Ten Things Worth Reading, More than Half Economics: February 21, 2010
This paper uses the adoption and invention of the spinning jenny as a test case to understand why the industrial revolution occurred in Britain in the eighteenth century rather than in France or India. It is shown that wages were much higher relative to capital prices in Britain than in other countries. Calculation of the profitability of adopting the spinning jenny shows that it was profitable in Britain but not in France or in India. Since the jenny was profitable to use only in Britain, it was only in Britain that it was worth incurring the costs necessary to develop it. That is why the jenny was invented in Britain but not elsewhere. Irrespective of the quality of their institutions or the progressiveness of their cultures, neither the French nor the Indians would have found it profitable to mechanize cotton production in the eighteenth century.
2) Steve Benen on Greg Mankiw:
A WEAK DEFENSE.... [Greg Mankiw writes:] "Let me offer an analogy. Many Democratic congressmen opposed the Bush tax cuts. That was based, I presume, on their honest assessment of the policy. But once these tax cuts were passed, I bet these congressmen paid lower taxes. I bet they did not offer to hand the Treasury the extra taxes they would have owed at the previous tax rates. Would it make sense for the GOP to suggest that these Democrats were disingenuous or hypocritical? I don't think so. Many times, we as individuals benefit from policies we opposed. There is nothing wrong about that."
This is no doubt the official Republican line. Indeed, Rep. Aaron Schock (R-Ill.) made the identical argument, with the exact same analogy, on "Meet the Press" over the weekend. But the response is deeply flawed. The hypocrisy charge may sting, but it's also entirely legitimate. It's not complicated -- Republicans have claimed, forcefully and repeatedly, that the stimulus effort was a mistake. The recovery spending couldn't generate economic growth and was simply incapable of creating jobs. The entire endeavor, the GOP said, was a wasteful boondoggle, and they're proud to have voted against it. Republicans rejected the very idea on ideological and policy grounds.... [T]he key to the hypocrisy charge is appreciating what else these same Republicans have said. When it comes to their states/districts/constituents, the identical GOP lawmakers have said the stimulus can generate economic growth, can create jobs, and can make an important and positive difference. In some cases, Republicans have even taken credit for stimulus projects they opposed -- projects that wouldn't even exist if they had their way.... Mankiw's analogy to the Bush tax cuts... doesn't stand up well.... The only way this would make sense is if Democrats opposed and voted against Bush's policy in D.C., and then went back to their states/districts to take credit for the tax cuts and boast about how effective they were. The fact that the hypocrisy charge seems to make Republicans nervous is itself encouraging. That the GOP has not yet come up with a coherent response should encourage Dems to keep it up.
3) Matthew Yglesias: Hank Paulson on Cantor:
I’m struck by how little attention has been given to the tough hits dished out by Bush administration Treasury Secretary Hank Pauslon to various prominent congressional Republicans, including golden boy Eric Cantor. Newsweek summary:
Meetings with Senate Republicans were “a complete waste of time for us, when time was more precious than anything” (page 275). Ideas that Republicans do add are “unformed,” like Virginia Rep. Eric Cantor’s plan to replace TARP with an insurance program. In a rare moment of sarcasm, Paulson goes off on the minority Whip: “I got a better idea. I’m going to go with Eric Cantor’s insurance program. That’s the idea to save the day” (page 285).
Politico, reflecting its usual shallowness, remarks:
But Republicans may have the last laugh: TARP is, arguably, the most unpopular federal program in recent memory — and voters seem poised to punish Democrats for passing it, even if Republicans like Cantor eventually signed off.
Well hardy-har-har. Some of us, though, are less interesting in the timing of who laughs when than in the formulation of national policy. The fact that Cantor had an approach to a severe economic crisis that attracted nothing but derision from his same-party Secretary of the Treasury seems noteworthy to me. The national press has, however, done an absolutely horrible job of putting conservative TARP-bashing in appropriate context as a program deemed necessary by all the leading officials in a very conservative administration to avert a Depression. If this stuff is just hypocrisy, that’s bad and noteworthy. But Paulson’s message seems to be that it’s not just hypocrisy, but rather genuinely frightening cluelessness.
4) Peter Slevin: Republicans look to gain traction with Hispanic voters:
The U.S. Hispanic population is expected to increase by nearly 200 percent by 2050, with non-Hispanic whites comprising about half the nation's population, down from 69.4 percent in 2000. From 1988 to 2008, the number of eligible Hispanic voters rose 21 percent -- from 16.1 million to 19.5 million. "The numbers don't lie," said Whit Ayres, a GOP consultant. "If Republicans don't do better among Hispanics, we're not going to be talking about how to get Florida back in the Republican column, we're going to be talking about how not to lose Texas."... "That's the word that got back to folks on the street: 'They don't want us,' " said Republican National Committee Chairman Michael S. Steele, who is looking for ways to tamp down fiery anti-immigration language.... Bonilla, now a consultant dividing his time between Texas and Washington, said he has urged Republican leaders in Congress "not to forget" Hispanics: "Sometimes I'm concerned that there's not more action. They're absolutely in agreement, but once the next day begins, they're distracted by bailouts and health care and cap-and-trade."...
