David Warsh: How America can get out of its political mess

Not much “unum’’ lately

SOMERVILLE, Mass.

The end of Joe Biden’s difficult first year in office evoked all kinds of comparisons. New York Times columnist Bret Stephens recalled successful presidential partnerships with strong chiefs of staff – Ronald Reagan and Howard Baker, George H.W. Bush and James Baker.  Stephens asked, “What’s Tom Daschle up to these days?”  Nate Cohn, also in The Times, compared Biden’s legislative strategy to that of Franklin D. Roosevelt in 1933, to Biden’s disadvantage.  I asked a friend who has known Biden for forty years.

I don’t think you can pin the things that Bret Stephens doesn’t like about the Biden presidency on the staff…. Is Biden missing someone who could talk him out of bad calls? Could a Tom Daschle serve as a keel for Biden the way Leon Panetta did for Bill Clinton? … Doubtful.  Think back on how Biden ran his campaign in 1987 and in 2020: lots of cooks in the kitchen. The only one he really trusted was his sister. He delegated authority to nobody. His campaigns were organizational [smash-ups]. Some people never change. At least his heart is in the right place.

Myself, I thought of the two-year presidency of Gerald Ford. The common denominator is that both Ford and Biden had to deal with long national nightmares.

As president, Ford had it easy.  After 25 years as a Michigan congressman from Grand Rapids, Republican minority leader for the last nine of them, he was the first political figure to be appointed vice president, under the terms of the 25th Amendment. Vice President Spiro Agnew resigned in October 1973, having plead guilty to a felony charge of tax evasion. Ford succeeded him in December. When Richard Nixon resigned the presidency in August, 1974, after an especially damaging White House tape recording was released, Ford was sworn in.

In his inaugural address, Ford stated “[O]ur long national nightmare is over. Our Constitution works; our great republic is a government of laws and not of men.”  A month later he pardoned Nixon for any crimes he might have committed as president.  Nixon’s acceptance was widely viewed as tantamount to an admission of guilt, and the former president withdrew from public life pretty much altogether. Ford’s two years in office were a stream of politics as usual. Disapproval of the pardon weighed against him; so did the fall of Saigon, in April 1975. He ran for the presidency in 1976, but was defeated by Jimmy Carter, governor of Georgia.

As president, Biden faces almost the opposite situation.  First, Trump lost the 2020 election, which he then falsely claimed he had won, Next, he apparently sought to interfere with the vote of the Electoral College, for which he is now under investigation.  He continues to interfere in Republican primaries, and has threatened to mount a second presidential campaign. Meanwhile, much of Biden’s ambitious legislative agenda has bogged down and his popularity has dwindled in public opinion polls.

What chain of events will allow some future president to pronounce a benediction on the Trump nightmare? My hunch is that a relatively moderate Republican with no previous ties to Trump can be elected, possibly in 2024; if not, in 2028.  That is easier said than done. The problem is getting by the Republican convention.  It all depends in large measure on the results of the mid-term elections; on the Republican primaries in 2024; and on Biden’s standing at the end of his term, when he will be 82 years old. .

Republican contenders are already edging away from Trump, Gov. Glenn Youngkin, in Virginia; Gov. Ron DeSantis, in Florida.  It is not necessary to disavow Trump’s political platform, if anyone besides Joe  Biden remembers what it was – less supply-chain globalization; more domestic infrastructure investment; immigration reform (whatever that is!); recalibration of foreign relations, China and Russia in particular.  All these positions are capable of commanding support among independent voters

It is Trump himself whose character must be thoroughly rejected. That will happen by degrees.   There will be no pardon this time. The next president, whoever it is, will continue to leave matters up to the courts. And, sooner or later, the lingering nightmare will end.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay first ran.

David Warsh: Meet the Putin-run CSTO; The Monitor's Fred Weir explains Russia well

Emblem of the Russia-led Collective Security Treaty Organization

SOMERVILLE, Mass.

I started writing about Russia in July, 2002, with “The Thing’s a Mess,” a glimpse of a story from the kleptomaniacal decade that followed the collapse of the USSR:  how a prominent Harvard economist, his wife and two sidekicks, working in Russia on behalf of the U.S. State Department, covered by high-level friends in the Clinton administration, had been caught seeking to cut to the head of the queue to enter the country’s  new mutual- fund business with a firm of their own.

This column followed the saga through the U.S. invasion of Iraq; Vladimir Putin’s objections; his brief 2008 war in former-Soviet Georgia to caution against further NATO expansion; Ukraine’s Maidan protest of 2014 and its aftermath; and the 2016 election of Donald Trump. Its little book, Because They Could: The Harvard Russia Scandal (and NATO Expansion) after Twenty-Five Years, appeared in 2018.

I still scan four daily newspapers to see what government sources are saying about Russia. I look regularly at Johnson’s Russia List, a Web-based compendium with a good eye for non-standard views. But mostly I form my views from dispatches of Fred Weir, Moscow correspondent for the Boston-based Christian Science Monitor. They are thoughtful, well-informed, and empathetic.

Last week I read three Weir articles to which I am entitled for the month (you can do the same).  Why Russia’s troop surge near Ukraine may really be a message for the West  made clear that the aim of large troop deployments – for the second time in a year – was to concentrate minds on Russian demands in Kyiv and the West. Russia want guarantees that Ukraine and other former Soviet states won’t join NATO as a basis for regional stability.

How the Kazakhstan crisis reveals a bigger post-Soviet problem explains the Collective Security Treaty Organization (CSTO), the six-member post-Soviet, Russian-led military alliance that intervened briefly in Kazakhstan to restore order and preserve the current poo-Moscow government. Weir wrote, “The swift and efficient injection of 2,600 troops [mostly Russian paratroopers, but contingents from Armenia, Belarus, Tajikistan, and Kyrgyzstan as well] demonstrated an unprecedented level of elite solidarity among emerging post-Soviet states, which are often depicted as allergic to Russian leadership.”

What’s in a name? For Russia’s “Putin Generation,” not as much as you’d think contrasted the experiences of Russians born in the 21st Century with those of those of their grandparents and parents.  Russians born after World War II lived lives of enforced conformity and struggled to satisfy basic consumer needs, Weir writes, before the disintegration of Soviet economic life in the ‘80’s gave way to the desperate 90’s, when people reinvented themselves while struggling to survive.

