Some Economic History Links

Bob Higgs on Doug North

The list of papers being presented at Clio sessions at ASSA.

Sheilagh Ogilivie on the Champagne fairs.

Michalopoulos and Papaioannou on the effects of the “Scramble for Africa”

Since My Last Post

The end of the semester has kept me away from this blog for a while. Once grading was done, Mary and I went up to Mercatus to see Eric Chaney present his research on “Religion and the rise and Fall of Islamic Science” at the Washington Area Economic History Seminar. Here is the version of the paper available on his page at Harvard.

We also went up to Philadelphia for a couple of days. We had dinner at our favorite restaurant, Pumpkin, and at Fork, which was also very good. While I’m at it, we usually stay at the Palomar and have breakfast at Schlesinger’s

Also went to the Art Museum this is my favorite thing there.

In the world of economic history

There is a new Chinese Economic History blog. Among other things, it has a number of interesting interviews.

In addition to the usual collection of interesting papers Journal of Economic History has four essays on the future of economic history.

Bakker, Crafts and Woltjer put out a new working paper  “A vision of the Growth Process in a Technologically Progressive Economy: the United States, 1899-1941.”

“Abstract

We develop new aggregate and sectoral Total Factor Productivity (T FP ) estimates for the United States between 1899 and1941 through better coverage of sectors and better measured labor quality, and show TFP –growth was lower than previously thought, broadly based a cross sectors, strongly variant intertemporally, and consistent with many diverse sources of innovation. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP –growth of the twentieth century. Second, TFP –growth was not predominantly caused by four leading sectors. Third, TFP –growth was not caused by a ‘yeast process’ originating in a dominant technology such as electricity.”

Historians on Edward Baptist

Al Zambone and Bob Elder discuss the book on the podcast Historically Thinking.

Trevor Burnard discusses Baptist’s responses to his critics. Burnard writes that “repeatedly, Baptist puts himself up as the authority on slave testimony; places himself as the judge of what is contained in slave testimony, and suggests that all of his critics are deficient because they don’t take slave testimony as seriously as he does.”

I tried to explain Baptist’s position to someone by pointing out that he seems to believe he speaks for the enslaved the way the Lorax speaks for the trees. The only difference is that the trees did not speak, the enslaved did.

More on Doug North

I don’t think anyone has yet mentioned Doug’s influence on the teaching of economics. The Economics of Public Issues (19^th edition) is still in print, though the first edition is still, in my opinion, the best. Like all successful entrepreneurs North and Miller attracted competitors and influenced the way material is presented in standard textbooks. Doug told me it sold enough to put three sons through Stanford. The book came about as a result of his returning to teaching principles of economics after several years of not having done so.   He finished his lecture on perfect competition with some reference to agricultural markets and asked if there were any questions. A student stood up in the back of the lecture hall. Doug asked him what his question was and the student said “That’s bullshit.” Doug said if you’re so smart why don’t you tell us all about it. Turned out the guy grew up on a farm in Eastern Washington and knew all about how the government interfered with agricultural markets. Doug said he knew that he couldn’t keep giving textbook lectures, but he didn’t know what he should do. He had been working with the Seattle City Council and began his next class with a statement about how many rapes and murders the council had voted to allow, illustrating the consequences of choices about how to allocate spending in the city. Doug ended up writing stories about the economics of crime, abortion, baseball, marijuana etc. He said it was Roger Le Roy Miller’s idea to turn these stories into a book. It sold so well as a textbook that they tried to sell a trade version called Abortion, Baseball and Weed. It bombed; people weren’t ready for freakonomics yet.

I also wanted to note that a couple of couple of places (e.g. NY Times) have mentioned that Doug’s father dropped out of school to become an office messenger. What they did not mention was that his father went on to become vice-president of Metropolitan Life Insurance Company. Doug’s uncle, his father’s younger brother, eventually became the president of Metropolitan Life Insurance Company. I had the impression that he was quite proud of his father. He said that his father was always the one to give the speech when they wanted to get the agents fired up. Doug’s dissertation was a pretty traditional economic history of the life insurance business, with a focus on the Armstrong Investigation. I seem to recall that he said his family was not particularly pleased with his essentially airing the family’s dirty laundry.

Here are some tributes to Doug by people who knew him well

Yoram Barzel remembers Doug at University of Washington

John Nye has both a personal reflection and a review of Doug’s contribution to economics.

John Wallis provides a really good review of Doug’s contributions to social sciences.

Barry Weingast’s tribute to Doug is my favorite so far. As soon as I saw the quote beginning with “Listen, Bub” I could heard Doug’s voice.

