January 06, 2004
Convenient Source of Economic Growth Estimates

Kurt Schuler writes: You should put up a link to the Penn World Tables on the Online Resources page of your Web site. You can find the tables at at the University of Pennsylvania: http://pwt.econ.upenn.edu/ or at the University of Toronto, which I sometimes use because its site has an easy format for downloading individual series: http://datacentre2.chass.utoronto.ca/pwt/ ...the Penn World Tables are the best free dataset I know for fairly long-term international comparisons. Yours truly, Kurt Schuler He is, of course, completely correct....

Posted by DeLong at 03:05 PM

January 03, 2004
Note: Statistical Discrepancies

In the second quarter of 1994 some $39.7 billion more worth of goods and services were sold to customers than were earned as income--an amount equal to 2.4% of the then-ongoing flow of national income. This cannot be, of course: the National Income and Product Accounts are set up to enforce the identity that the money paid for everything sold becomes somebody's income, that income is equal to expenditure. But the NIPA numbers are estimates, and fuzzy estimates at that--this 2.4% of GDP in 1994:II was thus a statistical discrepancy (and a very unusually large number for this discrepancy. By the first quarter of 2000 this statistical discrepancy had swung around to be -$42.9 billion: incomes were some $42.9 billion--some 2.0% of national income--higher that quarter than the value of goods and services sold. This large swing in the statistical discrepancy matters for our picture of growth in the late 1990s: according to income measures, the U.S. economic growth rate from 1994:II to 2000:I was some 0.8% per year higher than according to output or expenditure measures. Since 2000, the statistical discrepancy has swung back. This latest quarter--the third quarter of 2003--the statistical discrepancy was $13.5 billion, or 0.6% of...

Posted by DeLong at 05:13 PM

December 03, 2003
A Framework for the Economic Analysis of Technological Revolutions, with an Application to Nanotechnology

A Framework for the Economic Analysis of Technological Revolutions, with an Application to Nanotechnology J. Bradford DeLong U.C. Berkeley Let me simply assert that a fruitful way to analyze the social and economic impact of every technological revolution that has taken place over the past two and a half centuries is to seek the answers to four different questions, and then to draw out the implications of those answers: What commodities--what goods and services--become extraordinarily cheap as a result of the technological revolution? What human activities--what jobs and skills--become key bottlenecks, and thus become remarkably valuable and well-paid? What risks blindside the society as the technology spreads? What risks do people guard against that turn out not to be risks at all? These are the four questions. Let me expand on my assertion, by applying them to the case of the original British Industrial Revolution, at the heart of which was the application of automatic machinery and steampower to the tasks of spinning and weaving--key handwork tasks for every human society since the domestication of the sheep. Over the forty years that were the heroic phase of the British Industrial Revolution, the price of spinning a cloud of cotton wool...

Posted by DeLong at 11:03 AM

November 26, 2003
Economic Growth Lunch: December 3, 2003

Trade and Growth Can we believe the large effects of trade on economic growth found by Sachs-Warner (1995), Frankel-Romer (1999), Dollar (1992), Edwards (1992), and others--those that say that a one percentage point increase in import and export shares is associated with a two percentage point increase in real GDP? Readings: Jeffrey Sachs and Andrew Warner (1995), "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity 1995:1, pp. 1-118. Jeffrey Frankel and David Romer (1999), "Does Trade Cause Growth?" American Economic Review 89:3 (June), pp. 379-399. David Dollar (1992), "Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-85," Economic Development and Cultural Change, pp. 523-544. Sebastian Edwards (1992), "Trade Orientation, Distortions, and Growth in Developing Countries," Journal of Development Economics 39:1 (July), pp. 31-57. Dani Rodrik (1999), "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence" (Cambridge: NBER Working Paper 7081, April). Paul Krugman (1995), "Dutch Tulips and Emerging Markets," Foreign Affairs 74:4 (July/August), pp. 28-44. From Krugman (1995): ...Mexico's crisis is neither a temporary setback nor a purely Mexican affair. Something like that crisis was an accident waiting to happen because the stunning initial success of the Washington...

Posted by DeLong at 12:00 PM

November 17, 2003
Handwork Productivity

In the bottom-right corner of page one of today's Daily Californian is a picture of a spinning wheel accompanied by the caption: SHEEP TO SHAWL: Alfred Eberle of the Spindles and Flyers Spinning Guild uses a spinning wheel in a demonstration of the method to create a shawl from sheep wool. Seven people contributed the shawl in four and a half hours. That's 32 socially-necessary labor-time hours. In America today, the product of one average labor-hour retails for about $30. That means that a shawl was as great an expenditure of social labor back in preindustrial times as something that costs $1000 is today. God! They were poor! Three cheers for the Industrial Revolution!...

Posted by DeLong at 04:05 PM

October 17, 2003
Notes: Scratching My Head

I cannot figure out what the usually sound-thinking and highly-intelligent Stephen Roach is getting at: Morgan Stanley: On the surface, there's no denying the unique character of this productivity-led recovery. In the first six quarters after the US economy officially bottomed in 4Q01, nonfarm business productivity has recorded a 6.7% cumulative increase. That's the fastest six-quarter post-recession rebound since that which occurred after the recession ending in 4Q70. Equally impressive, however, is the extraordinary shortfall in job creation that has occurred since the end of the last recession in November 2001. Private nonfarm payrolls have contracted about 1% (or 1.1 million workers) in the ensuing 22 months since that cyclical trough. That stands in sharp contrast to gains of about 5% recorded, on average, over comparable periods of the preceding six business cycle upturns. In fact, had the current cycle conformed to the prior-cycle norm, today's job count would be fully 4.3 million workers higher.... In other words, for a GDP recovery that has run at half its cyclical norm, it makes sense to consider the productivity implications of an alternative hiring trajectory that would have closed about half the gap between the current cycle and those of the past....

Posted by DeLong at 01:04 PM

October 09, 2003
Wheel of Fortune

The Economist covers a Goldman-Sachs long-run forecast of the rise of China and India (Brazil and Russia are, I think, red herrings: their economies will probably be about the size of Britain's and Germany's in fifty years, if they (and we) are lucky). China and India, whose year 2050 populations are likely to be three times that of the United States and whose PPP-adjusted real income levels are likely to be... ah, there's the question. I would bet that China is likely to have a real income level equal to half and that India is likely to have a real income level equal to a third that of the United States in fifty years, but both those are means of distributions that have long and large lower tails. Political--and economic--catastrophe in both is a real live possibility. Economist.com | Global economic rankings A new study by Goldman Sachs focuses on the so-called BRICs (Brazil, Russia, India and China). Today their combined GDP (at market exchange rates) is one-eighth of the output of the G6 (Goldman leaves out Canada, which accounts for only 3% of the G7's GDP) But the study concludes that the total output of the four economies will...

