Marginal Revolution

Sentences to ponder

Argentina is nearly the size of India, but with less than one-thirtieth India’s population.

The full story, which mostly covers dining in Buenos Aires, is here.

Kelo update

Those who would sacrifice property rights to development end up with neither.

Berlin memories

I first visited Berlin in 1985, while traveling with Randall Kroszner.  We drove to West Berlin by car and we were terrified for the few hours we were underway in East Germany.  Randy did not drive over the speed limit once.  I was hardly a communist sympathizer but still I was unprepared for the day trip to East Berlin.  I saw soldiers goose-stepping down one of the main streets.  In the stores old ladies yelled and swung their brooms at me.  Many buildings still had bullet marks or bomb damage from World War II.  In a restaurant we ate a rubber Wiener Schnitzel and shared a table with an East German family; they did not have enough trust in their government to speak a word to us.  I was unable to spend my mandatory thirty-mark conversion on anything useful; I carried back some Stendahl and Goethe but didn't want the Lenin.  This was in the capital city in the showcase of the communist world.   

My biggest impression was simply that I had never seen evil before.

In the summer of 1990 I stayed in a dorm in East Berlin.  Everyone seemed normal.  Cute girls smiled.  Yet there were few signs of modern German life as a Westerner might understand it; it was as if I had stepped into an alternative science fiction universe.  The Vietnamese ran the street markets and Russian still mattered.  

In 1999 I heard an emotional performance of Fidelio there and most of the audience cried.

I like spending time in Berlin.  But I am never sure I like Berlin itself, West or East.  Berlin is Germany being imperial.  Berlin is Germany looking toward the east.  Today Berlin is Germany pretending it is normal, while not yet having a new identity.  Here is Kurt Tucholsky (in German) on Berlin.  Here is a silly quotation about Berlin:

“Berlin combines the culture of New York, the traffic system of Tokyo, the nature of Seattle, and the historical treasures of, well, Berlin.”

Here is the Berlin Sony Center.  Here is the Reichstag.  Here is the Jewish Museum.  Here is Knut, from the Berlin Zoo.

High-speed rail fact of the day

American Intercity rail service is slower today than it was in the 1940s.

Here is the full article, by train expert Mark Reutter.  It is a good look at some of the obstacles facing a successful high-speed rail program.

How short a time horizon is needed to motivate catch-up growth?

A few centuries ago, the ratio between the per capita income of the richest country and poorest country was maybe five to one.  Today it is maybe one hundred to one.

The classic example of economic catch-up is given by East Asia in the mid-twentieth century, starting with Japan.  In those days it was possible to obtain near-parity with the West in about thirty to thirty-five years.  In other words, as a young man you could see near-parity before you retired and you could see near-parity for your grandchildren.  You could see your children making it halfway there, even before they are entering the workforce.

What if, in the future, for the remaining poor countries, the West (and East Asia) is so rich that catch-up takes seventy years?  One hundred years?  Will any poor country be bothered?  Won't it all seem too far off to be worth the trouble?  (Catch-up growth takes lots of hard work and savings and sacrifices of previous social norms.)  Or do you believe in a technology-transfer Solow model where the maximum possible rate of catch-up growth keeps on growing?  One hundred years from now, will it be plausible to imagine catch-up growth of twenty or thirty percent a year?

*The Art of Not Being Governed*

The subtitle is An Anarchist History of Upland Southeast Asia and the author is James C. Scott of Yale University.  Here is a summary from the Preface:

...I argue that the [Southeast Asian] hill peoples are best understood as runaway, fugitive, maroon communities who have, over the course of two millennia, been fleeing the oppressions of state-making projects in the valleys -- slavery, conscription taxes, corvée labor, epidemics, and warfare.  Most of the areas in which they reside may be aptly called shatter zones or zones of refuge.

Virtually everything about these people's livelihoods, social organizations, ideologies, and (more controversially) even their largely oral cultures, can be read as strategic positionings designed to keep the state at arm's length.  Their physical dispersion in rugged terrain, their mobility, their cropping practices, their kinship structure, their pliable ethnic identities, and their devotion to prophetic, millenarian leaders effectively serve to avoid incorporations into states and to prevent states from springing up among them.  The particular state that most of them have been evading has been the precocious Han-Chinese state.

Highly recommended, this is a book Gordon Tullock would love.  So far it has received surprisingly little publicity but it strikes me as essential reading about Afghanistan as well.  Here is a much earlier Crooked Timber post on Scott.

One path to the Georgist solution?

Without bankruptcy protection, a city that couldn’t pay bondholders would be forced to raise taxes until it could. This happened to West Palm Beach, Florida in the Depression and property tax rates rose to 42.5 percent of assessed value.

Here is more (interesting throughout) and I thank Chug for the pointer.

Canada quotations markets in everything?

Canada was sarcastically known as "the Irishman's Prize", and there was talk in 1763 of swapping it for the French Caribbean island of Guadeloupe.

That is from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo World, 1783-1939.

The Argentine national identity

Yet, unlike the Italian, the Spanish settler transition was incomplete.  Indeed, counterintuitively, the Spanish "actually assimilated to the new land more slowly and more reluctantly than did the "alien" Italians", who were not quick.  The Spanish rate of return was lower than the Italian, but still high at 46 percent by 1930, and in-marriage and voluntary segregation was high in both groups.  Above all, both Spanish and Italian immigrants avoided Argentine citizenship like the plague.  Fewer than 4 per cent of Spanish took citizenship, and the Italian rate was below 2 per cent.  Immigrants received most legal rights without citizenship, with the important exception of voting in national elections.  Aliens were also not liable for military service.  There was therefore "no incentive to become a citizen", and a considerable disincentive.  Nativist fears among the lower classes, and the fear of political competition among the elite, led Argentines to accept this situation.  Immigrants dominated the Argentine lower middle classes...The incomplete settler transition therefore meant that booming Argentina's middle class was much less committed to it, much less politically powerful, and much more prone to send or take its money home, than in the Anglo newlands.  The power and novelty of Spanish settler transitions helps explain Argentina's relative success to the 1920s.  But the incomplete nature of the settler transition also helps explain Argentina's relative failure from the 1920s.

That is from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo World, 1783-1939.

*Replenishing the Earth*, by James Belich

How is this for a real estate bubble?

At peak in 1888, over 80 per cent of Victorian private investment went into Melbourne buildings.  Expenditure on housing was even greater than that on rail, and many houses were built without people to live in them, or without jobs for those who did.

In the 1890s Melbourne was an impressive place.  With 500,000 people, it was eighty percent bigger than San Francisco and nine hundred percent bigger than Los Angeles.  Three hundred trains a day serviced the suburbs.  The city had three hundred buildings with elevators and Melbourne was reputed to have more large public buildings than any British city outside of London.  There were plans to build a replica of the Eiffel Tower.

That is all from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo-World, 1783-1939.  I'll discuss this book more soon, but I'll tip my hand and say it is one of the very best non-fiction books of the year.  Imagine Jared Diamond or Greg Clark (albeit more measured, in each case) but applied to the settlement of the colonies rather than to Europe itself.  This book also has perhaps the best explanation as to why the Argentina growth miracle fell apart.