Instead, this [Putin] generation, at least among those young people that the Monitor interviewed, seems to have a sense of optimism about life and a desire to reach beyond simple material security and do something to improve the world around them. That’s something relatively new in Russia.

Despite his ubiquity in their lives, Mr. Putin is not a symbol or icon to his namesake generation, many experts say, but merely a flashy pop-sociology way to demarcate them without taking into account social class, education, gender, and other critical markers.

When I was finished reading my three stories, I subscribed to The Monitor and read a fourth:  Russian human rights group under threat: What soured the Kremlin? It was written before Russia’s Supreme Court shut down Memorial, a human-rights organization formed in the buoyant days of perestroika to document Soviet-era abuse, for having violated the country’s intricate “foreign agent” laws.

Weir wrote,  “[M]ost experts see [the decision] as part of an accelerating campaign to close down any space for independent political action or criticism amid deepening antagonism with the West, a stagnating economy, and uncertainties about the continuing stability of Mr. Putin’s regime.”

In other words, there is still plenty of room for improvement in Russian civil society.  I doubt, however, there will be war in Ukraine. Putin has made his point more forcefully than ever about the cavalier disrespect that America has shown since 1992. My sense is that he has been doing a pretty good job of putting his country back on its feet, after a surpassingly difficult century. I don’t have that feeling about Xi Jinping and China. But the situation that concerns me most is that of my own country. Bring on those mid-term elections!  There is a great deal of rebuilding to begin.

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Here are  complementary links to a handful of especially interesting sessions at the American Economic Association meetings on Zoom earlier this month.  Eight of the discussions deal with important meat-and-potatoes issues, while the ninth link connects to the hour-long lecture on preference formation, by Nathan Nunn, of Harvard University,  that I found so interesting and mentioned last week.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column originated.

The First Church of Christ, Scientist in Boston, with the mother church and administrative headquarters of the denomination

David Warsh: On why 'not every couple should have a pre-nup'

“The Marriage Contract,’’ by Flemish artist Jan Josef Horemans the Younger, circa 1768

SOMERVILLE, Mass.

The annual meetings of the American Economic Association convention unfolded over the weekend, on Zoom.  In Boston, where AEA members had hoped to meet in person, it snowed. After I shoveled (and read the news from Kazakhstan), I went through the motions, watching half a dozen sessions over two days, all of them interesting, none of them possessing the elusive quality of newsworthiness, at least where my column Economic Principals is concerned, given  the rest of the work at hand.

So I turned instead to two more deliverable items of interest:  the Kenneth J. Arrow Lecture at Columbia University, which David Kreps, of Stanford University’s Graduate School of Business, delivered in Manhattan last month; and an intriguing new paper by William A. Barnett, of the University of Kansas, editor of Macroeconomic Dynamics and first president of the Society for Economic Measurement.

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Kreps, described by Columbia’s José  Scheinkman as “one of the most accomplished theorists of our generation” (“and our generation wasn’t bad”), spoke under the title “Not Every Couple Should Have a Pre-Nup: How the Context of Exchange and Experience Affect Personal Preferences, and Why This Matters Both to Economic Theory and to Practical Human Resource Management.” The reference is to a long ago BusinessWeek column by the late Gary Becker, of the University of Chicago.

If a contract were required before a couple could legally marry, Becker argued, no bad vibes or stigma would attach to divorce.  Not so fast, Kreps countered.  There was abundant reason to suspect that preferences are not fixed; that such contracts might interfere with their evolution over the course of a marriage.  He proceeded to carefully sort through the implications, in the manner he learned as a close reader of Arrow.

Since the World War II, mainstream economics had become “mathematical,” Kreps said. Everyone understood what he meant: formal models had become the standard means of professional discourse. Developments then came in two broad waves. The first wave, between 1945 and 1970, developed choice theory, price theory and general-equilibrium theory, he said.

The second wave, beginning in 1970 and not over yet, consisted of information economics: “getting serious about the formation of beliefs, especially beliefs about the actions of other economic agents (and how they will react to your own actions).”

“It is well past time for the third wave,” he continued, “Getting serious about preference-determination and preference-evolution.”  He connected the movement to concerns that Arrow had expressed as long as fifty years ago.  He cited a couple of present-day books as  serious curtain-raising work – Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being,  by George Akerlof and Rachel Kranton; and The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens, by Samuel Bowles. And he elaborated his own views, “as a commentator, not an originator” – of the extensive careful modeling and testing that would be necessary to establish preference formation as a contribution to serious economics.

On “shaky grounds,” Kreps concluded, “I contend that taking more seriously how preferences are affected by context and experience within context, will— on net — be good for our discipline.” Joseph Stiglitz, of Columbia University, contributed a lively discussion.

All the more reason then, to tune in, when you can, to the Distinguished Lecture that Nathan Nunn, of Harvard University, delivered to the AEA meetings on Friday.  A recording of “On the Dynamics of Human Behavior: The Past, Present, and Future of Culture, Conflict, and Cooperation” presumably will be available for free viewing on the AEA Web site in a day or two.  If you like this sort of thing, it is definitely worth the wait.

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Barnett is less well-known in the profession than is Kreps, but he is an unusually interesting gadfly, a talented outsider with a knack for connecting with talented insiders over the course of a long career. Trained as a rocket scientist at the Massachusetts Institute of Technology, he spent most of the 1960s at Rocketdyne in suburban Los Angeles before leaving in 1969 for Carnegie Mellon University, and a PhD in statistics.

After seven years in the Special Studies Section of the Federal Reserve Board, a unit since abolished, Barnett left with the conviction that instead of depending on classical accounting procedures, the central bank should be using modern methods devised in the 1920s by the French economist François Divisia. a founder of the Econometric Society, and not well-understood by Anglophone economists until 1973.  Erwin Diewert, of the University of British Columbia, suggested employing a class of index numbers. known as “superlative” indices, as a suitable alternative to the Fed’s accounting aggregates. Barnett continued to advocate an approach known as the Törnqvist-Theil Divisia index. (Elaboration added)

In 2012, MIT Press published Barnett’s Getting It Wrong: How Faulty Monetary Statistics Undermine the Fed, the Financial System, and the Economy. He has been lobbying for the change (the “Barnett Critique”) ever since, first at the University of Texas, then Washington University, and, since 2002, at the University of Kansas. He was a founder of the Center for Financial Stability, a Manhattan-based think tank, and is director of one of its programs, as well.

