Tuesday, May 31, 2016

Economic and Business History Society

I first presented a paper at EBHS in 1996 in Savannah. My first, publication was in Essays in Economic and Business History. I go to the meeting whenever I can take the train or drive in a reasonable amount of time (say 12 hours or so), and I have published a couple more papers in Essays. EBHS has changed a great deal over the last twenty years. It has become much more international. Many of the members come from Europe, and there is an increasing number from Asia. Every other year the meeting is held outside the United States. This year it was in Montreal. Next year it will be in Oklahoma City, and in 2018 it will be in Finland. The editors of Essays have made it an open access online journal, with an impressive editorial board. What hasn’t changed is that the EBHS meeting always demonstrates that historians and economists (and even some business types) can coexist, not just peacefully, but happily and productively. As long as the methodology seems appropriate for the question, people just want to hear what you have to say. The sessions are well attended, and the questions and comments are thoughtful. EBHS is particularly welcoming of people just starting their academic careers.

This year

Fan Fei won the Lynne Doti award  for the best paper by a graduate student for his work on interstate highways and the decline of general stores. Fei is graduate student in the Economics Department at Michigan. You can find his job market paper here.

Soudeh Mirgashemi won the Fred Batemen prize for the best paper for her work on dams and agricultural development in the West in the early twentieth century.  She did her Ph. D. at Arizona and just finished her first year teaching at Hofstra. Soudeh presented at the same session as Nikola Tynan and Leslie Tomory. Nikola’s paper (coauthored with Brian Beach and Werner Troesken) showed a large drop in typhoid deaths following municipalization of water works in English cities. Leslie presented work on the history of the London water supply. I found it interesting that he said he began the work after he finished a book on the gas industry. Since Werner also started with the gas industry (the Chicago gas trust) it suggests there are economies of scope involved in the study of networks of pipe.   

Brad Sturgill and Dan Giedeman won the James Soltow Award for the best paper published in Essays the previous year.  

Economics still needs better critics

I just got back from the meeting of the Economic and Business History Society in Montreal, and I was going to blog about that, but then someone tweeted about this stupid essay at Evonomics. Eric Beinhocker writes about the problems with traditional economics and the benefits of the new economics. The primary problem with his essay is that his description of traditional economics is what would generally be referred to as bullshit.  He conveniently provides a table from his book, The Origin of Wealth, which I was fortunate enough to have never heard of before.

Pick any element you want. For instance the first one declares that traditional economics assumes that everyone has perfect information. Really? Even principles textbooks cover imperfect information and uncertainty. For Dynamics, he states that traditional economics assumes that the “The Economy automatically goes to equilibrium where social welfare is maximized.” Find me a principles textbook that doesn’t cover externalities, public goods, and monopoly. I like his description of the New Economics even better. “Economy is a highly dynamic system that can go far from equilibrium and become trapped in a suboptimal state.” It can become trapped in a state that is far from equilibrium? Does this guy not know what equilibrium means? Stability is the essential characteristic of equilibrium. In the absence of some sort of shock the situation won’t change. Later he refers to market failures, but he does so at the same time that he declares traditional economics assumes a natural tendency toward efficiency. Market failure is a situation in which the market equilibrium is inefficient. Moreover, equilibrium is a property of models, not reality. Reality is never stable. Equilibrium is nevertheless useful for helping us to consider the direction of change and possible unintended consequences.  In the case of innovation, what he ascribes to new economics is a feature of traditional economics and what he ascribes to traditional economics is not. Traditional economists have long studied the factors that are likely to encourage or impede innovation.

He describes one of the implications of new economic thinking for policy as follows:

Regulators take an action to address a perceived problem, that changes the perceptions and actions of market participants, which in turn creates a new set of problems triggering further regulator actions, and so on. Over time this infinite chase between fallible regulators and equally fallible market participants leaves a trail of rules, structures, and institutions that has a major effect on shaping the evolution of the economy.

Ironically, this is pretty much a description of my paper "LearningTo Tax: The Political Economy of the Opium Trade in Iran, 1921-1941," Journal of Economic History 61(March 2001):95-113. It is ironic because I regard myself as a pretty traditional economist. I see this paper, and most of my work on history and institutions, as building on traditional economics not refuting it.

