Category: History
Mexico’s lost century?
Mexico is slated to grow at somewhat over four percent this year (this popped up in the Mexican edition of the Miami Herald last week, no link handy). It has responded to the Chinese challenge by retooling its export base toward higher quality and quicker response times; the maquiladoras are once again growing. Higher oil prices do not hurt either. Of course four percent is a rate that most countries in the world would envy.
In the twentieth century Mexico grew at a rate above what the U.S. did (sorry, my exact figures are at home!). Mexican performance would be even better if we take out the disastrous 1980s. And in early colonial times, at least once Mexico recovered from various plagues, Mexico was arguably richer than the British colonies to the north. As late as 1820, Mexican GDP per-capita was in the same ballpark as that of the United States ($1287 U.S., $893 Canada, $760 Mexico, in 1990 dollars as estimated by Angus Maddison). So what went wrong?
The nineteenth century was an absolute, complete disaster for Mexico. By 1870, US per-capita had just about doubled but Mexican per-capita GDP had fallen to $710. Crime was rampant and the so-called infrastructure was a disaster. Many goods were carried on foot across rocky paths, not fit to be called roads. At the same time North Americans were building railroads, canals, and factories. Only late in the nineteenth century, under the regime of Portfirio Diaz, did Mexico start constructing a usable transportation network.
I can think of a few ways of interpreting these facts:
1. Mexico had one very unlucky century. In reality Mexico is better suited to grow than is the U.S.. Mexican government is low in quality, but in many ways it is very small. And perhaps you need big government more in some centuries than others.
2. The superior Mexican performance of the twentieth century represents “catching up,” sometimes called “growth convergence.” This sounds the most intuitive, although it implies that one bad century has kept Mexico captive in poverty for a long, long time. How long did it take Germany and Japan to recover from Allied bombing and losing the War? You can claim that these countries had superior institutions, but Mexican institutions have allowed for rapid growth for a long time. Note also that the evidence in general does not favor growth convergence, although you can come up with something if you leave Africa out of the growth equation.
3. Something about the Mexican economy is not robust to very bad times. Mexico has a higher variance economy than does the U.S., and the distribution of these growth rates is not normal. The Mexicans (implicitly) accept this high variance to enjoy a higher mean growth rate. But every now and then they pay a very steep price for this tradeoff.
4. We do not understand something fundamental about growth. We like to think of growth rates and income levels as conceptually separate to a greater degree than they are. The Solow model in particular shows us how to decompose changes into “once-and-for-all” and “growth-affecting” perturbations in growth. Perhaps this distinction can mislead us into looking for separate “causes of growth,” as distinct from our analyses of levels.
Am I allowed to vote for all four hypotheses? Even if they contradict each other to some extent?
Plus ca change…
There is a widespread prejudice against the newspapers, based on the belief that they cannot be trusted to report truly the current events in the world’s life on account of incompetence or venality. But in spite of this distrust we are almost altogether dependent on them for our knowledge of widely interesting events….The function of the newspaper in a well-ordered society is to control the state through the authority of facts, not to drive nations and social classes headlong into war through the power of passion and prejudice.
The source? The American Newspaper: A Study in Social Psychology (JSTOR) by one Delos Wilcox writing in the Annals of the American Academy of Political and Social Science…. July 1900.
My favorite things Mexican
I am in Mexico, and you will be hearing more about this. Here are a few of my favorite things.
1. Favorite Mexican novel: Pedro Paramo, by Juan Rolfo. A hilarious and moving tale of visiting rural Mexico and encountering the dead. The true heir to Dante. I remain surprised by how many people do not know this marvelous work, though the English translation does not capture the humor well. Will you be turned off if I tell you this is a favorite of Susan Sontag’s?
2. Favorite Mexican music: Mexican rap is extraordinarily eclectic and creative. I would be hard pressed to pick a favorite group, but Control Machete is one place to start.
3. Favorite Mexican artist: Marcial Camilo Ayala, whom I am currently visiting in Cuernavaca. Here is one of my favorite pieces of his; here is one in black and white. If you pay in advance (less than you think), I am happy to help you get one.
4. Favorite Mexican food: Chicken with mole sauce, a’ la Puebla or Oaxaca. For real authenticity, make sure you crumble in the stale tortilla.
