Category: History

“Soviet Power Plus Electrification: what is the long-run legacy of communism?”

That is a newly published paper by Wendy Carlin, Mark Schaffer, and Paul Seabright, and here is the abstract:

Two decades after the end of central planning, we investigate the extent to which the advantages bequeathed by planning in terms of high investment in physical infrastructure and human capital compensated for the costs in allocative inefficiency and weak incentives for innovation.  We assemble and analyse three separate types of evidence.  First, we find that countries that were initially relatively poor prior to planning benefited more, as measured by long-run GDP per capita levels, from infrastructure and human capital than they suffered from weak market incentives. For initially relatively rich countries the opposite is true. Second, using various measures of physical stocks of infrastructure and human capital we show that at the end of planning, formerly planned countries had substantially different endowments from their contemporaneous market economy counterparts. However, these differences were much more important for poor than for rich countries. Finally, we use firm-level data to measure the cost of a wide range of constraints on firm performance, and we show that after more than a decade of transition in 2002-05, poor ex-planned economies differ much more from their market counterparts, in respect to both good and bad aspects of the planning legacy, than do relatively rich ones.  However, the persistent beneficial legacy effects disappeared under the pressure of strong growth in the formerly planned economies in the run-up to the global financial crisis.

This paper is a very good place to start for trying to seriously figure out what communism did and did not do.  It accounts for the relatively disastrous performance of East relative to West Germany, while helping to explain why Russia is in some regards a better place to live than Mexico.  It is also a very strong testament to the extreme importance of human capital and good formal education.

They also cite a recent Broadberry and Klein piece, “When and Why did Eastern European Economies Begin to Fail?, Lessons from a Czechoslovak/UK Productivity Comparison, 1921-1991,” available in an earlier form here (pdf); in this case I worry more about the quality of the statistics, plus legacy effects can sustain a formerly successful economy for some while.

“The state of intoxication is a house with many mansions.”

So reads the preamble to the Winter 2013 issue of Lapham’s Quarterly, titled merely “Intoxication.” A tribute to tanking oneself, the anthology collects some 60 essays, poems, and stories from across the ages. As though anticipating Alex and Tyler’s trip to the Subcontinent, Lapham’s preamble traces the dignified heritage of the drink to those sacred Hindu texts (page references omitted):

Fourteen centuries before the birth of Christ, the Rigveda … finds Hindu priests chanting hymns to a “drop of soma,” the wise and wisdom-loving plant from which was drawn juices distilled in sheep’s wool that “make us see far; make us richer, better.” Philosophers in ancient Greece … rejoiced in the literal meaning of the word symposium, a “drinking together.” The Roman Stoic Seneca … recommends the judicious embrace of Bacchus as a liberation of the mind “from its slavery to cares, emancipates it, invigorates it, and emboldens it for all its undertakings.”

The litany continues through the Persians, Martin Luther, Samuel Johnson, and Baudelaire. Next to Plymouth and the American experiment.

The spirit of liberty is never far from the hope of metamorphosis or transformation, and the Americans from the beginning were drawn to the possibilities in the having of one more for the road. … The founders of the republic in Philadelphia in 1787 were in the habit of consuming prodigious quantities of liquor as an expression of their faith in their fellow men—pots of ale or cider at midday, two or more bottles of claret at dinner followed by an amiable passing around the table of the Madeira. Among the tobacco planters in Virginia, the money changers in New York, the stalwart yeomen in western Pennsylvania busy at the task of making whiskey, the maintaining of a high blood-alcohol level was the mark of civilized behavior. The lyrics of the Star-Spangled Banner were fitted to the melody of an eighteenth-century British tavern song. The excise taxes collected from the sale of liquor paid for the War of 1812, and by 1830 the tolling of the town bell (at 11 A.M., and again at 4 P.M.) announced the daily pauses for spirited refreshment.

