Category: History

Solving the fiscal crisis at the state level?

Moving to dispel claims that President Barack Obama was not born in Hawaii, his supporters in the state's legislature have introduced a bill that would allow anyone to get a copy of his birth records for a $100 fee.

The idea behind the measure is to end skepticism over Obama's birthplace while raising a little money for a government with a projected budget deficit exceeding $800 million over the next two years.

Here is more.

Egypt

There is some chance that 2011 will be the new 1989.  Cutting off the internet should signal to the populace that matters are dire and thus it may prove counterproductive.  Tullock might say it means they will start shooting soon.  It is difficult to put together a "Favorite Things Egyptian," at least for this American, once you get past Mahfouz and music.  Intellectually and culturally, Cairo has been punching below its weight for a long time.  Fortunately, there has been a resurgence in Egyptian cinema since 2007.  When I visited the country in the mid-1990s, I had an overwhelming impression of a cynical populace and a lot of cement.  Timur Kuran's work will rise in status and importance.  "Catch-up" remains the global story of the last ten to fifteen years.

Uncelebrated biographies

Nathan Labenz asks:

This got me thinking: what are the most compelling and informative biographies that remain uncelebrated?

"Uncelebrated by whom?" is of course the follow-up question.  Nonetheless I will put forward a few names: Jeremy Bentham, Leo Kanner, Norman Borlaug, Brahms and Stravinsky, Antoine Oleyant, a wide variety of 19th century German chemists, engineers, and scientists (who led a second Industrial Revolution), Montaigne, Thomas Bernhard, various French mathematicians, Simon Newcomb, Ramon Llull, Norbert Wiener, Babbage, and I would even say David Hume.

What are we to make of James K. Polk these days?  I am not sure.

Relative to their importance, their lives and exploits don't seem to receive much attention. In general, there are few good books (or movies) about the lives of famous economists.  Both Hayek and Friedman still lack good biographies, same with Samuelson and Arrow.  Smith, Keynes, and Nash are covered, but how many others? Why aren't there more scintillating biographies of engineers and second-tier scientists? It is harder to find important painters, even of the lower tiers, who have not received adequate biographic attention.

“Age and Great Invention”

This is from Benjamin Jones:

Great achievements in knowledge are produced by older innovators today than they were a century ago. Using data on Nobel Prize winners and great inventors, I find that the mean age at which noted innovations are produced has increased by 6 years over the 20th Century. I estimate shifts in life-cycle productivity and show that innovators have become especially unproductive at younger ages. Meanwhile, the later start to the career is not compensated for by increasing productivity beyond early middle age. I further show that the early life-cycle dynamics are closely related to variation in the age at Ph.D. and discuss a theory where accumulations of knowledge across generations lead innovators to seek more education over time. More generally, the results show that individual innnovators are productive over a narrowing span of their life-cycle, a trend that reduces, other things equal, the aggregate output of innovators. This drop in productivity is particularly acute if innovators’ raw ability is greatest when young.

Hat tip goes to Mike Gibson, read his post.

Here is a Gideon Rachmann column from today, on a similar but not exactly the same question.  I agree with his penultimate remark on the division of labor.

In praise of picture books

No, I don't mean the pictures, I mean the text.  Picture books are one of the best ways to learn basic information about a topic.  First, by viewing the photos you are more likely to remember some aspects of the material.  It works for kids and maybe it works for you too.  Second, the text is stripped down to essentials.  Third, the authors of picture books are often relatively "agenda-less," since most people don't read the text, the selling point is the pictures, and the book is so expensive that the publisher doesn't want to rule out the broadest possible audience.

I would not use picture books to resolve disputes over details or to find the best conceptual framework.  The text in picture books has some of the same strengths and weaknesses of Wikipedia pages.  It's odd to see a similar blandness in both the lowest cost and highest cost corners of the publishing world.

