We’re at the 200th anniversary of Karl Marx’s birth – also the 201st of Ricardo’s publication, the 242nd of Smith’s Wealth of Nations. And it has to be said that the latter two were more perceptive analysts of the human condition and also contributed vastly more to human knowledge and happiness. Most of the bits that Marx got right in economics were in fact lifted from those other two. The one big thing he got wrong was not to believe them about markets.
We can find, if we look properly, Marx’s insistences of how appalling monopoly capitalism would be in Smith. They’re both right too, it would be appalling. But we do have to understand what they both mean by this. In modern terms they mean monopsony, more specifically the monopoly buyer of labour. What is it that prevents this? Competition in the market among capitalists for access to the labour they desire to exploit. That very competition decreasing the amount of grinding of faces into the dust they’re able to do. Henry Ford’s $5 a day is an excellent example of this very point.
Ford wanted access to the best manufacturing labour of his time. He also wanted to have a lower turnover of that labour, lower training costs. So, he doubled wages (actually, normal wages plus a 100% bonus if you did things the Ford Way) and got that labour. At which point all the other manufacturers had to try and compete with those higher wages in order to get that labour they wanted to expropriate the sweat of the brow from. Marx did get this, he pointed out that exactly this sort of competition, in the absence of a reserve army of the unemployed, is what would raise real wages as productivity improved.
Smith also didn’t like the setting of wages as it precluded just such competition and such wage rises.
Where Marx went wrong was in not realising this power of markets. He knew of them, obviously, understood the idea, but just didn’t understand their power to ameliorate, destroy even, that march to monopoly capitalism.
[…]
The thing we really need to know on this bicentenary about Karl Marx is that he was wrong. He just never did grasp the power of markets to disrupt, even prevent, the tendencies he saw in capitalism. Specifically, and something we all need to know today, the power of competition among capitalists as the method of improving the lives of all us wage slaves. You know, that’s why we proletariat today, exploited as we are and ground into the dust, are the best fed, longest lived and richest, in every sense of the word, human beings who have ever existed. Something which is, if we’re honest about it, not a bad recommendation for a socio-economic system really. You know, actually working? Achieving the aim of improving the human condition?
Tim Worstall, “Marx At 200 – Yes, He Was Wrong, Badly Wrong”, Continental Telegraph, 2018-05-04.
August 2, 2020
QotD: Marx’s imperfect economic understanding
July 31, 2020
Xi Jinping and the “Chinese dream”
Zineb Riboua outlines possible ways for the West to counter ongoing Chinese economic espionage:
President Donald Trump and PRC President Xi Jinping at the G20 Japan Summit in Osaka, 29 June, 2019.
Cropped from an official White House photo by Shealah Craighead via Wikimedia Commons.
Since 2012, Chinese President Xi Jinping’s favourite catchphrase has been “the Chinese dream”. In stark contrast to the evil, capitalistic American dream, Xi’s alternative vision of progress teaches that the only route to prosperity is through rigid adherence to collectivist ideology.
The Chinese state embodies a very particular ideology. Over the last few decades, it has aggressively ramped up its economic and political capital through business and enterprise, inextricably tying itself to the economic fortunes of both developed and developing countries. It is now seeking to use the economic capital it has accumulated to force its political agenda into reality.
That is why the role of private companies in China is unparalleled. Milton Friedman defined corporate social responsibility in terms of private companies’ sole duty to make a profit, and then increase that profit. Chinese companies appear to be exempt from this rule because they interact with the state in a unique and troubling way.
The current state of the Chinese political and economic landscape is no accident. When Deng Xiaoping spoke in the 1980s of building a “socialism with Chinese characteristics”, this is probably exactly what he had in mind. The Chinese Communist party has succeeded in weaponising local market forces in such a way that it now holds all the cards in its nation’s dealings with the outside world, both political and economic, because the line between the public and the private is non-existent.
This strategy has not gone unnoticed. Thanks to the Chinese Communist party’s recent conduct – unprecedented aggression in Hong Kong, the appalling genocide of the Uyghur people and a costly unwillingness to share information relating to the coronavirus outbreak – the state of its internal affairs has come into sharp focus on the international stage.
