Category: History
Tyler Beck Goodspeed on Scottish free banking
His new book is titled Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772. From Harvard University Press, here is one summary bit:
The central argument of my thesis is thus that the salient financial crisis of the Scottish free banking period, the obtrusive exception to the hypothesis of greater financial stability under free banking in Scotland,was, pace Adam Smith, made more rather than less likely by precisely those regulated or “unfree” elements of Scottish banking which the author of The Wealth of Nations promoted. Further, I argue that this conclusion should hardly be cause for surprise once we realize that it was none other than the oldest, largest, and most established banks in Scotland that had lobbied for Smith’s legal restrictions on banking; regulations that had the effects of raising barriers to entry, lowering competition in the provision of short-term credit, increasing the efficient scale of banking, and therefore, ultimately, amplifying the level of systematic risk in Scottish credit markets.
Finally, in support of Selgin and White, among others, I find that the relative competitiveness of the Scottish financial system — certainly in contrast to the highly bifurcated English banking sector of the time — along with the unlimited legal liability of shareholders in Scottish private banks, were sources of considerable financial stability, both in 1772 and previously.
Here is the book’s home page.
My chat with Camille Paglia
It is set for 3:30 EST, the Live Stream will be here.
Update: The full event video, transcript, and audio edition will be released Monday, April 25. Check back here on MR or at mercatus.org/conversations.
How obscure is Rhode Island?
Here is Ann Althouse on Rhode Island:
I had to make a new tag for Rhode Island. I think it’s the very last state I’ve blogged about — I’d thought I already had a tag for every state — and it’s a story of it not getting respect. Oh, Rhode Island. You can use that previous sentence as your slogan if you want.
Or remember the old saying “Nothing but for Providence”?
It’s not even an island. How is this for a relevant update?:
The idea was simple enough — to create a logo and slogan that cast the long-struggling state of Rhode Island in a fresh, more optimistic light to help attract tourists and businesses. A world-renowned designer was hired. Market research was conducted. A $5 million marketing campaign was set. What could go wrong?
Everything, it turns out.
The slogan that emerged — “Rhode Island: Cooler and Warmer” — left people confused and spawned lampoons along the lines of “Dumb and Dumber.” A video accompanying the marketing campaign, meant to show all the fun things to do in the state, included a scene shot not in Rhode Island but in Iceland. The website featured restaurants in Massachusetts.
By the way, they hired a New Yorker to do the campaign.
And yet, as a native northeaster who spent three years of his early life in Fall River (southern Massachusetts), I cannot bring myself to name Rhode Island the nation’s most obscure state. It just doesn’t seem far away enough. Brown University is world famous, and most people who go from New York to Boston come in contact with the state in some way. It can count Gilbert Stuart and Cormac McCarthy and H.P. Lovecraft, and the film Dumb and Dumber starts off there, so probably it is no worse (better?) than the nation’s second most obscure state.
The socialization function of college — “school is to submit”
Robin Hanson has a good post on this, here is one bit:
How did the industrial era get at least some workers to accept more domination, inequality, and ambiguity, and why hasn’t that worked equally well everywhere? A simple answer I want to explore in this post is: prestigious schools.
While human foragers are especially averse to even a hint of domination, humans are especially eager to take “orders” via copying the practices of prestigious folks. Humans have a uniquely powerful capacity for cultural evolution exactly because we are especially eager and able to copy what prestigious people do. So if humans hate industrial workplace practices when they see them as bosses dominating, but love to copy the practices of prestigious folks, an obvious solution is to habituate kids into workplace practices in contexts that look more like the later than the former.
…centuries ago most young people did signal their abilities via jobs, and the school signaling system has slowly displaced that job signaling system. Pressures to conform to existing practices can’t explain this displacement of a previous practice by a new practice. So why did signaling via school did win out over signaling via early jobs?
Like early jobs, school can have people practice habits that will be useful in jobs, such as showing up on time, doing what you are told even when that is different from what you did before, figuring out ambiguous instructions, and accepting being frequently and publicly ranked relative to similar people. But while early jobs threaten to trip the triggers than make most animals run from domination, schools try to frame a similar habit practice in more acceptable terms, as more like copying prestigious people.
