What I'm Listening To

A really interesting Junto Cast on Bernard Bailyn's The Ideological Origins of the American Revolution.

It's A Start

More women are among the top earners

The cost of college

Susan Dynarski in the New York Times:

"In 1988, state legislatures gave their public colleges an average of $8,600 a student. Students contributed an additional $2,700 in tuition, which gets us to a total of $11,300. By 2013, states were kicking in just $6,100, while students were contributing $5,400"

The half (maybe a bit more) that Baptist does not tell

The new book by Edward Baptist The Half Has Never Been Told has been getting a lot of attention on the internet. More precisely, a review of the book in The Economist has been getting a lot of attention.

Amid all the attention to the Economist’s ridiculous review, the book itself has been somewhat neglected.

I have not read the entire book. I have read the parts related to the areas that I am most familiar with. What I have read I do not like. On page 129 he writes that “during the late antebellum years, northern travelers insisted that slave labor was less efficient than free labor, a point of dogma that most historians and economists have accepted.” The footnote for this statement does not actually provide any evidence to support, which is not surprising since you would be hard pressed to find an economic historian who does accept it. Actually, there have been surveys of economic historians that show that more than two-thirds would agree that slave agriculture was efficient relative to non-slave agriculture. It has been more than a half century since Conrad and Meyer showed that investment in slaves had a return comparable to other potential investments. As best I can tell Baptist does not even cite Conrad and Meyer. Fogel and Engerman long ago argued that slave agriculture was as dynamic a version of capitalism as existed anywhere in the United States. In awarding the Nobel Prize to Fogel in 1993, the Nobel committee stated that “Fogel showed that the established opinion that slavery was an ineffective, unprofitable and pre-capitalist organization was incorrect. The institution did not fall to pieces due to its economic weakness but collapsed because of political decisions. He showed that the system, in spite of its inhumanity, had been economically efficient.” How can any of this be reconciled with the claim that most economists and historians and economists accept the dogma that slave labor was less efficient?

To say that Baptist is knocking down a straw man would be an injustice to straw men.

He suggests that pretty much everyone has failed to notice that productivity increased on cotton plantations, but his primary evidence for this is from Olmstead and Rhode, and, for some reason, he cites their NBER working paper, even though the paper was published in the Journal of Economic History six years ago. He also rejects Olmstead and Rhode’s explanation for the productivity increase, which emphasizes improvement in cotton plants, but he does not address the evidence that they provided to support of this conclusion (productivity increased much more in areas that grew varieties of cotton for which new seeds were being developed than it did in areas where new varieties were not grown). Contrary to what he seems to suggest Olmstead and Rhode did not simply assume that it must have been technological change that caused productivity to increase. They went to considerable effort to rule out other explanations.

This is not nitpicking. These arguments are at the center of the book. Baptist consistently misrepresents or ignores the contributions of others, even when it is clear that he is familiar with their work. The false claims about the book’s contributions make it difficult to discern if there are any legitimate contributions.

By the way, if you are looking to read a good recent book about slavery in the United States, I would suggest Kathleen Hilliard’s Masters,Slaves and Exchange.

The Dismal Science

In the Los Angeles Times Hector Tobar writes that "In "The Half Has Never Been Told," Baptist adds many new, stark and essential elements to that story. His most important achievement is to show us how the "dismal science" of economics served to make the lot of slaves even grimmer."

If Baptist were to do this it would be a nice trick. Thomas Carlyle was the one who named economics the dismal science. What did he find dismal about it? He thought it was dismal that economic theory did not provide support for slavery and that economists like John Stuart Mill supported emancipation.

I think there are a number of problems with Baptist's book, but I suspect this quote just reflects Tobar's ignorance.

You call it predictive analytics. We call it econometrics.

HBR Blog Post on Predictive Analytics

The truth about student debt

The Reality of Student Debt in the New York Times


"the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday. Only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000."

For what shall it profit a university if it shall gain AACSB accreditation and lose its own soul?

Mark Perry argues that the Association to Advance Collegiate Schools of Business is fueling the growth of fraudulent journals by demanding that faculty publish but giving no consideration to where they publish. I am starting believe that he is right.

Evergreen

http://www.insidehighered.com/news/2014/02/28/evergreen-state-colleges-unusual-take-assessment

This sounds like a good idea, but I think the article might be exaggerating how large a change this is. I graduated from Evergreen in 1984. For each interdisciplinary program you had to write a self-evaluation and an evaluation of the program and faculty, and the faculty member that you worked with wrote an evaluation of you. Each of these evaluations was 2-4 pages. Written evaluations and serious reflection have always been the norm at Evergreen. I do, however, think this is a nice addition. It sounds like it asks students to keep the big picture in mind. It also reminds me a bit of the plans that my daughter had to do while she was at Bennington.

