Category: History

*The New New Deal*

by  Tyler Cowen in

That is the new book about ARRA and fiscal stimulus, by Michael Grunwald, available here with the subtitle The Hidden Story of Change in the Obama Era.  Excerpt:

…it was an astonishingly big bill,  In constant dollars, it was more than 50 percent bigger than the entire New Deal, twice as big as the Louisiana Purchase and Marshall Plan combined.  As multibillion-dollar items were being erased and inserted with casual keystrokes, Obama aides who had served under President Bill Clinton occasionally paused to recall their futile push for a mere $19 billion stimulus that seemed impossibly huge in 1993, or their vicious internal battles over a few million bucks for beloved programs that suddenly seemed too trivial to discuss.

Critics of ARRA will not agree with everything in this book, but putting mood affiliation aside for a moment, the writing, research, and conception of the work are all excellent.

What predicts when an Olympic record will fall?

by  Tyler Cowen in

It turns out that if the current holder also set the record in the past, the record is more likely to be broken at the next games.

If the current Olympic record is also the world record, it is less likely to be broken in the next games.

A change in the number of countries competing in an event  is also an important indicator of whether the record will fall.

And most surprising of all, the percentage by which the existing record improved on the first Olympic record, is also a significant indicator.

There is more here, and the original paper is here.  For the pointer I thank Michelle Dawson.

Gary Gorton’s *Misunderstanding Financial Crises*

by  Tyler Cowen in

Everything by Gary Gorton is worth reading.  I am not sure when this book is due out (Amazon claims Nov.2012), but it is not out yet.  The link is here.

Imagine a rewriting of earlier American financial history, though the lens of our recent financial crisis and extant ideas about bank runs through the shadow banking system.  Here are two short bits:

And interestingly, the figure below shows that capital input was actually higher in countries that did not have capital requirements.

…Bank capital was not the focus of bank regulation until recently.  In the 1980s regulators began focusing on bank capital as a buffer against idiosyncratic bank failures and associated losses that could have bankrupted the deposit insurance fund.  But it has been recognized that historically systemic bank crises are about cash.  They can be prevented or mitigated by the design of regulatory infrastructure, whether it is public or private.  They cannot be prevented by bank capital.

Recommended!

Honduras may appeal to London courts

by  Tyler Cowen in

Tricky legal dispute in Central America? Sort it out in the London courts. Honduras, the state with the highest homicide rate in the world, is preparing to send appeal cases to the judicial committee of the privy council (JCPC) in Westminster.

The extraordinary expansion of UK legal jurisdiction is being negotiated in an effort to support the development of a pioneering enterprise zone in the crime-scarred republic.

The Honduran government is establishing what amounts to semi-independent city states, hoping that improved governance backed by international partners will attract business investment and create employment.

The complex constitutional agreement under discussion involves Mauritius – an island 10,000 miles away in the Indian Ocean – guaranteeing the legal framework of the courts in the development zones, known locally as La Región Especial de Desarrollo (RED).

Here is more, and for the pointer I thank P.

*Affluence and Influence*

by  Tyler Cowen in

The author is Martin Gilens and the subtitle is Economic Inequality and Political Power in America.  A few points:

1. It is an interesting book.

2. It is poorly written and the first fifty pages should have been abolished.

3. It argues, using a comprehensive data set, that the preferences of poor and even middle income people are neglected or underrepresented in the policy process.  The preferences of the wealthiest ten percent seem to have more sway.

4. It should take greater care to distinguish the preferences of the (often ill-informed) poor across means and ends.  Say a poor or middle class person feels “I want tariffs” and also “I want prosperity.”  The elites then push through free trade to produce prosperity and for that matter to get reelected and perhaps also to serve commercial interests and donors.  Have they met or frustrated the preferences of the poor?  By the metrics of Gilens the poor did not get their way but that is not obviously the correct conclusion.  Matt makes a related point.

5. Many lower- or middle-income voters decide to vote retrospectively over outcomes (mostly), rather than over policy inputs.  That suggests we should judge the responsiveness of the system in terms of how well it aims toward those outputs, not whether it gives lower-income voters their preferred policy inputs.

6. What is wrong with this simple alternative hypothesis?:  Politicians seek some measure of redistribution-weighted prosperity to get reelected.  Wealthier voters are better educated and smarter, so they have a better sense of which policies will bring that about.  It seems the wealthier voters are getting their way on policy inputs, but a deeper look shows the pressures on politicians are quite general.

