I used Ipe as an alternative to TikZ package for LaTeX. Ipe is a great tool that allows some manual moving of chart's components but can also be edited through code. You can insert formulas using LaTeX typesetting. It's also much easier to use for a complete beginner than TikZ. Highly recommend giving it a shot if you found TikZ to be too time-consuming.
Longer answer: what you are interested in is called the “transmission mechanism”, and the reduced workforce (and also investment by businesses) is only a part of it. The main part of the transmission mechanism is consumption: when interest rates go up, saving becomes more attractive and people shop less, preferring to spend later. They also face lower asset prices (did you notice how all bonds lost value over the past year? that's what it is) and so choose to spend less.
The inflation-unemployment trade-off that you mentioned is also a part of it. All economists know that there are trade-offs between policy goals, and you have to make judgement calls about what the society's priorities are. If only the voters could vote on “2% lower inflation compared to now” vs “1 percent lower unemployment compared to now”. For better or for worse, they don't do that.
The transmission mechanism is not actually via raising interest rates in any real sense, it's by draining money from the economy - selling assets for money, and then retiring that money. This leaves economic actors with lower money balances than they wish to hold at the given level of nominal spending (price level × real activity) which in turn incents them to spend less in all kinds of ways. Which then leads to lower expectations of the future price level (as well as future real activity), which works to reel in the inflationary spiral.
Interest rates play little to no role in this specifically, and actually they are a lot more complicated because policy interest rates are set according to a liquidity effect (more money = lower rates) but natural or market rates move according to the Fisher effect (more money = more nominal spending in the future, thus higher interest rates!). Setting policy interest rates for any length of time thus always involves trying to achieve stability in an inerently unstable fashion, akin to balancing an inverted pendulum. It's not worth worrying too much about those.
> It is said to prove a point about the globalization of tea: words for tea that sound like chai reflect a historical spread via overland routes, the argument goes, while words like tea are a legacy of maritime trade. A 2018 viral article by the data journalist Nikhil Sonad in Quartz first put this idea on the world’s radar.
A paper on a similar topic but with much better execution: The Rate of Return on Everything, 1870–2015, https://economics.harvard.edu/files/economics/files/ms28533..... Among other things, it spans multiple countries, and includes housing in the comparison.
Interesting how the 1920s seem to be an era of social management experiments everywhere, with basic things like calendar being questioned all over the world. Just a few years later after Eastman's push for a reform in the United States, the Soviet Union actually changed its calendar. The reform affected the definition of a week rather than the month. The reform was not successful, and the changes were only in place in 1929–1931.
My grandfather, who turned 10 in 1929, vaguely recalled how the country briefly abandoned universal weekends, which meant a mess scheduling anything family-related. Everyone had different work schedules.
https://en.wikipedia.org/wiki/Soviet_calendar
US economic historian here. The idea that the US government funded the construction of the first Transcontinental Railroad and Panama Canal to trade with China is very, very weird.
- 1850-1890 was a period of high protectionism, highest tariffs on imports in the US history.
- A good approximation of share of traded goods in the railroads would be the share of imports+exports in the GDP. Together, exports and imports were not more than 15% of GDP. Source: https://www.nber.org/system/files/working_papers/w4710/w4710..., Table 3.
- railroads transported a lot of agricultural products and also passengers, and were hugely profitable from that. I doubt they would recover any cost by transporting porcelain and whatever other goods China exported at the time.
- "But that answer is wrong, as can be shown by examining historical records of the time." - citation needed.
"(Bonus question: what did the U.S. give to China in exchange for its china?)"
"(the answer to the question I posed above about what the U.S. traded to China in the 19th century is "fur")"
My understanding is that in this period, the most valuable China->US exports were tea, silk, and porcelain. The USA didn't produce anything the Chinese were interested in buying (unlike the Spanish, who had had torrents of silver coming from South American silver mines), and so British and American traders in the Canton System and Thirteen Factories period traded opium from British India to China, which of course led to the Opium Wars, British control of Hong Kong, etc.