 

P.S. I looked at the Evergreen webpage, and it is great to see that Greeners still have the opportunity to work with Tom Rainey and Jeanne Hahn.

HT to Steve Greenlaw

Problems with Bitcoin

The New York Times reports that "On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin’s existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation."

Economic History in the News

Gregory Clark of UC Davis describes the results of his recent research in the Sunday New York Times. He uses a large amount of evidence on family names and economic status o show that reversion to the mean takes place, but it takes a long time. I thought his story seemed pretty persuasive. On the other hand, at the end he concludes that adoption studies, "along with studies of correlations across various types of siblings (identical twins, fraternal twins, half siblings) suggest that genetics is the main carrier of social status." I don't find this conclusion nearly as persuasive. The problem with adoption studies is that adoptable children are not selected at random from the population, making it difficult to say how for results can be generalized. I would like to see more direct evidence that people do not treat people with high status names differently.

Business Women

The Washington Post ran a story this morning about a company called FlexProfessionals. The business helps professionals who have been out of the labor force return to the labor force. The founder has an MBA from Harvard. the business generated over $1 million in revenue last year. This is the photograph that went with the story. I did not find the photo online; consequently, this is a picture of the photograph I took with the camera attached to my computer. It struck me as odd that they would be portrayed sitting on the floor. I do not believe that I have ever seen articles about business men that show them sitting next to each on the floor.

Bitcoin

One of my students asked what I thought about bitcoin the other day in class. I told him that I thought Tyler Cowen had made an interesting case for an eventual decrease in the value of bitcoin. Consequently, I am reposting a link to Marginal Revolution here.

Minimum Wages

This is from the Economist, suggesting, in response to Noah Smith, that micro is not the good economics. the author offers up the minimum wage as his example.

There are three things that both me about the article.

First, the author states that if you "ask any two economists – macro, micro, whatever – whether raising the minimum wage will reduce employment for the low skilled, and odds are you will get two answers." The link is to a survey of well known economists. Click on the link. The survey asked the economists to respond to this
"Question A: Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment." I have seen this survey cited several times. The actual question is almost never stated. To an economist the questions are actually quite different. The economists question is about the direction of change will it reduce employment or not? The actuial question was about the size of the change will it be "noticeably harder?" To an economist that is a question about the elasticity of demand not the sloe of the demand curve. Microeconomic theory alone does not make a prediction about the size of the change, whether it will be noticeably harder. That is an empirical question. with that in mind, look at the results of the survey.  The most significant ting to note about the results is that none of the economists said that they strongly agree or strongly disagree, and about one quarter simply said they were uncertain. the rest were split between agree and disagree. In other words, when asked an empricial question which most of them had probably not conducted first hand research on, economists either replied "I don't know" or "my best guess is ...."

Second, it is not clear that this is a micro question. The survey and the Economist article seem to be talking about the aggregate amount of employment of low skilled workers. Not the employment in a particular market. I tell students the difference between micro and macro is that micro deals with particular markets and macro deals with aggregates.

Third, the time series data on the effects of the minimum wage on the employment of low skill workers (the direction of change) seems to be pretty consistent. The size of the change, whther it is noticeable, is not, however, very consistent.

Consider this graph from http://idiosyncraticwhisk.blogspot.com/2014/01/teen-employment-and-minimum-wage-60.html via Marginal Revolution

ASSA in Philadelphia

 

 

I got back from the ASSA meetings in Philadelphia last night. I had some excellent food. We'll have to go back to Alma de Cuba when its warmer and try their ceviche sampler. We took Mary's students Leanne Roncolato and Megan Fasules out to Serpico, which had a really nice tasting menu. And Pumpkin cemented its position as my favorite place to eat in Phildelphia. Also went to Saint John the Evangelist Friday night.

 

I also attended some great sessions. The economic history sesions (organized by the Cliometric Society and the Economic History Association) were all excellent and very well attended. The one in which my wife, Mary Eschelbach Hansen and her student, Megan Fasules, presented was packed and both Paul Solman and Matt Yglesias were there. Yglesias even tweeted one of the slides from Mary and Megan's presentation.

