The Citizens United Diet
January 20, 2012
Via Newsday
The Bright Side of British Colonialism: English institutions- the common law, property rights, and banking led to economic growth in the colonies
January 20, 2012
In most circles, colonialism is considered to be a sad episode in history—where dominant economic powers with sophisticated military might subjugated less developed, more vulnerable societies, turned them into colonies, imposed foreign languages and organizations upon them, and exploited local natural resources and labor. Indeed, Karl Marx argued that mature capitalist economies required such colonies in order to forestall their inevitable stagnation and decline. And there was a heavy price paid by the colonies themselves, with long-term negative consequences that are often pointed to as the reason why many of those societies remain poor today.
But this dark story has now been revised. A recent series of papers co-authored by Hoover Property Rights Task Force members Daron Acemoglu and James Robinson found that there were advantages from colonization as well, especially for those colonies within the British Empire. English institutions, such as the common law, property rights security, contract enforcement, and banking and trading practices provided a positive basis for economic growth in the colonies that has persisted.
As with all cross-country economic-growth comparisons, however, any measure of legal, political, or economic institutions, regardless of their source, must be done at a high level of aggregation with little specific detail. For this reason, it is hard to know why England, as compared to, say, France or Spain, was the possible cause of these benefits; precisely what they were; and how they were transmitted to the colonies.
In a new study in honor of the 1991 Economics Nobel Prize winner Ronald Coase, Dean Lueck, Trevor O’Grady, and I addressed these issues by examining the demarcation of property rights to land, the most basic resource in a developing economy. For any society to become rich, a precondition is that its land must be used productively and that land markets must emerge. Markets direct land to its highest-valued uses, redirect it as those change, and promote the consolidation or breakup of holdings in order to seize new economic opportunities. Secure property rights, of course, are essential, but some demarcation practices are more effective than others. In flat areas, for instance, squares have productive advantages and their uniformity allows for secure property boundaries and standardization for market trades.
The benefits of square demarcation were first seen, as with so many other institutional innovations, by the Romans. In territories conquered by Rome, land was organized into grids to support higher agricultural productivity and, presumably, exchange. But with the fall of Rome, many of its advances were lost. During the “Dark Ages,” property rights to land were insecure and haphazardly defined in irregular shapes by local markers—rocks, trees, streams, and hills, in a practice termed “metes and bounds.” “Metes” refers to property boundaries defined by the measurement of distances between terminal points, and “bounds” refers to boundary descriptions based on topography. After Rome, trade diminished and agricultural output declined in Europe.
At its peak, the British Empire controlled nearly 25 percent of the world’s land.
Fast forward to the seventeenth, eighteenth, and nineteenth centuries. Although many medieval land practices remained, by the mid-seventeenth century, land in Britain was becoming more valuable and this led to changes in land institutions from traditional practices. These advancements subsequently influenced British colonial policy. The enclosure of scattered and common lands helped to restructure, reshape, and consolidate plots into more useful forms for sheep-raising and large-scale food production. Land markets that had been local and limited became more active and broadly based. Thanks to new survey instruments and practices, boundaries were defined more accurately.
At the same time, Britain, France, Spain, Portugal, and, to a lesser degree, the Netherlands, were acquiring new lands or colonies elsewhere. Within England, the acquisition of vast new territories, especially those temperate lands that could be settled by English or other Northern European colonists, prompted debate over property rights and land management among the leading political economists of the time, including Adam Smith, Jeremy Bentham, John Stuart Mill, Thomas Malthus, David Ricardo, Edward Wakefield, and Robert Torrens.
Their concern was how to best design and manage land distribution and demarcation in the colonies so as to promote orderly settlement, economic growth to accommodate immigration, and generate higher land values and sales revenues. The old advantages of squares or rectangular demarcation were rediscovered and reintroduced. Indeed, the British Colonial Office in the seventeenth and eighteenth centuries issued circulars calling for synchronized, planned settlement and square land demarcation in the temperate British colonies. Not all of these mandates were implemented, but many were. This mixed pattern of institutional transfer and innovation is the focus of our study.