Add in all other intoxicants, and we have some dark comparisons within a realm of human experience that’s about worth Spain’s economy:

If what was at issue was a concern for people trapped in the jail cells of addiction, the keepers of the nation’s conscience would be better advised to address the conditions—poverty, lack of opportunity and education, racial discrimination—from which drugs provide an illusory means of escape. That they are not so advised stands as proven by their fond endorsement of the more expensive ventures into the realms of virtual reality. Our pharmaceutical industries produce a cornucopia of prescription drugs—eye opening, stupefying, mood swinging, game changing, anxiety alleviating, performance enhancing—currently at a global market-value of more than $300 billion. Add the time-honored demand for alcohol, the modernist taste for cocaine, and the uses, as both stimulant and narcotic, of tobacco, coffee, sugar, and pornography, and the annual mustering of consummations devoutly to be wished comes to the cost of more than $1.5 trillion. The taking arms against a sea of troubles is an expenditure that dwarfs the appropriation for the military defense budget.

Words to ponder this holiday season, when more bottoms are up than usual, and as the complex world of 2013 awaits. Cheers, Sarah Skwire, for the pointer.

Just how bad is corruption in China?

In a new paper, my colleague Carlos Ramirez has the scoop:

Abstract:
This paper compares corruption in China over the past 15 years with corruption in the U.S. between 1870 and 1930, periods that are roughly comparable in terms of real income per capita. Corruption indicators for both countries and both periods are constructed by tracking corruption news in prominent U.S. newspapers. Several robustness checks confirm the reliability of the constructed corruption indices for both countries. The comparison indicates that corruption in the U.S. in the early 1870s — when it’s real income per capita was about $2,800 (in 2005 dollars) — was 7 to 9 times higher than China’s corruption level in 1996, the corresponding year in terms of income per capita. By the time the U.S. reached $7,500 in 1928 — approximately equivalent to China’s real income per capita in 2009 — corruption was similar in both countries. The findings imply that, while corruption in China is an issue that merits attention, it is not at alarmingly high levels, compared to the U.S. historical experience. The paper further argues that the corruption and development experiences of both the U.S. and China appear to be consistent with the “life-cycle” theory of corruption — rising at the early stages of development, and declining after modernization has taken place. Hence, as China continues its development process, corruption will likely decline.

*The Measure of Civilization*

The author is Ian Morris and the subtitle is How Social Development Decides the Fate of Nations.  I don’t like the subtitle of this book, which I feel should include the word “energy.”  While a number of topics are covered, the core parts of the book concern the importance of energy sources for early economic development.

This strikes me as an important work.  I will report back on it once I have the chance to give it further study (which won’t be right away).  In the meantime I am simply reporting that it will come out this January and that it is worthy of your attention.

The Palestinian Emirates?

From Barry Shaw:, this is also known as the “eight-state solution”:

Dr. Mordechai Kedar of Bar-Ilan University, a Middle East expert…calls his alternative “the Palestinian Emirates.”

He visualizes eight emirate-type city states with designated borders that will incorporate the Arabs within them. The rest of the land can be populated by the inhabitants, whether they be Jews or Arabs, living and behaving with respect and deference to the inhabitants of the various city-states. The states shall be granted sovereignty. They shall be granted surrounding land for expansion and development. Road systems in vacant lands shall be developed for transport of people and commerce, both Jewish and Arab.

If Palestinians could “vote with their feet” across these various Emirates, it would be interesting to see what kind of policies would evolve, relative to what is produced by currently existing forms of political participation.

Here is a web site devoted to the concept, with one more detailed account here.  I should add that there are versions of this idea which do not add all of the “baggage” found on this web site.

In presenting this material, I am not seeking to have MR commentators reprise all of the usual debates on the broader topic of Middle East peace or lack thereof.  Nonetheless I had never heard this idea before, and so I am passing it along.

Measuring the distribution of spitefulness

There is a new paper by Erik Kimbrough and J. Philipp Reiss, of importance for my world view:

Spiteful, antisocial behavior may undermine the moral and institutional fabric of society, producing disorder, fear, and mistrust. Previous research demonstrates the willingness of individuals to harm others, but little is understood about how far people are willing to go in being spiteful (relative to how far they could have gone) or their consistency in spitefulness across repeated trials. Our experiment is the first to provide individuals with repeated opportunities to spitefully harm anonymous others when the decision entails zero cost to the spiter and cannot be observed as such by the object of spite. This method reveals that the majority of individuals exhibit consistent (non-)spitefulness over time and that the distribution of spitefulness is bipolar: when choosing whether to be spiteful, most individuals either avoid spite altogether or impose the maximum possible harm on their unwitting victims.

I put Bryan Caplan on the “least spiteful” side of the distribution.

For the pointer I thank (the non-spiteful) Michelle Dawson.

