The Essential James Buchanan (Cafe Hayek)
Defounding America (The New Criterion)
Marketplace Morality: From Masks to Veganism (The Walrus)
Can Structural Changes Fix the Supreme Court? (Journal of Economic Perspectives)
The Health Care Crucible (The Baffler)
I took my bachelor’s degree in History between 2001 and 2005. All the people I asked told me that the course I took was the best in the country. I suppose they were right, but today I understand that they were predominantly talking about the graduate program at the same school. A department with a good master’s and doctoral degree does not necessarily translate into a good undergraduate degree, in the same way that good researchers and writers are not necessarily good teachers. Most of my professors were very bad teachers. I hope to be saying this without bitterness or arrogance, just realizing that although they were good academics, they were mostly not good at imparting knowledge.
Perhaps one of my professors’ difficulties in transmitting knowledge was precisely the constant questioning about the validity of transmitting knowledge. Brazilian pedagogy is strongly influenced by a form of social-constructivism created by educator Paulo Freire. Freire strongly insisted that teachers could not be transmitters of knowledge, but that students created knowledge on their own, and that teachers were, if at all, facilitators of this process. At least that’s what I understood or is what I remember from my pedagogy classes. Paulo Freire’s pedagogy is admittedly a translation of Marxism into the teaching field: students are the oppressed class, teachers are oppressors. Freire wanted pedagogy to reflect a classless society. The result, in my view, was that teachers were terrified of being seen as “the owners of the truth”.
My bachelor’s degree had the bold goal of training teachers and researchers at the same time. In my view, this created a difficulty: students needed to learn to cook and be food critics at the same time. It was not an easy task for people of 18, 20 years of age. Most classes ended up being quite weak. Another problem is that my post-Marxist professors wanted us to have a critical attitude: we needed to be critical of everything that was understood as “traditional”. This ended up creating distrust in the students’ minds: if everything is to be criticized, what should I believe? Of course, contradictorily what professors said should not be criticized, especially the proposition that everything should be criticized. In general, the program tended to generate people of 18, 20 years boisterous or confused. Or both.
Another experience of my bachelor’s degree was the encounter with party politics. In my high school, I had little contact with highly politicized people or student unions. The same cannot be said of my undergraduate studies! I met many people who were already involved to some degree with political parties, always on the left. Some people say that Christians are the main reason churches are empty. I can say something similar about my undergraduate colleagues. It is largely thanks to them that I became conservative. The hypocrisy, the aggressiveness, the arrogance of many of them made me suspect that there was something very wrong with the left. It took a few years, but eventually, I discovered classic liberal or libertarian authors and found my intellectual home.
But there were positive things about my undergraduate studies as well. Undergraduate was my first great opportunity to leave home a little more. I met some people with whom I am still friends today. And I had some good classes too. Some professors were more conservative, and largely ignored the department’s directives. Their classes were more traditional, more expository, more dedicated to informing us about things that happened in history, without much questioning. I remember a quote from my professor of Contemporary History I (roughly equivalent to 19th century): “when writing your paper, don’t say “I think … ”. You don’t think anything. When you are in the master’s or doctorate, you will think something. Today, simply write “the so-and-so author says …”. Be able to understand what the authors are talking about. That is enough for you today ”. There were also professors who were able to introduce a more critical perspective but in a less radical way.
Perhaps my biggest disappointment with undergraduate is that I almost didn’t get to teach History. The education system in Brazil is essentially socialist. The government assumes that everyone has the right to free, good quality education. And you know: when the government says you have a right to something, you’re not gonna get it, it will be expensive and of poor quality. The life of a teacher in Brazil is quite harsh. I have several friends in the teaching profession, and I am very sorry for them. Maybe I should have listened to my mom and study engineering.
But I don’t want to end it bitterly! I studied History because I really wanted to be a teacher. I still think that being a teacher is a beautiful vocation. Unfortunately, in Brazil, this vocation ends up being spoiled by the undue state intervention. I also studied History simply because I liked History, and I still do. If I had the mind I have today, possibly I would have studied something else. But I didn’t, and I am grateful for the way my life happened.
There’s a whole set of simple but profound lessons that, if I were being lazy, I might call “the economic way of thinking.” We move through a hand-me-down world, solving some problems and creating new problems, adjusting and adapting, and shaping the world that we pass on to the next generation.
I just stumbled on a lovely example in an article about ballpoint pens and the end of cursive. A technological change changed the nature of handwriting, but the structure of human capital lagged behind. Specifically, the widespread adoption of ballpoint pens meant the old way of writing–how to hold the pen, how to form the letters, etc.–was poorly suited to the tool being used. This should have been an opportunity to test unchecked assumptions (e.g. about what the “correct” way to write is) but instead an inefficient practice (cursive writing with a bic pen) persisted in the face of increasing obsolescence.
I particularly like the idea of trying something new (fountain pens) can lead to a realization that some old method has a lot more going for it than was obvious to the non-alert.
