Category: History
*The Great Tamasha*
The author is James Astill and the subtitle is Cricket, Corruption, and the Spectacular Rise of Modern India. This is an excellent book on India even if you, like I, have no real understanding of cricket. Here are a few bits:
According to an analysis by Richard Cashman of the 143 Indians who played Test cricket up to 1979, half had a college degree, compared to 1 or 2 per cent of Indians as a whole.
And:
Cricket is now ubiquitous on Indian television. It is shown constantly on 16 sports channels and relentlessly discussed on over 100 news channels.
And quoting Ashis Nandy:
“Cricket is an Indian game accidentally discovered by the English.”
Recommended.
China allegory of the day
The subtitle of the article is:
A Chinese museum has been forced to close after claims that its 40,000-strong collection of supposedly ancient relics was almost entirely composed of fakes.
Here is one good excerpt:
Wei Yingjun, the museum’s chief consultant, conceded the museum did not have the proper provincial authorizations to operate but said he was “quite positive” that at least 80 of the museum’s 40,000 objects had been confirmed as authentic.
“I’m positive that we do have authentic items in the museum.”
Here is another bit:
Mr Wei said that objects of “dubious” origin had been “marked very clearly” so as not to mislead visitors and vowed to sue Mr Ma, the whistle-blowing writer, for blackening the museum’s name.
“He [acted] like the head of a rebel group during the Cultural Revolution – leading a bunch of Red Guards and making chaos,” Mr Wei claimed.
Shao Baoming, the deputy curator, said “at least half of the exhibits” were authentic while the owner, Wang Zonquan, claimed that “even the gods cannot tell whether the exhibits are fake or not,” the Shanghai Daily reported.
China is in the midst of a museum boom, and it is believed that eighty percent of the fossils in Chinese museums are fake.
Here is a very good piece by Kate Mckenzie on the Chinese economy.
The Puzzling Return of Glass-Steagall
I am puzzled by the renewed demand for the return of Glass-Steagall. I am puzzled not because Glass-Steagall might be bad policy but because it is so clearly a policy that doesn’t deal with the problems that created the financial crisis. If one had to sum the crisis up in one sentence it would be hard to do better than “a run on the shadow banking system.” The shadow banking system is that collection of mostly non-bank financial intermediaries who base their credit creation not on deposits but on repo, money market funds, SIVs, asset backed securitizations and other financial structures. The big new fact that I learned from the financial crisis and that I thought someone like Elizabeth Warren would surely also have learned is that the shadow banking system is larger than the regular banking system.
Separate commercial and investment banking? Please. The problem was that investment banking, in the form of shadow banking, become so separated from commercial banking that the Fed no longer had any idea where a majority of credit was being generated. Credit creation separated from banking as understood by the Fed, and moved into the shadows, hence, the term shadow banking.
Compare Glass-Steagall with the Gorton-Metrick proposal to reform banking. GM would in essence extend deposit insurance to the shadow bank system, i.e. instead of separating commercial and investment banking, Gorton and Metrick would erase the distinction entirely by making all credit creators regulated commercial banks. (I exaggerate, but only slightly). If you don’t like that idea then consider Larry Kotlikoff’s limited purpose banking. Kotlikoff, in essence, goes the full Rothbard–separate lending from money warehousing (i.e. transaction-cost reducing money services) (Tyler offers some criticisms here).
Now whether you think the Gorton-Metrick or Kotlikoff proposals are good ideas, and I am not arguing for either, these ideas at least addresses the important issues. In contrast, Glass-Steagall would merely shuffle around organizational boxes in the less important regulated banking sector. Indeed, why would anyone think that 1930s policy is the solution to a 21st century problem?
Addendum: Here are previous MR posts on Glass-Steagall. FYI, my paper on the public choice aspects of Glass-Steagall showed that the public reasons for the original Glass-Steagall were not the private reasons. Is something like this going on today?
Is Japanese stagnation demand-side or supply-side?
Here is an excellent post by Noah Smith on that topic.
Here is one bit:
It seems to me that the standard New Keynesian sticky-price story just cannot explain Japan. The “short run” for Japan is over and done. We are not looking at a “short-run” fluctuation caused by sticky prices.
This has implications for policy. It means that we can’t expect the “first arrow” of Abenomics – quantitative easing – to boost the real economy through the kind of channel described by a New Keynesian or AD-AS model. It might do so through some other channel, but how exactly that will work is not clear.
Here is another bit:
But I don’t think Japan is living in an RBC world either. Because in an RBC world, keeping interest rates at zero for decades, and printing a bunch of money (as the Bank of Japan did in the mid-2000s), should cause inflation (without helping growth). Instead, we see persistent deflation. So an RBC model of the common type can’t be describing Japan’s world either.
Here is his conclusion, with which I very much agree:
I’m not sure I know any model that describes Japan; maybe we don’t have one. But my guess is that it’s a world in which “Aggregate Demand” and “Aggregate Supply” are not as distinct entities as they are in Econ 102. In an AD-AS framework, either the AD curve or one of the AS curves shifts on its own. But in Japan, it may be that what look like supply shocks (falling productivity) and what look like demand shocks (deflation) may actually be due to the same cause.