Posted by DeLong at 03:21 PM

October 06, 2003
Declining Cost Capital in India

Edward Hugh directs us to the Zoo Station which quotes Rajiv Lall of Warburg Pincus on the effects of the declining risk premium in India: Zoo Station: (Via Pseumo) I got this story on interest rates in the mail, and I thought it made for a fascinating read. Rajiv Lall, of Warburg Pincus, writes in the Business Standard on the dramatic impact the lower cost of capital has had on the Indian economy, to the extent that he predicts that India will start to outperform China in the next 5 years: Over the past three years, borrowing rates have declined by about 600 basis points for most medium to large sized enterprises in the country. Whereas such companies were paying 14 per cent on one-year loans three years ago, today they are paying only 8 per cent. Borrowing rates for some of the largest corporates are up to 200 basis points lower. Consider the following: Every 10 per cent fall in interest rates leads on average to a 30 per cent increase in profits before tax (PBT) for larger Indian corporations. For firms in manufacturing that operate with higher levels of debt relative to the average for all companies (companies...

Posted by DeLong at 07:48 AM

October 05, 2003
Human Capital Deepening in Nineteenth-Century America

Claudia Goldin and Larry Katz think about how America became the most formal skill- and education-intensive economy in the world: The "Virtues" of the Past: Education in the First Hundred Years of the New Republic: By the mid-nineteenth century school enrollment rates in the United States exceeded those of any other nation in the world and by the early twentieth century the United States had accomplished mass education at all levels. No country was able to close the gap until the last quarter of the twentieth century. For much of its history U.S. education was spurred by a set of 'virtues,' the most important of which were public provision by small fiscally independent districts, public funding, secular control, gender neutrality, open access, a forgiving system, and an academic curriculum. The outcomes of the virtues were an enormous diffusion of educational institutions and the early spread of mass education. America borrowed its educational institutions from Europe but added to them in ways that served to enhance competition and openness. The virtues of long ago need not be the virtues of today, and they also need not have been virtuous in all places and at all times in the past. In this...

Posted by DeLong at 05:48 PM

Capital Deepening in Mid-Nineteenth Century America

Atack, Bateman, and Margo fill in a hole in our understanding of how America became the most capital-intensive economy in the world: Capital Deepening in American Manufacturing, 1850-1880: We use establishment-level data to study capital deepening -- increases in the capital-output ratio -- in American manufacturing from 1850 to 1880. In nominal terms, the aggregate capital-output ratio in our samples rose by 30 percent from 1850 to 1880. Growth in real terms was considerably greater -- 70 percent -- because prices of capital goods declined relative to output prices. Cross-sectional regressions suggest that capital deepening was especially importnat in the larger firms and was positively associated with the diffusion of steam-powered machinery. However, even after accounting for shifts over time in such factors, much of the capital deepening remains to be explained......

Posted by DeLong at 05:47 PM

September 29, 2003
1460 Calories per Person per Day

From Trevon Logan's economic history seminar: "1460 calories per person per day in 1888, in Britain?' "Yep." "But this is Britain's late-nineteenth century Labor Aristocracy." "Yes. They're relatively high wage workers in British industry. That's certainly true. So?" "But these are the people whom Eric Hobsbawm writes attained 'trade-union consciousness'. According to him, they used their market power to elevate their wages so much that they became satisfied with their place in the economy, and lost their 'natural' attachment to revolutionary socialism." "They were the best-off working class in the world in the late-nineteenth century--save, of course, for the American, Canadian, and Australasian working classes." "But 1460 calories a day? You can wean an entire segment of the working class off of revolutionary socialism and collective action over to self-satisfied attachment to the system on a mere 1460 calories a day?" "That's what the data show. 1460 calories a day." "That is per person, not per adult-equivalent." "Even so..."...

Posted by DeLong at 05:50 PM

August 27, 2003
Fast Food-Style Journalism

Ah. A piece of fast food-style journalism--i.e., low-quality, hastily-prepared, and bad for your brain (if not your heart)--from John Kay. There is only one possible response: it is time to break the glass, to sound the siren, to pull out the fire-axe, and to start channelling Milton Friedman: FT.com Home US: ...there has been intensive lobbying by smaller merchants. It is almost impossible today to create new shopping centres on greenfield sites. But these self-serving arguments have been successful not because their proponents made donations to political action committees but because many French people are sympathetic to the cause. They fear the marché municipal might disappear. I doubt if there is much justification for these fears. There are three supermarkets within a quarter of a mile of the market, which stock the same categories of goods, mostly of lower quality and at lower prices. On the outskirts of town is a much larger store with extensive parking. A 20-minute drive will take you to a Carrefour with more than 100,000 square feet of retail space and a US-style mall. In the face of this competition, the marché municipal and another daily market a mile away seem to be doing fine....

Posted by DeLong at 09:57 PM

August 21, 2003
In Memory of Rudi Dorbusch

The late Rudi Dornbusch was supposed to give the AEA's Richard T. Ely lecture last winter. Stanley Fischer gave it instead. Here the Economist summarizes on the main message that Stan had to convey: Economist.com | Economics focus: Begin with the top chart. Each point represents a country. The vertical axis shows average annual growth of income per head between 1980 and 2000; the horizontal axis shows the level of income per head in 1980. Note in passing that the countries of sub-Saharan Africa are distinguished from the others: they are clustered in the lower left-hand corner of the diagram, representing both very low incomes and very slow growth. In the last 20 years of the 20th century, globalisation, however you measure it, was advancing rapidly. Globalisation, according to its advocates, helps poor countries to catch up. So what one would wish this chart to show is a marked downward-sloping pattern of points: saying, in effect, the poorer any given country, the faster its growth. The chart shows no such pattern. In fact, a line of best fit through the scatter of points (as shown) slopes slightly upwards, implying that, on average, the rich are getting richer faster than the...

Posted by DeLong at 09:37 AM

August 20, 2003
Productivity Growth: America vs. Europe

Robert Gordon argues that a big chunk of the miraculous growth in U.S. productivity--and the bulk of the difference between the U.S. and the European experience--comes from the interaction of high investment in IT in the U.S. and the economic freedom to reconfigure retail and sell goods in high-volume from newly-built "big box" automobile-accessible stores: FT.com Home US: ...Where does Europe fit in? The data show that Europe's performance is worst in those industries that are heavy users of ICT, especially retail trade, which just happens to be where the US's productivity showing is strongest. America's retail productivity performance has all been achieved in stores newly built since 1990, not in existing stores. The new stores are the "big boxes" such as Wal-Mart, Home Depot and Best Buy, large new buildings set up on greenfield sites at interstate highway junctions, in suburbs and, increasingly, in inner cities. As these new stores reap the rewards of their size, openness and accessibility and drive smaller stores out of business, they bolster the average productivity of the US retail sector as a whole. While countries differ, Europe has many ways of stifling modern retailing, from green belts and land-use restrictions to laws that...

