Category: History

The Argentine national identity

Yet, unlike the Italian, the Spanish settler transition was incomplete.  Indeed, counterintuitively, the Spanish "actually assimilated to the new land more slowly and more reluctantly than did the "alien" Italians", who were not quick.  The Spanish rate of return was lower than the Italian, but still high at 46 percent by 1930, and in-marriage and voluntary segregation was high in both groups.  Above all, both Spanish and Italian immigrants avoided Argentine citizenship like the plague.  Fewer than 4 per cent of Spanish took citizenship, and the Italian rate was below 2 per cent.  Immigrants received most legal rights without citizenship, with the important exception of voting in national elections.  Aliens were also not liable for military service.  There was therefore "no incentive to become a citizen", and a considerable disincentive.  Nativist fears among the lower classes, and the fear of political competition among the elite, led Argentines to accept this situation.  Immigrants dominated the Argentine lower middle classes…The incomplete settler transition therefore meant that booming Argentina's middle class was much less committed to it, much less politically powerful, and much more prone to send or take its money home, than in the Anglo newlands.  The power and novelty of Spanish settler transitions helps explain Argentina's relative success to the 1920s.  But the incomplete nature of the settler transition also helps explain Argentina's relative failure from the 1920s.

That is from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo World, 1783-1939.

*Replenishing the Earth*, by James Belich

How is this for a real estate bubble?

At peak in 1888, over 80 per cent of Victorian private investment went into Melbourne buildings.  Expenditure on housing was even greater than that on rail, and many houses were built without people to live in them, or without jobs for those who did.

In the 1890s Melbourne was an impressive place.  With 500,000 people, it was eighty percent bigger than San Francisco and nine hundred percent bigger than Los Angeles.  Three hundred trains a day serviced the suburbs.  The city had three hundred buildings with elevators and Melbourne was reputed to have more large public buildings than any British city outside of London.  There were plans to build a replica of the Eiffel Tower.

That is all from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo-World, 1783-1939.  I'll discuss this book more soon, but I'll tip my hand and say it is one of the very best non-fiction books of the year.  Imagine Jared Diamond or Greg Clark (albeit more measured, in each case) but applied to the settlement of the colonies rather than to Europe itself.  This book also has perhaps the best explanation as to why the Argentina growth miracle fell apart.

*American Homicide* ($40, even though the release date is listed as 10/15)

This book has many good and quotable bits, for instance:

Anglos continued to kill Hispanics at a fairly high rate in the 1880s and 1890s.  Hispanics were five times more likely than the Chinese to be killed in interracial homicides.  They held a wider range of jobs than the Chinese did, moved more freely in society, and enjoyed full civil rights if they were citizens, so they came into contact with Anglos more often and posed a greater threat to them.  They also responded in kind to Anglo aggression, killing Anglos at eight times the rate the Chinese did.  But the Hispanic community, unlike the Chinese community, was becoming less homicidal.

That is from Randolph Roth's new and notable American Homicide (no subtitle, yay!).  Here is a PW summary:

[Roth] distills his argument into several key statistics, all of which hinge upon the fact that Americans are murdered more frequently than citizens in any other first world democracy: U.S. homicide rates are between six and nine per 100,000 people. Roth refutes popular theories about why this is so (e.g., poverty, drugs) and lays out an alternate hypothesis: "increases in homicide rates" correlate with changes in people's feelings about government and society, such as whether they trust government and its officials and their sense of kinship with fellow citizens.

The demons think this is an important book and the genetic influences on my behavior do not appear to contradict that assessment.  I found this bit interesting:

…although the FBI data are incomplete, there appears to have been a steady decline in spousal homicide in recent decades, from roughly 1.5 per 100,000 adults per year to 0.5 per 100,000.

This book is a treasure trove of historical nuggets, data, and clear writing.  It's the single best source on early murder rates in the American republic.  It's especially interesting on how the South evolved to be the most murderous region of the United States.  "There's just a whole lot of people there who need killin'," I recall one man (in another book) opining about Texas and its high murder rate.