Lately I have been "reading" Ottoman Architecture, by Dogan Kuban, Toyokuni (oddly I can't find it on Amazon or remember the author's name), Textiles: Collection of the Museum of International Folk Art, by Bobbie Sumberg, and Architectura, by Miles Lewis.  You can walk into any public library and take home more splendid picture books than you will have time for.  How many you can carry is another constraint. 

Does mismeasured inflation overturn a relative stagnation thesis?

In the comments, Slocum writes:

My skepticism is not that the nominal household income or GDP number are wrong, but that the inflation-adjusted numbers are wildly off because they fail to capture the innovations and transformational improvements in goods and services. Consider music. The music industry, measured in sales, is shrinking. 25 years ago as a college student, I bought a lot LPs and CDs (probably a few hundred $$ a year). Now I spend very little. Am I worse off as a music listener now? Obviously not — I am immensely better off. But judging by the gross dollar volume of the music business, you would reach exactly the wrong conclusion about 'stagnation'.

The fundamental fact is that U.S. real median income has risen at a lower rate since 1973, not that progress has been absent.  One might think that the CPI is skewed and there are reasonable arguments to be made in this direction.  But the CPI will be most skewed to underappreciate progress when truly new goods and services are being introduced into the marketplace or spreading to new regions.  And that is (roughly) the 1870-1950 period, more than any other time.  In other words, if you account for CPI bias, the slowdown in median income growth — the difference — is probably larger than the numbers make it appear, even though in absolute terms both growth rates will be higher than measured. 

When some people hear the relative stagnation thesis, their minds shoot to various bogeymen: Paul Ehrlich, ridiculous 1907 proposals to close the patent office, predictions of mass starvation, and so on.  The simplest version of the point is that technological progress is not uniform, and that is borne out by thousands of years of human history.  This isn't Lake Wobegon, so some periods have to have lower than average growth in living standards than other periods.  One of those periods happens to be now, since 1973, give or take.  And from that flows many propositions of importance, for politics too.

You can buy the eBook here.

Tim Worstall gets it

There was somewhere between none and fuck all economic growth in the US (and many other economies) in the 1929-1945 period. But the production frontier continued to move outwards, indeed, the 30s are one of the all time great decades for both technology and productivity improvements. The 50s to the 80s were simply playing catch up, in the same way that China and India are now.

And:

For it’s…saying that the great Post WWII economic expansion was nothing to do with high unionisation rates, Bretton Woods, restrictions upon capital movements, high marginal tax rates, fixed exchange rates or any other of the “liberal” or “social democratic” (use one for the US, the second for Europe) theories that are so often advanced.

The full post is here.

China fact (book) of the day

When it comes to the overall death toll, for instance, researchers so far have had to extrapolate from official population statistics…Their estimates range from 15 to 32 million excess deaths.  But the public security reports compiled at the time, as well as the voluminous secret reports collated by party committees in the last months of the Great Leap Forward, show how inadequate these calculations are, pointing instead at a catastrophe of a much greater magnitude: this book shows that at least 45 million people died unnecessarily between 1958 and 1962.

That is from Frank Dikötter's Mao's Great Famine: The History of China's Most Devastating Catastrophe, 1958-1962, which is one of the scariest books I have read.  Here is another passage, I am not sure how well it is sourced:

Mao was delighted.  As reports came in from all over the country about new records in cotton, rice, wheat or peanut production, he started wondering what to do with all the surplus food.  On August 4 1958 in Xushui, flanked by Zhang Guozhong, surrounded by journalists, plodding through the fields in straw hat and cotton shoes, he beamed: "How are you going to eat so much grain?  What are you going to do with the surplus?"

"We can exchange it for machinery," Zhang responded after a pause for thought.

[Showing a poor understanding of Say's Law] "But you are not the only one to have a surplus, others too have too much grain!  Nobody will want your grain!"  Mao shot back with a benevolent smile.

"We can make spirits of out of taro," suggested another cadre.

