Category: History

“What Lessons for Economic Development Can We Draw from the Champagne Fairs?”

There is a new paper by Jeremy Edwards and Sheilagh Ogilvie, here is the abstract:

The medieval Champagne fairs are widely used to draw lessons about the institutional basis for long-distance impersonal exchange. This paper re-examines the causes of the outstanding success of the Champagne fairs in mediating international trade, the timing and causes of the fairs’ decline, and the institutions for securing property rights and enforcing contracts at the fairs. It finds that contract enforcement at the fairs did not take the form of private-order or corporative mechanisms, but was provided by public institutions. More generally, the success and decline of the Champagne fairs depended crucially on the policies adopted by the public authorities.

It is a very nice paper and also quite readable.  Sheilagh’s star continues to rise and Edwards is also no slouch.  Here is their paper “revising” Avner Greif’s thesis about the Maghribi traders.

“It is too soon to tell” — the real story China fact of the day

The impact of the French Revolution? “Too early to say.”

Thus did Zhou Enlai – in responding to questions in the early 1970s about the popular revolt in France almost two centuries earlier – buttress China’s reputation as a far-thinking, patient civilisation.

The former premier’s answer has become a frequently deployed cliché, used as evidence of the sage Chinese ability to think long-term – in contrast to impatient westerners.

The trouble is that Zhou was not referring to the 1789 storming of the Bastille in a discussion with Richard Nixon during the late US president’s pioneering China visit. Zhou’s answer related to events only three years earlier – the 1968 students’ riots in Paris, according to Nixon’s interpreter at the time.

How so?

At a seminar in Washington to mark the publication of Henry Kissinger’s book, On China, Chas Freeman, a retired foreign service officer, sought to correct the long-standing error.

“I distinctly remember the exchange. There was a mis­understanding that was too delicious to invite correction,” said Mr Freeman.

He said Zhou had been confused when asked about the French Revolution and the Paris Commune. “But these were exactly the kinds of terms used by the students to describe what they were up to in 1968 and that is how Zhou understood them.”

But will this revelation diminish the use of this story?  Dare I say it is too soon to tell?  By the way:

The oft-quoted Chinese curse, “May you live in interesting times”, does not exist in China itself, scholars say.

*Unified Growth Theory*, by Oded Galor

In one scenario, the Neolithic revolution comes earlier to some areas than others; those areas then receive their gains in the form of higher population rather than higher wages, for Malthusian reasons.  Under some conditions, some of those regions manage slightly positive per capita income growth for extended periods of time (it is on this question that I find the argument both haziest and most parasitic on other theories; toward the end of the book the stress is on whether an economy has had prior selection for “quality” individuals).  That can lower their birth rates, which allows for a take-off out of Malthusian constraints.  There may be further positive selection for pro-economic growth humans, which compounds and extends growth.

That is not the entire unified theory but it does offer a flavor of which kinds of mechanisms do the work.  There isn’t much talk of government policies, coal, or liberal ideology, although every now and then incentives and intellectual property rights appear on a list of factors relevant for growth.

The book has many equations, right in the text, but the main arguments are explained clearly with words.

I would have found it valuable if the author would have asked a concrete question: “Could the Industrial Revolution have come to Song China (Rome, Baghdad, etc.)?” and told us in terms of the parameters of his theory why or why not.  I am never sure what stance he is taking on the degree of contingency in observed outcomes.

It is argued that Africa has too much genetic diversity, Native American populations too little.  This seems question-begging, and I wonder if the African populations which actually came into contact with each other on a regular basis, pre-imperialism, had so much genetic diversity.

The most valuable part of the book is the extended discussion of how “time since the Neolithic Revolution” matters and how subtle and indirect the indirect mechanisms of connection can be.  I consider those discussions to be a major contribution.

It’s certainly an interesting work, but most of the evidence offered is supporting the more general parts of the argument, not the more controversial or novel parts.  Galor is very smart, and anyone interested in economic growth should read this book, but I would not describe myself as a convert to either the conclusions or the overall method.

