nhaliday + mokyr-allen-mccloskey   31

What explains the formation and decay of clusters of creativity? - Marginal REVOLUTION
Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? In this paper we match data on thousands of notable individuals born in Europe between the XIth and the XIXth century with historical data on city institutions and population. After documenting several stylized facts, we show that the formation of creative clusters is not preceded by increases in city size. Instead, the emergence of city institutions protecting economic and political freedoms facilitates the attraction and production of creative talent.

IOW, the opposite of what Dick Florida said.
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january 2018 by nhaliday
King Kong and Cold Fusion: Counterfactual analysis and the History of Technology
How “contingent” is technological history? Relying on models from evolutionary epistemology, I argue for an analogy with Darwinian Biology and thus a much greater degree of contingency than is normally supposed. There are three levels of contingency in technological development. The crucial driving force behind technology is what I call S-knowledge, that is, an understanding of the exploitable regularities of nature (which includes “science” as a subset). The development of techniques depend on the existence of epistemic bases in S. The “inevitability” of technology thus depends crucially on whether we condition it on the existence of the appropriate S-knowledge. Secondly, even if this knowledge emerges, there is nothing automatic about it being transformed into a technique that is, a set of instructions that transforms knowledge into production. Third, even if the techniques are proposed, there is selection which reflects the preferences and biases of an economy and injects another level of indeterminacy and contingency into the technological history of nations.

https://twitter.com/whyvert/status/932451959079972865
https://archive.is/MBmyV
Moslem conquest of Europe, or a Mongol conquest, or a post-1492 epidemic, or a victory of the counter-reformation would have prevented the Industrial Revolution (Joel Mokyr)
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november 2017 by nhaliday
“Editor’s Introduction to The New Economic History and the Industrial Revolution,” J. Mokyr (1998) | A Fine Theorem
I taught a fun three hours on the Industrial Revolution in my innovation PhD course this week. The absolutely incredible change in the condition of mankind that began in a tiny corner of Europe in an otherwise unremarkable 70-or-so years is totally fascinating. Indeed, the Industrial Revolution and its aftermath are so important to human history that I find it strange that we give people PhDs in social science without requiring at least some study of what happened.

My post today draws heavily on Joel Mokyr’s lovely, if lengthy, summary of what we know about the period. You really should read the whole thing, but if you know nothing about the IR, there are really five facts of great importance which you should be aware of.

1) The world was absurdly poor from the dawn of mankind until the late 1800s, everywhere.
2) The average person did not become richer, nor was overall economic growth particularly spectacular, during the Industrial Revolution; indeed, wages may have fallen between 1760 and 1830.
3) Major macro inventions, and growth, of the type seen in England in the late 1700s and early 1800s happened many times in human history.
4) It is hard for us today to understand how revolutionary ideas like “experimentation” or “probability” were.
5) The best explanations for “why England? why in the late 1700s? why did growth continue?” do not involve colonialism, slavery, or famous inventions.
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october 2017 by nhaliday
How important was colonial trade for the rise of Europe? | Economic Growth in History
The latter view became the orthodoxy among economists and economic historians after Patrick O’Brien’s 1982 paper, which in one of many of Patrick’s celebrated phrases, claims that “”the periphery vs peripheral” for Europe. He concludes the paper by writing:

“[G]rowth, stagnation, and decay everywhere in Western Europe can be explained mainly by reference to endogenous forces. … for the economic growth of the core, the periphery was peripheral.”

This is the view that remarkable scholars such as N. Crafts, Deirdre McCloskey, or Joel Mokyr repeat today (though Crafts would argue cotton imports would have mattered in a late stage, and my reading of Mokyr is that he has softened his earlier view from the 1980s a little, specifically in the book The Enlightened Economy.) Even recently, Brad deLong has classifyied O’Brien’s 1982 position as “air tight”.

Among economists and economic historians more on the economics side, I would say that O’Brien’s paper was only one of two strong hits against the “Worlds-System” and related schools of thoughts of the 1970s, the other hit being Solow’s earlier conclusion that TFP growth (usually interpreted as technology, though there’s more to it than that) has accounted for economic growth a great deal more than capital accumulation, which is what Hobsbawm and Wallerstein, in their neo-Marxist framework, emphasize.

https://twitter.com/tcjfs/status/890034395456974848
A friend tonight, on the third world and the first world, and our relationships to the past: "They don't forget, and we don't remember."
https://twitter.com/edwest/status/872337163458932736
imo the European Intifada is being fueled by anti-Europeanism & widely taught ideas like this one discussed - Europe stole its riches

https://www.thinkpragati.com/opinion/1863/dont-blame-empire/
The British Empire was cruel, rapacious and racist. But contrary to what Shashi Tharoor writes in An Era Of Darkness, the fault for India’s miseries lies upon itself.