Unsurprisingly, the hawkish US has placed itself at the forefront of counter-Chinese rhetoric. Secretary of state Mike Pompeo said recently: “We gave the Chinese Communist party and the regime itself special economic treatment, only to see the CCP insist on silence over its human rights abuses as the price of admission for Western companies entering China.”
July 29, 2020
How Freight Trains Connect the World
Wendover Productions
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The Equity, Inclusivity, and Diversity Industrial Complex
In The Dominion, Ben Woodfinden comments on a Ross Douthat column on the “antiracist” demands of our modern protestariat (the hordes of un- or under-employed university-educated young liberals and socialists):
University College, University of Toronto, 31 July, 2008.
Photo by “SurlyDuff” via Wikimedia Commons.
… the most interesting aspect of this lockdown-induced outpouring of collective rage hasn’t been the protests, or the cancellations, but the woke job creation that is going on. The ideology behind things like “white fragility” is increasingly being transformed into what can be described as an equity-inclusivity-diversity (EID) industrial complex that might end up being the most significant long term structural change that emerges out of the protests.
One of the most common responses in elite institutions as they promise to address systemic racism has been the creation of new jobs and positions that will supposedly help to do so. For instance, the Washington Post created a set of new positions that will be focusing on racial issues. This included hiring a “Managing Editor for Diversity and Inclusion.” At Princeton, the administration announced, like many other elite universities, new courses (which means new teaching opportunities) focused on racial injustice, as well as new projects and funding for research to explore and address racial issues. Stanford has created a new Centre for Racial Justice at its law school.
This direct job creation is just the tip of the iceberg. The real EID industrial complex is in the creation of a vast number of new jobs dedicated to the promotion and advancement of the basic tenets of this ascendant ideology through the expansion of human resource departments to deal with these issues, the creation of new EID bureaucrats and administrators in universities, corporations, government departments, the rise of EID consulting and mandatory courses and workshops for employees, new jobs and potential litigation for lawyers, as well as courses and modules in law schools to teach aspiring lawyers about these things.
In the bestselling Ibram X. Kendi book How To Be An Antiracist, one of Kendi’s central solutions is to pass an anti-racist amendment to the U.S. Constitution and permanently establish and fund a Department of Anti-racism. This department:
would be comprised of formally trained experts on racism and no political appointees. The DOA would be responsible for preclearing all local, state and federal public policies to ensure they won’t yield racial inequity, monitor those policies, investigate private racist policies when racial inequity surfaces, and monitor public officials for expressions of racist ideas. The DOA would be empowered with disciplinary tools to wield over and against policymakers and public officials who do not voluntarily change their racist policy and ideas.
The radical tendencies of the bourgeois bolsheviks in the streets might make them seem like true revolutionaries, but what this movement seems to actually want to create, with remarkable success, is new employment opportunities for true believers in the new anti-racist creeds. Racism won’t so much be solved by tearing society down, but by massively expanding new professional and managerial jobs that can guarantee full employment for the credentialed class of true believers.
O’Boyle’s thesis is that the revolutions that swept across European cities in 1848 were because a large surplus of resentful and overeducated men felt society was denying to them what they were rightfully owed. O’Boyle looks at Germany, where university education was cheap, and was “emphasized as an avenue to wealth and power.” This ending up producing an excess of ambitious, but resentful and frustrated men who felt society was not allotting them the status and comfort they deserved. The same was true in France. But in Britain, the opportunities produced by industrialization that had yet to fully materialize on the continent kept this excess surplus of overeducated men much smaller, and helped insulate Britain from revolution.
What if the EID industrial complex actually helps to reduce the scarcity of opportunities in elite fields and institutions that will put a lid on the unrest that overproduction breeds? The EID industry is worth billions of dollars, and in a way it might be the solution liberalism offers to both the radical progressivism of this ideology, and to the challenge posed by elite overproduction.
July 28, 2020
How Matt Ridley stopped being an “Enviro-Pessimist”
It was human ingenuity that did it for him:
Spiti Valley in the Great Himalayan National Park. (The little blue speck in the middle of the photo is a truck, for scale.)
Photo by Sudhanshu Gupta via Wikimedia Commons.
