Saturday, July 13, 2019

Blog Post From Nebraska

We are visiting my family in Kearney, Nebraska. When we are here in the summer we go for walks in the nearby cemetery. There is a lot of shade there, and many of the tombstones are interesting. For instance,


I looked over and said that looks like land leveling equipment, and it was. At the bottom it says “He left the land better than he found it.” Nebraska, particularly the part west of the 100th meridian has historically been a relatively dry place (although the south side of Kearney was under water when we got here after a storm dumped about 9 inches of rain). There is, however, a lot of water under the ground, making it possible to produce water intensive crops if you can irrigate your fields.

One method of irrigation is to lay a pipe along the side of the field. Water comes out of holes in the pipe and runs along the rows.

This system obviously requires pretty level land. Land levelers used large construction equipment like the scraper pictured on the tombstone to turn land that could not be irrigated into land that could be irrigated. I remember when I was a kid it seemed like there was land leveling going on all the time. I don’t notice it as much now. That may be because I am not around as much, but it may also be due to development of and expanded us of center pivot systems. In the center pivot the pipe is elevated and rotates around the field. Its not quite as demanding in terms of the land. 

Center pivots are very common in this part of Nebraska. This is what the land looks like just south of Kearney. Circles inside of squares.

The squares are the result of the system of land surveying established by the Land Ordinance of 1785. Each square is a one square mile section (640 acres). The circles are due to the center pivot irrigation. As it rotates around the field it creates a circle.

Center pivot irrigation was developed in Nebraska after WWII. You can find out about ts development and impact in Richard Hornbeck and Pinar Keskin. "The historically evolving impact of the Ogallala Aquifer: Agricultural adaptation to groundwater and drought." American Economic Journal: Applied Economics 6, no. 1 (2014): 190-219.

This is another tombstone that some people might be surprised to find in Kearney, but there are several like it.

In the late 19th and early 20th centuries, a number of people immigrated to Kearney from The Levant. Here is some information on the Lebanese Community in Kearney Part 1 and 2 and here is some information about the Eastern Orthodox Church they established, St. George Orthodox Church

While we are on the subject of settlers in Nebraska, on the flight here (btw this is the first summer in 25 years that I have not driven through fly over country between Fredericksburg, VA and Kearney, Nebraska) I finally got a round to reading  Edwards, Richard, Jacob K. Friefeld, and Rebecca S. Wingo. Homesteading the Plains: Toward a New History. U of Nebraska Press, 2017. The book challenges pretty much all of the conventional wisdom (of academics) regarding homesteading, and provides new insights based on a study of homesteaders in two counties in Nebraska.

Finally, I need to make my usual pitch for two of my favorite museums

Pioneer Village in Minden

and the Stuhr Museum in Grand Island

Both are amazing and both are just a little (less than 20 minutes) off of interstate 80

Wednesday, June 26, 2019

“You think it’s dead but de past ain’t stopped breathin’ yet.”

“The past is never dead. It's not even past.” William Faulkner, 1951.

“You think it’s dead but de past ain’t stopped breathin’ yet.” Zora Neale Hurston, 1934.

The past is obviously central to discussions of reparations for slavery. At the hearing on a commission to study reparations Ta-Nehisi Coates cites Ed Baptist’s The Half Has Never Been Told, claiming that 60 percent of GDP was accounted for by slave produced cotton and that the value of slaves was greater than all other assets combined. Both statements are incorrect. Baptist (and the historians who have not called him out on the errors in his book) can be blamed for the first error but not for the second.

Coates is wrong about the percentage of GDP accounted for by slave labor because Baptist is wrong.
The following section in bold is from an earlier blog post of mine.
Baptist The Half has Never Been Told (page 321-2)

“But here’s a back- of- the –envelope accounting of cotton’s role in the US economy in the era of slavery expansion. In 1836, the total amount of economic activity―the value of all the goods and services produced―in the United States was about $1.5 billion. Of this, the value of the cotton crop itself, total pounds multiplied by average price per pound―$77 million―was about 5 percent of that entire gross domestic product. This percentage might seem small, but after subsistence agriculture, cotton sales were the largest single source of value in the American economy. Even this number, however, barely begins to measure the goods and services directly generated by cotton production. The freight of cotton to Liverpool by sea, insurance and interest paid on commercial credit―all would bring the total to more than $100 million (see Table 4.1).

                Next come the second- order effects that comprised the goods and services necessary to produce cotton. There was the purchase of slaves―perhaps $40 million in 1836 alone, a year that made many memories of long marches forced on stolen people. Then there was the purchase of land, the cost of credit for such purchases, the pork and the corn bought at the river landings, the axes that the slaves used to clear land and the cloth they wore, even the luxury goods and other spending by the slaveholding families. All of that probably added up to about $100 million more.

                Third order effects, the hardest to calculate, included the money spent by millworkers and Illinois hog farmers, the wages paid to steamboat workers, and the revenues yielded by investments made with the profits of the merchants, manufacturers, and slave traders who derived some or all of their income either directly or indirectly from the southwestern fields. These third order effects would also include the dollars spent and spent again in communities where cotton related trades made a significant impact another category of these effects is the value of foreign goods imported on credit  sustained the opposite flow of cotton. All these goods and services might have added up to $200 million. Given the short term of most commercial credit in 1836, each dollar “imported” for cotton would be turned over about twice a year: $400 million. All told more than $600 million, or almost half of the economic activity in the United States in 1836, derived directly or indirectly from cotton produced by the million odd slaves― 6 percent of the total US population―who in that year toiled in labor camps on slavery’s frontier.”