Indeed, the anti-Tharoor argument is arguably closer to the truth, because the British tended to use the landlord system in places where landlords were already in place, and at times when the British were relatively weak and couldn’t afford to upset tradition. Only after they became confident in their power did the British start to bypass the landlord class and tax the cultivators directly. King’s College London historian Jon Wilson (2016) writes in India Conquered, “Wherever it was implemented, raiyatwar began as a form of military rule.” Thus the system that Tharoor implicitly promotes, and which is associated with higher agricultural productivity today, arose from the very same colonialism that he blames for so many of India’s current woes. History does not always tell the parables that we wish to hear.

...

India’s share of the world economy was large in the eighteenth century for one simple reason: when the entire world was poor, India had a large share of the world’s population. India’s share fell because with the coming of the Industrial Revolution, Europe and North America saw increases of income per capita to levels never before seen in all of human history. This unprecedented growth cannot be explained by Britain’s depredations against India. Britain was not importing steam engines from India.

The big story of the Great Divergence is not that India got poorer, but that other countries got much richer. Even at the peak of Mughal wealth in 1600, the best estimates of economic historians suggest that GDP per capita was 61% higher in Great Britain. By 1750–before the battle of Plassey and the British takeover–GDP per capita in Great Britain was more than twice what it was in India (Broadberry, Custodis, and Gupta 2015). The Great Divergence has long roots.

Tharoor seems blinded by the glittering jewels of the Maharajas and the Mughals. He writes with evident satisfaction that when in 1615 the first British ambassador presented himself to the court of Emperor Jehangir in Agra, “the Englishman was a supplicant at the feet of the world’s mightiest and most opulent monarch.” True; but the Emperor’s opulence was produced on the backs of millions of poor subjects. Writing at the same time and place, the Dutch merchant Francisco Pelsaert (1626) contrasted the “great superfluity and absolute power” of the rich with “the utter subjection and poverty of the common people–poverty so great and miserable that the life of the people can be depicted…only as the home of stark want and the dwelling-place of bitter woe.” Indian rulers were rich because the empire was large and inequality was extreme.

In pre-colonial India the rulers, both Mughal and Maratha, extracted _anywhere from one-third to one half of all gross agricultural output_ and most of what was extracted was spent on opulence and the armed forces, not on improving agricultural productivity (Raychaudhuri 1982).

...

The British were awful rulers but the history of India is a long story of awful rulers (just as it is for most countries). Indeed, by Maddison’s (2007) calculations _the British extracted less from the Indian economy than did the Mughal Dynasty_. The Mughals built their palaces in India while the British built most of their palaces in Britain, but that was little comfort to the Indian peasant who paid for both. The Kohinoor diamond that graces the cover of Inglorious Empire is a telling symbol. Yes, it was stolen by the British (who stole it from the Sikhs who stole it from the Afghanis who stole it from the Mughals who stole it from one of the kings of South India). But how many Indians would have been better off if this bauble had stayed in India? Perhaps one reason why more Indians didn’t take up arms against the British was that for most of them, British rule was a case of meet the new boss, same as the old boss.

more for effect on colonies: https://pinboard.in/u:nhaliday/b:4b0128372fe9

INDIA AND THE GREAT DIVERGENCE: AN ANGLO-INDIAN COMPARISON OF GDP PER CAPITA, 1600-1871: http://eh.net/eha/wp-content/uploads/2013/11/Guptaetal.pdf
This paper provides estimates of Indian GDP constructed from the output side for the pre-1871 period, and combines them with population estimates to track changes in living standards. Indian per capita GDP declined steadily during the seventeenth and eighteenth centuries before stabilising during the nineteenth century. As British living standards increased from the mid-seventeenth century, India fell increasingly behind. Whereas in 1600, Indian per capita GDP was over 60 per cent of the British level, by 1871 it had fallen to less than 15 per cent. As well as placing the origins of the Great Divergence firmly in the early modern period, the estimates suggest a relatively prosperous India at the height of the Mughal Empire, with living standards well above bare bones subsistence.

https://twitter.com/pseudoerasmus/status/832288984009207810
but some of the Asian wage data (especialy India) have laughably small samples (see Broadberry & Gupta)

