🚀 Faster, Please! Week in Review+ #28
Slavery and the Industrial Revolution; 'House of the Dragon' and econ history; the next Green Revolution; the power of collaboration; industrial policy and Bidenomics
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In This Issue
The modern economic consensus is one of skepticism toward the notion of slavery as a significant causal factor in the Industrial Revolution and subsequent Great Acceleration. But in the new NBER working paper “Slavery and the British Industrial Revolution,” researchers Stephan Heblich (University of Toronto), Stephen J. Redding (Princeton University), and Hans-Joachim Voth (University of Zurich) “find that Britain would have been substantially poorer and more agricultural in the absence of overseas slave wealth. Overall, our findings are consistent with the view that slavery wealth accelerated Britain’s industrial revolution. One way financial advantage manifested itself was in the use of steam power, a key technology of the Industrial Revolution. But it was a costly technology. The researchers find that areas with more slaveholding in 1833 showed a higher rate of adoption. So did slavery make the West rich after all? That does not seem to be the sort of strong, iron-clad claim made by the researchers. Causality, even important causality, is not the same as monocausality. And I am positive that economic freedom still has plenty of explanatory oomph.
As Northwestern University economist and A Culture of Growth: The Origins of the Modern Economy author Joel Mokyr told me back in 2017, Early Modern Europe ‘was heavily fragmented into dozens and dozens of smaller and bigger states … all competing with each other, and all trying to one-up each other. They wanted smart people who could help their governments gain some kind of an advantage. And that competition creates the kind of environment in which innovation turns out to thrive.” But by the time of House of the Dragon, the great houses of Westeros had been mostly subjugated under the foreign Targaryens and their dragons for a century. By the time of GoT, for nearly three. While the lords of Westeros still competed for power and influence, it was at a far lower level of intensity than had they been independent kingdoms. I doubt many Westerosi lords worried about alienating their best and brightest scholars, as represented by the maesters assigned to each house. The television show treats the maesters as valued but also eminently replaceable should they run afoul of their lords. The commanding power of the Targaryens didn’t rest on the accumulated knowledge of the maesters, nor is there any evidence that their successors feared some scientific leap would undermine their power.
Now history seems to be repeating itself. The eco-pessimists again seem to be shifting their fear machine back into high great at the exact time that a new phase of the Green Revolution seems to be emerging. For example: Back in July, Chinese scientists reported that by giving “a Chinese rice variety a second copy of one of its own genes, researchers have boosted its yield by up to 40 percent,” according to Science. “The change helps the plant absorb more fertilizer, boosts photosynthesis, and accelerates flowering, all of which could contribute to larger harvests.” The part about absorbing more fertilizer is especially important since fertilizer use has downsides such as run-off causing algae blooms in coastal areas, as well as lakes and rivers. What’s more, a portion of the nitrogen in nitrogen-containing fertilizers is “lost to the atmosphere as nitrous oxide, a greenhouse gas nearly 300 times as powerful as CO2,” notes Carbon Brief.
Best of 5QQ
Carl Benedikt Frey is the Oxford Martin Citi Fellow at Oxford University, where he teaches economics and economic history. In 2019, he authored The Technology Trap: Capital, Labor, and Power in the Age of Automation, which I highly recommend! Another great read is the analysis “Disrupting science: How remote collaboration impacts innovation,” his recent collaboration with Giorgio Presidente, also of the Oxford Martin School at the University of Oxford.
What workplace collaboration activities can be most easily performed remotely via Zoom, email, etc.? Where do these technologies come up short?
I think they come up short three ways. First, people are just less creative when put in front of a computer screen: a recent experiment published in Nature shows that videoconferencing narrows people’s cognitive focus, so that they generate fewer ideas.
Second, sporadic encounters and watercooler moments do not happen in the virtual world, where in the absence of the Metaverse, every meeting needs to be planned at least on one end. And such meetings are highly important to new team formation and innovation.
Third, tacit knowledge, which is harder to share and express, is still even harder to transmit at distance. Early-stage conceptual tasks are best done in-person.
Best of the Pod
Scott Lincicome is the director of general economics and the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. He is the author of numerous reports on industrial policy and international free trade, including "The (Updated) Case for Free Trade" with Alfredo Carrillo Obregon and “Questioning Industrial Policy” with Huan Zhu. He’s also the author of Capitolism, a Dispatch newsletter.
The Biden administration has been doing quite a bit: this infrastructure bill, we've had a chips and R&D bill, now we have the Inflation Reduction Act. The president has said that one thing he's trying to do is boost the productive capacity of the economy. Do you view that as the main thrust of these bills?
Scott Lincicome: No. I think it's actually much more about picking and choosing specific sectors. You can maybe argue for infrastructure: to the extent that roads and bridges are going to actually lead to the expansion of the national productive capacity, okay. But particularly with semiconductors and the IRA, this is just classic industrial policy. “The market has failed. We don't like the sectoral composition of the United States economy. In particular, we are not making enough semiconductors. We are not making enough solar panels and wind turbines and electric vehicles, and government needs to get involved. We need to not only encourage the consumption of these goods, but we need to actually forcibly, or through a lot of subsidies and sweeteners, incentivize onshoring of these critical industries.”
I know that there are some attenuated ideas that this will then boost the overall productive capacity after several years. This is the whole idea that the Inflation Reduction Act will actually reduce inflation by spending all this money. But let's be clear: the immediate effects, the ones that don't require stretching the economic imagination beyond all recognizable length, are about a sectoral composition. It's about changing the shape of the US economy.