Category: History

That was then, this is now

Ali Akbar was two years younger than Robu [later named Ravi Shankar], but a couple of years ahead in his musical training.  He has been through a brutal regime: Baba had even tied him to a tree and beaten him when his progress was unsatisfactory.  Although Baba had arranged for Ali Akbar to marry at the age of fifteen, he still expected him to remain celibate — married to music.  Twice Ali Akbar ran away.  Ultimately the harsh discipline brought out his talent and made him into a master of the sarod, although one wonders about the emotional cost.

That is from Oliver Craske’s Indian Sun: The Life and Music of Ravi Shankar, which I am quite enjoying.

My (second) Conversation with Paul Romer

Interesting throughout, here is the audio and transcript.  Here is the summary:

Paul Romer makes his second appearance to discuss the failings of economics, how his mass testing plan for COVID-19 would work, what aspect of epidemiology concern him, how the FDA is slowing a better response, his ideas for reopening schools and Major League Baseball, where he agrees with Weyl’s test plan, why charter cities need a new name, what went wrong with Honduras, the development trajectory for sub-Saharan Africa, how he’d reform the World Bank, the underrated benefits of a culture of science, his heartening takeaway about human nature from his experience at Burning Man, and more.

I liked the parts about charter cities and the World Bank the best, here is one excerpt:

COWEN: How optimistic are you more generally about the developmental trajectory for sub-Saharan Africa?

ROMER: There’s a saying I picked up from Gordon Brown, that in establishing the rule of law, the first five centuries are always the hardest. I think some parts of this development process are just very slow. If you look around the world, all the efforts since World War II that’s gone into trying to build strong, effective states, to establish the rule of law in a functioning state, I think the external investments in building states have yielded very little.

So we need to think about ways to transfer the functioning of existing states rather than just build them from scratch in existing places. That’s a lot of the impetus behind this charter cities idea. It’s both — you select people coming in who have a particular set of norms that then become the dominant norms in this new place, but you also protect those norms by certain kinds of administrative structures, state functions that reinforce them.

And this:

COWEN: If you could reform the World Bank, what would you do?

ROMER: Oh, that’s an interesting question. I think the Bank is trying to serve two missions, and it can’t do both. One is a diplomatic function, which I think is very important. The World Bank is a place where somebody who represents the government of China and somebody who represents the government of the United States sit in a conference room and argue, “Should we do A or B?” Not just argue, but discuss, negotiate. On a regular basis, they make decisions.

And it isn’t just China and the US. It’s a bunch of countries. I think it’s very good for personal relationships, for the careers of people who will go on to have other positions in these governments, to have that kind of experience of, basically, diplomatic negotiation over a bunch of relatively small items because it’s a confidence-building measure that makes it possible for countries to make bigger diplomatic decisions when they have to.

That, I think, is the value of the World Bank right now. The problem is that that diplomatic function is inconsistent with the function of being a provider of scientific insight. The scientific endeavor has to be committed to truth, no matter whose feathers get ruffled. There’s certain convenient fictions that are required for diplomacy to work. You start accepting convenient fictions in science, and science is just dead.

So the Bank’s got to decide: is it engaged in diplomacy or science? I think the diplomacy is its unique comparative advantage. Therefore, I think it’s got to get out of the scientific business. It should just outsource its research. It shouldn’t try and be a research organization, and it should just be transparent about what it can be good at and is good at.

And toward the end:

COWEN: Last question thread, what did you learn at Burning Man?

ROMER: Sometimes physical presence is necessary to appreciate something like scale. The scale of everything at Burning Man was just totally unexpected, a total surprise for me, even having looked at all of these pictures and so forth. That was one.

Another thing that really stood out, which is not exactly a surprise, but maybe it was the surprise in that group — if you ask, what do people do if you put them in a setting where there’s supposed to be no compensation, no quid pro quo, and you just give them a chance to be there for a week. What do they do?

They work.

For purposes of contrast, here is my first Conversation with Paul Romer.

*The WEIRDest People in the World*

That is the new 655 pp. book by Joseph Henrich, due out September 8, and yes it is “an event.”  The subtitle is “How the West Became Psychologically Peculiar and Particularly Prosperous,” and that is indeed one of the very most important questions in all of social science.

“WEIRD” of course refers to “Western, Educated, Industrialized, Rich, and Democratic.”  And is it not weird that we (some of us, at least) are WEIRD?

