Category: History

In his last letter Thomas Jefferson declined for reasons of ill health to attend a celebration in Washington on the fiftieth anniversary of the Declaration of Independence.

I should, indeed, with peculiar delight, have met and
exchanged there congratulations personally with the small band, the
remnant of that host of worthies, who joined with us on that day, in
the bold and doubtful election we were to make for our country,
between submission or the sword; and to have enjoyed with them the
consolatory fact, that our fellow citizens, after half a century of
experience and prosperity, continue to approve the choice we made.
May it be to the world, what I believe it will be, (to some parts
sooner, to others later, but finally to all,) the signal of arousing
men to burst the chains under which monkish ignorance and
superstition had persuaded them to bind themselves, and to assume the
blessings and security of self-government.  That form which we have
substituted, restores the free right to the unbounded exercise of
reason and freedom of opinion.  All eyes are opened, or opening, to
the rights of man.  The general spread of the light of science has
already laid open to every view the palpable truth, that the mass of
mankind has not been born with saddles on their backs, nor a favored
few booted and spurred, ready to ride them legitimately, by the grace
of God.  These are grounds of hope for others.  For ourselves, let
the annual return of this day forever refresh our recollections of
these rights, and an undiminished devotion to them.

John Nye’s new War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689-1900 argues that 19th century Britain was not nearly as free trade as is commonly supposed.  Here is one summary of that argument.

Nye also argues that an odd industrial policy, as applied to alcohol, drove the rise of the British nation-state (and thus modernity as we know it).  As a result of the wars of 1689-1713, the British placed very high taxes on French spirits.  British domestic production grew, and to make up for the lost revenue, the British applied heavy domestic taxes to alcoholic production.  The British spirits industry became oligopolistic — in large part by governmental design — and the resulting monopolies were a cash cow for their owners and for the government alike.  The taxes on alcohol helped finance the British state on the backs of consumers, without requiring higher taxes on capital or land.

Here is a sample chapter of the book, which promises to be one of the most important works in economic history in recent times.  I am pleased that John will be joining us as a colleague at George Mason this coming year.

In a simplified way, the story of the collapse of the Soviet Union could be told as a story about grain and oil.

That is from Yegor Gaidar.  In the 1980s it was necessary to import more and more grain, and Saudi Arabia was no longer supporting oil prices.  It worked like this:

The timeline of the collapse of the Soviet
Union can be traced to September 13, 1985. On this date, Sheikh Ahmed
Zaki Yamani, the minister of oil of Saudi Arabia, declared that the
monarchy had decided to alter its oil policy radically. The Saudis
stopped protecting oil prices, and Saudi Arabia quickly regained its
share in the world market. During the next six months, oil production
in Saudi Arabia increased fourfold, while oil prices collapsed by
approximately the same amount in real terms.

As a result, the Soviet Union lost approximately $20 billion per
year, money without which the country simply could not survive. The
Soviet leadership was confronted with a difficult decision on how to
adjust. There were three options–or a combination of three
options–available to the Soviet leadership.

First, dissolve the Eastern European empire and effectively stop
barter trade in oil and gas with the Socialist bloc countries, and
start charging hard currency for the hydrocarbons. This choice,
however, involved convincing the Soviet leadership in 1985 to negate
completely the results of World War II. In reality, the leader who
proposed this idea at the CPSU Central Committee meeting at that time
risked losing his position as general secretary.

Second, drastically reduce Soviet food imports by $20 billion, the
amount the Soviet Union lost when oil prices collapsed. But in
practical terms, this option meant the introduction of food rationing
at rates similar to those used during World War II. The Soviet
leadership understood the consequences: the Soviet system would not
survive for even one month. This idea was never seriously discussed.

Third, implement radical cuts in the military-industrial complex.
With this option, however, the Soviet leadership risked serious
conflict with regional and industrial elites, since a large number of
Soviet cities depended solely on the military-industrial complex. This
choice was also never seriously considered.

Unable to realize any of the above solutions, the Soviet leadership
decided to adopt a policy of effectively disregarding the problem in
hopes that it would somehow wither away.  Instead of implementing actual
reforms, the Soviet Union started to borrow money from abroad while its
international credit rating was still strong.  It borrowed heavily from
1985 to 1988, but in 1989 the Soviet economy stalled completely…

The money was suddenly gone. The Soviet Union
tried to create a consortium of 300 banks to provide a large loan for
the Soviet Union in 1989, but was informed that only five of them would
participate and, as a result, the loan would be twenty times smaller
than needed.  The Soviet Union then received a final warning from the
Deutsche Bank and from its international partners that the funds would
never come from commercial sources.  Instead, if the Soviet Union
urgently needed the money, it would have to start negotiations directly
with Western governments about so-called politically motivated credits.

In 1985 the idea that the Soviet Union would begin bargaining for
money in exchange for political concessions would have sounded
absolutely preposterous to the Soviet leadership.  In 1989 it became a
reality, and Gorbachev understood the need for at least $100 billion
from the West to prop up the oil-dependent Soviet economy.

Here is the full article.  The pointer is from VoxBaby.  Do you have further thoughts?

In 1900, Americans spent nearly twice as much on funerals as on medicine, and less than 2 percent of Americans took vacations.

Source.

Teens in America are in touch with their peers on average 65 hours a week, compared to about four hours a week in preindustrial cultures.

Here is more.  The problem, of course, is that a contemporary wise and moderate 33 year old is looking to climb the career ladder, find a mate, or raise his babies.  He doesn’t have a great desire to educate unruly fifteen year olds and indeed he can insulate himself from them almost completely.  He doesn’t need a teenager to carry his net on the elephant hunt. Efficient capitalist production and rising wage rates lead to an increased sorting by age and the moral education of teens takes a hit.   