Where do I begin? The approach is fundamentally flawed. Baptist begins with gross domestic product (GDP), the value of all the final goods and services produced in the country during the year. He refers to this as a measure of the total economic activity. He notes that the value of cotton production equaled about 5 % percent of GDP. No problems so far. But he then adds the cost of the inputs to the production of cotton. Anyone who has taken Principles of Macroeconomics knows that you can’t do this; it is referred to as double counting. If I buy $1000 worth of wood and then make it into a table that I sell for $1,500, we do not add $1,000 and $1,500 because the value of the wood is included in the value of the table, the final good. If he is going to engage in double counting for cotton he would need to engage in double counting for all other goods. He then adds the costs of transportation and insurance; these only count toward US GDP to the extent that they are produced by Americans. He also adds the sales of assets: land and slaves. Again, the sales of assets are not counted in GDP. GDP only counts the value of final goods and services produced during the year. Not all purchases are counted as part of GDP. Only purchases of newly produced goods and services are counted in GDP.  Comparing his calculation of economic activity related to cotton to GDP is meaningless.

There is, however, an even deeper problem with this back of the envelope accounting:

perhaps $40 million

probably added up to about $100 million

might have added up to $200 million

Baptist is simply pulling numbers out of thin air, or a hat, or wherever it is that he gets them. Back of the envelope calculations tend to involve simplifying assumptions. Baptist seems to understand the term to mean that he can just make things up. The only reference provided is to Table 4.1. Table 4.1 does not provide, as one might assume, information about shipping and insurance. It does not even have any information at all for the year 1836.

Both historians and authors of fiction tell stories, but the stories that historians tell are distinguished from fiction by their grounding in the sources. Historians are constrained to tell stories that they can support with evidence from their sources. Baptist has thrown off this constraint and set himself free to simply make up numbers (or events).

Coates is also wrong about the relative importance of wealth in slaves, but he has to take the blame for this one himself.  

Baptist did present estimates of the value of slaves as a percentage of total wealth. Olmstead and Rhode have criticized these estimates. They point out that the estimates suffer from the inaccurate citations that are typical of Baptist’s work and suggest that the slaves accounted for about 14.1 percent of wealth not the 1/5th that Baptist suggested. Baptist’s wealth estimates Table 7.1, however, are not outrageous in the way his claim about production is. 

In fact they are pretty much the same as the estimates presented in Table 4 from Measuring Slavery in 2016 Dollars by Samuel H. Williamson and Louis P. Cain (based upon work by Gavin Wright). The value of slaves equaled about 18% of total wealth. The majority of wealth was in the North, not the South, and slaves did not account for the majority of wealth even in the South. Coates stated about wealth was probably based on the frequently stated claim that the value of slaves exceeded the value of railroads and factories. That claim is true, but it is misleading because the United States was still primarily and agricultural economy. A relatively small portion of wealth was in manufacturing and railroads.

Coates history was accurate in emphasizing that the story did not end with the end of slavery. It is bad enough to deprive generations of people of the opportunity to create and pass on their wealth, but the descendants of slaves were systematically, murdered, robbed, and deprived of basic civil rights. I live in Fredericksburg, Virginia; I am 56 years old, and segregated schools here only ended during my lifetime. It was 1968 before an African American, Venus R. Jones, graduated from the public college that I teach at. Numerous studies continue to document that African Americans are discriminated against in courts, by bankruptcy attorneys, by employers, etc. The past keeps breathin'.

Finally, I will note that economists, especially economic historians have been working on estimates of the value of reparations for quite a while. The overall, approach tends to be similar to the role that economists sometimes play in legal cases estimating the extent of damages. The focus is usually on lost wages. If you are thinking that is a relatively limited view of the cost of being enslaved, well, yes. In any case, here is a recent paper by the political scientist Thomas Craemer that refers to some of the earlier literature, describes the difficulties associated with estimating the loss to African Americans during slavery, and estimates how those losses should be valued now.

My current inclination would lean more toward focusing on the current disparities in wealth, which can be though of as summing the effects of slavery and its aftermath.

Thursday, May 9, 2019

Public Goods, Private Roads, and the Case of Scandinavia

In We Can Build the Roads, and Other Things Too Mike Munger argues that roads are not public goods and that the examples of Sweden and Finland support this argument. I think there are a few problems with this argument.

One problem arises from the way we tend to explain public goods in economics. We tell students that they are non-rival and non-excludable. Rival means that one person’s use of a good diminishes the benefit for other users: if you drink my coffee that will diminish the benefit that I get from it. Excludable means that it is possible to exclude other people from using a good at a reasonable cost. In fact, I generally do not have any problem keeping people for drinking my coffee. The most common example of a public good is national defense. The benefit you get from us not being invaded by North Korea does not diminish the benefit I get from it, and it would be very difficult to exclude either of us from those benefits. The problem with public goods is that because people can get the benefit without paying, they will tend to free ride, and the good will be underprovided. Munger points out that that roads are often rival and people can be excluded. Interstate 95, which runs through Fredericksburg, is a good example. Heavy traffic makes it rival more often than not, and we have new toll lanes that you have to pay to use.

