History

The causes of the Bengal famine

by on February 17, 2015 at 11:31 am in Books, Economics, History, Law | Permalink

The 1943 Bengal famine has been cited by Amartya Sen and others as a classic example of market failure.  But in his new (and excellent) book Eating Dead People is Wrong, and Other Essays on Famine, Its Past, and Its Future, Cormac Ó Gráda devotes an entire chapter to that episode and comes away with a different impression.  Here is a summary sentence:

The 1943-44 famine has become paradigmatic as an “entitlements famine,” whereby speculation born of greed and panic produced an “artificial” shortage of rice, the staple food.  Here I have argued that the lack of political will to divert foodstuffs from the war effort rather than speculation in the sense outlined was mainly responsible for the famine.

I will add to that price controls were imposed once the famine was underway, and campaigns were conducted against hoarders.

In the book I also very much enjoyed the discussion of the 1946-47 famine in Moldova, which apparently involved a good deal of cannibalism.

Kevin Drum reports an anomaly:

…here’s the rate of anti-Semitic incidents in the U.S., as tallied by the Anti-Defamation League. What you see is a peak in the early 90s and a decline ever since. This is exactly the same thing that you see in rates of violent crime in general. In other words, as violent crime fell, violent crime directed at Jews also fell. This makes sense.

But the global picture is quite different. Partly this is probably due to the fact that the worldwide numbers come from a different source (the Kantor Center in Tel Aviv) and are tallied up using a different methodology. But I doubt that accounts for the stark contrast: worldwide, anti-Semitic attacks have been on a straight upward path ever since the late 90s. This is despite the fact that violent crime in Europe, which accounts for most of the incidents, has followed a trajectory pretty similar to the U.S.

Kevin also reports that the Canadian pattern is closer to Europe than to the United States.  You also can find some charts at the link.

Are there any reasonable explanations which involve economic factors?

During the president’s two terms in office, the Washingtons relocated first to New York and then to Philadelphia. Although slavery had steadily declined in the North, the Washingtons decided that they could not live without it. Once settled in Philadelphia, Washington encountered his first roadblock to slave ownership in the region — Pennsylvania’s Gradual Abolition Act of 1780.

The act began dismantling slavery, eventually releasing people from bondage after their 28th birthdays. Under the law, any slave who entered Pennsylvania with an owner and lived in the state for longer than six months would be set free automatically. This presented a problem for the new president.

Washington developed a canny strategy that would protect his property and allow him to avoid public scrutiny. Every six months, the president’s slaves would travel back to Mount Vernon or would journey with Mrs. Washington outside the boundaries of the state. In essence, the Washingtons reset the clock. The president was secretive when writing to his personal secretary Tobias Lear in 1791: “I request that these Sentiments and this advise may be known to none but yourself & Mrs. Washington.”

There is more here, depressing throughout, and for the pointer I thank Michael Clemens.

I had never heard of this novella, and yet it is a splendid and and indeed frank exhibit of Hardy’s rather brutal and tragic view of human psychology.  It is explicitly a version of the Romeo and Juliet story, except the pair end up marrying rather than dying.  What happens then?  The story is full of behavioral economics and rational choice dilemmas.

Here is one excerpt:

“The only woman whom I never loved, I may almost say!” he added, smiling; “and therefore the only one I shall ever regret!”

Hardy later rewrote this novella under the title The Well-Beloved (available in the same Penguin volume), but a brief skim indicates to me that the first version was much better (here is one analysis of the differences in revision, pdf).  In any case there is much Thomas Hardy out there waiting to be rediscovered.  Some Google searches indicate this novella is not extremely well known, commonly read, or analyzed in detail.  Yet it will turn out to have been one of the best things I have read this year.  Caveat emptor: this one does not pull any punches about the male romantic psyche.

The petroleum sector is about 21% of gdp and half of exports.  It’s not just that prices are down, rather quantities produced have been declining throughout the oughties.  (That is the less well known angle here.)  Currently Norwegian oil production is at about half of its 2000 level, and the sector is now bracing for 40,000 job cuts.

Here is from a recent internal economists’ critique of the country:

The group has documented how Norwegian politicians all too often have approved major investment projects that benefit far too few people, are poorly managed and plagued by huge budget overruns. Costs in general are way out of line in Norway, according to the group, while schools are mediocre, university students take too much time to earn degrees and mainland businesses outside the oil sector lack enough prestige to help Norway diversify its oil-based economy. The group mostly blamed the decline in productivity, though, on systemic inefficiencies and too much emphasis on local interests at the expense of the nation.

