The decline of China, explained by population boom

The Fall and Rise of China, a course by Richard Baum (late professor at UCLA), asks how it was possible for an empire that had been so successful for 1,000 years to fall apart in about 100 years. The decline of China relative to Europe was anything but predictable, in his view, and the real question is why China didn’t continue to lead the world economy.

The professor’s thesis is that population growth doomed China. The Manchus improved the control of floodwater from China’s major rivers, thus enabling more stability in agriculture. Instead of an improved standard of living, however, this lead to a huge increase in what had been a stable population size, from about 125 million to 450 million over 200 years (1700 to 1900). Agricultural productivity per acre did not improve significantly and the cultivated land per person fell, thus reducing both the standard of living for the typical citizen and tax revenues for the government (people at a Malthusian level of subsistence can’t pay tax).

(The doom was accelerated to some extent, according to Professor Baum, by the corrupt and incompetent Empress Dowager Cixi, who ruled China for 47 years and obstructed efforts to modernize the military (partly by stealing money that had been appropriated for that purpose). Without her, China might have had a chance to go more in the Japanese direction.)

I’m not sure that the “overpopulation” answer is correct, but the question seems like the right one to ask. How did a country that was so far ahead of the rest of the world suddenly (when viewed through the lens of history) collapse?

Venezuela certainly didn’t thrive once its oil wealth was divided by a larger population. Chart from the World Bank:

Venezuela was producing roughly 2.5 million barrels of oil per day in 2010 at about $80 per barrel. That would have been $36,000/year in walking-around revenue for a family of 4 if total revenue were divided by the 1960 population of 8 million. Divided by 28 million, though, and revenue per family was down to $10,000 (and don’t forget that Venezuelans had to take care of the Big Guy and his family before oil revenue could be distributed more widely).

Are there lessons for the U.S.? As the U.S. population has grown (10 million in 1820, 180 million in 1960, 333 million today), Americans have gotten fatter, not thinner. We’re not running out of food like the Chinese did. On the other hand, folks who show up in the U.S. expect an endowment of land/housing. The standard of living to which Americans believe themselves entitled is now, absent taxpayer-funded subsidies, out of reach of roughly half of the people who live in the U.S. and the situation gets worse every day (see “Hundreds of Haitians arrive in Massachusetts from southern border lacking housing, health care” (Boston Globe, 10/10/2021), for example: “Advocates scramble to find homes and help for the new arrivals.” (if every Massachusetts homeowner with an “immigrants welcome” lawn sign and a spare room would host just one Haitian, a substantial fraction of the 1.1 million Haitians in the U.S. could be accommodated in just this one righteous state!).)

The NYT, 8/10/2021 says the situation is dire, but Biden’s central planners have a plan to fix this and we just need “a once-in-a-generation effort”. Harvard agrees that Biden, whose name occurs 6 times in this report, will make all of our housing dreams come true. The NYT article cites Japan favorably. Rents in Tokyo are no higher than they were 20 years ago (it looks as though the indices are adjusted for inflation because San Francisco rent is up only 150 percent and New York up only 100 percent). Not mentioned is that Japan’s population, over the last 20 years, is essentially flat (127 million down to 126 million). You shouldn’t need the world’s finest central planners to manage housing for a constant-sized population.

The Chinese, according to the professor, also suffered from insularity. They mostly stopped traveling to foreign countries (compare to our border-crossing restrictions since February 2020). They didn’t keep up with the Industrial Revolution (compare to our current dependence on Asia to fabricate semiconductors). Due to Internet, container ships, and air freight, however, it is tough to imagine the U.S. ever being truly disconnected from innovation centers around the world.

So history may not repeat itself nor even rhyme, but it is still an interesting question to ponder. Why were Michelle Faraday and Katherine Clerk Maxwell the pioneers in electromagnetism rather than physicists in Beijing? Why was it Mileva Marić who explained the photoelectric effect and figured out that gravity distorts spacetime, rather than someone in Shanghai? Why was it Louise-Hélène de Lesseps who created the Suez Canal rather than the Chinese, who had more than 2000 years of canal experience.

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The first computerized medical diagnosis systems (late 1950s)

“The Automatic Digital Computer as an Aid in Medical Diagnosis” (1959, Crumb and Rupe) is an interesting example of hope versus reality. Computers will turn medicine into a science and they’ll also save money.

The authors predicted that computers in medicine would “contribute to the good of mankind”:

What do we have, 60+ years later? Epic, whose primary function is making sure that the providers get paid!

Were these authors the pioneers? No! The references include a 1956 punched card-based diagnosis system for diseases of the cornea (TIME).

The comments on the article are interesting. Then, as now, we don’t know if computers are useful in medicine because we don’t know how often human doctors are correct:

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Great Society history lesson II

Now that at least 80 million Americans are on what used to be called “welfare” (see “Pandemic Swells Medicaid Enrollment to 80 Million People, a ‘High-Water Mark’”), perhaps it is time to revisit Great Society: A New History which describes the origin of the no-longer-called-welfare program on which nearly 25 percent of Americans now rely. (Previous post: Bitcoin has plenty of runway if we look back to the 1960s and 70s and the Great Society)

What’s the history of the program?

The costs of the previous legislation Johnson had pushed Mills into had already far outrun the projections. Budget officials had predicted that Medicaid, for example, would cost less than $ 400 million in fiscal 1967. Instead it had cost $ 1.1 billion.

Compare to $613 billion in Medicaid spending in 2019 ( which presumably is now closer to $800

Why do Californians love bigger government so much?

The value of the private sector’s relationship with the government seemed especially obvious in the Western state that Americans regarded as the land of the future, California. For many Californians, the government was their job. More active-duty military and civilian Defense Department employees were stationed in California than in any other state. The presence of Pentagon money in California wasn’t merely large, it was overwhelming. 4 In one year, 1959, the Defense Department was awarding more than $ 3 billion in contracts to four aerospace firms in Los Angeles.