Munger notes that what most people think of as public goods, things like roads and public education, are not “pure public goods.” But it is not unreasonable for people to think of many of these things as “public goods,” in the sense of things that the state may have a role in providing, even if they are not “pure” public goods. Rivalry and excludability are matters of degree, and to the extent that something has the characteristics of non-rivalry and non-excludability positive externalities tend to exist. While I may be able to exclude you from direct access to the good, I can’t completely prevent you from getting some of the benefits. When the fire department puts out the fire in my house, you are better off because it won’t spread to yours. Yes, I can exclude people from a school and after a point it becomes rival, but if someone does get an education, I can’t exclude other people from benefiting from that as well. I can exclude people from getting flu shots, but I can’t exclude them from the benefits of others getting the shot. What people tend to think of as public goods are goods that many people believe to have significant positive externalities. Standard economic theory tells us that the market equilibrium will tend to underprovide goods with positive externalities, and that government action (or possibly some other sort of cooperative action) might be able to move society to a point where the marginal benefit to society and the marginal cost to society are closer to being equated. Just because you can have a private road, or a private school, or private security does not prove that there are not benefits to public provision of education, and roads, and police.

Not only are rivalry and excludability matters of degree, they are not necessarily the same in all situations. A road is a piece of land that can be used by some sort of traffic. Merely being a road does not make something inherently public or private. The question “Are roads public goods?’ doesn’t really make sense.  If I owned a ranch in Wyoming and built a road on that ranch, nothing about that road would make it a public good. Similarly, if I build a road in a new housing development that only connects to one public road way there are unlikely to be benefits to people who do not live there and excluding people is unlikely to be an issue. On the other hand, the street that I live on in downtown Fredericksburg is non-rival most of the time and it is hard to imagine any scheme for excluding people that would be worth the cost. Personally, I am perfectly happy paying my taxes and not having to participate in its management.

The broader point about economics here is that we shouldn’t think of economic models as a bunch of bins to sort things into: “This goes into public goods. That goes in common property.” Or “This market goes in perfect competition; that one goes in monopoly.” Instead, the models help us to understand the influence of things like rivalry, excludability, product differentiation, and barriers to entry. All of which are matters of degree, not simply yes or no.

What about the examples of Sweden and Finland? Munger suggests that they support his argument that roads are not public goods:

A recent report from the Devoe L. Moore Center gives this description:
Two-thirds of roads in Sweden are privately operated and managed by local Private Road Associations (PRAs). These road associations are composed of homeowners who live along private roads. An estimated 140,000 kilometers (about 87,000 miles) of roads are the responsibility of 60,000 PRAs…. The costs of upkeep are divided among members of the association. PRAs that do not accept government subsidies can prohibit traffic at their discretion. Those that receive subsidies must allow all vehicles to travel on their roads.
Private ownership by PRAs has proven to be a cost-effective measure for operating roads according to the the Swedish government. In 2001, a government-commissioned evaluation found PRAs could run their roads at about half the cost as for the national.

Finland employs a similar system. Many private roads are managed by local cooperatives. Finland has 78,000 kilometers (about 48,500 miles) of public roads and 280,000 kilometers (about 174,000 miles) of private roads. Of the 5 million people who live in Finland, around 700,000 of them reside near a private road. Like Swedish PRAs, Finnish cooperatives are made up of homeowners who live proximate to private roads. These homeowners collectively maintain their local roads and are eligible to receive subsidies from the federal government to cover a portion of their expenses.
There are two lessons here, and both are important.
First, many of the things we expect from the state are not public goods. They could be more efficiently and effectively handled by other kinds of cooperation.

Second, roads in particular are emphatically not public goods, and many other nations have solved the problems of road use and financing by decentralizing provision and control. For some reason, the U.S. has allowed itself to become a socialized road system, with no sense of any local ability to improve roads, fix potholes, or cooperate with your neighbors. With available technology, and with the even better technology now being developed, roads can be operated locally and voluntarily. And that’s actually true for many activities we now simply assume are restricted to the state. Some creative rethinking can put us on the road to a better tomorrow.

This description makes the private roads in Sweden and Finland sound very important, and it seems to imply that we don’t have private roads in the United States.
Private roads in Sweden and Finland account for a lot of miles but very little traffic. This is from a paper by Sven Ivarsson, vice chairman of the Board of the National Federation for Private Road Associations in Sweden, and Christina Malmberg Calvo, the World Bank.
“The Swedish road network measures 419,000 kilometers (see Table 1). The Swedish National Road Administration (SNRA) manages one quarter of the network (98,000 kilometers), and the municipalities 10 percent (38,000 kilometers). The remaining two thirds (283,000 kilometers) are privately owned and managed roads. The SNRA roads carry 70 percent of the traffic, the municipal roads 26 percent of the traffic, and the private roads the remaining 4 percent of the traffic. While the private roads arguably constitute a low volume network, some serve vacation home areas and about 50 percent are forest roads mainly opened for commercial purposes, about one third of the private roads carry more than 100 vehicles per day, including some up to a 1,000 vehicles per day throughout the year. This paper focuses principally on the 50 percent of the private road network which is owned and managed by communities, half of which receive state subsidies.”

The situation is similar in Finland. In the 1990s,
“Finland has a surface area of 338 000 km2 and 5 million inhabitants. The road system includes 105 000 km of private roads in residential areas, 77 000 km of public roads maintained by the Finnish National Road Administration (FinnRA), and 23 000 km of city streets and municipal roads maintained by local authorities. Traffic volume on private roads is approximately 1000 million km per year, which is 2.5 percent of the total traffic volume in Finland.” Tiina Korte Also like Sweden many of the roads are through forests, and about 70% of lumber starts on private roads.