I wonder how many other mundane skills, shaped to accommodate outmoded objects, persist beyond their utility. It’s not news to anyone that students used to write with fountain pens, but knowing this isn’t the same as the tactile experience of writing with one. Without that experience, it’s easy to continue past practice without stopping to notice that the action no longer fits the tool. Perhaps “saving handwriting” is less a matter of invoking blind nostalgia and more a process of examining the historical use of ordinary technologies as a way to understand contemporary ones. Otherwise we may not realize which habits are worth passing on, and which are vestiges of circumstances long since past.How the Ballpoint Pen Killed Cursive
Learning takes time. So in a dynamic society, it’s natural that there will always be some sort of practice outliving its utility. The only other way I see is stagnation: no new methods, no new problems, and we eventually setting into a “making the best of it” equilibrium.
The discovery of each of these inefficiencies creates some pocket of entrepreneurship. Sometimes it’s a massive, market oriented bit of entrepreneurship–like Bic industrializing the process of making cheap, reliable pens. Sometimes it’s a niche community of hobbyists (who might be incubating the next big thing). But that entrepreneurial reaction to inefficiency is pretty exciting. Realizing how my bad handwriting is the outcome of a technical problem makes me want to try fountain pens.
First of all: Happy New Year Peeps!
I am trying my best to get some routine in blogging by sticking to this series. However, I do not know if I can still pull it off during the upcoming finals. We will see.
This week’s Poetry is less poetic yet very much informative (at least to me). David Motadel in his book “Islam and Nazi Germany’s War” reconstructs the bizarre relationship between Nazi Germany and Islam (and thus sheds light on another Myth of the Nazi Regime). What sounded completely counterintuitive to me, was this short passage on the halal cookery courses organized by the SS:
“In the end, both the Wehrmacht and the SS also took Islamic food regulations into consideration. In his instructions of 1942, Niedermayer ordered to ensure that the dietary requirements of Muslim soldiers, especially the ban on pork, were respected. Similar instructions were issued for Arab Wehrmacht soldiers. The SS went even further here. In July 1943, Himmler personally instructed Berger to find out “what Islam prescribes to its soldiers with regard to food” and added that he wanted to ensure that religious rules were observed. Shortly afterwards, Berger informed Himmler that the soldiers were not allowed to eat pork or drink alcohol. The Reichsführer-SS reacted promptly and ordered: “All Islamic members of the Waffen-SS and the police are granted as an unbreakable special right that, in accordance with their religious rules, they are never given pork as well as sausage containing pork and never alcohol to drink. An equally valuable diet is guaranteed in any case.” The SS even organized halal cookery courses near Graz.”
I wish you all a pleasant Sunday.
Humankind’s struggle with moral is of course nothing new, it rather inherent to our nature to revolt against the meaningless world and the manmade system of reason. Furthermore, moral values vary over a specific period of time swinging from rather high moral standards to very low ones. Regarding morality as an abstract compass guiding our thought, goals and behaviour, Economist, in general, are not known for dealing in depth with the metaphysical reason behind our behaviour yet they explore and explain human actions through our surrounding incentives, which also structure and direct our action. Economist such as Daron Acemoglu & James Robinson or William J. Baumol have explored these changes in human behaviour through changing incentive structures thoroughgoingly.
However, folks mourning the moral decline of today’s west often fail to provide concrete evidence for their argument. They either cherry-pick events or legislatures to infer a macro trend inductively or they lose themselves in difficult language trying to somehow save their argument by making it incomprehensible. I cannot help feeling that mourning the moral decay of the west has somehow become a shibboleth for eloquently expressing the “Things used to be way better back then” narrative. However, I admit that there were probably a couple of sociological papers who have covered this issue very well which I am unaware of. Contrary, the public debate was dominated by a few grumpy intellectuals holding the above-named attitude. I was recently provided with a very concrete set of indicators to measure moral decline while digging through Samuel P. Huntington’s infamous classic “The clash of civilization” from 1996. He states that there are five main criteria which indicate the ongoing decline of moral values in the West. 
After being provided with a concrete framework to quantify the moral decline of the west, I was keen to see how the moral decline of the west has developed in the 20 years since the book has first been published in 1996. Although I also take issue with some of these indicators to measure moral decline, I avoid any normative judgement in the first part and just look at their development over time. Furthermore, since Samuelson himself mostly takes data from the USA representing the West, I might as well do so too for the sake of simplicity. So, let’s see what happened to moral values in the West in the last years by checking each of Huntington’s indicator one by one.
Apart from the global long-term trend of declining homicides, we can also observe a recent downward trend in the reported violent crime rate since 1990 in the USA. Scholars agree that the crime rate is in an extreme decline. Expanding the realm towards Europe, you will see similar results (see here).
Despite these trends, the public (as well as some intellectuals as well I assume) vastly still holds a distorted perception of the crime rate. The sharp decline in actual crimes strongly contradicts the fact that a majority of the people still uphold the myth of increasing crime rates.
Regarding drug use in the USA, it is important to mention that the absolute amount of illicit drugs consumed has slightly gone up since 1990. This development is mostly driven by an increasing consumption of marijuana: “Use of most drugs other than marijuana has stabilized over the past decade or has declined.”, states the National Institute on drug abuse in 2015.
