmed and that the bulk of the cases come next year or the year after or even later, by which time our virologists will have worked miracles.
But Trump, Mnuchin, Kudlow, & co. appear to want to draw to an inside straight and make the existential bet that transmission will melt away with the coming of spring and the warming up of the country. It might. 10%.
I have not found any economist who will say in private that that is not a very bad idea from a cost-benefit risk point of view.
And then, in two months, we are going to want to restart all the businesses that were functioning as of March 15. Nobody should go bankrupt as a result of anything that happened between March 15 and May 15 this year. That should be the proper goal of economic policy: to create a moment of Jubilee in the middle of this spring.
How would I do it, if I were running economic policy? Medical tests, treatment, tests, food, utilities, plus everything we can do that does not require human-to-human contact within six feet—that should be the extent of our economy for the next three weeks. All else should be shut down. And then, in a month, everyone should go to the job they had on March 15. And if the financing isn't there to run your business on May 15—if you are bankrupt?
That is what the Jubilee is for: the government assumes your debts.
But what if people are worried about the now-higher government debt? That is good reason to impose a highly-progressive tax on income and wealth both to reassure investors that the long-term finances of the government are sound, and to recoup some of the unearned increment that will be captured over the next month by those who turn the lockdown into a source of financial advantage.
That is what the U.S. should do. That is not what the U.S. will do. For one thing, we do not have and are not making enough tests.
With respect to the "China" questions:
- The U.S. has passed China in reported number of cases.
- In two weeks, the U.S. is going to pass China in reported coronavirus deaths.
- Unless China loses (or has already lost control of the virus and is suppressing the news), for the next 50 years China's rulers will say:
- Our society handled this much better than yours did.
- Look to us rather than the U.S. for models and as your partners.
- The U.S. has lost all global leverage over China—unless they are suppressing very bad virus news, and I see only a 10% chance that they are.
- When the U.S. economy reopens, U.S.-China negotiations are likely to take the form of us saying "please allow us to buy your stuff on whatever terms you offer".
NEJM Group: Updates on the Covid-19 Pandemic http://m.n.nejm.org/nl/jsp/m.jsp?c=%40kxNtXckRDOq8oG0jJvAXsIzN4mPECIPhltxoTSdTU9k%3D&cid=DM89089_NEJM_COVID-19_Newsletter&bid=173498255: 'From the New England Journal of Medicine, NEJM Journal Watch, NEJM Catalyst, and other trusted sources...
Worldometer: Coronavirus Update (Live) https://www.worldometers.info/coronavirus/...
Financial Times: Coronavirus Tracked https://www.ft.com/coronavirus-latest...
CDPH: nCoV2019 Updates https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Immunization/ncov2019.aspx...
CDPH: News Releases 2020 https://www.cdph.ca.gov/Programs/OPA/Pages/New-Release-2020.aspx...
Josh Marshall: Epidemic Science & Health Twitter List https://twitter.com/i/lists/1233998285779632128...
Project Syndicate: The Trump Administration’s Epic COVID-19 Failure https://www.project-syndicate.org/commentary/trump-covid19-testing-failure-by-j-bradford-delong-2020-03: 'Whereas many other countries afflicted by the COVID-19 pandemic have pursued mass testing, quarantines, and other measures to reduce community transmission, the Trump administration has simply dithered. Although America could still shut down for a month to overcome the crisis, the sad truth is that it won't. BERKELEY—Even to US President Donald Trump’s most ardent critics, his administration’s disastrous response to the COVID-19 pandemic has come as a surprise. Who would have guessed that Trump and his cronies would be so incompetent that merely testing for the disease would become a major bottleneck?
The problem of dealing with the economic policy consequences of the current coronavirus public health emergency is best analyzed in two pieces: the Jubilee, and the Hunker Down.
Bringing the Jubilee
What is the Jubilee? It happens after we have managed to get the virus under control, so that normal public health measures of (1) testing a random panel sample periodically to understand where we are, (2) testing the symptomatic, (3) tracing and testing their contacts, and (4) hospitalizing patients with serious illnesses can manage the situation as best as it can be managed.
Note: I say “managed” rather than eliminated. The extent of asymptomatic transmission means that this disease will not be eliminated. It will become endemic. The task is to delay until our virologists can work their miracles. The task is to delay so that the medical care system is not overwhelmed so that we can keep mortality from the disease at 1% rather than 5% or more.
Once the virus is under control—by June 1, say—we will want every job that existed on February 1 and every business that was running on February 1 to resume. We will want no business to have received a “bankruptcy shut down“ from the market system. We will want no worker to have a received a “you are not wanted“ signal from the market economy.
There is a side constraint on the Jubilee: whatever policies we adopt need to be crafted to minimize unjust enrichment. Perhaps the second biggest economic policy mistake committed by the Obama administration was that its policies to deal with the great recession were both inadequate out of the fear of being perceived to contribute to unjust enrichment, and yet somehow also managed to generate a huge amount of unjust enrichment for the financial sector.
Then there is the question of how to manage the Hunker Down. In the Hunker Down, social distancing needs to reach a level that reduces the caseload to what the medical system can currently handle, but should not be pushed far beyond that point. Beyond that point, the benefits of generating a situation in which our ICUs and emergency rooms have excess capacity are low and the costs are high. In the Hunker Down, as many people as possible need to be given financial incentives to move into new productive occupations that provide useful goods and services without disrupting social distance. And in the hunker down, everyone needs to receive the income flow they need to pay their bills.
Managing the Hunker Down and bringing the Jubilee are two separate problems that need to be designed and implemented separately. We need to think about both. We need to keep worries about bringing the Jubilee from damaging our ability to undertake the Hunker Down. We need to keep inplementing the Hunker Down from impairing our power to bring the Jubilee.
It Looks as Though Very Evil People Named Kudlow, Laffer, and Moore Have Been Telling a Very Stupid President Very Misleading Things
The odds are that some very evil people—I am looking at you, Steve Moore; I am looking at you, Larry Kudlow; I am looking at you, Art Laffer—have been telling a very stupid president very misleading things:
Donald Trump https://twitter.com/AaronBlake/status/1242941041143156736:
"[Some states] have virtually no problem or a very small problem..." "We don't have to test an entire state in the Middle West, or wherever they may be..." "A lot of those states could go back right now, and they probably will..."
The only states whose populations are less than 50% urban are Maine, Vermont, West Virginia, and Mississippi. For every case of coronavirus we see, there are likely more than 20 we do not currently see.
West Virginia's five largest cities—Charleston 47,215, Huntington 46,048, Morgantown 30,955, Parkersburg 29,675, Wheeling 26,771—might make it the only state in which they are still free from self-sustaining community transmission.
But probably not.
Probably there are about 200 cases in each of those cities, now spreading. And probably Kentucky, West Virginia, and Puerto Rico are the only states in which coronavirus is more than 15 days behind its pace and prevalence in New York. (Texas, Oklahoma, Kansas, and Virginia I see as most likely much closer to New York in time—they just have not been testing.)
Philosophers, of course, if there are any in the audience here, will have winced by now. Perhaps they will have done more than winced—although I did not see any philosophers rise and run, screaming, from the room.
I have drawn strong conclusions about how high and important a priority reducing inequality should be for making a good society by being a bad philosopher. Philosophers would presumably say that I should first be a good philosopher. They would say that only after having reached good philosophical conclusions should I then use those conclusions as a springboard to derive “oughts” for political economy.