Private roads carry 4% of traffic in Sweden and 2.5% in Finland. I don’t know what percentage private roads carry in the United States. That’s right, there are private roads in the United States. As a matter of fact, there have pretty much always been private roads in the United States. Private roads were very important in early America. A lot of research has been done on such roads by people like John Majewski, Dan Klein and Daniel Bogart (see here for instance). There are still many private roads.  If you have spent any time in rural areas, you have probably come across signs on roads that say “Private Property. No Trespassing.” Private roads run to some rural homes, and across private forests, farms and ranches. Here is a template for a private road agreement provided by Orange County, VA.  The agreement provides for a group of people to privately provide for a road.
Points 4 through 7 are interesting
(4)   No public responsibility. Said construction and maintenance is under no circumstances a responsibility of the County, Virginia Department of Transportation (VDOT), the Commonwealth Transportation Board, or any other public entity.
(5)   Emergency services. It is understood that failure of the owners to adequately maintain the Roadway may inhibit the ability of the County to provide emergency services to the parcels, any liability for which shall be borne among the owners.
(6)   School bus service. The provision of Orange County public school bus services on this private road are not guaranteed or implied.  The suitability for any private road for school bus services and routes shall remain at the discretion of the Orange County School Board.
(7)   Liability. It is understood that the County and its agents shall not be liable or responsible in any manner to the developer or the property owners along the road, or to their contractors, subcontractors, agents, or any other person, firm or corporation, for any debt, claim, demand, damages, action or causes of action of any kind or character arising out of or by reason of the activities or improvements being required herein.  It shall not be eligible for acceptance into the State Secondary System of State Highways for maintenance until such time as it is constructed and otherwise complies with all requirements of the Virginia Department of Transportation for the addition of subdivision roads current at the time of such request.  Any costs required to cause this road to become eligible for addition to the State system shall be provided from funds other than those administered by the Virginia Department of Transportation and by Orange County.

The difference between the Scandinavian examples and the U.S example is that Orange County is telling people who want a private road not to expect anything from the government. People in Sweden and Finland, on the other hand, appear to believe that there are positive externalities associated with maintaining the population even in remote parts of the country, and, therefore, subsidize low volume private roads in those parts of the country.

Monday, May 6, 2019

More Evo-Nonsense

Occasionally, Evonomics provides something useful. For instance, it re-ran the blog post “Where do pro-Social institutions Come From? How Do Countries ‘Get to Denmark’? by Pseudoerasmus

Unfortunately, much of the time it runs critiques of “economics” by people who do not know anything about economics.

Here for example is Nick Hanauer writing about “How to Kill Neoliberalism Kill “Homo Economicus”:

I believe that these corrosive moral claims derive from a fundamentally flawed understanding of how market capitalism works, grounded in the dubious assumption that human beings are “homo economicus”:  perfectly selfish, perfectly rational, and relentlessly self-maximizing. It is this behavioral model upon which all the other models of orthodox economics are built. And it is nonsense.

The last 40 years of research across multiple scientific disciplines has proven, with certainty, that homo economicus does not exist. Outside of economic models, this is simply not how real humans behave. Rather, Homo sapiens have evolved to be other-regarding, reciprocal, heuristic, and intuitive moral creatures. We can be selfish, yes—even cruel. But it is our highly evolved prosocial nature—our innate facility for cooperation, not competition—that has enabled our species to dominate the planet, and to build such an extraordinary—and extraordinarily complex—quality of life. Pro-sociality is our economic super power.

What is nonsense is that economic theory is built on the assumption that human beings are “perfectly selfish, perfectly rational, and relentlessly self-maximizing.”

Here is Gary Becker on the meaning of rationality

“What is meant by rational behavior? Consider first what is not meant. Certainly not that people are necessarily selfish, “economic men” solely concerned with their own well-being. This would rule out charity and love for children, spouses relatives or anyone else, and a model of rational behavior could not be so grossly inconsistent with actual behavior and still be useful.”

“The essence of the model of rational behavior is contained in just two assumptions: each consumer has an ordered set of preferences, and he choses the most preferred position available to him.” (Becker Economic Theory page 26)

Show me where the sort of description of rationality that Hanauer puts forward appears in economics. I looked in my old copies of Varian and Silberberg. It wasn’t there.  Checked Mankiw’s principles text. Not there either. You can find assumptions about the consistency of preferences, but where do you find anything about what people are supposed to prefer? There is no more reason for economists to say that people can’t get utility from charity than there is for economists to say that you can’t get utility from eating apples.  

If we want to improve economics we need to start from where it actually is, not with some imagined boogeyman of homo economicus.

There are plenty of things we could do better. We could teach more history. We could place less emphasis on advanced math. We could try to get faculty and students that look more like the society we live in. But you aren’t going improve economics by assuming an imaginary homo economicus who isn’t there.

