Books for the Future

EconJournalWatch and Dan Klein asked its contributors “What 21st-century works will merit a close reading in 2050?”. You can find the responses, including mine, here and here. I particularly enjoyed Evan W. Osborne’s, Slaviša Tasić’s, Kurt Schuler’s and Scott Sumner’s picks.

I have interpreted this “question from the future” as coming from somebody who “already came to an outlook like my own: “a 40 year old classical liberal in 2050. But I also assumed that she had a special interest in works that helped in shaping the nuances of classical liberal arguments in the 21st century.

Besides the books I mentioned, I pondered adding others but had to leave them out because the limit was ten. Here are those that missed the list, but that I nonetheless believe will be significant and still read in 2050.


Martin Amis, Koba the Dread: Laughter and the Twenty Million (Vintage, 2003)
A splendid meditation on the blindness towards communist terror shown by many Western intellectuals. Many similar works may fade in memory from now to 2050, when hopefully the dangers and horror of communism will be understood for what they were by most people, but Amis’s literary powers will allow this to survive and enlighten new generations.


Luigi Marco Bassani, Liberty, State, & Union: The Political Theory of Thomas Jefferson (Mercer University Press, 2010)
The years 2000-2020 will be remembered as years of “revisionist” history, particularly in the United States, that put the “cult” of the framers in perspective. Yet at a certain point, people will accept again that we cannot read with 20th century lenses the personal behaviour of 18th century gentlemen, and people will search again for works investigating their ideas and why they matter. Bassani’s book will then come in handy, as the best account of Jeffersonian liberalism.


Anthony de Jasay, Justice and Its Surroundings (LibertyFund, 2002)
This is a collection of some of Anthony de Jasay’s (1925-2019) philosophical papers. Its shorter chapter (“Empirical Evidence”) is a little classic in its own right. De Jasay was a brilliant mind and should be known more widely. Perhaps by 2050 he will be.


Antonio Escohotado, Los enemigos del comercio: una historia moral de la propiedad (Espasa, published in three volumes between 2008 and 2018)
This is a tremendous trilogy on the intellectual origins of the “enemies of commerce,” explaining the intellectual prevalence of the anti-market thinkers. These are long, exhausting books, but filled with insights and written by a non-academic philosopher who brings together an astonishing erudition with a splendid wit.


Biancamaria Fontana, Germaine de Staël: A Political Portrait (Princeton University Press, 2016)
Madame de Staël (1766-1817) is a powerful liberal thinker who has not been forgotten and whose main works are sadly not available in the English language. Fontana’s book is a splendid introduction and would also work liberals in making sense of the circumstances of the French Revolution, which we typically tend either to worship or caricature.


Chandran Kukathas, The Liberal Archipelago: A Theory of Diversity and Freedom (Oxford University Press, 2003)
Government and the “good life”: the second is not a responsibility of the first. This is a thoughtful manifesto for freedom of conscience and tolerance, which does not take shortcuts in answering the question “Should we tolerate the intolerant?” The problems it deals with are not going to disappear, its answers are and will be unpopular, but hopefully, with time, they may enlighten more people.


Jonathan Littell, The Kindly Ones (HarperCollins, 2006)
An American writer writes in French the definitive novel over the mad slaughters of the 20th century. This book will impact the way in which future generations understand Nazism and totalitarianism.


Joel Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850 (Yale University Press, 2012)
This is and will be considered for generations an essential work on the Industrial Revolution, and why it started in England.


Charles Moore, Margaret Thatcher: The Authorized Biography (Allen Lane, published in three volumes between 2015 and 2019)
Few politicians have been so associated with free market reforms as Margaret Thatcher. If The Anatomy of Thatcherism by Shirley Robin Letwin (1924-1993) is still unparalleled as an analysis of Thatcherism, Charles Moore’s wonderful biography acquaints us with the circumstances of Thatcher’s life and makes us understand better her motives as well as the challenges of governing and reforming. For those in the future who will try to make sense of the very few political experiences in which the state was actually rolled back, Moore’s book will be a must read.


