Sunday 2014-02-09

A Farewell to Alms by Gregory Clark

Clark points out that the question of economic development remains open, despite recent popularizations of Institutions by Acemoglu et al.

He takes as a case in point a comparison of textile loom output in the US, UK, and India correcting for when they were at the same technological level. In terms of output, the ranking from most productive to least was US, UK, India. The question remains why?

It's not access to capital, as they had the same loom tech. It's not managerial talent, as the Indian companies brought in English managers to professionalize the workforce. It's not public institutions as the companies were running under British rule. So what is it?

We still don't know.

Though the book is about economics, we shall see that in the long run economic institutions, psychology, culture, politics, and sociology are deeply interwoven. Our very nature—our desires, our aspirations, our interactions— was shaped by past economic institutions, and it now in turn shapes modern economic systems
These were indeed societies more highly incentivized than modern high-income economies: medieval citizens had more to gain from work and investment than their modern counterparts
China and Japan did not move as rapidly along the path as England simply because the members of their upper social strata were only modestly more fecund than the mass of the population. Thus there was not the same cascade of children from the educated classes down the social scale
That is why, despite the enormous income gap between rich and poor societies today, reported happiness is only modestly lower in the poorest societies. And this despite the fact that the citizens of poor nations, through the medium of television, can witness almost firsthand the riches of successful economies. It thus might be that there is no absolute effect of income on happiness, even at the lowest income levels
Half of British troops stationed on the coast of West Africa in the eighteenth century died in their first year in station
The natural environment of Polynesia was benign. The scourge of the tropics, malaria, did not exist on the islands until it was imported, along with the mosquito, by white mariners
Preindustrial England before 1753 had its own equivalents of Las Vegas wedding chapels. Because of the arcane and involved nature of ecclesiastical authority, at a number of places in London free-lance chaplains, who made their living from the fees paid by couples, were able to legally marry couples without the formal posting of bans and a public marriage ceremony. These marriages were valid if they did not violate other church rules concerning marriages. The most popular place was the Fleet Prison and its “rules. ” 23 Between 1694 and 1754 an average of four thousand such marriages were performed yearly
Since in these same years there were only six thousand marriages per year in London, the Fleet prison was a huge purveyor of weddings. The
Samuel Pepys, for example, complains in his diary in October 1660 that “Going down to my cellar ... I put my feet into a great heap of turds, by which I find that Mr. Turner’s house of office is full and comes into my cellar
The medieval land market offered a practically guaranteed 10 percent or more real rate of return with almost no risk. It was a society in which anyone could significantly change his social position just by saving and investing a modest share of his income. Suppose, for example, that a landless farm worker in thirteenth-century England, at the bottom of the social ladder, were to start at age 15, invest 10 percent of his annual wage earnings in land, and reinvest any rents received. By age 50 he would have accumulated 85 acres to pass on to his children or support them in comfort in their old age, making him among the largest peasant proprietors in most medieval villages
In making a pair of jeans, labor costs even in such low-wage economies as China, Mexico, and Nicaragua, account for about 75 percent of all costs, including transport to the The cost of shipping a pair of jeans from a clothing workshop almost anywhere in the world to the highwage markets of the United States is no more than $0.09 per pair (1 percent of the wholesale cost of about $8