The Monster of Monticello?

Here is a good NYT Op-Ed on Thomas Jefferson.  In one of his periodic falls into exaggeration, Bruce Bartlett (whom I admire and often agree with), tweets: “I have yet to meet anyone on the right willing to deal honestly with Jefferson’s slave ownership.”  I have met large numbers of such people and they show up at virtually any Liberty Fund conference, for a start.  In fact that is one reason why they call it Liberty Fund.

I would add this: I am grateful for Jefferson’s contributions to this country in the form of the Declaration and also the Louisiana Purchase, to cite the two biggest.  But as a thinker I find him decidedly mediocre, other than that the Declaration is truly stirring in parts and of course of major historical importance.  (That said, I don’t think it was obvious ex ante that independence was a good idea, so even there Jefferson may be open to criticism.)  Reading the rest is a chore and for me there is little or nothing of analytic interest, unlike with say Madison or John Adams.  I don’t mean to detract from his peaks, but his overall record has lots of negatives, in addition of course to owning slaves and often treating them badly.  His record in practice on civil liberties for white people also left a lot to be desired.  I am not a fan of the agrarianism and arguably that could be labeled less politely.

Here is my previous post on Thomas Jefferson.  I have never liked him.

Addendum: For an alternative perspective, you can try this post and paper by David Post.

I basically agree with Ross Douthat here

The retreat from child rearing is, at some level, a symptom of late-modern exhaustion — a decadence that first arose in the West but now haunts rich societies around the globe. It’s a spirit that privileges the present over the future, chooses stagnation over innovation, prefers what already exists over what might be. It embraces the comforts and pleasures of modernity, while shrugging off the basic sacrifices that built our civilization in the first place.

His link is here, and I willingly admit that I am in some ways part of the problem.

Gains from Trade: Lessons from the 2007-2010 Gaza Blockade

I haven’t read this paper, by Assaf Zimring, a job market candidate from Stanford economics, but I pass it along for its obvious current relevance.  Here is the abstract:

This paper uses detailed household expenditure and firm production data to study the welfare consequences of the blockade on the Gaza Strip between 2007 and 2010. Using the West Bank as a counterfactual, I find that being removed from world markets reduced welfare by 17%-28% on average. Moreover, households with larger pre-blockade expenditure levels experienced disproportionally larger welfare losses. These effects are substantially larger than the predictions of standard trade models. I show that this discrepancy is due to a combination of resource reallocation and reduced productivity. Using firm level data I find that the blockade triggered reallocation of workers across firms and sectors, especially from manufacturing and into services, and from industries that use imported inputs intensively, or export. In addition, labor productivity fell sharply by 24%-29%. This decline was however significantly higher in manufacturing (45%) than in services (5%).

The link and the author’s home page you will find here.

*Thomas Jefferson: The Art of Power*

I quite liked this book, which is by Jon Meacham.  Here is the bit best suited to MR:

“She [Sally Hemings] was just beginning to understand the French language well, and in France she was free, while if she returned to Virginia she would be re-enslaved,” said Madison Hemings.  “So she refused to return with him.”

It was an extraordinary moment.  Fresh from arranging terms with the bankers of Europe over a debt that was threatening the foundation of the French nation, Thomas Jefferson found himself in negotiations with a pregnant enslaved teenager who, in a reversal of fortune hardly likely to be repeated, had the means at hand to free herself.

…So he began making concessions to convince Sally Hemings to come home to Virginia.  “To induce her to do so he promised her extraordinary privileges, and made a solemn pledge that her children should be freed at the age of twenty-one years,” Madison Hemings said.

Sally Hemings agreed…

Their father kept the promise he had made to Sally in Paris. “We all became free agreeably to the treaty entered into by our parents before we were born,” Madison Hemings said.  It was one of the most important pacts of Jefferson’s life.

The High Price of False Security

Charles Kenny has an excellent piece in Bloomberg BusinessWeek about security:

The attention paid to terrorism in the U.S. is considerably out of proportion to the relative threat it presents. That’s especially true when it comes to Islamic-extremist terror. Of the 150,000 murders in the U.S. between 9/11 and the end of 2010, Islamic extremism accounted for fewer than three dozen. Since 2000, the chance that a resident of the U.S. would die in a terrorist attack was one in 3.5 million, according to John Mueller and Mark Stewart of Ohio State and the University of Newcastle, respectively. In fact, extremist Islamic terrorism resulted in just 200 to 400 deaths worldwide outside the war zones of Afghanistan and Iraq—the same number, Mueller noted in a 2011 report (PDF), as die in bathtubs in the U.S. alone each year.