How profitable was colonialism for various European powers?: https://www.reddit.com/r/AskHistorians/comments/p1q1q/how_profitable_was_colonialism_for_various/

How did Britain benefit from colonising India? What did colonial powers gain except for a sense of power?: https://www.quora.com/How-did-Britain-benefit-from-colonising-India-What-did-colonial-powers-gain-except-for-a-sense-of-power
The EIC period was mostly profitable, though it had recurring problems with its finances. The initial voyages from Surat in 1600s were hugely successful and brought profits as high as 200%. However, the competition from the Dutch East India Company started to drive down prices, at least for spices. Investing in EIC wasn’t always a sure shot way to gains - British investors who contributed to the second East India joint stock of 1.6 million pounds between 1617 and 1632 ended up losing money.

...

An alternate view is that the revenues of EIC were very small compared to the GDP of Britain, and hardly made an impact to the overall economy. For instance, the EIC Revenue in 1800 was 7.8m pounds while the British GDP in the same period was 343m pounds, and hence EIC revenue was only 2% of the overall GDP. (I got these figures from an individual blog and haven’t verified them).

...

The British Crown period - The territory of British India Provinces had expanded greatly and therefore the tax revenues had grown in proportion. The efficient taxation system paid its own administrative expenses as well as the cost of the large British Indian Army. British salaries were lucrative - the Viceroy received £25,000 a year, and Governors £10,000 for instance besides the lavish amenities in the form of subsidized housing, utilities, rest houses, etc.

...

Indian eminent intellectual, Dadabhai Naoroji wrote how the British systematically ensured the draining of Indian economy of its wealth and his theory is famously known as ‘Drain of Wealth’ theory. In his book 'Poverty' he estimated a 200–300 million pounds loss of revenue to Britain that is not returned.

At the same time, a fair bit of money did go back into India itself to support further colonial infrastructure. Note the explosion of infrastructure (Railway lines, 100+ Cantonment towns, 60+ Hill stations, Courthouses, Universities, Colleges, Irrigation Canals, Imperial capital of New Delhi) from 1857 onward till 1930s. Of course, these infrastructure projects were not due to any altruistic motive of the British. They were intended to make their India empire more secure, comfortable, efficient, and to display their grandeur. Huge sums of money were spent in the 3 Delhi Durbars conducted in this period.

So how profitable was the British Crown period? Probably not much. Instead bureaucracy, prestige, grandeur, comfort reigned supreme for the 70,000 odd British people in India.

...

There was a realization in Britain that colonies were not particularly economically beneficial to the home economy. … [more]
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june 2017 by nhaliday
Enclosure - Wikipedia
Enclosure (sometimes inclosure) was the legal process in England during the 18th century of enclosing a number of small landholdings to create one larger farm.[1] Once enclosed, use of the land became restricted to the owner, and it ceased to be common land for communal use. In England and Wales the term is also used for the process that ended the ancient system of arable farming in open fields. Under enclosure, such land is fenced (enclosed) and deeded or entitled to one or more owners. The process of enclosure began to be a widespread feature of the English agricultural landscape during the 16th century. By the 19th century, unenclosed commons had become largely restricted to rough pasture in mountainous areas and to relatively small parts of the lowlands.

Enclosure could be accomplished by buying the ground rights and all common rights to accomplish exclusive rights of use, which increased the value of the land. The other method was by passing laws causing or forcing enclosure, such as Parliamentary enclosure. The latter process of enclosure was sometimes accompanied by force, resistance, and bloodshed, and remains among the most controversial areas of agricultural and economic history in England. Marxist and neo-Marxist historians argue that rich landowners used their control of state processes to appropriate public land for their private benefit.[2] The process of enclosure created a landless working class that provided the labour required in the new industries developing in the north of England. For example: "In agriculture the years between 1760 and 1820 are the years of wholesale enclosure in which, in village after village, common rights are lost".[3] Thompson argues that "Enclosure (when all the sophistications are allowed for) was a plain enough case of class robbery."[4][5]

Community and Market in England:
Open Fields and Enclosures Revisited: https://www.nuffield.ox.ac.uk/users/allen/community.pdf
Commons Sense: Common Property Rights, Efficiency, and Institutional Change: http://faculty.econ.ucdavis.edu/faculty/gclark/210a/readings/commons1.pdf
Allen’s Enclosure and the Yeoman: the View from Tory Fundamentalism: http://www.deirdremccloskey.com/docs/pdf/Article_52.pdf
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june 2017 by nhaliday
'Capital in the Twenty-First Century' by Thomas Piketty, reviewed | New Republic
by Robert Solow (positive)