7. I would be falling prey to the fallacy of mood affiliation if I simply assumed the author wanted policy to be more responsive to the wishes of the poor and middle class.  Still I can ask whether this would be a desirable end.  Aren’t they less educated and less well-informed on average?  Don’t they also care about politics less and derive less of their status from political processes and outcomes?  Do I want them to have a greater say over social issues, including gay marriage?  No.

Here is a Boston Review symposium on the book, including many responses from the notables on the sidebar, along with a response from the author.

The Great Olympic stagnation?

by  Tyler Cowen in

A FUNNY THING HAPPENED on the way to the London Olympics: Athletes stopped breaking world records. Remember the run-up to Beijing in 2008, when the sports world was abuzz over how many marks Michael Phelps would smash? He set seven world records there but hasn’t bested a global time since 2009. The Vancouver Winter Olympics in 2010 provided plenty of drama but few record-shattering wins — Shen Xue and Zhao Hongbo’s highest-ever score in pairs figure skating wasn’t exactly a Bob Beamon moment. World records are now decades old in classic men’s Olympic sports such as the long jump (1991), shot put (1990) and discus throw (1986).

Many scientists have concluded from recent events that athletic performance is hitting a wall. Geoffroy Berthelot of INSEP, a sports research institute in Paris, looked at competitions from 1896 to 2007 and found that peak scores stopped improving in 64 percent of track and field events after 1993. Giuseppe Lippi of the University of Verona examined nine Olympic sports from 1900 to 2007 and found similar results. “Improvement has substantially stopped or reached a plateau in several specialities,” he wrote. Berthelot has predicted that the “human species’ physiological frontiers will be reached” in most sports around 2027.

Yet his conclusion is more measured:

But what these researchers are detecting isn’t some final biological frontier but rather a lull in technological enhancement. Athletes have always relied on science to push the bounds of achievement. Olympic athletes’ great stagnation, then, is really a temporary halt in innovation.

That is from Peter Keating, here is more.  For the pointer I thank Allison Kasic.

*Savage Continent*

by  Tyler Cowen in

That is the new book by Keith Lowe, with the subtitle Europe in the Aftermath of World War II.  Excerpt:

The number of sexual relationships that took place between European women and Germans during the war is quite staggering.  In Norway as many of 10 percent of women aged between fifteen and thirty had German boyfriends during the war.  If the statistics on the number of children born to German soldiers are anything to go by, this was by no means unusual…

Resistance movements in occupied countries came up with all kinds of excuses for the behaviour of their women and girls.  They characterized women who slept with Germans as ignorant, poor, even mentally defective.  They claimed that women were raped, or that they only slept with Germans out of economic necessity.  While this was undoubtedly the case for some, recent surveys show that women who slept with German soldiers came from all classes and all walks of life.  On the whole European women slept with Germans not because they were forced to, or because their own men were absent, or because they needed money or food — but simply because they found the strong, “knightly” image of the German soldiers intensely attractive, especially compared to the weakened impression they had of their own menfolk.  In Denmark, for example, wartime pollsters were shocked to discover that 51 per cent of Danish women openly admitted to finding German men more attractive than their own compatriots.

Nowhere was this need more keenly felt than in France…

You can buy the book here.

*The Great Persuasion*

by  Tyler Cowen in

That is the new book by Angus Burgin and the subtitle is Reinventing Free Markets since the Depression.  As I had suspected, it is interesting.  Here is the core thesis:

To Hayek and the other founders of the Mont Pelerin Society, Friedman’s ascent within its orbit reflected the collapse of its attempt to integrate a restrained defense of free markets into a traditionalist worldview.  In the broader social environment Friedman’s rise portended, and precipitated, the triumphant return of laissez-faire.

One thing which strikes me reading this book, as it does when I reread Friedman’s 1962 Capitalism and Freedom, is how much market-oriented writers of that era were not focused on the problems of old people, even though today those problems take up a huge chunk of the budget of the federal government.

I found this excerpt interesting:

In stark contrast to the early post-war years, Friedman would conclude near the end of his career that “there are too many damn think tanks now,” adding that they simply “don’t have the talent for it.”

Growth tigers of the 1950s

by  Tyler Cowen in

If we pull out Japan, Israel, and postwar European catch-up, and do per capita growth, B.R. Shenoy’s list of top performers looks like this:

Jamaica, 6.9%

Trinidad and Tobago, 5.9%

Algeria, 5.7%

Puerto Rico, 5.5%

Rhodesia and Nysaaland, 4.1%

Turkey, 2.9%

Philippines, 2.5%

If you do absolute rather than per capita, many of those numbers go up by a few percentage points, for instance the Philippines becomes 5.8% and Algeria becomes 8.0%.