The problem, of course, is that there is no agreement on what the good philosophical conclusions are.
I maintain that my bad philosophy is a very useful middle ground. I draw conclusions for society from it. As you decide on what your view of good philosophy is, you move from my bad philosophy to yours, and that movement will carry with it a move of your political economy conclusions from the baseline I have established to those that you will think best. You will start with my conclusions, and adjust them in light of the difference between my bad and your good moral philosophy. My bad philosophy thus provides you with a convenient basecamp from which you—with your good philosophy—can begin your climb of the mountain of truth...
If we take as our metric the pattern of increase in the number of reported cases since the 100th reported case, the United States is now second worst in the world, behind only China. So that is bad. On the other hand, China now appears to have the coronavirus on the run. We think. It appears. So we could still manage this thing—with governmental competence:
- At the moment, we have a huge negative supply shock
- But as people lose their jobs as a result of this negative supply shock, it is going to turn into a demand shock
- And we also have a very powerful distribution shock as well
- We want to offset the demand shock without overdoing it
- We want to let the prices of goods and services in high demand rise to encourage people to produce more of them
- Hence an interesting policy problem:
- The right inflation rate for the next 3 months is not 2%
- The right inflation rate for the next 3 months is 2% + (share of the economy in high demand) x (how much prices need to rise to boost supply of commoditeis in high mand)/4
- The right monetary policy is... stimulative, but uncertain...
- The right fiscal policy is... stimulative, but uncertain...
- The right distribution policy is... massive boost to unemployment insurance: 100% replacement for those who lose their jobs
- The right lending policy is... lend enough on easy enough terms that businesses stay afloat, but not enough that stockholders make out like bandits—they are risk bearers, aren't they? Handsomely paid. Now is when they earn the money they earn in normal times...
- I really wish the public health people were being louder and more forthcoming...
- Because we do not know where we are
- At the moment, 200 deaths in USA
- Takes 4 weeks to die
- At a 1% death rate, that means 20000 cases in U.S. on Feb 20
- At a 3.33% death rate, that means 6000 cases in U.S. on Feb 20
- If cases have been doubling every 7 days...
- Then at least 100000 cases in the U.S. right now (and our testing is missing 6 out of 7)
- If cases have been doubling every 4 days...
- Then at most 2000000 cases in the U.S. right now (and our current testing is missing nearly everybody)
- We don't know which it is, because Trump said he didn't want bad numbers
- At the moment, 12% of those being tested are coming out as positive
- But to get the true fraction, you need to multiply that 12% by (those who have it who got tested)/(those who have it), and then divide the result by (those who don't have it who got tested)/(those who don't have it).
- & because are testing is messed up AF, we have no idea what those two key ratios are...
- And the Trumpists saluted and slow-walked building up testing capacity
- He should have been impeached and removed from office last week for this High Crime alone...
1919: Inevitability and Chance: A Teaser for "Slouching Towards Utopia?: An Economic History of the Long Twentieth Century"
From 1870-1914 we can see global economic history as by-and-large following a logic that was if not inevitable at least probable, or explicable after the fact. Luck and probability gave humanity an opening around 1870 in the form of a quintuple breakthrough: the ideology and policy of an open world, the transportation breakthrough, the communications breakthrough, and—most important the coming of the research laboratory plus the large corporation to to more than double the pace of invention and greatly speed the deployment of new technologies. Thereafter to 1914 the economic logic rolled forward: the idea of invention, the specialization of inventors, the deployment of technology in corporations trade, the international division of labor, and global growth (but also the creation of a low-wage periphery, and the concentration of industrialization of wealth in what is still the global north); the beginnings of the demographic transition that curbed the tendency for technological progress to be nearly entirely eaten up by greater numbers; the shift of work from farm to factory; and the coming of sufficient (if ill-distributed) prosperity. These all raised the possibility that someday, not that far away, humanity, in the rich economies of the global north at least, might attain something that previous eras would have judged to be a genuine utopia.
https://twitter.com/delong/status/1238263706837975043: The electorate of all those who care enough to be motivated to vote for Chief Neoliberal Shill has spoken: I am defeated. Congratulations to @scottlincicome on a well-fought campaign. I wish him luck. He will need it.
In 1994 Milton Friedman wrote about Judy Shelton: "In a recent Wall Street Journal op-ed piece (July 15)... Judy Shelton started her concluding paragraph: “Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade...” It would be hard to pack more error into so few words.... A system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital..." https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf. To turn monetary policy away from internal balance toward preventing exchange rate movements that market fundamentals wanted to see occur was, in Friedman's view, the road toward disaster. It was simply wrong. And it could be held together only if economies moved from free trade back toward managed trade—and so beggared not just their neighbors but themselves.
Larry Summers hates this, and, given that I lose three of four arguments I have with him, that is a sign that I may well be wrong here. Maybe it is that I spend too much time back in the eighteenth century, and do not understand modern public finance. Maybe it is just that we upper middle class urban Californians pay huge wealth taxes, and so don't see why others think it is a big deal. But it seemed and seems to me that whether one taxes wealth, income, or consumption in order to try to minimize the utility cost of taxation by placing burdens on those with a very low marginal utility of wealth is overwhelmingly a question of administrative practicality: how to identify those with a low marginal utility of wealth:
Isn't a Wealth Tax Common Sense? https://www.project-syndicate.org/commentary/wealth-tax-common-sense-by-j-bradford-delong-2020-01: I was not surprised when Gabriel Zucman and Emmanuel Saez https://www.brookings.edu/wp-content/uploads/2019/09/Saez-Zucman_conference-draft.pdf in offices down the hall and Thomas Piketty over in Paris began proposing, and Democratic presidential candidates began endorsing https://www.vox.com/policy-and-politics/2019/1/24/18196275/elizabeth-warren-wealth-tax https://www.vox.com/policy-and-politics/2019/9/24/20880941/bernie-sanders-wealth-tax-warren-2020, the idea of a “wealth tax“. What did surprise me was what seemed and still seems to be a surprising amount of unexpected pushback—pushback from people I had always thought to be on the side of a more-progressive rationalization of the tax system.
Back up: When I learned public finance, I was taught that there were three principles of taxation, all spring from Jean-Baptiste Colbert‘s observation that the point was to extract the feathers from the goose with the least amount of hissing. That meant, first, always broadening the tax base so that you could hit your revenue target with the lowest possible and hence the least annoying tax rates. That meant, second, imposing taxes on items for which demand was inelastic, so that the tech system did as little as possible destructive distortion to the pattern of economic activity. That meant, third, taxing those for whom the utility cost of their tax payments was least—that is, taxing the rich. And what is the broadest possible tax base on which to tax the wealthy? It is their wealth, of course. And for what is the demand of the wealthy least elastic—what are they least willing to sacrifice to try to reduce their tax burden? Their wealth, of course.
Time to Bang My Head Against the Wall Some More (Pre-Elementary Monetary Economics Department): Hoisted from the Archives from 2009
Hoisted from the Archives: Time to Bang My Head Against the Wall Some More (Pre-Elementary Monetary Economics Department) https://delong.typepad.com/sdj/2009/01/time-to-bang-my-head-against-the-wall-some-more-pre-elementary-monetary-economics-department.html: Oh boy. John Cochrane does not know something that David Hume did--that the velocity of monetary circulation is an economic variable rather than a technological constant. Cochrane:
Fiscal Fallacies: First, if money is not going to be printed, it has to come from somewhere. If the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. This is just accounting, and does not need a complex argument about “crowding out”...