Just Listen

In response to this Huffington Post article Jaci Evan's (a former student of mine who is about to finish her  Ph. D. at U. of Maryland) wrote this on Facebook.  Please listen to her.


"There are so many things I could write here that it's hard to choose. But I think I'll say this: I still remember the first time an adult man made me feel sexualized and unsafe. I was 12. That memory has stuck with me to this day, and it was the first of a countless number of times that it has happened since. So when your girlfriend says that your neighbor's behavior makes her feel unsafe, don't say you think it sounds normal, just listen. When she says she doesn't think she'd enjoy travelling to that country known for men who grope women on the subway or cat-call on the streets, don't tell her she's being too sensitive about it, just listen. When she gets upset about those "good old boy" songs involving rape that so many frats get in trouble for these days, don't tell her that they don't really mean it, just listen. Your reality isn't hers, and her thoughts are valid. They come from horrific experiences in her past and in her knowledge of horrific experiences in her friends' pasts. Just listen."

Doug North

My friend Tawni Hunt Ferrarini told me this morning that Doug North passed away last night. Douglass C. North was, of course, a Nobel Memorial Prize winner in Economics. I first, discovered his work while I was a graduate student in economic history at the London School of Economics in 1984-85. I read “A Framework for Analyzing the State in Economic History” published in a special issue of Explorations in Economic History dedicated to his dissertation adviser M.M. Knight. I still love the way he used such a simple model to think about such a complicated problem. When I decided to go back to graduate school to pursue a Ph.D. in economics, I wanted to study with him. I became his research assistant and he was the chair of my dissertation committee. He was everything I had hoped for as a professor and more than I could have imagined as a human being. I felt like I had won the lottery. I still feel that way.

I wanted to write about what he meant to me, both intellectually and as a friend, but I can’t. Maybe another day I will, but not today. 

Coase on Lighthouses and Economics

Earlier this week Daniel Shestakov noted the publication of a new paper on lighthouses by Erik Lindberg. He and I then had a brief exchange on twitter about whether or not the work since Coase’s (1974) paper had supported or contradicted his contentions. It got me thinking that maybe I had missed something in the more recent work. I went back and looked at some of the papers. I’m still not entirely certain what Shestakov’s position is, but it seemed to me that he was claiming that recent work had supported the theorists rather than Coase. I still don’t see it that way.  Theory suggests that if a good is non-rival and non-excludable that there will be a free rider problem and that the outcome will be inefficient in the sense that it will not maximize the sum of consumer and producer surplus. Coase did not set out to refute the theory. He simply argued that it did not necessarily apply in the case of a commonly used example: the lighthouse. The extent to which a good is non -rival and non-excludable is an empirical question. Coase argued that in some cases lighthouses were not in fact non-excludable. In some cases it is not prohibitively costly to charge the users for the service. It seems to me that recent work has not refuted this claim.

My interpretation of Coase’s paper is that it was really much more about economic methods than it was about lighthouses or public goods. The paper was about the way that economists like Samuelson didn’t bother to study the history of lighthouses before using them as an example of a public good. The primary claim of the paper was that the theory of public goods did not necessarily apply to lighthouses because in some cases it was possible to make the people who used the lighthouse pay for the service provided. Specifically, it was possible to identify which lighthouses a ship had benefited from and charge them accordingly at the time they docked. Coase described the finance and operation of private lighthouses as follows:

It was, for instance, much like a private toll bridge. Coase may actually overstate the extent to which the government set price distinguished the case of lighthouses from most goods. He was clearly aware of the extensive role of government in the provision of lighthouses, and he made no effort to hide this from his readers. Coase, however, characterized the government’s involvement as being not substantially different than the provision of other goods by private companies:

Responses to Coase’s paper seem to fall into two categories.

1.      

Government was extensively involved in the so called private lighthouses. Therefore, the lighthouses were not as private as Coase suggested. It has even suggested that it is ironic that Coase chided other economists for not getting their facts straight and then failed to do so himself.

2.       Coase’s speculation about the relative efficiency of private provision is unsupported by the evidence.

Van Zandt (1993) falls into the first category. Van Zandt, however, does not seem to disagree with Coase’s description of the finance and operation of lighthouses. Instead, he disagrees with the interpretation. His primary argument is that the “public” versus “private” dichotomy is not very useful. Coase seems to have agreed with Van Zandt in so far as Van Zandt notes that Coase suggested that there may be an even wider variety of institutional arrangements than he considers.