Those numbers are from B.R. Shenoy’s book Indian Economic Policy.  Are there lessons?  One is that parts of the Caribbean are in fact wealthier than many people think.  Another is that the 1950s were a very good decade for the Caribbean, culturally too.  A third lesson is that the top performers in one period may not have legs.  Finally, looking at this table makes one realize, yet again, how good it was to more or less rid the world of communism.

*Keep from All Thoughtful Men: How U.S. Economists Won World War II*

by  Tyler Cowen in

That is a new book out by Jim Lacey.  Here is one good review by Christopher Tassava:

…Lacey (a retired U.S. Army officer and current writer on defense matters) describes the bureaucratic fights between civilian experts and military staff over the extent and speed to which the American economy — hardly firing on all cylinders as war began in Europe — could be reoriented to produce the munitions necessary for a serious military effort. At the center of Lacey’s story are three economists who, he shows, had far-sighted views of the true capacity of the American economy: the reasonably well known Simon Kuznets and two nearly forgotten figures, Robert Nathan and Stacy May.

Lacey capably uses archival and secondary sources to show that these three men, along with a small group of other civilians inside the federal bureaucracy, were able to use social-scientific methods, including, crucially, statistical techniques, to assess how large the U.S economy could grow, how quickly that growth could occur, and how much war materiel the economy could produce for use by the U.S. and Allied militaries. Lacey persuasively shows that Kuznets, Nathan, and May were able to forecast in late 1942, before the first anniversary of Pearl Harbor, that June 1944 would be the moment at which the American “arsenal of democracy” would be able to produce sufficient materiel to launch a substantial invasion of Europe.

The words English has taken from India

by  Tyler Cowen in

Another author who has drawn inspiration from the dictionary is Tom Stoppard. In his play Indian Ink, two characters compete to use as many Hobson-Jobson words as possible:

  • Flora: “While having tiffin on the veranda of my bungalow I spilled kedgeree on my dungarees and had to go to the gymkhana in my pyjamas looking like a coolie.”
  • Nirad: “I was buying chutney in the bazaar when a thug who had escaped from the chokey ran amok and killed a box-wallah for his loot, creating a hullabaloo and landing himself in the mulligatawny.”

Here is more, hat tip goes to The Browser.  They also refer us to this long interview with philosopher Thomas Scanlon, and Ed Glaeser on what American can learn from Australia.

Reminiscences of Miles Kimball, and others

by  Tyler Cowen in

Miles and I were in the same entering class in Harvard.  Miles and Abhijit Banerjee were for economic theory the sharpest students in the group and it must have been an absolute terror to teach them.  Both were gentlemanly in the extreme, but if a mistake or ambiguity were on the board, or in a paper, you could be sure they would find it and point it out.  I recall Abhijit answering a question on the macro final exam and showing that what he thought would be the supposed Harvard faculty member answer was in fact wrong, in addition to solving for the right answer, finding a few other possible equilibria, and acing the rest of the exam in but a few hours’ time.  Steve Kaplan, from the same class, later became known as an empirical economist but his theoretical acumen was remarkably good.  Those three dominated a lot of the discussions.  Mathias Dewatripont was also no slouch in theory though temperamentally quieter.  Alan Krueger, in his third year, obtained the reputation of having the best eye for an important empirical paper and how to execute it; he learned the most from Larry Summers.  Nouriel Roubini was generally quiet, though he looked all-knowing and at times slightly jaded.

Brad DeLong was a few years older.  He was thought of as the slightly right-wing guy (compared to his peers he was) who read a lot of unusual history of economic thought, including Adam Ferguson.  He and his girlfriend (now wife) were inseparable and always affectionate.

Miles struck me as a mind in perpetual motion, in the best sense of that phrase.  I was not surprised, in 1984, when I heard about his linguistics Master’s thesis, which includes a learned and original discussion of Charles Peirce.  Miles is also a cousin of Mitt Romney, and he will soon blog “Will Mitt’s Mormonism Make Him a Supply-Side Liberal?”.  I wonder what he makes of us all.

Here are his early tweets.

One feature about his blog which is refreshing is that he is neither a libertarian nor a progressive, though he incorporates ideas from both approaches.  My RSS feed is mostly libertarians and progressives, but that is part of the strange selection mechanism of the blogosphere, not a reflection of the economics profession.

Again, Miles’s blog is here and Miles on Twitter is here.  Most of all, he seems to be a great dad, or at least his daughter thinks so.  She too is studying at Harvard, for an MBA.  Here is her project Expert Novice, “Every month or so, I write a letter about what I’ve learned lately.”