And whatever world Japan is living in may have multiple equilibria. It may be that Japan is trapped in a “bad equilibrium”, and it will require a “big push” to kick it back to the “good equilibrium”. In fact, that seems to me to be the implicit premise of Abenomics.
In any case, we shouldn’t be thinking about Japan solely in terms of our standard textbook models. The real world appears to be much weirder than those toy environments.
Income Inequality and the Servant Boom
Inequality is likely to drive increased jobs in the service sector as appears to be the case in London:
The number of domestic servants is booming across central London: wherever the multiple between the wages of the rich and the poor grows, so does the number of servants. Much of the time, the towering Georgian and Victorian terraced houses of Belgravia now have only servants living in them – their masters and mistresses are drifting around the world, from yacht to schloss to Park Avenue apartment, in search of pleasure or tax avoidance. Drive round the area at night, and it’s often only the lights in the attics and the basements – the servants’ quarters – that are on.
But it’s not just in the gilt-edged parts of Britain that the service industry is flourishing. According to the Work Foundation, there are now more than two million part-time or full-time domestic workers across the country. All told, 10 per cent of households now employ some sort of domestic help.
The Economist concurs:
According to Britain’s Office for National Statistics (ONS), household expenditure on domestic service hit a low point in 1978, since when it has quadrupled in real terms. It estimates there are as many domestic workers in London now as in Victorian times.
The idea of working as a personal servant strikes many people as distasteful. Indeed, there is much to be said for working for a faceless corporation or for selling directly to the impersonal market. Many jobs in the personal service sector, however, do offer significant autonomy and room for creativity–for example, personal chefs, gardeners, high-end nannies, pilots, publicists and tutors. Service workers today are also less likely to be tied to a single employer, either a ready market is available to switch employers or they are already selling to a range of customers. Compared to jobs in manufacturing and in impersonal service, personal service jobs are also likely to be more immune to competition from the robots.
Hat tip: Tim Harford.
My favorite things Iceland
1. Saga: First choice goes to Njal’s Saga. It’s the clearest and crispest of the lot.
2. Novel, modern: How about Audur Ava Olafsdottir’s The Greenhouse? This is a boom area. There are one hundred twenty Icelandic novels translated into German each year [correction of earlier estimate].
3. Popular music: Sigur Ros, Agaetis Byrjun. This CD has a transcendental and also anthemic sound, even if the group never quite lived up to their initial promise. Bjork albums I usually find pretentious and I would rather listen to her earlier group The Sugar Cubes.
4. Annual tournament: Ram groping.
5. Sea bird: The puffin, followed by the guillemot.
6. Video: Daniel Tammet learns how to speak Icelandic in a week. That’s hard.
7. Economist: Erik Brynjolfsson, although I do not believe he was born in Iceland.
8. Movie: Maybe 101 Reyjkavik? I have yet to see The Deep.
9. Movie, set in: Die Another Day, an underrated Bond movie in my view.
10. Vista: How about Höfn?
I am excited that we are arriving this morning. And as for the food, don’t forget the glories of skyr.
Real Gross Domestic Private Product, 2000–2012
In a new paper, Robert Higgs reports:
Until World War II and the postwar years, when the federal bureaucracy institutionalized the government’s preferred method for calculating national income, economists offered sound arguments for excluding government spending from estimates of gross domestic product. Using their general approach reveals that the private economy’s performance for the past thirteen years has been only somewhat better than complete stagnation.
I don’t think that zero counting of government consumption is the correct approach here, but this is nonetheless an interesting exercise. Keep in mind that even if government outputs are highly useful, many of them are closer to intermediate than final products. In other cases the output may be useful, and a final product, but not valued at actual market prices. There is then still something to be learned by considering and segregating, if only temporarily, those parts of gdp which are sold at true market prices.
For the pointer I thank Daniel B. Klein.
How the Dismal Science Got Its Name
Here is How the Dismal Science Got Its Name, one of my favorite videos from the Great Economists course at MRUniversity.
http://youtu.be/OkecTDf9Vh0
Sentences to ponder
A random sample of new books for sale on Amazon.com shows three times more books initially published in the 1850’s are for sale than new books from the 1950’s.
Here is much more, from Paul J. Heald.
Two excellent new books on the history of technology
1. David Arnold, Everyday Technology: Machines and the Making of India’s Modernity. The typewriter and the bicycle revolutionized India early in the twentieth century
2. Ernest Freeberg, The Age of Edison: Electric Light and the Invention of Modern America. Two of the takeaways from this book are a) the United States had a more statist approach to electricity infrastructure than did most of Europe, and to its advantage, and b) we didn’t let lots of people accidentally being electrocuted stop progress, again probably to our advantage.
How bad were the Navigation Acts really?
