Category: History
The economic legacy of the Holocaust in Russia
Daron Acemoglu, Tarek Hassan, and James A. Robinson have a new paper and the abstract is this:
We document a statistical association between the severity of the persecution and mass murder of Jews (the Holocaust) by the Nazis during World War II and long-run economic and political outcomes within Russia. Cities that experienced the Holocaust most intensely have grown less, and both cities and administrative districts (oblasts) where the Holocaust had the largest impact have worse economic and political outcomes since the collapse of the Soviet Union. Although we cannot rule out the possibility that these statistical relationships are caused by other factors, the overall patterns appear generally robust. We provide evidence on one possible mechanism that we hypothesize may link the Holocaust to the present — the change it induced in the social structure, in particular the size of the middle class, across different regions of Russia. Before World War II, Russian Jews were predominantly in white collar (middle class) occupations and the Holocaust appears to have had a large negative effect on the size of the middle class after the war.
Hat tip goes to Chris Blattman on Twitter.
From the comments
…in 1981 Margaret Thatcher cut UK government spending in the middle of a recession, and against the advice of 391 economists that it would worsen the recession, and UK GDP started its recovery the same quarter. In 1991 Ruth Richardson in NZ cut government spending against the advice of 15 economists, and NZ GDP started its recovery the same quarter. There are a number of other cases of expansionary fiscal consolidations, and there's a causal theory to explain why this can happen – see http://ideas.repec.org/p/cpr/ceprdp/417.html (shortly, it's that cutting government spending improves people's expectations about the future of the economy and taxes, so they start investing more right now). Of course, correlation does not prove causation, and perhaps there is something about the EU countries now that is so different as to the cases I cite as to make those results no longer likely to hold, but Krugman writes as if he has forgotten entirely about the 1980s and 1990s.
That is by TracyW. Later in the thread she refers us to this paper, on how "contractionary" fiscal policy can be expansionary, and vice versa.
Wikipedia on A.J. Ayer and Mike Tyson
He taught or lectured several times in the United States, including serving as a visiting professor at Bard College in the fall of 1987. At a party that same year held by fashion designer Fernando Sanchez, Ayer, then 77, confronted Mike Tyson harassing the (then little-known) model Naomi Campbell. When Ayer demanded that Tyson stop, the boxer said: "Do you know who the fuck I am? I'm the heavyweight champion of the world," to which Ayer replied: "And I am the former Wykeham Professor of Logic. We are both pre-eminent in our field. I suggest that we talk about this like rational men." Ayer and Tyson then began to talk, while Naomi Campbell slipped out.
The link is here and the pointer is from Daniel Klein.
*Wolf Among Wolves*, by Hans Fallada
Originally published in 1938, it just came out in English for the first time in complete form. I'm only on p.200 (of about 800), but so far it is a gripping albeit slightly schlocky Continental novel of ideas, set in 1923 Berlin, and pitched roughly at the level of a John Forsythe novel. It's also notable for its incorporation of monetary theory throughout the narrative. Fallada had a good grasp of the costs of hyperinflation, the associated accounting problems, the difficulty of personal economic calculation, how inflation destroys savings, and the evolution of parallel currencies; Thomas Mann also explored these themes.
I've yet to see any major English-language reviews, but it's been selling very well in the UK.
Mick Jagger on the economics of music
…people only made money out of records for a very, very small time. When The Rolling Stones started out, we didn’t make any money out of records because record companies wouldn’t pay you! They didn’t pay anyone!
Then, there was a small period from 1970 to 1997, where people did get paid, and they got paid very handsomely and everyone made money. But now that period has gone.
So if you look at the history of recorded music from 1900 to now, there was a 25 year period where artists did very well, but the rest of the time they didn’t.
Jagger, of course, studied economics at LSE and is known to be a fan of Hayek. Hat tip goes to Jerry Brito.