The author reminds us of the good old days of computing, before we got everything from Taiwan chip fabs:

In the mid-1950s, GE was a far richer company than IBM. General Electric had the resources necessary to get into computers, the computer fans reckoned, whatever Cordiner said. A clutch of engineers did manage to land a successful contract with the Bank of America for an innovative check sorter, the first computer system for banking applications, a testimony to the gumption of GE professionals and, ironically, to Cordiner’s own culture of department autonomy. California was the home of Bank of America, and also the home of the GE group that won the contract. The machines would serve the Sacramento, Fresno, Los Angeles, and San Diego areas. But California was a state where GE could endure the same troubles with organized labor as it did out East. GE internal reports noted that the company was looking to avoid the Golden State’s “punitive labor legislation.” GE based production of the project’s computer, weight 23,000 pounds, in Phoenix.

Unions can play an important role in expanding government for all:

Building a union that could beat the automakers at the negotiation table sounded like enough work, but Reuther also, early on, decided he wanted more. Reuther was falling in love with Northern Europe’s social democracies, countries where democratic government supplied health care and good schools, and even, Reuther noticed, funded time at worker spas for workers to recover from strenuous labor. It seemed to Reuther there was no reason America could not replicate the Scandinavian model. In the 1940s, Lem Boulware spoke at a graduation at Harvard University, making an early case for Boulwarism. During the same years Reuther gave the commencement address at Howard University, the historically black college in Washington. At Howard, Reuther said that U.S. unions needed to deliver better housing and medical aid to all Americans, not just union members. Otherwise, unions weren’t worth much. “The test of democratic trade unionism in a democratic society,” Reuther said, “is its willingness to lead the fight for the welfare of the whole community.”

The unions did beat the Detroit automakers, of course, but Detroit didn’t end up quite as prosperous as President Lyndon Johnson expected.

It was Detroit in particular that was, Johnson said [in May 1964], “the herald of hope in America. Prosperity in America must begin here in Detroit.” … If labor and industry would stick by his side, the president said, “the sky is the limit, and the sky is bright today.”

In the past, presidents had striven for abundance, Johnson noted. Now the country had abundance. The challenge of the next half century was proving “whether we have the wisdom to use that wealth to enrich and elevate our national life.” Some corners of the country were still poor. The Great Society, therefore, required, as Johnson had said before, an “end to poverty.”

See also Decline of Detroit (Wikipedia): “The population of the city has fallen from a high of 1,850,000 in 1950 to 680,000 in 2015 … Local crime rates are among the highest in the United States … and vast areas of the city are in a state of severe urban decay.” And Detroit bankruptcy (Wikipedia): “The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013. It is the largest municipal bankruptcy filing in U.S. history by debt, estimated at $18–20 billion…”

The central planners didn’t do a great job after World War II, but we can rely on them today…

Harrington took a frank position on the shame of urban renewal, in which unions had been complicit. After World War II, the unions had joined the federal government in a great plan to rebuild the cities. The bulldozers obliterated the slums, but also evicted entire black communities like Paradise Valley. This was not “urban renewal,” it was “Negro removal,” as the writer James Baldwin said. Two-thirds of the families displaced by urban renewal were black. Harrington argued that when the heavy equipment, whether Dwight Eisenhower’s in the past or new presidents’ in the 1960s, arrived at so-called slum neighborhoods, it crushed untold value. Old slums hadn’t merely been slums; they had been starting points: “there was community, there was aspiration.” New communities did not come to life in the new projects. The projects were cages that became graveyards. Harrington noted that the new housing that supplanted old tenements created “a new type of slum,” which isolated black families in ghettos. Harrington had seen the new type of slum firsthand in his hometown, St. Louis, where black families had been moved out of the Mill Creek areas to one of the largest of the urban renewal public housing projects in the country, Pruitt-Igoe.

Presidents Biden and Harris might be highly successful at transforming the U.S. via legislation:

And Johnson also could count some advantages of his own. First, there was his long record in the Senate, which gave him unparalleled experience as the shepherd of legislation. Roosevelt, a mere governor with a famous name, had had nothing like that. There was also the aching advantage of tragedy: Kennedy’s death would make Congress eager to pass Kennedy’s tax law and Kennedy’s languishing civil rights bill.

What are the parallels to today? Biden was in the Senate for decades and the U.S. is only now beginning to recover from the tragedy of rule by Donald Trump. Another parallel to today:

Moynihan noticed an irony. Whether a program’s beneficiaries were black or white, its planners were white. Blacks were scarcely present in all the work undertaken for the disadvantaged. Indeed, Moynihan later wrote, “at no time did any Negro have any role of any consequence in the drafting of the poverty program.”

The Great Society programs were supposed to get cheaper over time, as Americans realized that it was far better to work than to consume entitlement benefits:

At the August 20 signing ceremony, Johnson took further pains. The president told the public that the Economic Opportunity Act did not represent a “a handout or a dole.” He continued: “We know—we learned long ago—that answer is no answer. The measure before me this morning for signature offers the answer that its title implies. The answer is opportunity.” Spending now would bring savings later. Johnson promised the voters that this law would reduce the costs of “crime, welfare, of health and of police protection.” The act would yield a new era, and “the days of the dole in our country are numbered.” America would remember the 20 percent in poverty, the “forgotten fifth.”

Even today’s haters at the WSJ loved these ideas:

The Wall Street Journal characterized the law as “an opportunity to eradicate poverty, not opiate it.”

(Can we give them credit for prescience regarding opioids?)

