Category: History

*Capital and Ideology*, by Thomas Piketty

This book is more than 1000 pp., here are my impressions:

1. About 600 pp. of this book is a carefully done history of the accumulation and sometimes dissipation of wealth and property.  You can evaluate that material without reference to any particular set of political views.

2. At some point the book veers into partisan issues such as the wealth tax.  Many of those parts remain interesting, but it also becomes clear that Piketty is “out to lunch,” to wit (p.591):

To return to the Soviet attitude toward poverty, it is important to try to understand why the government took such a radical stance against all forms of private ownership of the means of production, no matter how small.  Criminalizing carters and food peddlers to the point of incarcerating them may seem absurd, but there was a certain logic to the policy.  Most important was the fear of not knowing where to stop.  If one began by authorizing private ownership of small businesses, would one be able to set limits?

I can think of a less naive explanation of Soviet attitudes toward the private sector.  Piketty also calls for “participatory socialism” (p.592), a dubious doctrine not to be confused with say Nordic social democracy.  For instance, Sweden (among other countries) seems to have fairly extreme wealth inequality.

3. The sentence “Real wages are much higher in America than in Western Europe” does not come easily to his pen.  Nor does “The United States is a remarkably successful innovator, let’s see what we can learn from that.”  Or even “Raising wages is more important than merely limiting inequality.”  Those seems to be banished thoughts in the Piketty intellectual universe.

4. The sections on Soviet and socialist experience can only be called “delusional.”  In his account, if only a few political decisions had gone the other way, the USSR might have ended up on a path similar to that of Norway (p.603 and thereabouts).

You know, maybe you think that the inequalities of the current day are much worse than people had been expecting.  but that should not revise your view of socialism and the Soviet Union, two matters fairly well settled by historical research.

5. Give these lenses, it is impossible for Piketty to offer any commentary on recent events (about the last 400 pp. of the book) that is anything other than distorted and unreliable.  There is massive distrust of the wealthy in this book, and virtually no distrust of concentrated state power.

6. There is a considerable sum of useful and valuable material in this book, and I would not try to dissuade anyone inclined from reading it.  Nonetheless I suspect its main import is as another sign of the growing compartmentalization of academic discourse — good work intermingled with highly questionable partisan material — and how so many academics, if the mood affiliation tilts in the right direction, will tolerate or even encourage that.

You can pre-order the book here.

Should the Left embrace Robert Moses more?

Here is a fantastic Politico essay by Marc J. Dunkelman, telling the whole story of Penn Station, new and old, and how it came to pass that New York finds it so difficult to construct new infrastructure.  Here is one short excerpt from a much longer story:

Since the mid-1960s—really since the opening of the Verrazzano-Narrows Bridge connecting Brooklyn to Staten Island—no major new piece of public infrastructure has been built within the five boroughs of New York City.

And toward the end:

For anyone convinced that government is an indispensable tool in the progressive mission to improve peoples’ lives, Penn Station is a monument to conservatism. If public officials can’t even clear the way for a serviceable facility at the nation’s busiest transit hub, why give them any more authority?

Recommended.  By the way, Madison Square Garden is now a dump and should be rebuilt from scratch, somewhere else of course.

*The Bridge: Natural Gas in a Redivided Europe*

What an excellent book.  Imagine somebody — in this case Thane Gustafson — taking all those snippets of gas history you used to read about and turning them into a coherent, well-written narrative.  The Dutch disease, Norwegian gas, the origins of Gazprom and Western Siberian reserves, the French decision to go nuclear, and much more.  It’s all here.  Every topic should have a book like this about it.   Excerpt:

Kortunov’s importance as the founder of the Soviet gas industry and the originator of the gas bridge with Europe cannot be overstated.  Without his vision and drive, organizational talent, and political skill, the development of West Siberian oil and gas might have been delayed by as much as a generation.  Gas exports to Europe would have remained modest, for lack of sufficient ready reserves and a pipeline system through which to ship them.  Above all, the rapid displacement of coal and oil by gas in the Soviet primary fuel balance  — one of the last successes of the Soviet planned economy — would have taken much longer.  By the beginning of the 1990s, when the Soviet Union fell apart and the Soviet oil industry with it, it was the gas industry, by then Russia’s most important source of primary fuel, that kept the Soviet cities heated and lighted, while oil was exported for desperately needed dollars.  That was Kortunov’s legacy to the country he so ardently believed in.

Due out in January, you can pre-order your copy here.

*The Rise of Skywalker* (no real spoilers)

MacGuffins!  That said, contrary to many reviews, the plot made perfect sense to me, many scenes were excellent, and the whole thing had a sweep and grandeur that episodes seven and eight completely lacked.  It had many of the strengths and flaws (and plot devices) of Return of the Jedi, but after forty-two years of waiting for the series to conclude mostly I went away happy.  Believe it or not.

