Wednesday, June 29, 2011

A Federal Balanced Budget Amendment is a Step Backward

Republicans are proposing a balanced budget amendment to the constitution. Since the Great Depression, there is widespread agreement among economists that governments should increase expenditures in hard times to stimulate the economy, paying off debts in good times both to reduce inflationary pressures and to prepare for the ability to increase expenditures the next time there is a recession or depression.

The Republicans are also refusing to consider any budget agreement that would raise tax income. They do this in spite of the fact that they just voted to cut tax breaks for ethanol production, a tax revenue increase that they do not seem to see as a tax increase. I would also point out that most Americans would not mind, nor even notice a $1 per year tax increase. The Republicans would apparently refuse to increase the debt limit, corresponding to the needs of the budgets that they already passed this year, rather than allow even a $1 per person tax increase. The entire international community and the community of professional economists agree that failing to raise the debt ceiling would be a very risky, with a strong possibility of triggering a global financial crisis.

I hope the electorate will recognize how stupid this is and vote out the Republicans at every near term opportunity.

Sunday, June 26, 2011

I recently posted a comment on a specific point in A History of Communications: Media and Society from the Evolution of Speech to the Internet by Michael Poe. This post deals more fully with the first chapter of that book.

Poe takes off from Marshall McLuhan's idea that "the medium is the message" from his landmark book, Understanding Media: The Extensions of Man. Poe, in his introduction dismisses quickly the contributions of a number of previous authors, and then goes on to suggest his own theoretical framework for consideration of the impact of new media on society, a framework which he will then apply to media: speech, writing, printing, visual media (e.g. movies and television) and the Internet.

Poe's conceptual framework begins with a simple framework for the study of technological innovation and growth, which emphasizes demand pull. He suggests that technologies are invented by tinkerers, building on previous knowledge. That seems simply silly to me, in the context of the Internet. Consider:
  • The conceptual design of the digital computer, done first by Charles Babbage who occupied Newton's chair at Cambridge University. The computer was reinvented in the 20th century, and perhaps the key paper was "Preliminary discussion of the logical design of an electronic computing instrument" by Arthur W. Burks, Herman H. Goldstine and John von Neumann. John von Neumann was a great mathematician who would have been of historic importance for his work in physics alone, had his efforts in mathematics and computers not overshadowed those contributions. Goldstine was among other things a PhD and a full professor at a major university. I actually took a course from Arthur Burks at the University of Michigan and can testify from personal knowledge that he was no "tinkerer".
  • The people at Bell Labs who first built integrated circuits or those at Intel who first figured out how to manufacture integrated circuits for personal computers were clearly consummate professionals.
  • Charles Townes who led the team that developed the maser and laser received the Nobel Prize for his work based on a body of theory that goes back to Einstein.
  • The team at the Corning Glass Works that made the critical breakthrough that made fiber optics production possible were similarly consummate professionals, not tinkerers.
  • Bob Kahn and Vint Cerf are credited with the invention of the Internet. I know them both, and neither is a tinkerer; both are brilliant technology developers with strong professional backgrounds.
  • Tim Berners-Lee OM, KBE, FRS, FREng, FRSA and a full professor at MIT invented the World Wide Web. A tinkerer? Really?
I also question whether Poe is right in holding that wide spread dissemination of technological innovations always comes from demand pull on the basis of large scale institutions creating the demand. Is that true of the World Wide Web, the personal computer, or the cell phone? I think more complex models of technology transfer are required.

I have written in the past of a model that looks at the preexisting knowledge and technology as well as the political, economic and cultural factors that influence the rate and extent of diffusion of a technology.

One example is that the dissemination of the Internet and the World Wide Web would not have been possible without the diffusion of information processing devices based on microchips and the diffusion of telephone connectivity. These, like television and radio, would not have been widely disseminated without the previous development of electrical systems and especially the electrical network.

Let me also note that there is a difference between the dissemination of electrical networks which depended on the development of a theory of electricity and an understanding of how electrical power could be produced and disseminated, as compared with the dissemination of telepathy based media. There is no theory of telepathy that would enable such a medium to be developed, and more importantly, there may not be a real phenomenon of telepathy that would make possible such theory.

