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. 

Micro economic history and some digital history too

William Easterly, Laura Freschi and Steven Pennings argue for the benefits of micro economic history of development by examining the development of one block in lower Manhattan over more than three hundred years. They have produced a fascinating paper and website.

Round table on Edward Baptist's Half has Never Been Told

The September Journal of Economic History has a round table of reviews of Edward Baptist’s book The Half Has Never Been told, with reviews by Alan Olmstead, Jonathan Pritchett, Trevon Logan and Peter Rousseau. They each address different aspects of the way that Baptist misrepresents the historiography of American slavery and makes things up. Thanks to Alan Olmstead for mentioning one of my blog posts on the book. Many of the points noted in these reviews  are similar to ones that I and Pseudoerasmus made about the book shortly after it came out, around the same time it was getting glowing reviews in places like the New York Times Book Reviews. I found Logan’s review particularly interesting when it stepped away from what is typically thought of as economic history. He concludes

  

I think as an economic historian I was so offended by the books portrayal of economic historians I may have missed some of the bigger problems. 

Tariffs and the Civil War, or 95% of All Statistics Are Made Up

A recent letter to the editor of our local paper argued that secession and the Civil War were caused by high tariffs not slavery. The Confederate states were rebelling against high taxes and big government. Apparently, they were really just Reagan Republicans or maybe even libertarians (slaveholding libertarians). The author of the letter made the claim that the South paid 75 percent of the tariff revenue in 1859. I thought the claim was so outrageous  he must have just made it up. It turns out you can find this claim all over the internet. It turns out it even has academic credentials behind it. Some people attribute it to Walter Williams, but he appears to have gotten it from Thomas Di Lorenzo, who attributed it to Frank Taussig’s The Tariff History of the United States. Di Lorenzo, however, did not provide a page citation. I suspect that he did not provide a page citation because one does not exist. If someone can find this in Taussig please let me know.

In any case, it is not true that most revenue came from Southern ports. A small fraction of tariff revenue came from Southern ports. In 1860 the Secretary of the Treasury reported the amount of revenue collected in each collection district between 1854 and 1859. (Sen. Ex. Doc. No. 33 36^th Congress 1^st Session). Looking at 1857, for instance, one finds that total revenue was $64,171,034. Most of the revenue, $42,510,753, came as it did every year from a single port: New York. The most important port in the South was New Orleans, which brought in a little more than $3 million, less than half as much as Boston. Southern ports were not even close to being the most important source of revenue.

There is no mystery as to why Southern states seceded. They issued secession proclamations explaining their actions. South Carolina was the first to secede, and the state’s proclamation does not mention tariffs. It is entirely about the perceived threat to slavery. It declares that 

“A geographical line has been drawn across the Union, and all the States north of that line have united in the election of a man to the high office of President of the United States, whose opinions and purposes are hostile to slavery. He is to be entrusted with the administration of the common Government, because he has declared that that "Government cannot endure permanently half slave, half free," and that the public mind must rest in the belief that slavery is in the course of ultimate extinction.” 

Apparently we are to believe that they were simply hiding their true motivation, opposition to tariffs. I wish modern defenders of the Confederacy were as honest as its original defenders.

History, Facts and Life Expectancy

Earlier this week on twitter Peter Bent mentioned Richard Yeselson’s review of Steve Fraser’s Age of Acquiescence: the Life and Death of American Resistance to Organized Wealth and Power in Dissent. One of the claims made by Fraser, and repeated by Yeselson, is that, although life expectancy increased during the Gilded Age, “it is also the fact that the life expectancy of white males born during or after the Civil War was ten years less than it had been a century earlier” (Fraser, 2015: 39). He provides a citation to Centers for Disease Control, National Center for Health Statistics. That is the entire citation. It is not clear whether it refers to a publication, a website, or personal correspondence. I checked the website for the Center. They do have statistics on life expectancy, but I only saw ones that went back to 1900. Historical Statistics of the United States has estimates of life expectancy, but they only go back to 1850. They show that life expectancy at birth increased from about 38 in 1850 to 40 in 1860 and 50 by 1900. If these estimates are reasonable and Fraser is correct, life expectancy at birth would have been between 50 and 60 years in the late 1700s.

There is one estimate that I know of life expectancy in the 1700 that is this large: Fogel, using family histories, estimated that life expectancy was greater than 55 years in the mid-1700s.(Robert William Fogel, "Nutrition and the Decline in Mortality since 1700: Some Preliminary Findings," in Engerman and Gallman Long Term Factors in American Economic Growth.

