UC Davis Econ in the News

(… of the blog coverage variety …)

Will Wilkinson writes about Prof. Clark‘s good book:

This a profoundly insightful work sure to raise ire and inspire further progress. Key claim: labor quality is the difference between rich and poor. Depressing claim: Sub-Saharan Africa has largely Malthusian conditions, so success in increasing health and life-spans has decreased the average material standard of living below hunter-gatherer levels. Biggest disappointment: seems evasive on the question of the cause of variations in labor quality. Why not culture?

I should be careful critiquing Prof. Clark’s work, he’s grading my Growth Field exam next week, but I have similar questions about his work.

The professor does a great job of carving out the negative space of whatever topic he’s writing about. In his papers, he tells his readers what can’t explain the phenomenon. He leaves us hanging, though, on what can explain it.

For example, take cotton mills in the 19th century. Many of the countries to develop early, did so via the textile industry. So the mills are important for understanding why some countries are rich today and some aren’t. Why was productivity in Indian cotton mills so much lower than in England in the 19th century (jstor link)? Clark demonstrates it wasn’t because of differences in schooling or the skill of managers or differences in technology or anything else you can think of. What caused the productivity differences then?

Dunno and Clark doesn’t provide the answer either. He does defend himself, though:

These lessons from the mills will undoubtedly seem to some as merely destructive of conventional wisdom on underdevelopment without suggesting any replacement. Nevertheless, identifying the effects of the local environment or culture on the labor force as the source of the poor performance of textile mills in low-wage countries is a significant advance in understanding development. For if we can isolate one factor as supremely important, no matter how poorly we comprehend that factor at present, we are in a much better position to direct future research on economic growth.

6 thoughts on “UC Davis Econ in the News”

  1. The professor does a great job of carving out the negative space of whatever topic he’s writing about. In his papers, he tells his readers what can’t explain the phenomenon. He leaves us hanging, though, on what can explain it.

    So… do you buy the whole “people got more patient since 1234 AD” explanation of modern economic growth?

    What’s your other field?

  2. My other field? I’m a macro guy… money theory.

    Without a good model of how it develops and spreads in a society, culture (i.e. variation in deep parameters) can explain anything.

    Clark has a chapter in his book called “the rise of modern man” suggesting modern (post-Malthusian) people are different than their ancestors in ways you suggest (e.g. they’re more patient, but also smarter, harder working and less violent).

    For example, interest rates declined steadily over the centuries. One by one, using the usual Ramsey results on interest rates, he eliminates the possible reasons for this. Growth premium? Nope, there was no growth pre-1800. Risk premium? Nope, the King didn’t really confiscate too much and the characteristics of death statistics didn’t change much in the Malthusian era. Without stating it, the only thing left to cause steadily declining interest rates is changes in time preferences.

    He then discusses rising levels of literacy, eliminating the possibility that people were responding to market pressures to increase their human capital… one by one, knock ’em down… he shows work hours increased and violence decreased. It could only mean one thing… you know, the obvious thing… which was… well you know.

    So you could counter Clark by arguing against each of these points, e.g. “yeah, maybe the King didn’t expropriate that often, but when he did it was a big deal, usually accompanied by a disembowelment or two”. Or you can take issue with the Ramsey model itself. But my biggest issue is that Clark never develops a positive theory of the “rise of modern man”, he simply tries a proof by exhaustion showing all the things that couldn’t explain the facts on demographics and interest rates.

    To be fair, though, he hints, using testate records, that these deep parameters developed by selection.

    To me that’s just a huge can of worms. What is being selected? Genes? Is there a temperance gene? If its genes, are there evolutionary models that select for such sophisticated behavior in just a couple of centuries? Instead were memes being selected? If so, what the hell are those?

    I think we need a positive, but not rationalizing, theory to explain the development of “modern men”. Positive because it should be falsifiable and not rationalizing because Clark persuasively argues that these thing developed without market incentives.

  3. Yeah, I’ve read FTA and it’s a really good book. But I agree with your general assessment – “proof by exhaustion” is a pretty good way to put it. Also I don’t think Greg really addresses some of the issues that usually crop up here – why England and how come people stopped having so many kids all of sudden (there’s the Becker explanation but again, why didn’t the same thing happen right after Black Death). Oded Galor has some models that are similar in spirit – a latent, unobservable variable changing over time until conditions are right for it to manifest itself or something.

    Also couple months ago there was a polemic over at Cato Unbound, I think, where people where discussing whether or not culture should have a bigger role to play in economics. Greg was part of it. Basically he was arguing that yes, culture matters, but every time economists have tried to incorporate it into their analysis they ended saying goofy things, and yes, you gotta be careful else you get an explanation for everything.

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