Kennedy Owen produces interviews at a pretty rapid pace. She has posted several new ones since I blogged about Time to Speak Econ a few days ago, including this one with Gary Hoover.
This is a blog about economics, history, law and other things that interest me.
Thursday, April 27, 2023
Thursday, April 20, 2023
Time to Speak on Econ
I received an email yesterday from Kennedy Owen, who is currently a junior in high school, telling me about Time to Speak on Econ a series of interviews she has done with economists. I checked them out and noticed there was one with the economic historian Josh Rosenbloom. I listened to the interview with Rosenbloom and then a couple of others. I like them. She asks questions about the education and careers of each person from the perspective of a young person who is considering studying economics in college. She has one of my favorite qualities in an interviewer: she asks relatively broad questions and then just lets the interviewee talk.
I hope other people find them useful and enjoyable.
Friday, April 7, 2023
Recent NBER Meetings
Yes, NBER charges for downloads of working papers, but you
can watch some recent meetings for free. By the way, it has also been my
experience that you can usually find ungated versions of most NBER working papers
if you look around.
I think both the Race and Stratification Economics and the
Development of the American Economy meetings should be of interest to readers
of this blog.
The final presentation at the Race and Stratification
meeting is University of Mary Washington economics alum Lavar Edmonds, who is
currently working on a Ph.D. in economics at Stanford, presenting his research
on the impact of HBCU trained teachers.
I also liked that the Race and Stratification meeting about how one could incorporate race and stratification economics into introductory
economics courses.
NBER
Race and Stratification Working Group on YouTube
https://www.nber.org/conferences/race-and-stratification-working-group-spring-2023
Caste-based and Racial Wealth Inequality in India and the
United States
Ishan Anand, Indian Institute of Technology Delhi
Discussants:
Ellora Derenoncourt, Princeton University and NBER
Ashwini Deshpande, Ashoka University
Perceptions of Racial Gaps, their Causes, and Ways to Reduce
Them
Matteo F. Ferroni, Boston University
Stefanie Stantcheva, Harvard University and NBER
Discussants:
Michael Kraus, Yale University
Candis Watts Smith, Duke University
Unequal Gradients: Sex, Skin Tone, and Intergenerational
Economic Mobility
Luis A. Monroy-Gómez-Franco, University of Massachusetts,
Amherst
Roberto Vélez-Grajales, Centro de Estudios Espinosa Yglesias
Gastón Yalonetzky, Leeds University
Discussants:
Art Goldsmith, Washington and Lee University
Chantal Smith, Washington and Lee University
Teaching Discrimination in Introductory Economics: An
Approach Incorporating Stratification Economics
Jorgen M. Harris, Occidental College
Mary Lopez, Occidental College
Complementary Investments Over the Life Course and the
Black-White Earnings Gap
Sonia R. Bhalotra, University of Warwick
Damian Clarke, Universidad de Chile
Atheendar Venkataramani, University of Pennsylvania and NBER
Estimating Disenfranchisement in U.S. Elections, 1870-1970
Jeffery A. Jenkins, University of Southern California
Thomas R. Gray, University of Texas at Dallas
The Determinants and Impacts of Historical Treaty-Making in
Canada
Donn. L. Feir, University of Victoria
Rob Gillezeau, University of Toronto
Maggie E.C. Jones, Emory University and NBER
A Simple Model of Group Conflict, Inequality and
Stratification
Daniele Tavani, Colorado State University
Brendan Brundage, Colorado State University
Discussants:
Pablo Beramendi, Duke University
Patrick L. Mason, University of Massachusetts Amherst
Racial Disparities in the Tax Treatment of Marriage
Janet Holtzblatt, Tax Policy Center
Swati Joshi, Brookings Institution
Nora R. Cahill, Brookings Institution
William Gale, Brookings Institution
Not so Black and White: Uncovering Racial Bias from
Systematically Misreported Trooper Reports
Elizabeth Luh, University of Michigan
Economic Inequality and Stratification after a Natural
Disaster
Anita Alves Pena, Colorado State University
Role Models Revisited: HBCUs, Same-Race Teacher Effects, and
Black Student Achievement
Lavar C. Edmonds, Stanford University
Discussant:
Michael Gottfried, University of Pennsylvania
Karolyn Tyson, Georgetown University
NBER
Development of the American Economy Program meeting on YouTube
https://www.nber.org/conferences/development-american-economy-program-meeting-spring-2023
A Penny for Your Thoughts
Walker Hanlon, Northwestern University and NBER
Stephan Heblich, University of Toronto and NBER
Ferdinando Monte, Georgetown University and NBER
Martin B. Schmitz, Vanderbilt University
Legal Activism, State Policy, and Racial Inequality in
Teacher Salaries and Educational Attainment in the Mid-Century American South
Elizabeth U. Cascio, Dartmouth College and NBER
Ethan G. Lewis, Dartmouth College and NBER
This paper was distributed as Working Paper 30631, where an
updated version may be available.