The post is interesting throughout. And via Brian S., here is Siderea on college, social class, and other matters.
Aeneid Book VI, Virgil translated by Seamus Heaney
A splendid book, here is Kate Kellaway at The Guardian:
There are two things this book requires. First, it is best read aloud – it comes thrillingly to life – it sounds tremendous. Second, it repays close reading. Studying it is to listen in on a poet with perfect pitch. Getting the diction right – so that the ancient is neither modern nor archaic – is the challenge. And Heaney shows that plain words are stormproofed. It is about more than George Orwell’s tired prescription: “Never use a long word where a short one will do.” It is about how plain language, like plain speaking, has integrity. And it is weight-bearing. It carries. When he introduces uncommon, eye-catching (sometimes longer) words – scaresome, asperging, hotbloods – they stand out but work harder against their plain backgrounds. Take the sighting of the golden bough. The word “refulgent” is strikingly charged, surrounded by “clear”, “green-leafed” and “cold”. Refulgent breaks Orwell’s rule and stands out like the golden branch itself. Or consider the description of Aeneas’s father, Anchises: “A man in old age, worn out, not meant for duress.” “Duress” is the pleasing surprise here (so much better than everyday “hardship”) seizing attention while “old age” and “worn out” do their unobtrusive work.
I will reread it shortly, you can buy it here.
The economics of pandemic influenza risk
There is a new NBER paper on this topic, by Victoria Y. Fan, Dean T. Jamison, and Lawrence H. Summers, here is the abstract:
Estimates of the long-term annual cost of global warming lie in the range of 0.2-2% of global income. This high cost has generated widespread political concern and commitment as manifested in the Paris agreements of December, 2015. Analyses in this paper suggest that the expected annual cost of pandemic influenza falls in the same range as does that of climate change although toward the low end. In any given year a small likelihood exists that the world will again suffer a very severe flu pandemic akin to the one of 1918. Even a moderately severe pandemic, of which at least 6 have occurred since 1700, could lead to 2 million or more excess deaths. World Bank and other work has assessed the probable income loss from a severe pandemic at 4-5% of global GNI. The economics literature points to a very high intrinsic value of mortality risk, a value that GNI fails to capture. In this paper we use findings from that literature to generate an estimate of pandemic cost that is inclusive of both income loss and the cost of elevated mortality. We present results on an expected annual basis using reasonable (although highly uncertain) estimates of the annual probabilities of pandemics in two bands of severity. We find:
1. Expected pandemic deaths exceed 700,000 per year worldwide with an associated annual mortality cost of estimated at $490 billion. We use published figures to estimate expected income loss at $80 billion per year and hence the inclusive cost to be $570 billion per year or 0.7% of global income (range: 0.4-1.0%).
2. For moderately severe pandemics about 40% of inclusive cost results from income loss. For severe pandemics this fraction declines to 12%: the intrinsic cost of elevated mortality becomes completely dominant.
3. The estimates of mortality cost as a % of GNI range from around 1.6% in lower-middle income countries down to 0.3% in high-income countries, mostly as a result of much higher pandemic death rates in lower-income environments.
4. The distribution of pandemic severity has an exceptionally fat tail: about 95% of the expected cost results from pandemics that would be expected to kill over 7 million people worldwide.
In other words, in expected value terms an influenza pandemic is a big problem indeed. But since, unlike global warming, it does not fit conveniently into the usual social status battles which define our politics, it receives far less attention.
“beetles can’t move continents”
I remember a very interesting debate that my father was involved in, where there was a water beetle that can’t travel very far and can’t fly. You have these in the north coast of Australia, and in millions of years, they haven’t been able to travel from one stream to another. And it came up that in the north coast of New Guinea, you have the same water beetle, with slight variations. The only way that could have happened was if New Guinea came off Australia and turned around, that the north coast of New Guinea used to be attached to the coast of Australia. It was very interesting seeing the reaction of the geologists to this argument, which was that ‘beetles can’t move continents.’ They refused to look at the evidence.
