Category: History

I never expected to write "Thorstein Veblen reminds me of Robin Hanson," but upon rereading Theory of the Leisure Class he does.  Everything is reduced to evolutionary biology.  Signaling and status-seeking are at the forefront of virtually every explanation.  Industrial habits spring from man’s biological nature, transplanted into a new and strange environment.  Had I reread this ten years (I first read it as a teen, and not since, then I hated it) ago, it would have been a revelation.  Now it sounds like a typical lunch discussion with the guys, with Spence, Hayek, and Geoffrey Miller sprinkled in.

Veblen, however, is a blowhard as a writer and Robin is not.

Here is Mark Blaug on Veblen.  Here are links to Veblen articles.  Here are more links.  Here is Mencken on Veblen.

I tried two other Veblen books and found them unreadable.  The guy deserves much more credit than he gets, especially from conservatives and libertarians, but read the evolutionary biologists first.

#20 in a series of 50.

[Milton] Friedman routinely overlooked three key facts about the city in the years of its rapid growth: as much 50 percent of its housing receives a substantial government subsidy; its citizens enjoy almost free medical treatment at government clinics and hospitals; and the cost of its defense has been borne entirely by the United Kingdom and now China.  Mark these services to their market prices, said the Sentinel, and the famously low share of government spending in GDP climbs sharply.

That is David Warsh.  Here is more, including also a discussion of the sale of Paul Romer’s on-line Aplia to Thomson.

Greg Clark is one of my favorite economists, but I am not convinced by his latest paper.  Here is the abstract:

Before 1800 all societies, including England, were Malthusian.  The average man or woman had 2 surviving children.  Such societies were also Darwinian.  Some reproductively successful groups produced more than 2 surviving children, increasing their share of the population, while other groups produced less, so that their share declined.  But unusually in England, this selection for men was based on economic success from at least 1250, not success in violence as in some other pre-industrial societies.  The richest male testators left twice as many children as the poorest.  Consequently the modern population of the English is largely descended from the economic upper classes of the middle ages.  At the same time, from 1150 to 1800 in England there are clear signs of changes in average economic preferences towards more "capitalist” attitudes.  The highly capitalistic nature of English society by 1800 – individualism, low time preference rates, long work hours, high levels of human capital – may thus stem from the nature of the Darwinian struggle in a very stable agrarian society in the long run up to the Industrial Revolution.  The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.

There is considerable evidence that commercially successful Englishmen had more kids than average, starting in medieval times.  There is much less comparative evidence about other societies; do see pp.31-2, 55-7, but his best example concerns one Amazon tribe, where the warlike reproduced with greater frequency.

Of course the commercial revolution and then the so-called industrial revolution came out of England, not Germany or Italy.  If it could be shown that the English family pattern stood out with regard to the rest of Europe, I would see greater heft in the idea.  The Yanamamo differ in too many other regards for this comparison to illuminate any possible role for genetics in the European economic take-off.  If family patterns can make the crucial difference, let’s keep as many other factors constant as possible.  Otherwise I’m back to thinking it is institutions (most of all for science) and peer effects, not genetics, at the relevant margin of take-off.  Did commercially active Germans and Italians, during the Renaissance, really fail to propagate their seed?

Addendum: See also the work of Oded Galor.

From the comments at Brad DeLong (way toward the bottom):

…fiscal policy had virtually nothing to do with the recovery. On this see

Brown, E. Cary. “Fiscal Policy in the Thirties: A Reappraisal.” American Economic Review 46, no. 5 (1956): 857-79.

Peppers, Larry. “Full Employment Surplus Analysis and Structural Change: The 1930s.” Explorations in Economic History 10 (1973): 197-210.

Raynold, Prosper, W. Douglas McMillin and Thomas R. Beard. “The Impact of Federal Government Expenditures in the 1930s.” Southern Economic Journal 58, no. 1 (1991): 15-28.

Christina Romer, “What Ended the Great Depression?”  Journal of Economic History (1992).

I went back and reread Romer and it is monetary policy, monetary policy, and monetary policy which ended the Great Depression.  It is a highly credible account.

By the way, here is Brad’s very interesting mini-essay on the New Deal, an extension of his Econoblog debate with Arnold Kling.

Econoblog, Arnold Kling vs. Brad DeLong, excerpt:

The New Deal is a mythical event in history.  Just as we revere the
constitution as the basis for our government and we revere Abraham
Lincoln for ending slavery and preserving the union, we are supposed to
revere the New Deal as somehow providing the basis for our modern
prosperity.  Yet the policies of the New Deal are quite a mixed bag, to
say the least.  Most were discarded by 1950.  The survivors include
agricultural policies that were almost certainly wrong then and are
almost certainly wrong now.  Most of the financial regulations, such as
interest rate ceilings on bank deposits, proved unworkable by the
1970s.  Social Security, and its offspring Medicare, are going to be the
next great financial crisis in this country.