Let us take this slowly.
Suppose that we have four agents: Alice, Beverly, Carol, and Deborah.
Suppose that Beverly has $500 in cash that she owes Carol, due in two months. Suppose that Alice and Carol are both unemployed and idle.
In one scenario in two months Beverly goes to Carol and pays her the $500. End of story.
In a second scenario Beverly says to Alice: "I have a house. Why don't you build a deck--I will pay you $500 after the work is done. Here is the contract." Alice takes the contract and goes to Carol. She shows the contract to Carol and says: "See. I will be good for the debt. Cook me meals so I will have the strength to build the deck--here's another contract in which I promise to pay you $500 within 90 days if you cook for me." Carol agrees.
Two months pass. Carol cooks and feeds Alice. Alice goes and builds the deck.
Alice then asks Beverly for payment. Beverly says: "Wait a minute." She goes to Carol and says: "Here is the the $500 cash I owe you." Beverly pays the money to Carol. Beverly then says: "But now could I borrow the cash back by offering you a long-term mortgage at an attractive interest rate secured with an interest in my newly more-valuable house?" Carol says: "Sure." Beverly files an amended deed showing Carol's mortgage lien with the town office. Carol gives Beverly back the $500. Beverly then goes to Alice and pays her the $500. Alice then goes to Carol and pays her the $500.
The net result? (a) Alice who would otherwise have been idle has been employed--has traded her labor for meals. (b) Carol who would otherwise have been idle has been employed--has traded her labor for a secured lien on Beverly's house. (c) Beverly has taken out a mortgage on her house and in exchange has gotten a deck built. (d) Carol has the $500 cash that Beverly owed her in the first place.
Alice has more income and consumption expenditure than if she hadn't taken Beverly's job offer. Carol has more income and saving than if she hadn't cooked for Alice and then invested her earnings with Beverly. Beverly has an extra capital asset (the deck) and an extra financial liability (the mortgage) than if she had never offered to hire Alice.
A deck has gotten built. Meals have been cooked and eaten. Two women have been employed. And all this has happened without printing any extra money.
John Cochrane would say that this is impossible.
Study Questions for the History of Economic Growth: For Midterm 1: Econ 135
- Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for real living standards https://delong.typepad.com/.a/6a00e551f0800388340240a50c1a9a200b-pi tells us about what the level of income will be in a Malthusian society.
- Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for the level of population https://delong.typepad.com/.a/6a00e551f0800388340240a50c1aa8200b-pi tells us about what the level of population will be in a Malthusian society.
- What do you think are the three most reasons not to take the Solow-Malthus model as gospel in understanding pre-Industrial Revolution economic growth—and its absence?
- What are three data sources that economic historians rely on to try to get a handle on the pace of economic growth in pre-modern times?
- Why did average incomes and prosperity levels remain so low back before the year 1500?
- What were the most important changes that made the Industrial Revolution possible?
- Where and when did the Industrial Revolution take place?
- What theory about why the Industrial Revolution happened when and where it did do you find most attractive?
- What are the limitations of and problems with the theory that you find most attractive about why the Industrial Revolution happened when and where it did?
- Were income and standards of living under the Roman Empire subject to Malthusian constraints?
- How, so far in this course, has the concept of economic class been important in shedding light on understanding processes of economic growth?
- Based on what we have covered in this course so far, what do you expect to see in economic growth in the world economy over the next 50, 100, and 1000 years?
- In the Solow growth model, what are the important determinants of prosperity in the sense of income per worker, and how do those determinants interact?
- Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth—that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one—attractive?
- Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth—that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one—inadequate?
- Why is it probably wrong to suppose that humanity's effective effort at innovation and technology development at any point in time is proportional to the human population then?
- What kinds of innovative effort are positive-sum? What kinds of innovative effort are negative-sum?
- Why do extensive empires often appear to have higher standards of living than other, more divided societies that possess the same level of useful ideas about technology and organization?
- Why do extensive empires often appear to have greater population densities than other, more divided societies that possess the same level of useful ideas about technology and organization and the same quality of natural resources?
- What was the "Columbian Exchange" and why was it important for economic growth?
- What was the impact of the Spanish Conquest on the population levels and the living standards of the Amerindian population living in the Americas when the conquistadores arrived?
- Explain why you are annoyed by Jared Diamond's claim that the invention of agriculture was a big mistake.
- On what evidence does Greg Clark base his conclusion that English working-class standards of living were roughly $2.50 a day in the eight centuries before 1800?
- Was the standard of living of the English working class highest in 1310, 1450, or 1800; and why was it highest when it was highest?
- Why does Lant Pritchett believe the world today is much more unequal than it was back in 1800? Do you buy his argument?
- Why, in Partha Dasgupta's view, is money an extremely useful societal invention?
- Why, in Partha Dasgupta's view, does "Becky" have so much more social power and opportunities than does "Desta"?
- At what rate does income per worker grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
- At what rate does society's total income grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
- What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path richer?
- What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path poorer?
- What is meant by saying that an economy is a "Malthusian economy"?
- What is meant by the "demographic transition"?
- Why doesn't technological progress raise standards of living in a Malthusian economy on its steady-state balanced-growth path?
- What do economic theorists think is the reason that the much larger global STEM workforce today than in 1870-1900 has not led to a faster proportional rate of technological progress now than back then?
- What does Aristotle claim are the four branches of household resource management, and which of the four does he think is most important?
- How much does Aristotle think a philosopher—or any aristocratic Greek male—should know about economic matters: market prices of commodities and production technologies?
- Why does Aristotle believe that markets and merchants are useful for a city-state, and for a Greek aristocratic male?
- Why does Aristotle believe that markets and merchants and too much knowledge about them are dangerous and destructive for a city-state, and for a Greek aristocratic male?
- Why does Gilgamesh deserve to be King of Uruk? And what should his people do when they recognize that he has turned into an overbearing tyrant?
- Why does Willem Jongman believe that the classical Mediterranean became so rich and prosperous, so much so that, in the words of the historian Edward Gibbon: "If a man were called to fix the period in the history of the world, during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of [the Emperor] Domitian [in 96] to the accession of [the Emperor] Commodus [in 180]..."?
- Why, in Willem Jongman's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
- What happened to the living standards of peasants and craftsmen in western Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
- What happened to the living standards of peasants and craftsmen in eastern Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
- Consider the course of history in western Europe after the Bubonic Plague of 1346-8, the course of history in eastern Europe after the Bubonic Plague of 1346-8, and the course of history in the Roman Empire after the Antonine Plague of 165-180. Which two do Willem Jongman and Melissa Dell think are more closely analogous? Why and how?
- Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity and a 1500 years-earlier Industrial Revolution?
- Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity that carried the proportional growth rate of the value of the stock of useful human ideas about technology and organization up from the 0.06%/year of the year -1000 to year 1 Axial Age to something like the 0.15%/year of the year 1500 to year 1700 Commercial Revolution Era?
- Why, in Moses Finley's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
- What factors made it so that the year 1 was much more likely to have seen the Mediterranean dominated by a Rome-based formal empire of conquest and legions first and trade and cultural influence second than an Athens-based informal empire of trade and cultural influence first and conquest and fleets second?