It is hard to measure the “Decay of the family” itself. Luckily, Huntington further concretizes his claim by naming some of the measurable effects. There is nothing much to do to refute these statement except for looking at the following graphs.
a) Firstly, the divorce rate is sharply declining.
b) Second, teenage pregnancy rates are also dropping since 1990.
Source: National Vita Statistics Report
c) Third, the number of Americans living in single parenthood is not increasing drastically since 1990.
I often take issue when (especially conservative) scholars mourn the declining importance of family. Even if there are certain indicators which would back up Huntington’s claims, he does not name them himself. While it is indeed true that “family” as an institution is undergoing changes, there is no evidence (at least named by Huntington) to back up the claim of a decline of its importance.
It is indeed true, that the adult volunteering rate declined from early 2000 to 2016 from 27.4% to 24.9%. Interestingly, it recently bounced back to a new high in 2018, hitting the 30% target. Really the only point where one must agree to Huntington’s claim is the decrease of interpersonal trust as well as trust in public institutions. This trend is indeed very worrisome considering that trust is a major factor for flourishing societies.
The research here is a little bit tricky and points in both directions. Although there has been wide academic coverage of the millennial work ethic scholars could not find a consensus on this issue. Its is especially difficult to extract the generational influence from other key determinants of work ethic, such as position or age. Academics warn to mistake the ever-ongoing conflict between young vs. old with the Boomer vs. Millenial conflict. I haven’t settled my opinion on this one. These Articles from Harvard Business Review and Psychology Today provide a good overview of both sides of the medal.
This indicator is particularly interesting for me because as a member of the 90’ generation, I have experienced quite the opposite in Germany. But let’s have a look at the data.
Despite ranking only in the middle in a global country comparison, the US students still made a huge leap in terms of maths and reading proficiency, which only slowed down in 2015:
Source: Pew Research Center
Furthermore, the overall educational level of the USA continues to rise, resulting in the fact that “the percentage of the American population age 25 and older that completed high school or higher levels of education reached 90% [for the first time ] in 2017.” Contrary, there are still major differences when one looks at features like race or parent household (See here), but the overall trajectory of the educational level is sloping upwards.
As you can see, there is little to no evidence to empirically back up the claim of western moral decay. Furthermore, while many case studies have shown that lack of interpersonal trust, lack of education or a declining work ethic can pose a great threat to society, I refuse to see a connection (a no known to me study disproves me here) between (recreational) drugs consumption, alternative family models, increasing hedonism and moral decline. Thus I believe that many advocates of the moral decay theory regard it as an opportunity to despise developments they personally do not like. I do not imply that everyone arguing for the moral decline of the west is unaware of the global macro-trends which heavily improved our life, but I highly doubt their assumption, that we are currently in a short-to-medium term “moral recession”. Even when one upholds the very conservative statements such as drug consumption adding to moral decline, is hard to argue that we are currently witnessing a moral decay of the west. Contrary, It may be true that Huntington has observed something different in the period before publishing “The clash of civilization” in 1996. Of course, I myself witness the ongoing battle against norms on the increasing hostility towards the intellectual enemy in the west, but one should always keep in mind the bigger picture. Our world is getting better – in the long- and in the short-run; There is no such thing as a moral decline of the West.
 Huntington, Samuel P. (2011): Kampf der Kulturen. Die Neugestaltung der Weltpolitik im 21. Jahrhundert. Vollst. Taschenbuchausg., 8. Aufl. München: Goldmann (Goldmann, 15190). P. 500
The line is often heard: economists are “scientific imperialists” (i.e. they seek to invade other fields of social science) jerks. All they try to do is “fit everything inside the model”. I have this derisive sneer at economists very often. I have also heard economists say “who cares, they’re a bunch of historians” (this is the one I hear most often given my particular field of research, but I have heard variations involving sociologists and anthropologists).
To be fair, I never noticed the size rift. For years now, I have been waltzing between economics and history (and tried my hand at journalism for some time) which meant that I was waltzing between economic theory and a lot of other fields. The department I was a part of at the London School of Economics was a rich set of quantitative and qualitative folks who mixed history of ideas, economics, economic history and social history. To top it all, I managed to find myself generally in the company of attorneys and legal scholars (don’t ask why, it still eludes me). It was hard to feel a big rift in that environment. I knew there was a rift. I just never realized how big it was until a year ago (more or less).
There is, however, something that annoys me: the contempt appears to be self-reinforcing. Elsewhere on this blog (here and here) (and in a forthcoming book chapter in a textbook on how to do economic history), I have explained that economists have often ventured into certain topics with a lack of care for details. True, there must be some abstraction of details (not all details are useful), but there is an optimal quantity of details. And our knowledge grows, the quantity of details necessary to answering each question (because the scientific margin is increasingly specialized) should grow. And so should the number (and depth) of nuances we make to answer a question. There is a tendency among economists to treat a question outside the usual realm of economics and ignore the existing literature (thus either rushing through an open door or stepping in a minefield without knowing it). The universe is collapsed into the model and, even when it yields valuable insights, other (non-econs) contributors are ignored. That’s when the non-econs counter that economists are arrogant and that they try to force everything into a mold rather than change the mold when it does not apply. However, the reply has often been to ignore the economists or criticize strawmen versions of their argument. Perceived as contemptuous, the economists feel that they can safely ignore all others.