Here is my previous post on the book.

*Pox: An American History*, by Michael Willrich

The Medical Department’s vaccination program had carried vaccination to the people on an unprecedented scale.  According to Hoff, the vaccinators had performed nearly 860,000 operations (742,062 vaccinations and 116,955 revaccinations) in a period of five months.  And the vaccine produced at Coamo Springs was, by contemporary standards, good, with a reported success rate of 87.5 percent.  Colonial administrators always kept the bottom line in view.  Hoff noted with satisfaction that the entire vaccination campaign had cost only $43,000.

By the end of June, the “head-fire of vaccination” had stopped variola [smallpox] in its tracks.  In the decade before the arrival of the U.S. Army, the annual death rate from the disease had averaged 620 people.  From January 1 to April 30, 1900, not a single death from smallpox was reported.

This was done under a form of martial law.  The Philippines, under colonial control, was another early example of a largely successful public health program: “Americanized Manila stood as a model of the healthful city.”  Who would have thought?

It’s an interesting book.

The 1937-1938 contraction

A few months ago I was surprised to see this paper by Chris Calomiris, Joseph Mason, and David Wheelock:

In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has been a matter of controversy. Using microeconomic data to gauge the fundamental reserve demands of Fed member banks, we find that despite being doubled, reserve requirements were not binding on bank reserve demand in 1936 and 1937, and therefore could not have produced a significant contraction in the money multiplier. To the extent that increases in reserve demand occurred from 1935 to 1937, they reflected fundamental changes in the determinants of reserve demand and not changes in reserve requirements.

My view had traditionally been that of Friedman and Schwartz, Eggertsson (and here), and Krugman, but if you wish to read the other side of the story there it is.  In any case I do not see any good argument for monetary contraction today, no matter how one reads the 1937 story.  We await clarification from Scott Sumner.

 

Sentences to ponder

There’s a measles outbreak in Massachusetts, probably thanks to low vaccination rates.

It’s hard to believe, but we’re sliding backwards on two of the three public health achievements of the 20th century: vaccination, antibiotics, and clean water.  Antibiotic resistance is a growing problem, one that we’re partly inflicting on ourselves by rampant overuse.  And now vaccine resistance is spreading among parents who want to free ride on the herd immunity of others.  If these diseases were widespread, they’d be rushing to vaccinate their kids.  But they can delay, or forgo the vaccines entirely, thanks to other parents who are willing to risk their kids in order to do the right thing.  They’re already killing little babies who catch pertussis before they can be vaccinated, and now measles has killed six people in France just since the start of the year.

That is from Megan McArdle.

Remembering the past

Kurt Schuler sends along this announcement from the AEA:

EconLit Now Starts with 1886.  The AEA has added records to EconLit for journal articles from 1886-1968 that were previously in the Index of Economic Articles, Vols. 1-10.  EconLit on library web sites now includes older articles from 146 journals, 95 of which are currently indexed. Many of these journals are available through libraries’ full text subscriptions and may be linked to/from EconLit.

What I’ve been putting down

The Great Sea: A Human History of the Mediterranean, by David Abulafia.

Religion in Human Evolution: From the Paleolithic to the Axial Age, by Robert Bellah.

These are very good books for large classes of readers, just not for me.  They have garnered, or will be garnering, stellar reviews.  The former, for my taste, covers too many eras, has too much detail on matters I don’t care about, and ultimately chooses the wrong organizing principle for its material.  The Economist, however, loved it.  The latter has too much general material and doesn’t get to the cutting edge points in a sufficiently ruthless manner.  For many people, though, it may be the best introduction to the general area.

By the way, I just pre-ordered Ezra F. Vogel, Deng Xiaoping and the Transformation of  China, which looks to be an important book.