 

Cliometric Society Sessions

Spatial Allocation of Conflict, Individuals, and Economic Activity

January 3, 2014, 12:30 – 2:15 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: Mary Hansen (American University)

Discussants: John Brown (Clark University), Allison Shertzer (University of Pittsburgh), Hugh Rockoff (Rutgers), Chris Vickers (Northwestern)

“Railroads and the Regional Concentration of Industry in Germany 1846 to 1882,” Theresa Gutberlet (Rensselaer Polytechnic Institute)

“Segregation (Forever?): Measuring the Short- and Long-Term Consequences of Segregation,” John Parman (College of William and Mary) and Trevon Logan (Ohio State University and NBER)

“Military Conflict and the Economic Rise of Urban Europe,” Mark Dincecco (University of Michigan) and Massimiliano Onorato (IMT Institute for Advanced Studies)

“Murder and the Black Market: Prohibition’s Impact on Homicide Rates in American Cities,” Brendan Livingston (???)

Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective

January 3, 2014, 2:30 – 4:30 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: William Collins (Vanderbilt and NBER)

Discussants: Carola Frydman (Boston University and NBER), William Collins (Vanderbilt and NBER), Matt Jaremski (Colgate University and NBER)

“Corporate Governance and the Establishment of Manufacturing Enterprises in New England,” Eric Hilt, (Wellesley College and NBER)

“Economies of Scale in Nineteenth Century American Manufacturing Revisited: A Resolution of the Entrepreneurial Labor Input Problem,” Robert A. Margo (Boston University and NBER)

“How Does Governance Matter? An Examination of the Long-Term Evolution of Bank Boards in the United States, 1800-1933,” Howard Bodenhorn (Clemson University and NBER) and Eugene White (Rutgers University and NBER)

Technology and Property Rights

January 4, 2014, 2:30 – 4:30 pm, Philadelphia Marriott, Meeting Room 406

Organizer: John Murray (Rhodes College)

Chair: David Mitch (University of Maryland-Baltimore County)

Discussants: Lisa Cook (Michigan State), Carol Shiue (University of Colorado), Ahmed Rahman (U.S. Naval Academy), Susan Wolcott (Binghamton University)

“Copyright and the Diffusion of Classical Music,” Petra Moser (Stanford University) and Jerry Lao (Stanford University)

“The Great Divergence and the Economics of Printing,” Luis Angeles (University of Glasgow)

“Turning Points in Leadership: Shipping Technology in the Portuguese and Dutch Merchant Empires,” Claudia Rei (Vanderbilt University)

“Industrial development and technology adoption in late nineteenth century Japan,” John Tang (Australia National University)

Economic History Association Sessions

Poverty from a Historical Viewpoint

January 4, 2014, 12:30 – 2:15 pm, Philadelphia Marriott, Meeting Room 307

Organizer: Martha Bailey (University of Michigan)

Chair: Robert Margo (Boston University)

Discussants: Tom Vogl (Princeton), Robert Margo (Boston University), Melissa Thomasson (Miami University – Ohio), Rob Gillezeau (New Democratic Party, Ontario Canada)

“Up from Poverty? The 1832 Cherokee Land Lottery and the Long-run Distribution of Wealth,” Joseph Ferrie (Northwestern University) and Hoyt Bleakley (University of Chicago)

“The Effects of Childhood Means-tested Cash Transfers on Mortality: Evidence from the Mother’s Pension Programs,” Shari Eli (University of Toronto), Anna Aizer (Brown University), Adriana Lleras-Muney (UCLA), and Joseph Ferrie (Northwestern University)

“Interactions between Social Insurance Programs: The Impact of Medicare on the Characteristics of Petitioners for Bankruptcy,” Megan Lynn Fasules (American University) and Mary Eschelbach Hansen (American University)

“Poverty and Progress among Canadian Immigrants, 1911-1931,” Chris Minns (London School of Economics), Kris Inwood (University of Guelph) and Fraser Summerfield (University of Guelph)

Reception hosted by the Cliometric Society

Saturday, January 4th, 6:00-8:00 pm

Philadelphia Marriott Downtown - Meeting Room 403

Banking

January 5, 2014, 10:15 am – 12:15 pm, Philadelphia Marriott, Meeting Room 307

Organizer: Martha Bailey (University of Michigan)

Chair: Hugh Rockoff (Rutgers)

Discussants: Dominick Bartelme (UC Berkeley), Joshua Hausman (University of Michigan), Jonathan Rose (Federal Reserve Board)

“American Banking and the Transportation Revolution Before the Civil War,” Matthew Jaremski (Colgate University), Jeremy Atack (Vanderbilt University), and Peter Rousseau (Vanderbilt University)

“Central Bank Credibility and Reputation: An Historical Exploration,” Pierre Siklos (Wilfrid Laurier University) and Michael Bordo (Rutgers University)

“Financial Liberalization and Bank Failures: The United States Free Banking Experience," Philipp Ager (University of Southern Denmark) and Fabrizio Spargoli (Erasmus University)