*The Fight for Fairfax*

That's a new book by Russ Banham and the subtitle is A Struggle for a Great American County.  It is published by George Mason University Press.  Excerpt:

Among the incorporated towns was Falls Church, which claimed 1,100 citizens and an excellent connection to Washington, D.C., via the Washington, Arlington, and Falls Church Electric Railway.  Electric trolley lines also connected commuters from the towns of Fairfax, Herndon, Vienna, and Clifton to the District.

That was in 1907.  Does anyone know how fast these electric trolleys were?  This source suggests speeds were up to 20 mph.  Is it possible that a mass transit trip from Fairfax or Clifton to DC was quicker in 1907 than today?  With stops, how fast does a bus go at 8:30 a.m.?

How did the Garn-St. Germain act matter?

Campbell and Hercowitz, which I found from a Krugman link, write:

The Monetary Control and the Garn-St.Germain Acts of 1980 and 1982 allowed market innovations that dramatically reduced these equity requirements: Greater access to sub-prime mortgages, mortgage refinancing, and home equity loans, reduced effective down payments and increased effective repayment periods. More important for the short run, it enabled households to cash-out previously accumulated home equity, which in 1982 amounted to 71 percent of GDP. This was followed by a huge wave of household borrowing.

Maybe I’ll deal with the 1980 Act another time. but on Garn-St. Germain those claims are not easy for me to verify.  (Their paper is a theory paper and offers no further evidence or narrative.  Here is also an earlier Krugman piece of relevance.

Here is one summary of what the Garn-St. Germain Act did.  Maybe this summary is incomplete but it is hard to see how Garn-St. Germain is responsible for either the current crisis or for the more general decline in national savings rates.  The closest I come to finding a relevant passage is:

(7) the act preempted state restrictions on enforcement by lenders of
due-on-sale clauses in most mortgages for a three year period ending
October 15, 1985, and authorized state chartered lenders to offer the
same kinds of alternative mortgages permitted nationally chartered
financial institutions.

Over time most institutions moved away from the state charter and those mortgages already were legal at the national level. 

Or try this summary of the Act, from a book.  Again, the connection is hard to see.  In fact Garn-St. Germain freed up S&Ls from investing so much in home mortgages.  You can blame that (partially) for the S&L crisis, but the current real estate bubble?  Or the general rise in indebtedness which started in the 1980s?

Here’s a recent empirical paper on the rise in U.S. household indebtedness.  Not surprisingly, it emphasizes demographic factors as the main causes.  pp.18-19 discuss financial innovation as a contributing cause but there is not a peep about Garn-St. Germain.  The authors do cite a paper by Wendy Edelberg, who pinpoints some of these innovations as coming in the mid-1990s and resulting from greater risk-based pricing of loans.

On mortgages, a lot of the relevant deregulation occurred at the state level or the problem was the simple lack of enforcement of anti-fraud laws.  Government-promoted low or zero down payment mortgages date back at least to Section 235 of HUD, from 1968 (a disaster, by the way) and Garn-St. Germain is hardly a turning point in that history.

Maybe I’m wrong about Garn-St. Germain.  If so, I’d like to learn how and I am asking you, readers, to set me straight. 

All Those Years Ago, or, how it feels to be a superpower

I was reading Paul Blustein's The Chastening, his book on the Asian financial crisis published in 2001, and came across the following passage:

"How does it feel to be a superpower?" Timothy Geithner, the U.S. Treasury's assistant secretary for international affairs, whispered jokingly to Eisuke Sakakibara, the Japanese vice minister of finance…Japan [with the bailout of Thailand] now was eager to show that it could take care of its Asian neighbors the same way Washington had helped its most important neighbor in Latin America [Mexico]…The lighthearted comment by Geithner masked an underlying tension between the United States and Japan that would intensify in the coming weeks as the crisis unfolded.  Washington wasn't adding a penny to the Thai package…in part because they feared the IMF's central role in crisis-fighting might be undermined.

How much did highways really matter for suburbanization?