Model of the Impact of the Medium on Society

The more developed portion of Poe's conceptual framework deals with the impact of media on society. He thinks of media as network phenomena, with each source or recipient of a communication as a node and the medium path defining the link between source and recipient. I am not sure that this framework works as well for speech, writing and print media as it does for the more modern media in which it has been elaborated. I look forward to reading subsequent chapters in which he tries to apply the idea.

Poe then suggests that every medium be characterized by eight (and only eight) critical attributes, each defined including considerations of cost :
  1. Accessibility
  2. Privacy
  3. Fidelity
  4. Volume
  5. Velocity
  6. Range
  7. Persistence
  8. Searchability
Each of these is seen as defining a continuum on which a specific medium may be located. (Do the locations change over time for a specific medium? I would assume so. 

According to human nature/human needs -- one need per attribute -- each of these attributes of the medium tends to engender an attribute of the network based on the medium. The attributes of the networks then tend to promote social practices. Poe then believes that the social practices tend to encourage the development of social values which are complementary to the practices. Thus radio and television media, in which relatively few people have access to create and transmit messages are seen to concentrate power, which in turn leads to hierarchical power structure, which in turn leads to authoritarianism as a value.

I am skeptical, but the proof of the pudding is in the eating, and the proof of the model will be in the following chapters that apply it to different media.

The best television program I watched in a long time/

Book TV this week is airing a program with Nobel Prize winning economist Michael Spence talking about his book, The Next Convergence: The Future of Economic Growth in a Multispeed World. Spence was the Chair of the Commission on Growth and Development. He makes a very clear case that the economic system put into place after World War II has been successful, but that success is about to enter into another stage.

The BRIC countries (Brazil, Russia, India and China) in the coming decades are all likely to achieve per capita GDPs comparable to the lower income economies of the OECD nations. Since the BRIC countries are so populous, their GDPs will be of the same order of magnitude as those of the United States and the European Community within a quarter century.

Spence, while obviously a front rank economist, has the gift of speaking clearly and helping a television audience understand the concepts he is applying to the global economic future. Even better, he is speaking to an audience of economists at the International Monetary Fund. The half hour question and answer session is perhaps the most informative I can recall. Would that television and even Congressional hearings would rise to the level of this hour long program.

Thursday, June 23, 2011

What Do Donors Discriminate On? Evidence From

Interesting post on Zunia about the people seeking loans on
Donors discriminate on the basis of attractiveness, skin color, and weight, preferring borrowers who are more attractive, who have lighter skin, and who are not overweight. The effects are statistically significant and robust, persisting across a variety of specifications and conditional on a full range of controls including country fixed effects, MFI fixed effects, economic sector and activity fixed effects, and date fixed effects. The effects are quantitatively significant. A borrower at the 75th percentile in terms of skin color (darker skin) is estimated to require 20% more time to have his or her loan funded than a borrower with lighter skin at the 25th percentile; similarly, a borrower at the 75th percentile in attractiveness (more attractive) requires almost 25% less time to receive full funding.

Wednesday, June 22, 2011

Thinking about Marshall Poe's book

In his book, A History of Communications: Media and Society from the Evolution of Speech to the Internet, Marshall Poe briefly cites a school of thought relative to the impact of literacy on thinking. He states that what he calls "the mentalists" suggest that the development of literacy changes the way people in a society think. His critique of the mentalists is based on the observation that anthropologists doing comparative studies of thinking in literate versus non-literate societies do not observe a difference in logical thought between the two.

First, it seems to me that people with more and better information from which to make logical inferences and deductions think differently than those with less information or information of lesser quality, and indeed that more and better information are likely to come to better results from their thinking. Indeed, literacy and access to printed information allow those who will utilize written resources to obtain more and better information more rapidly and easily than illiterates. I wonder if the anthropologists cited by Poe found a way to test these differences.

Having taken a couple of college courses in logic, I can attest that I have learned about logical thinking from books, and indeed our literate society has developed a body of information on logic using printed materials. Incidentally, there is also a body of literature on the biases that keep people from thinking logically, and there are clearly people who know some of this literature who use that knowledge to help avoid those biases.

I would suggest that professional scientists and engineers invariably come from literate societies, that they have learned specialized mental processes, and that they work in ways that are distinct from those of anyone in a completely non-literate society. They depend on bodies of knowledge specific to their scientific or engineering paradigms, and the knowledge and other products that they produce is important to their societies.