If you had asked me in 1980 to predict what would happen to that bird and its forest ecosystem, I would have been very pessimistic. I could see the effect on the forests of growing human populations, with their guns and flocks of sheep. More generally, I was marinated in gloom by almost everything I read about the environment. The human population explosion was unstoppable; billions were going to die of famine; malaria and other diseases were going to increase; oil, gas, and metals would soon run out, forcing us to return to burning wood; most forests would then be felled; deserts were expanding; half of all species were heading for extinction; the great whales would soon be gone from the oil-stained oceans; sprawling cities and modern farms were going to swallow up the last wild places; and pollution of the air, rivers, sea, and earth was beginning to threaten a planetary ecological breakdown. I don’t remember reading anything remotely optimistic about the future of the planet.
Today, the valleys we worked in are part of the Great Himalayan National Park, a protected area that gained prestigious World Heritage status in 2014. The logo of the park is an image of the western tragopan, a bird you can now go on a trekking holiday specifically to watch. It has not gone extinct, and although it is still rare and hard to spot, the latest population estimate is considerably higher than anybody expected back then. The area remains mostly a wilderness accessible largely on foot, and the forests and alpine meadows have partly recovered from too much grazing, hunting, and logging. Ecotourism is flourishing.
This is just one small example of things going right in the environment. Let me give some bigger ones. Far from starving, the seven billion people who now inhabit the planet are far better fed than the four billion of 1980. Famine has pretty much gone extinct in recent decades. In the 1960s, about two million people died of famine; in the decade that just ended, tens of thousands died — and those were in countries run by callous tyrants. Paul Ehrlich, the ecologist and best-selling author who declared in 1968 that “[t]he battle to feed all of humanity is over” and forecast that “hundreds of millions of people will starve to death” — and was given a genius award for it — proved to be very badly wrong.
Remarkably, this feeding of seven billion people has happened without taking much new land under the plow and the cow. Instead, in many places farmland has reverted to wilderness. In 2009, Jesse Ausubel of Rockefeller University calculated that thanks to more farmers getting access to better fertilizers, pesticides, and biotechnology, the area of land needed to produce a given quantity of food — averaged for all crops — was 65 percent less than in 1961. As a result, an area the size of India will be freed up by mid-century. That is an enormous boost for wildlife. National parks and other protected areas have expanded steadily as well.
Nor have these agricultural improvements on the whole brought new problems of pollution in their wake. Quite the reverse. The replacement of pesticides like DDT with much less harmful ones that do not persist in the environment and accumulate up the food chain, in addition to advances in biotechnology, has allowed wildlife to begin to recover. In the part of northern England where I live, otters have returned to the rivers, and hawks, kites, ospreys, and falcons to the skies, largely thanks to the elimination of organochlorine pesticides. Where genetically modified crops are grown — not in the European Union — there has been a 37 percent reduction in the use of insecticides, as shown by a recent study done at Gottingen University.
One of the extraordinary features of the past 40 years has been the reappearance of wildlife that was once seemingly headed for extinction. Bald eagles have bounced back so spectacularly that they have been taken off the endangered list. Deer and beavers have spread into the suburbs of cities, followed by coyotes, bears, and even wolves. The wolf has now recolonized much of Germany, France, and even parts of the heavily populated Netherlands. Estuaries have been cleaned up so that fish and birds have recolonized rivers like the Thames.
QotD: Incentives and opportunity costs
No, really, there was one of those natural experiments, when inheritance tax laws changed at the end of the year. There was a definite blip downwards in the death rate of people rich enough to pay inheritance tax at the end of the year, a corresponding one upwards again as the new, lower, rates came into effect in January. Incentives really, really, matter.
Tim Worstall, “What’s The Over And Under On Tesla’s 200,000th Car Being Delivered On July 1?”, Continental Telegraph, 2019-05-03.
July 25, 2020
QotD: The real life implications of “positive” rights
[…] the moment all your necessities are furnished by someone else, someone else gets to make all the decisions for you. I mean, if your health is paid for by the taxes of your fellow citizens, and the government aka the nation looks after your every need: should they pay for your health if you insist on smoking or drinking? Or should those resources be husbanded for people who take better care of themselves? Okay, Sarah, but isn’t there a point to individual responsibility? Why shouldn’t you be required to take minimal care of yourself, so you get the benefits of the government’s care, which as you say someone else pays for.