The unenlightened economy
SNAKING AROUND the outer wall of the courthouse in Mbaiki, Central African Republic, is a long line of citizens, all in human form and waiting to face judgment. It’s easy to imagine them as the usual mix of drunks, reckless drivers, and check-bouncers in the dock of a small American town. But here most are witches, and they are facing criminal punishment for hexing their enemies or assuming the shape of animals.
By some estimates, about 40 percent of the cases in the Central African court system are witchcraft prosecutions.
…most lawyers I consulted there favored keeping the law intact, although they admitted that it fits uneasily in a modern legal system. “The problem is that in a witchcraft case, there is usually no evidence,” said Bartolomé Goroth, a lawyer in Bangui…
More here. Add this to the evidence for Joel Mokyr's thesis.
Hat tip: The Browser.
Ramban, a 12th century Jewish Biblical Commentator
Doni Bloomfield sends me this passage:
Set aside a sum of money that you will give away if you allow yourself to be angered. Be sure that the amount you designate is sufficient to force you to think twice before you lose your temper… (Ramban: A letter for the Ages translated by Avrohom Chaim Feuer Reishit Chochmah, Shaar Ha'anavah Chapter 3)
The link to the source is here.
Serendipity in Istanbul
I am walking along the main shopping street, seeing many Turks but actually thinking it would be nice to read more on Edwin Chadwick, when I stumble across a bookstore with a largish section of Augustus M. Kelley reprints, no Chadwick but they do have the everyone-should-now-reread-it Herbert Feis, Europe the World's Banker, 1870-1914, and I stumble upon the section on Greece and the International Finance Commission of 1898.
A bit of Googling yields the following (JSTOR):
The I.F.C. was set up in 1898 as a result of Greece's disastrous defeat in the 1897 Greco-Turkish War. The powers involved in its creation were Great Britain, France, Germany, Austria, and Italy. The purpose of the commission was to control the collection and employment of the revenues assigned to…[various foreign loans, mostly to the aforementioned powers]…on which the country had defaulted in 1893, as a result of the slump in the currants trade.
The Greeks ended up raising the money through state monopolies on their customs ports, kerosene, salt, matches, playing cards, emery and cigarette paper, plus taxes on tobacco and stamp duties.
At $40, I pass on the book and I will see the story reenacted in any case.
The economic effects of disenfranchisement
Via Chris Blattman, here is a newish paper by Suresh Naidu, on how disenfranchisement translated into inferior economic outcomes for African-Americans:
This paper estimates the political and economic effects of the 19th century disenfranchisement of black citizens in the U.S. South. Using adjacent county-pairs that straddle state boundaries, I rst examine the effect of voting restrictions on political competition. I find that poll taxes and literacy tests each lowered overall electoral turnout by 10-23% and increased the Democratic vote share in national elections by 5%-10%. Second, employing newly collected data on schooling inputs, I show that disenfranchisement reduced the teacher-child and teacher-student ratio in black schools. Finally, I develop a model of suffrage restriction and redistribution in a 2-factor economy with occupational choice to generate sufficient statistics for welfare analysis of the incidence of black disenfranchisement. Consistent with the model, disenfranchised counties experienced a 7% increase in land and farm values per decade, despite a 4% fall in the black population share. The estimated factor market responses suggest that black labor bore a collective loss from disenfranchisement equivalent to at least 13% of annual income, much of which was transferred to landowners.
Here is Naidu's home page. Where did he end up getting a job?
And Craig Venter said, “let there be life.”
The best-selling book of all time
Charles Dickens, A Tale of Two Cities, two hundred million copies.
Next in line is Baden-Powell's Boy Scouts book and then Lord of the Rings.
The full list is here, interesting throughout. For the pointer I thank BrainPicker. Here is a related post from Andrew Gelman.
