Ambitiously-subtitled "A Brief Economic History of the World," UC-Davis economist Gregory Clark really tries to do three things in A Farewell to Alms.
First, he attempts to define economic conditions around the world prior to the Industrial Revolution, asserting that living conditions in different countries were largely equal and consonant with the vision of physical limits to economic growth propounded by Thomas Malthus. This is a difficult problem of inference from spotty and inconsistent data, and is typified by keyhole comparisons across centuries and civilizations.
Second, Clark explores the causes of the Industrial Revolution in England and its pattern of diffusion, albeit somewhat less convincingly than the previous exploration of Malthusian economies. Taking a stab at both the where and the when of the escape from the Malthusian trap is admittedly a high bar to try to clear.
Third, the narrative searches for some explanation of the pronounced divergence in growth rates and material living standards since the Industrial Revolution that has opened a gap between developed and developing countries. Explanations focus on the relative intensities of labor and capital usage in similar industries, notably textiles. Despite more and better data, the endogeneity of growth is a difficult empirical reality.
One the whole, the book is very detailed as the weight of academic evidence on these issues is meticulously brought to bear, yet the treatment is somewhat lighter than a standard academic tome. The result is an intermediate pace that is noticeably more formal than much of the popular economics literature that seeks to "explain" globalization. For anyone accustomed to reading academic work, it moves along quite nicely.
While some gaps must necessarily appear in a book with such a broad-ranging and ambitious objective, this volume makes a reasonable pass at presenting the logic of paradigmatic economic models as applied by economic historians and scholars of institutional change and growth to the causes and results of industrialization.
Tuesday, June 23, 2009
Tuesday, April 7, 2009
Guessing game
"Now they's good timber up here too. Real good timber. It's been cut over fifteen twenty year ago and so maybe it ain't big timber yet, but looky here. While you're a laying down there in your bed at night this timber is up here growin. Yessir. And I mean that sincerely. They is real future in this property. As much future as you'll find anywheres in this valley. Maybe more. Friends, they is no limits to the possibilities on a piece of property like this. I'd buy it myself if I had any more money. And I believe you all know that ever penny I own is in real estate. And ever one I've made has been from real estate. If I had a million dollars I would have it ever cent invested in real estate within ninety days. And you all know that. They ain't no way for it to go but up. A piece of land like this here I sincere believe will give ye ten percent on your investment. And maybe more. Maybe as high as twenty percent. Your money down here in this bank won't do that for ye and you all know that. There is no sounder investment than property. Land. You all know that a dollar won't buy what it used to buy. A dollar might not be worth but fifty cents a year from now. And you all know that. But real estate is goin up, up, up." -- 1973
who?
who?
Sunday, March 8, 2009
Book Review: Here Comes Everybody
I once wrote an article about the Quincy Library Group, an unlikely group of environmentalists, loggers, and small-town residents in Northern California. I spent quite a bit of time relating how difficult and costly it was to organize this group of people--in 1997. Looking back, today the task would be much easier, thanks in large part to the proliferation of communication tools that preclude the need to book a room in the town library in order to form an organization bent on improving forest management. (What would they have named it today?)
Clay Shirky claims that "social tools" like email, text messaging, and open-source models for business and pleasure represent a revolution of historic proportion. Here Comes Everybody is his magnum opus on the topic, condensing years of writing and teaching on the topic into a well-written volume. Detailed and well-chosen examples illustrate his point: from finding a phone left in a NYC taxicab to fomenting political dissent in Belarus to finding a friend of a friend in a busy bar. The chapters address how individuals generate media instead of simply consuming it, with the result that we have a publish-then-filter model, and explores some of the implications of these developments for social networks. The book is clearly better than other (unmentioned) attempts to "explain the current communication revolution." One of the strengths of the book is its reference to a Coasean framework for organization.
Coase laid out a framework for explaining who some activity takes place in a single organized entity--a firm--and other activity takes place in a decentralized way--the market. Shirky interjects a third category--the group--that he thinks will come to play an increasingly important role in society. In fact, he spends most of the book defining and illustrating what he thinks a group is. For example, a group needs three things: a promise (idea), a tool (means), and a bargain (contract). Why is this not just a new type of organization that is particularly suited to taking advantage of power law contributions? Shirky's argument is that transaction costs incurred in organizing groups have been dramatically lowered. Agreed. According to Coase, lowering transaction costs should lead to more activity period, and more activity within the scope of the firm. The Linux work group is still a firm even though its members work for free. Perhaps what we need is a retooling of our theories of not-for-profit activity--I agree.
But what about the challenge to familiar organizations (firms) that the existence of groups poses? Shirky cites the Boston archdiocese abuse scandal, and the organization of parishioners to bring it to the forefront of public debate as an example of how "groups" undermine "firms." Given the inherent heterogeneity of "groups," ranging from Wiccan discussion groups, to networks of college friends on Facebook, to community organizations working for specific changes in managing the forest surrounding their town, this new category doesn't seem very different from firms. There are big firms and small firms. Small firms rise and fall daily; when big firms crash, it makes the network news. So too with groups. It may be that groups are the kind of firms that can easily take advantage of power law or open source architecture. That contrasts them nicely to the existing and familiar firms that our government is trying to save.
My final critique of amending the Coasean framework with the introduction of the group is it makes no relation between them and markets. Coase's theory was useful (in part) because it was parsimonious--there are firms and there are markets, both broadly defined. Shirky's observations about changes in communication having large implications in business and society are astute, but unique only in their articulateness. Shoehorning a new category into Coase's framework without relating it to one of the existing two strikes me as a bit presumptuous and intellectually unsatisfactory. As the revolution progresses, perhaps the linkage will become more clear, and Shirky will have staked an intellectual claim.