Nicholas Phillipson, Adam Smith: An Enlightened Life (Penguin, 2010)
The early 21st century will certainly be remembered as a happy period, in terms of Smithian studies. This work will stand out, as a splendid intellectual biography written by a great scholar.


Amity Shlaes, The Forgotten Man: A New History of the Great Depression (Harper Collins, 2009)
The health of classical liberalism in 2050 will depend largely on the interpretation of the past which dominates academia and the public debate. The Great Depression is a pillar of the narrative that justifies more statism. In this book, Amity Shlaes explains why it shouldn’t be, providing us a detailed account of what happened and with a sound interpretation of it.


Vernon L. Smith, Rationality in Economics: Constructivist and Ecological Forms (Cambridge University Press, 2007)
Vernon Smith’s distinction between different forms of rationality is bound to be more fortunate, with the passing of time, as it is truly enlightening. This book is a methodological tour de force and an exploration of the fundamentals of our social and economic life. Smith is a giant on the shoulders of giants.


Tom Stoppard, Rock ‘n’ Roll (Faber, 2006)
Great insights on communism and how Western intellectuals saw it in this marvelous play by one of the greatest playwrights of his generation.


Mario Vargas Llosa, La llamada de la tribu (Alfaguara, 2018)
A gallery of portraits of classical liberal political thinkers written by a great novelist, who since the 1980s has been a leading voice for liberalism all over the world. Vargas Llosa not only presents lucidly and elegantly a brilliant selection of champions of this tradition of thought, he also provides the readers with some unique insights into how they became what they were.


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Charles Ball’s Humanity

I participated in a Liberty Fund colloquium on Zoom Friday and Saturday on the topic “Slavery and the New History of Capitalism.” It went very well.

One of the most interesting readings was by Charles Ball, an escaped slave. Ball’s book, published in 1837, was titled Slavery in the United States: A Narrative of the Life and Adventures of Charles Ball. In it, he describes his experience as a young man who was moved from Maryland’s Eastern Shore in 1805 to the cotton fields in South Carolina. One of the big issues in Cornell University history professor Edward E. Baptist’s work is whether the quotas of Ball and others were continuously raised by a ratcheting up of torture. Baptist claims that it was and, to back his point, quotes from Ball’s autobiography, but the striking thing about the 4-page excerpt from Ball’s autobiography is that Baptist left out passages that showed that his (Baptist’s) claim was untrue.

But I found something else striking: despite the fact that Ball was a slave, he took pride in his work. After detailing the fact that he picked “only” 38 pounds his first day on the job while two young men about his own age had picked 58 and 59 pounds, respectively, Ball writes:

I hung down my head. and felt very much ashamed of myself when I found that my cotton was so far behind that of many, even of the women, who has heretofore regarded me as the strongest and most powerful men of the whole gang.

He continues:

I had exerted myself today, to the utmost of my power; and as the picking of cotton seemed so very simple a business, I felt apprehensive that I should never be able to improve myself, so far as to becoming even a second rate hand. In this posture of affairs, I looked forward to something still more painful than the loss of character which I must sustain, both with my fellows and my master; for I knew that the lash of the overseer would soon become familiar with my back, if I did not perform as much work as any of the other young men.

He goes on to say that the overseer told him that he had good hands and would “make a good picker.” Sure enough, his productivity improved to 46 pounds the second day, and 52 pounds the third day. The next week he and the others were told that if they picked more than 50 pounds in a day, they would be paid a penny for every extra pound.

Here’s what I found interesting: not the incremental incentives but my own reaction to Ball. One of the other participants said that Ball was kind of pathetic, like a child or a puppy dog, for feeling shame at not being productive enough the first day.

I responded that I thought of the situation completely differently. I thought Ball was a man I would have liked. Here he was being enslaved but he didn’t let that take away his humanity. He still had pride in his work.