Posted by DeLong at 08:23 AM

August 19, 2003
William Saletan Is Unbalanced and Unfair

Why oh why do we have such a lousy press corps? Here we have William Saletan and Ben Jacobs sneering at Dick Gephardt for being proud of his role in the 1993 deficit-reduction package: The Best of Dick Gephardt - The bravest thing he ever did. By William Saletan and Ben Jacobs ...Whether that [1993 Clinton] budget caused the expansion, boosted home ownership, lowered inflation, and created millions of jobs is far more dubious. According to figures released by the Office of Management and Budget in 1999, the recovery from the 1990 recession started in April 1991, nearly two years before Clinton took office. Furthermore, the Dow Jones Industrial Average didn't begin skyrocketing until Republicans captured Congress in 1994. The Dow gained just 538 points during the two years in which Clinton enjoyed a Democratic Congress. The Dow then soared nearly 7,000 points in the six years during which Clinton faced a Republican Congress. And the nation's Gross Domestic Product didn't starting recording annual increases of 4 percent until 1996. Where to start? Let's work backwards, with the claim that the 1993 budget deal did not contribute to rapid growth in the late 1990s because GDP growth did not cross 4% per year...

Posted by DeLong at 08:44 AM

August 15, 2003
Good Industrial Production News for July

A surprisingly large jump in industrial production in July--especially considering that manufacturing employment fell by half a percent, by 71,000 in July: from 14.68 to 14.61 million: FT.com Home US: US industrial production rose at its fastest pace since January last month, adding to the evidence that economic growth is accelerating. Output rose by a robust 0.5 per cent over the month, its third consecutive gain and well ahead of expectations of a 0.2 per cent rise. The figure was boosted by a steep rise in utility output - which economists said reflected the greater use of air conditioning - and strong car sales, which have been helped by a new round of incentives. But the rise in output was relatively broad-based, with a particularly strong 4.2 per cent rise in home electronics... "This will increase confidence that we have a recovery on our hands," said Mark Cliffe, chief economist at ING. "There is now a fighting chance of getting growth of above 4 per cent by the end of the year." It's only one month, and manufacturing is not the same thing as industrial production, but it's interesting to see industrial production rising at a 6% per year rate...

Posted by DeLong at 09:26 PM

More Good GDP (and Productivity) News About the Second Quarter

News about the economy in the spring released since the initial estimate of second-quarter GDP growth tells us that the second-quarter growth rate is likely to be revised upward significantly--from a 2.4% annual growth rate to perhaps a 3.0% annual growth rate. This is excellent news for production and productivity: Forbes.com: Analysts see U.S. 2nd quarter GDP upward revision: Merchandise trade data out on Thursday showed exports rose a healthy 2.4 percent in June, while in real terms, which is what matters for gross domestic product, the trade deficit narrowed sharply to $47.23 billion from $50.04 billion in May. The [trade] deficit was much smaller than that assumed by statisticians in the advance measure of GDP released on July 31, suggesting trade subtracted less from growth than the 1.56 percentage points initially estimated. The trade news comes hot on the heels of significant upward revisions to retail sales figures for both May and June. On Wednesday the Commerce Department unexpectedly upped its June estimate of sales to a rise of 0.9 percent from 0.5 percent, while May now shows a gain of 0.5 percent when it was flat before. The sudden discovery that consumers spent a lot more than first...

Posted by DeLong at 09:54 AM

July 26, 2003
The Good Things in Life

Wendell Berry comes out foursquare in favor of the good things in life: short life expectancy, chronic malnutrition, plague, and poverty: Feminism, the Body and the Machine: ...Some people would like to think that this long sequence of industrial innovations has changed human life and even human nature in fundamental ways. Perhaps it has—but, arguably, almost always for the worse. I know that "techno- logical progress" can be defended, but I observe that the defenses are invariably quantitative--catalogs of statistics on the ownership of automobiles and television sets, for example, or on the increase of life expectancy--and I see that these statistics are always kept carefully apart from the related statistics of soil loss, pollution, social disintegration, and so forth. That is to say, there is never an effort to determine the net result of this progress. The voice of its defenders is not that of the responsible bookkeeper, but that of the propagandist or salesman, who says that the net gain is more than 100 percent--that the thing we have bought has perfectly replaced everything it has cost, and added a great deal more: "You just can’t lose!" We thus have got rich by spending, just as the advertisers...

Posted by DeLong at 07:01 PM

Notes: In the Shadow of Malthus

Begin with the shape of the demographic transition since 1820, with population growth rates plotted as a function of levels of guestimates of levels of real GDP per capita (measured in Maddison's 1990 "International Dollars") for the world's various regions for six irregular (but sensible) subperiods.* The figure shows how population growth rises rapidly as societies progress and grow their annual per-capita incomes from a Malthusian near-subsistence level of $400 (1990 International Dollars) per person per year up to $1,100 or so. Then population growth levels off--typically at 1.75% per year or so--as fertility restriction becomes widespread. Once societies pass $4,000 per capita a year or so, the demographic transition proper sets in, and population growth rates start to decline markedly. Underlying data source: Angus Maddison (2001), The World Economy in Millennial Perspective (Paris: OECD). Raw preliminary spreadsheet at: http://www.j-bradford-delong.net/movable_type/data-TCEH/Maddison_Millennial_Numbers.xls. Let's concentrate on the left-hand side of the figure--the one that lets us hypothesize that human population growth rates are essentially zero when annual GDP per capita levels (guessed-at in 1990 international dollars) are around $400, and that each ten percent increase in living standards above that subsistence level boosts population growth rates by about 0.2 percentage points per year:...

Posted by DeLong at 07:26 AM

July 06, 2003
What Should College Professors Be Paid?

The past is a different country. Even the relatively recent past of, say, a century ago is a very different country. In 1905 "G.H.M.", an anonymous college professor, wrote a four-page article for the Atlantic Monthly in which he pleaded for more money for college professor salaries, and claimed to be vastly underpaid. The first thing to note is the relative level of professorial salaries back then: he claimed that the "average college professor’s salary"--the salary that he saw as clearly inadequate and unfairly low--"is about $2,000." Stan Lebergott's estimates in the Historical Statistics of the United States are that the average annual earnings of an employee in America in 1905 were $490 dollars if employed for the entire year--or $451 taking account of the hazards of unemployment. What G.H.M. says is the average college professor's salary is more than four times annual average earnings of the time. Today's professors don't make such large relative salaries (except in business, law, and medical schools). In order to match turn-of-the-century college professors in terms of income relative to the national average, a professor today would have to make an academic salary of roughly $250,000--a height far above any professorial average, and one...