I have taught pretty traditional principles of microeconomics for more than a quarter century, and I still believe that those simple models provide a great deal of value to students. 

I'll try to write about EBHS and Montreal later today.

Monday, May 23, 2016

Science Fiction and Economics

My friend John McAdams said that he was going to internet stalk me this week. This post is for him.

Random Economic History Stuff

1. I will be in Montreal this week at the meeting of the Economic and Business History Society. Here is the program. I’ll be presenting a paper on “Trust Company Failures in New York State, 1875-1925.”

Despite what appeared to be lax regulation and rapid growth, trust companies rarely failed. These few failures, however, provide a path to understanding the overall success of trust companies in New York in the late nineteenth and early twentieth centuries. Failures played a disproportionate role in shaping the rules and regulations that governed trust companies, and the resolution of each failure provided additional information about how the laws and regulations would be implemented. These failures shed light on issues of corporate governance and financial stability that are still relevant today.

2. This blog made the Intelligent Economist’s list of The Top 100 Economics Blogs of 2016.
Anton Howe’s Capitalism’s Cradle is another economic history focused blog on the list.

3. Pseudoerasmus' blog, which should also be on the list, has some new posts: Did Inequality Cause the First World War?; Inequality and the First Globalization, and Economic History Readings

4. By the way, for those of you who do not know, Pseudoerasmus is the name of a person who blogs and tweets, mostly about economic history and development. Most people seem to assume that that Pseudoerasmus is a pseudonym. Consequently, some people refer to him as an anonymous blogger.
He recently contributed to discussion about the history of capitalism at the Junto and published a long blogpost about the Lenin-Hobson theory of World War I as it appears in Branko Milanovic’s recent book.
Richard Drayton argued with Pseudoerasmus in the comments section over at the Junto. Drayton concluded his part of the exchange with the following:

I’m rather intrigued by a chap, and there’s too much chap coming out of your prose for me to go for gender neutral pronoun, who spends so much of his time writing aggressive anonymous critiques of — and these are only the ones I’ve noticed — David Armitage, Steve Pincus, Ed Baptist, Sven Beckert. These are, or have become, high profile figures, who have produced substantial original work which has been widely received and even often forcefully and critically responded to. Why not publish these pieces with your name behind it? It begins to look rather mean spirited, even envious, and as if you are afraid to defend your position in public, or afraid that somehow whoever you are would diminish the respect with which your opinions are received?

I, on the other hand, am intrigued by a chap who seems so much more concerned with who people are than with what they have to say. The last line is the most intriguing.  Are you “afraid that somehow whoever you are would diminish the respect with which your opinions are received?” What does that mean? Are we absolved from considering the logic and evidence that someone presents if they are not a high profile figure? Or, perhaps he just takes the same approach to argument  that people like Baptist and Cowie do. All you have to do is note that someone is an economist (or a sociologist in the case of John Clegg) before dismissing their argument.

Milanovic’s response to the blogpost by Pseudoerasmus challenging his interpretation of the cause of World War I was to retweet it.

Wednesday, May 18, 2016

New Institutional Economics and Economic History

The University of Wisconsin La Crosse has posted several videos of talks given at a conference there on New Institutional Economics and Economic History



Friday, May 13, 2016

The Ironic Origins of Libertarianism

From I Chose Liberty: Autobiographies of Contemporary Libertarians

“some liberty-loving soul had donated a copy of John Hospers’s Libertarianism: A Political Philosophy for Tomorrow (1971) to my local public library. While I doubt I would find Hospers’s book impressive today, at the time it was a thrilling read. I had never heard the “standard libertarian arguments” before. (Bryan Caplan)

 “When I was about thirteen, I decided I wanted to read all of the good books in the public library. …. At the public library I found Ayn Rand; my grandmother also recommended her to me. Capitalism: The Unknown Ideal had a big influence on me, as did Atlas Shrugged. Hayek and Rothbard followed shortly thereafter.” (Tyler Cowen)

“I had some unusual early influences. In the eighth grade I borrowed an H.L. Mencken book from the city library. I couldn’t understand why everybody didn’t think and write like he did. Also, I became enamored of the Barry Goldwater legend.” (Karen De Coster) 

“That experience led me to the public library and a host of books on economics, one of which was a book whose table of contents I could not understand and which had never before even been checked out: Mises’s Human Action.” (Robert Formaini)