Here is an excerpt from the opening segment:

Let’s close by returning to the core questions of this book:

1. How can we explain the global psychological variation highlighted above?

2. Why are WEIRD societies particularly unusual, so often occupying the extreme ends of global distributions of psychology and behavior?

3. What role did these psychological differences play in the Industrial Revolution and the global expansion of Europe during the last few centuries?

If you are wondering how this material might differ from Henrich’s previous output, there is above all much more on marriage customs and monogamy, for instance:

…I’ll make the case that monogamous marriage norms — which push upstream against our polygynous biases and the strong preferences of elite men — create a range of social and psychological effects that give the societies that possess them a big edge in competition against other groups.

Obviously recommended, and you will be hearing more about this both from me and from others.  You can pre-order here.

What sports I’ve been watching

Game 2, Celtics vs. Bulls, 1986, the one where Michael Jordan scored 63 points.  Watching it over a number of days on the exercise bike, I was struck by the following:

1. The Chicago Bulls, to a remarkable degree, decided to run their offense through Orlando Woolridge, and not for the better.

2. The camera did not follow MJ around obsessively, nor do the announcers seem to realize how great he will become — this was his second season, and he spent much of it injured and not playing.  And he was not yet able to make his teammates better (see #1).

3. One announcer remarks that Charles Oakley is not big and strong enough to play center.  Admittedly Robert Parrish was taller, but Oakley was one of the strongest men ever to play in the NBA.

4. The game comes across as remarkably slow, and the Celtics as molasses slow and bad at defense.  A swarming contemporary defense would shut down Kevin McHale.  Ainge and Dennis Johnson are heralded as one of the best backcourts ever, but I believe Damian Lillard or a few other current peers would cut them to ribbons.  Note that the Celtics were 40-1 at home that season, still a record, so they were a remarkable team for their time.

5. Michael Jordan scores most of his points on shots — the long 2 — that coaches strongly discourage players from taking these days because of their low expected value.

6. Few of them look good taking a three-pointer.

7. MJ aside, Bill Walton is the one who comes across as the world-class player on the court, despite his age of 33, a long history of foot and other injuries, and limited mobility.

8. 63 points is a lot, but the Bulls lost the game and Jordan was far from his later peak.  It is nonetheless striking how much better was his conditioning than that of any other player on the court, and that is why he was able to score so much in the fourth quarter and take over the game.

My Conversation with Adam Tooze

Tinges of Covid-19, doses on financial crises, but mostly about economic history.  Here is the audio and transcript.  Here is the summary:

Adam joined Tyler to discuss the historically unusual decision to have a high-cost lockdown during a pandemic, why he believes in a swoosh-shaped recovery, portents of financial crises in China and the West, which emerging economies are currently most at risk, what Keynes got wrong about the Treaty of Versailles, why the Weimar Republic failed, whether Hitler was a Keynesian, the political and economic prospects of various EU members, his trick to writing a lot, how Twitter encourages him to read more, what he taught executives at BP, his advice for visiting Germany, and more.

Here is one excerpt:

And:

Tooze’s discussion of his own career and interests, toward the end, is hard to excerpt but for me the highlight of the conversation.  He also provided the best defense of Twitter I have heard.

Definitely recommended.

Did non-pharmaceutical interventions actually help against the Spanish flu?

From three economics Ph.D students at Harvard, namely Andrew Lilley, Matthew Lilley, and Gianluca Rinaldi:

Using data from 43 US cities, Correia, Luck, and Verner (2020) find that the 1918 Flu pandemic had strong negative effects on economic growth, but that Non Pharmaceutical Interventions (NPIs) mitigated these adverse economic effects. Their starting point is a striking positive correlation between 1914-1919 economic growth and the extent of NPIs adopted at the city level. We collect additional data which shows that those results are driven by population growth between 1910 to 1917, before the pandemic. We also extend their difference in differences analysis to earlier periods, and find that once we account for pre-existing differential trends, the estimated effect of NPIs on economic growth are a noisy zero; we can neither rule out substantial positive nor negative effects of NPIs on employment growth.

I am very willing to publish a response from the original authors on this one.

