Results for “lemin wu” 5 found
Very loyal readers may recall that Lemin Wu was a Berkeley Ph.D in economic history and a student of Brad DeLong. Then he seemed to disappear. But for the last few years he was been working and writing, and later in 2020 he has a book coming out in China, in Chinese, title still undetermined.
I have read only parts of the book (the parts in English), and an outline. Still , I am willing to predict it will be the best and most important economics book of the year, in any language. It also likely will mark the first time a Chinese economist, writing in Chinese, created an important work.
I won’t “give away the plot,” but suffice to say it is about the rise of the West, the Malthusian model, group selection in history, why development takes so long, and related big topics. Oh, and it does tie in to and draw upon Cixin Liu’s The Three-Body Problem, just in case you were wondering.
I hope very much this book will be published in English as well.
Hail Lemin Wu!
Lemin is recently out of UC Berkeley, and I have heard that he is on the American market right now.
Here is Lemin’s paper on the Malthusian trap (pdf), one of the most interesting papers of the last few years. The key point is that some kinds of production drive down living standards and other kinds of production do not, therefore enriching and disaggregating Malthus’s theory, some might say overturning it. Here is one excerpt:
It follows that the Romans were rich not because technological progress temporarily exceeded population growth—as Malthusianists claim—but because Rome had a business-friendly legal system and an active market economy. Well-functioning courts and market-places boost industry more than they boost agriculture. Thus biasing production structure to luxury, they raised the average living standards of the whole society. Conversely, the Agricultural Revolution left an unfortunate legacy: the hunter-and-gatherer-turned peasants failed to achieve the level of leisure and nutrition their ancestors once enjoyed (Diamond, 1987). Growth was immiserizing because agriculture biased production structure to subsistence. The same tragedy recurred when potato dominated the Irish diet in the late 18th century.
Lemin then introduces cross-societal migration into the model and shows that “…A tiny bit of bias in migration (say, if people are extremely reluctant to move and slow to learn) can still suppress a strong tendency of growth.” The Industrial Revolutipn did not come to Song China because there were insufficient mechanisms for exclusion.
Here is evidence for the Roberts Higgs thesis and, if I recall correctly, some recent remarks by Thomas Piketty on revolution and tax progressivity (does anyone know the link?). Juliana Londoño Vélez writes:
Abstract I argue that progressive income taxation in the twentieth century is a product of the exigency of war and not of democracy. I obtain long-run series of the top marginal personal income tax rate for a large sample of OECD countries, and use data on wars of mass mobilization and democracy from the Correlates of War data set and Scheve & Stasavage (2012) to test this hypothesis. My results suggest that wars of mass mobilization (i.e. wars in which more than 2% of the population served in the military) cause substantial increases in tax progressivity. These effects are persistent and do not vanish upon the conclusion of war.
The full paper is here (pdf), taken from the generally interesting Berkeley Economic History Lab list, as cited by Barry Eichengreen. As Barry notes, see also the revised and much improved version of Lemin Wu’s paper on the Malthusian trap (pdf).
I am not sure this paper (pdf) is sound, and it is hardly in publishable form. Still, it probably qualifies as the most interesting paper I have read this year to date. It is by Lemin Wu, graduate student in economics at UC Berkeley, who appears to have links to Brad DeLong and Peter Lindert. The title is “Millennia of Poverty: If Not Malthusian, Then Why?” and here is the abstract:
Living standards were constant for thousands of years before the industrial revolution. Malthus explained it this way: population grows faster when living standards rise; therefore, changes in technology alter the density of population but not the average welfare. This paper challenges Malthus’s explanation of the constancy and replaces it with the theory of group selection.
Malthusian theory is inadequate because it misses the fact that a dollar’s worth of diamonds contributes less to survival and reproduction than a dollar’s worth of grain. Grain is a subsistence commodity and a diamond is a surplus commodity. The Malthusian force anchors the average level of subsistence, but not that of surplus. If the surplus sector had grown faster than the subsistence sector, then living standards could have grown steadily before the industrial revolution, but they did not. The constancy of living standards thus implies that growth was balanced between subsistence and surplus, something Malthus did not explain.
To explain the balanced growth, I propose the theory of group selection. Selection of group characteristics, including culture and technology, goes on by migration and conquests. Since living standards rise with the ratio of surplus to subsistence, migrants and invaders usually move from places relatively rich in subsistence to those relatively rich in surplus. They spread the culture and technology of their subsistence-rich origin to the surplus-rich destination – the bias of migration favors the spread of subsistence over that of surplus. Even if surplus cultures and technologies would develop faster than subsistence ones in a local environment, the osetting biased migration balances the two sectors on a global scale. This explains the constancy of living standards.
My new theory reinterprets why living standards declined after the Agricultural Revolution and stagnated afterwards, how the Industrial Revolution happened and where the prosperity of Roman Empire and Song Dynasty came from.
I expect to hear more from Lemin Wu.
Olivier Blanchard and Nobuhiro Kiyotaki published a famous "Keynesian" paper in 1987 and it remains a well-cited piece in macroeconomics. One central result is that prices and wages can get stuck too high, above market-clearing. Market participants who produce more and lower prices and wages confer a strong large and positive externality on other individuals (or regions) in the market. Of course in the absence of such adjustments, activist monetary policy is recommended, but the point about externalities remains.
Yet often, today, we are told that the individuals (or regions) which produce (i.e., export) more are imposing negative externalities on other individuals or regions.
Of course the Blanchard and Kiyotaki model had its limitations. It did not, for instance, incorporate open economy considerations. It could be that the star producers impose an unfavorably high exchange rate on the broader region and hurt the ability of the broader region to export to the larger world economy.
When the open economy considerations are relatively strong, that coincides with…the conditions under which a coordinated fiscal policy will prove counterproductive, for reasons shown by the Mundell-Fleming model. In other words, if you think the strong Eurozone countries are hurting the Eurozone weakies, you also should be skeptical about coordinated European fiscal policy. This paper surveys some key issues.
In many open economy versions of the B-K model, or variants, looser monetary policy simply exports the problems of the region to other parts of the world. So why advocate such policies, especially if you are an outsider? Maybe the EU determines its own economic destiny (fine by me) but then we're back to German production and prosperity helping Spain rather than hurting it, for the reasons given by B-K.
In this well-regarded model, the international spillover effects from the monetary expansion can be either positive or negative. But it takes work to get those effects into the positive category.
Here is a survey of some literature which extends the sticky price model to open economy and policy coordination settings.
It is commonly suggested that German exports damage (or help) Spain without considering the broader implications of that proposition.
Overall, the results may depend on whether wage rigidity is real or nominal in each currency, the degree of capital mobility, the currency of invoicing in which sticky prices are set, and how much market participants look forward and consider stocks in addition to flows. This paper surveys some issues. There are many permutations, to the point where they are perhaps no longer very useful.
I wish to emphasize the broader point that not all combinations of views here are mutually consistent.