Category: History

G. Warren Nutter and Chile

In 1969, Warren Nutter left the University of Virginia Department of Economics to serve as the Assistant Secretary of Defense for International Security Affairs in the Nixon administration. During his time in the Defense Department, Nutter was deeply involved in laying the groundwork for a military coup against the democratically elected president of Chile, Salvador Allende. Although Nutter left the Pentagon several months before the successful 1973 coup, his role in the ascendance of the Pinochet regime was far more direct than the better-known cases of Friedrich Hayek, Milton Friedman, James Buchanan, and Arnold Harberger. This paper describes Nutter’s role in Chile policy planning and generating a “coup climate.” It shows how Nutter’s criticisms of Henry Kissinger are grounded in his economics, and compares and contrasts Nutter with other economists who have been connected to Pinochet’s dictatorship.

That is a new paper by Daniel Peter Kuehn.  You should note that Friedman and Buchanan have a truly scant connection to Pinochet and the coup (Harberger I do not know, Hayek was too skeptical of democracy in his thinking and informal remarks later in his life).

How to Become a Federal Criminal

Mike Chase, author of the excellent twitter feed @CrimeADay, has now written the illustrated handbook, How to Become a Federal Criminal. In truth, a handbook wasn’t necessary because it is very easy to become a federal criminal.

You may know that you are required to report if you are traveling to or from the United States with $10,000 or more in cash. Don’t hop over the Canadian border to buy a used car, for example, or the Feds may confiscate your cash (millions of dollars are confiscated every year). DiImage result for how to become a federal criminal chased you also know that you can’t leave the United States with more than $5 in nickels??? That’s a federal crime punishable by up to five years in prison. How about carrying a metal detector in a national park–up to six months in prison. And God forbid you should use your metal detector and find something more than 100 years old, that can put you away for up to a year. Also illegal in a national park? Making unreasonable gestures to a passing horse.

The expansion of Federal criminal law into every nook and cranny of life can be amusing but there is a darker side.

The feds also have unbelievably powerful tools at their disposal. They can subpoena your bank records, listen to your phone calls, indict you in a secret proceeding called a grand jury, an, if they think you lied to them, they can charge you for that alone. Then, if you can get a jury to find you guilty on just one charge, the judges is allowed to sentence you up to the statutory maximum based on things you were never charged with, or even things a jury acquitted you of, so long as the judge decides you probably did them. (italics added).

Moreover, when anyone can be charged with a crime, the application of criminal law becomes discretionary and that discretion may be used to suppress the free exercise of other rights. Indeed, the recent Supreme Court case, Nieves v. Bartlett, makes it easier for the police to arrest people even if the reason for the arrest is retaliation for lawful behavior.

Slate: The First Amendment makes it unconstitutional for government officials to retaliate against you because they dislike your speech. At the same time, federal law gives you the right to sue state officials for compensation if they violate constitutional rights such as your right to free speech. But on Tuesday, the Supreme Court invented a rule that will often allow police officers to arrest people in retaliation for disfavored speech without liability.

….Because local laws are full of minor infractions, like “loitering,” that are frequently violated without incident, police will often have a pretext to arrest people engaged in speech the officers don’t like. By immunizing such abuse, Nieves may have devastating effects on demonstrators, press photographers, and anyone who wants to exercise their speech rights in public, like the right to film the police or verbally challenge officer misconduct. The power to arrest is a potent tool for suppressing speech because even if charges are later dropped, arrestees must undergo the ordeal—and dangers—of being booked and jailed, and they may have to disclose the arrest on future job and housing applications, among other ramifications.

*One Giant Leap*

The author is Charles Fishman, and the subtitle is The Impossible Mission That Flew us to the Moon.  Here is one excerpt:

It [NASA’s Mission Control] was the first real-time computing facility IBM had ever installed.

And:

…the Apollo flight computer was the first anywhere to have responsibility for human lives.