I've never read anything about fur exports from USA to China being a big part of 19th century USA trade, but I have read a about mid-19th century booming East Coast and European demand for beaver pelts.
The answer to the bonus question is opium. In particular the Forbes family (not related to the magazine folks) traded about 20% of all the opium sold in China during this period with the other 80% coming from the British East India Company and other UK-based trading houses.
Fun fact, the Forbes family is still one of the wealthiest families in America, they own their own massive private island called Naushon Island right next to Martha's Vineyard. They also have their own family museum in Boston where you can learn about their trading history in Asia which I'm super eager to visit And the patriarch of the Forbes Family today is... wait for it... John Kerry. When Obama made Kerry his secretary of state the Chinese weren't super thrilled, they have a long memory.
Fur exports from North America to China were the major reason for the European exploration of western North America in the 17th and 18th centuries, and into the earliest 19th century. The Chinese elite used fur pelts to line their robes. Sea otter, which has the highest follicle density of any mammal, was the most favored (and I believe imperially mandated for the highest ranking mandarins) and the pelts were incredibly valuable. The Spanish and English exploration of the Pacific Northwest was largely done by trade expeditions which would trade various goods for pelts with the various Native tribes, and then sail to Canton to trade the pelts for Chinese goods. The Russians more or less enslaved some of the tribes of the Aleutians (the Unangan people) and brought them as far south as central California in their trade ships; the Unangan hunters hunted from sea kayaks by day.
Both the North West Company (British) and John Jacob Astor (US) set up transcontinental overland trade networks in the late 18th and early 19th century focused on the fur trade, with China being a primary customer for pelts.
I think in the first few decades of the 19th century, Chinese Imperial fashions changed and much of this system collapsed, although not fast enough to prevent the near-eradication of the sea otter population.
A good pop history of the US Overland component is Astoria by Peter Heller. It is also addressed a bit in more scholarly work such as the Columbia's River: Voyages of Robert Gray, by J. Richard Nokes.
America exported things to China in the 19th century. One random example is many rickshaws used in Asia back then were made in Burlington NJ. New Jersey built up a huge light industrial base over the 17th & 18th centuries as they were the initial colonial iron source. They also had a special surface water high in tannic acid which was key to successful transoceanic navigation. That water stayed clean. So even as those two industries declined they had plenty of timber and steel machinery to make into finished products which were easy to ship on the rivers from there to the ports on the Delaware river.
I don't know about the Panama Canal, but the rest is true (mainly UK).
" ... transporting porcelain and whatever other goods China exported at the time."
China exported Silk, porcelain and tea like the is no tomorrow but did not buy anything. At one point China accumulated a huge part of the world silver reserves, sucking liquidity out of the western economy. Opium "solved" this problem.
It was my understanding that the Opium trade was mainly a GB thing. I was not aware that the US was involved.
You may be interested in this article, "How Profits From Opium Shaped 19th-Century Boston" [0]
> Perkins' ships deposited tremendous wealth in Boston too. Chests of tea, bolts of silk, crates of porcelain and cakes of opium -- which was legal in the U.S. -- were hauled off ships onto giant scales outside Boston’s Custom House. The goods were tallied and taxed in basements and warehouses around Faneuil Hall and Quincy Market. Tax revenue from the trade funded Massachusetts police and fire departments, roads, bridges, courthouses and schools.
That wasn't a new problem, the Roman Empire was stripped of gold to pay for Chinese silks, to the point that several emperors made wearing silk illegal.