Bertrand (2006) agrees with Van Zandt that there was extensive involvement of the government in the so-called private lighthouses. She claims at one point that “We have thus shown that Coase, in his account of the English lighthouse system, underestimates the importance of government, and conversely overestimates the appropriateness of individual initiative (Bertrand 400).” But like Van Zandt she has not actually shown that the lighthouses were financed and operated differently than Coase described. People obtained charters from the government, which set the fees and was sometimes directly involved in the collection of these fees. But Coase said all of that. He never suggested that the government was not at involved. He never even suggested that it was not extensively involved.

Bertrand also argues that Coase overestimated the efficiency of the private lighthouses. The problem here is that Coase’s argument wasn’t about the relative efficiency of the private versus public provision. He did little more than speculate about them in the conclusion of the paper, and suggest that more research needed to be done.

Finally, Lindberg (2015) adds a comparative perspective as well as details about the amount of fees collected. Perhaps, most importantly, I think he moves in the direction originally suggested by Coase. He analyzes the actual lighthouse systems that existed in different places and times to try to understand what might explain the differences in institutional arrangements.

More on economic history

I forgot to add this to the post about new papers on economic history

Ran Abramitzky Economics and the Modern Economic Historian (ungated version here)

economics of open access

The Chronicle of Higher Education has an interesting article on open access publishing. It notes what many open access advocates don't. Publishing, even online, requires resources, which costs money, which some has to provide.

One of the benefits of the traditional publishing model is that the customer, libraries, associations, and individual subscribers, paid. Consequently, journal editors had an incentive to provide a product that people were willing to buy.

In contrast many open access publishers charge a publication fee to the author. Unfortunately, this scheme does not create incentives to publish good papers. The publisher does not get compensated unless they  publish the paper. While there are some legitimate open access publishers that charge a publication fee, many unethical entrepreneurs have stepped into the field to publish anything as long as they get paid. See Beall's list for some sense of how many there are. These publishers have an incentive to publish any crap as long as they get paid because they know that no one is going to read, let alone pay for, The International Journal of Business and Social Research or World Journal of Social Sciences.

I have had people try to defend the pay to publish model by saying that a lot of good journals charge fees. Those good journals charge submission fees. The incentives created by submission fees are exactly the opposite of those created by a publication fee. Submission fees encourage authors not to submit crap. Publication fees encourage journals to publish crap. They don't get paid if they don't publish the paper.

I'm not opposed to open access, and I certainly don't support Elsevier, but I don't like it when people champion open access without regard to the consequences.

Recent papers about economic history

Naomi Lamoreaux “Beyond the Old and the New: Economic History in the United States”

Claude Diebolt and Mike Haupert Clio’s Contributions to Economics and History

Isn't this what we are supposed to do?

Pseudoerasmus recently posted an analysis of the issues involved in the slave productivity debate. He also sent me a link to an interesting discussion between Edward Baptist and Trevon Logan on Twitter. I had previously noted Logan's review of Baptist's book in the JEH, which should be mandatory reading for anyone starting work in American history, economic or otherwise. I looked at some related tweets and saw that at one point Baptist wondered who his critics were and what motivated them. He seemed bothered by the anonymity of Pseudoerasmus. I've heard that Alexander Hamilton and William Sealy Gosset published some interesting stuff under pseudonyms. Anyone who wants to know more about who I am can click on the link to my CV in the upper right hand corner. I know John Clegg is a historical sociologist at NYU. I don’t know anything more about him. Pseudoerasmus is an anonymous blogger.   I don’t know who he is, and I don’t care. I evaluate what he writes, not who I think he is. I also don’t know anything about Edward Baptist other than what he writes. For all I know he might be a great guy. He may donate to the food bank and volunteer at the homeless shelter. I wouldn’t be surprised to hear he does both. I haven’t written about who he is, I’ve written my responses to things he has written.

As for the question of motivation, isn’t this what we are supposed to do? One person makes an argument: they state a claim and try to support it with logic and evidence. Other people respond to it. If they think the argument is wrong they say so and explain their reasoning. In Time on the Cross, Fogel and Engerman stated their theses, their reasoning and their evidence. Many economists and historians pointed out errors in all three. To the best of my knowledge, they did not ask what is motivating these guys; they (and their students) went looking for more evidence. 

When I was at Washington University I worked with Doug North (be the way yesterday was Doug’s birthday). Over a very long career, Doug was wrong more than a few times. For example, the central thesis of Economic Growth of the United States does not seem to have been supported by subsequent research. He once told me that the only real benefit of getting older was that he had learned a lot of things that did not work. Doug always seemed to be much more concerned about what he was going to do than with what he had done. Again, he once told me that his aim was to correct his errors before others did. In our economic history seminars we did not sit around telling each other how wonderful we were. My recollection is that people tried to find every potential flaw. I once asked John Nye if he hadn't been awfully hard on someone (not me). John said, "He's a big boy."