I have a doctorate with a specialization in operations research. I learned from books and lectures based on books, and other published materials. Indeed, more of the substance of the field was conveyed in printed or written symbols than in spoken language. For a time in my career I carried out logical analyses of problems using computer programs and quantitative techniques that I had learned in my training as an operations researcher. Those analyses and their conclusions led to significant changes in the way things were done in corporations and public institutions. I guarantee that that kind of analysis could and would not be done by most people in my literate society, much less by illiterate people in illiterate societies. The quality of my logical analysis was instrumental in increasing the efficiency of my clients.

The basic point I would make is that in a segmented society, it is not the thinking of "the average person" on the average issue that counts most on the way the society works, but rather the ways that the experts thinks in their areas of expertise that have the most important and pervasive influence on the way the society functions. Without engineers, doctors, agronomists, veterinarians, architects, and other professionals who depend not only on their own literacy (and numeracy) but also on the body of knowledge built and communicated through literature who make a profound difference in society as compared with illiterate societies.

I will point out that Poe's characterization of mentalists is not central to his argument and that I have barely started his book which looks quite interesting.

The Days of the French Revolution

I just read The Days of the French Revolution by Christopher Hibbert. The book follows the events of the French Revolution, emphasizing some of the key days in which especially notable or violent events took place. It is a real page turner, although some of the scenes described would distress many readers.

The government of France was heavily in debt entering and during the revolution, and its revenue did not suffice to deal with the debt in part because the aristocracy and the church were exempt from so many taxes and were willing and able to use their political power to avoid taxation. The poverty of the masses was exacerbated by years of poor harvests and a weak transportation infrastructure leading to wide spread hunger. What we would now call the middle classes (the more affluent and prestigious of the Third Estate) were demanding more political power, as indeed were the very poor (the sans culottes).

In keeping with the theme of this blog, it is hard to conceive of the French Revolution occurring had not the political, economic, social and other thought of the Enlightenment been widely spread in France. So too, many in France would have been familiar with the success of the people of the United States in their revolution that overthrew a monarchy and defeated (with French assistance) the professional army and navy supporting the monarch, to establish a democratic government, based on the concept of equality and with no state religion. The revolution itself was facilitated by a system for the publication and distribution of political pamphlets and by newspapers that published strong opinions, There was an extensive network of clubs in which these documents were made available and discussed. Indeed, the revolution began in 1789 with the convening of the Estates General which provided a public venue for wide discussion of the problems of the nation and its political system and succeeding governments continued the practice of public discussions; these were widely followed by the public and the debates were echoed in public fora.

It was hard for me to relate to the constantly changing cast of characters who rose to important positions in government, many with few qualifications and little ability to govern effectively. It was also difficult to grasp the level of violence that occurred in political life (although many among the tens of millions of French people must have been little involved in politics focusing instead on survival in difficult times). I suppose that the violence must be attributed to the anger fueled by hard times and a wealthy and uncaring elite, to mob psychology, to the recruitment of deviants and mentally ill by the mobs, and to a violent nature of our species which we usually manage to suppress or conceal.

Hibbert is a skillful writer and the book is a page turner, although some will wish not to have turned some pages due to the accounts of violence that the thereby uncovered, accounts that I found difficult to read. Still, I think it was useful to read this book to remind myself of how political systems can get out of hand, and of how cruel and violent people can be in the wrong circumstances.

Was Grant Greater than Lee?

Robert E Lee
Which Civil War general was the greater? The question is still asked today. In the late 19th century the consensus seems to have been Grant who was on the winning side, who led the troops who took Vicksburg and Richmond, and who went on to be President of the United States and to write what has been called the greatest book of its era in his memoirs. In the early 20th century with the romantic interest in the Confederacy and the revisionist history of slavery and racial relations, Lee's reputation soared and many came to regard his reputation with his troops and his various tactical successes against more numerous enemies as the greater military leader. Indeed, his willingness to accept that the Confederacy lost the war and his concern for the restoration of the Union was in indication of greatness of spirit.