Posted by DeLong at 04:09 PM

June 24, 2003
Notes: Desai, Marx's Revenge

The first thing to note about Marx's Revenge is that it is not in any sense a history of economic thought. What do I mean by this? Well, consider Desai's description of Marx's argument in Capital's chapter "The General Law of Capitalist Accumulation"--which Desai describes as a chapter about cyclical growth: There are three strands of analysis of the dynamics of capitalism [cyclical growth, balanced growth, and the falling rate of profit] in the three volumes of Capital. Since all three volumes were written in draft at the same time... these are not just mistakes... but consistent aspects of the same model. there is also... an apocalyptic vision, practically repeated from the Communist Manifesto, which sits uneasily with the rest of Capital. Thus Marx has three responses, not altogether contradictory, to the question of the dynamics of capitalism.... Cyclical Growth There is a cyclical pattern to a capitalist economy which is due to the way in which the rate of profit fluctuates. Capitalists employ workers to make profits, but as they employ more workers, unemployment goes down. This puts pressure on real wages. As real wages, as well as employment, go up, th eshare of profit goes down, and there...

Posted by DeLong at 10:06 PM

May 01, 2003
When Did You Say We Are Living?

Chad Orzel realizes that he is living in the future, in an era in which undergraduates routinely make batches of high-temperature superconductors as laboratory exercises: Uncertain Principles: I was teaching a lab today, watching a one and a half dozen pre-meds using spring-loaded projectile launchers to fire steel ball bearings around the room, when I noticed a Chemistry professor ducking into the stockroom at the back of the classroom. I wandered over to see what he was after, and found him pawing through the shelves of E&M demo gear with another of the physics faculty. "What're you looking for?" I asked, as if I have any idea where things are in the stockroom after only two years here. "I've got some students cooking up a batch of high-Tc superconductor in lab, and I just realized we don't have any of those neodymium magnets to levitate. Do you guys have any we can borrow?" Every now and then, I get smacked in the head with the fact that, flying cars or no, we're living in the future. I remember when this stuff first burst on the scene, and won a Nobel Prize. Now it's an undergraduate lab. The problem is...

Posted by DeLong at 10:13 PM

September 12, 2002
Who Benefits Most from the High-Tech Revolution?

David Wessel writes about one of the secrets of the new economy: the principal productivity gains and cost reductions are found not in IT-making but IT-using industries. Indeed, given the fierceness of competition in (most) IT-making industries, not just the productivity gains but the profits are likely to be found in IT-using industries, both here and abroad. WSJ.com - Capital: ...Ireland is proudly turning itself into the Silicon Isle. The Philippines and Thailand boast of their electronics exports. But one of the biggest beneficiaries from information technology is Australia, which hasn't any high-tech industry at all. Yet it is one of the few economies to have enjoyed a 1990s surge in productivity (or output for each hour of work) as impressive as the one the U.S. has seen. Its secret: import high-tech gear that others make. As in the U.S., the spread of bar-coding, scanning and inventory-management systems is making Australian wholesalers much more efficient, and that is paying economywide dividends. Compared to its population, Australia has more secure servers, the sort used in e-commerce, than anyone else besides the U.S. and Iceland (that is another story). "Australia is far better off being an importer of information- and communications-technology equipment...

Posted by DeLong at 01:48 AM

September 09, 2002
A Platonic Dialogue on Eldred v. Ashcroft

A Platonic Dialogue on Eldred v. Ashcroft Ignoramus Inquisitivus: I have a question. Why did the Supreme Court grant cert. [that is, agree to hear and decide] in Eldred v. Ashcroft [the case arguing that the most recent copyright extension act was unconstitutional because Article 1, Section 8, Clause 8 of the Constitution gives Congress the power to grant copyrights only for limited times, and only to promote the useful arts--and since the extension act was not intended to promote the useful arts Congress did not have the power to lawfully enact it]? One natural way to decide would be to say, "The Commerce Clause gives ample power for Congress to do whatever it wants as far as economic regulation is concerned. I§8¶8 covers patents and copyrights and should be read in a way consistent with the overall Commerce Clause to give the Congress effective plenary power..." A second way would be to say, "Congress has granted patents and copyrights for limited times, 100 years is a 'limited' time, 1000 years would be a 'limited' time, so what is the problem?" Realisticus: But this is not a Supreme Court that accepts cases simply to affirm the Appeals Court decision, and...

Posted by DeLong at 07:06 PM

September 06, 2002
High-Tech Investment

High-Tech Investment If you read your business pages, you might well think that business purchases of computers are way down. Guess what? They're not. This year it looks like America's businesses are going to buy 13% more in the way of quality-adjusted computers and peripherals than in any previous year. In 2001--the only year in which real investment in computers and peripherals fell--quality-adjusted purchases fell by only 3%. Spending on computers and peripherals has indeed fallen. But that's because computers have become cheaper--a lot cheaper--not because American business is installing less computer power this year than in the past. Things look less bright if you aggregate up all high-tech investment--not just real investment in computers, but also software and "other": real investment in this broader category this year will be 4 percent below its year-2000 peak--but still higher than in any year other than 2000. Why the different pattern? The falloff in telecom investment. We are no longer spending a fortune digging holes and stuffing large quantities of fiber optic cables down them....

Posted by DeLong at 05:34 PM

American Labor Productivity Growth Trends

Labor Productivity Growth Trends Bill Nordhaus just gave a paper on U.S. productivity growth. One problem with the subject is that the year-to-year data are so noisy: errors in measuring output this year, errors in measuring output last year, errors in measuring hours worked this year, and errors in measuring hours worked last year all disturb the numbers reported for any given year. As a result, such papers almost always divide the time period up into a few chunks--1977-1989; 1989-1995; 1995-2001--and simply compare averages over those chunks. But the time series is considerably richer. So while Bill was talking, I found myself (a) taking the annual data, (b) adjusting productivity growth for the business cycle (for productivity growth jumps by 0.39 percent for each percentage point increase in this year's unemployment rate, and falls by 0.77 percent for each percentage point increase in last year's unemployment rate), and (c) taking a centered five-year moving average (using our current forecasts for 2002, and taking a truncated four-year not-centered moving average for 2001). The resulting series--the "actual" and the "trend"--are plotted as the green and the red line in the figure below: As a measure of the underlying pace of potential economic...

Posted by DeLong at 05:28 PM

August 30, 2002
More Thoughts on Technology and the Division of Labor

Andrew Tobias drinks his coffee, and ponders both the incredible sophistication of our division of labor and the incredible depth of our technological knowledge and collective capital stock. Andrew Tobias - Money and Other Subjects: ...I would like to see someone write book called, quite simply, A Cup of Coffee. It would have a chapter on each element that’s involved – or at least as many as could fit (decaffeination? color printing on the sides of coffee cans?). And it would be written for a broad audience – who of us is not intrigued by how the world works? – but especially for high school kids. And there would be two points to it. One would be to teach a lot of stuff, like how running water works and how coffee is grown and what steel is (and who Bessemer and Carnegie were) and how hot it has to be to melt – and why whatever it’s in doesn’t melt, too (or, OK, but how did they forge that?) . . . so it could be a somewhat painless, maybe even fun, high school science text. But the bigger point would be to show the centuries of astonishing effort, sacrifice...