Then I told the following true story. In 1968, when I was at the University of Winnipeg, Prime Minister Pierre Trudeau’s buddy and Secretary of State (which isn’t like the position that has the same label in the United States) Gerard Pelletier had told a meeting of newspaper editors in Montreal that he was thinking of pushing for a draft in Canada. Canada has an even stronger tradition of a volunteer military than the United States has. I was 18 at the time and I wrote an angry letter to the Winnipeg Free Press, which was published in full.

I read with astonishment the article in the Free Press, October 29, entitled Non-Military Draft Plan Under Study. The only objection to the idea made by State Secretary Gerard Pelletier was that it would be difficult to put into practice. Considerations of justice do not appear to have entered his mind.

It is indicative of the temper of our times that when people propose government intervention, they do not say, “Is it right?” but only “Can we get away with it?”

In the same article Mr. Pelletier is quoted as saying that the young would like to “play their part in creating a more just society.” I am one of those young people. Because I want a just society I am taking my stand. I refuse to be coerced into serving a year for the government. Government intervention has never led to a just society and never will. (November 9, 1968.)

A week later I was thinking about the last part of my letter. I then realized who I was and said to myself, “You wouldn’t refuse. You would prefer the Army to jail. You always make the best of a bad situation. You would probably resist for a few hours at most and then would try to figure out what you could learn from the Canadian Army during this period of short-term slavery.” That’s why Ball’s first paragraph quoted above resonated with me. He made the best of a bad situation and didn’t let the fact that he was a slave  take away his humanity or his pride in his work.

This morning I woke up with a further thought. I remembered a 1957 movie titled Bridge on the River Kwai. SPOILERS AHEAD. Colonel Saito, the sadistic commandant of a Japanese POW camp in Burma, insists that the mainly British prisoners, including officers, build a bridge over the River Kwai. This, by the way, violated the Geneva Conventions. Work is not going well and there’s a lot of sabotage. But then Colonel Nicholson, played by Alec Guinness, takes over and persuades the men to take pride in their work and build a first-class bridge.

When I watched the movie, I was torn between wanting Nicholson to fail and wanting him to succeed. But the point is that he and many of his men took pride in their work. And this was a more difficult dilemma than Charles Ball had. To the extent they succeeded in building the bridge, it would help the Japanese war effort. But to the extent Charles Ball succeeded, he would help buyers of cotton.

By the way, I read a few years ago that some of the people who were actually prisoners in that prison camp were furious at the movie. They felt pride in sabotaging. Here’s Wikipedia:

Ernest Gordon, a survivor of the railway construction and POW camps described in the novel/film, stated in a 1962 book, Through the Valley of the Kwai: “In Pierre Boulle’s book The Bridge over the River Kwai and the film which was based on it, the impression was given that British officers not only took part in building the bridge willingly, but finished in record time to demonstrate to the enemy their superior efficiency. This was an entertaining story. But I am writing a factual account, and in justice to these men—living and dead—who worked on that bridge, I must make it clear that we never did so willingly. We worked at bayonet point and under bamboo lash, taking any risk to sabotage the operation whenever the opportunity arose.”[26]

I get that too. One could take pride in the work or take pride in the sabotage.


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Moral Relativism and Moral Fanaticism

In high school, Ayn Rand convinced me that moral relativism was a grave social problem.  Not in the weak sense that, “If everyone were moral relativists, there would be bad consequences,” but in the strong sense that, “Moral relativism has terrible consequences already.”  Soon afterwards, I read Paul Johnson’s Modern Times, and he reinforced my Randian belief.  In Johnson’s words:

At the beginning of the 1920s the belief began to circulate, for the first time at a popular level, that there were no longer any absolutes: of time and space, of good and evil, of knowledge, above all of value. Mistakenly but perhaps inevitably, relativity became confused with relativism.

Johnson then proceeds to interpret the world from the 1920s to the 1980s through the lens of moral relativism.  Moral relativism leads to Marxism-Leninism, fascism, Nazism, and World War II, as well as the barbaric wars of “national liberation” and the subsequent petty tyrannies.