The Brazil-Bolivia border

Who thinks of that region as having been important for the technological progression of mankind?  Yet it was, as Charles Mann explains:

Agricultural geneticists have long argued that the area around the railroad route — the Brazil-Bolivia border — was the development ground for peanuts, Brazilian broad beans…, and two species of chili pepper…  But in recent years evidence has accumulated that the area was also the domestication site for tobacco, chocolate, peach palm (Bactris gasipaes, a major Amazonian tree crop), and most important, the worldwide staple manioc (Manihot esculenta, also known as cassava or yuca).

That is from Mann’s forthcoming book 1493: Uncovering the New World Columbus Created, reviewed enthusiastically here.

*1493*

1491: New Revelations of the Americas Before Columbus, by Charles C. Mann, is one of my favorite books ever, in any field.  And now there is a “sequel,” namely 1493: Uncovering the New World Columbus Created, due out in August.  Excerpt:

Incredibly, the Basque-Vicuña war had almost no effect on the flow of silver.  Even as Basques and Vicuñas fought in the streets, they cooperated on mining and refining the silver, then shipping it from Potosi.  The last was a huge task.  One account describes how a single shipment of 7,771 bars left the city in 1549, four years after the lode’s discovery.  Each bar was about 99 percent silver and weighed more than eighty pounds.  All were stamped with serial numbers by the foundry and marked with the owner’s stamp, the foundry stamp, and the taxman’s stamp. By the time the assayer individually certified its purity with his stamp, the bar looked as if it had been graffiti-tagged by a demented numerologist.  Each llama could carry only three or four bars.  (Mules are bigger than llamas, but need more water and are less surefooted.)  The shipment required more than two thousand of the beasts.  They were watched by more than a thousand Indian guards who in turn were watched by squads of Spanish pistoleros.

Is 1493 as good as 1491?  That’s hard to say, but I can report this.  I am spellbound reading it, it will be one of the best books of this year, and, although I know this area somewhat, I am learning fascinating information on literally every page.  Mann stresses how much it mattered to suddenly be living in the “Homogenocene,” where Asia, Europe, and the New World suddenly started becoming more alike.  Mexico City had the world’s first Chinatown and was the first global city.  The discussion of the importance of the potato, and in general New World agriculture, surpasses previous accounts and he explains the importance of knowing how to make chuño.

I have an irrational fondness for this sentence of Mann’s:

The First World War distracted governments from the task of monitoring insect movements.

Definitely recommended.  By the way, here is Mann’s piece on soil erosion and the economics of dirt.  Here is Mann’s home page.  Journalists, if anyone is crying out to be the subject of a fascinating profile, it is Charles C. Mann.

What do we know about population and technological progress?

Bryan Caplan writes:

The more populous periods of human history–most obviously the last few centuries–clearly produced more scientific, technological, and cultural innovations than earlier, less populous periods. More populous countries today produce many more scientific, technological, and cultural innovations that less populous countries… Here’s a challenge for you: Name the most credible measure of idea production that isn’t at least moderately positively correlated with population.

Is this about the absolute number of ideas generated or ideas as a percentage contributor to economic growth?  If we are estimating the costs and benefits of greater population, or the future of economic growth rates, the latter is arguably the more important variable.  In any case, most plausible theories of economic growth imply that higher populations should lead to higher rates of ideas generation, as measured in terms of value.  Ideas are non-rival and can be enjoyed by the entire group, thus yielding a higher social rate of return.  There are also larger markets to pay for the ideas or award more fame to the inventors.

Here is a famous Michael Kremer paper arguing for a version of Caplan’s position.  That all said, it is far from obvious that Caplan is correct:

1. The measured rate of technological progress, as it contributes to gdp, seems to have peaked in the 1930s.  At that time total population, including the population of scientists, was much lower than today.  “Effective” total population was yet lower, given the backward nature of transportation and communications and trade at the time, compared to today.