My Portal podcast with Eric Weinstein

Eric and his team describe it as follows:

In this episode, Eric sits down with Tyler Cowen to discuss how/why a Harvard educated chess prodigy would choose a commuter school to launch a stealth attack on the self-satisfied economic establishment, various forms of existential risk, tech/social stagnation and more. On first glance, Tyler Cowen is an unlikely candidate for America’s most influential economist. Since 2003, Cowen has grown his widely read and revered economics blog Marginal Revolutions with lively thought, insight and prose resulting in a successful war of attrition against traditional thinking. In fact, his well of heterodox thinking is so deep that there is an argument to be made that Tyler may be the living person with the most diverse set of original rigorous opinions to be found in any conversation. The conversation takes many turns and is thus hard to categorize. We hope you enjoy it.

I recall it being about 2.5 hours long, and covering a lot of fresh material, Eric of course is superb.  Here is the link.  Here is the broader set of Portal podcasts, hosted by Eric.

*The Economics Book*

The author is Steven G Medema, and the subtitle is From Xenophon to Cryptocurrency, 250 Milestones in the History of Economics.  It is over 500 pages, one page per idea, with lovely color plates next to each page of text.  Test both your knowledge of economics and of history of economic thought.  For instance, it covers the median voter theorem, linear programming, the socialist calculation debate, and much more.  Very well done, and also a good gift book.

You can order it here.

Boris Johnson sentences to ponder

He has done what no other conservative leader in the West has done: He has co-opted and thereby neutered the far right. The reactionary Brexit Party has all but collapsed since Boris took over. Anti-immigration fervor has calmed. The Tories have also moved back to the economic and social center under Johnson’s leadership. And there is a strategy to this. What Cummings and Johnson believe is that the E.U., far from being an engine for liberal progress, has, through its overreach and hubris, actually become a major cause of the rise of the far right across the Continent. By forcing many very different countries into one increasingly powerful Eurocratic rubric, the E.U. has spawned a nationalist reaction. From Germany and France to Hungary and Poland, the hardest right is gaining. Getting out of the E.U. is, Johnson and Cummings argue, a way to counter and disarm this nationalism and to transform it into a more benign patriotism. Only the Johnson Tories have grasped this, and the Johnson strategy is one every other major democracy should examine.

Here is more by Andrew Sullivan, interesting throughout.

From the comments — on Paul Volcker

I worked at the Fed in the Volcker years. I am not a fan.

(1) He tightened far too much to get inflation down. A more moderate tightening and a more gradual reduction in inflation — which was the original agreement with the Reagan team — would have been better. The long 1980-82 recession was longer and deeper than it needed to be.

(2) He got the support of Democrats by blaming large deficits for the high interest rates rather than blaming his own excessively tight monetary policy. Of course, high interest rates caused federal interest rates to surge and boost the deficit.

(3) At the NY Fed and then as Chairman, what did he do to rein in reckless bank lending to Latin America? It is not like the banks had nothing to do with the Fed.

(4) Latam debt was floating rate debt. Volcker blew up those countries’ debt service. But the super strong dollar and collapse of commodity prices, connected to tight Fed policy, also damaged Latam.

(5) Volcker had modern leftists attitudes. The Fed has become quite transparent and communicates with the public and Congress. It may amaze younger readers that the Fed would adjourn FOMC meetings with no press statement or public policy announcement. Volcker figured you would find out what the Fed was up to when it did something. The Republican Greenspan and Bernanke started to let the sunshine into the Fed. The paranoid closeted quality of the old Fed generated resentment and conspiracy theories.

(6) Volcker had an authoritarian streak. He suppressed dissent within the Fed system, going after researchers at Fed banks who contradicted Fed dogma. The St. Louis Fed was particularly attacked, but others also.

(7) You might connect the death of Marvin Goodfriend with the death of Paul Volcker. Goodfriend was a critic of Volcker in the Fed. He said Volcker’s tight policy pushed inflation down, but Volcker would not deliver an inflation target. His Fed had no credibility, no one was wiling to believe that the Fed would keep inflation low. One result was a high long bond yield and a steep yield curve. It was fine that Volcker wanted to reduce inflation, but it was the Fed that needed credibility, not its temporary chairman.

(8) I found the recent Volcker Rule worthless. Prop trading played no role in creating the crisis of 2008. The Volcker Rule has simply made markets less liquid. After 2008, as after 1932, the federal government imposes useless regulations just for fun.

That is all from B.B.