Over time, however, I’ve almost completely changed my mind.  While I definitely think that moral relativism is false, I no longer think that moral relativism has grave geopolitical consequences.  Instead, I say that the horrors that Johnson describes were heavily driven by what I call moral fanaticism.  And the same goes for our contemporary political landscape.  The vast majority of liberals and conservatives are much closer to moral fanaticism than moral relativism.

What exactly is moral fanaticism?  Like moral relativism, moral fanaticism is a meta-ethical theory – a theory about moral facts and moral reasoning.  Moral relativism says, roughly, that there are no moral facts, and moral “reasoning” is just thinly-veiled emoting.  Moral fanaticism, in contrast, affirms that there are moral facts, but pretends that thinly-veiled emoting is ironclad moral reasoning.  The predictable result is that moral fanatics hold bizarre moral views with immense confidence.  They’re like people who use love to solve math problems.

Consider Nazism.  Leonard Peikoff notwithstanding, moral relativism had near-zero influence on the Nazis.  The Nazis didn’t think the truth of their moral position was a matter of opinion.  They totally thought they were right.  They believed that Aryans were the master race, and that as the master race they had the right to treat lesser people as slaves or vermin.  That’s the kind of self-righteousness you need to murder millions.  What made them fanatics?  The way they reached these conclusions.  They didn’t try to stay calm.  They didn’t test their moral positions against hypotheticals.  They didn’t invite intelligent people who disagreed to check their work.  They didn’t ponder Bayes’ Rule, or study cognitive biases.  Instead, they adopted the moral positions most compatible with their own power-hunger and hate.

Basically the same goes for Johnson’s entire rogues gallery.  Marxists-Leninists also totally thought they were right – and had the kind of self-righteousness you need to murder millions.  And while their writing style was obviously very appealing to the highly-educated, their reasoning process was fanatical.  In their writings, neither Marx nor Lenin try to stay calm.  They make near-zero effort to find and respond to intelligent critics.  They virtually never wonder if they’re just plain wrong.  Instead, they preach to the choir – with a subtext of fire and blood.  The anti-colonialist movement was obvious more varied.  But almost none of the prominent proponents of “national liberation” seriously wondered if their struggle against foreign oppression would unleash homegrown tyranny.  Questions like, “War is hell, so does it really make sense turn to violence to obtain independence?” were thought crimes.  Yes, even Nelson Mandela was such a moral fanatic – even according to his falsified autobiography which lies about his long-standing membership in the South African Communist Party.

The best case for my original position is that moral relativism enables moral fanaticism.  In the words of Bertrand Russell: “The trouble with the world is that the stupid are cocksure and the intelligent full of doubt.”  If reasonable people had the courage of their convictions, they would have proudly crushed Marxism-Leninism, Nazism, and other expressions of moral fanaticism before they became severe threats.  If you search carefully, you can definitely find statements consistent with this story.  Here’s what the great historian Carlton Hayes had to say about the Soviet Union in 1924:

Nevertheless, some order was emerging from the Russian chaos.  The world had failed to overcome Bolshevist Russia, and Bolshevist Russia had failed to overcome the world.  The Russian Revolution was left to work itself out as a great political and social experiment.  Already it stood forth in history as a most significant outcome of the Great War, and it promised to command the attention and interest of the whole world for many years to come.

In the end, however, these relativistic sentiments are throw-away comments.  A few casual words in a career.  When push comes to shove, almost everyone treats their political views as undeniable.  Take a look, for instance, at Hayes’ A Brief History of the Great War.  This book-length expression of absolute moral certitude in Wilson’s crusade to make the world safe from democracy starts with the dedication:

To those students of his who loyally left their books and proudly paid the supreme sacrifice in the cause of human solidarity against international anarchy the author inscribes this book.