If trading opportunities were the answer it would have been reported as much at the time imo. Here is the justification from the U.S. house of representatives about the project at the time, in 1856:
"The necessity that now exists for constructing lines of railroad and telegraphic communication between the Atlantic and Pacific coasts of this continent is no longer a question for argument; it is conceded by every one. In order to maintain our present position on the Pacific, we must have some more speedy and direct means of intercourse than is at present afforded by the route through the possessions of a foreign power" (1)
The reason seemed to be just geopolitics rather than trading opportunities. I'm curious if you know what route they were referring to in this quote that routed through a foreign power? An oversea route maybe? In 1856 we had territory coast to coast already so the caravan routes were within our possessions.
I am not that familiar with the history of railroads, but I will speculate:
- take the railroad as far west as possible, then a stagecoach (expensive, slow, uncomfortable). The land route was created after the Gold Rush: https://en.wikipedia.org/wiki/California_Trail
- ship to Panama, cross by land in Panama, ship from Panama to California (cheaper, slower, risk of disease like malaria)
- ship around South America. Yep, all the way to Antarctica, through Magellan Strait. (even cheaper, even slower, risks from travelling by the sea). This route seems crazy if you look at the map. However, for goods, it was very much in use before Panama Channel was built. Sea is so much easier than land.
I am not sure what "foreign power" this quote refers to though. Panama? Chile? Maybe you could also go through Mexico?
1853 is when Admiral Perry showed up in Japan with gun boats and said "You will trade with us." Whatever the confusing economics were of trade with East Asia, we were not only active over there, we were being rudely pushy about it.
I’ve always wondered if one of the reasons was to protect the Union. Would be a lot easier to prevent states from seceding, and defend US borders when you can quickly transport soldiers (plus equipment, food, etc.) to where they’re needed.
I don't think there is a single answer to "why the US built railroads", but both the railroads and the Eisenhower's Interstate Highway System certainly had something to do with the military needs.
I would imagine so. The CN railroad was specifically built to transport soldiers from eastern Canada to BC to defend against American machinations. (Not for expansion, nope, no way, we didn't want Alaska anyways!)
That seems mostly irrelevant, aside from maybe providing credit. The way in which you "co-opt" it in this piece is not as some questionable hypothesis, whose veracity is unimportant - which seems to be your intent based on this comment and the rest of the actual piece. It's hard to see how you are not explicitly endorsing this hypothesis when you have unquoted lines like "but that answer is wrong, as can be shown by examining historical records of the time." You are not saying that Donald Gibbs thinks this is wrong, you are saying you think it's wrong.
Yes, that's a fair criticism. If I were to rewrite this article today I would try to make this clearer. I think at the time, having recently seen Gibbs speak, I found his argument compelling. But I clearly could (and should) have done a much better job communicating it. Mea culpa.
That's true, but my blog is not a peer-reviewed publication, it is a personal journal, and as such my policy is not to make substantial changes to posts after they're published. I want my blog to be a reliable representation of who I am (or, in this case, who I was) warts and all. Sometimes I'll post corrections and updates, and maybe I will in this case, but geez, it's a twelve-year-old post and this is the first time anyone has brought this up. This probably isn't be the most egregious uncorrected error I've ever made.
I don't think it would be as trivial to fix as you think. I can't just say, "This is Gibbs's position, not mine" because I don't actually know that to be a fact. This happened 12 years ago, and my recollection could be wrong. It's entirely possible that this was actually my position at the time and I just don't remember. So before I can confidently attribute this position to Gibbs I'd have to verify that this was indeed Gibbs's position at the time, and that seems like a non-trivial undertaking.
I'll tell you what, though, if you can find a reference that this really was/is Gibbs's position I will make the correction.
It is trivial. No one's expecting you to find and state the exact current state of the literature, just to clarify that you were overstating the case at the time.
The problem is, you stated it as undisputed fact, when you didn't actually know it to be. Posters are only asking you to correct that overconfident "fake it til you make it" misrespresentation.
"Update: I was going off of my memory of the literature at the time, it turns out I was just parroting what I understood Gibbs's position to be; there are good reasons to believe China wasn't a major factor."