So, I don’t understand this question about the identity of critics or their motivation. It doesn’t matter who I am. It matters what I write. I do it because it’s what I am supposed to do.   Edward Baptist wrote a book related to American economic history. My primary field is American economic history. The book was getting a lot of attention, and I thought it was seriously flawed. I wrote about those flaws.

More and more capitalism and slavery

Now Baptist responds to Clegg at the Junto. Have I ever mentioned that the Junto is one of the best blogs out there. I think I have. I find Baptist's response to be about as well reasoned and persuasive as his other work.

Even More on Capitalism and Slavery

The Junto Blog post regarding slavery and capitalism prompted a discussion in the comment section, which Edward Baptist joined in on. He argued that he had not misrepresented the work of Olmstead and Rhode but then doubled down and presented an even more misleading version of their work.

Baptist writes that

 “I argue that they adopt a new system around 1800, more or less, as evidenced by the narratives of survivors, which is supported by the very existence of systematic cotton-picking data itself. (It’s unclear, in Olmstead and Rohde’s argument) why their data even exists.)  

In their paper in the Journal of Economic History, Olmstead and Rhode state that planters kept record books of the pickings of individual slaves and that

“Failing to meet picking standards had severe consequences. In 1834 S. A. Townes of Marion, Alabama threatened to "make those bitches go at least 100 [pounds] or whip them like the devil.” In the 1830s Dr. J. W. Monett of Mississippi asserted that after weighing an individual's daily picking, masters would whip slaves for light or trashy picking. On several occasions, Louisiana planter Bennet Barrow ordered a whipping for all hands because the output was too low. As yet another example, John Edwin Fripp of South Carolina recorded "popping" and "switching" his slaves for light picking. On the Mississippi plantation of John Quitman and Henry Turner, a number of slaves ran away rather than face punishment for light or trashy picking.”

In other words, they argued, based on the evidence, that the slaveholders used the combination of detailed record keeping and whipping to maximize the productivity of slaves. In addition, they found that the average pounds of cotton picked by a slave increased over time. 

There are essentially two ways that this increase over time could have occurred. First, slaves could have been forced to pick closer to the maximum that they were physically capable of. Second, the maximum that they were physically capable of picking increased over time. O & R argue for the second explanation. Improved plants enabled slaves to pick more cotton in a given amount of time. In other words, slaveholders used physical coercion to force slaves to pick at maximum picking rates and through plant breeding they were able to increase this maximum amount that a person was physically capable of picking overtime.

Baptist’s alternative seems to be that the maximum remained relatively stable (he acknowledges that improved plants may have played some role), but planters became more effective at forcing people to produce up to the maximum. But this explanation poses several problems.

1.      

Why were early slaveholders so bad at pushing people to their capacity? Keep in mind that all the records on picking are from slaveholders who kept picking books, yet picking rates in the 1820s appear to have been well less than half of those in the ‘40s and ‘50s.  

2.      

Why didn’t these techniques carry over to other crops (sea island cotton and sugar)

The two problems are illustrated with the following figures from  O & R. 

Finally, Baptist now seems to make much of the claim that productivity fell after the war, suggesting that this somehow contradicts O & R's argument. He claimed that there was a consensus on the decline in productivity. I pointed out that there was not a consensus on the issue and that the data used to estimate productivity after the war are not strictly comparable to that from the antebellum picking books. Personally, I suspect there was probably a decline in productivity. But a decline in productivity is consistent with O & R’s argument. Why? Because they assumed that physical coercion was used to push slaves throughout the period. If you remove it productivity will fall. Pseudoerasmus notes in the comments section at the Junto that the sources Baptist cites are more consistent with O & R's argument than they are with his.

Some Big Question Economic History

Joel Mokyr on the Culture of Growth

Working paper by Koyama, Moriguchi and Sng on the development of state capacity in China and Japan.

And Mokyr on the Needham Paradox

More on Capitalism and Slavery

There is more discussion of capitalism and slavery over at the Junto, prompted by Robin Balckburn's review of Emprire of Cotton and John Clegg's essay in the most recent issue of Critical Historical Studies.  Clegg points out a number of problems with the arguments made by Baptist and Beckert, which I (here, here and here)  and Pseudoerasmus had noted. Clegg also argues that for the new history of capitalism to be fruitful it needs to grapple with the definition of capitalism.

Christine Exley the Economic Rockstar

The latest edition of Economic Rockstar Podcast features Christine Exley of the Harvard Business School. Among other things, she talks about how she came to study economics at the University of Mary Washington.