Was President Johnson right about increased spending on government handouts cutting the cost of the police? Urban Institute: “From 1977 to 2018, in 2018 inflation-adjusted dollars, state and local government spending on police increased from $43 billion to $119 billion, an increase of 175 percent. Over the same period, real corrections expenditures increased from $18 billion to $81 billion, an increase of 350 percent.”

Ronald Reagan tried to talk Americans out of the idea that the path to salvation started with a much bigger government.

Reagan targeted the Office of Economic Opportunity. “Now do they honestly expect us to believe that if we add $ 1 billion to the $ 45 billion we’re spending . . . do they believe that poverty is suddenly going to disappear by magic?” Reagan also assailed the new camps being built for young workers. Room and board for each young person cost $ 4,700. Harvard tuition at $ 2,700 was less than that. Reagan took his jab at the college, and at Johnson’s misty affection for a humanities education: “I’m not suggesting Harvard is the answer to juvenile delinquency.” … America, Reagan said, was at a key moment—the country must choose whether it was a collectivist nation or a free one. The title of Reagan’s speech was “A Time for Choosing.” In early November the nation chose. It elected Johnson with an overwhelming majority.

We had faith then and have faith now!

To be continued…

More: Read Great Society: A New History

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Fordlandia: interesting facts about Henry Ford

Fordlandia: The Rise and Fall of Henry Ford’s Forgotten Jungle City, by Greg Grandin, has some interesting facts about Henry Ford that I want to jot down.

Ford was 50 years old when he put together the Model T with the assembly line and began his ascent into legend:

SUCCESS CAME LATE to Ford. Born on a Michigan farm in 1863, he was forty years old when he founded the Ford Motor Company in Detroit, forty-five when he introduced the Model T, and fifty when he put assembly line production into place and began to pay workers a wage high enough to let them buy the product they themselves made. So while he came of age during the early stages of the Industrial Revolution, the America he lived in for the first half of his life was still mostly rural, and the changes he helped set in motion came stunningly fast. Ford didn’t invent the assembly line. He claimed he got the idea of having workers remain at one location and perform a single task from the “disassembly lines” found in Chicago’s and Cincinnati’s slaughterhouses, where butchers hacked off parts as pig and cow carcasses passed in front of them on conveyor hooks. Nor did he conceive the other central idea of modern mass production, that is, making parts as identical as possible to one another so that they would be interchangeable. But Ford did fuse these two ideas together as never before, perfecting the idea of a factory as a complex system of ever more integrated subassembly processes. Most of this innovation took place in Ford’s new Highland Park plant, opened in 1910 and designed by the architect Albert Kahn, who prior to his work with Ford had been associated with the anti–mass production arts and crafts movement.

Ford gave a tremendous amount of work to Kahn, a member of the Jewish tribe that Ford would come to blame for many of the world’s problems. If he didn’t mind Jewish workers, he did object to unionized workers, referring to unions as “the worst thing that ever struck the earth.”

It is difficult to conceive of how much vertical integration Ford achieved in the 1920s:

Ford moved forward with the construction of a new factory complex, which he built along the Rouge River, in the county of Dearborn, near where he was born. When it was finished, the River Rouge would be the largest, most synchronized industrial plant in the world: sixteen million square feet of floor space, ninety-three buildings, close to a hundred thousand workers, a dredged deepwater port, and the world’s largest steel foundry. Ford barges, trucks, and freight trains brought silica and limestone, coal and iron ore, wood and coal, brass, bronze, copper, and aluminum from Ford forests and mines in Michigan, Kentucky, and West Virginia to the Rouge’s gates and piers, and everything was organized to achieve maximum efficiency in receiving the material and getting it to the complex’s power plants, blast ovens, furnaces, mills, rollers, forges, saws, and presses, to be transformed into electricity, steel, glass, cement, and lumber.

Is it an original idea that we Americans with our superior technology and ideas can improve countries south of the border so much that nobody will want to migrate up here and begin living in means-tested public housing, subscribing to Medicaid, and shopping for food via EBT?

It was technology, production, and commerce that made history, and it would be not gunboats or marines that would tame the world but his car. “In Mexico villages fight one another,” Ford said, but “if we could give every man in those villages an automobile, let him travel from his home town to the other town, and permit him to find out that his neighbors at heart were his friends, rather than his enemies, Mexico would be pacified for all time.”

Compare to “The imperative to address the root causes of migration from Central America” (Brookings, 2021), “VP Harris To Work With Central American Countries To Address Root Causes Of Migration” (NPR, 2021), and “How to address the causes of the migration crisis, according to experts” (Vox, 2019).

Ford had a grand idea for upgrading life in one of the most benighted parts of the U.S.:

… Ford made a bid to realize his industrial pastoralism on a large scale in a depressed river valley—not in the Amazon but in Muscle Shoals, along a stretch of the Tennessee River in northwestern Alabama.

He also said he planned to establish a seventy-five-mile-long city, as thin as Manhattan but five and a half times its length. Other chaotic, unplanned cities grew in sprawls, in a “great circle” that trapped residents, never giving them a chance to “get a smell of the country air or see a green leaf.” Those who lived in Ford’s river metropolis, in contrast, would never be more than a mile from rolling hills and farmlands.

Frank Lloyd Wright remarked that Ford’s valley city, imagined above in an illustration published in Scientific American in 1922, was “one of the best things” he had ever heard of. Ford was “going to split up the big factory,” Wright said. “He was going to give every man a few acres of ground for his own.”

(Instead, of course, the U.S. became more urbanized as the population grew from 106 million (1920) to 330 million (today) and a median-earning worker cannot afford an apartment, much less “a few acres of ground” anywhere near a job.).

Extreme climate events are new?