Friday, April 26, 2019

Why Tyler Cowen is wrong about the Wizard of Oz

This is part of Tyler Cowen’s conversation with Margaret Atwood at Conversations with Tyler
ATWOOD: Let’s talk about The Wizard of Oz.
COWEN: Sure.
ATWOOD: Now, there’s an absolutely core to the American psyche —
COWEN: It’s an economics movie. It’s about bimetallism, right? The yellow brick road is about the gold standard? This is not commonly known, but it’s true.
COWEN: It’s a monetary allegory, the whole movie.
ATWOOD: You think so?
COWEN: know so.
ATWOOD: You know a lot of things. So, the Tin Woodman is what in it?
COWEN: He’s one of the people in the bimetallist debates. But there was a Journal of Political Economy article going through all of the parallels.
ATWOOD: And Dorothy is what?
COWEN: I think just the innocent American crying for relief.
ATWOOD: Are you buying any of this? I’m not.
ATWOOD: And the tornado is?
COWEN: Maybe depression, deflation.
ATWOOD: And Toto is?
COWEN: That one I’m stumped on.
ATWOOD: The flying monkeys are?
COWEN: William Jennings Bryan?
ATWOOD: Okay. Well, here’s the really interesting thing about Wizard of Oz. In The Wizard of Oz, the male wizard is a fraud, and all of the other male characters are missing something.
COWEN: That’s right.
ATWOOD: Yes. But the witches are real. Now, Tyler, I’m going to tell you a story.

Someone posted this part of the conversation on twitter and I replied by saying it should be filed under things that Tyler knows that are not so and added a link to a paper I published on the Wizard of Oz. Cowen replied, 

I'm sticking with the JPE on this one, sorry!

I asked why, but he did not explain. 

Cowen does not seem to be particularly familiar with the JPE article. A link was added in the transcript, but the author, Hugh Rockoff, isn’t mentioned in the interview.  Rockoff’s paper does not have anything to do with the movie. The allegory story doesn’t work well with the movie because of changes from the book. For instance, in the book the slippers were silver and the Emerald City was fake; it only looked emerald because visitors were forced to wear green glasses. Moreover, Cowen does not seem to know what the characters in the Wizard of Oz are supposed to represent in this allegory. In Rockoff’s paper the Tin Woodman is the working man and the Cowardly Lion is William Jennings Bryan. Yet Cowen does not just think that it is an allegory he knows it. After all, it was published in the Journal of Political Economy

I really am curious why he is sticking with the JPE because I have a hard time seeing how anyone can read both the original JPE paper and my paper and still find the monetary allegory interpretation persuasive. Academics can have legitimate disputes, but at some point the amount of evidence falling on one side of the dispute should be able to tip the scales even if the original paper was published in JPE.

For those unfamiliar with the interpretation of Oz as a monetary allegory it goes something like this:

“In 1964, Henry Littlefield, a high school history teacher, described what appeared to be numerous coincidences between The Wonderful Wizard of Oz and the Populist movement of the late 19th century. Once viewed through a Populist lens, the symbolism of the book appears incredibly obvious. The Scarecrow represents farmers, the Tin Woodman represents industrial workers, and the Cowardly Lion represents William Jennings Bryan.' Dorothy was told to follow a yellow brick road-the gold standard. People in the Emerald City were forced to look at everything through green glasses-greenbacks. The silver shoes-coinage of silver-really had the power to take Dorothy home. Oz itself refers to the abbreviation for an ounce of gold.” (Hansen 2002, 255)

What evidence does Rockoff provide in the JPE paper?
(Rockoff  1990, 756)

Rockoff states that there is no direct evidence, and in my paper I argue that here was no circumstantial evidence either. It was not discovered independently numerous times. No one noticed in until Henry Littlefield came up with the idea as an exercise to get high school students thinking about the Populist movement. What is known about Baum’s politics also does not support the argument that it was written as a monetary allegory (see Hansen 2002, 257-260).  

Cowen added in another tweet reply that he was also going with this book review by J. Jackson Barlow. But neither Barlow nor the authors that he reviews argue that the story was written as a monetary allegory. Barlow’s interpretation is consistent with Baum’s claims that he was writing a fairy tale for modern times.

Read Hugh’s paper and read my paper (it is short and easy to read) and decide for yourself. 

Atwood's insights were more consistent with what is known about Baum: one of the few political issues that he really cared about was the suffrage movement. By the way, he was married to Maud Gage, daughter of Matilda Joslyn Gage.

Thursday, April 18, 2019

Historians and Economists

This is a short list of book reviews that I think support an argument that I have been making for a while now about the relationship between economic and historical research. 

Oakes, James. "Capitalism and slavery and the civil war." International Labor and Working-Class History 89 (2016): 195 -220.

Coclanis, Peter A. "Slavery, Capitalism, and the Problem of Misprision." Journal of American Studies 52, no. 3 (2018).

Logan, Trevon D. "The Republic for Which it Stands: The United States During Reconstruction and the Gilded Age, 1865–1896. By Richard White. New York, NY: Oxford, 2017. Pp. xx, 94. $35.00, hardcover." The Journal of Economic History 79, no. 1 (2019): 305-308.

Hansen, B.A., 2019. Brahmin Capitalism: Frontiers of Wealth and Populism in America’s First Gilded Age. By Noam Maggor. Cambridge: Harvard University Press, 2017. Pp. ix, 284. $39.95, hardcover. The Journal of Economic History79(1), pp.304-305.

Pseudoerasmus recently brought the Oakes review to may attention and spoke very highly of it. I agree that it is an outstanding review. I also think that together with several recent reviews it supports my argument that critiques of historians of capitalism by economic historians are not based on any fundamental methodological difference between economics and history. Instead, economic historians have largely been criticizing historians of capitalism for their failure to follow traditional standards of historical scholarship in their treatment of both primary and secondary sources. The first two are reviews of works by historians of capitalism by historians, who raise many of the same concerns that economists have. The second two are positive reviews by economists of recent work by historians associated with the history of capitalism.

Oakes reviews

Walter Johnson , River of Dark Dreams: Slavery and Empire in the Cotton Kingdom . Cambridge : Harvard University Press , 2013. 561 pp. $35.00.

