Asia’s miraculous miracle

This essay by Krugman on Asian development was being posted everywhere for a while. Everyone was trying to predict things about China with it, which is of course silly, but it is very useful as a bit of economic history. When writing about pretty much anything, people forget what they had learned in the past and pretend like everything is new. Or they just don’t learn about the past, which is just as bad.

…The leaders of those nations did not share our faith in free markets or unlimited civil liberties. They asserted with increasing self confidence that their system was superior: societies that accepted strong, even authoritarian governments and were willing to limit individual liberties in the interest of the common good, take charge of their economics, and sacrifice short-run consumer interests for the sake of long-run growth would eventually outperform the increasingly chaotic societies of the West. And a growing minority of Western intellectuals agreed.

The gap between Western and Eastern economic performance eventually became a political issue. The Democrats recaptured the White House under the leadership of a young, energetic new president who pledged to “get the country moving again”–a pledge that, to him and his closest advisers, meant accelerating America’s economic growth to meet the Eastern challenge.

The time, of course, was the early 1960s. The dynamic young president was John F. Kennedy. The technological feats that so alarmed the West were the launch of Sputnik and the early Soviet lead in space. And the rapidly growing Eastern economies were those of the Soviet Union and its satellite nations.

…We all do a primitive form of growth accounting every time we talk about labor productivity; in so doing we are implicitly distinguishing between the part of overall national growth due to the growth in the supply of labor and the part due to an increase in the value of goods produced by the average worker. Increases in labor productivity, however, are not always caused by the increased efficiency of workers. Labor is only one of a number of inputs; workers may produce more, not because they are better managed or have more technological knowledge, but simply because they have better machinery. A man with a bulldozer can dig a ditch faster than one with only a shovel, but he is not more efficient; he just has more capital to work with. The aim of growth accounting is to produce an index that combines all measurable inputs and to measure the rate of growth of national income relative to that index–to estimate what is known as “total factor productivity.”

…When economists began to study the growth of the Soviet economy, they did so using the tools of growth accounting. Of course, Soviet data posed some problems. Not only was it hard to piece together usable estimates of output and input (Raymond Powell, a Yale professor, wrote that the job “in may ways resembled an archaeological dig”), but there were philosophical difficulties as well. In a socialist economy one could hardly measure capital input using market returns, so researchers were forced to impute returns based on those in market economies at similar levels of development. Still, when efforts began, researchers were pretty sure about what they would find. Just as capitalist growth had been based on growth in both inputs and efficiency, with efficiency the main source of rising per capita income, they expected to find that rapid Soviet growth reflected both rapid input growth and rapid growth in efficiency.

But what they actually found was that Soviet growth was based on rapid growth inputs–end of story. The rate of efficiency growth was not only unspectacular, it was well below the rates achieved in Western economies. Indeed, by some estimates, it was virtually nonexistent.

It goes on to discuss Singapore, Japan, and China. It is shocking to realize how much improvements in accounting were important to economic analysis. One note to this article: Singapore now has a higher GDP per capita than the USA in PPP terms but not nominal terms.

Lists to learn about life

A brief post. I never realized economic history was a thing until I started listening to Brad DeLong’s lectures on the American Economic History. I would love to learn more about the subject so any book recommendations would be welcome. Here are some books that I’m going to read to start myself off on international economic history. The first few (besides Guns, Germs, and Steel):

The Auteurs has also compiled a list of Criterion Collection titles on Netflix’s Watch Instantly feature. It’s handy to have a quick index of good movies for times of need. Some titles to tantalize:

  • Solaris
  • The Royal Tenenbaums
  • Lord of the Flies
  • Rashomon
  • The Last Temptation of Christ
  • Revanche

I want to be saved by a po-tay-toe

potatoes

Between 1700 and about 1950, world populations began to skyrocket. This growth was fastest in Northern Europe, and coincided with both an increase in city population share and Northern European world-dominance. There are clearly many reasons why this happened, but one powerful argument suggests that it was the simple potato that played the largest role.

Population increase can be due to both an increase in fertility and or a decrease in mortality. In Northern Europe, decreases in fertility after 1820 were more than offset by the larger decreases in mortality. Although hygienic advances played a major role, the main contributing factor was likely improved nutrition. Importantly, Fogel showed “an enormous increase in caloric intake after the middle of the eighteenth century, measured both directly, from agricultural output and diary surveys, and indirectly through changes in adult height.”

Although often not thought of as a daily part of your balanced breakfast, potatoes are incredibly nutritious. A medium potato contains 45% of your daily vitamin C, 18% of your potassium, 26% vitamin B6, and significant amounts of thiamin, phosphorous, iron, zinc, and an amount of fiber equivalent to that of other cereals such as wheat. In fact, a diet a of potatos and milk/butter is enough to live “healthily” on. Since potatoes have such a higher density of calories than comparable grains – an acre of land can support roughly 10,000 calories of wheat, barley, or oats versus 32,000 calories of potatoes – that families were able to sustain themselves on much smaller parcels of land. A family needed only an acre of potatoes and a single milk-cow to be self-sufficient.

Other factors drove the adoption of potatoes. They could be easily stored in winter, and concomitantly fed to livestock which implies increased availability of meat. Also, potatoes could be discreetly buried. Advancing armies usually demanded local stores of grains for food, causing mass starvation. Since they were hesitant to start digging everywhere up, burying of potatoes allowed increased survival for local peasants. This helps explain why the proportion of land dedicated to potatoes increased after every major war (up to, and including, World War II).

A recent study analyzed potato growth in order to determine the effects of the introduction of the potato across the Old World (all of the non-Americas). They found that the potato accounts for 12% of the increase in population, 22% of the increase in population growth, 47% of the increase of urbanization, and 50% of the increase in urbanization growth. It is astounding that something as small as the introduction of a potato can be such a large positive shock to the population.

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