Here is an interview with Robert Epstein, recommended.  His new book, The Case Against Adolescence, argues that teenagers should be treated much more like adults.
 

Sahil, a loyal MR reader, asks:

I
read your blog post about Roger Scruton’s new book, which you praised
for giving a "good sense of just how much cultural background is needed
to sustain liberty."  That’s an interesting notion.  Do you have
recommendation for books that examine this very idea in a more
systematic way?  I’m sure they’re out there, and I’d be interested to
read them.

I’ll offer a few suggestions: all of Max Weber, the books by Lawrence Harrison, Alan MacFarlane on English individualism, Jonathan Israel on the Dutch Republic, Joseph Conrad, Levi-Strauss’s Triste Tropiques, Rene Girard on Christianity, anything good on English history, Hoskyns on Russian history, Albion’s Seed, IQ and the Wealth of Nations, Gilbert Freyre on Brazil, de Tocqueville, Sarmiento on Argentina, Louis Hartz, and John Gunther on America.  The book "The Influence of the African-American Tradition on the American Ideal of Liberty" remains to be written.  Nor have I scratched the all-important and largely non-European notions of liberty from the Nordic regions, which fed into the English success.

Pro-commercial norms are not scarce, as is evident here in Zanzibar.  But those norms get you only to a medieval standard of living; as Mancur Olson stressed, they do not on their own support the structures of large-scale capitalism.  It is harder to convince people to place larger abstract ideas above immediate duties to friends, family, and clan, but that is indeed the central feature of the problem.

Comments are open, what do you all recommend?

Chris Bertram reports:

Simon Kuper, in today’s FT, reviews Anne Goldgar’s Tulipmania,
a new study of the 17th century boom and bust in the Dutch tulip market. Disappointingly, it turns out that most of the stories are false. There was a boom, but it was a fairly marginal phenomenon in the
Dutch economy, and people weren’t ruined: the deals were done when the
plants were in the ground, but payment was due only when the bulbs were
dug up. Most people simply refused to pay, or paid only a small
fraction of what they owed.

Here is Peter Garber’s earlier revisionist account.  I’ve never been convinced by Garber’s claim that it was driven by fundamentals, but I am ready to believe that historically the crash was not such a big deal

This book has an implicit public choice theory, which I read as follows.  Division of powers is ultimately impossible, so there is either rule by one man or rule by the crowd, or as it will turn out, both at the same time.  Augustus represented the perfect fulfillment of the Roman ideal of statehood, and thus his reign heralded the beginning of the end.  Augustus had replaced all institutions with his perfect yet ultimately destructive personhood.  Given the importance of fortune, rule by a single man then meant an eventual downward ratchet in the quality of rule.  Tiberius, Caligula, and Nero were successively worse, but even a lucky break in the genetic lottery would only have put off this trend; there is more downside than upside in the weak-institutions version of this game.  The insane Nero plays all the different Roman roles on the stage and metaphorically Nero becomes Rome.  He plays to the crowd, and the suicide of Nero is the suicide of Rome itself.  Hope lies in the civilizations of the less historically conscious barbarians, who live on the fringe of the story, never becoming memorable but the modern reader knows they will allow Europe to one day live again.

For related points, I am grateful to fellow participants at a Liberty Fund conference this last weekend. 

Those that acted early, here is a new and noteworthy paper.

What worked: Early school, church, and theater closures.  The estimate for banning public gatherings depends on the test used.

What didn’t work: Closing dance halls, isolating flu cases, banning public funerals, and making influenza notifiable.

Early-acting cities were especially effective at stopping many casualties at the first flu wave, rather than being devastated by later waves as well.  Letting down one’s guard too early was a common problem.

The authors stress that this study used only 17 cities with highly correlated explanatory variables.  Still, in a case like this some chance at knowledge is better than no knowledge.  Here is a related paper. Here is a New York Times discussion of the results.

One infamous auction during Roman times is described by Edward Gibbon in his Decline and Fall of the Roman Empire (1776).  When the Praetorian Guard killed the Roman emperor Pertinax on March 28, 193 A.D., they sold the Roman Empire itself to the highest bidder, the wealthy senator Didius Julianus, who "rose at once to the sum of six thousand two hundred and fifty drachms, or upwards of two hundred pounds sterling" per man…The new emperor lasted only two months, but did manage to strike some very handsome coins.

That is from the new Snipers, Shills, and Sharks: Ebay and Human Behavior, by Ken Steiglitz.  Here is the book’s home page.  Here is more background on the Roman auction.

In a money game with anonymous rich and poor players, rich players will give up some money to help the poor but poor people are more likely to spend their money to make the rich players less rich.

That is from Jason Kottke.

1.  Institutions are affected by technology perhaps even more than by ideology.

2. In 1800, the United States was a large country relative to the
transportation and communication technologies that were available at
that time.  Further, it was very divided, both politically and
economically, over slavery.  Thus, one does not see major national
institutions of any sort, private or public.

3. The rise of powerful industrial corporations and the rise of a
large public sector in democracies over the past 150 years are results
of changes in technology.  Economies of scale have increased, because
transportation costs have fallen and communication is faster and
cheaper.

I agree with #1-3.  Here is more.  I would add that American government grew big as soon as it had the technological ability to do so; that suggests to me that the latent demand for big government, for better or worse, was already in place.  I await Brad DeLong’s book-length treatment of this topic.