The impact of the Empire was so important because its sheer size allowed British practices to have a profound effect. Although, the British Isles comprise only 121,673 square miles, at its peak, the British Empire covered 14.2 million square miles, or nearly 25 percent of the world’s land area. The colonial area that we examine involved 10.7 million square miles…
Not Fade Away: The myth of American decline.
January 20, 2012
Is the United States in decline, as so many seem to believe these days? Or are Americans in danger of committing pre-emptive superpower suicide out of a misplaced fear of their own declining power? A great deal depends on the answer to these questions. The present world order—characterized by an unprecedented number of democratic nations; a greater global prosperity, even with the current crisis, than the world has ever known; and a long peace among great powers—reflects American principles and preferences, and was built and preserved by American power in all its political, economic, and military dimensions. If American power declines, this world order will decline with it. It will be replaced by some other kind of order, reflecting the desires and the qualities of other world powers. Or perhaps it will simply collapse, as the European world order collapsed in the first half of the twentieth century. The belief, held by many, that even with diminished American power “the underlying foundations of the liberal international order will survive and thrive,” as the political scientist G. John Ikenberry has argued, is a pleasant illusion. American decline, if it is real, will mean a different world for everyone.
But how real is it? Much of the commentary on American decline these days rests on rather loose analysis, on impressions that the United States has lost its way, that it has abandoned the virtues that made it successful in the past, that it lacks the will to address the problems it faces. Americans look at other nations whose economies are now in better shape than their own, and seem to have the dynamism that America once had, and they lament, as in the title of Thomas Friedman’s latest book, that “that used to be us.”
The perception of decline today is certainly understandable, given the dismal economic situation since 2008 and the nation’s large fiscal deficits, which, combined with the continuing growth of the Chinese, Indian, Brazilian, Turkish, and other economies, seem to portend a significant and irreversible shift in global economic power. Some of the pessimism is also due to the belief that the United States has lost favor, and therefore influence, in much of the world, because of its various responses to the attacks of September 11. The detainment facilities at Guantánamo, the use of torture against suspected terrorists, and the widely condemned invasion of Iraq in 2003 have all tarnished the American “brand” and put a dent in America’s “soft power”—its ability to attract others to its point of view. There have been the difficult wars in Iraq and Afghanistan, which many argue proved the limits of military power, stretched the United States beyond its capacities, and weakened the nation at its core. Some compare the United States to the British Empire at the end of the nineteenth century, with the Iraq and Afghanistan wars serving as the equivalent of Britain’s difficult and demoralizing Boer War.
With this broad perception of decline as the backdrop, every failure of the United States to get its way in the world tends to reinforce the impression. Arabs and Israelis refuse to make peace, despite American entreaties. Iran and North Korea defy American demands that they cease their nuclear weapons programs. China refuses to let its currency rise. Ferment in the Arab world spins out of America’s control. Every day, it seems, brings more evidence that the time has passed when the United States could lead the world and get others to do its bidding.
Powerful as this sense of decline may be, however, it deserves a more rigorous examination. Measuring changes in a nation’s relative power is a tricky business, but there are some basic indicators: the size and the influence of its economy relative to that of other powers; the magnitude of military power compared with that of potential adversaries; the degree of political influence it wields in the international system—all of which make up what the Chinese call “comprehensive national power.” And there is the matter of time. Judgments based on only a few years’ evidence are problematic. A great power’s decline is the product of fundamental changes in the international distribution of various forms of power that usually occur over longer stretches of time. Great powers rarely decline suddenly. A war may bring them down, but even that is usually a symptom, and a culmination, of a longer process.