US Educational Mobility in the Early Twentieth Century
Martha J. Bailey, University of California, Los Angeles and
NBER
Abdul Raheem Shariq Mohammed, Northeastern University
Paul Mohnen, University of Pennsylvania
The Value of Ratings: Evidence from their Introduction in
Securities Markets
Asaf Bernstein, University of Colorado at Boulder and NBER
Carola Frydman, Northwestern University and NBER
Eric Hilt, Wellesley College and NBER
This paper was distributed as Working Paper 31064, where an
updated version may be available.
Germ Theory at Home: The Role of Private Action in Reducing
Child Mortality during the Epidemiological Transition
James J. Feigenbaum, Boston University and NBER
Lauren Hoehn-Velasco, Georgia State University
Sophie Li, Boston University
“Muddling Through or Tunnelling Through?”: UK Monetary and
Fiscal Exceptionalism during the Great Inflation
Michael D. Bordo, Rutgers University and NBER
Oliver Bush, Bank of England
Ryland Thomas, Bank of England
Tuesday, April 4, 2023
Economic History in The American Historical Review
Everyday Economic
Justice: Mediating Small Claims in Mexico City, 1813–1863
Louise E. Walker
Abstract
This article examines economic justice in nineteenth-century
Mexico City through analysis of small-claims conflicts—juicios verbales. After
the promulgation of the 1812 Cádiz Constitution, this centuries-old tradition
of judicial arbitration was shaped by liberal constitutionalism. A new class of
officials, the alcaldes constitucionales, were elected by residents to decide
cases. Cádiz liberalism inaugurated a new world. What happened when people
faced a classic problem, when they did not pay their debts? Microeconomic
history—the quantitative and qualitative study of the economic relationships,
decisions, and actions of individuals, households, and small
enterprises—exposes the workings of economic justice. From 1813 to 1863, tens
of thousands of residents pressed their claims before magistrates. As this
article shows, justice grounded in Cádiz liberalism was relatively effective
for ordinary people and evinced a gender fairness. These small-claims conflicts
might seem a petty world of negligible amounts and narrow-minded disputes, but
analyzed together, they challenge conventional interpretations about
institutional deficiency and historical underdevelopment. Cádiz liberalism
established a judicial institution to protect property rights, especially for
creditors, that enjoyed broad legitimacy.
When Hay Was
King: Energy History and Economic Nationalism in the Nineteenth-Century United
States
Ariel Ron
Hay was a linchpin of the early industrial energy regime. It
was the primary fodder for working horses, who became more rather than less
important over the 1800s. Though largely ignored by historians, hay was of
comparable value to cotton and wheat in the nineteenth-century United States.
The crop’s historiographical invisibility is partly due to its relatively
informal and decidedly subglobal production and exchange patterns. Whereas
cotton and wheat exports passed through customhouses and institutionalized
exchanges that carefully recorded trade volumes, hay was almost never exported
and often underwent no market transaction at all, instead being used as an
intermediate good on farms. Only when the US federal government added a
detailed agricultural census in 1850 did the magnitude and importance of hay
production become publicly legible. At that point, hay was drafted into a
wide-ranging debate about economic development between Northern antislavery
nationalists and Southern proslavery free traders, with “King Hay” emerging as
a foil for “King Cotton.” King Hay thus urges historians to pay more attention
to the trade patterns, developmental policies, and economic ideologies that
generated distinctly national, as opposed to global, economic spaces within
nineteenth-century capitalism.
Thursday, January 12, 2023
Economics and History
I have argued numerous times that the differences between economic and history tend to be exagerated, usually by economists who want to criticize history or historians who want to criticize economics. So, I really liked this paper by Sheilagh Ogilvie that reviews research on serfdom by both historians and economists and makes the case that the differences are exagerated and that the diferences that do exist make the fields complements, not substitues.
Economics and History: Analyzing Serfdom
Economics and history are often regarded as antithetical. This paper argues the opposite. It builds its case by showing how economics and history provide complementary approaches to analyzing a fundamental historical institution: serfdom. The paper scrutinizes three questions: how serfdom shaped peasant choices, how it constrained those choices, and how it affected entire societies. By working together, economics and history have generated better answers to these questions than either discipline could have achieved in isolation. Economic and historical approaches, the paper concludes, are not substitutes but complements.