That is Geoffrey Hinton, being interviewed by Adrian Lee, mostly about AI and Go, interesting throughout.
For the pointer I thank Michelle Dawson.
My favorite things North Dakota
It has been suggested to me that perhaps North Dakota is the most obscure state in the Union. Maybe so! Let’s take a look:
1. Author: William Gass would be a possible pick, but I do not enjoy his work. Same with Louis L’Amour.
2. Humorist: Chuck Klosterman.
3. Sociologist of religion: Rodney Stark.
4. Painter: Clifford Styll is the obvious pick, except I don’t much like his work. If you were wondering, he dominates so many rooms in American museums because of restrictions placed on grants of his paintings from the artist’s own collection. I suspect some curators have come to resent this, but often the grants were made propitiously near the peak of Styll’s reputation. I suppose I’ll opt for James Rosenquist, although I am not a huge fan of his work either.
5. Evening television bandleader and toastmaster: Lawrence Welk. I can’t even think of a clear runner-up, with or without bubbles; this video will show you why he was a favorite of so many.
6. Movie and TV show, set in: Fargo duh. Otherwise it is Man in the Wilderness, which was the original and in some ways superior source material for The Revenant.
7. Actress: Angie Dickinson comes to mind, Dressed to Kill is a good movie.
8. gdp per capita — That can set many things right, although 2016 may not be as good as was 2014.
The bottom line: Hm..but yet we must consider Delaware and Rhode Island!
Words of wisdom
We conclude that the new Keynesian model is a poor guide to the effects of supply-side shocks in depressed economies.
That is from a new NBER working paper by Jérémie Cohen-Setton, Joshua K. Hausman, and Johannes F. Wieland.
For the pointer I thank David Levey.
The new Yanis Varoufakis book
It is well written and consists mostly of reasoned economic arguments about the unworkability of various aspects of EU and eurozone affairs. It is not a kiss and tell memoir about what really happened or did not happen in Greece in the critical months of last year.
Here is a good FT Martin Sandbu review of the book, excerpt:
He [Varoufakis] clearly, and correctly, thinks Greece should have defaulted on its sovereign debt and Ireland should have restructured its banks in 2010. But if alternative policies did in fact exist, which leaders could have pursued but chose not to, then a fatalistic monetary theory that blames everything on the euro’s design serves, paradoxically, to exonerate the mistakes of those leaders. That may not be his intention, but Varoufakis glosses over why national governments repeatedly declined to restructure debt before it was refinanced by the rescue funds. Above all he does not mention why he, as finance minister, did not restructure Greece’s banks early in his tenure, so as to undo their dependence on the European Central Bank, which last summer forced Athens to accept a third bailout by shutting down banking liquidity. This very partial focus is why Varoufakis’s literary references are so telling. The rage expressed by Thomas and Thucydides’ Melians is not a constructive anger but a cover for helplessness. Neither death nor the Athenians are moved by their rage. Nor, I suspect, will eurozone decision makers be moved by Varoufakis’s.
You can order the book here, it is titled And the Weak Suffer What They Must?: Europe’s Crisis and America’s Future.
Why didn’t more Soviet movies have American villains?
Plenty of American films had Soviet or Soviet-linked villains, but the opposite was not true. Here is one excerpt from :
The Soviet and American mainstreams expressed themselves in radically different ways, with different fears. Being a single party state, the Soviet Union was always factionalist and unsustainable, and could only perpetuate itself through cycles of repression and repudiation. Its anxieties were mostly directed toward itself; as the Americans made fantasies of threat, the USSR made fantasies of stability and global standing. The Soviet Union was also dominated by Russian culture, and inherited its taste for oblique metaphor and indirect address. (It should be noted that the three greatest filmmakers to come out of the Soviet Union—Sergei Eisenstein, Andrei Tarkovsky, and Aleksei German—never completed a film set in the present day.)