A week earlier [in 1928], he and Edsel had taken the Ormoc out on a trial run down the Rouge River into Lake Erie. But now, a heat wave had settled over lower Michigan, killing scores of people. Defying the Amazon’s dry season from a world away was one thing. Suffering Detroit’s humidity in the flesh was another, so Ford escaped the city by taking off on one of his road trips.

Ford was an early enthusiast for aviation, having first flown in 1927 (including some stick time), according to the author (the Henry Ford Museum page on aviation shows that he began working to build airplanes, however, in 1924 (giving up in 1933)).

Aviation pioneers failed to predict the military uses of aircraft:

The disappointment of Alberto Santos-Dumont’s life was not that he didn’t get credit for inventing flight, though he did resent that the Wright brothers won all the acclaim. His real heartbreak was that he lived long enough to see the machine he helped develop be used as an instrument of death. Santos-Dumont wasn’t an ideological pacifist like Henry Ford, but he did hope that airplanes would knit humanity closer together in a new peaceful community, just as Ford had believed that his car, along with other modern machinery, could bring about a warless world and a global “parliament of man.” Both were of course proven wrong by World War I, which broke the conceit of many like Ford and Santos-Dumont that technology alone would usher in a new, higher stage of civilization. “I use a knife to slice gruyere,” Santos-Dumont said when war broke out in Europe, “but it can also be used to stab someone. I was a fool to be thinking only of the cheese.”

Ford dealt erratically with the fact that, after all his high-handed opposition to World War I, he turned his factories over to war production. He continued to speak out provocatively against war, maintaining his position that soldiers were murderers and quoting Tennyson’s “Locksley Hall” to the end of his days. Yet Ford’s faith in America as a revitalizing force in the world led him to say that he would support another war to do away with militarism. “I want the United States to clean it all up,” he said. No wonder the Topeka Daily Capital said that Ford put the “fist in pacifist.”

Orville Wright, for his part, predicted after World War I that the airplane had made war so terrible that no country would start a future war. The author reminds us of the 1932 war between Bolivia and Paraguay over non-existent oil that killed nearly 200,000 people. Airplanes were used on both sides.

Even the smartest best-connected people failed to predict that the Great Depression would last far longer than any previous economic downturn.

Ford at first restrained himself from using the crash to scold Wall Street and lash out at the money interests. He instead responded in a way many deemed responsible, preaching his gospel of consumer spending as a way out of the downturn. To back it up, he pledged that not only would he continue production at the Rouge full bore but he would raise his daily minimum wage from $6 to $7 a day. Ford seemed well positioned to lead the recovery: he himself had little invested in stocks, so his personal fortune was untouched, and his company, unlike General Motors, whose share price plummeted, wasn’t publicly traded. Yet demand for the new Model A gradually slowed, and inventories backed up. Ford lowered its price, taking the difference out of dealers’ commissions. But by the end of 1930, there was no margin left for any more reductions. The company quietly began to cut production and to buy more and more parts from outside low-wage suppliers—thus beginning the erosion of the fearsome self-sufficiency of the Ford Motor Company. By early 1931, the company had slashed the number of weekly hours of most workers, rendering meaningless Ford’s vaunted Seven Dollar Day. Later that year, the company officially reduced that as well. And then in August the assembly line ground to a halt—Ford had more cars than customers to buy them. Just four years after its introduction in late 1927, the Model A, which Ford had hoped would have as long a run as the T, was history.

The author reminds us that the solution to any economic problem is bigger government!

Of course, his exhortations to self-reliance and patronage of village industries had as little chance of solving the problems revealed by the Great Depression as Fordlandia managers had of taming the Amazon. Yet Ford never relented in his condemnation of the New Deal’s solution to the crisis: the promotion of unionism, government regulation of industry, and establishment of federal relief. Specifically, Ford refused to warm to Roosevelt and his New Dealers.

(See The Forgotten Man: A New History of the Great Depression, by a WSJ reporter, for the opposite perspective! Amity Shlaes says that FDR and bigger government are precisely what dragged out the Great Depression until World War II.)

How new is the idea of using distilleries to make hand sanitizer and/or making fuel in a way that is carbon-neutral?

[in the 1930s] Ford lobbied for Prohibition, saying that Detroit’s distilleries could be converted to make biofuels.

How new is the inability of a typical American worker to afford the kind of housing that he/she/ze/they thinks he/she/ze/they is entitled to?

Then he turned to Fordlandia’s housing crisis. The plantation’s original plans from 1928 called for the building of four hundred two-room houses “per Ford Motor Co. drawings,” at a cost of $1,500 each—clearly insufficient for the thousands of workers and their families who had come to the settlement. In truth, this failure to address workers’ housing needs was not that different from what was happening in Michigan. Despite his famed paternalism and acquisition of towns like Pequaming, Ford, except for a small experimental community of 250 homes, largely tried to avoid providing houses for his Dearborn and Detroit workers, believing his high wages would be enough to create prosperous neighborhoods. He steadfastly ignored the city’s mounting housing problems, which had dogged the automobile industry since the beginning of its expansion. Workers lived in overcrowded slums, flophouses, and tenements, most without decent plumbing, electricity, or heat, with African Americans consigned to the worst of the lot.

With a touch more focus on those who identified as “women” or

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Bitcoin has plenty of runway if we look back to the 1960s and 70s and the Great Society

When the U.S. was founded, minimum voting age was 21. A man might start work at age 13 or 14 and therefore a voter would be someone who’d worked for 8 years and who would experience higher taxes and a bigger government as a requirement to work longer hours. Since 1972, however, the 26th Amendment has ensured that 18-year-olds can vote and an 18-year-old may not begin working full time for 10 years (or ever, if he/she/ze/they has figured out that welfare yields a similar spending power). The majority of voters either work for the government or don’t work at all (too young, too old, in “means-tested” living (not “welfare” since it is only housing, health insurance, food, and smartphone that are received rather than cash), collecting alimony or child support from a defendant worker, married to a worker). So the big surprise is that this majority hasn’t voted itself a vastly larger government to be paid for by private sector suckers who will have to work longer hours.