Last week a paper by Barnett and four others circulated widely on the Internet.  “Shilnikov chaos, low interest rates, and New Keynesian macroeconomics,” from the latest Journal of Economic Dynamics and Control, was sufficiently interesting that Barnett arranged to have it published open access online. “[I]t might be very important,” he wrote.

I wrote back to say that Shilnikov chaos attractors were well above my paygrade.  Barnett replied in plain English:

We have another paper about how to fix the problem.  It isn’t difficult to fix.  The source of the problem is that attaching a myopic interest rate feedback equation (Taylor rule) to the economy’s dynamics without a long run terminal condition alters the dynamics of the system to produce downward drift in interest rates.  Our results produce an amazing match to the 30-year downward drift of interest rates into the current liquidity trap.  The solution is for the Fed also to have a second policy instrument to impose a long run anchor (no surprise to the ECB).  Since the short run interest rate is useless as a policy instrument at the zero lower bound, central banks are now experimenting with other instruments.  It would have been better if they had done that before interest rates had drifted down into the lower bound.

That wasn’t hard to understand at all, at least intuitively. Ever since William Harvey in 1628 demonstrated the heart’s circulation of the blood, economists, from John Law and François Quesnay to the designers of today’s flow of funds accounts, have sought to understand the mysteries of the economy’s circular flow of money, products and services. Though never a boatswain, I have had enough experience anchoring boats in sometimes powerful currents to recognize the virtues of having more than one anchor out, sometimes in a completely different direction.

The last fifty years have been a wild ride for the Fed’s managers of the world’s money. Don’t expect to enter a quiet harbor any time soon.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column originated.

David Warsh: Nobel economics prize committee needs to look at the lessons of the 2008 crisis

Lehman Brothers headquarters in New York before the firm’s bankruptcy in September 2008 sent the world into the worst financial panic since the Great Depression.

SOMERVILLE, Mass.

It was a substantial responsibility the government of Sweden licensed when, in the 1960s, it gave its blessing to the creation of a prize in economic sciences in memory of Alfred Nobel, to be administered by Nobel Foundation and awarded by the Royal Swedish Academy of Sciences. That bold action wasn’t easy, but it was as easy as it would get.

The Cold War smoldered ominously between two very different systems, “capitalist” and “communist.” In the West, the prestige of the Keynesian revolution was at its height, compared by some historians of science to the Darwinian, Einsteinian, Freudian and quantum revolutions. And the Science Academy possessed seventy-five years of experience as administrators of the physics and chemistry awards that were among the five prizes mandated by Nobel’s handwritten will.

Since 1969, when the first economics prize was awarded, the committee that oversees it has done pretty well, at least in the judgment of those who have followed the program closely.  The Nobel system has imposed a narrative order on various developments since the 1940s in an otherwise fractious profession, often by recognizing its close neighbors. Goodness knows where we in the audience would be without it – still reading Robert Heilbroner’s The Worldly Philosophers, perhaps, first published in 1953, as though nothing since had happened.

Now, however, the Nobel Prize in economic sciences is facing a crucial test. The authorities need to give a prize to clarify understanding inside and outside the profession of the events of 2008, when emergency lending and institutional restructuring by the world’s central banks halted a severe financial panic. What might have turned into a second Great Depression was thus averted. Governments’ responsibilities as lenders of last resort were the heart of the issue over which Keynesians and Monetarists jousted for seventy-five years after 1932.

Either the Swedes have something to say about what happened in 2008, not necessarily this year, but soon, or else they don’t. Their discussions are well underway. The credibility of the prize is at stake.

The Nobel committees that administered the prizes in physics and chemistry faced similar problems in their early years.  When the first prizes were awarded, in 1901, well-established discoveries dating from the 1890s made the decisions relatively noncontroversial – the discovery of x-rays, radioactivity, the presence of inert gases in the atmosphere, and the electron. Foreign scientists were invited to make nominations; Swedish experts on the small committees, several of them quite cosmopolitan, made the decisions. The members of the much larger academy customarily accepted their recommendations.

But a pair of scientific revolutions, in quantum mechanics and relativity theory, soon generated “problem candidacies” that took several years to resolve.  Max Planck, first seriously considered in 1908 for his discovery of energy quanta, was final recognized in 1918. Albert Einstein, first nominated in 1910 for his special relativity theory, was recognized only in 1921, and then for his less important work on the photo-voltaic effect.

It is thanks to Elisabeth Crawford, the Swedish historian of science who first won permission to study the Nobel archive, that we know something about behind-the-scenes campaigns among rival scientists that underlay these decisions. Overlooked altogether may have been the significance of the work of Ludwig Boltzmann, who committed suicide in 1906.

The economics committee has what it needs to make a decision about 2008. The Swedish banking system suffered a similar crisis in the early Nineties and dealt with it in a similar way. Fifteen years later, Swedish economists paid close attention to what was happening in New York and Washington,

In 2017, in cooperation with the Swedish House of Finance, the committee organized a symposium on money and banking, at which the leading interpreters of the 2008 crisis contributed discussions. (You can see here for yourself some of the sessions from that two-and-half day affair, but good luck making sense of the program.  That’s what the committee exists to do – after the fact.)

A previous symposium, in 1999, considered economics of transition from planned economies, and wisely steered off.  No such inquiry was required to arrive the sequence of prizes that interpreted the  disinflation that  followed the Volcker stabilization – Robert Lucas (1995), Finn Kydland and Edward Prescott (2004), Thomas Sargent and Christopher Sims (2012) – a process that unfolded more slowly and less certainly than the intervention of 2008.

The money and banking prize should be understood as fundamentally a prize for theory. For all the talk in the last few years about the rise of applied economics, the Nobel narrative, at least as I understand it, has emphasized mainly surprises of various sorts that have emerged from fresh applications of theory, in keeping with Einstein’s dictum that it is the theory that determines what we can observe.

Some of these applications may have reached dead ends, leading to new twists and turns.  The advent of cheap, powerful computer and designer software in the Nineties handed economists a power new tool, and two recent prizes have reflected the uses to which the tools have been put – devising randomized controlled tests of economic policies, and drawing conclusion from carefully-studied “natural experiments.” But otherwise “the age of the applied economist” may be mainly a marketing campaign for a generation of young economists eager to advance their careers. It won’t be an age in economic science until the Nobel timeline says it is.