I wonder whether the question makes much sense. The outcomes of battles must be the result of many factors, such as the sizes of the forces on each side, their training, their equipment, and the terrain on which the battle is fought. It is not only the leadership of the commanding general that counts but that of all the other senior and junior officers and the morale of the troops. In the battles of the 19th century there must have been a large component of chance in the outcomes of the best planned battles.

I further suppose that a general who is great in planning overall strategy of a campaign may not be as good at planning tactics of a battle, and that some generals are better defensively and others offensively, some better in logistics and preparation of their troops while others excel in leadership in the heat of battle.

Both Grant and Lee seem to me to have been great generals.

Saturday, June 18, 2011

Science, Engineering and the search for facts

Chris Mooney, the science writer, appeared this weekend on Need to Know. The program noted that not only did a number of people believe a self proclaimed prophet that the world would end on May 21, 2011, but they still had faith in him after that time. Mooney suggests that while we think we are evaluating evidence rationally, we tend often to use arguments much as a lawyer might to defend an already established belief. He also points out that as we deal with policy issues it would be better to start from facts or at least strongly supported postulates rather than from superstitious and erroneous beliefs.

I have often discussed the scientific approach to beliefs. Essentially, scientists should always be willing to reject a current belief and accept another when there is sufficient evidence that the new concept is more meritorious than the past.

Of course, the basis of science is observation, including the development of instruments to improve observations (e.g. telescopes, microscopes), the willingness to share honest reports of those observations, and the replication of observations. Scientists if they do not believe that "seeing is believing" certainly believe that "that which can not be observed should be taken with a large grain of salt."

I think the basis for science is taxonomy. The prototype of scientific taxonomy is the taxonomy of species which now seeks to group species according to genetic similarity. The more recent the descent of two species from a common ancestor species, the more closely they are grouped. Note that the criteria for judgement changes over time, as DNA evidence has come to be used to measure genetic distance, replacing measures of apparent similarity of species appearances, of the growth and development of individuals, or of anatomical features.

Note that grouping otherwise unlike phenomenon into a single class has been a rich vein in science. Think of Newton realizing that the orbits of planets, the fall of an apple, the trajectory of a cannon ball or the path and period of a pendulum were all examples of the effect of gravity on the motion of large objects. That recognition allowed the same mathematics to be used to describe all of those instances and perhaps marked the beginning of modern science.

Also a critical part of the scientific approach is the development of testable hypotheses from a postulate, and the use of controlled experiments, and the replication of those tests by other people in other facilities. The tests must be such that the hypothesis may prove false.

Finally, science demands peer review of publications, including of the interpretation of observations and community acceptance of the integrated body of knowledge within a specific field.

The highest achievement in science is to challenge a long and widely held belief successfully, showing an alternative belief is superior. That is what Einstein did in showing that relativity theory was better than Newtonian physics. There is little room in science for those who will not believe in evidence or who deny observed reality.

Engineering is increasingly grounded in science, but engineers are different than scientists. The key criterion in engineering is "does it work". Does the bridge an engineer designed span the distance it is supposed to span, does it carry the load it needs to carry, and does it stand up in all kinds of weather and conditions. Does the airplane that an engineering team designed fly safely, does it carry the load it was intended to carry, and does it meet standards set for the design. These are really gold standards for an engineering belief.

Of course, engineers also put their designs to the test of the market. Is the design for the bridge accepted in the competition, and is the work on the bridge finished within the time and budget allocated. Does the plane succeed in the market place, selling enough individual planes to pay off for the company.

Of course engineers build better bridges now than they did a century ago, and new plane designs keep replacing the old ones as the state of engineering arts improves.

Still there is little place in engineering denial of a bridge actually falling down or a plane crashing. The analysis done after such failures is based on a serious intent to prevent such failures from occurring in future projects. Again, there is little room in engineering for those who would deny failed projects failed, or who fail to learn from experience.

Monday, June 13, 2011

Sovereignty and Globalization

Eric Posner, in his talk on CSPAN's Book TV, mentioned that the level of states rights envisioned by the authors of the U.S. Constitution is no longer appropriate in view of the development of national institutions and infrastructure in the centuries since the constitution was written.

There seem to be people such as Sovereignty International who don't realize that not only have states given up states rights to the federal government to meet the governance challenges posed by the development of U.S. national infrastructure and institutions, but that the national government is also giving up some national rights to better meet the governance challenges posed by globalization.