Ah, but there’s the rub. See, ultimately, there’s always something some of us say or do that can be used to justify denying care or giving only palliative care. For instance, I’m overweight, which seems to be one of the remaining sins in the current lexicon. Sure, I gained tons of weight over 20 years of untreated hypothyroidism, even though I was starving myself for a long portion of those. But hey, I allowed myself to be overweight. So my prognosis is poor. Why spend money on me, when someone else could have better results?
Hell, even when it comes to my autoimmune. I’m a poor prospect, so why give me top of the line care?
If the government controlled other things, it would be exactly the same. Food? Sure, I break out in eczema all over when I eat a diet rich in carbs. But hey, flour and rice are cheap, and why should I get a specialized diet, since I’m only a writer who isn’t even a leftist or a supporter of the state, and besides my prospects of survival are poor?
College? Sure you want to be an economist, but your teachers say you’re cheeky and talk back, and the state doesn’t need that. What we need right now are pipe fitters. Here, you can take this six week course.
When the state is paying the bill, the state gets to decide what is better for you. The European constitution gives you the right to “death with dignity” because death with dignity is much cheaper than expensive treatments with a low chance of survival. After all this money is for everyone, you know?
And like the NHS, in Britain, they won’t even let you seek treatment outside their tender mercies. Why should they? They pay for you. That means in the end they decide what to spend on you. They own you. And if you went outside their system and your kid got cured? It would look pretty bad for them, wouldn’t it? Why should they allow you to do that? And besides, peasant, you have a bad attitude.
Sarah Hoyt, “Slouching Into Shackles”, According to Hoyt, 2018-04-27.
July 24, 2020
Winston Churchill and the 1943 Bengal famine
Christopher Howarth on a recent BBC production that threw facts out the window in a rush to condemn British Prime Minister Winston Churchill for the famine in Bengal during 1943:
A 1945 map of Bengali districts as of 1943.
Famine Inquiry Commission (1945): Report on Bengal via Wikimedia Commons.
This argument was put forward by the BBC’s own Yogita Limaye, an Indian engineer and reporter on Women’s safety, based on the book Inglorious Empire by Shashi Tharoor, who was interviewed to give his opinion that Churchill was an “odious figure of reprehensible views and racist attitudes.”
No doubt the narrative of British evil and oppression is believed in India and elsewhere, but that does not make it true or worthy of the BBC reporting it as fact without any semblance of balance. The BBC failed its licence fee paying audience in two main regards, namely, conceptually and factually.
The British ruled India, one of the largest populations on earth, for well over two centuries. Good and bad things happened, just like everywhere else ever. You can join the dots to create whatever picture you like – Dr Tharoor chose the picture he wished to create. Why is the Bengal famine uniquely interesting to a BBC audience in 2020 over say a mini-series on British Railways and development in India? BBC presenters are demonstrably more interested in the first narrative: this is a major conceptual failing on their part. Being equal mixtures primitivism and solipsism. Always the borderline racist Western assumption is that “we” did things to “them”: we had agency, they were passive brutes. They are boring, we are endlessly interesting. Let’s talk about us. However even the slightest knowledge of the British-in-India teaches one that “we” did nothing without them. How on earth could we? There were famously few of us.
Yet it’s the second great BBC failing – over accuracy – which is so especially galling. On the actual allegation the BBC is plain wrong. Churchill was not responsible for the Bengal famine as any actual delving into the facts would have shown. Note well that they didn’t even try.
In 1943 Britain was at war with Japan, who were at the gates of India having occupied Burma, a major supplier of grain to Bengal. Important facts. Bengal was in the grips of a famine, nobody disputes that. But Churchill was not responsible, neither for the weather nor the agriculture nor the Japanese aggression.
Even the BBC did not allege that Churchill instigated the famine, the charge sheet is that he refused to help when he could. There were “stockpiles [of food] in the UK” and shipping which was retained in the northern hemisphere, prioritised for use there. Stockpiles of food in the UK in 1943? Even if there was the food and shipping, transporting US corned beef to Bengal would have been ludicrous. If there was shipping and protection from Japanese naval assault the food would have come from the rest of India. So why was food not transported from other parts of India to Bengal?
Prime Minister Winston Churchill greets Canadian PM William Lyon Mackenzie King, 1941.
Photo from Library and Archives Canada (reference number C-047565) via Wikimedia Commons.