That didn't seem so hard. OTOH, if you're just optimizing for sounding confident and smart, I guess none of that matters. But you've spent at least as much effort complaining about changing as it would have taken to correct it.
Fair enough, I will fix this one way or another. Thank you for your patience. (Just out of curiosity, why do you care about this enough to put so much effort into persuading me? Surely this is not the most destructive bit of misinformation floating around on the internet?)
P.S. I decided to actually look into the actual fact of the matter, and it appears Gibbs's claim may actually have some merit:
"[The] chief promoter of a transcontinental railroad was Asa Whitney, a New York merchant active in the China trade who was obsessed with the idea of a railroad to the Pacific. In January 1845 he petitioned Congress for a charter and grant of a sixty-mile strip through the public domain to help finance construction." [Emphasis added]
The article doesn't specifically say that China was the principal motivation, but in 1845, before the discovery of gold in California, there weren't many other reasons to build a transcontinental railway. And since the railroad didn't actually get built until long after the gold rush was well underway, the actual motivation is probably a mix of different factors. But given Whitney's role, the idea that China was a factor seems like it could turn out to be defensible after all.
As an economist, I strongly believe this is a strawman argument. Economists have studied cooperation for decades. Methodological individualism that the article mentions is not an assumption that everyone is waging war against each other, and the war against each other does not follow from methodological individualism. Game theory was interested in cooperation, especially across many time periods, for as long as it existed. Avner Greif has done amazing work on the rise of cooperative institutions. These things are a part of standard curriculum for any economics major (although maybe not a 101 class). This is not to say that economics is free of issues, but the claims of the article reveal that the author has no idea about what economists care about and have cared about for decades now.
Two thirds of the way through this all I could think of was “strawman”. He talks about the invisible hand but doesn’t even namecheck Smith or his central thesis.
If he understood that, he might understand that Jeff Bezos got rich not by exploiting people but rather by improving people’s lives
More effective exploitation of labor is a competitive advantage that lowers costs and thereby increases profits and/or allows for lower prices. Exploitation of workers and value delivered to consumers are entirely compatible.
Also, Amazon uses (used? it might have stopped) its influence to prevent sellers from selling things cheaper off Amazon, meaning the Amazon tax gets applied to the product everywhere – reducing consumer incentives to buy things without Amazon. This is neither exploitation of labour nor delivering value to consumers.
If Amazon were uniquely exploitative, why would anyone work there? In the US, the number of available jobs has regularly outstripped the number of unemployed, which is to say that there is no shortage of jobs--and yet folks are choosing to work at Amazon rather than any other alternative. The most straightforward explanation for this would seem to be that working at Amazon is the best option available to people who work at Amazon, which doesn't seem to be compatible with the idea that Amazon is somehow uniquely exploitative. .
So Amazon is exploitative, even if they're the best option available to workers... because all employers are exploitative? This isn't an argument against Amazon at all--you're just bellyaching about "the system".
> If he understood that, he might understand that Jeff Bezos got rich not by exploiting people but rather by improving people’s lives
The catch here is that it was a marginal improvement for some people, not everyone. Before e-commerce took off, there was a lovely amount of serendipity going out to pick up an album or even a new graphics card. I'd run across buskers, parades, protests, weird little shops I had no idea existed, and had great conversations with perfect strangers. Now the whole experience is so efficient that it has disappeared entirely. Something of value is being lost when tens of thousands of small business are shuttered and replaced by a single corporate entity with enormous power and leverage over their competitors.
A web page is never going to compare with the amount of information and variety I can experience in person. Their "recommendations" are simply not as good as the advice of a small business owner who used to help me pick out what I was looking for. I spend so much time researching before I buy, because I can't judge the quality of a product by looking at an image of it. Instead of the old model of trusting a local expert, I have to now become the expert for every single category of thing I buy.