(Imagine how different our government would be if, except for the disabled, 8 years of full-time work history was a requirement to vote!)

There have been three major episodes in U.S. history when the voters hungry for more government benefits prevailed over the beasts of burden (folks for whom the main consequence of bigger government will be longer hours). One was in 1930s (FDR and the New Deal). One was in the 1960s (Lyndon Johnson’s Great Society, though arguably started by JFK). One was in November 2020. If we think that Episode 3 will be a lot like Episode 2, it is worth reading Great Society: A New History a 2019 book by Wall Street Journal reporter turned economic historian Amity Shlaes. I’m just digging into this, but the author seems to have anticipated our current situation (Episode 3). She looks at what happened to last the time that the U.S. decided to “go big” on addressing inequality. The economic and stock market stagnated while the dollar fell and gold surged. If Shlaes is right, every Federal spending initiative is great news for Bitcoin investors.

Some excerpts:

As Stalin was said to have joked, America was the only country in the world that could afford communism.

In a recent book the author had itemized the kinds of reform America needed. Laws that backed up organized labor so it might represent a greater portion of the American workforce, including black Americans or immigrants from Mexico. Higher minimum wages—the current levels were a cruel joke. Minimum wages that covered more workers, even those who did not work in an office or full-time. A dramatic change in the training of bigoted policemen in the big cities. A reinvigoration of the poor so that they became a force in political life. America was a country made of classes, the author thought; it just didn’t know it. The money was simply in the wrong hands. The writer wanted a tax system that captured the elusive wealth of the superrich. The moment had come to level incomes in a systematic fashion. Poverty was the obvious lunch theme. Just days before, the president had tapped the author’s host to lead a new campaign against poverty. In his State of the Union address, the president had told the country he wanted not only to alleviate suffering but to actually “cure poverty.” No American leader had ever taken on poverty in this way before.

The focus of the author’s book was the cycle of poverty in one region, Appalachia. The man had also seen poverty in the city where he grew up, St. Louis. In St. Louis the poverty was in part caused by government plans gone wrong, as in the case of the bulldozing of streets people loved in the name of moving them into public housing slums they didn’t love. America, the author thought, should invest billions to abolish poverty. It was incredible that America knew so much about poverty and had done so little. The state governments could not do this work. State governments were beholden to retrograde conservative legislatures. For systemic change, the author had come to believe, there was “no place to look except toward the federal government.”

Still, as he sat in the makeshift offices, the author kept returning to what he saw as the problem behind the problem, American capitalism. He and his friend took to concluding their memos with a half-serious line: “Of course, there is no real solution to the problem of poverty until we abolish the capitalist system.”3 At one point the author stopped censoring himself and wrote a few lines of what he actually felt: “that the abolition of poverty would require a basic change in how resources are allocated.” The boss actually took this bold call for redistribution to the president, who, the boss reported, proved remarkably friendly. The boss said that the president, a Roosevelt fan, told him that if serious economic redistribution was necessary to realize the long-delayed completion of the New Deal, then redistribution might be worth it.

The president being pitched on what today we might call transferism was Lyndon Johnson and the year was 1964. The author was Michael Harrington, whom Wikipedia describes as a “democratic socialist.”

The economic boom that had preceded JFK’s election gave Americans the confidence that anything was affordable. (I’ve seen this among quite a few folks in my parents’ social circle. Born in the 1930s, they don’t agree with Margaret Thatcher that it is possible to run out of other people’s money. They imagine the U.S. to be so wealthy that no spending proposal could ever exceed Americans’ ability to pay.)

Most Americans shared something else with Harrington: confidence. In the 1930s, the New Deal had failed to reduce unemployment. The prolonged periods of joblessness were what had made the Depression “Great.” But the memory of the New Deal failure had faded just enough that younger people liked the sound of the term. And memories of more recent success fueled Americans’ current ambition. Many men were veterans. They had been among the victorious forces that rolled across Europe and occupied Japan at the end of World War II. Compared with overcoming a Great Depression, or conquering Europe and Japan, eliminating poverty or racial discrimination had to be easy. American society was already so good. To take it to great would be a mere “mopping up action,” as Norman Podhoretz, who had served in Europe, would put it.

First came a campaign, led by President John F. Kennedy, to rehabilitate troubled youth. Soon after, President Johnson led the passage of series of federal civil rights laws. Around the same time came Johnson’s War on Poverty. Next were Johnson’s national housing drive and his health care drive. Richard Nixon followed up with a guaranteed-income campaign and an environmental drive.

When government accomplishes little, how do you persuade the public that enormous achievements are occurring?

Ambitious reforms needed time to succeed. It would be a shame if a project aborted because early results didn’t look good. So, for display purposes, presidents emphasized inputs, not outputs. Congress, too, as the Hoover Institution’s John Cogan has put it, “measured success by labels and dollars attached to legislation”—not by results. The political success of a project mattered more than empirical success. Occasionally, the effort got a new name. The “New Frontier” of Kennedy became Johnson’s “Great Society,” which became the “Great Nation,” and then the “Just and Abundant Society” of Richard Nixon.

We hear a lot about the various $2 trillion spending plans, but we never see a New York Times article on what Americans actually got from the preceding $2 trillion spending program. (exception?)

How did the dreams of the 1960s play out?

… by 1971, for the first time, federal spending on what we now call entitlements—benefits for the aged, the poor, and the unemployed, along with other social programs—outpaced spending on defense.