"But every county will make spirits!  How many tonnes of spirits do we need? Mao mused.  "With so much grain, in future you should plant less, work half time and spend the rest of your time on culture and leisurely pursuits, open schools and a university, don't you think?…You should eat more.  Even five meals a day is fine!"

Here are some reviews of the book.

*The Great Stagnation*, excerpt

From my new eBook, here is one bit:

I’m also persuaded by the median income numbers because they are supported by related measurements of other magnitudes. For example, another way to study economic growth is to look not at median income but at national income, gdp, or gross domestic product, the total production of goods and services.  Charles I. Jones, an economist at Stanford University, has “disassembled” American economic growth into component parts, such as increases in capital investment, increases in work hours, increases in research and development, and other factors. Looking at 1950–1993, he found that 80 percent of the growth from that period came from the application of previously discovered ideas, combined with heavy additional investment in education and research, in a manner that cannot be easily repeated for the future. In other words, we’ve been riding off the past. Even more worryingly, he finds that now that we are done exhausting this accumulated stock of benefits, we are discovering new ideas at a speed that will drive a future growth rate of less than one-third of a percent (that’s a rough estimate, not an exact one, but it is consistent with the basic message here). It could be worse yet if the idea-generating countries continue to lose population, as we are seeing in Western Europe and Japan.

I do not hold the view that relative stagnation will last forever, only that it has lasted for thirty-seven years and that it will not end immediately.  Oddly, it is the so-called "economic right" — which complains bitterly about decades of increasing taxes and regulation and litigation and government privilege — which finds such a claim hardest to accept.

You can pre-order the eBook; the Amazon link is here, Barnes&Noble here, $4.00.  I offer further information on the book here.

*Peddling Protectionism*

The author is the excellent Douglas A. Irwin and the subtitle is Smoot-Hawley and the Great Depression.  The book's home page is here.  Excerpt:

The popular perception is that the Smoot-Hawley tariff raised import duties to record levels and helped cause the Great Depression.  In fact, the legislated tariff increase was much smaller than commonly imagined, although it still managed to erase 15 percent of America's imports of dutiable goods upon impact.  For reasons that will be explained, it was the deflation of prices that accompanied the Great Depression that pushed the tariff to near record levels, restricting trade even more…most economic historians do not believe that the Smoot-Hawley tariff played a large role in the macroeconomic contraction experienced during the Great Depression.

It is well known that Doug is hard at work on what will prove to be "the modern Taussig," a history of international trade, and protection, in the context of the rise of the American economy; one assumes that this more focused book will be feeding into the larger whole. 

Has school segregation gone down since MLK?

I received this very useful email from Ken Hirsch:

I looked into the basis for the statement I read on Marginal Revolution that "American schools are more segregated by race and class today than they were on the day Martin Luther King, Jr. was killed". The source that was given did not actually have statistics going back to the 1960s, but the author of the report, Gary Orfield, pointed me to an earlier report, "Brown at 50: King's Dream or Plessy's Nightmare" (http://tinyurl.com/BrownAt50), which did contain a time series for one measurement, "Percent of Black Students at Majority White Schools".  There's a graph of this statistic for Southern black children on the cover of the report which I am attaching to this email.

This statistic is quite problematic. Most starkly, in "majority minority" states, such as Texas and California, this statistic measures the *opposite* of integration.  The more evenly distributed that ethnic groups are in schools, the lower the the number. If all schools in California had exactly the same ethnic make-up, there would be no majority white schools, so 0% of black students would be in them!  Indeed, in Table 11 from this report (p. 27), California is given as the most segregated state by this measure.

The other two measures that Dr. Orfield uses have similar problems. Most of the change in all three are probably caused by the increase in the percent of Hispanics and the decrease in the percent of non-Hispanic whites, not by segregation. By most mathematically sensible measures, segregation has decreased and integration has increased over the last 20 years. See "Measuring School Segregation" by David M. Frankel and Oscar Volij for details: http://www.econ.iastate.edu/research/working-papers/p11808

The original post was here.