A true believer mentality infuses the entire book.  None of the sordid history of the origins or aftermath of World War I even faze Hayes.  (Though to his credit, Hayes later wrote a book-length critique of moral fanaticism called Nationalism: A Religion).  And while he’s obviously just one man, he’s an archetype.

If moral fanaticism rules the world, though, why aren’t violent conflicts much more common?  Not because of moral relativism, but because of political pragmatism.  Even most moral fanatics realize that trying to impose their dogmas on the entire world would end in disaster.  For their own power-hungry selves.  They combine absurd confidence in their own moral rectitude with reasonable doubts about their ability to bring a world of enemies to their knees.  So life goes on.


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Baseball, Black History, and Bottom-Up Integration

In early 1964, in the immediate aftermath of Jackie Robinson’s election to the Baseball Hall of Fame and John F. Kennedy’s assassination, Robinson put together a rather triumphalist book with dozens of friends and colleagues from across the world of baseball entitled Baseball Has Done It. In a series of interviews, Robinson occasionally interjects his thoughts on the years before, during and immediately after his entry into Major League Baseball in 1947. The interviews are with management, coaches, and players, including those who were for breaking the “color barrier,” those willing to let it happen, and even a few who were against it at the time. For those interested in history as it happened, discussed by the people who made it, it is a singular and valuable document.


That makes the publication history of this book surprising. The 1964 edition published by J. B. Lippincott appears to be the only version of this book available until Ig Publishing put together a paperback edition in 2005 with a short introduction by Spike Lee. Copies of the original appear to be rare online, which is a shame as the 2005 edition (the version I have) is filled with printer errors and formatting problems. Why would this book, which represents the first draft of an important moment in baseball and social history, get such shoddy treatment and so few copies?

The answer to that question, I believe, has something to do with both the content and the timing of the book itself. The very title of the book has a finality to it. As it was published shortly before the final passage of the 1964 Civil Rights Act and the 1965 Voting Rights Act, this makes sense. But of course, the assassination of JFK hangs over the general optimism of the book, and is not mentioned anywhere in the text. By the time of the assassination of Dr. Martin Luther King, Jr. in 1968, the book may have seemed antiquated, or at least naïve.

Language is also an issue of note throughout the book that could possibly turn off readers in later years. Robinson and all his interviewees use the word Negro, and occasionally colored people, to refer to themselves and African-Americans generally. Almost all of the people in this book played in the Negro Leagues and grew up in the Jim Crow South, so this makes complete historical sense. But the book, again, had the unfortunate timing to be published at the very end of the acceptability of that language. By the end of the 1960s, Black was the more common term, and Negro had been labeled as insulting and demeaning.

Besides word choice, the language of how Robinson and others express the defeat of racial prejudice in baseball changes significantly during the 1960s. For example, in Robinson’s introductory chapter he writes about his experience being inducted into the Baseball Hall of Fame:

I was welcomed to beautiful Cooperstown, New York, where high officials of baseball did everything in their power to make that day the happiest of my life. No one mentioned that I was the first Negro in the Hall of Fame, or that another bastion of prejudice had fallen. (24-25)

That language of color-blindness and a world that had purged prejudice so completely that it did not even need to be recognized is not something that survived the 1960s. Robinson expresses here as a positive experience something that many today would see as a serious omission.

Despite these issues, this book is valuable in showing the thoughts and strategy behind breaking the color barrier in Major League Baseball. Branch Rickey, Manager of the Brooklyn Dodgers’ team that brought Jackie Robinson in during the 1947 season, spoke about the lesser known second black player in baseball:

I was alone in the majors in 1947 as the sponsor of a Negro player until Bill Veeck [owner of the Indians] signed [Larry] Doby that July. I do not know Veeck’s opinion about Negroes at that time, as I never had any conversation with him on the subject. But I can give you my opinion on Veeck’s position: he would be the first one in baseball to embrace any innovation, and therefore I would accept him as the one to hire a Negro quicker than anyone I can think of, not because of race, not because he was grappling with a social problem. That would be completely foreign to him. He would not let any tradition interfere with his policy of winning a pennant for his Indians.