Tuesday, November 22, 2022
Bruce Carruthers' Economy of Promises: Trust, Power, and Credit in America
There are many good books on various aspects of the history of
credit: Rowena Olegario’s A Culture of
Credit: Embedding Trust and Transparency in American Business, Josh
Lauer’s Creditworthy
A History of Consumer Surveillance and Financial Identity in America , Louis
Hyman, Debtor
Nation: A History of America in Red Ink, Anne Fleming’s City of Debtors:
A Century of Fringe Finance, Judge Glock’s The Dead
Pledge: The Origins of the Mortgage Market and Federal Bailouts, 1913–1939.
I can also point to some good books on law and credit, particularly bankruptcy
law: Bruce Mann’s Republic of
Debtors: Bankruptcy in the Age of American Independence, Edward
Balleisen’s Navigating Failure:
Bankruptcy and Commercial Society in Antebellum America, David Skeel’s Debts
Dominion: A History of Bankruptcy Law in America, and our own Bankrupt
in America: a history of debtors, their creditors, and the law in the twentieth
century (Mary Eschelbach Hansen and Bradley A. Hansen). In addition,
there are many excellent books on the history of banking. On the other hand, I
have always had hard time pointing to a big picture book on the history of
credit that I can recommend. Most are not as bad as David Graeber’s Debt,
but they tend to have the same problem as Graeber. They try to cover so much ground that they get in over their head and glaring factual errors start to pile up.
Now I have a book I can recommend. Bruce Carruthers' Economy
of Promises: Trust Power, and Credit in America provides a history of
credit in the American economy that covers everything from the local
storekeeper allowing customers to pay later, to retail trade credit, to bank
lending, to corporate and government bonds, to mortgages, to credit cards, to
student loans. He weaves these developments into a single over arching story
and he does so without the sort of glaring factual errors that have afflicted
other attempts to cover this much ground.
The overarching story is built around the idea that credit
is a specific kind of promise: I promise to pay you in the future. Focus on
this promise leads to a question: whom to trust? How do we tell which promises
are credible. During the colonial era and early Republic, most people made such
promises to people they knew. They were able to base their decisions about whom
to trust on their extensive knowledge of the people in their community. Trusting
people beyond this community required the creation of substitutes for this
local knowledge. Caruthers first examines the expansion of trade credit. After
the Panic of 1837 mercantile agencies began to collect and sell to merchants such
local knowledge, making it possible for manufacturers and wholesalers to evaluate
the credibility of merchants who lived far from them, merchants they did not
know personally. Over time their assessments of the trustworthiness of merchants
became professionalized and routinized, based on data rather than just ad hoc impressions.
The process of formalizing the evaluation of debtors spread to other types of
credit. People who specialized in determining who to trust developed ratings
for the riskiness of trade creditors, corporations, municipalities, home buyers,
and consumer credits.
In telling this story, Carruthers highlights one of the most
important trends in modern business history, the transformation of activities
that depended on the tacit knowledge of individuals into processes that could
be made explicit and replicated on a large scale. He also gives attention to
the role that the government has played in credit, helping to provide institutions
that facilitate credible promises, but also promoting or impeding access to
credit to achieve other objectives.
Economy of Promises is also a model for other work in
social science history. Carruthers is a sociologist who values the work not
just of other sociologists but of economists, political scientists, historians,
and legal scholars. Consequently, he can tell a story that covers the traditional
economic issues of credit but also blends them with concerns about the relationship
between credit and issues of power.
In short, Economy of Promises is the best place to
start if you want to understand the role of credit in the American economy.
Saturday, July 23, 2022
More How I Built This and Business History
This is the second post on the podcast How I Built This and academic research on business history and entrepreneurship.
Danny Meyer founded some of the most highly regarded restaurants in New York: Eleven Madison Park, Union Square Café, and Gramercy Tavern. He is also the founder of Shake Shack, which generates over $400 million in revenue a year. When he decided that he wanted to get into the restaurant business rather than go to law school a college friend got him an interview that led to his first restaurant job. Later he was able to use his father’s connections in the travel business to work with chefs in France and Italy. Another friend, who happened to be Bryan Miller, the food writer for the New York Times, who helped him make contacts with people in the New York food scene. When he found the perfect place to open his first restaurant, Union Square Café, he was able to obtain the lease for about $240,000 and spend another $500,000 building out the restaurant thanks to loans from his mother, aunt and uncle. This aspect of Meyer’s story is not that unique. Many of the stories on How I Built This involve getting loans of tens or even hundreds of thousands of dollars from relatives. The mother of Daymond John, the founder of FUBU, borrowed $100,000 on her house to put into his business and then let him use the house as his factory. The founders of Whole Foods, Supergoop, Chipotle, MM La Fleur, Tempurpedic, and Crate and Barrel all received large loans or investments from family members.