*The Great Stagnation*

The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better.

That's the title and it's by me, the Amazon link is here, Barnes&Noble here.  That's an eBook only, about 15,000 words, and it costs $4.00.  If you wish, think of it as a "Kindle single."

Your copy will arrive on January 25 and loyal MR readers are receiving the very first chance to buy it.  Very little of the content has already appeared on MR.

Many of you have read my article "The Inequality that Matters," but there I hardly touched on median income growth.  That is because I was writing this eBook. 

Has median household income really stagnated in the United States?  If so, why?  Are the causes political or something deeper?  What are the important biases in how we are measuring national income and productivity and why do they matter for economic policy?  Are we getting enough value for all the extra money we are spending on the health care and education sectors?  What do some major right-wing and left-wing thinkers miss about this phenomenon?

How does all this relate to our recent financial crisis? 

I dedicated this book to Michael Mandel and Peter Thiel, two major influences on some of the arguments.  

Why did big government arise in the late 19th and early 20th centuries, what is its future, and why is science so important for macroeconomics?  How can we fix the current mess we are in?

Read (and buy) the whole thing.

I wish to thank my publisher, Dutton, for accommodating this experiment in a new medium.  I believe it will be one piece of our new publishing future and here is your chance, as a reader, to try it out.

*The Return*

The author is Daniel Treisman and the subtitle is Russia's Journey from Gorbachev to Medvedev.  Is this the first non-fiction book to be making my "Best of 2011" list?  Most of all, it argues persuasively that, rather than botching the transition away from communism, the Russians/Soviets did a remarkably good job, relative to what could have been expected.  It's also the best all-round book-length treatment of what the subtitle indicates and it is readable as well.  Excerpt:

But [under Putin] did the bureaucracy become more effective and the population safer?  The state certainly grew.  In Putin's eight years as president, about 363,000 additional bureaucrats were hired, mostly federal agents stationed in the regions.  Law enforcement mushroomed.  In the United States, there are two judges and prosecutorial employees per 10,000 residents.  When Putin took over, Russia had eight; when he left, it had fourteen.  Federal spending on law enforcement and national security rose from $4 billion in 1998 to $26 billion in 2007.

Despite this influx of resources, most indicators suggest the state became less, not more, effective.  It built less housing, paved fewer roads, and laid fewer water mains and gas lines per year than under Yeltsin.  The number of public schools and buses in service fell faster than before.  Reforms of the education and health systems were repeatedly postponed…As for keeping citizens safe, few saw any improvement.

Here is a recent review of the book from the WSJ; I liked the book more than he did.

*Monocle* and high-altitude cities

Edition Alpino, for this month's issue.  I had not known there was a periodical called Monocle and now I have a piece in it, next to the ads for fancy watches and articles geared toward the European elite.  (Given the business model of this periodical, I believe the piece will never be on-line.)  There is also an article "Radio: Four modern alternatives to Alpine horn blowing."  And "Monocle goes on snow patrol with the Federal Republic's Gebirgsjägerbrigade, the traditional Alpine troops with a very modern mission."  

My fun but not very scholarly bit asks why so many cities of the far north are so pleasant to travel to, the task the editors set me.  Doing the piece got me thinking why cold, high altitude cities such as La Paz and Kathmandu do not always offer the same virtues.

In high altitude cities it is harder to raise large herds of pack animals, cultivate broad agricultural plains, establish critical mass in terms of size, or trade with heighbouring regions.  There are also fewer sea connections.  If we look in Europe, the largest Swiss cities are near the plain rather than tucked into the Alps.

This may be historical accident, but two of the more successful high altitude cultures came in the New World, namely the Incas and the Aztec alliance.  Is that because domesticated animals were less important on this side of the Atlantic?  That tomatoes and potatoes and corn can do well or better at high altitudes?  In and near Tenochitlan of course, the Nahuas built their own extensive network of canals.