Following up on my earlier post, Dan Klein points my attention to the following piece by Wendell Cox, Peter Gordon, and Christian Redfearn, from Econ Journal Watch.  Excerpt:

Suburbanization has, for a long time, been a trend based on consumer preferences and larger trends, notably rising wealth and transportation and communications improvements (including the highways Baum-Snow investigates). Jackson (1985) finds U.S. suburbanization began at the end of the 19century. Indeed, he refers to “streetcar suburbs.” The 20th century U.S. experience is shown in Figure 1, which shows the percentage of US population living in metropolitan areas, and breaks that percentage down into central cities population and suburbs. The growth of the suburbs relative to the central city is seen well before 1950. Moreover, in the figure the relative decline of the central cities is understated because central cities have been annexing suburbs for many years.

The simple broad narrative is that, by and large, suburban living expanded throughout the twentieth century. Around the world, as incomes rise, people choose the mobility of the automobile; they overwhelmingly prefer the range and choice of personal transportation. As they choose automobility, origins and destinations disperse; and as these disperse, the attraction of the auto grows. It is a self-reinforcing cycle that is facilitated by better highways. But as with most public sector infrastructure developments, these usually follow rather than lead.

This article offers some striking facts.  Before the interstate highway system, the percentage of the U.S. population living in suburbs went from 7.1 percent in 1910 to 23.3 percent in 1950.  From 1950 to 2000 it had a smaller proportional increase, namely from 23.3 percent to 50 percent.

The central city of Copenhagen reached its population peak in 1950 and by 1990 had lost nearly 40 percent of its population; that is comparable to some of the highest losses in the U.S. Rust Belt.  The central city of Paris reached its peak population in 1920 and has lost one-quarter of its population by 1990.

There are many other interesting points in this piece.  I am not suggesting that highways do not matter, but the extent of the influence is maybe not as large as many people think.

Did highways cause suburbanization?

Via RortyBomb, that is a research paper by Nathaniel Baum-Snow.  Here is the abstract:

Between 1950 and 1990, the aggregate population of central cities in the United States declined by 17 percent despite population growth of 72 percent in metropolitan areas as a whole. This paper assesses the extent to which the construction of new limited access highways has contributed to central city population decline. Using planned portions of the interstate highway system as a source of exogenous variation, empirical estimates indicate that one new highway passing through a central city reduces its population by about 18 percent. Estimates imply that aggregate central city population would have grown by about 8 percent had the interstate highway system not been built.

You can quibble with the model specification but I accept the paper's general conclusion.  A few points:

1. I am reluctant to call this a subsidy without qualification.  Visit an old medieval city like Esternach, Luxembourg ("a formidable fortress erected by Count Siegfried in 963").  The main buildings are grouped together on a hill.  It's value-enhancing that later governments adopted policies, such as near-free trade and national defense, which eased those constraints and spread out the population.  I wouldn't say that the resulting population distribution of say Paris is best thought of as resulting from a subsidy because they're not all on top of a hill somewhere,  I would say it is the result of greater wealth and trade opportunities and law enforcement, with some element of subsidy.  So if you favor the construction of the interstate highway system, as I think most commentators do (try driving for long on Rt.1), it is a rhetorically loaded decision to invoke the word "subsidy" as the major mode of explanation.

2. Greater wealth, transport, and trade naturally cause people to seek out larger homes and greater living space.  In a world with no policy distortions this may well be the dominant effect in various long-run settings.  The rise of the suburbs is not all subsidy-driven by any means.

3. I recall the D.C. area quite well before it had either the Orange Line on the Metro (serving the Virginia suburbs) or Rt.66 going into Washington.  The construction of both enabled the suburbs to spread further westward.  But which was more important in driving this process?  Mass transit also can encourage suburbanization, especially the city has abominable public schools.  A longer and better Metro system — most of all with better parking — would have meant even more people moving to the suburbs.

4. Do not forget "white flight."  For American cities, this paper suggests that each black arrival lead to, on average, 2.7 white departures.  When it comes to DC, "black flight" has been a significant phenomenon and it is a major reason why the city has been losing population. 

5. Canada is much less suburbanized than is the United States and the greater "flight from blight" in the U.S. seems to be a major reason (see p.8 here).  When I think of U.S. suburbanization, I think of the failures of our municipal public sector as very important in this process.  In contrast, Fairfax County and Fairfax City governments are of reasonable quality.