July 22, 2020
QotD: Urban decline
Intelligent mayors could prevent, halt and perhaps reverse their city decline by paying more attention to efficiency than equity. That might be politically difficult. Regardless of any other goal, mayors must recognize that their first order of business is to retain what economists call net positive fiscal residue. That’s a fancy term for keeping those people in the city who put more into the city’s coffers, in the form of taxes, than they take out in services. To do that might require discrimination in the provision of city services — e.g., providing better street lighting, greater safety, nicer libraries, better schools and other amenities in more affluent neighborhoods.
As one example, many middle-class families leave cities because of poor school quality. Mayors and others who care about the viability of a city should support school vouchers. That way, parents who stay — and put a high premium on the education of their children — wouldn’t be faced with paying twice in order for their kids to get a good education, through property taxes and private school tuition. Some might protest that city service discrimination is unfair. I might agree, but it’s even more unfair for cities, once the magnets of opportunities for low-income people, to become economic wastelands.
Walter E. Williams, “A Mayor’s Most Important Job”, Townhall, 2018-04-18.
July 20, 2020
A lost nation that lasted for 300 years in (relative) peace and prosperity
I’d heard of the Khazar Khaganate occasionally, but didn’t know much about it until I read a useful summary by Lawrence W. Reed:
Borders of the Khazar Khaganate between 650 and 850 A.D.
Wikimedia Commons.
The list of extinct countries includes the better known ones like the USSR (aptly dubbed “the Evil Empire” by Ronald Reagan) and Yugoslavia, as well as hundreds of largely forgotten others like Majapahit, Assyria, Babylonia, Burgundy, and the Ottoman Empire. Far more countries are long gone, in fact, than the 195 on the map today. As a history lover, I’ve never yet discovered a country whose inhabitants’ experience was devoid of interesting facts and lessons.
Take Khazaria, for example. It lasted over 300 years (650 to 965 AD) and covered more territory than the combined Scandinavian nations of our time. It spanned the eastern half of modern-day Ukraine, the steppes of the Volga-Don region of present Russia, the entire Crimean Peninsula, and the northern Caucasus. Its southern portion took in most of the shorelines of three seas: the Black, the Caspian and the Aral.
It’s my thesis that for a country to be “successful” for a considerable period — success being defined loosely here as economically prosperous, politically stable, and militarily defensible — it must possess substantial TTD. That’s not a pronounceable acronym, unfortunately, but it stands for trade, tolerance and decentralization.
Each of these three criteria for success is worth volumes of discussion but here’s the nub of it: When economic freedom and private property exist, trade flourishes. And trade is what peaceful humans do to satisfy wants and improve material well-being. Choke it off and living standards plummet. Tolerance is a sign that people appreciate the benefits derived from diversity in personal choices. An intolerant people deprive themselves of what others can offer and waste time and resources fighting instead of collaborating. Decentralization preserves the rich identities of local communities and stymies the concentration of authority with its inevitable corruption. Power dispersed is power tamed.
So a successful country is one that can boast a lot of TTD. It encourages exchange, celebrates diversity and avoids top-down, political command-and-control. Almost every “failed state” in history did just the opposite by stifling commerce; stoking racial, ethnic or nationalistic hatred; and/or installing a dictatorship.
Khazaria, to its great credit, practiced remarkable measures of trade and tolerance and enough decentralization to prevent its government from sabotaging either one. In the end, it met its demise not from internal decay but from foreign assault.
QotD: Protectionists misunderstand the role of money
The Econ 101 teacher typically draws on the white board a diagram of two countries trading with each other. Country A is shown exporting (say) steel to country B in exchange for dollars, and then using those dollars to buy lumber from country B. The Econ 101 teacher informs his or her class that, while these exchanges are mediated by dollars, what ultimately is going on in this diagram is that the people of country A produce steel and send some of that steel to the people of country B because the people of country A want lumber from country B. Likewise, the people of country B produce lumber and send some of it to the people of country A because the people of country B want steel from country A. “The money that you see, class,” explains the Econ 101 teacher, “merely facilitates the exchange of steel for lumber. What’s important here is the getting of steel and of lumber. Money is a tool used by the people of country A to transform some of the steel they produce into lumber that they want to consume. Likewise, money is a tool used by the people of country B to transform some of the lumber they produce into steel that they want to consume.”