The data then exhibit a clear pattern. In France and Great Britain, national capital stood fairly steadily at about seven times national income from 1700 to 1910, then fell sharply from 1910 to 1950, presumably as a result of wars and depression, reaching a low of 2.5 in Britain and a bit less than 3 in France. The capital-income ratio then began to climb in both countries, and reached slightly more than 5 in Britain and slightly less than 6 in France by 2010. The trajectory in the United States was slightly different: it started at just above 3 in 1770, climbed to 5 in 1910, fell slightly in 1920, recovered to a high between 5 and 5.5 in 1930, fell to below 4 in 1950, and was back to 4.5 in 2010.

The wealth-income ratio in the United States has always been lower than in Europe. The main reason in the early years was that land values bulked less in the wide open spaces of North America. There was of course much more land, but it was very cheap. Into the twentieth century and onward, however, the lower capital-income ratio in the United States probably reflects the higher level of productivity: a given amount of capital could support a larger production of output than in Europe. It is no surprise that the two world wars caused much less destruction and dissipation of capital in the United States than in Britain and France. The important observation for Piketty’s argument is that, in all three countries, and elsewhere as well, the wealth-income ratio has been increasing since 1950, and is almost back to nineteenth-century levels. He projects this increase to continue into the current century, with weighty consequences that will be discussed as we go on.

...

Now if you multiply the rate of return on capital by the capital-income ratio, you get the share of capital in the national income. For example, if the rate of return is 5 percent a year and the stock of capital is six years worth of national income, income from capital will be 30 percent of national income, and so income from work will be the remaining 70 percent. At last, after all this preparation, we are beginning to talk about inequality, and in two distinct senses. First, we have arrived at the functional distribution of income—the split between income from work and income from wealth. Second, it is always the case that wealth is more highly concentrated among the rich than income from labor (although recent American history looks rather odd in this respect); and this being so, the larger the share of income from wealth, the more unequal the distribution of income among persons is likely to be. It is this inequality across persons that matters most for good or ill in a society.

...

The data are complicated and not easily comparable across time and space, but here is the flavor of Piketty’s summary picture. Capital is indeed very unequally distributed. Currently in the United States, the top 10 percent own about 70 percent of all the capital, half of that belonging to the top 1 percent; the next 40 percent—who compose the “middle class”—own about a quarter of the total (much of that in the form of housing), and the remaining half of the population owns next to nothing, about 5 percent of total wealth. Even that amount of middle-class property ownership is a new phenomenon in history. The typical European country is a little more egalitarian: the top 1 percent own 25 percent of the total capital, and the middle class 35 percent. (A century ago the European middle class owned essentially no wealth at all.) If the ownership of wealth in fact becomes even more concentrated during the rest of the twenty-first century, the outlook is pretty bleak unless you have a taste for oligarchy.

Income from wealth is probably even more concentrated than wealth itself because, as Piketty notes, large blocks of wealth tend to earn a higher return than small ones. Some of this advantage comes from economies of scale, but more may come from the fact that very big investors have access to a wider range of investment opportunities than smaller investors. Income from work is naturally less concentrated than income from wealth. In Piketty’s stylized picture of the United States today, the top 1 percent earns about 12 percent of all labor income, the next 9 percent earn 23 percent, the middle class gets about 40 percent, and the bottom half about a quarter of income from work. Europe is not very different: the top 10 percent collect somewhat less and the other two groups a little more.

You get the picture: modern capitalism is an unequal society, and the rich-get-richer dynamic strongly suggest that it will get more so. But there is one more loose end to tie up, already hinted at, and it has to do with the advent of very high wage incomes. First, here are some facts about the composition of top incomes. About 60 percent of the income of the top 1 percent in the United States today is labor income. Only when you get to the top tenth of 1 percent does income from capital start to predominate. The income of the top hundredth of 1 percent is 70 percent from capital. The story for France is not very different, though the proportion of labor income is a bit higher at every level. Evidently there are some very high wage incomes, as if you didn’t know.