That computer had 73 kilobytes of memory and had 0.000002 percent of the computing capacity of an iPhone.  And don’t forget this:

At least while you were headed outbound, you’d have plenty of fuel to correct things.  Coming home from the Moon is a lot less forgiving.  The heat of reentry, the splashdown targeting into the ocean, and the g-forces piling up on the spaceship and the astronauts inside combine to create a very thin slice of air you need to slide your spaceship into.  The command module had just 1 degree of latitude on reentry.  Too shallow an angle, and your space capsule skips off the top of the atmosphere like a flat stone — out into space and a wide orbit around the Earth, from which there was no rescue.  Too steep a cut into the atmosphere, and the speed, heat, and g-forces would combine to incinerate your space capsule.  And unlike on the way out, on the way back there are no go-arounds.

Definitely recommended, gripping from start to finish.  Overall the best history of how the space revolution and the computer revolution were interconnected.

Why China is not close to democratizing

That is the topic of my latest Bloomberg column, here is one excerpt:

It’s also worth thinking through exactly what changes Chinese democracy is supposed to bring. China’s urbanization has been so rapid — it has had more urban than rural residents for less than a decade — that a national election might well reflect the preferences of rural voters, which after all most Chinese were until very recently. If you belong to the Chinese upper class or even middle class along the eastern coast, you may end up asking yourself the following question: Who is more likely to protect my basic economic interests, the current Chinese Communist Party, or a democratic representative of Chinese rural interests? China is also growing rich during a time of extreme economic inequality, which may make many Chinese elites think twice about democratization.

Compare China’s situation to that of Taiwan, which is much smaller, does not have a comparable preponderance of rural population, and started becoming democratic in an era when inequality was not so extreme. There was enough of a sense of a common Taiwanese national interest for democracy to be trusted, and furthermore Taiwan has always been keen to distinguish itself from a non-democratic mainland.

What about social issues? One recent study has shown that Communist Party members are more likely to have progressive views on issues of gender equality, political pluralism and openness to international exchange than do the Chinese public at large. Again, if you are an elite among the Chinese citizenry, it is not a sure thing that you will do better with democracy than under the Communist Party.

There are many other points at the link.

*The Great Successor*

The author is Ana Fifield, and the subtitle is The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un.  I’ve never read a book that has so much actual information about Kim, most of all about his early time in Switzerland.  Or how about this?:

Kim Jong Un’s efforts to clamp down on illegal drugs did not work.

At the time he left North Korea, Mr. Kang estimated that about 80 percent of the adults in Hoeryong were using ice [meth], consuming almost two pounds of the highly potent drug every single day…

For many North Koreans, taking meth became an essential part of daily life, a way ot ease the grinding boredom and deprivations of their existence.  For that reason, drugs can never be eradicated, he said.

Men are not allowed to have long hair, the concentration camps are reputed to be worse than those of the Nazis, and there is a detailed account of the rise of the “new rich” class in Pyongyang.  Plastic surgery has arrived as well.

Definitely recommended, the book also serves up the inside story on the Dennis Rodman visit to North Korea.  By the way, Kim hates the showiness of the Harlem Globetrotters.

*The Great Cauldron: A History of Southeastern Europe*, by Marie-Janine Calic

This book is perhaps the best general overview of its chosen subject area.  One part I enjoyed were the discussions of how much the Balkans once had numerous transport hubs for Europe, Belgrade being one but not the only example:

Thessaloniki was among the cities that experienced an economic boom.  The city was home to the third most important port in the Ottoman Empire.  Between 1880 and 1912, the volume of goods traded in Thessaloniki doubled from one to two million tons.  There were railway connections to Vienna and Istanbul.  new local factories produced flannel, woolen, and cotton products, as well as cigarettes.  Important exports included leather, silkworms, raw materials for textiles, and especially tobacco, the production of which took off around the turn of the century.  Thirty-eight of fifty large companies in the city were owned by Jewish families…The majority of these families specialized in the import-export business.