The problem is that this is a reinforcing loop: a) the economists are arrogant; b) non-economists respond by dismissing the economists and ridiculing their assumptions; c) the economists get more arrogant. The cycle persists. I struggle to see how to break this cycle, but I see value in breaking it. Elsewhere, I have made such a case when I reviewed a book (towards which I was hostile) on Canadian economic history. Here is what I said for the sake of showcasing the value of breaking the vicious circle of ignoring both sides:
These scholars (those who have been ignored by non-economists) could have easily derived the same takeaways as Sweeny. Individuals can and do engage in rent-seeking, which economists define as the process through which unearned gains are obtained by manipulating the political and social environment. This could be observed in attempts to shape narratives in the public discourse. According primacy to the biases of sources is a recognition that there can be rent-seeking in the form of actors seeking to generate a narrative to reinforce a particular institutional arrangement and allow it to survive. This explanation is well in line with neoclassical economics.
This point is crucial. It shows a failing on both sides of the debate. Economists and historians favorable to “rational choice” have failed to engage scholars like Sweeny. Often, they have been openly contemptuous. The literature has evolved in separate circles where researchers only speak to their fellow circle members. This has resulted in an inability to identify the mutual gains of exchange. The insights and meticulous treatments of sources by scholars like Sweeny are informative for those economists who consider rational choice as if the choosers were humans, with all their flaws and limitations, rather than mechanistic utility-maximizing machines with perfect foresight (which is a strawman often employed to deride the use of economics in historical debates) . In reverse, the rich insights provided by rational choice theorists could guide historians in elucidating complex social interactions with a parsimony of assumptions. Without interaction, both groups loose and resolutions remain elusive.
See, as a guy who likes economics, I think that trade is pretty great. More importantly, I think that trade between heterogeneous groups (or different individuals) is even greater because it allows for specialization that increases the value (and quantity) of outputs. I see the benefits of trade here, so why is this “circle of contempt” perpetuating so relentlessly?
Can’t we just all pick the 100$ bill on the sidewalk?
A few days ago, I received goods news that the Canadian Journal of Economics had accepted my paper that constructed a consumer price index for Canada between 1688 and 1850 from homogeneous sources (the account books of religious congregations). I have to format the article to the guidelines of the journal and attach all my data and it will be good to go (I am planning on doing this over the weekend). In the meanwhile, I thought I would share the finalized price index so that others can see it.
First, we have the price index that focuses on the period from 1688 to 1850. Most indexes that exist for pre-1850 Canada (or Quebec since I assume that Quebec is representative of pre-1850 Canadian price trends) are short-term, include mostly agricultural goods and have no expenditures weights to create a basket. Now, my index is the first that uses the same type of sources continuously over such a long period and it is also the first to use a large array of non-agricultural goods. It also has a weights scheme to create a basket.
The issue of adding non-agricultural goods was especially important because there were important differences in the evolution of different types of goods. Agricultural goods, see next image, saw their nominal prices continually increase between the 17th and 19th centuries. However, most other prices – imported goods, domestically produced manufactured goods etc. – either fall or remain stable. These are very pronounced changes in relative prices. It shows that reliance on agricultural goods price index will overstate the amount of “deflating” needed to arrive at real wages or incomes. The image below shows the nominal price evolution of groupings of goods as described above.
And finally, the pièce de résistance! I link my own index to other existing post-1850 index so as to generate the evolution of prices in Canada since 1688. The figure below shows the evolution of the price index over … 328 years (I ended the series at 2015, but extra years forward can be added). In the years to come, I will probably try to extend this backwards as much as possible at least to 1665 (the first census in Canada) and will probably try to approach Statistics Canada to see if they would like to incorporate this contribution into their wide database of macroeconomic history of Canada.
I recently engaged in a discussion (a twittercussion) with Leah Boustan of Princeton over the “popularity” of economic history within economics (depicted below). As one can see from the purple section, it is as popular as those hard candies that grandparents give out on Halloween (to be fair, I like those candies just like I do economic history). More importantly, the share seems to be smaller than at the peak of 1980s. It also seems like the Nobel prize going to Fogel and North had literally no effects on the subfield’s popularity. Yet, I keep hearing that “economic history is back”. After all, the Bates Clark medal went to Donaldson of Stanford this year which should confirm that economic history is a big deal. How can this be reconciled with the figure depicted below?
As I explained in my twittercussion with Leah, I think that there is a popularity for using historical data. Economists have realized that if some time is spent in archives to collect historical data, great datasets can be assembled. However, they do not necessarily consider themselves “economic historians” and as such they do not use the JEL code associated with history. This is an improvement over a field where Arthur Burns (former Fed Chair) supposedly said during the 1970s that we needed to look at history to better shape monetary policy. And by history, he meant the 1950s. However, while there are advantages, there is an important danger which is left aside.