After he signed Doby I did advise him to follow the same procedure that I had devised [with Robinson]. “Don’t allow incidents to happen,” I told him. “Control the boy!” (68-69)

While Branch Rickey and few others were forthright about their desire to integrate baseball, Rickey claims he had no desire throughout the process to convince anyone of the moral correctness of it. Instead, he was convinced that Negro League talent would speak for itself and force every team to integrate in order to compete. Time and competition would do the work of integration.

Ford Frick was National League President from 1934 to 1951 and then MLB Commissioner from 1951 to 1965. He provided a chapter in Robinson’s book:

It’s not baseball’s function to crusade or to point the finger at state laws. Our theory is that Negroes want to play in baseball and we want the very best players available anywhere. Baseball will go anywhere where we’re wanted. If we can’t take our Negro players into certain cities, our policy is to stay away … If this policy has been effective in desegregating these towns … it’s because they want baseball. (113)

Baseball Has Done It provides a powerful record of a particular moment in time. It is a moment when a largely private institution, such as baseball, could integrate not through top-down fiat or law but through wise and forward-looking business decisions. The success of those decisions created a short-lived optimism about the prospects for long-term racial harmony in America. Unfortunately, history, politics, assassination, and resistance interfered with this model and Jackie Robinson’s optimistic title looks naïve in retrospect. 


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White Guilt and Reparations: A True Story

Co-blogger Bryan Caplan’s post this morning on collective guilt and the subsequent discussion in the comment section reminded me of something that happened my first day of a microeconomics class in 2001. At the end of the opening class, a number of people came up to ask questions. One was a young black woman who said, “Professor, what do you think of reparations for slavery?”

I answered, “I promise I’ll answer but first I want to know what you think.”

She said, “I favor them.”

“And those reparations would be paid for by white people?”

“Yes,” she answered.

I turned to a white guy who was waiting to ask a question, and I took a risk.

“Where are your grandparents from?” I asked.

“The Netherlands,” he answered.

I then turned back to the woman who had asked and said, “I’m ready to answer you. His grandparents came to this country well after slavery had ended. I think it’s wrong for the government to tax people who didn’t even inherit wealth from slavery to give to the great, great grandchildren of former slaves.”

Note: Of course it’s possible that his grandparents inherited wealth from their predecessors having had slaves in the Netherlands. I don’t know the history of slavery in the Netherlands. But the odds that they gained big time and came to the United States as wealthy people were probably pretty low.


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David Hume on Ancient Revolutions

The longest essay in the modern edition of David Hume’s Essays  is “Of the Populousness of Ancient Nations,” first published in 1752. The essay aims to discomfort those who lionize the ancients of Greece and Rome, by arguing, in effect, that neither had succeeded in establishing a political order that truly achieved what we today would call the rule of law. That is a mark of “every wise, just, and mild government” (382). The moderns have succeeded better, somehow.

The establishment of the rule of law in an extensive territory would bring prosperity, and prosperity would be reflected in populousness. Thus, Hume uses populousness to assess the ancient world. He argues that ancient Greece and Rome were much less populous than many like to think, and, thus, less prosperous, and less glorious.

Hume proceeds through a number of major aspects of the empirical question of populousness, highlighting the violence, capriciousness, and brutality of ancient society. The first is slavery. He explains why it is wholly detrimental to populousness, and, indeed, this section of the essay (pp. 383-397) is nothing short of an excoriation of slavery.

Next, Hume writes about infanticide and of the “great” families, which he presents as a sort of cult (398), with practices by no means conducive to the raising up of large families.

