Category: History

40-year-old tractors are now a hot commodity

Tractors manufactured in the late 1970s and 1980s are some of the hottest items in farm auctions across the Midwest these days — and it’s not because they’re antiques.

Cost-conscious farmers are looking for bargains, and tractors from that era are well-built and totally functional, and aren’t as complicated or expensive to repair as more recent models that run on sophisticated software.

“There’s an affinity factor if you grew up around these tractors, but it goes way beyond that,” Peterson said. “These things, they’re basically bulletproof. You can put 15,000 hours on it and if something breaks you can just replace it.”

BigIron Auctions, a Nebraska-based dealer that auctioned 3,300 pieces of farm equipment online in two days last month, sold 27 John Deere 4440 tractors through 2019.

The model, which Deere built between 1977 and 1982 at a factory in Waterloo, Iowa, was the most popular of the company’s “Iron Horse” series of tractors, which used stronger and heavier internal components to support engines with greater horsepower. The tractors featured big, safe cabins, advancing a design first seen in the 1960s that is now standard.

A sale of one of those tractors in good condition with low hours of use — the tractors typically last for 12,000 to 15,000 hours — will start a bidding war today. A 1980 John Deere 4440 with 2,147 hours on it sold for $43,500 at a farm estate auction in Lake City in April. A 1979 John Deere 4640 with only 826 hours on it sold for $61,000 at an auction in Bingham Lake in August.

Maybe there is a great tractor stagnation or in some cases even retrogression?  Here is more from Adam Belz, via Naju Mancheril.

Prediction difficulty seems to be rising

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

My main prediction for 2020, if it can be called a prediction, is trend exhaustion: For the first time in a long while, several important trends have come to an end.

What do I mean by that? Trends ebb and flow, of course, but at any given moment many of them embody one of two distinct states: momentum, or reversion to the mean. The first is a continuation of past progress, either upward or downward. The second is a movement back toward “normal,” however that may be defined.

The relevant list of exhausted trends includes the U.S. labor market, Chinese economic growth, the growth of populist parties, and numerous others.  And:

One implication is that the coming year may hold an especially large number of surprises. Alternatively, rational people (and readers of Philip Tetlock, who has studied the difficulty of forecasting the future) might discard their hubris and not be very surprised at all.

Recommended.

The Dan Wang year-end letter

Always recommended.

This year I want to discuss mostly science and technology. First, some thoughts on China’s technology efforts. Then I’ll present a few reflections on science fiction, with a focus on Philip K. Dick and Liu Cixin. Next I’ll discuss books I read on American industrial history. I save personal reflections for the end.

Dan now lives in Beijing.  He left out music, however…

The United States as a Developing Nation

In the decades between 1850 and 1950, the United States decisively transformed its place in the world economic order. In 1850, the US was primarily a supplier of slave-produced cotton to industrializing Europe. American economic growth thus remained embedded in established patterns of Atlantic commerce. One hundred years later, the same country had become the world’s undisputed industrial leader and hegemonic provider of capital. Emerging victorious from the Second World War, the US had displaced Britain as the power most prominently situated — even more so than its Cold War competitor — to impress its vision of a global political economy upon the world. If Britain’s industrial revolution in the late eighteenth century marked the beginning of a ‘Great Divergence’ (Pomeranz) of ‘the West’ from other regions around the world, American ascendance in the decades straddling the turn of the twentieth century marked a veritable ‘second great divergence’ (Beckert) that established the US as the world’s leading industrial and imperial power.

That is an excerpt from a new essay in Past and Present by Stefan Link and Noam Maggor.  (You’ll find the best summary of the actual thesis in the last few pages of the piece, not in the beginning.)  It is one of the more interesting economic history pieces I have read in some time.  The pointer is from Pseudoerasmus, who also has been doing some running commentary on the article in his afore-linked Twitter feed.

What libertarianism has become and will become — State Capacity Libertarianism

Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow.  One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents.  For one thing, it doesn’t seem that old-style libertarianism can solve or even very well address a number of major problems, most significantly climate change.  For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious.  Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.”  On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women.

There is also the word “classical liberal,” but what is “classical” supposed to mean that is not question-begging?  The classical liberalism of its time focused on 19th century problems — appropriate for the 19th century of course — but from WWII onwards it has been a very different ballgame.

Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.  I define State Capacity Libertarianism in terms of a number of propositions:

1. Markets and capitalism are very powerful, give them their due.

2. Earlier in history, a strong state was necessary to back the formation of capitalism and also to protect individual rights (do read Koyama and Johnson on state capacity).  Strong states remain necessary to maintain and extend capitalism and markets.  This includes keeping China at bay abroad and keeping elections free from foreign interference, as well as developing effective laws and regulations for intangible capital, intellectual property, and the new world of the internet.  (If you’ve read my other works, you will know this is not a call for massive regulation of Big Tech.)