The creation of a good dataset has several advantages. The main one is that it increases time coverage. By increasing the time coverage, you can “tackle” the big questions and go for the “big answers” through the generation of stylized facts. Another advantage (and this is the one that summarizes my whole approach) is that historical episodes can provide neat testing grounds that give us a window to important economic issues. My favorite example of that is the work of Petra Moser at NYU-Stern. Without going into too much details (because her work was my big discovery of 2017), she used a few historical examples which she painstakingly detailed in order to analyze the effect of copyright laws. Her results have important ramifications to debates regarding “science as a public good” and “science as a contribution good” (see the debates between Paul David and Terence Kealey on this in Research Policy for this point).
But these two advantages must be weighted against an important disadvantage which Robert Margo has warned against in a recent piece in Cliometrica. When one studies economic history, one must keep in mind that two things must be accomplished simultaneously: to explain history through theory and bring theory to life through history (this is not my phrase, but rather that of Douglass North). To do so, one must study a painstaking amount of details to ascertain the quality of the sources used and their reliability. In considering so many details, one can easily get lost or even fall prey to his own prior (i.e. I expect to see one thing and upon seeing it I ask no question). To avoid this trap, there must be a “northern star” to act as a guide. That star, as I explained in an earlier piece, is a strong and general understanding of theory (or a strong intuition for economics). To create that star and give attention to details is an incredibly hard task and which is why I argued in the past that “great” economic historians (Douglass North, Deirdre McCloskey, Robert Fogel, Nathan Rosenberg, Joel Mokyr, Ronald Coase (because of the lighthouse piece), Stephen Broadberry, Gregory Clark etc.) take a longer time to mature. In other words, good economic historians are projects that have have a long “time to build problem” (sorry, bad economics joke). However, the downside is that when this is not the case, there are risks of ending up with invalid results that are costly and hard to contest.
Just think about the debate between Daron Acemoglu and David Albouy on the colonial origins of development. It took more than five years to Albouy to get his results that threw doubts on Acemoglu’s 1999 paper. Albouy clearly expended valuable resources to get the “details” behind the variables. There was miscoding of Niger and Nigeria, and misunderstandings of what type of mortalities were used. This was hard work and it was probably only deemed a valuable undertaking because Acemoglu’s paper was such a big deal (i.e. the net gains were pretty big if they paid off). Yet, to this day, many people are entirely unaware of the Albouy rebuttal. This can be very well seen in the image below regarding the number of cites of the Acemoglu-Johnson-Robinson paper on an annual basis. There seems to be no effect from the massive rebuttal (disclaimer: Albouy convinced me that he was right) from the Albouy piece.
And it really does come down to small details like those underlined by Albouy. Let me give you another example taken from my work. Within Canada, the French minority is significantly poorer than the rest of Canada. From my cliometric work, we now know that there were poorer than the rest of Canada and North America as far as the colonial era. This is a stylized fact underlying a crucial question today (i.e. Why are French-Canadians relatively poor). That stylized fact requires an explanation. Obviously, institutions are a great place to look. One of the institution that is most interesting is seigneurial tenure which was basically a “lite” version of feudalism in North America that was present only in the French settled colonies. Some historians and economic historians argued that there were no effects of the institutions on variables like farm efficiency. However, some historians noticed that in censuses the French reported different units that the English settlers within the colony of Quebec. To correct for this metrological problem, historians made county-level corrections. With those corrections, the aforementioned has no statistically significant effect on yields or output per farm. However, as I note in this piece that got a revise and resubmit from Social Science Quarterly (revised version not yet online), county-level corrections mask the fact that the French were more willing to move to predominantly English areas than the English were willing to predominantly French areas. In short, there was a skewed distribution. However, once you correct the data on an ethnic composition basis rather than on the county-level (i.e. the same correction for the whole county), you end with a statistically significant negative effect on both output per farm and yields per acre. In short, we were “measuring away” the effect of institutions. All from a very small detail about distributions. Yet, that small detail has supported a stylized fact that the institution did not matter.
This is the risk that Margo speaks about illustrated in two examples. Economists who use history merely as a tool may end up making dramatic mistakes that will lead to incorrect conclusions. I take this “juicy” quote from Margo (which Pseudoerasmus) highlighted for me:
[EH] could become subsumed entirely into other fields… the demand for specialists in economic history might dry up, to the point where obscure but critical knowledge becomes difficult to access or is even lost. In this case, it becomes harder to ‘get the history right’
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.
Ever since Nancy MacLean’s new book came out, there have been waves of discussions of the intellectual legacy of James Buchanan – the economist who pioneered public choice theory and won the Nobel in economics in 1986. Most prominent in the book are the inuendos of Buchanan’s racism. Basically, public choice had a “racist” agenda. Even Brad DeLong indulged in this criticism of Buchanan by pointing that he talked about race by never talking race, a move which reminds him of Lee Atwater.