As a journalist, I’ve covered the field for forty years.  My impression is that many exciting developments have occurred in that time that have not yet been recognized, some of them quite surprising, many of them reassuring. As the Nobel view of the evolution of the field is revealed in successive Octobers, the effect may be to buttress confidence in the field and diminish skepticism about its roots – or not. As for natural experiments, it is hard to beat the events of 2008. The Swedes have many nominations.  What they must do now is decide.

David Warsh, an economic historian and a veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this essay first appeared.

David Warsh: A smelly red herring in Trump-Russia saga

Herrings "kippered" by smoking, salting and artificially dyeing until made reddish-brown, i.e., a "red herring". Before refrigeration kipper was known for being strongly pungent. In 1807, William Cobbett wrote how he used a kipper to lay a false trail, while training hunting dogs—a story that was probably the origin of the idiom.

Grand Kremlin Palace, in Moscow, commissioned 1838 by Czar Nicholas I, constructed 1839–1849, and today the official residence of the president of Russia

SOMERVILLE, Mass.

A red herring, says Wikipedia, is something that misleads or distracts from a relevant and important question. A colorful 19th Century English journalist, William Cobbett, is said to have popularized he term, telling a story of having used strong-smelling smoked fish to divert and distract hounds from chasing a rabbit.

The important questions long have had to do to do with the extent of Trump’s relations with powerful figures in Russian before his election as president; and with whether the FBI did a competent job of investigating those charges.

The herring in this case is the Durham investigation of various forms of 2016 campaign mischief, including (but not limited to) the so-called “Steele Dossier’’. The inquiry into Trump’s Russia connections was furthered (but not started) by persons associated with Hillary Clinton’s campaign. {Editor’s note: The political investigations of Trump’s ties with Russia started with anti-Trump Republicans.}

Trump’s claims that his 2020 defeat were the result of voter fraud have been authoritatively rejected. What, then, of his earlier fabrication? It has to so with the beginnings of his administration, not its end. The proposition that Clinton campaign dirty tricks triggered a tainted FBI investigation and hamstrung what otherwise might have been promising presidential beginning has been promoted for five years by Trump himself. The Mueller Report on Russian interference in the 2016 election was a “hoax,” a “witch-hunt’’ and a “deep-state conspiracy,” he has claimed.

Today, Trump’s charges are being kept on life-support in the mainstream press by a handful of columnists, most of them connected, one way or another, with the editorial page of The Wall Street Journal.  Most prominent among them are Holman Jenkins, Kimberly Strassel and Bret Stephens, now writing for The New York Times.

Durham, a career government prosecutor with a strong record as a special investigator of government misconduct (the Whitey Bulger case, post 9/11 CIA torture) was named by Trump to be U.S. attorney for Connecticut in early 2018.  A year later, Atty. Gen. William Barr assigned him to investigate the president’s claims that suspicions about his relations with Russia had been inspired by Democratic Party dirty tricks, fanned by left-wing media, and pursued by a complicit FBI. Last autumn, Barr named Durham a special prosecutor, to ensure that his term wouldn’t end with the Biden administration.

There is no argument that Durham has asked some penetrating questions.  The “Steele Dossier,” with its unsubstantiated salacious claims, is now shredded, thanks mostly to the slovenly methods of the man who compiled it, former British intelligence agent Christopher Steele.   Durham’s quest to discover the sources of information supplied to the FBI is continuing. The latest news of it was supplied last week, as usual, by Devlin Barrett, of The Washington Post. (Warning: it is an intricate matter.)

What Durham has not begun to demonstrate is that, as a duly-elected president, Donald Trump should have been above suspicion as he came into office.  There was his long history of real estate and other business dealings with Russians. There was the appointment of lobbyist Paul Manafort as campaign chairman in June 2016;  the secret beginning on July 31 of an FBI investigation of links between Russian officials and various Trump associates, dubbed Crossfire Hurricane; Manafort’s forced resignation in August; the appointment of  former Defense Intelligence Agency Director  Michael Flynn as National Security adviser and his forced resignation after 22 days; Trump’s demand for “loyalty” from FBI Director James Comey at a private dinner a week after his inauguration, and Comey’s abrupt dismissal four months later (which triggered Robert Mueller’s appointment as special counsel to the Justice Department): none of this has been shown to do Hillary Clinton’s campaign machinations.

The Steele Dossier did indeed embarrass the media to a limited extent – Mother Jones and Buzzfeed in particular – but it was President Trump’s own behavior, not dirty tricks, that disrupted his first months in office.  Those columnists who exaggerate the significance of campaign tricks are good journalists.  So why keep rattling on?

In the background is the 30-year obsession of the WSJ editorial page with Bill and Hillary Clinton. WSJ ed page coverage of the story of John Durham’s investigation reminds me of Blood and Ruins, The Last Imperial War 1931-1945 (forthcoming next April in the US), in which Oxford historian Richard Overy argues that World War II really began,  not in 1939 or 1941, but with the Japanese invasion of Manchuria in 1931. Keep sniffing around if you like, but what you smell is smoked herring.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay originated.

© 2021 DAVID WARSH

David Warsh: Perhaps we're in the Third Reconstruction

Former slaves voting in New Orleans in 1867. After Reconstruction ended, in 1977, most Black people in much of the South lost the right to vote and didn’t regain it until the 1960s.

SOMERVILLE, Mass.

“Reconstruction” (1865–1877), as high school students encounter it, is the period of a dozen years following the American Civil War. Emancipation and abolition were carried through; attempts were made to redress the inequities of slavery; and problems were resolved involving the full re-admission to the Union of the 11 states that had seceded.

The latter measures were more successful than the former, but the process had a beginning and an end. After the back-room deals that followed the disputed election of 1876, the political system settled in a new equilibrium.

I’ve become intrigued by the possibility that one reconstruction wasn’t enough.  Perhaps the American republic must periodically renegotiate the terms of the agreement that its founders reached in the summer of 1787 – the so-called “miracle in Philadelphia,” in which the Constitution of the United States was agreed upon, with all its striking imperfections.

Is it possible that we are now embroiled in a third such reconstruction?