Of course, the framers of the constitution realized that the government would have to make treaties, giving that power to the executive branch with the advice and consent of the Senate and not allowing the states to make independent treaties, making such treaties the supreme law of the land, and giving the Judiciary the right to enforce treaties. A treaty by its very nature would seem to reduce the sovereignty of the parties so that they thenceforth respect the terms negotiated in the treaty.

Think about the benefits to our health brought about by international agreements to control the spread of communicable diseases, or the benefits obtained by international agreements allowing international mails or international telephone calls. The World Trade Organization helps to deal with trade disputes that could not be settled unilaterally. I could go on and on.

Thinking about innovation more broadly

It seems clear that innovation is the key to increasing total factor productivity. New industries and new products are important sources of economic growth. Technological innovations lead to increased productivity of labor and of capital.

I wonder whether our current system is providing all the innovation that the economy needs. For example, does civil society spend enough on research and development, and is it sufficiently focused on innovation? Are the incentives for civil society innovation sufficient to achieve the socially optimal rates of innovation?

Similarly, think about the public sector. Military expenditures on innovation are high, and indeed military support for dual use technological innovation (e.g. innovations that can be used for civilian products as well as military products) has been important in the economic growth of the United States. On the other hand, has innovation been adequate in education and public infrastructure? What is the level of public investment in research and technological innovation for the public sector, and what are the incentives for public sector innovation and diffusion of innovations?

Thinking about the private sector, I wonder if our system for the financing of innovation does not emphasize the search for innovations that increase the productivity of (and thus the return to) capital without attending equally to innovations that increase the productivity of labor. Do company executives work equally hard to increase productivity (and thus potential returns) to labor as to capital? Do the systems of angel capital and venture capital have corresponding and complementary systems promoting technological innovations increasing labor productivity or new products providing primarily jobs for workers? I doubt is.

Do we spend enough money in government funded R&D to develop new "natural" resources, or to develop better technologies for the exploitation of those natural resources? It was once widely recognized that economic productivity was dependent on capital and labor applied to the exploitation of resources, and indeed the first government science agencies in the United States were devoted to locating mineral resources and developing technology for the improved exploitation of land and water resources.

Note also that our industrial production is also largely responsible for the productivity of our energy, transportation and communications infrastructures. Does our innovation system focus adequately on developing and providing incentives for innovations that improve the total factor productivity of industry, civil society and government as served by infrastructure? I doubt it.

Thursday, June 09, 2011

Would that George W. Bush had studied Calhoun

John C. Calhoun, the great South Carolina senator, spoke against the proposed use of the U.S. military to invade Mexico and force it to a more democratic form of governance. A Country of Vast Designs: James K. Polk, the Mexican War and the Conquest of the American Continent quotes him as saying that he couldn't see how such a republic could grow up under the protection of a conqueror.
I had always supposed that republican government was the spontaneous work of the people - that it came from the people - from the hearts of the people - that it was supported by the hearts of the people, and that it required no support, no protection, from any quarter whatsoever.

James Polk: President 1845-1849

My history book club met last night to discuss A Country of Vast Designs: James K. Polk, the Mexican War and the Conquest of the American Continent by Robert W. Merry. The consensus, with which I agreed, was that it was a pretty good book, well organized and relatively easy to read.

During Polk's single term of office, "the United States grew by more than a million square miles, adding territory that now composes the states of Arizona, Utah, Nevada, California, Oregon, Idaho, Washington, much of New Mexico, and portions of Wyoming, Montana, and Colorado." There were also important financial reforms passed by the Congress and signed into law. For some reason Polk's presidency seems to garner little attention in American schools, but it was an important period in American history nonetheless.

Source of map
The population of the United States was growing quickly in the early 19th century, and especially quickly in the 1840s with large scale immigration from Ireland and Germany. In the lives of senior political figures railroads had been introduced as had steamships and travel was becoming more convenient. The postal service had been instituted and the telegraph was beginning to be influential by the end of Polk's term in office. The American System of Manufacturing had been successfully institutionalized and rifles with interchangeable parts were being manufactured in U.S. armories. The cotton gin and McCormick's reaper had been invented and were transforming agriculture in the nation. I suspect that leading thinkers could see how a nation ruled from Washington could come to rule a huge territory effectively, spanning the continent from sea to sea.

