Speed at Explorations - mid-year update

... isn't everything, but it is a start. Kris Mitchener and I have been running EEH since 2013/14. Here is how turnaround speed has evolved:


For 2015, we are now down to less than 6 weeks to first decision. While desk rejects enter here, we feel that this is nonetheless a meaningful measure of turnaround time -- better to know quickly than to wait for months... The second-round (and N-round) time is also fast; it took more than 11 weeks after the first round (not counting author resubmission time) in 2012. This year, final decisions only added 4.3 weeks to the total. Put another way, time to final decision is now less than time to first decision was in 2011, 2012, or 2013.

Brainwashing for the long run

PNAS has just published Nico Voigtländer's and my paper on Nazi indoctrination and anti-Semitism. Here is the abstract:

Attempts at modifying public opinions, attitudes, and beliefs range from advertising and schooling to “brainwashing.” Their effectiveness is highly controversial. In this paper, we use survey data on anti-Semitic beliefs and attitudes in a representative sample of Germans surveyed in 1996 and 2006 to show that Nazi indoctrination––with its singular focus on fostering racial hatred––was highly effective. Between 1933 and 1945, young Germans were exposed to anti-Semitic ideology in schools, in the (extracurricular) Hitler Youth, and through radio, print, and film. As a result, Germans who grew up under the Nazi regime are much more anti-Semitic than those born before or after that period: the share of committed anti-Semites, who answer a host of questions about attitudes toward Jews in an extreme fashion, is 2–3 times higher than in the population as a whole. Results also hold for average beliefs, and not just the share of extremists; average views of Jews are much more negative among those born in the 1920s and 1930s. Nazi indoctrination was most effective where it could tap into preexisting prejudices; those born in districts that supported anti-Semitic parties before 1914 show the greatest increases in anti-Jewish attitudes. These findings demonstrate the extent to which beliefs can be modified through policy intervention. We also identify parameters amplifying the effectiveness of such measures, such as preexisting prejudices.

and there is a bit of news coverage here... [and a piece on VOX]

IAS Distinguished Lecture

I was in Hongkong the other day, at the invitation of James Kung, who has one of the most interesting research agendas in Chinese economic history that I know. I was delivering an IAS Distinguished Lecture on the Divergence between Europe and China after 1500. They kindly put up a video of the talk:

https://www.youtube.com/watch?v=GKMnLdDKpt0

when debt is beautiful

debt is awful, debt is bad, debt is too high for growth... sounds familiar? Well, you'll be forgiven if you thought this was about Herr Schäuble and the Greeks, or some such fun topic. Actually, it is much more boring. It's about a paper Jaume Ventura and I finally put into circulation. In it, we ask the simple question -- why did the country that piled up the biggest debt mountain in history manage to industrialize regardless?

Traditionally, thinking about this fell into two camps - those who thought that it happened despite all that debt, and those who thought that it didn't matter at all. The first school - let's call them crowding-outers - looked at lots of evidence showing that government borrowing slowed industrial growth and expansion. Peter Temin and I actually wrote a paper about it, which one seminar participant called the "most beautiful piece of evidence in favor of crowding out" (published in Explorations in Economic History, link here). The second school of thought argues for Ricardian equivalence - people know the debt has to be temporary, and hence they will undo its effects through savings decisions, etc. Robert Barro wrote a beautiful paper with these features.

What do we do? We argue that debt was good - under the (particular) circumstances of the British IR. Here is the abstract and the paper:

Why did the country that borrowed the most industrialize first? Earlier research has viewed the explosion of debt in 18th century Britain as either detrimental, or as neutral for economic growth. In this paper, we argue instead that Britain’s borrowing boom was beneficial. The massive issuance of liquidly traded bonds allowed the nobility to switch out of low-return investments such as agricultural improvements. This switch lowered factor demand by old sectors and increased profits in new, rising ones such as textiles and iron. Because external financing contributed little to the Industrial Revolution, this boost in profits in new industries accelerated structural change, making Britain more industrial more quickly. The absence of an effective transfer of financial resources from old to new sectors also helps to explain why the Industrial Revolution led to massive social change – because the rich nobility did not lend to or invest in the revolutionizing industries, it failed to capture the high returns to capital in these sectors, leading to relative economic decline.

I think the beauty here is that the paper offers a unified explanation for a number of features - painstakingly unearthed over the last 30 years by NFR Crafts, Bob Allen, Nick Harley, Charles Feinstein and others -- that are hard to reconcile otherwise in standard growth models:

• growth was slow (despite rapid technological change)
• over short horizons, there was crowding out - but Britain industrialized first regardless
• structural change was rapid
• wage growth lagged output growth; counting urban disamenties, workers probably shared none of the gains of industrialization for the first 70 years or so
• financial intermediation played no role in financing the new industries
• rates of return on capital remained high and even rose for half a century - there is no evidence of capital chasing high returns, driving down rates of return in consequence