Edward E. Baptist , The Half Has Never Been Told: Slavery and the Making of American Capitalism . New York : Basic Books , 2014. 528 pp. $35.00.

Sven Beckert , Empire of Cotton: A Global History . New York : Alfred A. Knopf , 2014. 640 pp. $35.00.

Calvin Schermerhorn , The Business of Slavery and the Rise of American Capitalism, 1815-1860 . New Haven : Yale University Press , 2015. 352 pp. $65.00.

Coclanis reviews

Sven Beckert and Seth Rothman (eds.), Slavery’s Capitalism: A New History of American Economic Development (Philadelphia: University of Pennsylvania Press.

Here is Oakes take on Baptist’s claims about the economic impact of slavery.

Baptist's most extravagant and least persuasive claim is that all of the prosperity of the American economy derived from slavery. There's barely a sentence in his book that could justify such a claim, however, and for a very obvious reason: Any study aimed at calculating the impact of slavery for northern economic development would not be a book about slavery at all. It would have to be a book about the North. At the very least, The Half Has Never Been Told would require a second half that examines the process of economic development in the free states and demonstrates precisely when and how that process depended on southern slavery. That will not be easy, at least not based on the extraordinary scholarship of the last generation or two.

Consider the outcome of the debate among scholars that raged through the 1980s over the transformation of the northern countryside. There is now broad agreement that farmers in the northern colonies always produced surpluses for sale although they were careful to limit their market involvement in ways that protected their economic independence. That began to change in the 1790s, when New England farmers found themselves trapped by the competitive demands of a rapidly commercializing agriculture in ways that forced them to steadily increase their productivity. The process spread westward, and the northern countryside was thoroughly transformed by 1845, when wheat farmers began to mechanize production at an astonishing pace.17Northern agricultural productivity skyrocketed even as the rural economy extruded "surplus" population into cities and factories at a rate that outpaced number of immigrants--who were by then streaming into the North by the millions. Those landless workers were attracted by a new form of free labor that had simultaneously developed in the North in the decades following the American Revolution. Apprentice contracts became wage contracts, indentured servitude disappeared, and slavery was abolished. By the 1820s "a day's pay for a day's work" became the norm--and with it a uniquely mobile population of free laborers was created. Within the space of a single lifetime forms of long-term labor subordination that had existed for centuries, even millennia, were dramatically overthrown. "Thus it was not slavery," Gavin Wright has concluded, "but the post-Revolutionary abolitions and the exclusion of slavery from the Northwest Territory that launched the American economy on its modern trajectory."18Put these two developments together--the transformation of the northern countryside and the rapidly expanding population of highly mobile wage laborers--and the stage was set for the dynamic interaction of the city and the country that so many scholars have seen as the preeminent characteristic of northern economic development.19
None of this appears in Baptist's account. Instead, he disinters an older story that told of industrialization "spiraling outward" from the textile mills of Massachusetts and Rhode Island--a story long ago abandoned by most economic historians. Before we revert to this traditional account, however, Baptist will have to explain where historians like Diane Lindstrom went wrong when they adduced evidence that the southern trade was relatively unimportant to the economic development of the Philadelphia. He would have to explain away the evidence that "metropolitan industrialization" overshadowed New York City's ties to slavery, that economic development bound the city much more closely to the wheat and dairy farmers in the Hudson, Mohawk, and Ohio River valleys--as most scholars now believe. He would have to explain away the extraordinary maps in William Cronon's Nature's Metropolis demonstrating the way railroads spread out from Chicago bringing wheat farmers throughout the Midwest into the city's powerful economic orbit--an orbit that reached back to the east coast and all the way to Europe but that barely touched the slave states. In these accounts the history of the northern economy after 1776 is one of growing independence from slavery, a fact of no small significance for the origins of the Civil War.

 In addition to explaining where generations of scholarship on northern economic development have gone wrong, Baptist would have to tell us where he's getting his numbers. He points out that in 1836 cotton production represented about five percent of the gross domestic product. This is a widely accepted statistic, having been calculated in several different ways by a number of different scholars. But its significance is not self-evident. Is five percent a lot or a little? Instead of addressing that question, however, Baptist quickly moves on to the second- and third-order effects of cotton in the larger economy, and here a number of problems arise. To begin with, second-order effects are notoriously difficult to calculate, and by the time you get to third-order effects, you might as well be floating in the clouds. At the very least, such calculations require extensive justification and analytical precision--none of which Baptist provides. In fact, he provides no sources whatsoever for any of his calculations. From his brief description he seems to be adding the proceeds of wealth transfers--such as the sale of slaves--to the figures for output. Finally, having posited suspiciously large second- and third-order effects, he then adds those effects to the original GDP statistic, and suddenly, without explanation, five percent becomes fifty percent. Obviously if you applied the same technique to every other northern enterprise--the granaries of the Midwest, the printing shops of Manhattan, the iron foundries of Pennsylvania, the small manufacturers of Philadelphia, the meatpackers of Cincinnati, the dairy farmers of the Hudson Valley, the wheat farmers along the Erie Canal--you would end up with five thousand percent of the GDP. If Baptist's numbers were even remotely accurate, the abolition of slavery during the Civil War would have been accompanied by a catastrophic collapse of the northern economy.