- What, in Josh Ober's view, was the likelihood that classical Mediterranean civilization might have attained something like the pace of commercial activity and productivity growth of the 1500-1700 Commercial Revolution Era?
- What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the long Agrarian Age between the invention of agriculture in the year -8000 and the year 1500? Why was this rate of growth so low?
- What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Commercial Revolution Era of 1500-1770? Why was this rate of growth so much higher than in the previous Agrarian Age? Why was this rate of growth so much lower than in the subsequent Industrial Revolution Era?
- What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Industrial Revolution Era of 1770-1870? Why was this rate of growth so much higher than in the previous Commercial Revolution Era? Why was this rate of growth so much lower than in the subsequent Modern Economic Growth Era?
- What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Modern Economic Growth Era of 1870-today? Why was this rate of growth so much higher than in the previous Industrial Revolution Era?
- What is Brad DeLong's guess of what the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization will be in the next five centuries? Why doesn't he think it will be higher? Why doesn't he think it will be lower?
- What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so low?
- What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so much lower than the rate of growth of the useful ideas stock?
- Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Commercial Revolution Era 1500-1770 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
- Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Industrial Revolution Era 1770-1870 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
- Suppose population growth in the "advanced west"—the European North Atlantic coast countries that were the most technologically advanced and became militarily powerful in the Commercial Revolution Era 1500 to 1770—had been at its historic level of 0.4%/year over 1500 to 1770, that invention and innovation had proceeded as in actual world history, but that the rest of the world had managed to fight off European colonialism and retain control of the Americas and of Indian Ocean trade in non-European hands. Would living standards in the European North Atlantic coast countries have then been likely to increase between 1500 and 1770? (In our history they increased by some 40% over that period.)
Th Feb 6: 2.1. Malthusian Agricultural Economies
- Read Before: Jared Diamond (1997): The Worst Mistake in the History of the Human Race https://www.discovermagazine.com/planet-earth/the-worst-mistake-in-the-history-of-the-human-race
- Read Before: The Man Who Saw the Deep (Gilgamesh), selections https://delong.typepad.com/files/gilgamesh-selections.pdf
- Slides: https://github.com/braddelong/public-files/blob/master/econ-135-lecture-5.pptx
Read: J. Bradford DeLong: Lecture Notes: Determinants of Ideas Growth https://github.com/braddelong/long-form-drafts/blob/master/solow-model-6-innovation.ipynb
What you need to know:
The Malthusian equilibrium level of productivity and income is (a) the zpg subsistence level of necessities consumption (b) times the taste for luxuries (including urbanization and an upper class, as well as middle-class conveniences) (c) bumped up to make the economy prosperous enough to support population growth at the rate (d) warranted by progress in technology and organization.
The Malthusian equilibrium level of population is (a) the quotient of useful ideas divided by the zpg subsistence level of necessities consumption, (b) times the ratio of the savings rate (boosted by law-and-order and by any imperial peace) to the depreciation rate raised to the elasticity of production with respect to capital intensity, (c) divided by the taste for luxuries, (d) all raised to the salience γ of ideas as opposed to resources in productivity, with (e) two nuisance terms tagging along.
This File: https://www.bradford-delong.com/2020/01/a-brief-cheat-sheet-note-on-the-solow-malthus-model-for-understanding-pre-industrial-economies.html
Edit This File: https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f0800388340240a5067c53200b/edit
Up a Level: Malthusian Perspectives https://delong.typepad.com/teaching_economics/malthus.htm
#ancienteconomies #economicgrowth #economichistory #highlighted #teachinggrowth #teachinghistory #2020-01-30
How does an economy well-approximated by the Solow growth model—one that has a constant labor-force growth rate n and labor-efficiency growth rate g; a constant savings-investment share of production s and capital deprecation rate δ; and a constant elasticity θ of production Y with respect to the economy's capital intensity κ, where capital intensity is defined as κ = K/Y, the quotient of the economy's capital stock K and its production level Y—behave? What does it do? How are you—if you are a student—to understand it? And to use it?
Standard explanations often focus on graphs like:
which are often unhelpful.
With this class I would like—if I can get it working—to take another tack. If you have a Berkeley CalNet account, click on this link: https://datahub.berkeley.edu/hub/user-redirect/git-pull?repo=https%3A%2F%2Fgithub.com%2Fbraddelong%2Flecture-support-2020&urlpath=tree%2Flecture-support-2020%2F. If you have access to another Jupyter notebook server, go to https://github.com/braddelong/lecture-support-2020. In either case, then open the file: lecture-support-solow-2020-01-23.ipynb. You should then have, open, my Solow Growth Model Simulator. Click in the second code cell—the one whose first line is—"# SET PARAMETERS, INITIAL CONDITIONS, AND SCENARIO LENGTH IN THIS CELL". You can now edit the text in this code cell. Do so in order to either accept defaults or change the variable assignment statements (those with no "#" in the first column and an "=" sign in them to set values for the model parameter in the lines:
- n = 0.01 # the labor-force L proportional growth rate
- g = 0.02 # the labor-efficiency E proportional growth rate
- s = 0.12 # the share of production Y that is saved and invested
- δ = 0.03 # the capital depreciation rate
- θ = 1.09 # the elasticity of production Y with respect to capital intensity κ
Then click lower down and edit in order to accept default or choose alternative starting values L_0, E_0, and κ_0 for the initial values as of time 0 for the labor force, labor efficiency, and capital intensity in the lines:
- L_0 = 1
- E_0 = 1
- κ_0 = 8
Then click lower down again and either accept the default or choose the length of time for which the simulation will run in the lines:
- T = 100
Then go up to the top of your environment. In the "Kernel" drop down menu click on "Restart Kernel and Run All Cells"
Then scroll down the webpage. If all has gone well you should see, interspersed among the code, ten graphs showing how each of and some combinations of the model variables behave over time.
Note what looks interesting. Then go back to the top, and change something in the second code cell. Once again, go up to the top of your environment, and in the "Kernel" drop down menu click on "Restart Kernel and Run All Cells". What has changed? What strikes you as interesting? Take notes.
Repeat until you think you have an understanding of how an economy that happened to be well-modeled by the Solow growth model would behave.
The assignment? Write 200-300 words on the simulations you carried out, why you chose the parameter values and starting conditions you did, what (if anything) you learned from this exercise, and how useful you think models and exercises like this are in understanding economic growth out there in the real world.
why would one want to think like an economist? What is thinking like an economist—rather than like a sociologist (looking for the webs of human connections and common belief), a political scientist (looking at power and at authority both given and taken), or a historian (looking at origins and development)? One wants to think like an economist because it is an especially useful way of thinking about the economy. What, then, is the economy? And why is “thinking like an economist”—marginal, interdependence, benefit-cost, and opportunity cost calculations—a good way of understanding it?
Partha Dasgupta provides the best short answer to those two linked questions, and in the process of doing so provides the best introduction to economics, that I have seen
Partha Dasgupta: Economics: A Very Short Introduction https://delong.typepad.com/files/dasgupta-economics.pdf
Let me remind you about Aristoteles son of Nikomakhos of Stagira:
He lived from -384 to -322, in the Greek-speaking communities around the Aegean Sea. He spent most of his time in Athens. For the two millennia following his death, he would be, for a large chunk of the world, THE Philosopher: capital “P” and capital “THE”. 1650 years after his death, poet Dante Alighieri would call him “the Master… of those who know”, “il Maestro di color che sanno”. Aristotle’s was, even at so long a distance in time, the most powerful intellectual name that one could conjure with...