Posted by DeLong at 04:30 PM

August 29, 2002
European Economic History Reading Course: Fall 2002: Second Draft Syllabus

1. Basics September 12: Robert Bates and Avner Greif (1998), Analytical Narratives (Princeton: Princeton University Press). Massimo Livi-Bacci (2001), A Concise History of World Population (Oxford: Blackwell). September 19: Douglass North (1981), Structure and Change in Economic History (New York: Norton). Douglass North (1990), Institutions, Institutional Change, and Economic Performance (Cambridge, UK: Cambridge University Press). Jack Goldstone (1987), "Cultural Orthodoxy, Risk, and Innovation: the Divergence of the East and West in the Early Modern World," Sociological Theory, 119-135. September 26 Jared Diamond (1999). Guns, Germs, and Steel (New York: W.W. Norton). 2. Europe Before the Industrial Revolution October 3: Carlo Cipolla (1980), Before the Industrial Revolution (New York: Norton). Philip Hoffman (1988), "Institutions and Agriculture in Old Regime France," Politics and Society, 16, 241-264. October 10: Jan de Vries and Ad van der Woude (1997), The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500-1815 (Cambridge, UK: Cambridge University Press). Jan De Vries, “The Industrious Revolution and the Industrious Revolution,” Journal of Economic History 54 (1994): 249-270 3. The European World Economy October 17: Kenneth Pomeranz (2000), The Great Divergence: Europe, China, and the Making of a Modern World Economy (Princeton: Princeton University Press). Richard Easterlin (1981),...

Posted by DeLong at 09:44 AM

August 22, 2002
With the Nine-Year-Old in the Grocery Store

"Daddy?" "Yes?" "How many people did it take to make all the things that are in this grocery store? It must have taken a lot, mustn't it? Look! There's even a company that makes these number-giving machines so they can tell who's next at the deli counter" "I don't know.... Tens of thousands of people, probably. But not just for this grocery store--the same people make things for lots of other grocery stores too." "Is it a good thing to have so many people making things for this grocery store?" "I think so, and two hundred and twenty-five years ago Adam Smith thought so too. He wrote that free trade and commerce produces a division of labor, in which everyone gets to concentrate on doing one thing and can become good at it. And so, he wrote, '...without the assistance and co-operation of many thousands, the very meanest person in a civilised country could not be provided, even according to what we very falsely imagine the easy and simple manner in which he is commonly accommodated... yet it may be true... that the accommodation of... an industrious and frugal peasant... exceeds that of many a... king, the... master of... ten...

Posted by DeLong at 08:16 PM

August 21, 2002
Go To College!

If you're listening to this, are under 35, and haven't been to college: go to college. If you have children who are thinking of not going to college: convince them to go to college. Harvard economists Claudia Goldin and Larry Katz have called the twentieth century, "America's century of education." During that century the United States widened its lead over other industrial economies by creating the universal high school, and by developing a large and flexible system of colleges and universities. They believe that this educational expansion greatly increased the skills and adaptability of America's labor force throughout the twentieth century, and was a large part of the reason that America was and is richer and Americans more productive than people anywhere else in the world. But in the past few decades we've seen a slowdown in the growth of education in America. This slowdown has been accompanied by a sharp rise in the difference between the earnings of young workers who have and have not been to college. We economists are scratching our heads: since the--economic--benefits of going to college have become so large, why aren't more people going? One possibility is that people do not realize that the...

Posted by DeLong at 05:09 PM

August 11, 2002
New Data Confirm Amazingly Strong Productivity Trend

Usually reliable sources report that as the preliminary estimates of productivity growth were reported over the past year, Alan Greenspan was dumbfounded. "I don't believe it," he is supposed to have said. "You just can't get such high productivity growth in a recession. It will be revised down." And I don't know anybody who didn't agree, to some degree at least. Well, the revisions are in, and the productivity growth trend is a little bit weaker, but only a little bit. This leaves one big question: if this is productivity growth during a recession, what is the underlying trend rate of productivity growth now? I find it hard to think of a scenario in which trend productivity growth is not continuing the acceleration that began in the mid-1990s--and thus there is reason to think that the next eight years will see more rapid productivity growth than the past seven. One caveat: with productivity surging, it's hard to be pessimistic about GDP growth, but it's easy to be pessimistic about unemployment. washingtonpost.com: Productivity Strong Despite Revisions ...Productivity gains slowed with economic growth in the second quarter, but in the past year, the amount of goods and services produced for each hour...

Posted by DeLong at 04:26 AM

July 24, 2002
Boomtime in Europe

FT.com / Comment & analysis | Boomtime in Europe | by J. Bradford DeLong | July 23, 2002 | ...some socially unproductive investments were made during the Nasdaq bubble; some European companies have held back on investment plans because of slack demand; others have held back on investment plans because of various obstacles to economic flexibility; and there are important differences between US and many European statistical systems in their ability to track economic growth. Yet I cannot help but be reminded of America just a decade ago, when commentators and analysts speculated that all the investment in high-tech equipment was wasteful and dissipative. People in Washington, DC, observed the ferment of innovation in Silicon Valley but dismissed the possibility that it would have a big macroeconomic impact. After all, steadily and rapidly increasing computer power had already been at work for three decades without having any effect on aggregate productivity. What the conventional wisdom of a decade ago in the US missed was that you do not expect growing sectors - even rapidly growing ones - to have an impact on aggregate statistics until they achieve critical mass......

Posted by DeLong at 08:16 AM

July 14, 2002
2002-07-13: Notes: African Development

2002-07-13 Notes: African Development: An Email Exchange > And? Don't keep us in suspense! Was the fertilizer plant feasible? > Was it built? Does it work? Do thousands of cheering Tanzanians daily > praise the name of ________ _______? > The plant was actually in Uganda, but Tan-zanier is one of the main markets. But no. It fizzled. Not because it wasn't feasible, it was an excellent project, IMO. Trouble was the whole thing ground to a slow stuttering halt, because there's too many people who want to know what you can do for them, instead of doing their jobs. <shrug> ________ > Too many people in Britain? In Cyprus? In Uganda? > > > Brad In Uganda. Like endemic bribery and corruption to a degree that was almost a self-parody. _________ But Yoweri Musaveni is supposed to be one of Africa's best rulers, and his government one of the most honest......