Baptist takes his title from Lorenzo Ivy, one of the many elderly ex-slaves interviewed by the WPA in the 1930s. Ivy and his mother were originally owned by a "mean" master who broke up families left and right. Ivy told the interviewer that the only good thing his heartless owner ever did, and did unintentionally, was to sell the boy and his mother to his father's owner. This endless buying and selling of slaves--the coffles of chained human beings who passed by Ivy's Virginia home year after year--is the "half" of slavery's history that Baptist claims has never been told. But Baptist himself doesn't tell the other half of the ex-slave's own story. Ivy described his new master as a good man who kept the slave family together, recognized the boy's talent as a shoemaker, sent him off to Lynchburg to learn the trade, and let Ivy hire himself out. Ivy's mistress taught the boy to read. When the Civil War ended, Ivy was sufficiently literate and skilled to set up his own shoemaking shop and attend Hampton Institute. He was at Hampton when his former master died, and Ivy was upset that he was unable to attend the funeral to pay his respects.20”

This is from near the end of Coclanis’ review
“One assumes that the editors and most of the authors of Slavery’s Capitalism are coming from one or another critical political-economy position, but which one is difficult, if not impossible, to tell.
This would not be the case had the editors and authors engaged more directly with work written before they started scribbling, a point also made by Scott R. Nelson in an important assessment of the NHAC movement. And here I do not just mean theoretical work on the history of capitalism – the huge internal literatures in the Marxist and marxisant traditions, most notably – but the equally large empirical literatures by historians and economists writing about capitalism and slavery within the context of the United States. Since the mid-1950s, “new” economic historians have been wrestling with questions concerned with slavery and capitalism, and the relationship between slavery and capitalism became central to the entire “new” economic history project beginning in the late 1960s and remained so until the early 1990ss. But this seems like ancient history – so yesterday – to many devotees of the NHAC. And American historians, likewise, were wrestling with similar issues at the same time. Not only Eugene Genovese and Elizabeth Fox-Genovese either, but also their students, as well as dozens of other scholars, who came at such issues from a variety of points of view. Here, we can start with names such as Hal Woodman, Jim Oakes, Allan Kulikoff, Lorena Walsh, John McCusker, Russ Menard, Drew McCoy, Laurence Shore, Barbara Fields, Joseph Reidy, Steven Hahn, Rachel Klein, Joyce Chaplin, Lacy Ford, Robin Blackburn, Shearer Davis Bowman, etc. For my part, I wrote an entire book in 1989 wherein I dealt directly with the relationship between slavery and capitalism, and, in so doing, dealt explicitly with matters regarding the definition of capitalism, among other concerns. Now Beckert for one knows all of this. He has previously acknowledged some of the scholars mentioned above – those operating in what he sees as the political-economy tradition – as “distinguished antecedents.” But in Slavery’s Capitalism such acknowledgment is nowhere to be found, lost perhaps in the frisson of excitement that the NHAC initiative has evoked.

All of which brings me to my final points, involving misrepresentation and scholarly comity. As the paragraphs above suggest, neither Slavery’s Capitalism specifically nor the NHAC more generally accurately captures and conveys economists’ and historians’ engagement with the questions treated in Slavery’s Capitalism and the issues of concern to new historians of American capitalism.”

These are essentially the same claims that economists have made about Baptist’s misuse of both the previous literature and primary sources. Oakes also provides the most critical review of Johnson that I have come across. He is, however, not entirely critical of their work. He finds more to value in Baptist than I do. And although he is very critical, his motivation is not just to tear down (I have to admit that when it comes to Baptist, I personally want to not leave a single brick standing). Oakes and Coclanis, on the other seems to want to push the new historians of capitalism in productive directions. Most importantly they want them to integrate their work with earlier work on capitalism, slavery, and its origins. By the way, here is my review of Slavery's Capitalism

Economists Logan and Hansen, in contrast, provide favorable reviews of more recent work by people associated with the history of capitalism. I’m not sure that Richard White is as strongly associated with the New History of Capitalism as people like Beckert, Baptist, Johnson or Levy, but he could make a reasonable claim to having been at it longer. One of the common features of both books are that, in contrast, some of the work criticized by Coclanis and Oakes, both White and Maggor attempt to integrate the work of people, including economists, who have worked in their field. I had previously noted this in regard to one element of White’s book, the evidence on material well-being in the late nineteenth century. Although I disagreed with his conclusion, my argument was based primarily on very recent research. Some of which probably wasn’t even available at the time he was writing. I believe that White was probably using the estimates that were most widely accepted by economic historians at the time he was writing.

The books by White and Maggor are not economic history as economists typically do it now, but each has something interesting to say. Economists and historians do not have to use the same methods or even ask the same questions. What is essential is that where there is overlap we need to honestly acknowledge and address each other’s work. If a historian is interested investment in the west during the nineteenth century, they should at least note what economists have had to say about interregional capital flows, as Maggor does. Conversely, if an economist is interested in the development of state and local institutions intended to promote or regulate these investments, they should read what Maggor says.

Sunday, March 3, 2019

Some Recent Economic History of Slavery and Its Political and Economic Legacy

The other day on twitter, Seth Rockman and I were discussing current work on slavery by economic historians. He thought that there was “more energy being spent policing "driving force" claims than in generating new findings about how/where slavery mattered to broader economic transformations.” I told him that refuting claims like those made by Ed Baptist really doesn’t take that much effort, and I suggested a list of people that he might want to look at to see where the energy of economic historians was actually going. This is a much fuller list than I provided in the tweet, and it provides citations and links (wherever possible to ungated versions). There are a couple of papers that go back about ten years, but I think most of the published papers are within the last five years. Some are still working papers.  