The decline of the British Empire, for instance, occurred over several decades. In 1870, the British share of global manufacturing was over 30 percent. In 1900, it was 20 percent. By 1910, it was under 15 percent—well below the rising United States, which had climbed over the same period from more than 20 percent to more than 25 percent; and also less than Germany, which had lagged far behind Britain throughout the nineteenth century but had caught and surpassed it in the first decade of the twentieth century. Over the course of that period, the British navy went from unchallenged master of the seas to sharing control of the oceans with rising naval powers. In 1883, Britain possessed more battleships than all the other powers combined. By 1897, its dominance had been eclipsed. British officials considered their navy “completely outclassed” in the Western hemisphere by the United States, in East Asia by Japan, and even close to home by the combined navies of Russia and France—and that was before the threatening growth of the German navy. These were clear-cut, measurable, steady declines in two of the most important measures of power over the course of a half-century.
SOME OF THE ARGUMENTS for America’s relative decline these days would be more potent if they had not appeared only in the wake of the financial crisis of 2008. Just as one swallow does not make a spring, one recession, or even a severe economic crisis, need not mean the beginning of the end of a great power. The United States suffered deep and prolonged economic crises in the 1890s, the 1930s, and the 1970s. In each case, it rebounded in the following decade and actually ended up in a stronger position relative to other powers than before the crisis. The 1910s, the 1940s, and the 1980s were all high points of American global power and influence.
Less than a decade ago, most observers spoke not of America’s decline but of its enduring primacy. In 2002, the historian Paul Kennedy, who in the late 1980s had written a much-discussed book on “the rise and fall of the great powers,” America included, declared that never in history had there been such a great “disparity of power” as between the United States and the rest of the world. Ikenberry agreed that “no other great power” had held “such formidable advantages in military, economic, technological, cultural, or political capabilities…. The preeminence of American power” was “unprecedented.” In 2004, the pundit Fareed Zakaria described the United States as enjoying a “comprehensive uni-polarity” unlike anything seen since Rome. But a mere four years later Zakaria was writing about the “post-American world” and “the rise of the rest,” and Kennedy was discoursing again upon the inevitability of American decline. Did the fundamentals of America’s relative power shift so dramatically in just a few short years?
The answer is no. Let’s start with the basic indicators. In economic terms, and even despite the current years of recession and slow growth, America’s position in the world has not changed. Its share of the world’s GDP has held remarkably steady, not only over the past decade but over the past four decades. In 1969, the United States produced roughly a quarter of the world’s economic output. Today it still produces roughly a quarter, and it remains not only the largest but also the richest economy in the world. People are rightly mesmerized by the rise of China, India, and other Asian nations whose share of the global economy has been climbing steadily, but this has so far come almost entirely at the expense of Europe and Japan, which have had a declining share of the global economy.
Optimists about China’s development predict that it will overtake the United States as the largest economy in the world sometime in the next two decades. This could mean that the United States will face an increasing challenge to its economic position in the future. But the sheer size of an economy is not by itself a good measure of overall power within the international system. If it were, then early nineteenth-century China, with what was then the world’s largest economy, would have been the predominant power instead of the prostrate victim of smaller European nations. Even if China does reach this pinnacle again—and Chinese leaders face significant obstacles to sustaining the country’s growth indefinitely—it will still remain far behind both the United States and Europe in terms of per capita GDP.
Military capacity matters, too, as early nineteenth-century China learned and Chinese leaders know today. As Yan Xuetong recently noted, “military strength underpins hegemony.” Here the United States remains unmatched. It is far and away the most powerful nation the world has ever known, and there has been no decline in America’s relative military capacity—at least not yet. Americans currently spend less than $600 billion a year on defense, more than the rest of the other great powers combined. (This figure does not include the deployment in Iraq, which is ending, or the combat forces in Afghanistan, which are likely to diminish steadily over the next couple of years.) They do so, moreover, while consuming a little less than 4 percent of GDP annually—a higher percentage than the other great powers, but in historical terms lower than the 10 percent of GDP that the United States spent on defense in the mid-1950s and the 7 percent it spent in the late 1980s. The superior expenditures underestimate America’s actual superiority in military capability. American land and air forces are equipped with the most advanced weaponry, and are the most experienced in actual combat. They would defeat any competitor in a head-to-head battle. American naval power remains predominant in every region of the world…
We The People Say: Get Out of The Way
January 20, 2012
Not since the days of Watergate have American politicians been so despised, and small wonder. At present the job approval rating for all national politicians stands at 11 per cent, making them about as popular as car-jackers. With unemployment at 8.6 per cent, “hope and change” exposed as the cynical electioneering soundbite it always was, legislative gridlock right across Capitol Hill, and a government closedown only averted at the last minute back in June, the one last slender hope was that the bipartisan congressional “Supercommittee” would be able to come up with $1.2 trillion of spending cuts in $44 trillion of projected deficits. It couldn’t. The “Stuporcommittee”, as the New York Post dubbed it, failed, and with it went the last of the American people’s respect for and patience with Washington DC.