And:

Between 1850 and 1913, the value of exports from Serbia increased by a factor of five, and from Romania by a factor of fourteen.

You can order the book here.  I think about the Balkans a great deal (and enjoy visiting there), if only because they are one simple alternate scenario for what the rest of world history will look like.

That was then, this is now

From Mrs. Bird, wife of Senator Bird, from Harriet Beecher Stowe’s Uncle Tom’s Cabin:

“Well; but it is true that they have been passing a law forbidding people to give meat and drink to those poor colored folk that come along?  I heard they were talking of some such law, but I didn’t think any Christian legislature would pass it!”

And today’s version?: “An activist faced 20 years in prison for helping migrants. But jurors wouldn’t convict him.”  The activist was giving them food and water, but that law against that of course is on the books, as it was in Harriet Beecher Stowe’s time for aiding fugitive slaves.  Later in the chapter (vol.I, chapter IX) Mrs. Bird continues:

“It’s a shameful, wicked, abominable law, and I’ll break it, for one, the first time I get a chance; and I hope I shall have a chance, I do!  Things have gotten to a pretty pass, if a woman can’t give a warm supper and a bed to poor, starving creatures, just because they are slaves, and have been abused and oppressed all their lives, poor things!

…Now, John, I don’t know anything about politics, but I can read my Bible; and there I see that I must feed the hungry, clothe the naked, and comfort the desolate; and that Bible I mean to follow.”

Here is a discussion of the religious issues behind current “aiding the immigrant” cases.

Chernobyl model this

Now, in a strange turn more than three decades after the meltdown, the exclusion area around Chernobyl is gaining a following as a tourism destination, apparently propelled by the popularity of a TV mini-series about the blast that was broadcast in the United States and Britain last month.

The mini-series, HBO’s “Chernobyl,” fictionalizes the events in the aftermath of the explosion and fire at the plant’s Unit 4 nuclear reactor. It has been one of the highest-rated shows on the IMDB charts.

“The number of visitors increases every day, every week, by 30, 40, now almost 50 percent,” said Victor Korol, the head of SoloEast, a company that gives tours of the site. “People watch TV, and they want to go there and see the place, how it looks.”

Here is the full NYT story by Iliana Magra.  Not long ago I predicted, half tongue in cheek, that the Chernobyl show could end up making nuclear power more rather than less popular…

Laying of cable for the transatlantic telegraph is an underrated achievement

To provide storage space for the huge coils of wire, three great tanks were carved into the heart of the ship.  The drums, sheaves, and dynamometers of the laying mechanism, occupied a large part of the stem decking, and one funnel with its associated boilers had been removed to give additional storage space.  When the ship sailed from the Medway on June 24, 1865, she carried seven thousand tons of cable, eight thousand tons of coal, and provisions for five hundred men.  Since this was before the days of refrigeration, she also became a seagoing farm.  Her passenger list included one cow, a dozen oxen, twenty pigs, one hundred twenty sheep. and a whole poultry-yard of fowl.

That is 1865 we are talking about here, remarkably early (in my view) for laying a cable across the bottom of the entire Atlantic.

The passage is from Arthur C. Clarke’s excellent How the World Was One: Beyond the Global Village.

Beware of persistence studies

A large literature on persistence finds that many modern outcomes strongly reflect characteristics of the same places in the distant past. However, alongside unusually high t statistics, these regressions display severe spatial auto-correlation in residuals, and the purpose of this paper is to examine whether these two properties might be connected. We start by running artificial regressions where both variables are spatial noise and find that, even for modest ranges of spatial correlation between points, t statistics become severely inflated leading to significance levels that are in error by several orders of magnitude. We analyse 27 persistence studies in leading journals and find that in most cases if we replace the main explanatory variable with spatial noise the fit of the regression commonly improves; and if we replace the dependent variable with spatial noise, the persistence variable can still explain it at high significance levels. We can predict in advance which persistence results might be the outcome of fitting spatial noise from the degree of spatial au-tocorrelation in their residuals measured by a standard Moran statistic. Our findings suggest that the results of persistence studies, and of spatial regressions more generally, might be treated with some caution in the absence of reported Moran statistics and noise simulations.