Paul Volcker’s Latin American legacy

That is the topic of my latest Bloomberg column, the history with Latin America is also a big part of the Volcker story, here is one bit:

Global banks raised their interest rates for lending and shortened their repayment periods. In the mid-’70s real lending rates to Latin America hovered in the range of zero, but by the early ’80s they were between 8% and 10%. Liquidity was cut off, and the underlying growth potential of the region’s economies was not strong enough to sustain the debt. This affected other parts of the world as well and became known as “the third world debt crisis.”

The crisis came to a head in 1982, when Mexico announced it would no longer be able to service its debt, sparking a financial crisis and currency collapse. Ultimately, 16 Latin American countries also were forced to reschedule their debt payments. This created problems for the banks too, since by 1982 the nine largest U.S. money-center banks had Latin American debts equal to 176% of their capital, a figure which rose to 290% when lesser developed countries elsewhere in the world were included. Eventually the U.S. led a bailout and debt-reduction program, with the participation of the International Monetary Fund.

But for Latin America, things would never be the same. Governments had to cut spending, which in turn led to further adjustment problems, akin to the eurozone crisis of more recent times. Poverty rates rose sharply, and the general mood turned pessimistic. By the end of the 1980s, Latin American per capita GDP had fallen from 112% of the world’s average to 98%, a stunning plunge and by some measures the worst financial disaster the world had ever seen, albeit a regionalized one.

And this:

Repercussions in the U.S. were more modest. The potential insolvency of some major U.S. banks, such as Citibank, was ignored amid forbearance and hope about their return to profitability. They did, eventually, but in retrospect one has to wonder if allowing so much non-transparent bank accounting — with the blessing of regulators, including Volcker’s Fed — was such a good idea.

That all said, I do not think Volcker had much operative choice on most of these matters, and the excess Latin American borrowing certainly was not his fault.  Note: the inspiration for this column came from a tweet by Pseudoerasmus.

My debate with Žižek

It was quite something, the proceedings did not disappoint, here is the YouTube:

I can’t fully access video from this airport location, but I believe the actual debate starts at around 1:06.  After the debate proper, a particular highlight is the four video questions that were taped and sent in from humanities academics.

The Holberg people put on a great event.

*The Korean Mind: Understanding Contemporary Korean Culture*

This is a weird book, published primarily in Singapore, and somehow not fitting the canons of what people “are supposed to do” (NB: it is not at all racist, just bolder in its cultural generalizations than is currently in vogue).  Nonetheless I learned a great deal from the book, while taking some parts with a grain of salt.  Here is one interesting bit of many:

Since 1948 the government in North Korea has been dominated by people from North Hamkyong Province, where the late Il Sung Kim, founder of the North Korean regime, was active as a guerrilla leader during World War II.  Since that time people from the North Korean provinces of Hwanghae and Kangwon, which are the closest to South Korea, have been virtually banned from high government offices because they are considered untrustworthy and unfit.  In South Korea government has been controlled mostly by natives from North Kyongsang Province in the Youngnam (formerly Shilla) region.

…Ongoing competition and conflicts between people from Cholla and Kyongsang Provinces are said to be serious enough that they have significant negative impact on national politics, the economy, and life in general.

The author is Boye Lafayette de Mente, and he seems to know a lot about Korean bowing.  Do note the book is mainly about South Korea.  Reviewers, by the way, complain that there are significant mistakes in the Korean characters.  Recommended nonetheless, albeit with caveats, you can buy it here.

Principles for Amazon (and other?) censorship

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

Focus on whether the merchandise contributes to further understanding, one way or another, rather than whether it might embody evil.


This principle runs counter to how the world of social media works, I realize. “Cancel culture” tends to issue decisions based on the worst aspects of a product, writer or public figure, because that is what is endlessly circulated and condemned. But there is another way of thinking about the problem — namely, by focusing on the positive.

It is still possible, for example, to buy Adolf Hitler’s “Mein Kampf” on Amazon, either through third-party merchants or Amazon itself. That book is more offensive than an Auschwitz bottle opener, as it directly calls for the extermination of the Jews and the conquest of Europe, and it probably still inspires neo-Nazis today. Nonetheless, I hope “Mein Kampf” continues to be for sale.

For all of its evil, “Mein Kampf” is an essential document for understanding the rise of Nazism and Hitler. As such, it should be allowed in spite of its potential downside. There is both intrinsic and utilitarian value in maximizing public access to as much knowledge as possible.

In contrast, it is hard to argue that an Auschwitz-themed mouse pad has anything positive to offer, whether to our historical knowledge or otherwise. At best, it is an act of obnoxious trolling and thus it was appropriate for Amazon to take it down.