Communism still matters liberty still matters

Those who grew up in East Germany seem to have a harder time cottoning to the realities of capitalism:

We analyze the long-term effects of living under communism and its anticapitalist doctrine on households’ financial investment decisions and attitudes towards financial markets. Utilizing comprehensive German brokerage data and bank data, we show that, decades after Reunification, East Germans still invest significantly less in the stock market than West Germans. Consistent with communist friends-and-foes propaganda, East Germans are more likely to hold stocks of companies from communist countries (China, Russia, Vietnam) and of state-owned companies, and are unlikely to invest in American companies and the financial industry. Effects are stronger for individuals exposed to positive “emotional tagging,” e.g., those living in celebrated showcase cities. Effects reverse for individuals with negative experiences, e.g., environmental pollution, religious oppression, or lack of (Western) TV entertainment. Election years trigger further divergence of East and West Germans. We provide evidence of negative welfare consequences due to less diversified portfolios, higher-fee products, and lower risk-adjusted returns.

That is from a new NBER paper by Christine Laudenbach, Ulrike Malmendier, and Alexandra Niessen-Ruenzi.

But if you are looking for a contrary point of view, consider this new paper by Sascha O. Becker, Lukas Mergele, and Ludger Woessmann:

German separation in 1949 into a communist East and a capitalist West and their reunification in 1990 are commonly described as a natural experiment to study the enduring effects of communism. We show in three steps that the populations in East and West Germany were far from being randomly selected treatment and control groups. First, the later border is already visible in many socio-economic characteristics in pre-World War II data. Second, World War II and the subsequent occupying forces affected East and West differently. Third, a selective fifth of the population fled from East to West Germany before the building of the Wall in 1961. In light of our findings, we propose a more cautious interpretation of the extensive literature on the enduring effects of communist systems on economic outcomes, political preferences, cultural traits, and gender roles

That said, I still believe that communism really matters, and durably so, even if the longer history matters all the more so.  And now there is yet another paper on East Germany and political path dependence, by Luis R. Martinez, Jonas Jessen, and Guo Xu:

This paper studies costly political resistance in a non-democracy. When Nazi Germany surrendered in May 1945, 40% of the designated Soviet occupation zone was initially captured by the western Allied Expeditionary Force. This occupation was short-lived: Soviet forces took over after less than two months and installed an authoritarian regime in what became the German Democratic Republic (GDR). We exploit the idiosyncratic line of contact separating Allied and Soviet troops within the GDR to show that areas briefly under Allied occupation had higher incidence of protests during the only major episode of political unrest in the GDR before its demise in 1989 – the East German Uprising of 1953. These areas also exhibited lower regime support during the last free elections in 1946. We argue that even a “glimpse of freedom” can foster civilian opposition to dictatorship.

I take the core overall lesson to be that the eastern parts of Germany will experience significant problems for some time to come.

And speaking of communist persistence, why is it again that Eastern Europe is doing so well against Covid-19?  Belarus is an extreme case, with hardly any restrictions on activity, and about 14,000 cases and 89 deaths.  You might think that is a cover-up, but the region as a whole has been quite robust and thus it is unlikely to be a complete illusion.  And no, it doesn’t seem to be a BCG effect.

Does communism mean there is less of a culture of consumption and thus people find it easier to just stay at home voluntarily?  Or have all those weird, old paranoid communist pandemic ministries persisted and helped with the planning?  Or what?

Double credit on this one to both Kevin Lewis and Samir Varma, neither less excellent in his conjunction with the other.

Melissa Dell, economic historian, wins John Bates Clark award

Very well-deserved, here is the full account, including a summary of her research.  Excerpt:

Historians (e.g., Engerman and Sokolov) have long argued for the persistence of institutions and the “long shadow” of historical events on developing countries. For example, cross-national studies have noted that Latin America and North America organized labor differently during colonial periods and used cross-country historical data to support the idea that these differences have had long-run impacts. More generally, Acemoglu, Johnson, and Robinson compare the experience of countries with different institutions set in place during colonial time for largely accidental reasons, showing that these early differences continue to matter today.

In her work, Dell goes beyond the cross-country evidence, using historical accidents or peculiarities to shed light on persistent effects of institutional differences, including different in the organization of the state. She exploits historical settings in which she is able to very convincingly establish the persistent impacts of specific institutions as well as explore specific channels through which these impacts occur.

Do read the whole thing.  Here are some previous MR posts on Melissa Dell.

The Decline of the Innovation State is Killing Us

The latest relief bill contains another $320 billion in small business relief and $25 billion for testing. Finally, we get some serious money to actually fight the virus. But as Paul Romer pointed out on twitter, this is less than half of what we spend on soft drinks!!! (Spending on soft drinks is about $65 billion annually). Soda is nice but it is not going to save lives and restart the economy. Despite monumental efforts by BARDA and CEPI we are also not investing enough in capacity for vaccine production so that if and when when a vaccine is available we can roll it out quickly to everyone (an issue I am working on).