This is a fairly recent development. In the 1960s, the top 1 percent of wage earners collected a little more than 5 percent of all wage incomes. This fraction has risen pretty steadily until nowadays, when the top 1 percent of wage earners receive 10–12 percent of all wages. This time the story is rather different in France. There the share of total wages going to the top percentile was steady at 6 percent until very recently, when it climbed to 7 percent. The recent surge of extreme inequality at the top of the wage distribution may be primarily an American development. Piketty, who with Emmanuel Saez has made a careful study of high-income tax returns in the United States, attributes this to the rise of what he calls “supermanagers.” The very highest income class consists to a substantial extent of top executives of large corporations, with very rich compensation packages. (A disproportionate number of these, but by no means all of them, come from the financial services industry.) With or without stock options, these large pay packages get converted to wealth and future income from wealth. But the fact remains that much of the increased income (and wealth) inequality in the United States is driven by the rise of these supermanagers.

and Deirdre McCloskey (p critical): https://ejpe.org/journal/article/view/170
nice discussion of empirical economics, economic history, market failures and statism, etc., with several bon mots

Piketty’s great splash will undoubtedly bring many young economically interested scholars to devote their lives to the study of the past. That is good, because economic history is one of the few scientifically quantitative branches of economics. In economic history, as in experimental economics and a few other fields, the economists confront the evidence (as they do not for example in most macroeconomics or industrial organization or international trade theory nowadays).

...

Piketty gives a fine example of how to do it. He does not get entangled as so many economists do in the sole empirical tool they are taught, namely, regression analysis on someone else’s “data” (one of the problems is the word data, meaning “things given”: scientists should deal in capta, “things seized”). Therefore he does not commit one of the two sins of modern economics, the use of meaningless “tests” of statistical significance (he occasionally refers to “statistically insignificant” relations between, say, tax rates and growth rates, but I am hoping he does not suppose that a large coefficient is “insignificant” because R. A. Fisher in 1925 said it was). Piketty constructs or uses statistics of aggregate capital and of inequality and then plots them out for inspection, which is what physicists, for example, also do in dealing with their experiments and observations. Nor does he commit the other sin, which is to waste scientific time on existence theorems. Physicists, again, don’t. If we economists are going to persist in physics envy let us at least learn what physicists actually do. Piketty stays close to the facts, and does not, for example, wander into the pointless worlds of non-cooperative game theory, long demolished by experimental economics. He also does not have recourse to non-computable general equilibrium, which never was of use for quantitative economic science, being a branch of philosophy, and a futile one at that. On both points, bravissimo.

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Since those founding geniuses of classical economics, a market-tested betterment (a locution to be preferred to “capitalism”, with its erroneous implication that capital accumulation, not innovation, is what made us better off) has enormously enriched large parts of a humanity now seven times larger in population than in 1800, and bids fair in the next fifty years or so to enrich everyone on the planet. [Not SSA or MENA...]

...

Then economists, many on the left but some on the right, in quick succession from 1880 to the present—at the same time that market-tested betterment was driving real wages up and up and up—commenced worrying about, to name a few of the pessimisms concerning “capitalism” they discerned: greed, alienation, racial impurity, workers’ lack of bargaining strength, workers’ bad taste in consumption, immigration of lesser breeds, monopoly, unemployment, business cycles, increasing returns, externalities, under-consumption, monopolistic competition, separation of ownership from control, lack of planning, post-War stagnation, investment spillovers, unbalanced growth, dual labor markets, capital insufficiency (William Easterly calls it “capital fundamentalism”), peasant irrationality, capital-market imperfections, public … [more]
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april 2017 by nhaliday
The End of the Past | Notes On Liberty
The phenomenon coined by Fernand Braudel, the “Betrayal of the Bourgeois,” was particularly powerful in ancient Rome. Great merchants flourished, but “in order to be truly valued, they eventually had to become rentiers, as Cicero affirmed without hesitation: ‘Nay, it even seems to deserve the highest respect, if those who are engaged in it [trade], satiated, or rather , I should say, satisfied with the fortunes they have made, make their way from port to a country estate, as they have often made it from the sea into port. But of all the occupations by which gain is secured, none is better than agriculture, none more delightful, none more becoming to a freeman’” (Schiavone, 2000, 103).

Such a cultural argument fits perfectly with Deirdre McCloskey’s claim in her recent trilogy that it was the adoption of bourgeois cultural norms and specifically bourgeois rhetoric that distinguished and caused the rise of north-western Europe after 1650 (here, here, and here).