The thing is that it is true that Buchanan never talked about race as DeLong himself noted. Yet, that is not a sign (in any way imaginable) of racism. The fact is that Buchanan actually inspired waves of research regarding the origins of racial discrimination and was intellectually in line with scholars who contributed to this topic.
Protecting Majorities and Minorities from Predation
To see my point in defense of Buchanan here, let me point out that I am French-Canadian. In the history of Canada, strike that, in the history of the province of Quebec where the French-Canadians were the majority group, there was widespread discrimination against the French-Canadians. For all intents and purposes, the French-Canadian society was parallel to the English-Canadian society and certain occupations were de facto barred to the French. It was not segregation to be sure, but it was largely the result of the fact that the Catholic Church had, by virtue of the 1867 Constitution, monopoly over education. The Church lobbied very hard in order to protect itself from religious competition and it incited logrolling between politicians in order to win Quebec in the first elections of the Canadian federation. Logrolling and rent-seeking! What can be more public choice? Nonetheless, these tools are used to explain the decades-long regression of French-Canadians and the de facto discrimination against them (disclaimer: I actually researched and wrote a book on this).
Not only that, but when the French-Canadians started to catch-up which in turn fueled a rise in nationalism, the few public choice economists in Quebec (notably the prominent Jean-Luc Migué and the public choice fellow-traveler Albert Breton) were amongst the first to denounce the rise of nationalism and reversed linguistic discrimination (supported by the state) as nothing else than a public narrative aimed at justifying rent-seeking attempts by the nationalists (see here and here for Breton and here and here for Migué). One of these economists, Migué, was actually one of my key formative influence and someone I consider a friend (disclaimer: he wrote a blurb in support of the French edition of my book).
Think about this for a second : the economists of the public choice tradition in Quebec defended both the majority and the minority against politically-motivated abuses. Let me repeat this : public choice tools have been used to explain/criticize attempts by certain groups to rent-seek at the expense of the majority and the minority.
How can you square that with the simplistic approach of MacLean?
Buchanan Inspired Great Research on Discrimination and Racism
If Buchanan didn’t write about race, he did set up the tools to explain and analyze it. As I pointed out above, I consider myself in this tradition as most of my research is geared towards explaining institutions that cause certain groups of individuals to fall behind or pull ahead. A large share of my conception of institutions and how state action can lead to predatory actions against both minorities and majorities comes from Buchanan himself! Nevermind that, check out who he inspired who has published in top journals.
For example, take the case of the beautifully written articles of Jennifer Roback who presents racism as rent-seeking. She sets out the theory in an article in Economic Inquiry , after she used a case study of segregated streetcars in the Journal of Economic History. A little later, she consolidated her points in a neat article in the Harvard Journal of Law and Public Policy. She built an intellectual apparatus using public choice tools to explain the establishment of discrimination against blacks and how it persisted for long.
Consider also one of my personal idols, Robert Higgs who is a public-choice fellow traveler who wrote Competition and Coercion which considers the topic of how blacks converged (very slowly) with whites in hostile institutional environment. Higgs’ treatment of institutions is well in line with public choice tools and elements advanced by Buchanan and Tullock.
The best case though is The Origins and Demise of South African Apartheid by Anton David Lowenberg and William H. Kaempfer. This book explicitly uses a public choice to explain the rise and fall of Apartheid in South Africa.
Contemporaries that Buchanan admired were vehemently anti-racist
Few economists, except maybe economic historians, know of William Harold Hutt. This is unfortunate since Hutt produced one of the deepest and most thoughtful economic criticism of Apartheid in South Africa, The Economics of the Colour Bar. This book stands tall and while it is not the last word, it generally is the first word on anything related to Apartheid – a segregation policy against the majority that lasted nearly as long as segregation in the South. This writing, while it earned Hutt respect amongst economists, made him more or less personae non grata in his native South Africa.
Oh, did I mention that Hutt was a public choice economist? In 1971, Hutt published Politically Impossible which has been an underground classic in the public choice tradition. Unfortunately, Hutt did not have the clarity of written expression that Buchanan had and that book has been hard to penetrate. Nonetheless, the book is well within the broad public choice tradition. He also wrote an article in the South African Journal of Economics which expanded on a point made by Buchanan and Tullock in the Calculus of Consent.
Oh, wait, I forgot to mention the best part. Buchanan and Hutt were mutual admirers of one another. Buchanan cited Hutt’s work very often (see here and here) and spoke with admiration of Hutt (see notably this article here by Buchanan and this review of Hutt’s career where Buchanan is discussed briefly).
If MacLean wants to try guilt by (inexistent) association, I should be excused from providing redemption by (existent) association. Not noting these facts that are easily available shows poor grasp of the historiography and the core intellectual history.
Buchanan inspired a research agenda regarding how states can be used for predatory purposes against minorities and majorities which has produced strong interpretations of racism and discrimination. He also associated with vehement and admirable anti-racists like William H. Hutt and inspired students who took similar positions. I am sure that if I were to assemble a list of all the PhD students of Buchanan, I would find quite a few who delved into the deep topic of racism using public choice tools. I know better and I did not spend three years researching Buchanan’s life. Nancy MacLean has no excuse for these oversights.
