Week of June 21, 2020

On account of Father’s Day, the newsletter will not be featuring any original content. In place of an essay, however, goes a holiday edition with additional links and commentary.

Links (Special Edition)

The Bothersome Problem of China in the Anglo-American Alliance, by Oliver Yule-Smith

Yule-Smith contends that, while the “Special Relationship” has been and remains important to Anglo-American diplomacy, the alliance has been frequently strained by the distant vortex of China. His piece recounts the surprising independence of Western policy in dealing with Beijing from the Opium Wars to the financial crisis, stressing the complex and fluctuating interactions of ideology, personality, and political necessity. A strong introduction to foreign relations in the Pacific Theater over the last century.

Transaction Costs Are The Costs of Engaging in Economic Calculation, by Rosolino Candela

Comparing the Austrian and Coasean responses to the “socialist calculation debate,” Candela suggests that transaction costs are, per the title, the price of engaging in economic calculation—that is, pricing a good based on underlying information and institutional context. His reflection is interesting throughout, and the analogy with the combination of the Menger and Alchian theories of money is particularly effective.

Just Use Your Thinking Pump!, by Jessica Riskin

A fascinating and entertaining overview of the origins of the scientific method and the “two cultures,” featuring a cast of characters from Matthew Arnold to Karl Popper. Riskin’s emphasis on the role that Herbert Spencer’s writing in The Popular Science Monthly played in spreading the notion (in service of social science) of a scientific research program characterized by a distinct technique is overlooked in the history of science.

Sins of Omission and the Practice of Economics, by George A. Akerlof

This essay is typical Akerlof—incisive, lucid, and wide-ranging. He discusses the causes and consequences of “hardness bias” in economics, or a preference for quantitative rigor among influential practitioners, which he finds to have increased substantially over the past three decades. The result is an orthodoxy in which young economists are trained as narrow-minded, conformist number-crunchers and important problems (such as the Global Financial Crisis) are ignored as incompatible with an inflexible paradigm.

Extraordinary Exile, by Rebecca West

Many readers will be familiar with West’s work, but perhaps not with the fact that she, like Hannah Arendt, reported on the Nuremberg trials at the close of the Second World War. Her journey to what she effectively termed a German Toledo (Ohio) resulted in one of the best pieces of long-form journalism to grace the pages of The New Yorker—a poignant tribute to a cadre of American servicemen marooned in occupied Europe by the “winding down” of an incestuous military machine. West’s character sketches are stunning, too, from the sickening malice of Göring to the familiar affability of Sir Hartley Shawcross. Any apparent stereotypes are only so because she has created them herself.

From chaos to free will, by George Ellis

Ellis underestimates the weight of his science jargon (this is after 2.5 readings), but his claim against determinism is more subtle (and thus worthier of more attention) than the standard argument from uncertainty. His explanation of “downward causation,” in which biological structures mediate between a potentially constrained physics and the natural environment, is not wholly convincing, but the author lacks sufficient expertise in any of the relevant subject areas to offer a considered critique.

History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World, by Kenneth L. Sokoloff and Stanley L. Engerman

A classic of the institutions and development literatures, this paper argues compellingly that resources, crop suitability, and labor availability—more than settler origins—determined the disparate success of colonial regimes in the Americas. Scarce native labor led to egalitarian institutions in the British North, whereas economies of scale encouraged large plantation and mining projects in the Latin nations which entrenched “extractive elites” (to borrow from AJR) and stifled participatory institutions.

The Counterfactual and the Factual, by Mark Koyama

Koyama, an economic historian at George Mason University, has written a useful piece on a topic repeatedly discussed here—the utility of counterfactual history in discovering the weights of causal factors in historical processes. His distinction between speculative and well-directed inquiries is a pragmatic guideline for refuting crude methodological critiques.