Could Rome Have Had an Industrial Revolution?: https://medium.com/@MarkKoyama/could-rome-have-had-an-industrial-revolution-4126717370a2
This question is prompted by Kingdom of the Wicked, a new book by Helen Dale. Dale forces us to consider Jesus as a religious extremist in a Roman world not unlike our own. The novel throws new light on our own attitudes to terrorism, globalization, torture, and the clash of cultures. It is highly recommended.
Indirectly, however, Dale also addresses the possibility of sustained economic growth in the ancient world. The novel is set in a 1st century Roman empire during the governorship of Pontus Pilate and the reign of Tiberius. But in this alternative history, the Mediterranean world has experienced a series of technical innovations following the survival of Archimedes at the siege of Syracuse, which have led to rapid economic growth. As Dale explains in the book’s excellent afterword (published separately here), if Rome had experienced an industrial revolution, it would likely have differed from the actual one; and she briefly plots a path to Roman industrialization. All of this is highly stimulating and has prompted me to speculate further about whether Rome could have experienced modern economic growth and if Dale’s proposed path towards a Roman Industrial Revolution is plausible.

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This assessment is bold but consistent with the recent findings of archaeologists who continue to uncover evidence of dense trading networks and widespread ownership of industrially produced consumption goods across the empire.

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From this wealth of evidence, we know that the classical world experienced what Jack Goldstone has called a “growth efflorescence”.
But at even the Roman empire at its peak in the reign of Marcus Aurelius does not appear to have been on the verge of modern economic growth. Rome lacked some of the crucial characteristics of Britain on the eve of the Industrial Revolution. There was no culture of invention and discovery, no large population of skilled tinkerers or machine builders, and no evidence of labor scarcity that might have driven the invention of labor-saving inventions.

Could the Ancients Have Had an Industrial Revolution?: http://adlows.com/2017/11/12/ancient-industrial-revolution/
I would suggest that what specifically was missing in the case of Rome was a ratchet. By that, I mean some way to lock in the gains of new inventions. Where both the Dutch and British had many social and commercial mechanisms to spread knowledge of new innovations, Roman technology stayed in use only so long as the state continued to fund it. There was no widely-diffused base of knowledge that was constantly passed on and modified, resilient enough to survive political upheavals.

To put this in perspective, consider how stunningly little of Rome’s engineering knowledge endured the collapse of the empire. Imperial authorities erected aqueducts and amphitheaters, and laced the land with a complex network of roads and bridges. Yet none of these feats of engineering ratcheted; all such knowledge was lost with the fall of Rome.

...

So for all the astonishing engineering feats of the Romans, they were unlikely to incubate an industrial revolution. Is there anyone in antiquity who could have? Perhaps: those notoriously metaphysical Greeks.
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april 2017 by nhaliday
THE DEMISE OF U.S. ECONOMIC GROWTH: RESTATEMENT, REBUTTAL, AND REFLECTIONS
The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. This paper predicts that growth in the 25 to 40 years after 2007 will be much slower, particularly for the great majority of the population. Future growth will be 1.3 percent per annum for labor productivity in the total economy, 0.9 percent for output per capita, 0.4 percent for real income per capita of the bottom 99 percent of the income distribution, and 0.2 percent for the real disposable income of that group.

The primary cause of this growth slowdown is a set of four headwinds, all of them widely recognized and uncontroversial. Demographic shifts will reduce hours worked per capita, due not just to the retirement of the baby boom generation but also as a result of an exit from the labor force both of youth and prime-age adults. Educational attainment, a central driver of growth over the past century, stagnates at a plateau as the U.S. sinks lower in the world league tables of high school and college completion rates. Inequality continues to increase, resulting in real income growth for the bottom 99 percent of the income distribution that is fully half a point per year below the average growth of all incomes. A projected long-term increase in the ratio of debt to GDP at all levels of government will inevitably lead to more rapid growth in tax revenues and/or slower growth in transfer payments at some point within the next several decades.

There is no need to forecast any slowdown in the pace of future innovation for this gloomy forecast to come true, because that slowdown already occurred four decades ago. In the eight decades before 1972 labor productivity grew at an average rate 0.8 percent per year faster than in the four decades since 1972. While no forecast of a future slowdown of innovation is needed, skepticism is offered here, particularly about the techno-optimists who currently believe that we are at a point of inflection leading to faster technological change. The paper offers several historical examples showing that the future of technology can be forecast 50 or even 100 years in advance and assesses widely discussed innovations anticipated to occur over the next few decades, including medical research, small robots, 3-D printing, big data, driverless vehicles, and oil-gas fracking.