The protectionist thinks of this hypothetical two-country exchange entirely differently from the way that the Econ 101 teacher thinks of it. For the protectionist, the people of country A produce steel as a means of getting money; that is the ultimate goal. And the people of country B produce lumber as a means of getting money; that – the getting of money – is the ultimate goal. While for the Econ 101 teacher the two-country diagram that he or she draws is meant to show how money facilitates the ultimate acquisition by the peoples of each country of real goods, for the protectionist the diagram seems to show that the production of real goods is a means of facilitating the ultimate acquisition by the peoples of each country of money.
Don Boudreaux, “A Protectionist is Someone Who…”, Café Hayek, 2018-04-10.
July 18, 2020
“Agglomerationists” today and in the Middle Ages
In his latest Age of Invention newsletter, Anton Howes compares the views of today’s “urbanists” with the “agglomerationists” of the late Medieval period:
John Norden’s map of London in 1593. There is only one bridge across the Thames, but parts of Southwark on the south bank of the river have been developed.
Wikimedia Commons.
The other day, economic historian Tim Leunig tagged me into a comment on twitter with the line “intellectually I think the biggest change since settled agriculture was the idea that most people could live in cities and not produce food”. What’s interesting about that, I think, is the idea that this was not just an economic change, but an intellectual one. In fact, I’ve been increasingly noticing a sort of ideology, if one can call it that, which seemingly took hold in Britain in the late sixteenth century and then became increasingly influential. It was not the sort of ideology that manifested itself in elections, or even in factions, but it was certainly there. It had both vocal adherents and strenuous opponents, the adherents pushing particular policies and justifying them with reference to a common intellectual tradition. Indeed, I can think of many political and economic commentators who are its adherents today, whether or not they explicitly identify as such.
Today, the people who hold this ideology will occasionally refer to themselves as “urbanists”. They are in favour of large cities, large populations, and especially density. They believe strongly in what economists like to call “agglomeration effects” — that is, if you concentrate people more closely together, particularly in cities, then you are likely to see all sorts of benefits from their interactions. More ideas, more trade, more innovation, more growth.
Yet urbanism as a word doesn’t quite capture the full scope of the ideology. The group also heavily overlaps with natalists — people who think we should all have more babies, regardless of whether they happen to live in cities — and a whole host of other groups, from pro-immigration campaigners, to people setting up charter cities, to advocates of cheaper housing, to enthusiasts for mass transit infrastructure like buses, trams, or trains. The overall ideology is thus not just about cities per se — it seems a bit broader than that. Given the assumptions and aims that these groups hold in common, perhaps a more accurate label for their constellation of opinions and interests would be agglomerationism.
So much for today. What is the agglomerationist intellectual tradition? In the sixteenth century, one of the mantras that keeps cropping up is the idea that “the honour and strength of a prince consists in the multitude of the people” — a sentiment attributed to king Solomon. It’s a phrase that keeps cropping up in some shape or form throughout the centuries, and used to justify a whole host of agglomerationist policies. And most interestingly, it’s a phrase that begins cropping up when England was not at all urban, in the mid-sixteenth century — only about 3.5% of the English population lived in cities in 1550, far lower than the rates in the Netherlands, Italy, or Spain, each of which had urbanisation rates of over 10%. Even England’s largest city by far, London, was by European standards quite small. Both Paris and Naples were at least three times as populous (don’t even mention the vast sixteenth-century metropolises of China, or Constantinople).
Given their lack of population or density, English agglomerationists had a number of role models. One was the city of Nuremburg — through manufactures alone, it seemed, a great urban centre had emerged in a barren land. Another was France, which in the early seventeenth century seemed to draw in the riches to support itself through sheer exports. One English ambassador to France in 1609 noted that its “corn and grain alone robs all Spain of their silver and gold”, and warned that it was trying to create still new export industries like silk-making and tapestry weaving. (The English rapidly tried to do the same, though with less success.) France may not have been especially urban either, but Paris was already huge and on the rise, and the country’s massive overall population made it “the greatest united and entire force of any realm or dominion” in Christendom. Today, the population of France and Britain are about the same, but in 1600 France’s was about four times as large. Some 20 millions compared to a paltry 5. If Solomon was right, then England had a lot of catching up to do to even approach France in honour.