…According to one estimate of direct and indirect costs borne by the U.S. as a result of 9/11, the New York Times suggested the attacks themselves caused $55 billion in “toll and physical damage,” while the economic impact was $123 billion. But costs related to increased homeland security and counterterrorism spending, as well as the wars in Iraq and Afghanistan, totaled $3,105 billion.

Matt Yglesias adds a good point:

Something that I would love to see the Transportation Security Administration, the FBI, the CIA, and whoever else do is pull together an estimate of how many airplanes they think would have been blown up by terrorists if there was no passenger or baggage screening whatsoever. One way of thinking about it is this. If commercial airplanes were no more secure than your average city bus, planes would be blown up as frequently as city buses—which is to say never. I’ve heard some people postulate that terrorists have a special affection for blowing up planes, but I’m not sure that’s right. In the not-too-distant past, Israel had a substantial terrorists-blowing-up-buses problem and had to take countervailing security measures. But unlike Israel, we’re not doing anything to secure our buses. It’s at least possible that nobody blows up American buses because nobody is trying to blow anything up.

I would also add to the monetary costs the price of lost civil liberties and a populace that has sadly grown accustomed to government surveilling, scanning, and groping. As I said some years ago when visiting Independence Hall, the price of eternal vigilance is liberty.

The changing economics of youth subculture

From a Metafilter discussion, here is one comment:

Music distribution, music purchasing and the ethics around them have changed. When I was a mere slip of a girl, it really mattered whether one was on a major label or not, and everyone knew someone who ran a tiny label out of their bedroom, etc etc. I can’t get over how my fellow anarchists listen to, like, Beyonce. That would not have gone over well in 1996. As a result, fashion/music subcultures are, I think, more permeable and fluid, and there’s less oppositionality associated with music.

Also, fast fashion and big changes in the distribution and status of vintage and thrift store fashion. I’d argue that up through the nineties, second hand clothes were a little bit declasse; they aren’t anymore. Clothes more than 20 years old were easy to find in the thrift stores and were of fairly high quality. Now even the last of the union-made eighties clothes are hard to find and can be quite pricey. (I mean, I remember when I bought a 50s silk-satin Dior dress – not atelier, but still – for $5.99 at Saver’s.) So style changes faster and it’s harder to associate style with oppositionality and with a stable ‘style tribe’.

“Style tribes” themselves are pretty well commodified, too – you can make a nice living catering to goths or VLV folks or whatever. So there’s less, I guess, libidinal investmentthere.

Also, life is more precarious and it’s harder to get work. Back when I was properly young in the nineties, if you didn’t have a job you could just temp. It wasn’t fun (remember that zine Temp Slave) but you could keep a roof over your head. A lot easier to do subculture stuff then. Even the serious anarchists I know now scrabble a lot more for work, food and money than back then.

Rents are higher – where in 1995 you could run a whole anarchist community center on $300/month plus utilities – which could be paid with three people who had jobs and could chip in $100 each, now you’re looking at $1200/month plus utilities and fewer people who can kick down $100.

I mean, there’s still plenty of youth fashion, music and neat stuff going on – it’s just that the support structures are more fragile and temporary and the borders between things are thinner.

That is from Frowner.  Hat tip goes to @NatashaPlotkin, the most underrated tweeter I know of, with only 76 followers.

Edward Moore asks

From a reader email:

This hypothetical question just popped into my head and after mulling it over for a while it occurred to me that it’s really a great stagnation question.

“Would you trade your last five years of life to always have the best personal technology provided to you (iPhones, iPads, google glass, whatever implantable, wearable things are coming) if the consequence of not making the trade was that you were limited to basic desktop technology for the rest of your life?”  The decision must be made now and is binding.  Right now I think I would make the trade because I would hate to miss out on all the things that are coming.  I think I would have said no in 1995.  Does that make me a great stagnation skeptic?

I love your blog.

Go for the years, I say.  But at “six months” it is a tougher call…and perhaps Ed is a younger man than I am.  I certainly would advise an eighty-year-old to take the years, or for that matter the six months.