The drama of Reconstruction is well documented and thoroughly understood. It started with Lincoln’s Gettysburg Address, continued with his Second Inaugural address, the surrender of the Confederate Army at Appomattox Courthouse; emerged from the political battles Andrew Johnson’s administration and the two terms of President  U.S. Grant; and climaxed with the passage of the Thirteenth, Fourteenth and Fifteenth Amendments to the Constitution – the “Reconstruction Amendments.” It ended with the disputed election of 1876, when Southern senators supported the election of Rutherford B. Hayes, a Republican, in exchange for a promise to formally end Reconstruction and Federal occupation he following year.

The shameful truce that followed came to be known as the Jim Crow era. It last 75 years. The subjugation of African-Americans and depredations of the Ku Klux Klan were eclipsed by the maudlin drama of reconciliation among of white veterans – a story brilliantly related in Race and Reunion: The Civil War in American Memory, by David Blight, of Yale University.  For an up-to-date account, see The Second Founding: How the Civil War and Reconstruction Remade the Constitution, by Eric Foner, of Columbia University.

The second reconstruction, if that is what it was, was presaged in 1942 by Swedish economist Gunnar Myrdal’s book, An American Dilemma: The Negro Problem and American Democracy, commissioned by the Carnegie Corporation. The political movement commenced in 1948 with the desegregation of the U.S. armed forces. The civil rights movement lasted from Rosa Parks’s arrest, in 1955, through the March on Washington, in 1963, at which Martin Luther King Jr. made delivered his “I Have a Dream” speech, and culminated in the passage of the 1965 Voting Rights Act.  Repression was far less violent than on the way to the Jim Crow era. There were murders in the civil rights era, but mostly they made newspaper front pages.

And while the second reconstruction entered on race, many other barriers were breached in those rears as well: ethnicity, gender and sexual preference. In Roe v Wade the Supreme Court established a constitutional right to abortion a decade after the invention of the Pill made pregnancy a fundamentally deliberate decision.

How do reconstructions end?  In the aftermath of decisive elections, it would seem  – in the case of the second reconstruction, with the 1968 election of Richard Nixon, based on a Southern strategy devised originally by Barry Goldwater. Nixon was in many ways the last in a line of liberal presidents who followed Franklin Roosevelt. He had promised to “end the {Vietnam} war” the war and he did.  An armistice of sorts – Norman Lear’s All in the Family television sit-com – preceded his Watergate-inspired resignation. Peace lasted until the election of President Barack Obama.

So what can be said about this third reconstruction, if that is what it is?  Certainly it is still more diffuse – not just Black Lives Matter, but #MeToo, transgender rights, immigration policy and climate change, all of it aggravated by the election of Donald Trump.  This latest reconstruction is often described as a culture war, by those who have never seen an armed conflict.  How might this episode end? In the usual way, with a decisive election. Armistice may takes longer to achieve.

For a slightly different view of the history, see Bret Stephens’s Why Wokeness Will Fail. We journalists are free to voice opinions, but we must ultimately leave these questions to political leaders, legal scholars, philosophers, historians and the passage of time. I was heartened, though, at the thought expressed by economic philosopher John Roemer, of Yale University, who knows much more than I do about these matters, when he wrote the other day to say “I think the formulation of the first, second, third…. Reconstructions is incisive. It reminds me of the way we measure the lifetime of a radioactive mineral. We celebrate its half-life, three-quarters life, etc….. but the radioactivity never completely disappears.  Racism, like radioactivity, dissipates over time but never vanishes.”

 David Warsh is a veteran columnist and an economic historian He’s proprietor of Somerville-based economicprincipals.com, where this essay first ran.

David Warsh: Pinning things down using history

SOMERVILLE, Mass.

In Natural Experiments of History, a collection of essays published a decade ago, editors Jared Diamond and James Robinson wrote, “The controlled and replicated  laboratory experiment, in which the experimenter directly manipulates variables,  is often considered the hallmark of the scientific method” – virtually the only approach employed in physics, chemistry, molecular biology.

Yet in fields considered scientific that are concerned with the past – evolutionary biology, paleontology, historical geology, epidemiology, astrophysics – manipulative experiments are not possible. Other paths to knowledge are therefore required, they explained, methods of “observing, describing, and explaining the real world, and of setting the individual explanations within a larger framework “– of “doing science,” in other words.

Studying “natural experiments” is one useful alternative, they continued – finding systems that are similar in many ways but which differ significantly with respect to factors whose influence can be compared quantitatively, aided by statistical analysis.

Thus this year’s Nobel Prize in Economic Sciences recognizes Joshua Angrist, 61, of the Massachusetts Institute of Technology; David Card, 64, of the University of California, Berkeley; and Guido Imbens, 58, of Stanford University, “for having shown that natural experiments can answer central questions for society.”

Angrist, burst on the scene in in 1990, when “Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security administrative records” appeared in the American Economic Review. The luck of the draw had, for a time, determined who would be drafted during America’s Vietnam War, but in the early 1980s, long after their wartime service was ended, the earnings of white veterans were about 15 percent less than the earnings of comparable nonveterans, Angrist showed.

About the same time, Card had a similar idea, studying the impact on the Miami labor market of the massive Mariel boatlift out of Cuba, but his paper appeared in the less prestigious Industrial and Labor Relations Review.  Card then partnered with his colleague, Alan Krueger, to search for more natural experiments in labor markets.  Their most important contribution, a careful study of differential responses in nearby eastern Pennsylvania to a minimum-wage increase in New Jersey, appeared as was Myth and Measurement: The New Economics of the Minimum Wage (Princeton, 1994). Angrist and Imbens, meanwhile, mainly explored methodological questions.

Given the rule that no more than three persons can share a given Nobel prize, and the lesser likelihood that separate prizes might be given in two different years, Krueger’s tragic suicide, in 2019, rendered it possible to cite, in a single award, Card, for empirical work, and Angrist and Imbens, for methodological contributions.

Princeton economist Orley Ashenfelter, who, with his mentor Richard Quandt, also of Princeton, more or less started it all, told National Public Radio’s Planet Money that “It’s a nice thing because the Nobel committee has been fixated on economic theory for so long, and now this is the second prize awarded for how economic analysis is now primarily done. Most economic analysis nowadays is applied and empirical.” [Work on randomized clinical trials was recognized in 2019.]