5. Favorite Mexican movie: You probably already know Y Tu Mama Tambien, Amores Perros, and El Mariachi. So I’ll recommend Luis Bunuel’s old version of Wuthering Heights, a truly strange adaptation that captures the spirit of the original novel remarkably well. You do not have to buy into Bunuel’s later, more pretentious work to like this one.
Addendum: My favorite Mexican dish might be Chiles Nogada.
The Olympics and Greek History
Here are two free 30 minute lectures from the Teaching Company.
The Olympics: From Ancient Greece to Athens, Parts 1 and 2.
From 776 BC onwards, the greatest champions among the Greeks began assembling every four years at Olympia in western Greece to assert their strength and physical prowess. Who were the most charismatic of the ancient Greek Olympic heroes? To truly understand the origins of the Olympics, why do we really need to begin with Homer? In these specially commissioned lectures, Professor McInerney takes you on a journey back to the Olympics of the ancient Greek world.
Henry Thoreau revisited
Henry Thoreau is perhaps the best-known anti-materialist thinker from the American tradition. But his life belied his formal doctrines:
The popular image of Thoreau is of the lone eccentric contemplating nature at Walden Pond. In fact, he spent only two years and two months there, and while he always preferred to be thinking and writing, he spent much of his life improving his father’s pencil business, surveying land, and otherwise earning money.
Here is the longer account, which is focused more on American attitudes toward materialism than Thoreau. Here are some of Thoreau’s passages on economy, read here also. Here is some biographical information. Alexander Pope was another author who damned commercial incentives while proving a master of them.
The glory of Athens
Politicians often refer to our Judeo-Christian heritage but in math, science, philosophy, and especially politics we owe much more to our Greco-Roman heritage. Consider; democracy, republicanism, and the rights of citizenship, these idea owe virtually nothing to the Judeo-Christian tradition and everything to Greece and Rome.
I am reminded of this by rereading Pericles’ Funeral Oration. Here, from nearly 2500 years ago, is Pericles, in the midst of war in a ceremony to honor the dead he speaks to Athens, and also perhaps to us, about liberty and war.
If we turn to our military policy, there also we differ from our antagonists. We throw open our city to the world, and never by alien acts exclude foreigners from any opportunity of learning or observing, although the eyes of an enemy may occasionally profit by our liberality; trusting less in system and policy than to the native spirit of our citizens; while in education, where our rivals from their very cradles by a painful discipline seek after manliness, at Athens we live exactly as we please, and yet are just as ready to encounter every legitimate danger.
Royal Purple
Why was purple considered the royal color? The answer lies in economics not in aesthetics. Purple is rare in nature. A Toga’s worth of Tyrian purple die, about 1.5 grams, required the beating, drying and extracting of mucus from the hypobranchial gland of some twelve thousand Murex mollusks.
Legend credits its discovery to Herakles, or rather to his dog, whose mouth was stained purple from chewing on snails along the Levantine coast. King Phoenix received a purple-dyed robe from Herakles and decreed the rulers of Phoenicia should wear this color as a royal symbol.
The practice was later adopted by the Romans; to wear purple, therefore, was to show off your great wealth. Purple is an interesting example of a snob or Veblen good because it is clear that if purple had not been expensive it would not have been greatly desired. Indeed, do we see any great demand for purple today? If purple paint were say 25 or 50% more expensive then people would switch to substitutes but make it 500 or 1000 times as expensive and it becomes a fashion statement.
The quote is from here, more information than you would ever want to know about Tyrian purple is here.
My first mentor starts blogging
Walter Grinder is a new blogger over at the libertarian Liberty & Power blog.
Meeting Walter at the age of thirteen was a formative moment in my life. Walter had been a friend of my father’s, and one night we had dinner together. Walter was (and remains) a polymath to top all polymaths. Meeting him hooked me on the world of ideas. I looked forward to each meeting with Walter more than anything else (hey, I was a nerd). I spent the whole time asking him what I should read and why. Walter is a longstanding friend of liberty and one of the world’s great teachers and role models.
Elsewhere in the blogosphere there is a new economics blog, www.divisionoflabour.com, just remember that is the British spelling. And Jane Galt has started a second blog, right now she is drawing on Mark Twain for content. Here is her explanation.