Is this entirely reassuring?:

Prime Minister Erna Solberg recently spoke of the need to invest in areas where people actually live…

After you adjust for wage differences, it costs 60% more to build a road in Norway than in Sweden.

There is this too:

“Approximately 600,000 Norwegians … who should be part of the labor force are outside the labor force, because of welfare, pension issues,” says Siv Jensen, the finance minister.

The country has largely deindustrialized, oil of course aside.  And there is a fair amount of debt-financed consumption.

The country has falling and below average PISA scores by OECD standards.

Not everyone admires Norway’s immigration policy, and there is periodic talk of banning begging in the country.  It seems there are only about 1000 beggars — mostly Roma — in a country of about five million, so you can take that as a sign they are not very good at processing discord.  Far-right populist views do not seem to be going away.

For sure, Norway will be fine.  Did I mention per capita income is over $100,000 a year and they have no current problems which show up in actual life?  Hey, the “over” in “overrated” has to come from somewhere!  The country also has the world’s largest sovereign wealth fund and owns about one percent of global stocks.  Still, the idea of a rentier economy makes me nervous.  When most people don’t “have to” do that well, often cultural erosion sets in.

They’ve made a new film : “Here’s a beautiful video of Iceland and Norway, time-lapsed and tilt-shifted to show the hustle, the bustle, and the beautiful splendor of Scandinavia from a more toy-like perspective. Called The Little Nordics, it was filmed by Dutch design team Damp Design. Happy Friday!”

Sorry Magnus, Karl —  I know you guys are still underrated.  It’s not for nothing that I used to call it “the Norwegian century.”

Addendum: Here is my earlier post on whether Sweden is an economically overrated country.  At least it is cheaper to build a road there.

Yesterday a few of you asked me to run this poll.  Please leave your answers in the comments, I will report back.  I thank you all in advance for the wisdom of your responses.  And please restrict your answers to living people, or say anyone who has passed away in the last five years, so this should be about contemporaries, not Joan of Arc or Einstein.

In order:

1. Barack Obama

2. Pope Francis

3. Bill Clinton

4. Rev. Billy Graham

5. George W. Bush

6. Ben Carson

7. Stephen Hawking

8. Bill Gates

9. Bill O’Reilly

10. Benjamin Netanyahu

11. Vladimir Putin

The source is here.  If I understand the ranking system properly, #6-11 are basically tied.

Given who is on the list, what should we infer about America as a nation?  About human nature?

David N. Weil has a new paper on this topic, and it makes some interesting points, here is one:

Net Social Security wealth of currently living Americans in 2013 was $12.9 trillion, or three quarters of a year’s GDP.

More generally he makes this point:

In 1700, at the beginning of the period that he studies in his book, marketable assets were indeed pretty much the only form of wealth.  But over the intervening 300 years, new types of wealth, most notably human capital and transfer wealth, have come to constitute a very significant fraction of total wealth.  Thus the constancy of the wealth/income ratio as portrayed in his data is an illusion.  More important, however, is the fact that the distribution of the new types of wealth that he does not measure is far more equal than, and not perfectly correlated with, wealth that falls into his analysis.

The paper is interesting throughout, the NBER version is here.  The top link here leads you go an ungated pdf.

Addendum: In a new essay Piketty responds to critics.

Tullock’s Questions?

by on February 5, 2015 at 7:20 am in Economics, History | Permalink

Gordon Tullock was famous for asking a lot of questions. Some odd, some uncomfortable, some on the spot and some in his work. For example, Gordon would often ask, Why don’t we invade Brazil? Meaning why did countries stop invading other countries and setting up colonies? It’s a good question. I am interested in collecting more of Tullock’s questions. Please respond with any questions Gordon asked you or questions that you find him asking in his work. Thanks!

Tullock

That is the subtitle, the title of the paper is Killing the Golden Goose, and the authors are Ashish Arora, Sharon Belenzon, and Andrea Patacconi.  The abstract shows what an important paper this is:

Scientific knowledge is believed to be the wellspring of innovation. Historically, firms have also invested in research to fuel innovation and growth. In this paper, we document a shift away from scientific research by large corporations between 1980 and 2007. We find that publications by company scientists have declined over time in a range of industries. We also find that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These effects appear to be associated with globalization and narrower firm scope, rather than changes in publication practices or a decline in the usefulness of science as an input into innovation. Large firms appear to value the golden eggs of science (as reflected in patents) but not the golden goose itself (the scientific capabilities). These findings have important implications for both public policy and management.