Adam Smith supported them and he was no mercantilist. Here is another take:
…that remains the consensus view among a broad sample of modern scholars: a recent study concluded that nearly 90 percent of the economists and historians surveyed agreed with proposition that “[t]he costs imposed on the colonists by the trade restrictions of the Navigation Acts were small.”
if the burden of the Navigation Acts was so slight — no more than one percent of GDP, according to Thomas’ calculation — why did the Americans make such a fuss over it? The short answer is that although the burden to the American colonies as a whole was low, it did not fall evenly across the entire economy: some sectors and regions suffered disproportionately, while others were barely affected. The regions and sectors that suffered the most from the Navigation Acts tended to be the strongest supporters of the American Revolution.
That is from the forthcoming useful book by Richard S. Grossman Wrong: Nine Economic Policy Disasters and What We Can Learn from Them. For the two relevant Robert Paul Thomas pieces (jstor) see here and here.
To further brighten your day, here is a non-gated piece by Robert Whaples, “Where is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions” (pdf).
*Napoleon’s Egypt*
The author of this interesting work is Juan Cole and the subtitle is Invading the Middle East. Here is one excerpt:
Many of the French took seriously Bonaparte’s proclamations that he intended to bring liberty to the Egyptians through institutions such as the clerically dominated divan. The French not only interpreted Egypt in terms familiar to their eighteenth-century world, they were also capable of reinterpreting their own history in light of what they saw in Egypt. Just as rationalist officers coded popular Islam as reactionary Catholicism, so the Republican French mapped the defeated beys as analogous to the French Old Regime and saw their overthrow and institution of municipal elections as the advent of liberty.
This book is one good place to start. Here is the Wikipedia page on the French invasion of Egypt and Syria.
How might democracy disappear?
From my latest request for requests, anonymous asked:
It’s 2050. Democracy has ended in most countries, with a few exceptions. What happened?
Another reader, Dirk, asked:
If democracy ended in the USA, how do you think it would most likely play out?
Maybe you are thinking in terms of war or pandemic, but external conditions would have to be truly extreme to end democracy in the United States. The poor military fortunes of the Confederacy in the South, during the Civil War, did not lead to non-democracy (for Whites, slanted source here). Nor did siege by the Nazis make Great Britain less democratic, if anything the contrary.
If the Anglo democracies are to disappear, it will be because they will have voted themselves out of the idea, democratically of course.
As for many other parts of the world, my view is if you haven’t had democracy for one hundred years or more, it probably isn’t as stable as it may at first appear.
Do positive wealth shocks stick?
There is a new paper by Hoyt Bleakley and Joseph P. Ferrie, titled “Up from Poverty? The 1832 Cherokee Land Lottery and the Long-run Distribution of Wealth.” This paper uses a very clever experimental design, relying on random, lottery-based allocations of land. The question is how much winning this land lottery helped people in the longer run. Here is the abstract:
The state of Georgia allocated most of its land to the public through a system of lotteries. These episodes provide unusual opportunities to assess the long-term impact of large shocks to wealth, as winning was uncorrelated with individual characteristics and participation was nearly universal among the eligible population of adult white male Georgians. We use this episode to examine the idea that the lower tail of the wealth distribution reflects in part a wealth-based poverty trap because of limited access to capital. Using wealth measured in the 1850 Census manuscripts, we follow up on a sample of men eligible to win in the 1832 Cherokee Land Lottery. We assess the impact of lottery winning on the distribution of wealth 18 years after the fact. Winners are on average richer (by an amount close to the median of 1850 wealth), but mainly due to a (net) shifting of mass from the middle to the upper tail of the wealth distribution. The lower tail is largely unaffected.
The bottom line is that the grants increased inequality, many people were helped a great deal, and a large chunk of people weren’t helped at all. An ungated version of the paper is here.
*World War Z*
I was surprised how serious a movie it is and also by how deeply politically incorrect it is, including on “third rail” issues such as immigration, ethnic conflict, North Korean totalitarianism, American urban decay as exemplified by Newark, gun control, Latino-Black relations, songs of peace, and the Middle East. Here is one (incomplete) discussion of the Middle East angle, from the AP, republished in el-Arabiya (here is a more detailed but less responsible take on the matter, by a sociology professor and Israeli, spoilers throughout).
The movie is set up to show sympathy for the “Spartan” regimes and to have a message which is deeply historically pessimistic and might broadly be called Old School Conservative, informed by the debates on martial virtue from pre-Christian antiquity. But they recut the final segment of the movie and changed the ending altogether, presumably because post-Christian test audiences and film executives didn’t like it. Here is one discussion of the originally planned finale. It sounds good to me. The actual movie as it was released reverts to a Christian ending of sorts. My preferred denouement would have relied on the idea of an asymptomatic carrier or two, go see it and figure out the rest yourself.
By the way, for all the chances taken by the film makers, they were unwilling to offend the government of China (see the first link), in part because you cannot trick them easily with subtle, veiled references. Such tomfoolery works only on Americans — critics included — which I suppose suggests a lesson of its own.
Here is a Times of Israel review of the movie, interesting throughout, and it notes that the Israel scenes are simply translated to “the Middle East” for Turkish audiences.
A good film, I liked it. How many other movies offer commentary on Thucydides, Exodus, Gush-Shalom, Lawrence Dennis, and George Romero, all rolled into one?