Cyclopaedia of Political Economy
Have you ever wondered what nineteenth century, classical liberal political economy looked like? No, not the classic writers but rather ordinary political economy?
A new web resource answers your question. John J. Lalor’s Cyclopaedia of Political Science, Political Economy collected classical liberal writings on the economic issues of the day, circa 1881. You can now access and read the work in its entirety. Here is information about the book and author.
For one sample, here is the brief article on the political economy of debt. Or try this entry on the balance of trade, still relevant today. The item on the division of labor remains eloquent and insightful. Gustav de Molinari writes passionately on the link between freedom, prosperity, and the arts, a favorite topic of mine. I’ve spent a good bit of time browsing through the book (both recently and much earlier), and it offers surprisingly few clunkers. On social issues it is consistently liberal and progressive.
Kudos to the ever-excellent Liberty Fund for putting the work on-line. Until their efforts, you could buy the book for a mere $675.
Addendum: The links to the previous version of this post have now been fixed.
Facts about Orkney
Sorry, no links in this post, but I am sticking to the local sources that sound credible:
1. The richest man in Orkney is (was?) a fisherman. His large net turned out to violate EU regulations, so he received $20 million from the British government to stop fishing. He is now building a house that overlooks the entire town of Stromness from above. The townspeople are not happy.
2. One-third of the employment in Orkney stems from an NHS hospital on the main island. Waiting times are significantly lower here than elsewhere in Britain and the service is correspondingly better.
3. Much of the labor force switches jobs over the course of the year. They serve tourists for three months in the summer, and pick up odd jobs the rest of the year. Work is easy to come by, careers are almost impossible to develop.
4. There have been only two murders in Orkney in the last two hundred years. One happened about two hundred years ago. The other is about ten years old; a waiter was shot and killed in Kirkwall’s Indian restaurant. Neither crime has been solved yet.
5. Orcadians eat pickled herring in oatmeal, smoked fish with scrambled eggs, and fried haddock with chips. For dessert they have Orkney fudge or Orkney ice cream. Haggis is nowhere to be found.
Here is a a tourist introduction to Orkney. Here is historical information. The islands are among the most beautiful spots in Europe and remain largely unspoilt, go if you can.
Has urban architecture declined?
Strolling the streets of Edinburgh, it is hard not to be struck by the beauty and general consistency of the older buildings. It is hard to find post World War II examples where a wealthy Western region has done something comparable. Suburbs have sprung up around the United States, but few of them have architecturally notable exteriors on a consistent basis. There are so many new suburban developments, cannot just one of them be lovely and aesthetically challenging?
What might have gone wrong? I can think of a few possible explanations:
1. Architecture has suffered from the “cost disease.” In this context, a rising general level of wages makes quality handwork more expensive in relative terms. In other words, they don’t handweave many carpets in Silicon Valley. There may be something here, but then why don’t the poorer countries of the world become architectural leaders? And I see home interiors as improving significantly over time.
2. In older times governments at various levels were less democratic. Competition for status within an oligarchy may have upped the incentive to produce beautiful exteriors. This mechanism clearly operated in Renaissance Florence.
3. Perhaps consumers and lenders were less well informed in times past. A nice exterior was a good way to signal the quality and long-term commitment of a business enterprise. Just look what happened to the quality of bank architecture in this country once the FDIC was instituted.
4. Perhaps we idealize times past. The so-called “Royal Mile” is today a leading tourist sight in Edinburgh. In the eighteenth century it was considered “a dark, narrow canyon or rickety buildings, some stacked ten or even twelve stories high, thronging with people, vehicles, animals, and refuse…Sanitation was nonexistent.” (That is from Arthur Herman’s notable book on Scotland.) We may be co-authors in the beauty of the past more than most people realize.
5. Perhaps contemporary suburban developments will be seen as beautiful by future generations. I’ll bet against this one, but we will see.
I am hardly suggesting that architecture is declining in every regard. I love the lights of the Ginza district in Tokyo. And our best stand-alone buildings are no less wonderful than those from times past. But I still wonder why urban architecture no longer yields consistently beautiful urban regions. Anyone who has walked around the major European cities, or even glanced at the Chrysler building, surely has asked the same question. Why is the quality of exteriors declining relative to interiors? Given that nice exteriors are a public good, why were they ever so nice in the first place?