It is fine to watch Leni Riefenstahl and listen to Richard Strauss, for instance.  But most private platforms — if they can — should ban sheer trolls.

Claims about real rates of return

With recourse to archival, printed primary, and secondary sources, this paper reconstructs global real interest rates on an annual basis going back to the 14th century, covering 78% of advanced economy GDP over time. I show that across successive monetary and fiscal regimes, and a variety of asset classes, real interest rates have not been “stable”, and that since the major monetary upheavals of the late middle ages, a trend decline between 0.6-1.8bps p.a. has prevailed. A consistent increase in real negative-yielding rates in advanced economies over the same horizon is identified, despite important temporary reversals such as the 17th Century Crisis. Against their long-term context, currently depressed sovereign real rates are in fact converging “back to historical trend” – a trend that makes narratives about a “secular stagnation” environment entirely misleading, and suggests that – irrespective of particular monetary and fiscal responses – real rates could soon enter permanently negative territory. I also posit that the return data here reflects a substantial share of “nonhuman wealth” over time: the resulting R-G series derived from this data show a downward trend over the same timeframe: suggestions about the “virtual stability” of capital returns, and the policy implications advanced by Piketty (2014) are in consequence equally unsubstantiated by the historical record.

That is from a new paper by Paul Schmelzing, via the excellent Kevin Lewis.

My Conversation with Daron Acemoglu

Self-recommending of course, most of all we talked about economic growth and development, and the history of liberty, with a bit on Turkey and Turkish culture (Turkish pizza!) as well.  Here is the audio and transcript.  Here is one excerpt, from the very opening:

COWEN: I have so many questions about economic growth. First, how much of the data on per capita income is explained just simply by one variable: distance from the equator? And how good a theory of the wealth of nations is that?

ACEMOGLU: I think it’s not a particularly good theory. If you look at the map of the world and color different countries according to their income per capita, you’ll see that a lot of low-income-per-capita countries are around the equator, and some of the richest countries are pretty far from the equator, in the temperate areas. So many people have jumped to conclusion that there must be a causal link.

But actually, I think geographic factors are not a great explanatory framework for understanding prosperity and poverty.

COWEN: But why does it have such a high R-squared? By one measure, the most antipodal 21 percent of the population produces 69 percent of the GDP, which is striking, right? Is that just an accident?

ACEMOGLU: Yeah, it’s a bit of an accident. Essentially, if you think of which are the countries around the equator that have such low income per capita, they are all former European colonies that have been colonized in a particular way.


COWEN: If we think about the USSR, which has terrible institutions for more than 70 years, an awful form of communism — it falls; there’s a bit of a collapse. Today, they seem to have a higher per capita income than you would expect a priori, if you, just as an economist, write about communism. Isn’t that mostly just because of what is now Russian, or Soviet, human capital?

ACEMOGLU: That’s an interesting question. I think the Russian story is complicated, and I think part of Russian income per capita today is because of natural resources. It’s always a problem for us to know exactly how natural resources should be handled because you can do a lot of things wrong and still get quite a lot of income per capita via natural resources.

COWEN: But if Russians come here, they almost immediately move into North American per capita income levels as immigrants, right? They’re not bringing any resources. They’re bringing their human capital. If people from Gabon come here, it takes them quite a while to get to the —

ACEMOGLU: No, absolutely, absolutely. There’s no doubt that Russians are bringing more human capital. If you look at the Russian educational system, especially during the Soviet time, there was a lot of emphasis on math and physics and some foundational areas.

And there’s a lot of selection among the Russians who come here…

The Conversation is Acemoglu throughout, you also get to hear me channeling Garett Jones.  Again, here is Daron’s new book The Narrow Corridor: States, Societies, and the Fate of Liberty.

*Towards an Economics of Natural Equals*

The authors are David M. Levy and Sandra J. Peart, and the subtitle is A Documentary History of the Early Virginia School.  This is the true history, told by people who know, and with extensive citations from correspondence and primary documentation.


Beginning quite early and throughout his long career, Buchanan studied, endorsed, and extended the Smithian economics of natural equals.

You will find the correspondence of Buchanan and Rawls, the dealings of Buchanan with a skeptical Ford Foundation, the real story behind the Buchanan and G. Warren Nutter “Universal Education” voucher plan, what actually happened in Buchanan’s Chile visit, Chicago vs. Virginia disputes, the anti-democratic views of Murray Rothbard, and the contested history of neoliberalism.  And much correspondence from Ronald Coase.


David Levy worked with Buchanan and Tullock from the late 1970s through their deaths, and he and Peart are extremely careful in their sourcing and quotation practices — get the picture?

Due out Februrary, leap year day, you can pre-order here.