(Also, Amazon's employees are definitely exploited, and that's absolutely one reason why he is wealthy. The first thing they did when they bought Whole Foods was cut pay and benefits.)
Small businesses and serendipity were largely crushed before Amazon became dominant.
Albums were bought at Best Buy, graphics cards were bought at Fry's, books were bought at Borders, tools were bought at Home Depot, groceries were bought at Kroger... (or sometimes they were almost all bought at Walmart or Target instead of any of those!)
Bezos was rich before the next-day-everything-fulfill-as-fast-as-possible push of the last decade. What did the warehouse environment look like back then? It won by doing better, but unforunately that alone isn't good enough, you have to FOREVER get more and more efficient, so the market demands exploitation at some point.
How much do you think his salary and stock grants would do for the employees if it was distributed? Less than a dollar a year. He could sell all his equity and give a one time bonus of 10k and then they would be in the same boat. He could give all of his stock to the company, and they could get $1,000 a year in profit sharing. Less than half of the profit is in retail, but maybe that's closer to $500 a year
it's very much a trade off. I too remember going to independent record stores when I was younger. every once in a while, I got into a cool conversation with someone who worked there and discovered a new band. much more often, I left empty handed because they didn't have the specific album I wanted. I didn't have particularly obscure taste; it's just not practical for a small shop to stock every single album that exists.
if you want someone to pick a reasonably good example of X for you or if you actually enjoy the experience of shopping, then yeah, amazon sucks. if you want a specific thing, amazon is pretty much the best store ever; if it's out of stock on amazon, it's probably out of stock everywhere else too.
It goes beyond that. Did everyone forget mail-order catalogs? Even up into my early teens, we would regularly receive them. One could mail-in (or phone-in) orders for a similar variety of goods as is available on Amazon (relative to the number of goods generally available in the American market). I understand that they're still common for enterprise, if for little else as marketing. Amazon's advantage over those is not so large, and the caveats involved in using it make me wonder about the net utility - especially now, as the politicians whose Amazon's success has enabled have badly damaged our postal system and drastically slowed the delivery of goods not available at a local distribution center.
That is not to say you can't get rich without improving lives, or that that you can't get rich explicitly by harming people's quality of life.
There are countless cognitive exploits such as short term thinking that people can take advantage of, in addition to outright fraud and abuse.
These are valid questions to ask, but my personal view is most of those making the claims aren't showing their work, just positing they are true.
When the claim is that a millions amazon workers and contractors plus hundreds of millions of customers are acting against their best interests, you need strong evidence.
Or, all the people who did the work to make it possible to sell things over the internet made peoples lives better, and then a Hedge Fund manager figured out how he could take a 200 Billion dollar cut as a middleman.
Homelessness? Yes, sort of. I have family who work at a distribution center. They work under conditions that I couldn't contend with at a similar facility and which quickly drove me out. I don't know how they manage psychologically with late nights and stringent scheduling; they only manage economically with help from other family.
Amazon is, without a doubt, exploitative. And it's quite annoying to have someone, whose only contact with them is as a consumer and quasi-client, to be so adamant that they aren't.
> ...the author has no idea about what economists care about and have cared about for decades now.
While scientific progress may advance one funeral at a time, some "zombie" ideas are rather more tenacious.
To your point, a nod to more contemporary behavioral economic schools of thought would be useful. As would pointing out how rhetorical economics has not kept apace.
Agapitov later gave a long interview to Meduza explaining the decision. It's surprisingly honest. Here is an interesting quote:
In America, in recent years, both in our company and in the media, various minorities have been actively protected and people are very cautious about the dismissal of gays, blacks, and more recently, Asians. But in Xsolla, we did not give immunity to these groups, because all decisions that a human makes, from the point of view of Americans, have a risk of being biased, and our algorithmic solution is as unbiased as possible. Therefore, from the point of view of American media and American civil society, for us it is much better and more indisputable than if some manager fired someone.