Aristotle: Politics, Book I https://delong.typepad.com/files/aristotle-politics-book-i.pdf
Subject: Your Squawk Box segment this Thursday, January 2: Please get to the studio at UC Berkley by 6:40am est
Body: The anchors will be Joe and Becky. You’ll share the segment with Shermichael Singleton, political consultant, contributor at The Hill. The discussion will be about "running against the Trump economy". Trump has had the best 3 year performance out of every president since Reagan, since being elected. How does one run against this? Who has the potential to compete? Can Trump keep it up, how? Please send thoughts and talking points.
Jump in the S&P over the past eight years from 1300 to
1.5x1.8x in the valuation ratio
- A 1.16x due to inflation
- A 1.15x due to an increase in the fundamental earning power underpinning each share of stock
- All of that is due to buybacks. None of that is due to greater business earning power
- Thus the optimism with respect to the valuation ratio—even given limited opportunities to earn money elsewhere—somewhat puzzles me
- Plus there is the joker in the deck: will the wage share remain depressed indefinitely?
- Usually I'm a "150% of your net worth in stocks" guy
- Now we are moving money out, and I'm a "50% of your net worth in stocks" guy
The talk I hear about the "strong Trump economy" makes no allowance for the difficulty of the dive he has faced relative to that that other presidents face...
- Trump was handed very good cards
- Taking account of the difficulty of the dive, I think you have to say that:
- The Clinton economy turned out much better than expected (due to good policy)
- The Obama economy turned out better than expected (due to good but inadequate policy)
- The Trump economy has turned out as expected—but with extra damage done by the trade war, which has on net hurt manufacturing and agriculture, and with no investment boom
- The Reagan economy turned out somewhat worse than expected—policy incoherence between the tax cutter, the defense spenders, and Paul Volcker really stomped the entire economy over 1981-3 and the Midwest over 1981-1987.
- The George H.W. Bush economy turned out worse than expected—they took their eye off the ball on the S&L crisis
- The George W. Bush administration really _ _ the pooch...
It looks like we have dodged a recession...
- We have had a manufacturing recession, but domestic manufacturing is no longer an important enough sector for a manufacturing recession to bring down the economy as a whole...
- The Trump economy is very weak in productivity growth and the wage share, and those are very worrisome for long-term trends.
The most striking aspect of the political situation is the strong divergence between Trump's good unemployment and inflation numbers and his lousy approval numbers
- Yet perhaps what should surprise me the most is that his approval numbers are so high
- Policy incoherence while you insult people on Twitter would not have seemed to me to be a governing strategy that many Americans would approve of...
- It's not just not doing your job...
- It's undignified
- Yet he has his fans—and very few of them are beneficiaries of his tax cut, and there are no beneficiaries of his trade war or his foreign-born sliming...
- Perhaps all his fans think they will benefit from his tax cut?
- Recall John Steinbeck: "We didn’t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist..."
- A new paper out by Alberto Alesina and Stephanie Stantcheva on how Americans think there is much more and Europeans think there is substantially less upward mobility than in fact there is—and how in real life there is more in Europe than in America
Feminism: I Need to Include Something Like This in My Twentieth Century History Book. But I Would Like Something from 1870-1950—Not Something from 1776 and 1700 and Before...
Plus I am worried that I am, somewhere in here, striking the wrong tone. Yes, many people will find what is below annoying. But will the people annoyed be the people I want this to annoy, or will they be people whom I desperately do not want to read my work and then be annoyed?
2.5: The Arrival of Feminism: In 1764 in Britain’s Massachusetts colony Abigail Smith was 20, and had had no formal education at all: girls weren’t worth it. In that year married a man she had known for five years: the up-and-coming 30-year-old lawyer John Adams. Their daughter Nabby was born the following year, in 1765. There followed John Quincy (1767), Suky (1768, who died at the age of 2), Charles (1770, who died at the age of 10), Thomas (1772), with high probability a couple of (very early) miscarriages from 1774-6, then the stillborn Elizabeth (1777), and (perhaps) another miscarriage afterwards—but I suspect not. She ran their Boston-Braintree household and property operations while he played his role on the large political-intellectual stage, becoming second president of the United States.
Death and disease were, as was the case in the Agrarian Age, omnipresent. Her most famous letter to her husband was written in 1776. A part of it that is rarely—I would say never—excerpted contains these: “our Neighbour Trot whose affliction I most sensibly feel but cannot discribe, striped of two lovely children in one week…”, “Betsy Cranch has been very bad…”, “Becky Peck they do not expect will live out the day…”, “The Mumps… Isaac is now confined with it…”, and “your Brothers youngest child lies bad with convulsion fitts…”
Her letters tell us that she badly wanted to know what was going on in the world outside her household and the Boston-Braintree circle:
I wish you would ever write me a Letter half as long as I write you; and tell me if you may: Where your Fleet are gone? What sort of Defence Virginia can make against our common Enemy? Whether it is so situated as to make an able Defence? Are not the Gentery Lords and the common people vassals? Are they not like the uncivilized Natives Brittain represents us to be?…” and “I have sometimes been ready to think that the passion for Liberty cannot be Eaquelly Strong in the Breasts of those who have been accustomed to deprive their fellow Creatures of theirs…”
And note how she cannot say "I think...", even to her ten-years-older husband: she has to say "I have sometimes been ready to think..."
Noah Smith and Bradford DeLong: Neoliberalism: Are We Sure That's the Right Word? http://www.pairagraph.com/dialogue/6420f501123b4520892978e93565cff9/1: Noah Smith: 'So we're supposed to be discussing neoliberalism, are we? Well, I was elected "Chief Neoliberal Shill of 2018" in a rigged joke online poll, so I spent a year looking around for reasons to think that "neoliberalism" might describe a good and useful policy outlook instead of Reagan/Thatcher/Milton Friedman libertarian dogma. I remembered that you had penned a defense of something called "neoliberalism" a while back: You framed "neoliberalism" as basically a program that protected markets as the basic engine of production and then tried to add a welfare state on top of those markets. And you depicted the main benefits of this system as being poor-country growth and global convergence. That strikes me as a useful definition and a solid assessment of its benefits...
Knowledge system and cognitive science guru Andy Matuschak writes a rant called Why Books Don’t Work https://andymatuschak.org/books/, about big, difficult books that take him six to nine hours each to read:
Have you ever had a book… come up… [and] discover[ed] that you’d absorbed what amounts to a few sentences?… It happens to me regularly…. Someone asks a basic probing question… [and] I simply can’t recall the relevant details… [or] I’ll realize I had never really understood the idea… though I’d certainly thought I understood…. I’ll realize that I had barely noticed how little I’d absorbed until that very moment…
However, he goes on to say:
Some people do absorb knowledge from books… the people who really do think about what they’re reading.… These readers’ inner monologues have sounds like: “This idea reminds me of…,” “This point conflicts with…,” “I don’t really understand how…,” etc. If they take some notes, they’re not simply transcribing the author’s words: they’re summarizing, synthesizing, analyzing…
The purpose of this weblog is to be the best possible portal into what I am thinking, what I am reading, what I think about what I am reading, and what other smart people think about what I am reading...