Next he turns to the “political customs” (400) and “political maxims and institutions” (404), treating a number of facets, including war and revolution. These too, he says, should make us skeptical about claims of ancient prosperity and populousness. About ancient revolutions, Hume writes:

In ancient history, we may always observe, where one party prevailed, whether the nobles or people (for I can observe no difference in this respect) that they immediately butchered all of the opposite party who fell into their hands, and banished such as had been so fortunate as to escape their fury. No form of process, no law, no trial, no pardon. A fourth, a third, perhaps near half of the city was slaughtered, or expelled, every revolution; and the exiles always joined foreign enemies, and did all the mischief possible to their fellow-citizens; till fortune put it in their power to take full revenge by a new revolution. And as these were frequent in such violent governments, the disorder, diffidence, jealousy, enmity, which must prevail, are not easy for us to imagine in this age of the world.

There are only two revolutions I can recollect in ancient history, which passed without great severity, and great effusion of blood in massacres and assassinations, namely, the restoration of the Athenian Democracy by Thrasybulus, and the subduing of the Roman republic by Cæsar. We learn from ancient history, that Thrasybulus passed a general amnesty for all past offences; and first introduced that word, as well as practice, into Greece. It appears, however, from many orations of Lysias, that the chief, and even some of the subaltern offenders, in the preceding tyranny, were tried, and capitally punished. And as to Cæsar’s clemency, though much celebrated, it would not gain great applause in the present age. He butchered, for instance, all Cato’s senate, when he became master of Utica; and these, we may readily believe, were not the most worthless of the party. All those who had borne arms against that usurper, were attainted; and, by Hirtius’s law, declared incapable of all public offices.

These people were extremely fond of liberty; but seem not to have understood it very well. When the thirty tyrants [a pro-Spartan oligarchy installed in Athens after its defeat in the Peloponnesian War in 404 BC] first established their dominion at Athens, they began with seizing all the sycophants and informers, who had been so troublesome during the Democracy, and putting them to death by an arbitrary sentence and execution. Every man, says Sallust and Lysias, was rejoiced at these punishments; not considering, that liberty was from that moment annihilated. (407-408)

Hume goes on to address the security of life and property and the attitudes toward and extent of commerce and trade. He throws salt on ancient accounts that have suggested great populousness, and highlights other ancient remarks suggesting otherwise.

Happiness, prosperity, and populousness depend on the rule of law. Let us hope that it will be there for our grandchildren’s grandchildren to enjoy.




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Sadie Alexander

The Economist has an interesting article on Sadie Alexander, who in 1921 became the first African-American to earn a PhD in economics. Her politics were not easy to pin down in today’s terms, as she favored a mix of Keynesian demand-side stimulus and black self-improvement.

Franklin Roosevelt attracted many black votes when he succeeded in boosting the economy after taking office in 1933. However, Alexander did not view his policies as an unmixed blessing:

Some policies designed to relieve the Depression neglected black workers. New pensions and unemployment insurance introduced in 1935 left out both servants and farm labourers. “It is clear that in his years of planning for Social Security of the common man, Mr Roosevelt never had in mind the security of the American Negro,” she said. Other policies made things worse. Many blacks in the South could get only jobs that whites did not want at pay they would not accept. When the National Industrial Recovery Act lifted the wages and prestige of these jobs, blacks lost them. Roosevelt’s national recovery act, she thought, might as well be called the “Negro Reduction Act”.

My research suggests that the NIRA set back the recovery by several years, after the dollar devaluation of early 1933 had temporarily boosted output sharply.

FDR had two really bad ideas, the NIRA and his court packing proposal. It’s a testament to America’s checks and balances that the NIRA was thrown out by the Supreme Court in 1935 and his court packing proposal was rejected by an overwhelmingly Democratic Senate in 1937. On Wednesday, our system of government will have another opportunity to check a questionable power grab by the executive branch.


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Gold hoarding during the Great Depression

Back in 2015, I wrote The Midas Paradox, which showed how gold hoarding helped to cause the Great Depression. I’ve always hoped that another (presumably younger) economist would repeat this research using updated methods.  Better yet, I hoped the new study would confirm my findings.