Help doesn’t always come from family. Holly Thaggard was able to get a chemist to help her develop the product and she was able to get a PR firm to take her on because of a phone call from Roxanne Quimby, founder of Burt’s Bees, who had befriended Thaggard at a trade show.
These stories reminded me of one of my favorite business history books, Pull: Networking and Success since Benjamin Franklin by Pamela Walker Laird. In the book Laird challenged the notion of the entrepreneur as a self-made man or woman by highlighting the role of connections in stories of business success. This is from the introduction
Far from being the self-made men or woman of entrepreneurial mythology, one of the common characteristics of successful business founders appears to be the ability to recognize when they need help and the willingness to go get it.
Wednesday, July 13, 2022
The Importance of Douglass North
I just listened to an episode Econ Roots, in which Mike Munger was interviewed about the importance of Douglass C. North. Like myself, Munger went to Washington University and worked with North. His answer to why North was important was that “he had a view of economic history that took time seriously.” He notes, for example, that North would ask about where preferences came from rather than taking them as given.
It is a great podcast episode, but my personal answer to the question would be slightly different because I had recognized the importance of explain changes in institution over time before I read North. As an undergraduate at the The Evergreen State College the two books that had the biggest impact on me were Samuelson’s Economics and Thorstein Veblen’s Theory of the Leisure Class.
The neo-classical economics of Samuelson immediately made sense to me. I found the use of models to analyze individuals maximizing subject to constraints and interacting with other people doing the same to be an incredibly powerful tool.
Then I read Veblen. Veblen argued that economic theory was fine as far as it went, but it didn’t go far enough. In his first book, The Theory of The Leisure Class (1899), he explained that, "The institutions are, in substance, prevalent habits of thought with respect to particular relations and to particular functions of the individual and of the community: and the scheme of life, which is made up of the aggregate of institutions in force at a given point in the development of any society, may on the psychological side be broadly characterized as a prevalent spiritual attitude, or theory of life." (Veblen 1912, 190) Thus, “the evolution of society is substantially a process of mental adaption on the part of individuals under the stress of circumstances which will no longer tolerate habits of thought formed under and conforming to circumstances in the past." (Veblen 1912, 192) To Veblen this process of cultural change should be the central concern of economists: He argued that both the preferences and constraints that economic theory takes as given change over time and answering the biggest questions in economics requires understanding how they change over time.
So, I was persuaded of both the utility of economic theory and the need to explain how the things that influences those choices, including preferences, change over time.
I know that Doug read Veblen when he was younger, but I don’t think he was influenced by him, at least consciously. I don’t know if he ever read Samuelson. Yet what North provided me was a link between institutional change and economic theory. And the link ran in both directions. He provided an approach that made it possible to talk about the impact of institutions on market performance and to use economic theory to try to understand how institutions changed. The idea of transaction costs provided a means to connect different institutional arrangements to the performance of markets. Transactions costs create a wedge between buyers and sellers. The more resources you must use trying to enforce agreements or protect your property the less mutually beneficial trades will exist. Effective institutions can lower the cost of transactions, encouraging trade, investment, and innovation. Economic models can also be used to try to explain differences in institutions and how they change over time. The first thing I read by North was a “Framework for Analyzing the State in Economic History,” followed immediately by Structure and Change. In both he used a simple model of a wealth maximizing ruler to explain institutions that do not maximize economic output. He asked why wealth maximizing ruler might not create rules that maximized output for the country, creating the largest possible pool of wealth to extract revenue from. The answer in this model was that the ruler faced a transaction cost constraint and a competition constraint. The wealth maximizing institutions might entail higher costs of collecting taxes than institutions that lead to lower levels of output. For instance, selling a monopoly might be an easy way to raise revenue but not one that is likely to maximize output. This is the transaction cost constraint. The competition constraint arises from the fact that wealth maximizing institutions might be ones that enhance the power of potential competitors to the ruler. For instance, international trade might increase output but also increase the wealth and power of people who present a potential threat to the ruler.
For me, Doug’s work meant that I didn’t have to choose between Samuelson and Veblen.
North, Douglass C. "A framework for analyzing the state in economic history." Explorations in economic history 16, no. 3 (1979): 249.
North, Douglass Cecil. Structure and change in economic history. Norton, 1981.