"Bring expertise, bring a willingness to learn, bring good humor, bring a desire to improve the world—and also bring a low tolerance for lies and bullshit..." — Brad DeLong
"I have never subscribed to the notion that someone can unilaterally impose an obligation of confidentiality onto me simply by sending me an unsolicited letter—or an email..." — Patrick Nielsen Hayden
"I can safely say that I have learned more than I ever would have imagined doing this.... I also have a much better sense of how the public views what we do. Every economist should have to sell ideas to the public once in awhile and listen to what they say. There's a lot to learn..." — Mark Thoma
"Tone, engagement, cooperation, taking an interest in what others are saying, how the other commenters are reacting, the overall health of the conversation, and whether you're being a bore..." — Teresa Nielsen Hayden
"With the arrival of Web logging... my invisible college is paradise squared, for an academic at least. Plus, web logging is an excellent procrastination tool.... Plus, every legitimate economist who has worked in government has left swearing to do everything possible to raise the level of debate and to communicate with a mass audience.... Web logging is a promising way to do that..." — Brad DeLong
"Blogs are an outlet for unexpurgated, unreviewed, and occasionally unprofessional musings.... At Chicago, I found that some of my colleagues overestimated the time and effort I put into my blog—which led them to overestimate lost opportunities for scholarship. Other colleagues maintained that they never read blogs—and yet, without fail, they come into my office once every two weeks to talk about a post of mine..." — Daniel Drezner
Introduction: Let me write, overwhelmingly, about inequality understood as inequality between people who regard themselves as members of a common culture, economy, nation. There is the separate issue of inequality between the different cultures, economies, nations that make up the world, but let me leave that for the very end, and then deal with it only briefly.
History of Inequality: For most of human history since the invention of agriculture, typical settled human societies have been about 80% as unequal as they could possibly be: were anything to stretch out the distribution of income and wealth by more than an additional 20%, and working-class women would have become too skinny to ovulate regularity and working-class children would have had compromised immune systems, and so the population would have failed to reproduce itself. The typical economy's Gini index was about 45 or so (the same Gini value as if 72% of wealth and income were evenly divided among the top 28%, and the rest evenly among the rest)—with New Spain in the eighteenth century estimated up at above 60 (the same Gini value as if 4/5 were evenly divided among the top 1/5, and the rest evenly among the rest) and the Kingdom of Naples and China estimated down below 30 (the same Gini value as if 65% were evenly divided among the top 35%, and the rest of income evenly among the rest).
Hoisted from the Archives: If You Are So Rich, Why Aren't You Smart? http://www.bradford-delong.com/2009/08/if-you-are-so-rich-why-arent-you-smart.html: A correspondent emails me a link to https://web.archive.org/web/20090830190212/http://gregmankiw.blogspot.com/2009/08/least-surprising-correlation-of-all.html... Greg Mankiw looks at:
The Least Surprising Correlation of All Time: So what? This fact tells us nothing about the causal impact of income on test scores.... This graph is a good example of omitted variable bias, a statistical issue discussed in Chapter 2 of my favorite textbook. The key omitted variable here is parents' IQ. Smart parents make more money and pass those good genes on to their offspring.... Suppose we were to graph average SAT scores by the number of bathrooms a student has in his or her family home. That curve would also likely slope upward.... But it would be a mistake to conclude that installing an extra toilet raises yours kids' SAT scores. It would be interesting to see the above graph reproduced for adopted children only. I bet that the curve would be a lot flatter...
The explicit argument, of course, is that the parents are rich because they are genetically smart, and that the children test well because they have inherited smartness genes from their parents, and all is good because it is right that the worthy should be rich and the most important part of being worthy is being smart. And Mankiw drops it there—without even acknowledging that, say, being able to afford an extra bathroom is a good signal that you can afford to spend more money on your children's education. Without trying to do a quantitative calculation of the expected slope. But, rather, hingeing the entire thing on "good genes".
IMHO, merely saying that correlation is not always causation and dropping the issue is profoundly unhelpful—moreover, it shows a... certain lack of work ethic as well. Off the top of my head...
Project Syndicate: [Brad DeLong Says More...](htt*PS*: //us10.campaign-archive.com/?u=9116789a51839e0f88fa29b83&id=646c7b19aa&e=a7192bc790): Project Syndicate: One forgotten lesson of the Great Depression, you wrote last month, is that “persistent ultra-low interest rates mean the economy is still short of safe, liquid stores of value, and thus in need of further monetary expansion”...
...Since then, the US Federal Reserve has cut the federal funds rate – a move that you argued in March could either stave off a recession or drastically undermine the Fed’s capacity to respond to one. What steps should the Fed take to help encourage the former and prevent the latter? At a time of growing political pressure on the Fed, what approach is it likely to take?
Brad DeLong: Back in 1992, Larry Summers and I warned participants at the Fed’s annual symposium in Jackson Hole, Wyoming, that low inflation and high equity-return and bond-risk premiums do not play well together. Dealing with a typical recession had, historically, required that the Fed cut the federal funds rate by five full percentage points. A large recession would require even larger cuts.
Project Syndicate: How Trolls Overran the Public Square https://www.project-syndicate.org/commentary/trolls-win-control-of-the-public-square-by-j-bradford-delong-2019-12: Since the invention of writing, human innovation has transformed how we formulate new ideas, organize our societies, and communicate with one another. But in an age of rapid-fire social media and nonstop algorithm-generated outrage, technology is no longer helping to expand or enrich the public sphere: Every year since 1900 we have had change in human technology and organization at a blistering pace: human productivity, organization, and technological capabilities now change at a rate that packs into one year what would have been 50 years of change back before 1500. It used to be that culture, war, the rise and fall of individuals' statuses, and politics were the meat of human history, with technology and organization much of an unchanging background, and productivity growing only very slowly on average. But that is not the world we live in today.
Project Syndicate: Stop Inflating the Inflation Threat https://www.project-syndicate.org/commentary/us-inflation-flat-phillips-curve-by-j-bradford-delong-2019-10: Given the scale and severity of inflation in America in the 1970s, it is understandable that US monetary policymakers developed a deep-seated fear of it. But, nearly a half-century later, the conditions that justified such worries no longer apply, and it is past time that we stopped denying what the data are telling us.: I remember September 2014: That month the U.S. unemployment rate dropped below 6%, and I was assured by very many that that meant that the Phillips Curve predicted that inflation would soon be on the rise, and that it was time for the Federal Reserve to begin to—rapidly—normalize monetary policy—to begin shrinking the monetary base, and raising interest rates back into a "normal" range. Today unemployment is 2.5%-points lower than what I was then assured was the "natural" rate of unemployment. According to the rule-of-thumb as they stood back when I was an assistant professor in 1990, such a low unemployment rate should lead annual inflation to climb by 1.3%-points every year: if this year inflation were to be 2.0%, next year's would be 3.3%, and—if unemployment stayed this low—the year after that's would be 4.6%, and the year after that 5.9%.
Project Syndicate: No, We Don’t “Need” a Recession https://www.project-syndicate.org/commentary/myth-of-needed-recession-by-j-bradford-delong-2019-10: Business cycles can end with a "rolling readjustment" in which asset values are marked back down to reflect underlying fundamentals, or they can end in depression and mass unemployment. There is never any good reason why the second option should prevail: BERKELEY – I recently received an email from my friend Mark Thoma of the University of Oregon, asking if I had noticed an increase in commentaries suggesting that a recession would be a good and healthy purge for the economy (or something along those lines). In fact, I, too, have noticed more commentators expressing the view that “recessions, painful as they are, are a necessary growth input.” I am rather surprised by it.