In 1966, the [Dow Jones Industrial Average] moved tantalizingly close to the 1,000 line, a landmark. Soon after, however, the index stalled, and stayed stuck below the 1,000 line, year in, year out. By the end of the decade, inflation, always present, was expanding to alarming levels. The same period brought another alarm, this time from abroad. Foreign governments started to turn more of their dollars in for gold from the United States’ coffers. The U.S. papers went into denial, quoting a Yale professor, Robert Triffin, who argued that the withdrawals were the result of crossed incentives in the international monetary arrangement, a technical, rectifiable flaw. What came to be known as the Triffin dilemma provided a convenient explanation for the mysterious outflows.

The 1971 run on American gold also, however, reflected foreigners’ insight. Outsiders knew a tipping point when they saw one. America had moved closer to Michael Harrington’s socialism than even Harrington understood. The United States had locked itself into social spending promises that might never be outgrown. Today, interest in Bitcoin and other cryptocurrencies serves as a measure of markets’ and individuals’ distrust of the U.S. dollar. In those days there was no Bitcoin, but gold played a similar role. The dollar was the common stock of America, and foreigners used gold to short it.

The disastrous performance of the U.S. economy in the following years proved the foreigners’ 1971 wager correct. To pay for its Great Society commitments, the U.S. government in the next decade found itself forced to set taxes so high that it further suppressed the commercialization of innovation.

Eventually the market bounces back, right?

The Dow flirted with the 1,000 level throughout the decade, but did not cross the line definitively until 1982, an astonishingly long period to stagnate, nearly a generation.

You just had to wait from 1966 to 1982 to sell a stock for more than you’d paid… in nominal dollars. Shlaes fails to point out that you’d need $3 in June 1982 to have the same spending power as $1 in 1966. On an inflation-adjusted basis (chart), the DJIA didn’t exceed its 1966 high until 1996, i.e., 30 years later.

What about all the great stuff that happened in the 1960s? Going to war in Vietnam was a terrible decision, of course, but continuing Eisenhower’s work in desegregation wasn’t, surely. The author says “Well…”:

The early civil rights laws, as important as they were, set a precedent for federal supremacy over states to an extent some of the Constitution’s authors would have likened to tyranny. The later civil rights laws, with their emphasis on group rights, pitted Americans against one another. Both Johnson and Nixon conducted domestic policy as if they were domestic commanders in chief.

Already I can see some stuff that seems wrong or at least not supported.

For today, the contest between capitalism and socialism is on again. Markets do promise strong growth; we do live in a creative society, the most creative in the world, creative enough to lift the nation to new heights. Yet new, progressive proposals bearing a strong resemblance to those of Michael Harrington’s and his peers’, from redistribution via taxation to student debt relief to a universal guaranteed income, are sought yet again. Once again, many Americans rate socialism as the generous philosophy. But the results of our socialism were not generous. May this book serve as a cautionary tale of lovable people who, despite themselves, hurt those they loved. Nothing is new. It is just forgotten.

How does the author know that the U.S. is “the most creative in the world”? Why isn’t it equally plausible that our wealth was built on stealing a huge chunk of land from the Native Americans rather than on some sort of unique creativity? If it was the land that made us comparatively rich, combined with the wars and Communism consuming our competitors in the 20th century, then we aren’t guaranteed to get richer going forward. Taking the long view, it is the Chinese and Europeans who have

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Happy 27th birthday to the cable modem

“Big Cable Company to Offer A High-Speed Internet Link” (New York Times, March 9, 1994):

Continental Cablevision Inc., the nation’s third-largest cable television company, said yesterday that it had begun offering a high-speed link to the Internet data network over the same coaxial cables that carry television channels into the home.

The Internet connection is initially available only to Continental customers in Cambridge, Mass., but company officials said it would eventually be offered to nearly three million customers nationwide. Continental, based in Boston, provides cable service to Westchester County, N.Y., and in California, Idaho and Michigan.

However, at a rate of $125 a month for residential customers, and higher for business customers, the service is unlikely to displace the MTV’s and the Home Box Offices at the top of a 500-channel hit parade, even in Cambridge, the sort of academic-technical redoubt where enthusiasts consider Internet access more important than the telephone.

At the same time, telephone and data-communications companies are constantly expanding the capacity of twisted-pair phone lines and speeding the installation of fiber optic lines, which also offer data-transfer speeds fast enough to handle video signals.

“Cable is a kludge,” remarked Mr. Harris of Jupiter Communications, using a computer term for an inelegant solution to a technical problem. “The market is aching to have everything in full motion, and cable is sort of a middle-of-the-road solution.”

Here we are, 27 years later, and Cambridge, thanks to the miracle of government regulation, still doesn’t have fiber to the home!

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Obituary of Nathaniel Greenspun, 1930-2021

Nathaniel Greenspun died at age 90 on February 24, 2021 at home with his wife Regina in the Maplewood Park Place Retirement Community, Bethesda, Maryland.  He had been getting progressively weaker over the past few years and suffered a dramatic episode of weakness, leading to a fall, one week after receiving his second dose of the Pfizer COVID-19 vaccine. It is possible that a stroke accelerated his decline, but no definitive diagnosis was obtained. Most of the following was written by Nat himself in 2017.

He was the loving husband of many years of Regina, the father of Suzanne, Philip, and Harry, the grandfather of 11, and great-grandfather of 1. In addition to his immediate family, he is survived by his younger sister, Elinor Dulit.

Born in New York City, Nathaniel attended elementary and high schools in Forest Hills, Queens, and was the valedictorian of his class at Forest Hills High School. He then went to Harvard College where he was graduated summa cum laude and admitted to Phi Beta Kappa.