keep in mind, "the world is just atoms" and I think I know some things that Robert J Gordon doesn't
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march 2017 by nhaliday
More frivolously assembled lists of books | pseudoerasmus
some of the forthcoming ones look really good, in particular, stuff still not out:
Allen, The Industrial Revolution: A Very Short Introduction
Ang, How China Escaped the Poverty Trap
Colarelli & Arvey, ed., The Biological Foundations of Organizational Behavior
O’Rourke & Williamson, ed. The Spread of Modern Industry to the Periphery since 1871
Fuller, Paper Tigers, Hidden Dragons: Firms and the Political Economy of China’s Technological Development
econotariat  pseudoE  gnxp  books  list  recommendations  top-n  confluence  economics  culture  anthropology  biodet  cliometrics  history  growth-econ  🎩  🌞  garett-jones  hive-mind  turchin  west-hunter  scitariat  broad-econ  wealth-of-nations  todo  mokyr-allen-mccloskey  2017 
february 2017 by nhaliday
The most stimulating economic history books since 2000 | pseudoerasmus
Inspired by Vincent Geloso, here is a list of the 20-25 books in economic history published since 2000 which I have found most stimulating or provocative. Not necessarily comprehensive, or the best, or the most ‘correct’, but things which influenced, stimulated, or provoked my own personal thinking.

some highlights I wasn't already aware of:
- Lee & Feng, One Quarter of Humanity: Malthusian Mythology and Chinese Realities, 1700-2000
- Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850
- Mitterauer, Why Europe? The Medieval Origins of its Special Path
- Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy
- Temin, The Roman Market Economy

https://wintertomato.com/2017/06/08/book-club-sampling-pseudoerasmus-top-25-economic-history-books-since-2000/
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january 2017 by nhaliday
Rolling Stones – spottedtoad
I’m not 100% convinced that dads make a huge difference to their kid’s individual development; there are of course reasonable arguments on either side. But I’ve become convinced that the end of married fatherhood is a hugely politically and socially destabilizing force, and that the particular form of the married family was deeply important to both the rise of capitalism and the gradual expansion of liberty where and when it occurred. There are multiple reasons to doubt Deirdre McCloskey’s sanguine conclusion that The Great Enrichment of capitalist wealth and political equality will expand to every corner of the globe, but this seems like one of the important ones.

THERE ARE TWO AMERICAS…: https://spottedtoad.wordpress.com/2017/10/18/there-are-two-americas/
…with almost wholly separate life histories:

Age Women Have Children by Marital Status: First Births 2016

https://twitter.com/WilcoxNMP/status/931365452999249921
https://archive.is/t3juH
Now for some good news (of a sort). Changes in family structure for kids have largely ground to a halt.
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december 2016 by nhaliday
Random thoughts on critiques of Allen’s theory of the Industrial Revolution | pseudoerasmus
more:
http://spinning-wheel.org/2016/12/spinning-little-stories-about-the-high-wage-economy/
http://bradleyahansen.blogspot.com/2016/12/my-response-to-seth-rockmans-tweetstorm.html

Allen has been advocating for at least 20 years now that England in the 18th century possessed a “high wage economy”. English labour costs relative to continental Europe and Asia were unusually high. This is an important part of his “induced innovation theory” for the invention and adoption of machines in the leading industries of the Industrial Revolution. In short, England’s high wages relative to its cheap energy and low capital costs biased technical innovation in favour of labour-saving equipment, and that is why it was cost-effective to industrialise in England first, before the rest of Europe (let alone Asia).

The theory is appealing, in part, because the technological innovations of the early Industrial Revolution were not exactly rocket science (a phrase used by Allen himself), so one wonders why they weren’t invented earlier and elsewhere. (Mokyr paraphrasing Cardwell said something like nothing invented in the early IR period would have puzzled Archimedes.)

But I’ve always had reasons to doubt it. As Mokyr has tirelessly argued, inventions were too widespread across British society to be a matter of just the right incentives and expanding markets — and this is a point now being massively amplified by Anton Howes.
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december 2016 by nhaliday
Genetically Capitalist? The Malthusian Era, Institutions and the Formation of Modern Preferences.
The highly capitalistic nature of English society by 1800 – individualism, low time preference rates, long work hours, high levels of human capital – may thus stem from the nature of the Darwinian struggle in a very stable agrarian society in the long run up to the Industrial Revolution. The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.

...

key figure:
Figure 8 Surviving Children by Testator’s Assets in £

...

on foragers and farmers:
When we consider forager societies the evidence on rates of return becomes much more indirect, because there is no explicit capital market, or lending may be subject to substantial default risks given the lack of fixed assets with which to secure loans. Anthropologists, however, have devised other ways to measure people’s rate of time preference rates. They can, for example, look at the relative rewards of activities whose benefits occur at different times in the future: digging up wild tubers or fishing with an immediate reward, as opposed to trapping with a reward delayed by days, as opposed to clearing and planting with a reward months in the future, as opposed to animal rearing with a reward years in the future.