Posted by DeLong at 03:21 PM

July 10, 2002
In Memory of Mancur Olson

Today, for some reason, I find myself wanting to talk to my late friend Mancur Olson, the University of Maryland economist best known for his mid-1960s book The Logic of Collective Action. His death was a great loss to all of us, as he was one of the keenest and most creative politico-economic analysts working for the Long-Term Planning Department of the Human Race. Ah. I know why I am thinking about him. It's because I just reread Brink Lindsey book, and he uses a number of Olson's insights as springboards for his own arguments. Here is one example: "[Mancur] Olson argued persuasively that underdevelopment reflects,not the absence of markets generally, but rather the absence of particular types of markets--namely, "socially contrived" or "property-rights-intensive" markets that arise and flower only with the help of appropriate, government-provided legal institutions... Those essential government activities that undergird a liberal market order are, by and large, so routine and uncontroversial that they do not figure in the ongoing debate over the role of government. In that context, economic liberals are always seen demanding less government intervention, and so develops the misconception that 'the less government, the better' is the sum and substance of their...

Posted by DeLong at 06:14 PM

July 08, 2002
Brink Lindsey Says: The Human Race Has Been Dealt a Winning (and Invisible) Hand

"I think you're wrong," said one of the barons of the center-left Washington, DC thinktanks. "Cato's biggest problem isn't that its day-to-day stuff is too carefully crafted to be politically useful to those factions of the Republican Party that it approves of. Cato's biggest problem is that it doesn't have a deep enough analytical bench. In fact, it has only one young full-time truly-heavy intellectual hitter."* "Brink?" "Yes, Brink Lindsey. Very smart. Very knowledgable. Very thoughtful. And--which is very unusual--very willing to entertain the possibility that he might be wrong." Now Brink Lindsey has written a book: Brink Lindsey (2002), Against the Dead Hand: The Uncertain Struggle for Global Capitalism (New York: John Wiley: 0471442771). The purpose of the book is to celebrate the end of one of what Lindsey sees as one of the great obstacles to human progress. The obstacle is "the dream of centralized, top-down control over the course of economic development" (p. 2). In Lindsey's mind, whether the policies were the bloody collectivization of agriculture by Stalin, Mao's command that peasants smelt steel in their backyards, French bureaucrats providing indicative guidance to enterprises for capacity expansion, the UK Labour Party nationalizing the "commanding heights" of...

Posted by DeLong at 06:34 PM

Sustaining American Economic Growth: Education as the Highest Priority

The third of the four things that I had hoped to have finished by mid-May is finally put to bed--on July 9. *Sigh*. Nevertheless, I like it a lot: it is a chapter for a book to be edited by Henry Aaron, part of Brookings's Agenda for the Nation series. It's co-written with the brilliant and thoughtful team of Claudia Goldin and Larry Katz. We're supposed to talk about sustaining American economic growth. What do we say? A fast growing economy is a rich economy. A rich economy is one in which people have more options and better choices: the people can—through their individual private and collective public decisions—decide to consume more, lower tax rates, increase the scope of public education, take better care of the environment, strengthen national defense or accomplish any other goals they might choose. For an economist these are sufficient reasons to consider growth a good thing. Moreover, in America at least, slow economic growth appears to heighten political gridlock, and thus reduce the quality of political decisions. Although faster economic growth is a good thing, it is not the only good thing. The future benefits of more rapid economic growth come at a cost. Resources...

Posted by DeLong at 12:32 PM

July 05, 2002
A Supermarket Epiphany

James Lileks has an epiphany about modern America and its economy in the grocery store, after staring at some people with weird tattoos. | LILEKS (James) The Bleat | Ever seen photographs of old grocery stores? Rent "Double Indemnity" some time, and watch the scene where Fred MacMurray and Babs Stanwick meet at an A&P. Four aisles of soap flakes and lousy coffee. My neighborhood has two old grocery stores from the post-war era; one is now a small restaurant, the other a liquor store. People are surprised to learn they were once grocery stores, because they look so small.Look at grocery stores today: gigantic. And look who they're for: not the lotus-eaters, but everyday folk. They're for people who aren't doing fabulous - but they're doing all right. Money's tight, the Visa's a bitch, but they have a house - not big, not new, but it's home, and if it's in this first-ring burb they have a huge yard, tall trees over the street and a decent school around the corner. They have a car - no Saab, but it runs great and you can fit six bags of groceries in the trunk. They have a couple of TVs,...

Posted by DeLong at 09:01 AM

July 03, 2002
The Boom in IT Investment

Real gross investment in IT relative to real GDP. The series is in chained 1996 dollars, so the relative levels are equal to nominal spending levels in 1996. We could choose an earlier base year, and blow up the apparent salience of IT investment today. We could choose a later base year, and reduce somewhat the salience of IT investment today. The first thing to note--the thing that is invariant to the choice of base year--is the extroardinary rise in the relative salience of IT, and how quickly it was accomplished. The second thing to note is how small the real decline in IT investment in the current recession has been. It erased less than two years' growth in relative real IT investment. Real Investment in Information Technology Equipment and Software Divided by Real GDP From the National Income and Product Accounts prepared by the Commerce Department's Bureau of Economic Analysis. Real gross private investment in information technology and software divided by real gross domestic product [GDP]. Note that this is not a "share": it is just two series of numbers, one divided by the other....

Posted by DeLong at 02:30 PM

The Accumulation Century, the Education Century, and What Comes Next...?

The nineteenth century was the age of invention, innovation, and accumulation. New technologies were developed in the lab and installed in the field, on the road, and in the factory. These new technologies were for the most part embodied in expensive and sophisticated capital goods. Hence economic growth in the nineteenth century was overwhelmingly the accumulation and deployment of physical capital goods that embodied productve modern technologies. By contrast, the twentieth century saw not a rise but a fall in the physical capital-output ratio. We have many more and much more sophisticated machines and structures now, yes. But the ratio of the value of capital to the value of output has fallen. In this sense, the twenteith century was the human-skill century, one in which the key complementarity was not between technology and machines but between technology and the skills and capabilities of the labor force. What comes next? What will the start of the twenty-first century bring? Unless the U.S. makes a major national effort, a variety of forces seem to be working to make the upgrading of the educational and skill level of the American labor force much slower in the future than it has been in the...

Posted by DeLong at 01:20 PM

The Upward Shift in Gross Investment in America

Before the 1990s there was some evidence for a long, slowly-moving upward trend in the volume of investment relative to GDP. Many Republican politicians (and a few analysts) thought that the Reagan tax cuts of the early 1980s had generated an investment breakthrough: they looked at the rise in investment from 1982 to its 1984 peak, projected this rise forward, and forecast rapid economic growth as it was "morning in America." But whatever supply-side incentives did in the mid- and late-1980s to boost demand for investment funds, the large federal deficits (and the swing in the balance of payments back toward zero) did more to drain the pool of savings and reduce the supply of potential investment funds. Anomalously, the later 1984-1989 stage of the 1980s expansion saw not rising but falling investment relative to GDP. The 1990s, by contrast, saw a stunning explosion of investment in America. A fall in private savings was greatly outweighed by a combination of the Clinton administration's successful commitment to deficit reduction, the return of foreigners' willingness--nay, eagerness--to invest in America, and stunning declines in the relative prices of high-tech investment goods that gave firms undertaking investment projects much more bang for the buck....