Both the Tea Party and the Occupy Wall Street movements are reactions against establishment Washington politics, from the Right and the Left respectively, and there is now an assumption that both will promote independent candidates to stand in the presidential elections. The emergence of Michelle Bachman, then Rick Perry, then Herman Cain and now Newt Gingrich was not solely a repudiation of Mitt Romney’s centrism by conservative Republicans, but also an emphatic rejection of the kind of business-as-usual politics Romney seems to personify. Despite Gingrich having earned an estimated $100 million over the past decade as a Washington lobbyist, he is somehow thought of as an outsider, at least in Republican eyes.
Of course it has always been popular to run against “Washington”: every candidate since Lyndon Johnson has tried it, with varying success. Ronald Reagan did it very efficiently in 1980, but all candidates try to distance themselves from the politicking and deal-making that are the unavoidable by-products of a large modern democracy. Frank Capra’s iconic movie Mr Smith Goes to Washington, in which Jefferson Smith (played by Jimmy Stewart) takes on and beats Washington corruption, was made in 1939, after all. In the denouement, Mr Smith tells his colleagues in the Senate: “I’ve got a few things I want to say to this body. I tried to say them once before and I got stopped colder than a mackerel. Well, I’d like to get them said this time, sir. And as a matter of fact, I’m not gonna leave this body until I do get them said.” Cue the return of honesty and decency to American public life.
What makes the problem so much more serious nowadays, and away from celluloid, is that individual corrupt politicians are not the problem; Americans appreciate that it’s the system itself that’s broken. With President Obama 11 months from an election in which he has adopted a platform of blaming “the millionaires and the billionaires” for blocking recovery, and the Republicans refusing to increase taxes without corresponding spending cuts, any movement on the economy has been “stopped colder than a mackerel”. Yet Americans being the self-reliant individualists that they thankfully remain are not taking their politicians’ failures as the last word on matters.
Recalling that they weren’t led by a single president of note between Lincoln’s death in 1865 and the advent of Teddy Roosevelt in 1901, and yet became the world’s largest economy, Americans are appreciating that political leaders aren’t essential to national success. Individuals and corporations in particular are providing public goods and services to an extent that they rarely did in the past, and are doing it far more efficiently than the government does.
Increasingly, all that Americans are asking of their sclerotic civil service is that it simply gets out of their way; indeed, if you want to see “the Big Society” working in practice, forget Scandinavia and look towards “the land of the Free”.
The Committee to Encourage Corporate Philanthropy, the main research institute that tracks corporate giving trends, reports from its database of 184 companies (63 of which are in the Fortune 100) that corporate giving overall has increased by 53 per cent since 2007, i.e. since before the economic crisis. Instead of cutting back on their generosity and involvement in the hard times, individuals and corporations are actually giving more. The sum of contributions across all respondents totalled more than $15.5 billion in cash and products. The biggest increases were unsurprisingly to be found among those companies that work in the healthcare sector which, because of the dislocations inherent in Obamacare, are giving away more medicines to Americans than ever before.
In America’s vast educational-industrial complex, private money is making a huge impact, with philanthropists acting far more proactively than in the past. The Bill & Melinda Gates Foundation, noting that the average graduation rate in US high schools is only 57 per cent among black and Hispanic students, has poured money into consultancies, research institutes, testing groups and for-profit school networks to try to improve the system. The foundation virtually invented the concept of “common core standards” in English and maths…
Together At Last
January 20, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
Jobs vs Politics
January 20, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