A standard stylized fact in Canada is that we are poorer, on average, than the average American. This has been presented as a fact that is as steady as the northern star. But our evidence on Canadian incomes is pretty shoddy prior to 1870 (here I praise M.C. Urquhart for having designed a GNP series that covers from 1870 to 1926 and links up with the official national accounts even if I think there are some improvements that can be brought to measuring output from some key industries and get the deflator right). But what about anything before 1870? There are some estimates for Ontario from 1826 to 1851 by Lewis and Urquhart (great stuff), but Ontario was pretty much the high-income of Canada.
So, can we go further back? This is what my work is about (partially), and I just made available my results on Canadian living standards (proxied by Quebec where the vast majority of the population was) from 1688 to 1775 as captured by welfare ratios. So that’s pretty much the closest we can get to the “founding”. Below are my results derived from this paper. They show that the colonists in Canada were not very much richer than their counterparts in France with the basket meant to capture the meanest of subsistence and roughly equal to their counterparts in France with a basket that includes more manufactured goods like clothing and more alcohol. This explains why most migrants from France to Canada were “volunteered” (in the sense that they were pretty much reluctant migrants) for migration. But the key interesting result is that relative to New England – the poorest of the American colonies – it is poorer regardless of the basket used. Thus, there seems to be truth to the common logic about Canadians being always poorer than the Americans.
However, I am not fully convinced of my own results. This may surprise some. The reason is not that I do not trust my data (in fact, I think it is superior to most of what exists for the time given that I will be able to proceed to tons of other data). The reason is simple (and rarely discussed): natives.
Natives are always omitted from the stories of living standards. But they existed nonetheless. In terms of national accounts, if the British and French settlers dispossessed and killed natives, their welfare losses are just not computed. But the welfare losses of a musket shot to the head are real. I have always been convinced that if we could correct estimates of living standards to account for the living standards of natives, the picture would change terribly. The reason is two-fold. The first reason is that the historiography is pretty clear that while they were obviously not nice, the French were nicer than the British towards the Natives (at least until 1763 when the British shifted strategy). In fact, trade between French and Natives was very frequent and so it might be that for the whole population (natives + settlers), the French-area peoples enjoyed more growth and higher average levels. In the British colony, if the settlers killed and dispossessed natives, this is basically the British turning native capital stocks into their own capital stock or into consumption (which would enter settlers GDP but not change total GDP). In essence, this is basically a variation on the arguments of Robert Higgs with regards to measuring the American GDP in World War Two and Albrecht Ritschl on the German interwar growth. I am pretty sure that adjusting for the lives of natives would show a greater level for Canada leading to rough equality between the two colonies. However, I am not sure if the argument would cut that way (my guts say yes) since in their conjectural growth estimates, Mancall and Weiss show that with the natives included, their zero rate of income per capita growth turns into a positive rate.
Nonetheless, I still think that knowing that the settlers were better off in the US as an improvement over the current state of knowledge. Until ways to impute the value of native output and production are found, my current estimates are only a step forward, not the whole nine yards.
This week on EconTalk, Russ Roberts interviewed Bruce Bueno de Mesquita on how presidents who took the United States to war find themselves higher in the rankings of “Great Presidents” (see this paper by Henderson and Gochenour on the issue) For some time now, I have found myself in agreement with that contention as wars are generally momentous events that stand out in history. In contrast, the man who sits by and does nothing except preventing a war or making it easier for people to trade, that is harder to observe. But why would evaluating Presidents be associated with such a premium? Individuals are aware that wars are bad, so why are they praising this? On other metrics, how do Presidents fare?
On the power-display bias
In my forthcoming book on Canadian economic history (published by Palgrave McMillan as part of their Studies in Economic History), I reviewed some pantheons and counter-pantheons of Presidents (which I will present below) and I felt I had to offer my argument regarding these pantheons:
The established pantheon and the counter-pantheon differ mostly due to people’s bias towards positively assessing outward signs of power. When he wrote to one of his correspondents that “absolute power corrupts absolutely,” British historian Lord Acton was not only speaking of politicians, but also of those would retroactively judge them: Acton was referring to a general human tendency – accentuated amongst historians – to be more forgiving of those who hold power, because the powerful are judged by their actions. Indeed, it is easier to size up a politician who undertook significant reforms – regardless of the results obtained thereby – than to evaluate the achievements of one who passively held the line. If the reformer fails, it can be said that at least he tried. Moreover, a given president’s place in the pantheon is closely linked to how many Americans he killed during the military conflicts that defined his reign. The more Americans killed per capita overall, the higher a given president’s ranking in the list of “greats.”
Economic history teaches us, however, that the most proactive presidents may not be the most beneficial to their country, on the contrary. For several years now, Franklin Delano Roosevelt (1933-1945) has been the subject of increased criticism in the economic literature for his interventionist economic policies between 1932 and 1939. Economists Albrecht Ritschl, Monique Ebell, Lee Ohanian and Harold Cole have determined that FDR’s interventionist policies in fact served to prolong the Great Depression.