In 2010 Angrist and Jörn-Staffen Pischke described the movement as “the credibility revolution.” And in the The Age of the Applied Economist: the Transformation of Economics since the 1970s. (Duke, 2017), Matthew Panhans and John Singleton wrote that “[T]he missionary’s Bible today is less Mas-Colell et al and more Mostly Harmless Econometrics: An Empiricist’s Companion (Angrist and Pischke, Princeton, 2011)

Maybe so.  Still, many of those “larger frameworks” must lie somewhere ahead.

“History,’’ by Frederick Dielman (1896)

That Dale Jorgenson, of Harvard University, would be recognized with a Nobel Prize was an all but foregone conclusion as recently as twenty years ago. Harvard University had hired him away from the University of California at Berkeley in 1969, along Zvi Griliches, from the University of Chicago,  and Kenneth Arrow, from Stanford University (the year before). Arrow had received the Clark Medal in 1957, Griliches in 1965; Jorgenson was named in 1971. “[H]e is preeminently a master of the territory between economics and statistics, where both have to be applied in the study of concrete problems.” said the citation. With John Hicks, Arrow received the Nobel Prize the next year.

For the next thirty years, all three men brought imagination to bear on one problem after another. Griliches was named a Distinguished Fellow of the American Economic Association in 1994; he died in 1999. Jorgenson, named a Distinguished Fellow in 2001, began an ambitious new project  in 2010 to continuously update measures of output and inputs of capital, labor, energy, materials and services for individual industries. Arrow returned to Stanford in 1979 and died in 2017.

Call Jorgenson’s contributions to growth accounting “normal science” if you like – mopping up, making sure, improving the measures introduced by Simon Kuznets, Ricard Stone, and Angus Deaton.  It didn’t seem so at the time. The moving finger writes, and having writ, moves on.

                                                                xxx

Where are the women in economics, asked Tim Harford, economics columnist of the Financial Times the other day. They are everywhere, still small in numbers, especially at senior level, but their participation is steadily growing. AEA presidents include Alice Rivlin (1986); Anne Krueger (1996); Claudia Goldin (2013); Janet Yellen (2020); Christina Romer (2022), and Susan Athey, president elect (2023).  Clark medals have been awarded to Athey (2007), Esther Duflo (2010), Amy Finkelstein (2012), Emi Nakamura (2019), and Melissa Dell (2020).

Not to mention that Yellen, having chaired the Federal Reserve Board for four years, today is secretary of the Treasury; that Fed governor Lael Brainerd is widely considered an eventual chair; that Cecilia Elena Rouse chairs of the Council of Economic Advisers; that Christine Lagarde is president of European Central Bank; and that Kristalina Georgieva is managing director of the International Monetary Fund, for a while longer, at least.

The latest woman to enter these upper ranks is Eva Mörk, a professor of economics at Uppsala University, apparently the first female to join the Committee of the Royal Swedish Academy of Sciences that recommends the Economics Sciences Prize, the last barrier to fall in an otherwise egalitarian institution. She stepped out from behind the table in Stockholm last week to deliver a strong TED-style talk (at minutes 5:30-18:30 in the recording) about the whys and wherefores of the award, and gave an interesting interview afterwards.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column originated.

David Warsh: Goldin's marriage manual for the next generation

SOMERVILLE, Mass.

For many people, the COVID-19 pandemic has been an eighteen-month interruption. Survive it, and get back to work. For those born after 1979, it may prove to have been a new beginning. Women and men born in the 21st Century may have found themselves beginning their lives together in the midst of yet another historic turning point.

That’s the argument  that Claudia Goldin advances in Career and Family: Women’s Century-long Journey toward Equity (Princeton, 2021). As a reader who has been engaged as a practitioner in both career and family for many years, I aver that this is no ordinary book. What does greedy work have to do with it?  And why is the work “greedy,” instead of “demanding” or “important?” Good question, but that is getting ahead of the story.

Goldin, a distinguished historian of the role of women in the American economy, begins her account in 1963, when Betty Friedan wrote a book about college-educated women who were frustrated as stay-at-home moms.  Their problem, Friedan wrote, “has no name.” The Feminine Mystique caught the beginnings of a second wave of feminism that continues with puissant force today.  Meanwhile, Goldin continues, a new “problem with no name” has arisen:

 Now, more than ever, couples of all stripes are struggling to balance employment and family, their work lives and home lives.  As a nation, we are collectively waking up to the importance of caregiving, to its value, for the present and future generations. We are starting to fully realize its cost in terms of lost income,  flattened careers, and trade-offs between couples (heterosexual and same sex), as well as the particularly strenuous demands on single mothers and fathers.  These realizations predated the pandemic but have been brought into sharp focus by it.

A University of  Chicago-trained economist; the first woman tenured by Harvard’s economics department; author of five  important books, including, with her partner, Harvard labor economist Lawrence Katz, The Race between Education and Technology (Harvard Belknap, 2010); recipient of an impressive garland of honors, among them the Nemmers award in economics; a former president of the American Economic Association:  Goldin has written a chatty, readable sequel to Friedan, destined  itself to become a paperback best-seller – all the more persuasive because it is rooted in the work of hundreds of other labor economists and economic historians over the years.  Granted, Goldin is expert in the history of gender only in the United States; other nations will compile stories of their own.  .

To begin with, Goldin distinguishes among the experiences of five roughly-defined generations of college-educated American women since the beginning of the twentieth century.  Each cohort merits a chapter. The experiences of gay women were especially hard to pin down over the years, given changing norms.

In “Passing the Baton,” Goldin characterizes the first group, women born between 1878-97, as having had to choose between raising families and pursuing careers.  Even the briefest biographies of the lives culled from Notable American Women make interesting reading: Jeannette Rankin, Helen Keller, Margaret Sanger, Katharine McCormick, Pearl Buck, Katharine White, Sadie Alexander, Frances Perkins. But most of that first generation of college women never became more prominent than as presidents of the League of Women Voters or the Garden Club.  They were mothers and grandmothers the rest of their lives.

In “A Fork in the Road,” her account of the generation born between 1898 and 1923,  Goldin dwells on 75-year-old Margaret Reid, whom she frequently passed at the library as a graduate student at Chicago, where Reid had earned a Ph.D. in in economics  in 1934. (They never spoke; Goldin, a student of Robert Fogel, was working on slavery then.)  Otherwise, this second generation was dominated by a pattern of jobs, then family. The notable of this generation tend to be actresses – Katharine Hepburn, Bette Davis, Rosalind Russell, Barbara Stanwyck – sometimes playing roles modeled on real-world careers, as when Hepburn played a world-roving journalist resembling Dorothy Thompson in Woman of the Year.  