Posted by DeLong at 01:12 PM

June 24, 2002
Productivity Growth in the 2000s

Another paper put to bed. This one took me twice as long as I wished to say what I wanted to say, and so I only got to say about half of what I wanted. It is remarkable how optimistic about productivity growth I seem to be--am I simply insanely optimistic, or is everyone else not looking hard at the evidence? I'm sorry I didn't get to write the rest of the paper, about the total-factor-productivity-growth-producing sector. I need to find out what I think someday, and I won't get my thoughts in order until I actually write them down. Abstract: A near-consensus sees the cause of the productivity speed-up of the 1990s in the information technology [IT] sector. The pace of invention and innovation in the information technology sector generated real price declines of between ten and twenty percent per year for decades. Increased productivity in the IT capital goods-producing sector coupled with real capital deepening as the quantity of investment bought by a dollar of nominal savings grows have together driven the productivity speed-up of the 1990s. J. Bradford DeLong (2002, forthcoming), "Productivity Growth in the 2000s," NBER Macroeconomic Annual 2002 (Cambridge: MIT Press). Full text http://www.j-bradford-delong.net/Econ_Articles/macro_online/delong_macro_annual_2002_fi.pdf Will...

Posted by DeLong at 06:57 PM

June 07, 2002
Two Decades After Mrs. T...

Am I going to have to change my mind and conclude that all-in-all Margaret Thatcher's "reforms" were good for the long-term economic health of Britain? Richard Freeman and David Card--neither of them a neoconservative, card-carrying or otherwise--are pushing me very hard toward such a position......

Posted by DeLong at 01:14 PM

June 06, 2002
PEIS--Notes on Reform...

For my sins, I have wound up as chair of an interdisciplinary studies major, Political Economy of Industrial Societies, here at Berkeley. The major has lots of eager and enthusiastic students--those who want to do interdisciplinary work are, in my experience, the most eager and enthusiastic, and often very capable as well. The major has next to no money. Therefore we survive through exploitation: paying lecturers $7000 a pop to teach courses, thus taking advantage of the large excess supply of academics in history, political science, and related disciplines that have--in an appalling failure of workforce planning--been pumped out of America's universities over the past decades. I had coffee with one of my lecturers yesterday. Jesse Goldhammer, a guy who has just moved to Berkeley from Austin, a newly-minted Berkeley Ph.D. in political science, a political theorist, with a just-completed dissertation (and, hopefully, soon a book contract) on French political thinkers' conceptions of violence as both foundation-making and foundation-breaking for political regimes. We have him slotted to teach one course--PEIS 101, Modern Theories of Political Economy--this summer, and two courses next spring. He is--as are all of our lecturers--smart, enthusiastic, a very good teacher, intellectually curious, and convinced at some...

Posted by DeLong at 10:54 AM

June 05, 2002
Profits and Productivity

In the 1990s profits, as measured by the national income accountants, peaked in 1997. Thereafter--even as productivity and production in the entire economy grew more rapidly than they had in a quarter-century--profits fell. The benefits of the wave of innovation in information technology and economic growth in the last years of the twentieth century flowed not to corporations' shareholders but to consumers in the form of lower prices and to workers in the form of high wages and salaries. There had been a debate about whether the coming of information technology would subject American businesses to more competition, as better information technology made it easier to comparison shop, or subject to less competition, as first movers exploited economies of scale and scope to acquire entrenched monopoly positions. The answer, of course, is "both"--America is a big place where lots of things can happen. But it seems clear that the first happened more than the second: that the late 1990s saw a profit squeeze as the benefits of economic growth went overwhelmingly to workers and consumers. The joker was that America's businesses did not tell their investors that profits had peaked in 1997. By 2000 the S&P 500 firms were...

Posted by DeLong at 11:44 AM

A Truly Loathsome Toad

So I stopped by Andrew Sullivan's weblog this morning to see what's what, and was confronted with a short item which read, in its entirety: SELF-PARODY WATCH: "Special Report: Zambian Copper," - a headline from this week's Economist. At first, I genuinely didn't get the joke. You see, I'd read the Economist's Zambian copper story. It was one of the most interesting (and depressing) articles in this week's edition: the failure of privatization in southern Africa, 15000 workers who may lose their jobs, a mining complex that once produced 10 percent of the world's copper so damaged by two decades of neglect during nationalization that now there appears to be no way--not even if the mineworkers of Zambia work for free--that the mines can produce more in value than they take in, the fact that Zambia has little else worth exporting besides copper, whether the key flaw lay in the decades of nationalization or in the transformation of the privatization program into a "looting exercise." Why, I wondered, does Andrew Sullivan consider this--interesting and important--story to be a big joke? But then I began to imagine what the inside of Andrew Sullivan's mind must be like... Look! The Economist thinks...

Posted by DeLong at 09:22 AM

May 23, 2002
Strong American Relative Growth

During the 1990s, U.S. economic growth by far outstripped that of the other major industrial economies.

Posted by DeLong at 02:27 PM

May 17, 2002
The Persistence of Relatively Rapid U.S. Growth

U.S. economic growth in the 1990s has vastly outstripped that of the other components of the world economy's industrial core.

Posted by DeLong at 02:43 PM

May 06, 2002
Jean Dreze Sounding Neoliberal

Development economist Jean Dreze sounding amazingly neoliberal--shrink the (corrupt and incompetent) state and grow the market--as he rips into India's Food Distribution Program.

Posted by DeLong at 03:12 PM

April 30, 2002
International Productivity Comparisons

My main point, however, is that the world is complicated, and single statistics are bound to be incomplete. Anyone who presents to you one single number for a nation--and then draws sweeping conclusions from it--is interested in driving you into the corral as if you were a panicked sheep. Don't pay attention to such people....

Posted by DeLong at 03:28 PM

April 15, 2002
April 15: Tax Day

Of course, if you can find someone else willing to pay my share, so that I can keep my $91,000, have 'em give me a call...

Posted by DeLong at 03:49 PM

April 12, 2002
Was the New Economy Oversold?

But if you hang out with the professional forecasters and builders of economic models, you hear a very different story. They are impressed by how small the recession of 2001 has been in terms of lost output, how rapid productivity growth has been throughout the recession...

Posted by DeLong at 03:55 PM

Productivity Forecasts

It suggests something much more interesting--that the process of automation and investment in information technology that fueled such rapid real wage and production growth in the late nineties is still going on under the surface...