In other words, the bias we have when evaluating men with power is that we evaluate based on the exercise of displaying the use of power. Those who refrain from using it are, properly, not recorded as historical events are conflicts/tensions/oppositions. This I think is generally a bias that is easily to fall prey to. I am not immune to that even if I happen to have libertarian leanings. I often see in one politician or another in history a man/woman that I wish would be here today to “save the day” (one of my childish belief). But each time I dig around that person, I am less enthused. For example, I used to be an admirer of William Pitt the Younger – a fierce one. After all, he had assisted Wilberforce in ending the slave trade, he had instituted a sinking fund to repay the British public debt (he had willfully tied his hands) and he he had been moderately sympathetic to the American revolution. I saw his role in the wars against France as a contest of circumstances. But, that was the point, I was ready to discount the war. In addition, as I read the work of Jane Humphries on child labor in industrializing Britain (here and here), I discovered more unsettling things. During the French Wars, the build-up of the British state did lead to some crowding-out on factors markets, notably the labor market. Upon complaints of manufacturers, Pitt proposed to “Yoke Up the Children”. More precisely, he proposed the use of orphan in the public care to work as pauper apprentices to firms at pences on the shilling (bad pun of pennies on the dollar). He “lent” orphans to private firms and its hard to assume that they consented to work (as Humphries’s use of oral histories makes clear). If a person with libertarian leanings like me was willing to excuse such a man before, it is quite telling of how limited knowledge shores up the reputations of powerful men. This is because their use of power overshadows all the rest. Their use of power is like the joke about economists looking where the lamppost is: we evaluate them on what their use of power has illuminated.
So, are there any other metrics that are less subjected to our inherent power-display bias? Obviously, anything that has a subjective element will be biased. However, evaluating the evolution of living standards under their rule is one way to go at it. Mark Zachary Taylor, in an article published in PS: Political Science and Politics, proposed an economic ranking of US Presidents since 1789. Whichever way you cut it, there is a weak rank correlation between the rankings of presidential greatness and the ranking of economic grades.
There is another type of ranking, which is more subtle. It measures how much Presidents refrained from expanding federal power. This exercise was made by Richard Vedder and Lowell Gallaway (two great economic historians) who measured presidents based on their changes to the size of government and inflation. This measure alone (see table below) is not sufficient to be convincing, but taken as part of a constellation of rankings, it provides a key piece of evidence. This is really a counter-pantheon to the rankings of presidential greatness. In fact, one could see it as the cost for societies of presidential greatness.
When comes the time to evaluate great rulers, being aware of our biases is crucial (as Lord Acton, I think they should rarely be excused based on flimsy excused like circumstances – the virtue of being an historian/economic historian is that we have enough hindsight to say how terrible certain choices were). And that awareness should lead us to develop a “dashboard” of rankings to properly weigh the impact of such rulers.
Hello loyal readers. I apologize for being so absent from this blog lately (not that most of you are here for me, but I digress). I’ve been hitchhiking around Colorado and Utah and trying to “suck out all the marrow of life,” as it were. I’ve been busy preparing for graduate school applications, and enjoying the company of my family.
First off, updates. LA Repucci, a guest blogger here at the consortium, has launched a project of his own, and I can’t wait to see what he comes up with. Please be sure to support his endeavor.
Second, I’ve been in talks with a number of scholars around the world and am pleased to announce that I suckered a number of them into participating in this experiment with spontaneous order. You may have noticed that the ‘Recommendations‘ section, for example, has been revamped and that the Fundación Instituto David Hume, based in Buenos Aires, Argentina, is now placed prominently alongside some of the other organizations with which Notewriters are associated with.
This is because Federico Sosa Valle and Eliana Santanatoglia – the founders and most prominent researchers for the institute – will soon be blogging with us, and mostly in Spanish to boot! Federico, if you’ll remember, has actually started already.
I’ve also managed to convince Lucas Freire, who works with Dr van de Haar on libertarianism and International Relations, to begin blogging with us in both English and Portuguese. Be sure to give him a warm, NOL-style welcome when he begins.
You’ve already met Dr Barry Stocker, but in any case here is his official profile page. Be sure to keep those ‘comments’ coming!
I’ve managed to pester two historians into contributing the blog, Andrei Znamenski and Jonathan Bean. Dr Znamenski already made his debut post and you can find out more about him on his profile page. Dr Bean is currently enjoying his summer but you can check out his most recent book, Race and Liberty in America, on the sidebar.
Last but certainly not least is Michelangelo Landgrave, an economics graduate student at Cal-State Long Beach. You can check out his profile page here, and here is some of his work at .Mic and more here at Open Borders. I’m very excited to have him on board.
Our work here at Notes On Liberty has recently been featured at RealClearMarkets and at Reason magazine’s Hit & Run blog. While this is nothing to the authors who were actually featured, Dr Foldvary and Dr Hummel respectively, it is always nice to know that your project – started from scratch – has gained such a prominent readership. We couldn’t have done it without your support and especially your comments. Have a great weekend!