Clay Shirky claims that "social tools" like email, text messaging, and open-source models for business and pleasure represent a revolution of historic proportion. Here Comes Everybody is his magnum opus on the topic, condensing years of writing and teaching on the topic into a well-written volume. Detailed and well-chosen examples illustrate his point: from finding a phone left in a NYC taxicab to fomenting political dissent in Belarus to finding a friend of a friend in a busy bar. The chapters address how individuals generate media instead of simply consuming it, with the result that we have a publish-then-filter model, and explores some of the implications of these developments for social networks. The book is clearly better than other (unmentioned) attempts to "explain the current communication revolution." One of the strengths of the book is its reference to a Coasean framework for organization.
Coase laid out a framework for explaining who some activity takes place in a single organized entity--a firm--and other activity takes place in a decentralized way--the market. Shirky interjects a third category--the group--that he thinks will come to play an increasingly important role in society. In fact, he spends most of the book defining and illustrating what he thinks a group is. For example, a group needs three things: a promise (idea), a tool (means), and a bargain (contract). Why is this not just a new type of organization that is particularly suited to taking advantage of power law contributions? Shirky's argument is that transaction costs incurred in organizing groups have been dramatically lowered. Agreed. According to Coase, lowering transaction costs should lead to more activity period, and more activity within the scope of the firm. The Linux work group is still a firm even though its members work for free. Perhaps what we need is a retooling of our theories of not-for-profit activity--I agree.
But what about the challenge to familiar organizations (firms) that the existence of groups poses? Shirky cites the Boston archdiocese abuse scandal, and the organization of parishioners to bring it to the forefront of public debate as an example of how "groups" undermine "firms." Given the inherent heterogeneity of "groups," ranging from Wiccan discussion groups, to networks of college friends on Facebook, to community organizations working for specific changes in managing the forest surrounding their town, this new category doesn't seem very different from firms. There are big firms and small firms. Small firms rise and fall daily; when big firms crash, it makes the network news. So too with groups. It may be that groups are the kind of firms that can easily take advantage of power law or open source architecture. That contrasts them nicely to the existing and familiar firms that our government is trying to save.
My final critique of amending the Coasean framework with the introduction of the group is it makes no relation between them and markets. Coase's theory was useful (in part) because it was parsimonious--there are firms and there are markets, both broadly defined. Shirky's observations about changes in communication having large implications in business and society are astute, but unique only in their articulateness. Shoehorning a new category into Coase's framework without relating it to one of the existing two strikes me as a bit presumptuous and intellectually unsatisfactory. As the revolution progresses, perhaps the linkage will become more clear, and Shirky will have staked an intellectual claim.
Wednesday, March 4, 2009
Book Review: A Splendid Exchange
Few recent phenomena evoke such strident reaction as "globalization." Proliferation of trade and communication changes our world in ways that may be improving in aggregate. but the distribution of benefits is far from uniform. William Bernstein laughs at the modernistic hubris associated with globalization protests, since trade has waxed and waned over centuries, and with its ebb and flow, the forces of globalization have also fluctuated. Clearly we are a flood tide (or were a few short months ago), and in A Splendid Exchange Bernstein traces the historical role that trade and its attendent forces of diversification or globalization have had during recorded history. This history focuses in the Indian Ocean trade as much as anywhere else, as first spices, then later slaves, Oriental goods, cotton, tea, and opium have been transshipped by various merchant classes--Roman, Arab, Jewish, Chinese, western Europeans, and Indians in turn.
Bernstein's point is simple. Trade is not inherently evil. It has been going on for centuries. Some globalization is clearly a good thing. Today's debate about winners and losers should be that, not a condemnation of trade and endorsement of autarky. The final chapter--"The Battle of Seattle" makes this point subtly, connecting "organized anarchists" to Chinese barbers in Mexico City in the 16th century.
The narrative necessarily skips large and potentially interesting sections of history in order to fit into a volume of salable length. But the selected episodes fit together well: ancient trade, explaining why the Europeans thought there were "Dark Ages, the economic underpinnings of the European colonial expansion, the disease effects of trade, the rise and impact of European trading empires, the tragedies of modern protectionism (which mind you, didn't necessarily cause the Great Depression), and finally the modern controversy over globalization. IN all, a useful context for debaters on both sides of the globalization issue.
Bernstein's point is simple. Trade is not inherently evil. It has been going on for centuries. Some globalization is clearly a good thing. Today's debate about winners and losers should be that, not a condemnation of trade and endorsement of autarky. The final chapter--"The Battle of Seattle" makes this point subtly, connecting "organized anarchists" to Chinese barbers in Mexico City in the 16th century.
The narrative necessarily skips large and potentially interesting sections of history in order to fit into a volume of salable length. But the selected episodes fit together well: ancient trade, explaining why the Europeans thought there were "Dark Ages, the economic underpinnings of the European colonial expansion, the disease effects of trade, the rise and impact of European trading empires, the tragedies of modern protectionism (which mind you, didn't necessarily cause the Great Depression), and finally the modern controversy over globalization. IN all, a useful context for debaters on both sides of the globalization issue.
Thursday, January 22, 2009
When Poli Sci Gets Econ Envy...
They pretend that they can answer interesting questions, understand a legitimate and rigorous methodology, and then inevitably completely screw it up. Then wallow in smugness as other disciplines pile into the same trap.
Hat tip: Magua
Hat tip: Magua
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