Posted by DeLong at 03:52 PM

April 01, 2002
Productivity Growth in the 2000s

In the second half of the 1990s American productivity picked itself up off the ground to which it had fallen at the early-1970s start of the productivity slowdown. Between the beginning of 1995 and the semi-official NBER business cycle peak in March 2001, U.S. nonfarm-business output per person-hour worked grew at an annual rate of 2.80 percent per year. (Extending the sample through the 2001 recession to the likely trough point of 2001:4, the late-1990s growth rate is 2.69 percent per year.) Between the beginning of 1995 and the semi-official NBER business cycle peak in March 2001, U.S. real GDP grew at a pace of 4.21 percent per year. The causes of the productivity slowdown of the 1973-1995 or so period remain disappointingly mysterious. Baily (2002) calls the growth-accounting literature on the slowdown "large but inconclusive." No single factor provides a convincing and coherent explanation, and the residual position that a large number of growth-retarding factors suddenly happened to hit at once is unlikely. By contrast, nearly all agree on the causes of the productivity speed-up of 1995-2001: it is the result of the extraordinary wave of technological innovation in computer and communications equipment–solid-state electronics and photonics. Robert Gordon (2002)...

Posted by DeLong at 10:03 AM

March 30, 2002
Productivity growth in the 2000s: what will it be?

I'm supposed to forecast what productivity growth will be in the United States over the next decade, and what policies could accelerate or retard it, in three different papers and for five different audiences over the course of this spring and summer. The tricky part is that it is not at all clear to me what the right way to proceed is. But it may not matter much: whatever approach I take, I keep getting optimistic answers--although I'm not sure whether this describes the set of possible worlds we might live in or my own disposition. There are natural optimists, like former IMF head Michel Camdessus, of whom his subordinate Michael Mussa once cracked, "He's so optimistic he sees the glass as half full even when there's no glass at all"... In 1995 American productivity growth, which had been motionless and prostrate, face-down on the ground since the early 1970s productivity slowdown, suddenly picked up its mat and walked. By pre-1973 standards the pace of growth of labor productivity was nothing special. But by the standards of 1973-1995 it seemed nothing less than an economic growth miracle. Between the beginning of 1995 and the semi-official NBER business cycle peak...

Posted by DeLong at 10:10 PM

December 07, 2001
If You Don't Believe That Trade Causes Economic Development, You Have to Argue That There Is Some Powerful and Unidentified Development-Inducing Force Correlated with Trade

Gains from Trade if you divide poor countries into those that are more and less globalized, more globalized poor countries have grown faster than rich countries. Since 1980 manufactures have risen from 25% of poor-country exports in 1980 to more than 80% in 1998. Manufacturing export growth has been concentrated in two dozen countries, chief among them China, India and Mexico, that are home to 3 billion people. These economies have doubled their ratio of trade to national income. And the 1990s their GDP per head grew by an annual average of 5%. For the 2 billion people who live in the non-globalizing rest of the developing world, the story is very different. Trade has fallen relative to GDP. Income per capita has grown slowly, or has shrunk. And poverty has risen....

Posted by DeLong at 10:00 PM

September 18, 2001
A Link to One of My Interesting Graphs...

The Industrial Revolution in Cotton Spinning The heroic age of the British Industrial Revolution saw a three-hundredfold decline in the real cost of spinning cotton. What had been one of the principal bottlenecks of the pre-industrial economy, and one of the principal non-agricultural occupations of humanity, became one of the cheapest and easiest parts of production. The extraordinary fall in the price of spinning cotton gave an extraordinary boost to demand for cotton--to the benefit of Indian farmers, Egyptian tax collectors, and American slaveholders......

Posted by DeLong at 09:52 PM

August 22, 2001
The Last Crusade for Economic Development

William Easterly (2001), The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (Cambridge: MIT Press: 026205065X). Today the industrialized world as a whole is embarked--half-heartedly, I admit--on yet another crusade to try to make the poorer parts of the world rich. The ideology behind this crusade--an ideology that I believe in--is called "neoliberalism." It has two guiding principles. The first is that close economic contact between the industrial core and the developing periphery is the best way to accelerate the transfer of technology which is the sine qua non for making poor economies rich (hence all barriers to international trade should be eliminated as fast as possible). The second is that governments in general lack the capacity to run large industrial and commercial enterprises (hence save for core missions of income distribution, public-good infrastructure, administration of justice, and a few others, governments should shrink and privatize)......

Posted by DeLong at 05:07 PM

November 06, 1999
Review of Jared Diamond, Guns, Germs, and Steel

Why did Europeans conquer Peru, Mexico, Ghana, and Australia? Why didn't Incas, Aztecs, Ashanti, or Australians conquer Eurasians. That is the question that Jared Diamond answers--largely successfully--in this book. And his answer can be summed up in one phrase: "seeds, germs, size, and guns." (Note that the answer is not "guns, germs, and steel"--a phrase that is more euphonious but less meaningful.) Eurasian societies acquired a key advantage relative to other societies because of big seeds. Eurasian societies acquired a key advantage (relative to other societies) in their resistance to germs. The relatively advantageous biological endowment of Eurasian societies was then reinforced because of the size of Eurasia. And the relative edge possessed by European societies was then amplified to overwhelming proportions by guns....

Posted by DeLong at 04:17 PM

September 01, 1989
J. Bradford DeLong and Lawrence H. Summers, "On the Existence and Interpretation of a `Unit Root' in U.S. Real GDP" (Cambridge, MA: Harvard University Department of Economics, 1989).

J. Bradford DeLong and Lawrence H. Summers (1989), "On the Existence and Interpretation of a `Unit Root' in U.S. Real GDP" (Cambridge, MA: Harvard University Department of Economics)....

Posted by DeLong at 01:51 PM

July 01, 1989
J. Bradford DeLong (1989), "The `Protestant Ethic' Revisited: A Twentieth-Century Look," Fletcher Forum 13: 2 (Summer), pp. 229-242.

J. Bradford DeLong (1989), "The `Protestant Ethic' Revisited: A Twentieth-Century Look," Fletcher Forum 13: 2 (Summer), pp. 229-242....

Posted by DeLong at 01:59 PM

December 01, 1988
J. Bradford DeLong (1988), "Productivity Growth, Convergence, and Welfare: Comment," American Economic Review 78: 5 (December), pp. 1138-1154.

J. Bradford DeLong (1988), "Productivity Growth, Convergence, and Welfare: Comment," American Economic Review 78: 5 (December), pp. 1138-1154. JSTOR....

Posted by DeLong at 11:51 AM

September 01, 1987
J. Bradford DeLong (1987), "Review of N.F.R. Crafts, British Economic Growth during the Industrial Revolution," Journal of Economic History 47:3 (September), pp. 790-792.

J. Bradford DeLong (1987), "Review of N.F.R. Crafts, British Economic Growth during the Industrial Revolution," Journal of Economic History 47:3 (September), pp. 790-792....

Posted by DeLong at 11:39 AM

J. Bradford DeLong (1987), "Review of Bernard Elbaum and William Lazonick, The Decline of the British Economy," Journal of Economic History 47:3 (September), pp. 792-795.

J. Bradford DeLong (1987), "Review of Bernard Elbaum and William Lazonick, The Decline of the British Economy," Journal of Economic History 47:3 (September), pp. 792-795....

Posted by DeLong at 11:37 AM