How did Scotland grow so quickly?
Scotland had been an economic backwater at the time of the 1707 union with England. By 1770 at least the Scottish cities were among the most developed and intellectually advanced parts of Europe. How could this happen?
Arthur Herman supplies at least one piece of the puzzle:
…the fact that Scotland was very much the junior partner in this union also turned out to be an advantage. The new Parliament largely ignored Scotland; outbursts such as the malt riots and the threat of Jacobitism apart, the government in London paid little attention to what was happening north of the border. Scots ended up with the best of both worlds: peace and order from a strong administrative state, but freedom to develop and innovate without undue interference from those who controlled it. Over the next century, Scots would learn to rely on their own resources and ingenuity far more than their southern neighbors would…
A strong government that leaves well enough alone: this was the dual, seemingly contradictory, nature of the British state as it became part of life in post-union Scotland. Scots became used to these dualities, and learned to accept them as basic reality, just as the Union itself involved a fundamental duality: “a ship of state with a double-bottomed hull,” as Jonathan Swift put it. They also learned to think in a new way as a result of the Union: in terms of the long term.
Many economic development problems today stem from a similar conundrum. Ideally we would like a state that is both strong and not too large. Most parts of the world are unable to institute this duality; of course Hong Kong was a notable exception. I am not in general an imperialist, but the most successful instances of imperialism are likely to be highly successful indeed.
Nerd Pride
The word “nerd” appears to have been coined in 1950 by none other than Dr. Seuss. From the webpage of Eric Raymond:
nerd: n.
1. [mainstream slang] Pejorative applied to anyone with an above-average IQ and few gifts at small talk and ordinary social rituals.
2. [jargon] Term of praise applied (in conscious ironic reference to sense 1) to someone who knows what’s really important and interesting and doesn’t care to be distracted by trivial chatter and silly status games. Compare geek.
The word itself appears to derive from the lines “And then, just to show them, I’ll sail to Ka-Troo / And Bring Back an It-Kutch, a Preep and a Proo, / A Nerkle, a Nerd, and a Seersucker, too!” in the Dr. Seuss book If I Ran the Zoo (1950)… How it developed its mainstream meaning is unclear, but sense 1 seems to have entered mass culture in the early 1970s (there are reports that in the mid-1960s it meant roughly “annoying misfit” without the connotation of intelligence.
When I was a kid, no one wanted to be a nerd. Nowadays, though, nerds are “out of the closet.” People (well, guys) are proud to be nerds. Is this just part of the nerd life cycle – unpopular at 10, proudly nerdy at 33? I very much doubt it. Nerds of my dad’s generation (like, say, my dad!) wanted to fit in with regular folks, not embrace their nerdity.
Why the change? Alex Tabarrok attributes it to the rising education premium. The ratio of nerd to non-nerd earnings has gone up, and the group’s status has risen along with it. This is probably part of the reason, but I primarily credit the Internet. Communication, not economic success, is the foundation of group identity. Lots of non-nerdy sub-cultures have profited from the free-fall in the cost of social interaction. But in contrast to most other sub-cultures, nerds are virtually 100% computer literate. The Internet has been the One Ring of nerddom.
In case you haven’t guessed, yes, I consider myself a nerd. I’m such a nerd that I worry that my sons will fail to embrace their nerd heritage. The best game show in history, Beat the Geeks, began by asking each contestant “What’s the geekiest thing about you?” I still wish I could have been a contestant just to give my response:
“I am the Dungeon Master for an all-economists’ Dungeons and Dragons game.”
Beat that, geeks!
The Freedom of a Confucian
The great free-market economists and libertarian philosophers of China were not Taoists, but Confucians, according to Auburn University philosopher Roderick Long. I often say that I never doubted the value of history of thought until someone tried to convince me of it, but Long’s “Rituals of Freedom: Austro-Libertarian Themes in Early Confucianism” Journal of Libertarian Studies 17(3) is an amazingly interesting and learned paper. It is true, Long admits, that the Taoists have a few grand libertarian passages. The favorite from Lao-tzu has to be:
The greater the number of laws and restrictions,
the poorer the people who inhabit the land.