That is from a new paper by Morgan Kelly, and here is a look at the studies he considers, via Morton Jerven.

Hong Kong in the broader history of liberty

That is my other Bloomberg column for this week, here is one excerpt:

Still, actual life in Hong Kong seemed to be pretty free, especially compared to the available alternatives, which included the totalitarian state that was Mao’s China. Yet as the British lease on Hong Kong approached expiration, an even deeper problem with a non-democratic Hong Kong became evident: Because there was no legitimate alternative sovereign to protest, the British simply handed the territory over to China. (Compare Hong Kong’s experience to that of Taiwan, which did evolve into a free democratic state and remains independent.) Hong Kong was bartered away like a piece of colonial merchandise. Everyone learned the hard way that democracy really does matter.

Hong Kong still ranks near or at the top of several indices of economic freedom. But that may be a sign these indices have lost touch with the nature of liberty. In Hong Kong, the notion of a credible commitment to the future ceased to have meaning some time ago. Not only is there the specter of Chinese intervention, but there is also a broader understanding that the rules of the game can change at any time, including of course when it comes to extradition procedures. Meanwhile, many Hong Kong residents know their behavior is being monitored and graded, and they know the role of the Chinese government will only grow.

Thus is revealed a deeper lesson still: Freedom is not merely the ability to buy and sell goods at minimum regulation and a low tax rate, variables that are readily picked up by economic freedom indices. Freedom is also about the narratives people live by and the kind of future they imagine for themselves. Both of these are greatly affected by the legitimacy and durability of their political institutions.

The piece also offers a brief discussion of the Bruce Lee movie “Enter the Dragon.”

Does trade reform promote economic growth?

Do trade reforms that significantly reduce import barriers lead to faster economic growth? In the two decades since Rodríguez and Rodrik’s (2000) critical survey of empirical work on this question, new research has tried to overcome the various methodological problems that have plagued previous attempts to provide a convincing answer. This paper examines three strands of recent work on this issue: cross-country regressions focusing on within-country growth, synthetic control methods on specific reform episodes, and empirical country studies looking at the channels through which lower trade barriers may increase productivity. A consistent finding is that trade reforms have a positive impact on economic growth, on average, although the effect is heterogeneous across countries. Overall, these research findings should temper some of the previous agnosticism about the empirical link between trade reform and economic performance.

That is the abstract to the new NBER working paper from Douglas Irwin, self-recommending.

Has the division of labor hindered knowledge integration and productivity growth?

…we suggest that this division of innovative labor has not, perhaps, lived up to its promise.  The translation of scientific knowledge generated in universities to productivity enhancing technical progress has proved to be more difficult to accomplish in practice than expected.  Spinoffs, startups, and university licensing offices have not fully filled the gap left by the decline of the corporate lab.  Corporate research has a number of characteristics that make it very valuable for science-based innovation and growth.  Large corporations have access to significant resources, can more easily integrate multiple knowledge streams, and direct their research toward solving specific practical problems, which makes it more likely for them to produce commercial applications.  University research has tended to be curiosity-driven rather than mission-focused.  It has favored insight rather than solutions to specific problems, and partly as a consequence, university research has required additional integration and transformation to become economically useful.  This is not to deny the important contributions that universities and small firms make to American innovation.  Rather, our point is that large corporate labs may have distinct capabilities which have proved to be difficult to replace.

That is from Ashish Arora, Sharon Belenzon, Andrea Patacconi, and Jungkyu Suh, “The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth,” recommended, an excellent paper spanning several disciplines.  I would myself note this is further reason not to split up the major tech companies.