Fogel’s graph appears to indicate that life expectancy did not return to its mid 1700s level until the middle of the twentieth century. Personally, I’m skeptical of the accuracy of these estimates. They are much higher than other estimates. In the late 1700s, Wigglesworth estimated life expectancy in the mid 30s in Massachusetts in the late 1700s. Recently, Becker estimated life expectancy in the 1700s to be around 40, using data on people who attended Yale. In addition, Fogel notes that members of the British peerage had a life expectancy of only about 40 years in the late 1700s. It should also be noted that Fogel’s estimates of large decreases in life expectancy are consistent with estimates of large decreases average height, but there are good reasons to question the validity of that conclusion as well. If there were no large decreases in welfare reflected in average height, does it make sense that there would have been large decreases in life expectancy. In short, much of the available evidence seems hard to reconcile with very high life expectancy in 1700s America.

 I do find it plausible that there may have been a number of factors in the early nineteenth century that could have adversely affected health. Increased urbanization almost certainly increased the spread of disease. In addition, there were new diseases to spread, like cholera.

With some luck and a lot of work we will probably have more confidence in our knowledge of health and welfare in the eighteenth and nineteenth centuries. In the meantime, I am inclined to believe Becker’s estimates for the 1700s. That would mean that life expectancy increased very slowly during the nineteenth century, and then more rapidly after about 1900 as cities began to invest in sewage removal and water purification.  Chapter 3 of Higgs Transformation of the American Economy (still my favorite book on American economic history and now free from the Mises Institute) describes the impact of these improvements.

What is the point of all this rambling on about what we don’t know? The point is precisely that, we don’t know. I know it’s a lot to ask, but historians should take a critical approach to the evidence. Let people know when something is still up in the air. There is really nothing resembling a fact regarding mean life expectancy in the 1700s in America. There are a number of widely varying estimates. Don’t tell people we have “facts” that we don’t have. There are more, and more important, puzzles in history than what happened to the Roanoke Colony. Perhaps I’m getting old and cranky, but it seems to me that I have seen a lot of historians lately playing fast and loose with the evidence in order to make their point. And many of their reviewers do the same: they evaluate the book on how well it conforms to their preconceptions. 

Some random stuff

Did heights actually decline during the industrial revolution in the United States? Probably not.

New website about research on bankruptcy.

The history of Kool Aid at the Hastings Museum.

Until I was 9 I lived a block away from the Hastings Museum. My Grandma Schneider bought my brother and me annual passes. We spent a lot of time there as kids and went back for the first time in over thirty years last week. It is still one of my favorite museums. Some of my other favorites are Pioneer Village in Minden, NE, the Deutsches Museum in Munchen, the Frontier Culture Museum in Staunton, VA, the Royal British Columbia Museum in Victoria, B.C., and the National Museum of American History in D.C.

 

By the way if you are near Kearney, NE and want some good Mexican food go to El Maguey

How are prices determined? The case of statistical consultants

How are prices determined? AnnMaria De Mars offers advice to statisticians on how to price their services. It comes down to this

 “So, that’s it, decide a fair rate based on what the market is paying, where, based on objective criteria, your skills and experience fall compared to the general population of whatever-you-do and figure in what non-monetary requirements you or the employer have .” 

Dr. De Mars’ offers good advice and good economics. This is pretty much what I tell students regarding how businesses set prices, except I throw in a little economic terminology. She essentially describes a price that is a function of the price elasticity of demand. The price elasticity of demand is the percentage change in the quantity demanded in response to a one percent change in price. Other things equal, when the price of a good increases people buy less of it. Consequently, the more inelastic the demand for the product you sell, the greater your ability to mark up the price above the cost of production.

What determines elasticity? Elasticity is determined by the availability of close substitutes. The more close substitutes for the good you sell (the more elastic the demand), the less control you have over the price; the less close substitutes there are for the good you sell (the more inelastic the demand), the more control you have over the price. In other words, if you are pretty much like the other statisticians out there you need to charge what they are charging; you can only charge more if you can convince people that you are superior in some way. And, in the long run, you can probably only convince people that you are better than others if it is true. In other words, businesses that do not generally follow De Mars’ suggestions are unlikely to survive.

Understanding how prices are determined also provides a better understanding of business strategy. I tell students that if they plan on starting a business they should aim to be a monopolist. The essence of being a monopolist is that you are the only seller. To be the only seller, you need to convince customers that other goods are not a substitute for yours, and you need some barriers to entry, things that keep people from copying what you do. Fortunately for statisticians, they already have somewhat of a barrier to entry in that most people think that math is a lot of work and not much fun.

The other good point that she makes is that people should not just focus on the money. A lot of people think economists are totally focused on money. Nothing could be further from the truth about good economics. Economists assume that people maximize utility, which means satisfaction. People can get satisfaction from a lot of different things.

Two related things:

1. De Mars is trying to make math more fun.

2. One of De Mars’ daughters has done an extraordinary job of demonstrating that none of her competitors provide a close substitute for what she does.