Can you guess which of the two wrote that?

I have read much of the book, but I’ve yet to find a good chuckle.  This narrative is typical:

Waehrend der Eingeborenenaufstaende in Deutsch-Ostafrika erlaesst das Kaiserliche Ministerium in Berlin folgende Anweisung an die zustaendigen Stellen: "Die Eingeborenen sind dahingehend zu instruieren, dass sie under Androhung schwerer Strafen jeden Aufstand sechs Wochen vor Ausbruch schriftlich anzumelden haben!"

Translation drains away the "humor," but it uses awkward bureaucratic language to report that "the natives" in East Africa have been told that if they wish to revolt, they must first submit six weeks written notice.  If there is anything vaguely funny about this, it concerns how the German language can formalize even very brutal topics, alternatively a simple German street sign can become ridiculous through long constructions and the use of the passive voice.  But I don’t think that was the point of the joke, which I take to be mocking the German bureaucracy.

Moral issues aside, I believe the Nazi jokes are not funny because of their monotone nature, their lack of irony, and the lack of reflective humor behind the putdowns.  A victimized group will be mentioned, and put immediately in a subordinate position, but only rarely is that group the direct butt of the joke.  The oppressed group is there en passant, so to speak.  The resulting incongruity is scary rather than funny and I suspect this would remain the case even if we were not well-informed about what the Nazis did.

Charlie Chaplin’s The Great Dictator, while scary, is also funny in parts.  It mocks the ridiculous element in Hitler.  The Nazi jokes have a huge and ridiculous elephant(s) in the room, so to speak, but by refusing to mock those beasts the rest of the joke almost certainly cannot be funny.

The chapter on the Holocaust is of course chilling.

It can be argued that no one should write a book "reselling" and thus profiting from Nazi jokes (or for that matter blogging them).  I take this point of view seriously, though ultimately I believe the story should be told.

The tough part is that good humor is often brutal rather than morally pure, so the question remains what exactly distinguishes funny brutality from unfunny brutality.

Social scientists do not devote enough attention to the phenomenon of humor, and I found this book one of the better places to start.

Here is an article on the book.  Here is a new book on tourism to Nazi Germany.

All these facts highlight the need to understand why some behaviors that, although found in other countries, are more common in Colombia. During the last several years, Colombian scholars have begun to explore why Colombian society imposes few, if any, controls on individual behavior…Indeed, every Colombian has a high degree of freedom to establish his or her own norms.  Because of this freedom, Colombians show great individual creativity and various degrees of social discipline.  The lack of social controls produces individuals with remarkable behaviors: anybody who respects the law and the rights of others does so because of individual convictions, as do those who break the laws.  Success in Colombia is individual, not social or collective.  Loyalty normally extends only to people close to oneself because without their help it is impossible to survive in the midst of a hostile environment.  "The net result is an abundance of anti-social behaviors: individual rationality predominates over collective rationality"…

Geography has been a main reason for differences between Colombia and other Latin American countries.  Since colonial times Colombia has been a collection of diverse regions with little communication and trade among them.  Physical barriers have been (and are) so great that many regions remained very isolated and self-sufficient.  Because of geography, until the early 20th century Colombia was the Latin American country with the lowest exports per capita and total international trade in the region.  Only the development of coffee in the 1920s changed this.  Furthermore, the growth of exports led to the development of an export-oriented infrastructure that established communications and transport facilities between the producing region and the ports, but did little to integrate the country.  Geography also made tax collection very expensive.  Not surprisingly, tax collection was frequently auctioned to the private sector and became a source of private wealth.  Until the mid 20th century, international trade taxes were the main central government tax source. A very poor central state was a corollary of the country’s regional diversity.  Because of its geography, Colombia had a great need to spend on infrastructure in order to integrate the country and to generate a national identity and a feeling of belonging, but it had few resources.  Further, other financial restrictions and the pressures of the urban populations concentrated government expenditures in a few cities, and the state never established a significant presence or controlled most of its territory.  It may be argued that these problems were similar to those of other Latin American countries.  The difference was that the population in Colombia was spread out in the country while in most other countries it was concentrated in one or two cities and some rural areas. Thus, the lack of control of the territory had greater implications in Colombia than in the rest of the region because it also implied lack of control over a large proportion of the population…

While in many Latin American countries the armed forces have been a source of national pride, the Colombian armed forces traditionally have been weak.  They have not been capable of overthrowing governments as has been common in other countries.  For example, the military coup of 1953 was more "an opinion coup" promoted by the traditional parties in response to societal clamors to end violence.  They have never controlled the territory and have not had a significant presence along the national border.

If you read only one piece on Colombia in your lifetime, it should be this one.