For a bit over the first half of the 1860s-2010s Long 20th Century, global history was profoundly shaped by the peculiarity of Prussia. The standard account of this peculiarity—this sonderweg, sundered way, separate Prussian path—has traditionally seen it has having four aspects. Prussia—and the “small German” national state of which it was the nucleus—managed to simultaneously, over 1865-1945: (1) wage individual military campaigns with extraordinary success; (2) wage wars no sane statesman would have entered; (3) via the role, authority and interests of the military-service nobility societal caste, divert the currents of political development from the expected channel into a sonderweg; (4) engage in continent-spanning systematic patterns and campaigns of terror, destruction, murder, and genocide that went far beyond anything other European powers engaged in within Europe, and even went far beyond the brutalities of colonial conquest and rule. Did Prussia—and the “small German” national state of which it became the core—in fact follow a separate and unusual path, with respect to economic, political, cultural, social development, relative to other western European national states in the arc from France to Sweden? Do these four aspects as components rightly summarize the sonderweg? What is their origin, and what is the relation between them?...
4.3) Part VII: The Accumulation of Capital: 4.3.1. The Bourgeoisie Is the Ruling Class: This is where the book starts to sing (to me, at least).
The first important thing I get out of Part VII is that, to quote from the Communist Manifesto, “the executive of the modern state is a committee for managing the affairs of the _business class”. Wealth speaks loudly, and influences the government to arrange things for the convenience of wealth—to keep wages low, and workers available.
I have finished (a draft of) my "Smith, Marx, Keynes" lecture notes—well, I have not written 7.6 and 8.2. For 7.6, I have simply dumped in (much of) Paul Krugman's Mr. Keynes and the Moderns. 8.2 I have not written anything on. But what it is, it is...
4) Karl Marx’s Analytical System: 4.1. On Reading Capital: 4.1.1. Why Are We Making You Do This?: Marx spent the next 20 years of his life after writing On the Jewish Question trying to figure out the economics, and then write it down. And in 1867 he published Capital: A Critique of Political Economy. (Or, at least, he published volume I. He died before he finished volumes II and III to his satisfaction.) Capital is a big and difficult book. And we have set you to read it in order to gain a sense of what answers Marx arrived at: what he concluded and why, and whether his conclusions are correct.
Why have we set you to read it? We could, after all, digest it into twenty bullet points and say “these will be on the exam”.
4.1.2) The Skill of Reading Difficult Books: One answer is that the skill of reading difficult books is something we have to teach. The labor economists tell us that going to Berkeley, or to other elite American universities, is very good for you not just in terms of making you a more knowledgeable, thoughtful, and well-rounded person, but also in terms of inculcating you a lot of skills that give you many, many extra life choices. Chief among these skills are: presenting yourself in English in person; presenting yourself in English on paper; and figuring out how to get information out of all the written English words that appear before your eyes. Thus one thing we are here to do is to teach the valuable skill of reading hard and difficult but valuable books. And reading hard and difficult but valuable books with us on the teaching staff coaching you through the process is the best way to do that.
Knowledge system and cognitive science guru Andy Matuschak writes a rant called Why Books Don’t Work https://andymatuschak.org/books/, about big, difficult books that take him six to nine hours each to read.... [His] points have strong relevance for students in U.C. Berkeley’s Econ 105: History of Economic Thought: Do we live in a Smithian, Marxian or Keynesian World?. The core of the course is an assisted reading of three big books that are d—-ably difficult.... To assist you in this process, we have compiled 150 questions-and-answers—50 about Smith, 50 about Marx, and 50 about Keynes—that we think you should review and learn as part of your active-learning incorporation of the thought of these three authors into your own minds.... For those of you reading this who are in the intended audience of Econ 105 students in the fall of 2019, here is an incentive.... Some of these questions will be on the exam...
2.5) Adam Smith & Inequality: 2.5.1. Inequality Generated Outside the Market: Smith’s first way of minimizing the importance of inequality—or at least minimizing the responsibility of the market and of the economy for fighting inequality—is to argue that inequality springs from politics and sociology rather than from market economics. Inequality arises from the role that hierarchy and command-and-control play in the mixed-up processes that are human society. The society of England becomes more unequal because William the Bastard from Normandy and his thugs with spears—300 families, plus their retainers—kill King Harold Godwinson, and declare that everyone in England owes him and his retainers 1/3 of their crop. The society of England becomes more unequal because Queen Elizabeth I Tudor grants a monopoly over trade with America to Sir Walter Raleigh. Why? Because he had successfully flirted with her. These are not economic processes. These are not closely connected with the “system of natural liberty” than is the market economy.
Indeed, the system of natural liberty is only one way you can organize society. Societies can be organized as ones of feudal lords and peasants, as priests and worshippers, robbers bands and their victims. But these ways of organizing society are impoverishing and, Smith claims in his very naming of his system the “System of Natural Liberty”—unnatural. Dugald Stewart quotes from one of Smith’s lectures that, at least in the lecture hall at Glasgow in 1749, Smith was blunt:
Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things…
I believe that the later Adam Smith would note that “tolerable administration of justice” covers a lot of ground: the later books of An Inquiry into the Nature and Causes of the Wealth of Nations are very long indeed: Book III on how the historical development of Europe has let it to deviate from the System of Natural Liberty is 43 pages, Book IV on errors being made in 1776 by the governments of Europe is 273 pages, and Book V on what governments should and should not do is 276 pages—a total of 592 pages on what governments should, should not, and have unfortunately done, with only a total of 346 pages laying out Smith’s analytical system and its conclusions, among them that:
All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and, to support themselves, are obliged to be oppressive and tyrannical…
As Heilbroner puts it:
The great enemy to Adam Smith's system is not so much government per se as monopoly—in any form. “People… meet[ing] together… [and] the conversation ends in… some diversion to raise prices.”… If the working of the market is trusted… anything that interferes… lowers social welfare. If, as in Smith’s time, no master hatter anywhere in England could employ more than two apprentices or no master cutler in Sheffield more than one, the market system cannot possibly yield its full benefits…. If, as in Smith's time, great companies are given monopolies of foreign trade, the public cannot realize the full benefits of cheaper foreign produce. Hence, says Smith, all these impediments must go…
3) Karl Marx’s Intuitions: Marx’s Enthusiasm for the Market: But back up. First, note that Karl Marx was much more enthusiastic about the market economy and the prospects for the societal division of labor than Smith had been. This enthusiasm had multiple causes:
- Marx lived 75 years later, in a time of much more rapid economic growth.
- Marx saw, much more clearly, technology as the magic force that it was going to be.
- Smith wanted to make his way in the world as an upwardly mobile outsider intellectual taking a measured view of things and entertaining his potential audience; Marx wanted to leave his mark upon the world—hence all his enthusiasms, and all his hates, were outsized.
- Marx was, in a very strange way, a Fundamentalist Christian—albeit a massively heretical one: a firm believer in the redemption and total transformation not of an individual soul bur of humanity at the hands of a benevolent power. As American literary critic Edmund Wilson was to write in 1940: a lot of Marx’s and Marxist writing makes no sense unless you replace phrases like “progress of history” and “dialectic of history” with “Providence” and “God”.