Beyond the immigration issue, Hispanics were alienated by the Republican push for English-only policies and stringent law enforcement while opposing paths to legal residency and citizenship. Bonilla said it was a moment when "all of this came crashing backward. Hispanics would get me on the phone and say, 'What's going on? Don't you like us anymore?' " he recalled. Steele said the vitriol on immigration "harkens back, quite frankly, to the Southern strategy that the Republicans embraced in the 1960s, causing black Republicans to abandon the party." He wants to avoid a repeat with Hispanics....
The clock, Gillespie said, is ticking. He said Bush received 54 percent of the non-Hispanic white vote in 2000 and finished in a dead heat with Al Gore. Sen. John McCain (R-Ariz.) got 55 percent of that vote in 2008 and lost the election by seven percentage points. "If the current voting percentages among white, black, Asian and Hispanic stay the same," Gillespie said, "the Republican nominee will lose by 14 points in 2020. We have to be more competitive."
5) Matthew Yglesias: The Spending Tug:
I’ve previously mentioned Kinder & Kam’s US Against Them: Ethnocentric Foundations of American Opinion but it helps shed some light on this issue. They use National Election Survey data and show that if you restrict your attention to white Americans then ethnocentric views (both in terms of positive views of whites and negative views of non-whites) is correlated with hostility to means-tested welfare programs. The relationship remains statistically significant even when you control for partisanship and for self-described political beliefs regarding egalitarianism and limited government. But if you look at views on social insurance programs—Social Security and Medicare—you get the reverse result. Ethnocentrism is associated with support for increases in Social Security and Medicare spending, again even when you control for partisanship and self-described political beliefs regarding egalitarianism and limited government. And what seems to matter here isn’t dislike for non-whites, but positive solidaristic feelings about other white people.
Which is just to say that in a rarified “I work at a think tank” kind of way, beliefs about entitlement spending ought to roughly line up with beliefs about means-tested welfare and it all ought to be driven by abstract beliefs about small government and egalitarianism. In the real world, however, there are significant other factors driving opinion that push views about these categories of spending in different directions.
6) DELONG SMACKDOWN OF THE DAY: Stan Collender (Reconciliation Bill Version):
FYI.... Reconciliation can’t be used to increase the deficit. The Democrats passed a rule when this Congress began that says it can only be used to decrease the deficit.
7) GRAPH OF THE DAY:
8) BEST NON-ECONOMICS THING I HAVE READ TODAY: George Packer: The Top of Our Game:
David Broder had a devastatingly unremarkable assessment of Sarah Palin in the Post the other day. Her speech at the Tea Party convention in Nashville “showed off a public figure at the top of her game—a politician who knows who she is and how to sell herself.”... Broder wasn’t analyzing Palin’s positions or accusations, or the truth or falsehood of her claims, or even the nature of the emotions that she appeals to. He was reviewing a performance and giving it the thumbs up, using the familiar terminology of political journalism. This has been so characteristic of the coverage of politics for so long that it doesn’t seem in the least bit odd.... It would be strange if the Times’s coverage of the financial crisis, which has been stellar, focussed entirely on things like Richard Fuld’s handling of his P.R. problems while Lehman was going down. And it would be strange if the paper’s coverage of Afghanistan, which has also been stellar, focussed entirely on things like Hamid Karzai’s use of traditional Pashtun rhetoric in his effort to ride the wave of public anger at the Americans. Imagine Karzai’s recent inaugural address as covered by a Washington journalist:
Speaking at the presidential palace in Kabul, Mr. Karzai showed himself to be at the top of his game. He skillfully co-opted his Pashtun base while making a powerful appeal to the technocrats who have lately been disappointed in him, and at the same time he reassured the Afghan public that his patience with civilian casualties is wearing thin. A palace insider, who asked for anonymity in order to be able to speak candidly, said, ‘If Karzai can continue to signal the West that he is concerned about corruption without alienating his warlord allies, he will likely be able to defuse the perception of a weak leader and regain his image as a unifying figure who can play the role of both modernizer and nationalist.’ Still, the palace insider acknowledged, tensions remain within Mr. Karzai’s own inner circle. At one point during the swearing-in ceremony, observers noted that Mohammad Hanif Atmar, his interior minister, seemed to ignore the greeting of Amrullah Saleh, the intelligence chief. The two have been rumored to be at odds ever since last year’s controversial election. A palace spokesman, speaking on background, denied that the incident had any significance. ‘The sun was in Hanif’s eyes—that’s it,’ the spokesman said.
A war or an economic collapse has a reality apart from perceptions, which imposes a pressure on reporters to find it. But for some reason, American political coverage is exempt.... [A]s an exercise in accountability, political journalists should ask themselves from time to time: Would I write this about a war, or a depression? In the same vein, a government official once told me that the best way to cover Washington is as a foreign capital—as Baghdad, or Kabul.
9) STUPIDEST THING I HAVE READ TODAY: *The Odious Stuart Taylor, Jr., as observed by Matthew Yglesias:
Stuart Taylor, Jr’s attack on race-conscious congressional districting would be easier to take seriously if he evinced any real sympathy for the idea that it’s good to have some non-white folks in the congress...
10) HOISTED FROM THE ARCHIVES: DeLong (2002): A Trillionfold Fall in the Price of Computation: Archive Entry From Brad DeLong's Webjournal:
William Nordhaus (2002), "The Progress of Computing" (New Haven: Yale University xerox), heroically ventures where angels fear to tread and constructs estimates of the falling price of computation: trillionfold in the past 60 years: 35 percent per year compounded continuously. A halving time of 2 years:
