Mary and I wrote an op-ed about the possibility of using bankruptcy law to reduce the economic impact of the pandemic that was published by the Washington Post’s Made by History.We found out this morning that we won the first in a series of prizes that the Stanton Foundation is awarding for applied history articles related to the pandemic.

There is a lot of anxiety about the state of the economy.
Coronavirus is spreading, the stock market is falling, treasury yields have
reached an all time low. So, of course, I decided to write a long post
about the American economy in the early nineteenth century. 

                In  "The United States as a DevelopingNation: Revisiting the Peculiarities of American History." Past & Present (2019) Link
and Maggor seek to direct our attention toward the peculiarity of America’s economic
history by encouraging us to consider the United States in the first half of
the nineteenth century as a developing country. They also suggest that the key
to understanding this transformation may lie in industrial development policies
at the state level. Link and Maggor encourage historians to think

We received our copies of Bankrupt in America: A History of Debtors, Their Creditors, and the Law in the Twentieth Century 

also available at Amazon

I previously posted an overview of the book but here is a description of each of the chapters.

Chapter 1 Introduction

The introduction acquaints the reader with what is already
known about bankruptcy in the twentieth century, describes the methods used in
the book, and previews the central argument. The chapter begins with a broad
overview of the laws and procedures governing the collection of unpaid debt at
the state and describes federal bankruptcy. The text highlights the interplay
between state and federal law. It introduces the interdisciplinary literature on
bankruptcy, emphasizing the need for an analytic framework that

Trump claimed that "In just three short years, we have shattered the mentality of American decline," by reversing the disastrous policies of the previous administration. Anyone who has been paying attention knows that this is probably not true, since he said it. I don’t have time to address all of his lies (see this article in the Washington Post), but its not hard to show that there hasn’t been any sharp break in terms of the economy

The unemployment rate is low, but it has been falling for about a decade. One could argue it was falling more rapidly before he too office. It fell 2 percentage points in the last three Obama years, but only 1.2 percentage points in the first three Trump years.

GDP is increasing, but again it has been since the last

Bankrupt in America: A History of Debtors, Their Creditors and the Law in the Twentieth Century by Mary Eschelbach Hansen and Bradley A. Hansen is available from Amazon and The University of Chicago Press. It is part of the Markets and Governments in Economic History series edited by Price Fishback.

I’m going to do few posts about the book, starting today with an overview of the book. Bankrupt in America

Though the U.S. Constitution granted it the power to create
a bankruptcy law, Congress did not pass the first permanent bankruptcy law until
1898. Bankruptcies rose from about one per 10,000 people annually in the first
decades of the twentieth century to about one per 300 people at the turn of the
twenty-first century. Bankrupt in America
explains the how bankruptcy evolved from an

I’m not sure how much of an impact the
1619 Project will have on the public, but it has certainly gotten a lot of academic
historians wound up. Historians at the American
Institute for Economic Research and the World
Socialist Web Site have both criticized the Project. Talk about politics
making strange bedfellows. Peter
Coclanis is the latest to criticize it. And, of course, everyone with a
Twitter account has an opinion. More than a few seem to be of the opinion that
the entire project is tainted by bias and invalid. Others are certain that the
biases of the critics are the problem.

I’m
not an opponent of the project. I agree with Beckert and Rothman that “American
slavery is necessarily imprinted on the DNA of American capitalism,” And there
is a lot of recent and ongoing

Bankrupt in America: A History of Debtors, Their Creditors and the Law in the Twentieth Century will be published by The University of Chicago Press in January 2020.In the meantime, here are the review quotes:

Lee J. Alston, Indiana University

“Bankrupt in America is a tour de force analysis of bankruptcy legislation and its impact over the twentieth century. It shows the interplay among state and federal legislation, economic conditions, social stigma, and the role of certain individuals in accounting for changes over time and across states. The authors offer an institutional and cliometric account that deftly draws on economics, history, law and political science. It will become the resource for many scholars, and I hope legislators.”

Hugh Rockoff, Rutgers University

“Mary

I’m writing this because Nikole
Hannah Jones said on Twitter that she was trying to understand the argument
that economic historians have against the work of Edward Baptist but had a problem
with some of the terminology used by economists. I usually try to avoid
economic jargon, but today I have tried even harder. If there are terms that
are unclear please let me know. I’m also writing this because Ben Schneider suggested I give it a try.

I can write this without reference
to economic terminology because, although I could point to problems related to economics,
the fundamental flaws in the book arise from Baptist’s historical methods, not
his economics. In The Half Has Never Been Told, Baptist misrepresents previous
scholarship on slavery, misrepresents the content of primary sources,

A couple of weeks ago Vox.com published and essay by Jared
Bernstein titled “What
economists have gotten wrong for decades: Four economic ideas disproven
by reality.” I was unaware of it until a discussion emerged on twitter last
week, in which people were offering explanations for why economists were not
only wrong but wrong in ways that harmed lower income people
disproportionately. The discussion was irritating because it was premised on
the assumption that Bernstein’s essay was a accurate, when nothing could be further
from the truth. The four economic ideas are not economic ideas at all. 

Bernstein begins by describing Alexandria Occasio-Cortez
questioning Jerome Powell, the Chair of the Federal Reserve, about the natural
rate of unemployment:

“The topic was the so-called

This post started out as my attempt
to understand an argument that John Wallis was making about institutions, but
it kept expanding. I’m posting it now because fall semester is approaching and
we are supposed to get the galleys for our book in the next couple of days. In
other words, I need to stop messing around with this and get to work.

Thorstein Veblen (1899)

“The institutions are, in
substance, prevalent habits of thought with respect to particular relations and
to particular functions of the individual and of the community: and the scheme
of life, which is made up of the aggregate of institutions in force at a given
point in the development of any society, may on the psychological side be
broadly characterized as a prevalent spiritual attitude, or theory of
life." (Veblen,

We are visiting my family in Kearney, Nebraska. When we are
here in the summer we go for walks in the nearby cemetery. There is a lot of
shade there, and many of the tombstones are interesting. For instance,

I looked over and said that looks like land leveling
equipment, and it was. At the bottom it says “He left the land better than he
found it.” Nebraska, particularly the part west of the 100th
meridian has historically been a relatively dry place (although the south side of Kearney was under water when we got here after a storm dumped about 9 inches of rain). There is, however, a lot
of water under the ground, making it possible to produce water intensive crops if you can irrigate your fields.

One method of irrigation is to lay a pipe along the side of
the field. Water

“The past is never dead. It’s not
even past.” William Faulkner, 1951.

“You think it’s dead but de past ain’t
stopped breathin’ yet.” Zora Neale Hurston, 1934.

The past is obviously central to discussions of reparations for slavery. At the hearing on a commission to study reparations
Ta-Nehisi
Coates cites Ed Baptist’s The Half Has Never Been Told, claiming
that 60 percent of GDP was accounted for by slave produced cotton and that the
value of slaves was greater than all other assets combined. Both statements are
incorrect. Baptist (and the historians who have not called him out on the errors
in his book) can be blamed for the first error but not for the second.

Coates is wrong about the percentage
of GDP accounted for by slave labor because Baptist is wrong.

The following

Gavin Wright’s Tawney Lecture  Slavery and Anglo-American Capitalism Revisited is now available

In We Can
Build the Roads, and Other Things Too Mike Munger argues that roads are not
public goods and that the examples of Sweden and Finland support this argument.
I think there are a few problems with this argument.

One problem arises from the way we tend to explain public
goods in economics. We tell students that they are non-rival and non-excludable.
Rival means that one person’s use of a good diminishes the benefit for other
users: if you drink my coffee that will diminish the benefit that I get from
it. Excludable means that it is possible to exclude other people from using a good
at a reasonable cost. In fact, I generally do not have any problem keeping
people for drinking my coffee. The most common example of a public good is
national defense. The benefit you get from us not

Occasionally, Evonomics provides something useful. For
instance, it re-ran the blog post “Where do pro-Social
institutions Come From? How Do Countries ‘Get to Denmark’? by Pseudoerasmus. 

Unfortunately, much of the
time it runs critiques of “economics” by people who do not know anything about
economics.

Here for example is Nick Hanauer writing about “How
to Kill Neoliberalism Kill “Homo Economicus”:

I believe that these
corrosive moral claims derive from a fundamentally flawed understanding of how
market capitalism works, grounded in the dubious assumption that human beings
are “homo economicus”:  perfectly selfish, perfectly rational, and
relentlessly self-maximizing. It is this behavioral model upon which all the
other models of orthodox economics are built. And it

This is part of Tyler Cowen’s conversation with
Margaret Atwood at Conversations
with Tyler

ATWOOD: Let’s
talk about The Wizard of
Oz.

COWEN: Sure.

ATWOOD: Now,
there’s an absolutely core to the American psyche —

COWEN: It’s
an economics movie. It’s about bimetallism, right? The yellow brick road is
about the gold standard? This is not commonly known, but it’s true.

[laughter]

COWEN: It’s
a monetary allegory, the whole movie.

ATWOOD: You
think so?

COWEN: I know so.

ATWOOD: You
know a lot of things. So, the Tin Woodman is what in it?

COWEN: He’s
one of the people in the bimetallist debates. But there was a Journal of
Political Economy article going
through all of the parallels.

ATWOOD: And
Dorothy is what?

COWEN: I
think just the innocent American crying for relief.

This is a short list of book
reviews that I think support an argument that I have been making for a while
now about the relationship between economic and historical research. 

Oakes, James. "Capitalism
and slavery and the civil war." International Labor and
Working-Class History 89 (2016): 195 -220.

Coclanis, Peter A. "Slavery,
Capitalism, and the Problem of Misprision." Journal of
American Studies 52, no. 3
(2018).

Logan, Trevon D. "The
Republic for Which it Stands: The United States During Reconstruction and the
Gilded Age, 1865–1896. By Richard White. New York, NY: Oxford, 2017. Pp.
xx, 94. $35.00, hardcover." The Journal of Economic History 79,
no. 1 (2019): 305-308.

Hansen, B.A., 2019. Brahmin
Capitalism: Frontiers of Wealth and Populism in America’s First Gilded Age.

The other day on twitter,
Seth Rockman and I were discussing current work on slavery by economic
historians. He thought that there was “more energy being spent policing
"driving force" claims than in generating new findings about
how/where slavery mattered to broader economic transformations.” I told him
that refuting claims like those made by Ed Baptist really doesn’t take that
much effort, and I suggested a list of people that he might want to look at to
see where the energy of economic historians was actually going. This is a much
fuller list than I provided in the tweet, and it provides citations and links (wherever
possible to ungated versions). There are a couple of papers that go back about
ten years, but I think most of the published papers are within the last five
years. Some

Robert Wright has a blog post about Why
the History of Capitalism Subfield Got Slavery (and Almost Everything Else) so
Terribly Wrong His argument is that because history departments
abandoned economic and business history, there was no one with expertise in
these subjects to guide new scholars when interest in economic issues re-emerged.
The evidence that history departments largely abandoned economic and business history
is irrefutable, and I certainly wish that they would pursue his remedy of
hiring some highly qualified economic and business historians. However, I am
not entirely persuaded by his argument. I am not persuaded because I think that
the problems he points to arose more from the failure to follow traditional
standards of historical research than lack of knowledge in

Marginal Revolution University is starting a series on Women in Economics. It reminded me to post that the St. Louis Federal (which happens to be the best Fed) already has a podcast series on Women in Economics.

I saw a celebration of Ayn Rand online the other day (her birthday was Feb. 2). So thought I would post this, though I don’t think you can really describe it as being in honor of her birthday.

I don’t like really like Ayn Rand’s fiction. If I just
thought it was bad fiction, I would probably ignore it. I usually only criticize fiction when it is masquerading as history. But many people seem to
think that Rand’s fiction has important things to say about reality. One
of the central messages seems to be that progress depends on the efforts of a
few great people. In general, American’s seem to like “Great Man” theories of
business history. If you want to sell books write another big biography of J.P.
Morgan, Ford, Rockefeller, Vanderbilt, or Carnegie. Rand’s heroes are extreme
versions of

Blogger tells me that a lot of people are looking at this post on loan sharks from 2017.  That post is mostly about what I regarded as a big problem with Charles Geisst’s book on loan sharks. If someone is looking for a more substantial post on loan sharks you should check out this post from 2016. 
It also contains this cool cartoon

Since several students asked about my dog, here is a picture of Lyra

Since this blog is supposedly about economics, here is a link to wagaroo a non-profit that helps match people in need of pets with pets in need of people. It was founded by University of Mary Washington econ alum Christine Exley, who went on to earn her Ph.D. at Stanford and is now a professor at Harvard Business School. Here is an interview that Frank Conway did with Christine at Economic Rockstar.Here is the Fredericksburg SPCA, which is where Lyra came from.

After the announcement that Sears had filed for bankruptcy
Louis Hyman put out tweet thread about Sears role undermining Jim
Crow in the South. The thread got thousands of likes and the story was picked
up by The
Chicago Tribune, The
New York Times, The
Washington Post, NPR,
and Vox.
I have posted a copy of the tweet thread below.

The thread argues that Sears catalogs helped to undermine
Jim Crow. To preserve racial control, Southern store owners tried to
keep African Americans in the South from using Sears, but Sears responded to
this opposition. Sears not only acted to undermine Jim Crow it
did so intentionally.  Scott Cunnigham raised an interesting question to economic historians on twitter about how one might try to estimate the effect of the Sears catalog. So far

I got around to reading Caitlin Rosenthal’s Accounting
for Slavery: Masters and Management. Rosenthal does not need me to sing
her praises. Plenty of people will be doing that. I’m just doing it because I
feel like it.

I do want to warn people that they should ignore some of the press
for the book that suggests it is about how slavery
inspired modern management. Rosenthal explicitly states that the book is
not about the origins of modern management. She draws parallels with
modern management practices, but she does not argue that they can be traced
back to slavery.

I use the phrase management practices because the subtitle
is more accurate than the title: the book is about much more than accounting. Rosenthal
examines the techniques that slave holders developed to track

I read Michael Zakim’s new book Accounting
for Capitalism: The world the clerks made last week. I saw Tyler
Cowen’s brief review on Marginal Revolution, and Cowen included the
following excerpt from the book

A single block
fronting Wall Street in 1850 was thus home to seventeen separate banking firms,
as well as fifty-seven law offices, twenty-one brokerage houses, eleven
insurance companies, and an assortment of notaries, agents, importers,
commission merchants, and, of course, stationers.  A rental market for
office “suites” developed apace “fitted up with gas and every other
convenience,” which also included newly invented “acoustic tubes” that allowed
managing partners to communicate with porters in the basement and clerks in the
salesroom without ever having to leave their

Along with the term “pushing system” that Baptist invented
and attributed to slaves and his fictional estimate of the economic impact of
slave produced cotton, the “whipping machine” has been one of the most frequently
cited stories from The Half Has Never Been Told. Foner, for instance, explained
in his New
York Times review “Each slave was assigned a daily picking quota, which
increased steadily over time. Baptist, who feels that historians too often
employ circumlocutions that obscure the horrors of slavery, prefers to call it
“the ‘whipping-machine’ system.” I saw it mentioned again recently and decided to look at the actual slave narrative that Baptist refers to. By this time I should not have been surprised at what I found. Nevertheless, I was.

Here is Baptist’s description

The other day I said that when someone says something is
just Econ 101 you can be confident it is probably not Econ 101. I have a couple more
examples now. Simon Johnson writes about Saving
Capitalism from Economics 101. He writes that

All across the United
States, students are settling into college – and coming to grips with “Econ
101.” This introductory course is typically taught with a broadly reassuring
message: if markets are allowed to work, good outcomes – such as productivity
growth, increasing wages, and generally shared prosperity – will surely follow.

Unfortunately, as my
co-author James Kwak points out in his recent book, Economism: Bad Economics and
the Rise of Inequality, Econ 101 is so far from being the whole story
that it could actually be considered misleading –