2. A recent paper by Ashraf and Galor (it’s also worth reading for other reasons) concludes: “…population density in pre-industrial times was on average higher at latitudinal bands closer to the equator.”  Yet the countries closer to the equator did not end up being the drivers of industrial progress, even though they sometimes had higher rates of progress in agricultural times.  Northern Europe, with the exception of the Dutch Republic, was never the star for population density.  This paper also indicates that technology drives population growth — more than vice versa — and that “time elapsed since a region’s neolithic breakthrough” predicts later technological progress fairly well.

If you add an extra baby to most societies, ceteris paribus, the rate of expected idea generation does indeed go up in theory.  But how important a factor is that, compared to other influences on ideas generation?

Or: at very gross time scales (“the last few hundred years” vs. “the dark ages”) a positive relationship holds between population and ideas production, or at very gross numerical comparisons (“one million people” vs. “ten people”).  But viewed at finer granulations (by the way, the evidence in the Kremer paper is quite gross; e.g., pp. 710-712), the relationship isn’t nearly as strong as one might expect.  In the time series, it’s been largely a negative relationship for the last eighty years or so, as mentioned above.

What model might give you a positive relationship between population and innovation at grosser scales but not finer scales?  Let’s say there are various technological “platforms,” such as “fire,” “agriculture,” and “fossil fuels,” and maybe someday “uploads.”  At any point in time, growth rates depend on how much a region has exhausted the potential of its current platform.  This is largely independent of current population.  That said, larger population areas may have a greater chance of progressing to the next platform, so there is a long-term, gross correlation between population size and levels of technology.  Furthermore, if all regions have more or less exhausted the current platform, the larger region has a greater chance of leading the next breakthrough and thus being first to have the new and higher growth rate, even if most of the time it doesn’t have a higher growth rate for technological progress.  That view is hardly anti-population, but it explains why you will find screwy population-innovation correlations all over the place.  Finally, further breeding, as a recipe for progress, is an extreme lottery ticket and it only works at some special margins.

Hemp for Victory

During World War II hemp made a brief comeback as an American crop due to shortages of rope-making stock from other countries. Hemp for Victory is a 1942 US Department of Agriculture film that encourages farmers to grow hemp. It opens with a discussion of the ancient history of hemp (canvas derives from cannabis) and then moves into how it is being farmed in Kentucky and other US states to help in the war effort.

The film has an interesting history. For decades the USDA and the Library of Congress denied that such a thing had ever been made but in 1976 Rastafarians delivered a copy to a reporter in Florida.

http://www.youtube.com/watch?v=W0xHCkOnn-A

*The Changing Body*

The authors are Roderick Floud, Nobel Laureate Robert W. Fogel, Bernard Harris, and Sok Chul Hong, and the subtitle is Health, Nutrition, and Human Development in the Western World since 1700.  Here is one key sentence:

Chronically malnourished populations of Europe universally responded to food constraints by varying body size.

You can write an important and fascinating 400-page book around that sentence, although it will not hold the attention of all readers.  Here is a good summary article (1/20) on the book.  Here is another excerpt:

Even if it is assumed that the daily number of calories available for work was the same in the United States in 1860 as today, the intensity of work per hour would have been well below today’s levels, since the average number of hours worked in 1860 was 1.75 times as great as today.  During the mid nineteenth century, only slaves on southern gang-system plantations appear to have worked at levels of intensity per hour approaching current standards.

It is interesting to read the authors’ estimates of wage growth from 1750 to about 1820.  Some estimates suggest zero growth, while a more optimistic study shows that in Great Britain real wages rose about 12.5 percent between 1770 and 1818, and that was during the Industrial Revolution or should that be “during the so-called Industrial Revolution”?  Read this piece by Charles Feinstein; the standard of living for the average working class family increased by only 15 percent from the 1780s to the 1850s.  Here is an ungated paper with similar results.  Great Stagnation-like phenomena are not new and as Arnold Kling noted recently, theories of technological unemployment may yet make a comeback.

Here are two blue-footed boobies.