Not mentioned in the book was the fact that West Point had been established, leading to the creation of an exceptional young officer corps that included people like Lee, Grant and Sherman who served in junior roles in the Mexican campaigns. (The naval academy was established in 1845.) The regular U.S. army was strong enough to accept and train large numbers of volunteers for service in Mexico, and the U.S. navy was strong enough to dominate Mexican waters and blockade its ports.

1848 was a year of European upheaval that has been compared with this year's Arab Spring. France, Germany, the Austro-Hungarian empire, and Italy were in turmoil. The Irish potato famine had begun in 1845 and increased in the following years leading to a million deaths and mass migration. Mexico, which had gained independence earlier in the century was undergoing major political upheavals; the north of Mexico was suffering from major Indian insurgencies and Mexico city could not effectively govern the northern states including New Mexico and California.

Polk lead an effective reform of the federal tariffs, leading to increased trade and indeed to increased revenues for the government. He also led return to a strong U.S. Treasury that would hold federal funds and manage the gold and silver reserves that backed U.S. currency. While the annexation of Texas had been carried by his predecessor, President Tyler, it was completed early in Polk's presidency. The agreement on joint administration of the Oregon Territory and western Canada by Britain and the United States was abrogated by Polk, and a new treaty was negotiated giving the United States control of the lands south of the 49th parallel. In the treaty ending the war with Mexico, the United States not only established the boundaries of Texas but obtained New Mexico and California. (Not mentioned in the book) Polk's administration also negotiated a treaty with what is now Colombia which granted rights to a canal across the Isthmus of Panama that eventually led to the creation of the Panama Canal.

How do we rank Polk as a president? 

The book makes clear that he had great difficulties managing his administration, from the conflict within his cabinet and his party to the way in which he appointed men he did not trust to manage the war and then undercut them. On the other hand, his long service in the Congress including as Speaker of the House under Jackson seems to have made him a master at getting what his administration needed from the legislature. Historians seem to have a more positive view of Polk than does the general public, ranking him as a good president, but not among the greatest. There is no doubt that he set clear goals for his administration and was very consistent in seeking them. It seems that he was intellectually gifted.

Counting against Polk are the facts that he was a slave owner, racially prejudiced against blacks and Indians, prejudiced against Mexicans (as of mixed race), and probably held religious prejudices against Catholics. Still, it seems more fair to judge Polk as a man of his time, rather than against the cultural beliefs of our own. The difficulty is that the 1840s marked a watershed in American life.

I think there was a marked clash between the idea of American Exceptionalism and Manifest Destiny. The exceptionalist doctrine held that the United States was exceptionally virtuous, and that our democratic republican government with its respect for human rights and rule of law set the nation above others -- less likely to exploit other peoples and more likely to seek to set a good example among nations. Manifest Destiny, a term first appearing in 1846, held that divine providence would assure that the Anglo-Saxon, Protestant peoples of the United States would invariably come to rule the continent "from sea to sea". While the belief in American Exceptionalism may have been credited as the reason for divine support of territorial expansion, the methods that were used to achieve that expansion appeared to many (including Lincoln and Grant) to undermine the virtues claimed. Polk clearly was willing to go to war with Mexico (and England) to obtain the lands he wanted for the country.

There was also a clash between pro slavery and anti slavery factions. The Missouri Compromise of 1820 had divided the country evenly between slave holding states and states in which slavery was not permitted. By 1844, there were equal numbers of slave and non-slave states. Texas was brought into the union as a slave state, but Mexico had outlawed slavery and New Mexico and California raised the issue of slavery again. Southerners (correctly) perceived that if the majority of the nation became anti-slavery, then they would eventually lose their slaves. Thus slavery again became a major issue in the context of the Mexican war and its resolution. This was over the objection of Polk who did not want the issue raised to complicate the annexation of huge tracts of land.

Ultimately, it seems clear that the vast majority of the country wanted the United States to acquire the lands of Oregon, New Mexico and California. (Perhaps both the pro slavery and the free land factions thought that they would personally benefit from the sparely populated lands that could be acquired and made productive.) Polk clearly played a major role in acquiring those lands so desired by the nation, and thus should be seen as successful in the aspirations of his time and place.