In “The Bridge Group,” Goldin discusses the generation born between 1924-1943, who raised families first and then found jobs – or didn’t find jobs. She begins by describing what it was like to read Mary McCarthy’s novel, The Group (in a paper-bag cover), as a 17-year-old commuting from home in East Queens to a summer job in Greenwich Village.  It was a glimpse of her parents’ lives – the dark cloud of the Great Depression that hung over w US in the Thirties, the hiring bars and marriage bar that turned college-educated women out of the work-force at the first hint of second income.

“The Crossroads with Betty Friedan” is about the Fifties and the television shows, such as I Love Lucy, The Honeymooners, Leave It to Beaver and Father Knows Best that, amid other provocations, led Betty Friedan to famously ask, “Is that all there is?” Between the college graduation class of 1957 and the class of 1961, Goldin finds, in an enormous survey by the Women’s Bureau of the U.S. Labor Department, an inflection point.  The winds shift, the mood changes. Women in small numbers begin to return to careers after their children are grown:  Jeane Kirkpatrick, Erma Bombeck, Phyllis Schafly, Janet Napolitano and Goldin’s own mother, who became a successful elementary school principal. Friedan had been right, looking backwards, Goldin concludes, but wrong about what was about to happen.

In “The Quiet Revolution,” members of the generation born between 1944-1957 set out to pursue careers and then, perhaps, form families. The going is hard but they keep at it.  The scene is set with a gag from the Mary Tyler Moore Show in 1972.  Mary is leaving her childhood home with her father, on her way to her job as a television news reporter.  He mother calls out, “Remember to take your pill, dear.” Father and daughter both reply, “I will.”  Father scowls an embarrassed double-take. The show’s theme song concludes, “You’re going to make it after all.” The far-reaching consequences of the advent of dependable birth control for women’s new choices are thoroughly explored.  This is, after all, Goldin’s own generation.

“Assisting the Revolution,” about the generation born between1958-78, is introduced by a recitation of the various roles played by Saturday Night Live star Tina Fey – comedian, actor, writer.  Group Five had an easier time of it. They were admitted in increasing numbers to professional and graduate schools. They achieved parity with men in colleges and surpassed them in numbers.  They threw themselves into careers. “But they had learned from their  Group Four older sisters that the path to career must leave room for family, as deferral could lead to no children,” Golden writes. So they married more carefully and earlier, chose softer career paths, or froze their eggs.  Life had become more complicated.

In her final chapters – “Mind the Gap,” “The Lawyer and the Pharmacist” and “On Call” – Goldin tackles the knotty problem.  The gender earnings gap has persisted over fifty years, despite the enormous changes that have taken place.  She explores the many different possible explanations, before concluding that the difference stems from the need in two-career families for flexibility – and the decision, most often by women, to be on-call, ready to leave the office for home.  Children get sick, pipes break, school close for vacation, the baby-sitter leaves town.

The good news is that the terms of relationships are negotiable, not between equity-seeking partners, but with their employers as well. The offer of parental leave for fathers is only the most obvious example. Professional firms in many industries are addicted to the charrette – a furious round of last-minute collaborative work or competition to meet a deadline. Such customs can be given a name and reduced.  Firms need to make a profit, it is true, but the name of the beast, the eighty-hour week, is “greedy work.”

It is up the members of the sixth group, their spouses and employers, to further work out the terms of this deal.  The most intimate discussions in the way ahear will occur within and among families. Then come board rooms, labor negotiations, mass media, social media, and politics.  Even in its hardcover edition, Career and Family is a bargain. I am going home to start to assemble another photograph album – grandparents, parents, sibs, girlfriends, wife, children, and grandchildren – this one to be an annotated family album.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay first ran.

A "Wife Wanted" ad in an 1801 newspaper
"N.B." means "note well".

David Warsh: The exciting lives of former newspapermen

— Photo by Knowtex

SOMERVILLE, Mass.

After the Internet laid waste to old monopolies on printing presses and broadcast towers, new opportunities arose for inhabitants of newsrooms. That much I knew from personal experience. With it in mind, I have been reading Spooked: The Trump Dossier, Black Cube, and the Rise of Private Spies (Harper, 2021), by Barry Meier, a former reporter for The New York Times and The Wall Street Journal. Meier also wrote Pain Killer: A “Wonder” Drug’s Story of Addiction and Death (Rodale, 2003), the first book to dig in to the story of the Sackler family, before Empire of Pain: The Secret History of the Sackler Dynasty (Doubleday, 2021), by New Yorker writer Patrick Radden Keefe, eclipsed it earlier this year.  In other words, Meier knows his way around. So does Lincoln Millstein, proprietor of The Quietside Journal, a hyperlocal Web site covering three small towns on the southwest side of Mt. Desert Island, in Downeast Maine.

Meier’s book is essentially a story about Glenn Simpson, a colorful star investigative reporter for the WSJ who quit in 2009 to establish Fusion GPS, a private investigative firm for hire.  It was Fusion GPS that, while working first for Republican candidates in early 2016, then for Hillary Clinton’s presidential campaign, hired former MI6 agent Christopher Steele to investigate Donald Trump’s activities in Russia.

Meier, a careful reporter and vivid writer, doesn’t think much of Simpson, still less of Steele, but I found the book frustrating: there were too many stories about bad behavior in the far-flung private intelligence industry, too loosely stitched together, to make possible a satisfying conclusion about the circumstances in which the Steele dossier surfaced, other than information, proven or not, once assembled and packaged, wants to be free. William Cohan’s NYT review of Spooked was helpful: “[W]e are left, in the end, with a gun that doesn’t really go off.”

Meier did include in his book (and repeat in a NYT op-ed) a telling vignette about  Fusion GPS co-founder Peter Fritsch, another former WSJ staffer who in his 15-year career at the paper had served as bureau chief in several cities around the world. At one point, Fritsch phones WSJ reporter John Carreyrou, ostensibly seeking guidance on the reputation of a whistleblower at a medical firm – without revealing that Fusion GPS had begun working for Elizabeth Holmes, of whose blood-testing start-up, Theranos, Carreyrou had begun an investigation.