The failure to spend on actually fighting the virus with science is mind boggling. It’s a stunning example of our inability to build. By the way, note that this failure has nothing to do with Ezra Klein’s explanation of our failure to build, the filibuster. Are we more politically divided about PCR tests than we are about unemployment insurance? I don’t think so yet we spend on the latter but not the former. The rot is deeper. A failure of imagination and boldness which is an embarrassment to the country that put a man on the moon.

In Launching the Innovation Renaissance I said the US was a welfare/warfare state and no longer an innovation state. The share of R&D in the Federal Budget, for example, has diminished from about 12% at its height in the NASA years to an all time low of about 3% in recent years. We are great at spending on welfare and warfare but all that spending has crowded out spending on innovation and now that is killing us.

My Conversation with Philip Tetlock

Here is the audio and transcript, here is part of the summary:

He joined Tyler to discuss whether the world as a whole is becoming harder to predict, whether Goldman Sachs traders can beat forecasters, what inferences we can draw from analyzing the speech of politicians, the importance of interdisciplinary teams, the qualities he looks for in leaders, the reasons he’s skeptical machine learning will outcompete his research team, the year he thinks the ascent of the West became inevitable, how research on counterfactuals can be applied to modern debates, why people with second cultures tend to make better forecasters, how to become more fox-like, and more.

Here is one excerpt:

COWEN: If you could take just a bit of time away from your research and play in your own tournaments, are you as good as your own best superforecasters?

TETLOCK: I don’t think so. I don’t think I have the patience or the temperament for doing it. I did give it a try in the second year of the first set of forecasting tournaments back in 2012, and I monitored the aggregates. We had an aggregation algorithm that was performing very well at the time, and it was outperforming 99.8 percent of the forecasters from whom the composite was derived.

If I simply had predicted what the composite said at each point in time in that tournament, I would have been a super superforecaster. I would have been better than 99.8 percent of the superforecasters. So, even though I knew that it was unlikely that I could outperform the composite, I did research some questions where I thought the composite was excessively aggressive, and I tried to second guess it.

The net result of my efforts — instead of finishing in the top 0.02 percent or whatever, I think I finished in the middle of the superforecaster pack. That doesn’t mean I’m a superforecaster. It just means that when I tried to make a forecast better than the composite, I degraded the accuracy significantly.

COWEN: But what do you think is the kind of patience you’re lacking? Because if I look at your career, you’ve been working on these databases on this topic for what? Over 30 years. That’s incredible patience, right? More patience than most of your superforecasters have shown. Is there some dis-aggregated notion of patience where they have it and you don’t?

TETLOCK: [laughs] Yeah, they have a skill set. In the most recent tournaments, we’ve been working on with them, this becomes even more evident — their willingness to delve into the details of really pretty obscure problems for very minimal compensation is quite extraordinary. They are intrinsically cognitively motivated in a way that is quite remarkable. How am I different from that?

I guess I have a little bit of attention deficit disorder, and my attention tends to roam. I’ve not just worked on forecasting tournaments. I’ve been fairly persistent in pursuing this topic since the mid 1980s. Even before Gorbachev became general party secretary, I was doing a little bit of this. But I’ve been doing a lot of other things as well on the side. My attention tends to roam. I’m interested in taboo tradeoffs. I’m interested in accountability. There’re various things I’ve studied that don’t quite fall in this rubric.

COWEN: Doesn’t that make you more of a though? You know something about many different areas. I could ask you about antebellum American discourse before the Civil War, and you would know who had the smart arguments and who didn’t. Right?

And another:

TETLOCK:

…I had a very interesting correspondence with in the 1980s about forecasting tournaments. We could talk a little about it later. The upshot of this is that young people who are upwardly mobile see forecasting tournaments as an opportunity to rise. Old people like me and aging baby-boomer types who occupy relatively high status inside organizations see forecasting tournaments as a way to lose.

If I’m a senior analyst inside an intelligence agency, and say I’m on the National Intelligence Council, and I’m an expert on China and the go-to guy for the president on China, and some upstart R&D operation called IARPA says, “Hey, we’re going to run these forecasting tournaments in which we assess how well the analytic community can put probabilities on what Xi Jinping is going to do next.”