3. A strong state is distinct from a very large or tyrannical state.  A good strong state should see the maintenance and extension of capitalism as one of its primary duties, in many cases its #1 duty.

4. Rapid increases in state capacity can be very dangerous (earlier Japan, Germany), but high levels of state capacity are not inherently tyrannical.  Denmark should in fact have a smaller government, but it is still one of the freer and more secure places in the world, at least for Danish citizens albeit not for everybody.

5. Many of the failures of today’s America are failures of excess regulation, but many others are failures of state capacity.  Our governments cannot address climate change, much improve K-12 education, fix traffic congestion, or improve the quality of their discretionary spending.  Much of our physical infrastructure is stagnant or declining in quality.  I favor much more immigration, nonetheless I think our government needs clear standards for who cannot get in, who will be forced to leave, and a workable court system to back all that up and today we do not have that either.

Those problems require state capacity — albeit to boost markets — in a way that classical libertarianism is poorly suited to deal with.  Furthermore, libertarianism is parasitic upon State Capacity Libertarianism to some degree.  For instance, even if you favor education privatization, in the shorter run we still need to make the current system much better.  That would even make privatization easier, if that is your goal.

6. I will cite again the philosophical framework of my book Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals.

7. The fundamental growth experience of recent decades has been the rise of capitalism, markets, and high living standards in East Asia, and State Capacity Libertarianism has no problem or embarrassment in endorsing those developments.  It remains the case that such progress (or better) could have been made with more markets and less government.  Still, state capacity had to grow in those countries and indeed it did.  Public health improvements are another major success story of our time, and those have relied heavily on state capacity — let’s just admit it.

8. The major problem areas of our time have been Africa and South Asia.  They are both lacking in markets and also in state capacity.

9. State Capacity Libertarians are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats.  Modern Democrats often claim to favor those items, and sincerely in my view, but de facto they are very willing to sacrifice them for redistribution, egalitarian and fairness concerns, mood affiliation, and serving traditional Democratic interest groups.  For instance, modern Democrats have run New York for some time now, and they’ve done a terrible job building and fixing things.  Nor are Democrats doing much to boost nuclear power as a partial solution to climate change, if anything the contrary.

10. State Capacity Libertarianism has no problem endorsing higher quality government and governance, whereas traditional libertarianism is more likely to embrace or at least be wishy-washy toward small, corrupt regimes, due to some of the residual liberties they leave behind.

11. State Capacity Libertarianism is not non-interventionist in foreign policy, as it believes in strong alliances with other relatively free nations, when feasible.  That said, the usual libertarian “problems of intervention because government makes a lot of mistakes” bar still should be applied to specific military actions.  But the alliances can be hugely beneficial, as illustrated by much of 20th century foreign policy and today much of Asia — which still relies on Pax Americana.

It is interesting to contrast State Capacity Libertarianism to liberaltarianism, another offshoot of libertarianism.  On most substantive issues, the liberaltarians might be very close to State Capacity Libertarians.  But emphasis and focus really matter, and I would offer this (partial) list of differences:

a. The liberaltarian starts by assuring “the left” that they favor lots of government transfer programs.  The State Capacity Libertarian recognizes that demands of mercy are never ending, that economic growth can benefit people more than transfers, and, within the governmental sphere, it is willing to emphasize an analytical, “cold-hearted” comparison between government discretionary spending and transfer spending.  Discretionary spending might well win out at many margins.

b. The “polarizing Left” is explicitly opposed to a lot of capitalism, and de facto standing in opposition to state capacity, due to the polarization, which tends to thwart problem-solving.  The polarizing Left is thus a bigger villain for State Capacity Libertarianism than it is for liberaltarianism.  For the liberaltarians, temporary alliances with the polarizing Left are possible because both oppose Trump and other bad elements of the right wing.  It is easy — maybe too easy — to market liberaltarianism to the Left as a critique and revision of libertarians and conservatives.

c. Liberaltarian Will Wilkinson made the mistake of expressing enthusiasm for Elizabeth Warren.  It is hard to imagine a State Capacity Libertarian making this same mistake, since so much of Warren’s energy is directed toward tearing down American business.  Ban fracking? Really?  Send money to Russia, Saudi Arabia, lose American jobs, and make climate change worse, all at the same time?  Nope.

d. State Capacity Libertarianism is more likely to make a mistake of say endorsing high-speed rail from LA to Sf (if indeed that is a mistake), and decrying the ability of U.S. governments to get such a thing done.  “Which mistakes they are most likely to commit” is an underrated way of assessing political philosophies.

You will note the influence of Peter Thiel on State Capacity Libertarianism, though I have never heard him frame the issues in this way.

Furthermore, “which ideas survive well in internet debate” has been an important filter on the evolution of the doctrine.  That point is under-discussed, for all sorts of issues, and it may get a blog post of its own.

Here is my earlier essay on the paradox of libertarianism, relevant for background.

Happy New Year everyone!