Doug Irwin directed me to a new paper by Sören Karau that reaches a similar conclusion, using better data and much better statistical techniques.  Here’s the abstract:

I identify monetary policy shocks in a structural macroeconometric framework and assess their role in causing the initial downturn in prices and production from 1929-31. In deliberate contrast to existing work on the depression, I take an international perspective that builds upon an appreciation of the gold standard system operating at the time. First, I employ a hand-collected monthly data set that covers a large share of the interwar world economy. Second, derived from a theoretical monetary framework, I model monetary disturbances as shocks to central bank gold demand as measured by the world gold reserve ratio. This is preferable not only on theoretical grounds to, say, interest rate measures of individual countries. It also allows me to employ narrative in- formation to sharpen structural shock identification based on sign restrictions. I do so by imposing a single narrative sign restriction that captures a key shift in US and French monetary policy in 1928.

In my view, the gold reserve ratio is the best measure of the stance of monetary policy during the Great Depression.  Under a fiat money regime, I generally use expected NGDP growth to measure the stance of monetary policy.  But central banks are somewhat constrained under a gold standard, and hence it make sense to use the one variable they can control—gold reserve ratios.  Other variables such as the money stock and the interest rate are essentially endogenous, determined by global forces.  The other advantage of the gold reserve ratio is that this ratio is stable when countries adhere to the so-called “rules of the game”.  Hence changes in this ratio measure not just discretionary monetary policy, but also deviations from the (admittedly imprecise) rules of the game.

Karau’s paper cites previous work along these lines by myself, Doug Irwin, Clark Johnson, David Glasner and other researchers.  But Karau’s paper is the one I’d point to if a younger economist asked for a more “rigorous” demonstration of our claims about the role of gold hoarding in the Depression.  Here’s an excerpt:

These findings are remarkably in line with the analysis in Sumner (2015). According to his narrative, the initial slump up to the fall of 1930 was largely caused by central bank gold hoarding after which other deflationary forces became more prominent. Indeed, in Figure 5 there is another steep unexpected decline in industrial production in October and November of 1931, which is not well explained by the identified monetary shock. Instead it might be associated with the wide-spread banking panics, chiefly in the United States. In that sense then the failure of the monetary shock to account for this second decline in production actually speaks to the quality of the simple identification scheme, which is supposed to narrowly identify exogenous innovations in central bank gold hoarding rather than monetary or non-monetary financial shocks more broadly.

I strongly encourage scholars interested in the Great Depression to take a look at Karau’s paper.

And then buy my book.  🙂


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Tocqueville’s Hope

After his visit to America in 1831, Alexis de Tocqueville returned to France and published the first volume of Democracy in America in 1835, and the second in 1840. The work is remarkably timely. Here I have selected a few words from the final pages. The work is full of warning, especially toward the end of the second volume. In what follows, one sees how he inspired Friedrich Hayek’s title The Road to Serfdom. But the final words also sustain a note of hope. When Tocqueville speaks of certain “more enlightened” people, it is with irony:


Among our contemporaries, I see two contrary but equally fatal ideas.

Some perceive in equality only the anarchic tendencies to which it gives birth. They dread their free will; they are afraid of themselves.

Others, fewer in number, but more enlightened, have another view. Next to the route that, departing from equality, leads to anarchy, they have finally discovered the path that seems to lead men invincibly toward servitude. They bend their souls in advance to this necessary servitude; and despairing of remaining free, at the bottom of their hearts they already adore the master who will soon come.

The first abandon freedom because they deem it dangerous; the second because they judge it impossible.

If I had had this latter belief, I would not have written the work you have just read…

Let us therefore have that salutary fear of the future that makes one watchful and combative, and not that sort of soft and idle terror that wears hearts down and enervates them…

As for myself, having come to the final stage of my course,…I feel full of fears and full of hopes. I see great perils that it is possible to ward off; great evils that one can avoid or restrain, and I become more and more firm in the belief that to be honest and prosperous, it is still enough for democratic nations to wish it.


Dan Klein is professor of economics and JIN Chair at the Mercatus Center at George Mason University.


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