6. For competitive Tiebout-related reasons, it is no accident that the public schools are so often better in the suburbs than in major cities.  Countries with strong social norms, such as Sweden, have this problem less.

7. One simple model (which I am not endorsing straight up) is that most American people with kids have a near-lexical preference for living in the suburbs.  Anything that enables them to do so can be called a cause of suburbanization and measured as such.  But isolating and measuring these marginal impacts, in the econometric sense, distracts us from seeing how general and how strong the underlying infra-marginal forces are and those are very often preference-based.

The Politics of Bearing Arms

Historian David Beito, writing at The Beacon, reminds us

The controversy about carrying guns in public is not new. In 1967, however, the political alignments on this issue were completely different. Many conservatives (and others) objected when the Black Panthers insisted on exercising this right. In response, Governor Ronald Reagan signed the Mulford Act banning the carrying of guns in public.

Black panthers_1968

Simon Newcomb, the most important economist from Nova Scotia

Yes, Simon Newcomb (1835-1909).  Newcomb was a polymath and he made important contributions to time-keeping, astronomy (most of all; he was arguably the most famous American astronomer of the 19th century), statistics, mathematics, and economics.  He was especially good at coming up with new ways of calculating tables for almanacs and he was deeply interested in lunar and planetary tables.  He sought to bring the scientific method to research on parapsychology.  He even wrote a science fiction novel.  In preparation for my Nova Scotia trip I have been rereading his Principles of Political Economy.

In economics Newcomb is best known for producing the earliest version of the equation of exchange as a means of representing the quantity theory of money.  He had a remarkably good understanding of monetary velocity and the purchasing power of money, favoring a "tabular standard." 

The most interesting part of the text are the questions at the end of each chapter.  Many show that Newcomb knew more than the text itself let on.  Others are bizarre and would not be found in 2009.  How about this one?:

16. How does the modern system of production by large organizations operate upon the shiftless class who will never stick to a regular line of work?  Show why, when this class really wants to work, it is harder to get it than it would be in a primitive economy.

Despite its possible inappropriateness, it is nonetheless an interesting question about fixed capital and unemployment.  If you want insightful questions, here are a few picks, taken from a single page, chosen randomly:

Define what portion of the price paid for a coat goes to compensate the friction of exchange.

Does the proportion of the population engaged in intellectual pursuits tend to increase or diminish with the increase of wealth?

Is there any method of calculation by which we can approximate to the total population which the earth can sustain?  If so, state the method, and show what data are necessary to apply it.

Has cheap transportation of passengers and goods across the ocean tended to retard or to stimulate emigration?

I have seen many worse questions in contemporary principles texts.  He also formulated Benford's Law:

In 1881, Newcomb discovered the statistical principle now known as Benford's law, when he observed that the earlier pages of logarithm
books, used at that time to carry out logarithmic calculations, were
far more worn than the later pages. This led him to formulate the
principle that, in any list of numbers taken from an arbitrary set of
data, more numbers will tend to have the leading digit "1" than any
other leading digit

He was mostly self-taught.  He suffered problems at the age of seven and was removed from school and it seems he never returned.  Later his father tortured him with farm work to help improve his manual dexterity (it didn't seem to work).  He was an expert chess player and could recite large amounts of poetry from memory.  He started studying astronomy before he was ten.  Next week I will read his autobiography, available on-line.

Here are quotations from Newcomb; I have read that the "anti-flight" remarks are ripped from context and are misleading.  There is a crater, an asteroid, and a Canadian writing award named after him.

Here is Newcomb on libertarian ethics and wanting to be left alone

If you have any interest in the history of economic thought, or in 19th century North American intellectual history, you should read Simon Newcomb.  Here are some of his on-line works.  When he died, President Taft and many foreign dignitaries attended his funeral.  But today Newcomb is very much an underrated thinker and an underrated historical figure.

Newcomb's father once wrote to him: "You were an uncommon child for truth, I never knew you to deviate from it in one instance."