QotD: Peace can also be the health of the state
The story Bruno Nardi told made me think of the book that explains how peace is also the health of the state, namely Mancur Olson’s public choice theory classic, The Rise and Decline of Nations. It is years since I read this, but the story that this book tells is of the slow accumulation and coagulation of politics, at the expense of mere business, as the institutions of a hitherto thriving nation gang up together to form “distributional coalitions” (that phrase I do definitely recall). The point being that if you get involved in a war, and especially if you lose a war, the way Germany and Japan lost WW2, that tends to break up such coalitions.
The last thing on the mind of a German trade unionist or businessman, in 1946, was lobbying the government for regulatory advantages or for subsidies for his particular little slice of the German economy. Such people at that time were more concerned to obtain certificates saying that they weren’t Nazis, a task made trickier by the fact that most of them were Nazis. Olson’s way of thinking makes the post-war (West) German and then Japanese economic miracles, and the relative sluggishness of the British economy at that time, a lot more understandable. Winning a war, as Olson points out, is not nearly so disruptive of those distributional coalitions, in fact it strengthens them, as Crozier’s earlier posting illustrates.
Brian Micklethwait, “The view from Brazil is that peace is also the health of the state”, Samizdata, 2018-04-13.
July 15, 2020
Donald Shoup, the “Sir Isaac Newton of parking” or an “‘academic bottom-feeder’ who found a wonderful, rich ecological niche down there in the depths”
Colby Cosh, after taunting Ontarians yet again over our just-barely-past-Prohibition views on alcohol in public places, goes on to praise the work of UCLA economist Donald Shoup and his insights into the economics of parking:
“Parking meter FAIL” by kingdesmond1337 is licensed under CC BY-NC-SA 2.0
Parking — boring topic, ain’t it? Shoup latched onto it as a young-ish man because he was a follower of Henry George (1839-1897), the intriguing “single tax” economic theorist of the 19th century. George favoured a tax on the unimproved value of land parcels as a way of socializing pure rent (the value earned from occupying a mere location) and encouraging development. It is a concept that many economists still like, although it is potentially difficult to apply at scale. The widely used concept of tax increment financing is one example of Georgism in practice.
Shoup started out trying to fit parking spaces into the Georgist picture, but the boring topic was so underexamined that he found himself having to build a general theory of parking. He quantified the relationship between parking and traffic, finding that people “cruising” for parking spots were more destructive than anyone had imagined, and he inspired waves of research into the hidden market values of parking spots, which are rarely bought or sold in their own right. He happily describes himself as an “academic bottom-feeder” who found a wonderful, rich ecological niche down there in the depths.
Shoup has spent decades travelling the world and preaching against the concept of free parking, often meeting with bad-tempered resistance. Nevertheless, he has made a lot of headway in the world of urban planning. Any economist can see immediately how bundling a “free” parking space with an apartment or a job might be inefficient. The renter or homeowner has to pay a hidden extra cost for an amenity he might not choose to use, and the commuter is being given an incentive to drive to work — an incentive whose cash value he might prefer to keep. Shoup soon found, on empirical investigation, that most urban parking lots show signs of less-than-optimum use.
[…]
Of course, too little parking is as much of an efficiency problem as too much, which is why Shoup and his followers want parking to be priced wherever possible: if more is really needed, let a market create it. (To my eyes he has at least as much Hayek in him as Henry George.) In the era of Uber and smartphones, it is a lot easier to imagine a fully Shoupista world in which prices for parking spots update in real time and drivers look up prices at or near their destination before setting out.
QotD: State and private charity
Similarly with US aid to poorer countries. The United States is regularly berated for being very low on the list of aid givers, but this only applies to government-to-government aid. Once the private contributions made by Americans to people in poorer countries are counted in, the US rises to the top. In fact US private help is better spent, usually going to people to spend in towns and villages in the local economy, rather than on gold palaces and white elephant steel mills in the desert.
Part of this mismatch arises from the fact that these analysts seem to wear spectacles that admit only light of a political wavelength and ignore private generosity. The latest victim of this myopia is the “bank of mom and dad.” It is assumed to be a bad thing that young people should turn to mom and dad to help out with deposits and mortgages.
“Richard”, “Is Private Help a Bad Thing? – Political Spectacles of the Left”, Continental Telegraph, 2018-04-02.