After college, he earned an M.A. in Economics from Harvard and was a Teaching Fellow  in the Economics department. Beginning in 1953, he served twenty-one months in the Army.

In 1956, he married Regina Gittes and in 1958 moved to Washington, D.C. where he worked at the Bureau of the Census on a new program of “company statistics.”  Four years later, he transferred to the Bureau of Economics at the Federal Trade Commission where he worked on an effort to collect data from the 500 largest companies. In 1962, he transferred to the Board of Governors of the Federal Reserve where he worked in a division that evaluated the competitiveness of bank mergers.

In 1966, he returned to the Federal Trade Commission where he mostly worked on issues relating to consumer protection, such as false advertising.

Living during an era of the rapid development of technology, he became an enthusiastic user of the computer, enjoyed music in stereo, frequently recorded TV programs, etc.

He and Regina loved to travel and over the years made numerous trips to many parts of the United States, Canada, Europe and Israel. Classical music was his constant companion, something he had enjoyed since perhaps the age of 10. He was a devoted supporter of Israel.

Contributions in lieu of flowers may be made to the Plant a Tree in Israel (JNF) organization.

A memorial service will be held in May 2021 at the Garden of Remembrance in Clarksburg, Maryland.

From a family history video project:

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Happy Valentine’s Day from the Katherine Group of the 13th Century

From Hali Meiðhad (“holy maidenhood”) of the Katherine Group (translation into modern English by Huber and Robertson)…

A letter on virginity for the encouragement of virgins.

(1) Of these three states (maidenhood and widowhood, and wedlock is the
third) you may, by the degrees of their bliss, know what and by how much the one surpasses the others. (2) For wedlock has a thirty-fold fruit in Heaven, widowhood sixty-fold. (3) Maidenhood, with a hundred-fold, surpasses both. (4) See then by this: whoever descends into wedlock from her maidenhood, by how many degrees she falls downwards…

(1) “No,” you will say, “it is not at all for that filth. (2) But a man’s strength
is worth a great deal, and I need his help for sustenance and for food.

(1) You say that the wife has much comfort of her husband if they are well-
matched, and either is in all ways satisfied with the other. (2) Yes, but it is seldom seen on earth. (3) Though their comfort and their delight be like this now, what is in it mostly but the flesh’s filth or the world’s vanity, which all come to sorrow and to pain in the end? (4) And not only in the end but always, for many things will anger and annoy them and cause them to worry, and to grieve and to sigh for each other’s misfortunes.

(10) What will the joining between you in bed be like? (11) Even those who love each other best often quarrel in there, though they do not show it in the morning, and often, however well they love each other, they bitterly irritate each other over many nothings when they are by themselves. (12) She must endure his will greatly against her will — however much she loves him — often with great misery. (13) All his foulnesses and his indecent love play however filled with filth they may be (in bed, that is!), she must, will she nill she, endure them all.

Look, blessed woman: once the knot of wedlock is knotted, be he idiot or cripple, be he what so ever he may be, you must stay with him.

(1) But now, say it happens that she has all her desire for a child that she
wishes for; and let us look at what happiness she gets from that: in the conceiving of that, her flesh is at once soiled with that filth (as it has been shown before); in the carrying of it, there is always heaviness and hard pain; in its birth the strongest of all stabbing pains and sometimes death; in its upbringing many a weary hour. (2) As soon as it comes into this life it brings with it more worry than joy, especially to the mother. … (5) And often it happens that that dearest and most bitterly paid for child upsets and grieves his parents the most in the end.

(6) Let us now go further and look at what joy arises thereafter in the carrying of the child, when that offspring in you awakens and grows, and how many miseries awaken at once with that, which work woe enough for you, fight against your own flesh and make war upon your own nature with many miseries. (7) Your rosy face will grow lean and become green as grass. (8) Your eyes will grow dim and will darken underneath, and from your brain’s turning your head aches sorely. (9) Inside, in your womb, a swelling in your belly that puffs you up like a water-skin, your bowels’ pain and stitches in your side, and pain in your aching loins, heaviness in every limb, your breast’s burden of your two paps, and the streams of milk that flow from them. (10) Your beauty is completely ruined with wilting, your mouth is bitter, and all that you chew nauseating. (11) And what food your stomach scornfully accepts (that is, with distaste) it casts out again.

(1) After all this there comes, from that child born in this way, wailing and
weeping which will wake you up around midnight, …

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What if Thomas Edison were alive today?

Edison by Edmund Morris, gives us some hints as to how Thomas Edison might have dealt with our society’s challenges today. (Below, Edison’s workshop, transported to Michigan by Henry Ford and now part of Greenfield Village.)

Although he was an early enthusiast for aviation, trying to build a helicopter in the 1880s, Edison (1847-1931) actually lived (and continued to work hard and effectively) through the period of the most rapid advances in aviation. He seems not to have contributed anything significant to the development of flying machines.

One thing that I learned from the book is that Edison loved huge projects and was not afraid of doing things at scale. He put about $2 million and years of work into trying to mine iron ore in New Jersey and then mill it profitably. From the early 1890s:

A party of inspectors sent by Engineering and Mining Journal toured the plant early in the fall. Although some sections were idled for refurbishment and Edison was coy about showing any of his new machines, they could see that he already excelled at quarrying and magnetic separation, if not yet in the difficult processes of crushing and refinement. They were particularly impressed with his cableway system, every suspended “skip” delivering four tons of rock to the crushers at only twelve cents a load. But they predicted that in view of the low iron content of local ore, Edison would still have to spend a fortune and deploy “the utmost resources of engineering skill” to compete with Mesabi ore at 64 percent iron. “With his surpassing genius [and] capacity for taking infinite pains, it cannot be doubted that he will ultimately achieve success.”