There is an ungated version here (pdf).  Of course, for better or worse, this means there is more of a burden on universities.

Ms Merkel is familiar with Mr Putin’s psychological operations. In 2007, he played on her well-known fear of dogs by allowing his black Labrador, Koni, into a meeting with her in his summer residence in Sochi. Photos show her tight-lipped as the Labrador buried its head in her lap.

Berlin officials say the chancellor does not allow Mr Putin to get to her through such displays or, for example, by turning up hours late for a meeting, as he did the night before the summit in Milan. Instead, she turns it to her advantage, treating the Kremlin chief’s bad manners as a sign of weakness.

From the FT, there is more here, interesting throughout.  File under still an important relationship.

That is the new eBook from my colleague Philip Auerswald and Anthony JoonKyoo Yun, you can buy it here.

The most recent issue of the Fletcher Security Review features a paper by Alex Nowrasteh and myself on Privateers! Their History and Future. One of the interesting side notes is that Americans supported privateering not just because it was effective but also because America’s greatest patriots, the founding generation, were deeply skeptical about standing armies and navies. Today, the right-wing, uber-patriotic brand of Americanism is pro-military and pro-empire. In contrast, the founders would regard the empire as deeply un-American. Quoting from the paper:

The founders feared standing armies as a threat to liberty. At the constitutional convention, for example, James Madison argued that “A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence against foreign danger have been always the instruments of tyranny at home.” For the founders, the defense of the country was best left to citizens who would take up arms in times of national peril, form militias, overcome the peril, and then to return to their lives.

As a result, the ideal military for the founders was small and circumspect (remember also that the second amendment was in part about the fear of standing armies, hence the support of the militia). The 1856 Treaty of Paris banned privateering but the United States refused to sign. Secretary of State William Marcy explained why in a great statement of patriotic American anti-militarism:

The United States consider powerful navies and large standing armies as permanent establishments to be detrimental to national prosperity and dangerous to civil liberty. The expense of keeping them up is burdensome to the people; they are in some degree a menace to peace among nations. A large force ever ready to be devoted to the purposes of war is a temptation to rush into it. The policy of the United States has ever been, and never more than now, adverse to such establishments, and they can never be brought to acquiesce in any change in International Law which may render it necessary for them to maintain a powerful navy or large standing army in time of peace.

Today the patriotic brand of anti-militarism, the brand that sees skepticism about the military and the promotion of peace and commerce as specifically American, is largely forgotten. President Eisenhower’s farewell address to the nation was perhaps the last remnant in modern memory. It’s a tradition, however, that true patriots must remember.

I wrote a short piece on this for Vox, here is one excerpt:

Who is the most influential public intellectual of the last 20 years?

This designation should go to someone who actually has helped change the world, rather than just changing lots of minds. It also should go to someone who has embodied key trends of the time, noting that for both standards I am focusing on the United States.

Based on those standards, I am inclined to pick Andrew Sullivan, who is most recently in the news for his announcement that he is quitting after fifteen years of blogging.

Any discussion of Sullivan’s influence must begin with gay marriage. Thirty-six states and the District of Columbia already have legalized gay marriage, representing a majority of the American population, with possibly Alabama and others to follow. A broader Supreme Court decision for nationwide legalization may be on the way. More generally, gay rights have taken a major leap forward.

…I thought long and hard before selecting Andrew for the designation of most influential public intellectual. Perhaps Paul Krugman has changed more minds, but his agenda hasn’t much changed the world; we haven’t, for instance, gone back to do a bigger fiscal stimulus. Peter Singer led large numbers of people into vegetarianism and veganism and gave those practices philosophic respectability; he is second on my list. A generation ago, I would have picked Milton Friedman, for intellectual leadership in the direction of capitalist and pro-market reforms. But that is now long ago, and the Right has produced no natural successor.

Self-recommending!  And again, please note, you should not confuse the designation “most influential” with “the person who, I, the reader, would most like to see elevated in status.”  That would be a fallacy of mood affiliation.

*Schubert’s Winter Journey*

by on January 28, 2015 at 3:53 pm in Books, History, Music | Permalink

The author is Ian Bostridge and the subtitle is Anatomy of an Obsession, and of course it focuses on Die Winterreise.  This is the first book published this year to make it into my 2015 “best of the year list.”  Here is one good review of the book.