Cuban agriculture was transformed from the early 1960s with Soviet and East European agricultural machinery and supplies, resulting in a downgrading of animal traction.  But the collapse of the Soviet bloc in 1989 led the Cuban government to develop an animal traction programme.  The agricultural horse population recovered, but the main focus was on oxen.  They were bred and trained in large numbers, and the technical infrastructure needed to use them was built up.  The recovery in the number of oxen was spectacular.  They had fallen from 500,000 in 1960 to 163,000 in 1990 but increased to 380,000 in the late 1990s.  They replaced 40,000 tractors.

That is from David Edgerton’s The Shock of the Old: Technology and Global History Since 1900, an intermittently excellent book.

Joseph Cullen and Price Fishback write:

We examine whether local economies that were the centers of federal spending on military mobilization experienced more rapid growth in consumer economic activity than other areas.  We have combined information from a wide variety of sources into a data set that allows us to estimate a reduced-form relationship between retail sales per capita growth (1939-1948, 1939-1954, 1939-1958) and federal war spending per capita from 1940 through 1945.  The results show that the World War II spending had virtually no effect on the growth rates in consumption that we examined.  This contrasts with Fishback, Horrace, and Kantor’s (2005) findings of about half a dollar increase in retail sales associated with a dollar of New Deal public works and relief spending.  Several factors contributed to this relative lack of impact. World War II spending often required a conversion of plants designed for civilian good production into military factories and back again over the 9 year period.  Substantially higher federal tax rates that were paid by the majority of households imposed much stronger fiscal drags on the benefits of the spending.  Finally, less of the military spending was earmarked for wages and use of locally produced inputs, which reduced the direct stimulus to the local economy.

Here is the paper, here are non-gated versions.  My understanding has long been that wartime orders from Europe, by 1940, provided the decisive turning point for the American economy.  So if WWII did end America’s Great Depression, it was not through the traditional mechanism of massive domestic fiscal stimulus.

Addendum: Here is James Hamilton on the Great Depression.  And Brad DeLong replies to critics, but if we are going to count as monetary policy we must recognize 1937-8 as a disaster which cut off a recovery.  And Paul Krugman chips in, see the comment by Robert Waldmann, I am myself skeptical that a liquidity trap was in place.

Second addendum: The authors have another good paper on crime and social spending during the New Deal.

Brad DeLong is overreaching when he argues "A normal person would not argue that the New Deal [TC: parts of, or "on net"] prolonged the Great Depression."  HedgeFundGuy, who may or may not be normal, responds:

A 2004 paper at the SSRN by Chari, Kehoe and McGratten argues that increased labor rigidity from the New Deal was primarily responsible for prolonging the Great Depression. Cole and Ohanian wrote a similar piece for the Minneapolis Fed in 1999.

Further, the 1937 recession was most probably due to a tax over-reach by anti-business Democrats.  Unemployment rose from 5 million to almost 12 million in early 1938.  Manufacturing output fell off by 40% from the 1937 peak; it was back to 1934 levels.  What caused the plunge in taxes was the tax on retained earnings…

I had thought that bad monetary policy in 1937-8 (arguably not "the New Deal", though we tread close to semantics) was at fault more than fiscal policy; I have never studied that question in depth.  The earlier attempted cartelization of the economy through NIRA and NRA didn’t help either.  Deposit insurance, and a move toward automatic stabilizers for aggregate demand, stand on the more positive side of the ledger.

I disagree with much of Gene Smiley’s book on the Great Depression, but he has many more reasonable arguments about the negative economic consequences of the New Deal and their connection to the magnitude and length of the Great Depression.  I do not know if he is normal.

…Sarah Bernhardt [renowned French actress] in 1886…soon shocked [Brazilian] society with her daring swimsuit and alarmed the city’s inhabitants by entering the water….At the time, Brazilians had believed a quick dip in the sea had some medical efficacy, but only around dawn before the sun became too strong and only if prescribed by a doctor.  The elite cultivated their whiteness to set themselves apart from the darker-skinned lower classes  To actually sit in the sun was considered declasse and a serious breach of social decorum.

…In 1917 the city established strict regulations to govern seaside conduct.  Bathing in the sea was allowed only from five to eight in the morning and from five to seven in the evvening…the law permitted an extra hour on Sundays and holidays…Noise and shouting on the beach, or bathing during prohibited hours, brought a stiff fine or five days in jail.

That is from Colin MacLachlan, A History of Modern Brazil: The Past Against the Future.

Or so it seems.  For twenty-five years I thought he was.  As I recall, the John Costello and Richard Deacon books said he recruited impressionable young British men to the Soviet side.  Now, using Google BookSearch I read that he was mistakenly accused.  Pigou, by the way, no matter what his politics, remains one of the most underrated economists.  He was, among other things, also a father of behavioral economics.