Merry, president and editor-in-chief of the Congressional Quarterly, provides a great view of the processes of deliberation and decision making within the administration. I think that the lessons from the study of those processes still apply today, albeit in a much more complicated government. (I suppose the processes among Bush, Cheney, Rumsfeld and Powell were as Byzantine as those among Polk and his cabinet.) The book is even better on the complex maneuvering to obtain desired legislation from the Congress and to hold the President's party together and to keep it an effective political force. There is only so much an author can do with a book and still have it readable. While I might have liked to see more about Mexico, more about the Indians and their impact, and more about the geo-political setting, I appreciate the good job that the author did on the material he chose to emphasize!

James Knox Polk

Tuesday, June 07, 2011

How is the economic recovery doing?

The melt down of the financial system was prevented.

The stock market has regained a lot of the losses it suffered.

GDP has returned to pre-crisis levels.

The rate of job losses, which was 2 million per quarter at its worst, has been stopped and the unemployment rate of 9.1 percent is too high but better than it was.

Too many families owe more money on their homes than the homes are worth. (When home prices are going up, the three-fifths of families that live in their own homes save less of their income and buy more; now they are paying off debts, including credit card and consumer debts. The demand for goods and services is thus suffering.)

Economists are arguing as to whether more economic stimulus is needed now to fight the recession, or whether we should start immediately to pull down the national debt.

Republicans don't seem to care what the experts think is the right strategy, focusing all their efforts to decrease public spending. They may do more harm than good.

~7000 new HIV infections today and every day until more progress is made

Nearly 30 million people have already died of AIDS and its complications. An estimated 34 million people are now infected with HIV. Many of the do not know that they have the disease, and thus are likely to transmit it to others.

Friday, June 03, 2011

A History of Business in Medieval Europe, 1200-1550

I recently finished reading A History of Business in Medieval Europe, 1200-1550 by Edwin S. Hunt and James Murray.

In 1200, 96 percent of the people in Europe lived on farms. There were few towns, and the road system had deteriorated greatly from that left by the Roman empire. What little economic surpluses were produced by agriculture were shared by the warlike aristocracy and the church.

The population of Europe and the economic production of Europe rose from 1200 to 1350. went down in the following half century due to the Black Death, other diseases and the disruption that they caused.

Hunt and Murray stress that business developed in this period in response to the demand for luxury goods from the small elite. Productivity increased as the remaining Roman technology was used more extensively (e.g. water mills), as some Roman technologies that had been lost were rediscovered (e.g. separation of silver and copper ore) and new technologies were developed (e.g. wind mlls, improved sailing ships). Not only were maritime routes improved, but roads were improved and better wagons were developed, reducing costs for the shipment of goods.

The textile industry seems to have led development during this period, and construction was focused on churches and military construction. There was also an industry in weapons, one in ship building, and many craft industries (with their associated guilds). Still, compared with modern industry, there was not much manufacturing.

Nor was there much commerce. There were fairs, especially in the early part of the period, in which merchants came to sell their wares and buyers came to acquire those things that were not produced locally. As time when on, towns came to centralize trade and even to create financial exchanges. Often these towns pioneered new forms of cooperation between political powers and businesses. For those who doubt the importance of regulation of trade, the early trade fairs and market towns already found regulation to be necessary.

New forms of business organizations were created, as were business instruments such as letters of credit and letters of exchange. Business tools, such as double entry bookkeeping, were also created. By the end of the three and one-half centuries covered in the book, business was much more developed and important than at the start of the period.

Hunt and Murray suggest that terms such as "high middle ages" and "Renaissance" are not very useful for describing the emergence of business during the period, as the process was both more complicated and more continuous than would be suggested by that older terminology. I suppose that the development of mining, shipping, trade, cloth manufacturing etc. was critical to the overall economic development that followed.

The book left me with a strong feeling of how deep the roots of our modern world go in history. The world of 1550 Europe was quite different than that of 1200 Europe. I suppose that the European invaders of the Americas did not properly understand the deep historical roots of the differences between Europeans and Native Americans. Indeed, those who would see "nation building" as being accomplished in the least developed nations in a period of a few decades might contemplate the history as set forth in this book in some detail. Still the book is not for the casual reader.