Simply put, it wasn’t an environment that was primed to depict the Cold War directly. But it was also an environment with a Cold War mythos that was very different from that of the West. The Soviets did have a “worthy villain,” whom they beat year after year on the big screen: the Nazis. The Soviet Union was the hero who slew the dragon; defeating the Third Reich was a point of national pride. There would never be a more important opponent. The Soviets couldn’t reasonably elevate the Americans to the same status, or even to the status of the White Guard of the bloody Russian Civil War—the USSR’s origin-story villains, in a way.
…Americans couldn’t be expected to kill or die for their cause, because—as the 1965 spy film Game With No Rules, set in Berlin at the start of the Cold War, suggests—they didn’t have a cause to begin with. Instead, the rare American antagonists of popular Soviet film were portrayed as pawns of business interests, military-industrial collusion, or, of course, the Nazis. Portraying a monolithic United States of true believers, focused on the eradication of the USSR, would have gone against two essential aspects of the mythology of Soviet propaganda: the defeat of Nazism, which rid the world of an evil the likes of which it would never see, and the notion of communism as a self-evident ideal.
For decades, Soviet media attacked the United States—with varying degrees of subtlety—as a broken society, its failure obvious. Capitalism and Western democracy weren’t values that could inspire the same kind of commitment as communism, and the only reason anyone would fight for them was because they’d didn’t know better.
Here is the full piece, via someone in my Twitter feed sorry I can no longer find it.
Why hasn’t economic progress lowered work hours more?
Here is a 42-minute video of a talk I gave on that topic at Duke University recently.
I start with Keynes’s prediction that we will be working 15 hours a week by 2030 and ask why it doesn’t seem to be coming true. Along the way, I consider the dominance of the substitution effect over the income effect for labor supply, and ponder why we don’t all have more sex. I conclude that progress is real rather than illusory, and we are not all caught up in a destructive rat race.
A paper on the same is forthcoming.
The criticism of Trump which few will utter
It is sad to see so many people, including those on the Left or in the Democratic Party, criticize the idea of a Trump presidency without ever uttering the phrase: “No man or woman should have so much political power over others.” I agree with many of the moral criticisms of Trump as a leader, but don’t let them distract you from this broader truth.
It is strange but instructive how many Democratic criticisms of Trump circle back into criticisms of other, earlier, and now often irrelevant Republicans. That is simply a language of attack they are more comfortable with.
The good news, if that is what one should call it, is that the best criticisms of Trump involve the concept of individual liberty and freedom from arbitrary legal authority and pure presidential discretion. The bad news is that so few intellectuals have the relevant ideological vocabulary in that regard.
*Money Changes Everything*
The author is William N. Goetzmann, and the subtitle is How Finance Made Civilization Possible. This is a very good general history about the useful role finance has played through the ages.
I also have been enjoying Robert Teitelman’s Bloodsport: When Ruthless Dealmakers, Shrewd Ideologues, and Brawling Lawyers Toppled the Corporate Establishment, a general history of American corporate deal-making.
Did NAFTA help the U.S. auto industry?
There are still more than 800,000 jobs in the American auto sector. And there is a good case to be made that without Nafta, there might not be much left of Detroit at all.
“Without the ability to move lower wage jobs to Mexico we would have lost the whole industry,” said Gordon Hanson of the University of California, San Diego, who has been studying the impact of Nafta on industries and workers since its inception more than two decades ago.
Even in the narrowest sense — to protect jobs in car assembly plants — a wall of tariffs against America’s southern neighbor would probably do more harm than good.
And this:
The Honda CR-V assembled in El Salto, Jalisco, for example, uses an American-made motor and transmission. Roughly 70 percent of its content is either American or Canadian, according to government statistics.
This regional integration gave the United States-based auto industry a competitive edge that was critical to its survival. “There was a concern 20 years ago that an auto industry production chain would develop across Asia, including China and Taiwan and Southeast Asia,” Professor Hanson said. “Maybe Nafta saved us from that.”
That is from Eduardo Porter at the NYT.