Fogel on economics and ideology

Many, upon reading the conclusions of economists, believe that economics has an ideological bent. I often respond that this is not the case. True, the “window” of political opinions in economics is narrower but that is largely because the adhesion of economists to methodological individualism precludes certain ideological views that rest on holistic approaches or concepts. However, when you consider more complex situations than “party affiliation”, you will find economists all over the place. They will often cross ideological lines or even have a foot in two antagonistic camps.

Recently, I was reading Robert Fogel’s lectures on the “Slavery debates” which retells the intellectual history of American slavery from U.B. Phillips to … well … Fogel himself. One must remember that Fogel was, and remained from what I can tell, a quite strongly left-leaning economist for most of his life (see here). As such, it is hard to consider Fogel as an ideologue preaching for free market economics. Yet, in the lectures, Fogel (p.19) makes a point that supports the contention that I often make regarding economists and ideology that I believe must be shared:

The ability to view Phillips (NDLR: the dominant interpretation of slavery pre-1960) in a new light was facilitated by the sudden intrusion of a large corps of economists into the slavery debates during the 1960s. This intrusion was welcomed by neither the defenders of the Phillips tradition nor the neoabolitionist school led by Stampp (NDLR: Kenneth Stampp, author of The Peculiar Institution). The cliometricians, as they were called, refused to be bound by the established rules of engagement, and they blithely crossed ideological wires in a manner that perplexed and exasperated traditional historians on both sides of the ideological divide.

Given that the source of this quotation is Fogel, I admit that I am particularly fond of this passage. Maybe the distrust towards economists is because economists can be both friend and foes to established interlocutors in a given discussion.

Lessons from the Stamp Act

That’s the subject of my latest over at RealClearHistory. Peep game:

The refusal of the colonies to pay for the war they initiated also led to the flare up of a simmering tension between elites on both sides of the British Atlantic: representation. The colonists wanted to send representatives to London and have them participate as full members of the body politic. The elite on the islands, however, were openly disdainful of American elites and probably did not want to disperse their power even more thinly by admitting new seats. Adam Smith was especially prescient on this matter, actually arguing that London could avoid most of its trouble by simply admitting American representatives to parliament.

Please, read the whole thing.

Rent-Seeking Rebels of 1776

Since yesterday was Independence Day, I thought I should share a recent piece of research I made available. A few months ago, I completed a working paper which has now been accepted as a book chapter regarding public choice theory insights for American economic history (of which I talked about before).  That paper simply argued that the American Revolutionary War that led to independence partly resulted from strings of rent-seeking actions (disclaimer: the title of the blog post was chosen to attract attention).

The first element of that string is that the Americans were given a relatively high level of autonomy over their own affairs. However, that autonomy did not come with full financial responsibility.  In fact, the American colonists were still net beneficiaries of imperial finance. As the long period of peace that lasted from 1713 to 1740 ended, the British started to spend increasingly larger sums for the defense of the colonies. This meant that the British were technically inciting (by subsidizing the defense) the colonists to take aggressive measures that may benefit them (i.e. raid instead of trade). Indeed, the benefits of any land seizure by conflict would large fall in their lap while the British ended up with the bill.

The second element is the French colony of Acadia (in modern day Nova Scotia and New Brunswick). I say “French”, but it wasn’t really under French rule. Until 1713, it was nominally under French rule but the colony of a few thousands was in effect a “stateless” society since the reach of the French state was non-existent (most of the colonial administration that took place in French North America was in the colony of Quebec). In any case, the French government cared very little for that colony.   After 1713, it became a British colony but again the rule was nominal and the British tolerated a conditional oath of loyalty (which was basically an oath of neutrality speaking to the limited ability of the crown to enforce its desires in the colony). However, it was probably one of the most prosperous colonies of the French crown and one where – and this is admitted by historians – the colonists were on the friendliest of terms with the Native Indians. Complex trading networks emerged which allowed the Acadians to acquire land rights from the native tribes in exchange for agricultural goods which would be harvested thanks to sophisticated irrigation systems.  These lands were incredibly rich and they caught the attention of American colonists who wanted to expel the French colonists who, to top it off, were friendly with the natives. This led to a drive to actually deport them. When deportation occurred in 1755 (half the French population was deported), the lands were largely seized by American settlers and British settlers in Nova Scotia. They got all the benefits. However, the crown paid for the military expenses (they were considerable) and it was done against the wishes of the imperial government as an initiative of the local governments of Massachusetts and Nova Scotia. This was clearly a rent-seeking action.

The third link is that in England, the governing coalitions included government creditors who had a strong incentives to control government spending especially given the constraints imposed by debt-financing the intermittent war with the French.  These creditors saw the combination of local autonomy and the lack of financial responsibility for that autonomy as a call to centralize management of the empire and avoid such problems in the future. This drive towards centralization was a key factor, according to historians like J.P. Greene,  in the initiation of the revolution. It was also a result of rent-seeking on the part of actors in England to protect their own interest.

As such, the history of the American revolution must rely in part on a public choice contribution in the form of rent-seeking which paints the revolution in a different (and less glorious) light.

On British Public Debt, the American Revolution and the Acadian Expulsion of 1755

I have a new working paper out there on the role of the Acadian expulsion of 1755 in fostering the American revolution.  Most Americans will not know about the expulsion of a large share of the French-speaking population (known as the Acadians) of the Maritimes provinces of Canada during the French and Indian Wars.

Basically, I argue that the policy of deportation was pushed by New England and Nova Scotia settlers who wanted the well-irrigated (thanks to an incredibly sophisticated – given the context of a capital-scarce frontier economy – dyking system) farms of the Acadians. Arguing that the French population under nominal British rule had only sworn an oath of neutrality, they represented a threat to British security, the settlers pushed hard for the expulsion. However, the deportation was not approved by London and was largely the result of colonial decisions rather than Imperial decisions. The problem was that the financial burden of the operation (equal to between 32% of 38% of the expenditures on North America – and that’s a conservative estimate) were borne by England, not the colonies.

This fits well, I argue, into a public choice framework. Rent-seeking settlers pushed for the adoption of a policy whose costs were spread over a large population (that of Britain) but whose benefits they were the sole reapers.

The problem is that this, as I have argued elsewhere, was a key moment in British Imperial history as it contributed to the idea that London had to end the era of “salutary neglect” in favor of a more active management of its colonies.  The attempt to centralize management of the British Empire, in order to best prioritize resources in a time of rising public debt and high expenditures level in the wars against the French, was a key factor in the initiation of the American Revolution.

Moreover, the response from Britain was itself a rent-seeking solution. As David Stasavage has documented, government creditors in England became well-embedded inside the British governmental structure in order to minimize default risks and better control expenses. These creditors were a crucial part of the coalition structure that led to the long Whig Supremacy over British politics (more than half a century). In that coalition, they lobbied for policies that advantaged them as creditors. The response to the Acadian expulsion debacle (for which London paid even though it did not approve it and considered the Acadian theatre of operation to be minor and inconsequential) should thus be seen also as a rent-seeking process.

As such, it means that there is a series of factors, well embedded inside broader public choice theory, that can contribute to an explanation of the initiation of the American Revolution. It is not by any means a complete explanation, but it offers a strong partial contribution that considers the incentives behind the ideas.

Again, the paper can be consulted here or here.