And I’ll be on a level playing field, competing against 25-year-olds, and I’m a 65-year-old, how am I likely to react to this proposal, to this new method of doing business? It doesn’t take a lot of empathy or bureaucratic imagination to suppose I’m going to try to nix this thing.

COWEN: Which nation’s government in the world do you think listens to you the most? You may not know, right?

Definitely recommended.

What should I ask Adam Tooze?

I will be doing a Conversation with him, no associated public event.  He has been tweeting about the risks of a financial crisis during Covid-19, but more generally he is one of the most influential historians, currently being a Professor at Columbia University.  His previous books cover German economic history, German statistical history, the financial crisis of 2008, and most generally early to mid-20th century European history.  Here is his home page, here is his bio, here is his Wikipedia page.

So what should I ask him?

Why has the Census become less productive over time?

For the 1970 and subsequent censuses, the Postal Service took on an even greater role. Most households received a machine-readable survey by mail and returned it the same way. This cut out two labor- intensive processes: canvassing most households and transcribing data by hand. Censuses since 1970 have generally followed the same process. The biggest change was that the 2010 survey dropped the “long-form” census – a major labor-saving change that nevertheless did not have an obvious impact on the amount of labor expended.

Despite the introduction of labor-saving technologies, the Census hires more people relative to the population than it did in earlier periods. In 1950, 46 million households – the entire country – were canvassed by 170,000 field staff. In 2000, 45 million addressees failed to mail back the survey, and the Census Bureau hired 539,000 field staff to take on the task of nonresponse follow-up. What seems like basically the same task took three times as many employees.

That is from Salim Furth, there is much more at the link, including footnotes for the above excerpt.  Of course this year the labor investment is likely to be much, much lower.

*Markets, Minds, and Money: Why America Leads the World in University Research*

One of the best books on the history of American higher education, author Miguel Urquiola of Columbia argues for the importance of market competition in the rise and dominance of the American system.  Strongly argued and full of good evidence and stories, here is one excerpt I found of interest:

That Columbia would be among the first successful American research universities would have surprised many observers around 1850, as the school had seen real oscillations in its fortunes.  For the first decades after its creation in 1754, Columbia was a wealthy but small school.  In 1774 it had the highest collegiate endowment, but only 36 students, while Harvard and Yale had four or five times as many…in 1797 the college had eight faculty members, during most of the 1800s it had four.  In 1809, an inquiry warned that Columbia College “was fast becoming, if it has not become already, a mere Grammar School”; between 1800 and 1850, even as New York City grew, the school’s enrollment stagnated, and even in 1850 the average entering age was 15.

And this:

Among wealthy countries, the United States is unusual in letting its university sector operate as a free market.  Self-rule, free entry, and free scope are much less prevalent in Europe.

Recommended, you can pre-order here.

*Islam, Authoritarianism, and Underdevelopment*

That is a recent book by Ahmet T. Kuru, published in August.  All books should have a (non-Amazon) abstract, and here it is for this book:

Why do Muslim-majority countries exhibit high levels of authoritarianism and low levels of socioeconomic development in comparison to world averages? Ahmet T. Kuru criticizes explanations which point to Islam as the cause of this disparity, because Muslims were philosophically and socioeconomically more developed than Western Europeans between the ninth and twelfth centuries. Nor was Western colonialism the cause: Muslims had already suffered political and socioeconomic problems when colonization began. Kuru argues that Muslims had influential thinkers and merchants in their early history, when religious orthodoxy and military rule were prevalent in Europe. However, in the eleventh century, an alliance between orthodox Islamic scholars (the ulema) and military states began to emerge. This alliance gradually hindered intellectual and economic creativity by marginalizing intellectual and bourgeois classes in the Muslim world. This important study links its historical explanation to contemporary politics by showing that, to this day, the ulema–state alliance still prevents creativity and competition in Muslim countries.

I don’t really have my own view on these issues, and due to various duties and also the slowness of my on-line reading, I have read only a segment of this book.  I can report it is clearly written, to the point, and well argued, and I am happy to recommend it to anyone interested in these issues.

I think I will use MR today to catch up on some “book news,” after that back again to coronavirus for a while.

The Economic Consequences of the Virus?

The inhabitant of New York could order by computer, sipping his morning coffee in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate with passport or other formality and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing just a credit card upon his person, and would consider himself greatly aggrieved by the TSA but otherwise much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, exclusion and of pandemics which were to play the serpent to this paradise, were little more than the amusements of his daily twitter feed, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.

Only slightly modified.