Bourgeois Dignity as a Source of Growth

Deidre McCloskey argues that what changed around 1700 to produce consistent growth was sociological: we stopped thinking of people making money as a bad thing, and not surprisingly people went off and made a lot of it.

Here’s an interview.

… What people like about the Weber hypothesis [i.e., the Protestant work ethic] is that it combines a spiritual change inside the souls of businesspeople (Geist was the German word) with a focus on routine investment (savings rates were supposed to be higher among Calvinists). It combined idealism with Marxism. No wonder everybody likes it. But alas, it’s wrong.

What changed was the sociology. That is, what changed was the attitude of the rest of the society toward businesspeople, and with that new attitude came a change in government policy. …

Hayek Poster

Don Boudreaux is (reasonably) worried about whether it’s legal to use the photo … but the whole mash-up by Peter Barber it is too good to pass up:

 

200 Years of Health and Wealth

Hans Rosling:

People don’t dislike economic growth because it doesn’t work.

They dislike it because they’re twisted.

Kids Prefer Cheese: Hans Rosling's Chart is SERIOUSLY MISLEADING

I noticed this too Angus ...

But I didn't post about it ... and there's a decent reason (actually two - perhaps not good, but merely decent).

1) Income inequality really wasn't the point of the chart. Health outcomes equality is. I see this chart like a comparison of per capita income to per capita consumption: we really shouldn't be worried as much about inequality in the former as in the latter.

2) I think the vertical axis is far more likely to have an upper bound, and therefore a declining growth rate, than the horizontal axis. In our lingo, longevity is unlikely to be I(1), while per capital income is likely to be I(1). And, if it's I(1) in a log-linear form, then we'd probably do a log transform first. The base 10 log isn't what we'd normally use in macro, but it still works. Now, it would also be pretty standard to difference the logged I(1) variable when plotting two series like that: it's why we plot inflation - instead of the price level - against interest rates. In this case, Rosling might have done per capita real income growth rates against longevity, and I don't think he would have ended up with just-so story that he did. If he did though, I think many people would have walked away with the impression that low growth rates are a good thing. Too many people make that assumption casually for me to advocate encouraging it.

Another Unemployment Rate by County Video

Three years of county by county unemployment:

Unemployment 2007-2010

The impression is not like some monolithic discrete change as presented in the legacy media, but more like a piece of fruit going bad on the table … it starts with a little brown spot or two that slowly takes over.

The Uneven Recovery

Recessions and expansions are always uneven, so this shouldn’t be a surprise.

And, keep in mind that this is just showing above and below average, so every metropolitan area has to be either yellow or red.

But, how many people do you know from yellow areas that are complaining about the recession (that officially ended 15 months ago), or the weak job market?

Colonial Institutions Might Have Been Worse that We Thought

It’s a 30 year old position in economics: former British colonies have done better because British colonial institutions were better than those of other imperialists.

Except that there’s new evidence from India.

India has areas that were under direct British rule, and areas that were … hmmm … paying tribute to avoid direct British rule.

The areas of India that were directly ruled by Britain have turned out worse.