As the title of the post suggests the list includes both papers that are directly about slavery and papers that are about the political and economic legacy of slavery. Most are specifically about the U.S. since that is the area I know best, and I tried to stay focused on economic history, i.e. research that is about understanding the past. There is also a large literature that focuses on tracing current conditions to the existence of slavery in the past, see e.g. Nathan Nunn; Yeonha Jung "How the Legacy of Slavery Survives: Labor Market Institutions and Demand for Human Capital." (2018); or Graziella Bertocchi and Arcangelo Dimico. "Slavery, education, and inequality." European Economic Review 70 (2014): 197-209. 

In addition, if you are interested in recent work on the Atlantic slave trade you might start with Warren Whatley and Rob Gillezeau, or work in progress by Ellora Derenoncourt “Atlantic Slavery’s Impact on European and British Economic Development.” Finally, there are other interesting working papers that I know of, but I try to honor the wishes of authors when they request that preliminary work not be cited or circulated. You will have to find those papers yourself.

Bodenhorn, Howard. The color factor: The economics of African-American well-being in the nineteenth-century South. Oxford University Press, USA, 2015.

Calomiris, Charles W., and Jonathan Pritchett. "Betting on secession: Quantifying political events surrounding slavery and the civil war." American Economic Review 106, no. 1 (2016): 1-23.

Carruthers, Celeste K., and Marianne H. Wanamaker. "Separate and unequal in the labor market: human capital and the jim crow wage gap." Journal of Labor Economics 35, no. 3 (2017): 655-696.

Collins, William J., and Robert A. Margo. "Race and Home Ownership from the End of the Civil War to the Present." American Economic Review 101, no. 3 (2011): 355-59.

Collins, William J., and Marianne H. Wanamaker. Up from slavery? African American intergenerational economic mobility since 1880. No. w23395. National Bureau of Economic Research, 2017.

Cook, Lisa D. "Violence and economic activity: evidence from African American patents, 1870–1940." Journal of Economic Growth 19, no. 2 (2014): 221-257.

Cook, Lisa D., Trevon D. Logan, and John M. Parman. "Racial segregation and southern lynching." Social Science History42, no. 4 (2018): 635-675. Summary here.

Craig, Lee A., and Robert G. Hammond. "Nutrition and signaling in slave markets: a new look at a puzzle within the antebellum puzzle." Cliometrica 7, no. 2 (2013): 189-206.

González, Felipe, Guillermo Marshall, and Suresh Naidu. "Start-up nation? slave wealth and entrepreneurship in civil war Maryland." The Journal of Economic History 77, no. 2 (2017): 373-405.

Hornbeck, Richard, and Suresh Naidu. "When the levee breaks: black migration and economic development in the American South." American Economic Review 104, no. 3 (2014): 963-90.

Lander, Kevin, and Jonathan Pritchett. "When to Care: The Economic Rationale of Slavery Health Care Provision." Social Science History 33, no. 2 (2009): 155-182.

Lennon, Conor. "Slave escape, prices, and the fugitive slave act of 1850." The Journal of Law and Economics 59, no. 3 (2016): 669-695.

Logan, Trevon D. Do Black Politicians Matter?. No. w24190. National Bureau of Economic Research, 2018.

Logan, Trevon D. "A Time (Not) Apart: A Lesson in Economic History from Cotton Picking Books." The Review of Black Political Economy 42, no. 4 (2015): 301-322.

Logan, Trevon D., and Jonathan B. Pritchett. "On the marital status of US slaves: Evidence from Touro Infirmary, New Orleans, Louisiana." Explorations in Economic History 69 (2018): 50-63.

Miller, Melinda C. "Land and racial wealth inequality." American Economic Review 101, no. 3 (2011): 371-76.

Miller, Melinda C. "Destroyed by slavery? Slavery and African American family formation following emancipation." Demography 55, no. 5 (2018): 1587-1609.

Naidu, Suresh. Suffrage, schooling, and sorting in the post-bellum US South. No. w18129. National Bureau of Economic Research, 2012.

Olmstead, Alan L., and Paul W. Rhode. "Cotton, slavery, and the new history of capitalism." Explorations in Economic History 67 (2018): 1-17.

Price, Gregory N., William A. Darity Jr, and Alvin E. Headen Jr. "Does the stigma of slavery explain the maltreatment of blacks by whites?: The case of lynchings." The Journal of Socio-Economics 37, no. 1 (2008): 167-193.

Pritchett, Jonathan, and Jessica Hayes. "The occupations of slaves sold in New Orleans: Missing values, cheap talk, or informative advertising?." Cliometrica 10, no. 2 (2016): 181-195.

Sacerdote, Bruce. "Slavery and the intergenerational transmission of human capital." Review of Economics and Statistics 87, no. 2 (2005): 217-234.

Steckel, Richard H., and Nicolas Ziebarth. "A troublesome statistic: Traders and coastal shipments in the westward movement of slaves." The Journal of Economic History 73, no. 3 (2013): 792-809.

Steckel, Richard H., and Nicolas Ziebarth. "Trader Selectivity and Measured Catch-Up Growth of American Slaves." The Journal of Economic History 76, no. 1 (2016): 109-138.

Sutch, Richard C. The Economics of African American Slavery: The Cliometrics Debate. No. w25197. National Bureau of Economic Research, 2018.

Wanamaker, Marianne H. "Fertility and the Price of Children: Evidence from Slavery and Slave Emancipation.The Journal of Economic History 74, no. 4 (2014): 1045-1071.