Disruption Disrupted

The Chronicle of Higher Education examines challenges to Clay Christensen’s theory of disruption. His The Innovator’s Dilemma has become one of the bestselling and most influential books on business strategy.  The historian Jill Lepore wrote an interesting critique of Christensen’s work   for the New Yorker last year. Now, Andrew King  and Baljir Baatartogtokh have a new paper in MIT Sloan Management Review, asking “How Useful is the Theory of Disruptive Innovation?” King and Brent Goldlfarb also have evidence of broader problems in empirical research in management (the problem they examine is not unique to management research). The Chronicle article is interesting both on the specific issue of Christensen’s theory but also on the difficulty King faced in publishing  a challenge to Christensen’s work:

“King and Tucci presented their findings at a conference in 1999. King recalls sitting at a restaurant soon after and a well-known figure in the field approached, shook his hand, and said, "You’re the guy who burst Christensen’s bubble." But it didn’t turn out that way. "We wrote a couple of papers, which we had to tone down a little bit because of the referees," says Tucci. The paper — working title: "Wrong. Wrong. Wrong." — was too polemical, they were told. When it finally appeared in Management Science, in 2002, the article had been smothered in theory and jargon. The published title: "Incumbent Entry Into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities." As Brent Goldfarb, an associate professor of management at the University of Maryland business school and friend of King, says, "You have to look really hard to realize King and Tucci slaughtered Christensen." - See more at: http://chronicle.com.ezproxy.umw.edu/article/The-Undoing-of-Disruption/233101/#sthash.LUXodkFg.dpuf

The historian's craft and economics

My paper (with Mary Eschelbach Hansen) “The historian’s craft and economics” is now available on First View at the Journal of Institutional Economics:

Abstract

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historian's craft. The essence of the historian's craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

Economics really needs better critics

Per Byland recently complained that economists had killed economics

“What we have seen over the course of the last eighty years is a systematic dismantling of the contribution of economics to our understanding of the social world. Whatever the cause, modern economics is now not much more than formal modeling using mathematics dressed up in economics-sounding lingo."

I’m not sure that Bylund and Michael Lind would agree on much, but Lind also has seen the destruction of economics

 “Before World War II, economics — the field which had replaced the older “political economy” — was contested between neoclassical economics, which sought to model the economy with the methods of physics, and the much more sensible and empirically-oriented school of institutional economics. Another name for institutional economics was the Historical School. After 1945, the institutional economics associated in the U.S. with John Kenneth Galbraith was purged from American economics faculties, in favor of the “freshwater” (Chicago) and “saltwater” (MIT) versions of mathematical economics, which focused on trying to model the economy using equations as though it were a fluid or a gas.”

Either Bylund and Lind are completely out of touch with what economists are doing now or I am. Their critique of economics is an old one. I’m not sure it ever really applied, but it does not now. The American Economic Review and other top journals are full of empirical research, not lots of new papers about General Equilibrium.   

What sort of work do economists admire? Here are the John Bates Clark medalists since 1990. How many are known as pure theorists and how many are known for the empirical research?

1991	Paul R. Krugman	Massachusetts Institute of Technology	United States
1993	Lawrence H. Summers	Worldbank	United States
1995	David Card	Princeton University	Canada
1997	Kevin M. Murphy	University of Chicago	United States
1999	Andrei Shleifer	Harvard University	United States
2001	Matthew Rabin	University of California, Berkeley	United States
2003	Steven Levitt	University of Chicago	United States
2005	Daron Acemoğlu	Massachusetts Institute of Technology	Turkey United States
2007	Susan C. Athey	Massachusetts Institute of Technology	United States
2009	Emmanuel Saez	University of California, Berkeley	France
2010	Esther Duflo	Massachusetts Institute of Technology	France
2011	Jonathan Levin	Stanford University	United States
2012	Amy Finkelstein	Massachusetts Institute of Technology	United States
2013	Raj Chetty	Harvard University	United States
2014	Matthew Gentzkow	University of Chicago	United States
2015	Roland G. Fryer, Jr.	Harvard University	United States

Bylund and Lind seem to think that economists all aspire to be Samuelson, Arrow or Debreu. Yes formal models with lots of imposing math are still to be found, but more often than not they lead in to empirical research.

Are there things that economist can do better? Yes. I, for instance wish that economists would give as much attention to the evidence that they use as they do to the formal model and the choice of econometric techniques. On the topic, Mary and I have a paper on “The Historian’s Craft and Economics” that I am happy to say was just accepted by Journal of Institutional Economics. I also wish they would give more attention to history generally, but I’m not really an unbiased source on that topic.