Social welfare expenditures in the United States and the Nordic Countries
Price Fishback has a new paper and perhaps this abstract should be screamed from the yttertak:
The extent of social expenditures in the U.S. and the Nordic Countries is compared in the early 1900s and again in the early 2000s. The common view that America spends much less on social welfare than the Nordic countries does not survive closer inspection when we consider the differences in the structures of social expenditures. The standard comparison examines gross social expenditures. After adjustments for direct and indirect taxes paid, the net social expenditures in the Nordic countries are much closer to American levels. Inclusion of mandatory and private social expenditures raises the American share of GDP devoted to social expenditures to rank among the middle of the Nordic countries. Per capita net public social expenditures in the U.S. rank behind only Sweden. Add in the private spending, and per capita spending in the U.S. is higher than in all of the Nordic countries. Finally, I document the enormous diversity across time and place in public social expenditures in the U.S. in the early 1900s and circa 1990.
Fishback does discuss how, in line with intuition, the U.S. system is more porous and less universal. He also stresses how common it is that people do not claim or apply for benefits for which they are eligible.
Here are some of Fishback's papers on-line, but I do not see an ungated copy of this one.
Where Greece went wrong
Here is another useful paper on Greek economic history. Here is one excerpt:
Rather than adopting policies to correct the macroeconomic imbalances of the Greek economy in order to restore macroeconomic stability and growth, the newly elected Socialist government further promoted policies for income redistribution and the expansion of the public sector. These policies reflected two aspects of the political and economic system of that period. First, they reflected the political priorities of the newly elected government, which was elected under a promise to the public for a radical change in the socioeconomic system. The expansion of the welfare state in the late 1970s had increased the public’s appetite for additional state transfers and for further measures to lower the gap between low- and high-income groups in the society. Second, they reflected the lack of any constraint, internal or external, in the conduct of economic policy. The debt-to-GDP ratio in 1981 was only 34.5%, despite the fiscal expansion that took place during that year. The debt-to-GDP ratio was the highest of the previous 30 years, but still at a relatively low level by world standards. Thus, the Greek government did not face any difficulties borrowing from the domestic and international markets in the early 1980s. This allowed the government to continue pursuing its expansionary policies. Moreover, the central bank lacked independence, a factor that Alesina (1988) and Cukierman, et. al., (1992) find to be inversely related to inflation. Even though the Currency Committee was officially abolished in 1982, the government continued to set the broad outlines of monetary and exchange rate policies during the 1980s. This meant that monetary policy was dominated by the need to finance fiscal expansion.
Although I still favor Greece leaving the Eurozone, we should remember they joined the currency union for a plausible reason, namely that their own monetary policy was a disaster in the making. Here's a very good post on how deeply structural the Greek problems run.
When did Greek economic policy turn bad?
Stan Tsirulnikov forwards to me this very interesting paper (JSTOR, gated for many of you). Here is an excerpt from the summary:
For twenty years up to 1974, Greece enjoyed rapid growth, high investment and low inflation; during the next twenty years, growth and investment collapsed and inflation became high and persistent.
After 1974, debt and deficits rose sharply as well, and later EU transfers helped postpone the necessary fiscal adjustments. At this same time Greece was becoming more democratic, in part because the previous autocratic arrangements were collapsing. The figure on p.150, representing the difference between the two periods, is a knockout. And after 1974, the average rate of gdp growth goes from 7.1 percent to 2.1 percent.
The full reference is "The Two Faces of Janus: Institutions, Policy Regimes and Macroeconomic Performance in Greece," George Alogoskoufis, Economic Policy, Vol. 10, No. 20 (Apr., 1995), pp. 149-192.
Addendum: Here is an ungated copy.
Marshallian joint supply, Russian style
Some Old Believers refused to eat the tsars' recommended new staple food, the potato, because it was an import from the godless West — potatoes were generally hated among the Russian peasantry on their first arrival, before their value in making vodka became apparent.
That is from the still-excellent Christianity: The First Three Thousand Years, p.545.