In July Edison learned that his mining venture had so far cost him $850,000, including some $100,000 that could not be accounted for. A profit-killing amount of money was being lavished on labor that simply loaded and unloaded rock at either end of the conveyors. The jaw crushers took too long to do their work and often broke down, necessitating expensive repairs. The magnetic separators, plagued by screening problems, were concentrating only 47 percent iron—far less than the 66 or 70 percent he needed to match the richness of Great Lakes ore. He was still digesting this information when a stockhouse under construction at Ogden collapsed, killing five men and injuring twelve. Lawsuits alleging negligence were filed by bereaved families.106 A newspaper clipping he carried in his wallet read, “Thomas Edison is a happy and healthy man. He does not worry.” As usual he countered the pull of bad news by pushing forward harder. Rather than continue to “improve” Ogden with ad hoc adjustments, he increased the capital of its parent company to $1.25 million, then shut the plant for a tear-down rebuild that would expand it enormously and make it a showpiece of automated design. No sooner had a new separator house gone up than he decided it needed some screening towers, and should be constructed all over again.

Given what we now know about the ore near Lake Superior (ore in the water of Tahquamenon Falls, below, from Travels with Samantha), the idea seems laughable today and, indeed, it was a complete failure. Nonetheless, it was amazing how many problems Edison was able to solve.

My theory about what he would be working on today, therefore, is geoengineering. He would take complaints about a warming planet as inspiration to work in the lab and then build infrastructure on the scale of the largest mines and power plants.

How about coronaplague? Edison did like to jump into solving problems that society perceived as urgent. But what kind of machine would be useful for fighting the plague? Big shade structures to move activities outdoors? Edison did put a lot of effort into “tornado-proof concrete houses”:

Last May’s catastrophic earthquake in San Francisco revived an idea he had had when the cement mill was first ready to roll. He saw low-cost, molded concrete houses replacing the fragile wooden boxes in which most Americans lived—houses that contractors would mix from cement (with a colloidal additive for grit suspension) and spill on the spot into prefabricated forms. A three-story house could be poured in six hours and set in less than a week.

He had to admit that the individual kits, consisting of nickel-plated cast iron parts, would be expensive, at around $25,000 apiece. But they would pay for themselves in frequency of use and universality of detail, molding mantelpieces, banisters, dormer windows, conduits for wiring, “and even bathtubs.” Having made the investment, a contractor could pour a new house every four days. Each could be sold for $500 or $600, enabling millions of low-income Americans to become homeowners for the first time, with no need to worry about earthquakes, hurricanes, or fire. “I will see this innovation a commonplace fact,” Edison promised, “even though I am in my sixtieth year.”

What about a wearable device that would deflect the evil coronavirus away from a person’s mouth and nose, but without obstructing breathing the way that a mask does?

Where would Edison have stood on this year’s Presidential campaign? “Edison had always been a loyal Republican,” writes Morris, but quotes Edison explaining why he voted for Teddy Roosevelt whose statue was just toppled in Manhattan: “I’m a Progressive, because I’m young at sixty-five,” he said. “And this is a young man’s movement. There are a lot of people who die in the head before they are fifty. They’re the ones who get shocked if you propose anything that wasn’t going when they were boys.” Morris says that “Edison had come to despise government bureaucrats, seeing them as a blight on democracy,” but perhaps Edison’s Progressive streak would have led him to support Bernie nonetheless!

On the third hand, Edison would probably not have been able to hold a job in the present-day U.S.:

Relations between him and [son] Charles warmed to the extent they could resume their old exchange of “negro jokes.”

Wikipedia points out that Edison married a subordinate whom we would today call “underage”:

On December 25, 1871, at the age of 24, Edison married 16-year-old Mary Stilwell (1855–1884), whom he had met two months earlier; she was an employee at one of his shops.

Mary likely died, only 28 years old, in the modern American manner. The author quotes from a contemporary source:

At the request of Mr. Edison she took a trip to Florida last winter. Instead of obtaining relief she fell victim to gastritis, due to the peculiar atmosphere or perhaps the long acquaintance with morphine. She returned to Menlo Park in a more troubled condition. Her pain intensified, and at times she was almost frantic. Morphia was the only remedy, and naturally she tried to increase the quantity prescribed by the doctors. From the careless word dropped by [a] friend of the family it was more than intimated that an overdose of morphine swallowed in a moment of frenzy caused by pain greater than she could bear brought on her untimely death. The doctor in attendance said she died of congestion of the brain. When a reporter put the question to him he positively asserted that it was the immediate cause, but about the more remote causes he preferred to remain silent.

(1.5 years later, Edison was 39 and married Mina, age 20.)

What about shutting down schools, society, and the economy for three months so as to end up with the same death rate from Covid-19 as Sweden?

as Edison lay dying [in 1931, age 84], it was suggested to President Hoover that the entire electrical system of the United States should be shut off for one minute on the night of his interment. But Hoover realized that such a gesture would immobilize the nation and quite possibly kill countless people.

Readers: Fun speculation for today… suppose that Thomas Edison were alive today, age 40, and had $1 billion available to invest. What problem would he attack?

More: Read Edison by Edmund Morris.

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Migrants and Refugees were Genghis Khan’s best weapons

I enjoyed Professor Dorsey Armstrong’s Years that Changed History: 1215 course.

One interesting tidbit: When Genghis Khan wanted to take over a big fortified city, he would attack surrounding small villages and drive the inhabitants as migrants and refugees to the big city. Swelled with a larger-than-usual population, the big fortified city would collapse from within, its resources (such as food) exhausted. This saved Temüjin, the Great Khan, the effort of a traditional Greek/Roman-style siege and catapult attack on a walled city.

Thus did Genghis Khan assemble the largest contiguous land empire that the world has ever seen.

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