The sharper the weapons of battle and war,
the greater the troubles besetting the land.
The greater the cunning with which people are ruled,
the stranger the things which occur in the land.
The harder the rules and regulations,
the greater the number of those who will steal.
The sage therefore does not contrive,
in order to bring about reform,
but teaches the people peace of mind,
in order that they might enjoy their lives.Tao Te Ching Section 57
Unfortunately, Long points out, a much stronger theme in Taoist is primitivist hostility to modern civilization. Listen to Lao-tzu describe the Taoist utopia:
Lessen the population. Make sure that even though there are labor saving
tools, they are never used. Make sure that the people look upon death as a
weighty matter and never move to distant places. Even though they have
ships and carts, they will have no use for them. … Make sure that the
people return to the use of the knotted cord [in lieu of writing]. … Then
even though neighboring states are within sight of each other, [and] can
hear the sounds of each other’s dogs and chickens … people will grow old
and die without ever having visited one another.
In contrast, Long finds much of value in the Confucians:
The early Confucians, by contrast, may not be as radical in
their anti-statism as the Taoists, but in my estimation they make up for this flaw by firmly
yoking their anti-statism to the cause of civilization, commerce, and the Great Society;
their overall program thus looks a lot more like contemporary libertarianism than the
Taoist program does. One Confucian text, while noting approvingly Laozi’s hostility to
despotism, sharply criticizes Laozi for wanting to “drag the present age back to the
conditions of primitive times and to stop up the eyes and ears of the people”; the best
ruler instead “accepts the nature of the people,” which is to long for “beautiful sounds
and forms,” “ease and comfort.”
The highlight of Long’s article is his discussion of the Sima Qian (c. 145-85 B.C.). Almost two thousand years before Adam Smith, Qian opined that “Wealth and currency should be allowed to flow as freely as water!” and had arguments to defend his position. And who said that Chinese intellectuals had no appreciation for the merchant class? Few Western thinkers match Sima’s appreciation of entrepreneurship:
These, then, are examples of outstanding and unusually wealthy men.
None of them enjoyed any titles or fiefs, gifts, or salaries from the
government, nor did they play tricks with the law or commit any crimes to
acquire their fortunes. They simply guessed what course conditions were
going to take and acted accordingly, kept a sharp eye out for the
opportunities of the times, and so were able to capture a fat profit. …
There was a special aptness in the way they adapted to the times …. All of
these men got where they did because of their devotion and singleness of
purpose. … [T]here is no fixed road to wealth, and money has no
permanent master. It finds its way to the man of ability like the spokes of
a wheel converging upon the hub, and from the hands of the worthless it
falls like shattered tiles. … Rich men such as these deserve to be called the
“untitled nobility” …
Murray Rothbard praised Sima in his history of economic thought, but Long notes that he neglected to mention that he was a Confucian!
It is hard to read this piece and not stand in awe of Long’s command of the Chinese literature. This is a body of thought comparable to Western philosophy in its intricacy and depth. Even if you couldn’t care less about Chinese proto-libertarians, this article exemplifies the true meaning of scholarship. And so the Sage says: check it out!
My favorite things Scottish
Favorite Scottish painting: I have to go with Henry Raeburn, check out the sense of motion in this picture.
Favorite Scottish novel: I’ve never found Stevenson or Scott very readable, so I’ll opt for Alasdair Gray’s quirky Lanark, a playful fantasy that recalls Tristram Shandy and science fiction.
Favorite Scottish music: Some of you might say Jesus and Mary Chain, but on this one I am stuck by the lack of a true favorite. This list did not much sway me. Must I go with Donovan, Garbage, Annie Lennox, or Lonnie Donegan? The bagpipes don’t do it for me, nor do Belle and Sebastian.
Favorite Scottish economist: For me this is not a no-brainer. No doubt, Adam Smith’s lifetime achievement is number one. But if you actually sat down and talked econ for a few hours, I suspect one would come away with a higher opinion of David Hume. He was, after all, the smartest person ever.
Favorite Scottish smartest person ever: David Hume
Favorite Scottish Commissioner of Customs: Adam Smith
Favorite Scottish biographer: Duh.
Favorite Scottish movie: Gregory’s Girl. This movie gives new meaning to the phrase “oozes charm.”