A recent study of Mikea forager-farmers in Madagascar found, for example, that the typical Mikea household planted less than half as much land as was needed to feed themselves. Yet the returns from shifting cultivation of maize were enormous. A typical yielded was a minimum of 74,000 kcal. per hour of work. Foraging for tubers, in comparison, yielded an average return of 1,800 kcal. per hour. Despite this the Mikea rely on foraging for a large share of their food, consequently spending most time foraging. This implies extraordinarily high time preference rates.39 James Woodburn claimed that Hadza of Tanzania showed a similar disinterest in distant benefits, “In harvesting berries, entire branches are often cut from the trees to ease the present problems of picking without regard to future loss of yield.”40 Even the near future mattered little. The Pirahã of Brazil are even more indifferent to future benefits. A brief overview of their culture included the summary,
"Most important in understanding Pirahã material culture is their lack of concern with the non-immediate or the abstraction of present action for future benefit, e. g. ‘saving for a rainy day.’" (Everett, 2005, Appendix 5).

...

The real rate of return, r, can be thought of as composed of three elements: a rate of pure time preference, ρ, a default risk premium, d, and a premium that reflects the growth of overall expected incomes year to year, θgy. Thus
r ≈ ρ + d + θgy.

People as economic agents display a basic set of preferences – between consumption now and future consumption, between consumption of leisure or goods – that modern economics has taken as primitives. Time preference is simply the idea that, everything else being equal, people prefer to consume now rather than later. The rate of time preference measures how strong that preference is.

The existence of time preference in consumption cannot be derived from consideration of rational action. Indeed it has been considered by some economists to represent a systematic deviation of human psychology from rational action, where there should be no absolute time preference. Economists have thought of time preference rates as being hard-wired into peoples’ psyches, and as having stemmed from some very early evolutionary process.41

...

on china:
Figure 17 Male total fertility rate for the Qing Imperial
Lineage

In China and Japan also, while richer groups had more
reproductive success in the pre-industrial era, that advantage was
more muted than in England. Figure 17, for example, shows the
total fertility rate for the Qing imperial lineage in China in 1644-1840. This is the number of births per man living to age 45. The royal lineage, which had access to imperial subsidies and allowances that made them wealthy, was more successful reproductively than the average Chinese man. But in most decades the advantage was modest – not anything like as dramatic as in preindustrial England.

But these advantages cumulated in China over millennia perhaps explain why it is no real surprise that China, despite nearly a generation of extreme forms of Communism between 1949 and 1978, emerged unchanged as a society individualist and capitalist to its core. The effects of the thousands of years of operation of a society under the selective pressures of the Malthusian regime could not be uprooted by utopian dreamers.

Review by Allen: http://faculty.econ.ucdavis.edu/faculty/gclark/Farewell%20to%20Alms/Allen_JEL_Review.pdf
The empirical support for these claims is examined, and all are questionable.

Review by Bowles: http://sci-hub.tw/10.1126/science.1149498

The Domestication of Man: The Social Implications of Darwin: http://gredos.usal.es/jspui/bitstream/10366/72715/1/The_Domestication_of_Man_The_Social_Impl.pdf

hmm: https://growthecon.com/blog/Constraints/
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november 2016 by nhaliday
Sweet Talk – Putting the soft in soft science
The name of this blog is a tribute to Deirdre McCloskey, a scholar who walks the fine line between these perspectives. On the one hand she is an economist by training who does not believe that the laws of supply and demand are up for negotiation. On the other hand, she believes that persuasion is of the utmost importance in human affairs; she and a co-author attributed one-fourth of America’s GDP to professional persuasion. Moreover, she is currently laying out the case that persuasion and rhetoric were responsible for the Industrial Revolution.

This blog is not committed to McCloskey’s particular ideas, so much as her emphasis on both social science and the humanities, a line we hope to straddle and blur as best we can. Whatever a particular author thinks about the power of conversation to move history, we have all come here because we believe it to be sublime, a pastime worthy for its own sake. We talk, not just because we love the sound of our own voices or the way our words look on a screen, but because we love the art of telling and trading stories. We come to entertain notions as much as to defend them, and to learn from one another as equals as much to win people over to some perceived side of a debate.
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september 2016 by nhaliday

bundles : econpeeps

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