We see this enthusiasm show through in the passages of Capital in which Marx talks about the transformative work that is being done by the capitalist market economy. But it shines through much more clearly in Marx and Engels’s 1848 Communist Manifesto, in an extended passage that outstrips pretty much anything ever written by capitalism’s friends:
The bourgeoisie, historically, has played a most revolutionary part…. The bourgeoisie has disclosed how it came to pass that the brutal display of vigour in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.
The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.
The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.
The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.
The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.
The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. Just as it has made the country dependent on the towns, so it has made barbarian and semi-barbarian countries dependent on the civilised ones, nations of peasants on nations of bourgeois, the East on the West.
The bourgeoisie keeps more and more doing away with the scattered state of the population, of the means of production, and of property. It has agglomerated population, centralised the means of production, and has concentrated property in a few hands. The necessary consequence of this was political centralisation. Independent, or but loosely connected provinces, with separate interests, laws, governments, and systems of taxation, became lumped together into one nation, with one government, one code of laws, one national class-interest, one frontier, and one customs-tariff.
The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?…
“What earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?”
The bourgeoisie —the market economic system in which the capitalists, the business class, hold the reins and have the wealth—has, is, and will create the material abundance needed for humanity to pass through the gates of history and enter its proper destiny of utopia.
Smith Gets Snarky, Stoic, and Cynical: Snarkism: Adam Smith’s third way of minimizing the importance of economic inequality is to snark. The aim of wealth is to make you happy. Smith thinks that what wealthy women wish they could buy is beauty, and what wealthy men wish they could buy is strength. But who are the beautiful and strong in England? Adam Smith tells us in an aside on nutrition on the good qualities of the potato:
The chairmen, porters, and coal-heavers in London, and those unfortunate women who live by prostitution, the strongest men and the most beautiful women perhaps in the British dominions, are said to be, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this root [the potato]…
The rich aren’t doing a terribly good job of using their wealth to promote human flourishing, are they? And there is the implication that the rich are none too happy. We see Smith, and what he is doing here, I think.
Stoicism: Adam Smith’s fourth way of minimizing the importance of economic inequality is to assume the philosophical pose of the stoic. One works hard. One sacrifices one’s peace and leisure in order to get rich. And what does that get you as you age? Adam Smith writes that to the aging, looking back at a life in which they have sacrificed their ease and their happiness in order to gain wealth:
Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which in spite of all our care are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. They are immense fabrics, which it requires the labour of a life to raise, which threaten every moment to overwhelm the person that dwells in them, and which while they stand, though they may save him from some smaller inconveniencies, can protect him from none of the severer inclemencies of the season. They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more, exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death…
Who then benefits from all the industry and toil of the upwardly-mobile? Adam Smith argues that it was, somewhat paradoxically, the poor. The rich sacrifice their true happiness to set in motion enterprises. And the commodities produced by those enterprises are principally consumed by the poor:
The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants…. The proud and unfeeling landlord…. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of… all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice…
Cynicism: Fifth and last, Adam Smith minimizes the importance of economic inequality by claiming that there is little or nothing to be done about it. Human nature is such that people will seek to create, and then to obey, those whom they will call their superiors. It is the view expressed by Calvera in the movie The Magnificent Seven. Chico asks Calvera:
And the people of the village? What about them?
I leave that to you. Can men of our profession worry about that? If God did not want them to be sheared, he would not have made them sheep!
As Adam Smith puts it in his Theory of Moral Sentiments:
A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than they are to those of meaner stations.
Upon this disposition… is founded the distinction of ranks, and the order of society. Our obsequiousness to our superiors more frequently arises from our admiration for the advantages of their situation, than from any private expectations of benefit from their goodwill…. We desire to serve them for their own sake, without any recompense but the vanity or the honour of obliging them…
To attempt to eliminate inequality is, for Smith in his cynical mode, like trying to bail out the sea: make society equal, and people will find somebody to look up to, and then figure out a way to give their money away to the rich.
So that is Adam Smith: worry about prosperity and wealth, yes; worry about poverty and want, yes; worry about inequality, not so much.
Needless to say, Karl Marx did not agree that income inequality is not worth a great deal of concern. He saw inequality as a necessary product of the market economy, a necessary product that poisoned all of its fruits, and one that made hopes of eliminating or even reducing poverty and dire poverty vain.
2.4) Adam Smith & Poverty: Adam Smith loathes poverty.
Adam Smith is eager to create a society in which there is no poverty.
Adam Smith spends a substantial amount of time investigating the course of poverty over time. For example, he takes time and care to write:
During the course of the last century, taking one year with another, grain was dearer in both parts of the united kingdom than during that of the present…. It is equally certain that labour was much cheaper. If the labouring poor, therefore, could bring up their families then, they must be much more at their ease now. In the last century, the most usual day-wages of common labour through the greater part of Scotland were sixpence in summer, and fivepence in winter.… Through the greater part of the Low country, the most usual wages of common labour are now eight pence a-day; tenpence, sometimes a shilling, about Edinburgh…. In England, the improvements of agriculture, manufactures, and commerce, began much earlier than in Scotland. The demand for labour, and consequently its price, must necessarily have increased with those improvements. In the last century, accordingly, as well as in the present, the wages of labour were higher in England than in Scotland. They have risen, too, considerably since that time, though, on account of the greater variety of wages paid there in different places, it is more difficult to ascertain how much…. Not only grain has become somewhat cheaper, but many other things from which the industrious poor derive an agreeable and wholesome variety of food have become a great deal cheaper. Potatoes… cost half the price which they used to do thirty or forty years ago. The same thing may be said of turnips, carrots, cabbages; things which were formerly never raised but by the spade, but which are now commonly raised by the plough. All sort of garden stuff, too, has become cheaper…. The great improvements in the coarser manufactories of both linen and woollen cloth furnish the labourers with cheaper and better clothing; and those in the manufactories of the coarser metals, with cheaper and better instruments of trade, as well as with many agreeable and convenient pieces of household furniture…
Which he then cross-checks with elite gossip:
The common complaint that luxury extends itself even to the lowest ranks of the people, and that the labouring poor will not now be contented with the same food, clothing, and lodging which satisfied them in former times, may convince us that it is not the money price of labour only, but its real recompense, which has augmented…
Having established that poverty has diminished, he next launches a full-bore attack on all those who claim this is a bad thing:
Is this… to be regarded as an advantage or as an inconveniency?… Servants, labourers, and workmen… make up the far greater part…. What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable…
And then he makes a strong appeal to human solidarity, and to the reciprocal obligations humans undertake by entering into the gift-exchange relationships that knit society together:
It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged…
“It is but equity, besides…” This is a very strong appeal to human solidarity. It is coming from someone often seen as and sometimes dismissed as an apostle of human self-interest.
Adam Smith starts with the observation that humans are largely but not exclusively self-interested creatures: we are, largely but not exclusively greedy. Yet we have a complex and sophisticated societal division of labor. And that division of labor is essential to our prosperity. Indeed, it is essential to our survival: drop one or two of us into the Sierra Nevada, even in summer, and we will quite likely die. Drop 100 of us, and we will quite likely survive, and even flourish. How can animals that are by nature greedy nevertheless cooperate on a large scale? That is the deep moral-philosophical question that we can see in both of Smith’s big books...
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#berkeley #economics #highighted #historyofeconomicthought #lecturenotes #moralphilosophy #politicaleconomy #2019-11-21