The great Lemin Wu reemerges

Very loyal readers may recall that Lemin Wu was a Berkeley Ph.D in economic history and a student of Brad DeLong.  Then he seemed to disappear.  But for the last few years he was been working and writing, and later in 2020 he has a book coming out in China, in Chinese, title still undetermined.

I have read only parts of the book (the parts in English), and an outline.  Still , I am willing to predict it will be the best and most important economics book of the year, in any language.  It also likely will mark the first time a Chinese economist, writing in Chinese, created an important work.

I won’t “give away the plot,” but suffice to say it is about the rise of the West, the Malthusian model, group selection in history, why development takes so long, and related big topics.  Oh, and it does tie in to and draw upon Cixin Liu’s The Three-Body Problem, just in case you were wondering.

I hope very much this book will be published in English as well.

Hail Lemin Wu!

My Conversation with Abhijit Banerjee

I had an excellent time in this one, here is the audio and transcript.  Here is the opening summary:

Abhijit joined Tyler to discuss his unique approach to economics, including thoughts on premature deindustrialization, the intrinsic weakness of any charter city, where the best classical Indian music is being made today, why he prefers making Indian sweets to French sweets, the influence of English intellectual life in India, the history behind Bengali leftism, the best Indian regional cuisine, why experimental economics is underrated, the reforms he’d make to traditional graduate economics training, how his mother’s passion inspires his research, how many consumer loyalty programs he’s joined, and more.

Yes there was plenty of economics, but I feel like excerpting this bit:

COWEN: Why does Kolkata have the best sweet shops in India?

BANERJEE: It’s a bit circular because, of course, I tend to believe Kolkata has —

COWEN: So do I, however, and I have no loyalty per se.

BANERJEE: I think largely because Kolkata actually also — which is less known — has absolutely amazing food. In general, the food is amazing. Relative to the rest of India, Kolkata had a very large middle class with a fair amount of surplus and who were willing to spend money on. I think there were caste and other reasons why restaurants didn’t flourish. It’s not an accident that a lot of Indian restaurants were born out of truck stops. These are called dhabas.

COWEN: Sure.

BANERJEE: Caste has a lot to do with it. But sweets are just too difficult to make at home, even though lots of people used to make some of them. And I think there was some line that was just permitted that you can have sweets made out of — in these specific places, made by these castes.

There’s all kinds of conversations about this in the early-to-mid 19th century on what you can eat out, what is eating out, what can you buy in a shop, et cetera. I think in the late 19th century you see that, basically, sweet shops actually provide not just sweets, but for travelers, you can actually eat a lunch there for 50 cents, even now, an excellent lunch. They’re some savories and a sweet — maybe for 40 rupees, you get all of that.

And it was actually the core mechanism for reconciling Brahminical cultures of different kinds with a certain amount of social mobility. People came from outside. They were working in Kolkata. Kolkata was a big city in India. All the immigrants came. What would they eat? I think a lot of these sweet shops were a place where you actually don’t just get sweets — you get savories as well. And savories are excellent.

In Kolkata, if you go out for the day, the safest place to eat is in a sweet shop. It’s always freshly made savories available. You eat the freshly made savories, and you get some sweets at the end.

COWEN: Are higher wage rates bad for the highest-quality sweets? Because rich countries don’t seem to have them.

BANERJEE: Oh no, rich countries have fabulous sweets. I mean, at France —

COWEN: Not like in Kolkata.

BANERJEE: France has fabulous sweets. I think the US is exceptional in the quality of the . . . let me say, the fact that you don’t get actually excellent sweets in most places —

And this on music:

BANERJEE: Well, I think Bengal was never the place for vocal. As a real, I would say a real addict of vocal Indian classical music, I would say Bengal is not, never the center of . . . If you look at the list of the top performers in vocal Indian classical music, no one really is a Bengali.

In instrumental, Bengal was always very strong. Right now, one of the best vocalists in India is a man who lives in Kolkata. His name is Rashid Khan. He’s absolutely fabulous in my view, maybe the best. On a good day, he’s the best that there is. He’s not a Bengali. He’s from Bihar, I think, and he comes and settles in Kolkata. I think a Hindi speaker by birth, other than a Bengali. So I don’t think Bengal ever had top vocalists.

It had top instrumentalists, and Ravi Shankar, Ali Akbar Khan, Nikhil Banerjee — these were all Bengali instrumentalists. Even now, I would say the best instrumentalists, a lot of them are either Bengali or a few of them are second . . . Vilayat Khan and Imrat Khan were the two great non-Bengali instrumentalists of that period, I would say, of the strings especially. And they both settled in Kolkata, so that their children grew up in Kolkata.

And the other great instrumentalists are these Kolkata-born. They went to the same high school as I did. There were these Kolkata-born, not of Bengali families, but from very much the same culture. So I think Kolkata still is the place which produces the best instrumentalists — sitarists, sarod players, et cetera.

COWEN: Why is the better vocal music so often from the South?

Definitely recommended, Abhijit was scintillating throughout.

*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.