Fritsch’s further efforts to undermine Carreyrou’s investigation failed. Simpson and Fritch tell their story of the Steele dossier in Crime in Progress (2019, Random House.) I’d like to someday read more personal accounts of their experiences in the private spy trade, I thought, as I put Spooked and Crime in Progress back on the shelf  Given the authors’ new occupations, it doesn’t seem likely those accounts will be written.

By then, Meier’s story had got me thinking about Carreyrou himself. His brilliant reporting for the WSJ, and his 2018 best-seller, Bad Blood: Secrets and Lies in a Silicon Valley Startup (Knopf, 2018, led to Elizabeth Holmes’s trial on criminal charges that began last month in San Jose. Thanks to Twitter, I found, within an hour of its appearance, this interview with Carreyrou, now covering the trial online as an independent journalist.

My head spun at the thought of the leg-push and tradecraft required to practice journalism at these high altitudes. The changes wrought by the advent of the Web and social media have fundamentally expanded the business beyond the days when newspapers and broadcast news were the primary producers of news. In 1972, when I went to work for the WSJ, for example, the entire paper ordinarily contained only four bylines a day.

So I turned with some relief to The Quietside Journal, the Web site where retired Hearst executive Lincoln Millstein covers events in three small towns on Mt. Desert Island, Maine, for some 17,000 weekly readers. In an illuminating story about his enterprise, Millstein told Rick Edmonds, of the Poynter Institute, that he works six days a week, again employing pretty much the same skills he acquired when he covered Middletown, Conn., for The Hartford Courant forty years ago. (Millstein put the Economic Principals column in business in 1984, not long after he arrived as deputy business editor at The Boston Globe).

My case is different. Like many newspaper journalists in the 1980s,  I worked four or five days a week at my day job and spent vacations and weekends writing books. I quit the day job in 2002, but kept the column and finished the book. (It was published in 2006 as Knowledge and the Wealth of Nations: A Story of Economic Discovery).  
Economic Principals subscribers have kept the office open ever since; I gradually found another book to write; and so it has worked out pretty well. The ratio of time spent is reversed: four days a week for the book, two days for the column, producing, as best I can judge, something worth reading on Sunday morning. Eight paragraphs, sometimes more, occasionally fewer: It’s a living, an opportunity to keep after the story, still, as we used to say, the sport of kings.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay first ran.

David Warsh: Looking at a ‘three-pronged approach’ to global warming

Average surface air temperatures from 2011 to 2020 compared to the 1951-1980 average

SOMERVILLE, Mass.

The most memorable theater scene I’ve ever witnessed was performed one summer evening long ago in a courtyard at the University of Chicago. The play was Luigi Pirandello’s Six Characters in Search of an Author, a complicated work from the 1920s about the relationship between authors, the stories they tell, and the audiences they seek.

At one point, a company of actors, having been interrupted in their rehearsal by a family of six seeking a playwright to tell their story, are bickering furiously with their interrupters when, at the opposite end of courtyard, two key members of the family had slipped away, to be suddenly illuminated by a spotlight as they stood beneath a tree to make a telling point: their story was as important as the play – maybe more. The act ended and the lights came up for intermission.

That was the technique known as up-staging with a vengeance, an abrupt diversion of attention from one focal point to another.

I remembered the experience after reading Three Prongs for Prudent Climate Policy, by Joseph Aldy and Richard Zeckhauser, both of the Harvard Kennedy School, a sharply critical appraisal of the prevailing consensus on the prospects for controlling climate change. Delivered originally as Zeckhauser’s keynote address to the Southern Economic Association in 2019, you can read it here for free at Resources for the Future.  Its thirty pages are not easy reading, but they are formidably clear-headed, and I doubt that you can find a better roundup of the situation that the leaders are discussing blah-blah-blah next month at the U.N.’s Climate Change Conference in Glasgow.

The possibility of greenhouse warming was broached 125 years ago by the Swedish physical chemist Svante Arrhenius. The specific effect was discovered by Roger Revelle in 1957, and the growing problem brought into sharp focus in the U.S. by climate scientist James Hansen in Senate testimony in 1988.  It has taken thirty years to reach a broad global consensus about the first of Aldy and Zeckhauser’s three prongs.

“For three decades, advocates for climate change policy have simultaneously emphasized the urgency of taking ambitious actions to mitigate greenhouse gas (GHG) emissions and provided false reassurances of the feasibility of doing so. The policy prescription has relied almost exclusively on a single approach: reduce emissions of carbon dioxide (CO₂) and other GHGs. Since 1990, global CO₂ emissions have increased 60 percent, atmospheric CO₂ concentrations have raced past 400 parts per million, and temperatures increased at an accelerating rate. The one-prong strategy has not worked.’’

A second prong, adaptation, has been added in to most menus in recent years: everything from design changes (moving electric installations to roofs instead of basements) to seawalls, marsh expansions, and resettlement of populations. Adaptations are expensive.  A six-mile long sea barrier with storm surge gates might protect New York City from climate change, but would take 25 years to build.

A third prong of climate policy ordinarily receives little attention. This is amelioration, or “the ‘G’-word,” as the chair of British Royal Society report dubbed it in 2009, meaning the broad topic of geo-engineering. For a dozen years, it was thought possible that fertilizing the southern oceans might grow more plankton, absorb more atmospheric carbon, and feed more fish. Experiments were not encouraging.   The technique considered most promising today is solar-radiation management, meaning creating atmospheric sun-screens for the planet.  The third prong is by far the last expensive of the three.  It is also the most alarming.

Ever since “the year without a summer” of 1816, it has been known that volcanic eruptions, spewing sulfur particles into the atmosphere, produce worldwide net cooling effects. Climate scientists now believe that airplanes could achieve the same effect by spraying chemical aerosols  at high altitudes into the atmosphere.  The trouble is that very little is known with any certainty about the feasibility of such measures, much less their ecological effects on life below.

Many environmentalists fear that the very act of public discussion of solar- radiation management will further bad behavior – create “moral hazard” in the language of economists. Glib talk by enthusiasts of economic growth about cheap and easy redress of climate problems will diminish the imperative to reduce emissions of greenhouse governance, some say. Others think that sulfur in the air above would accelerate acidification in the oceans below. Still others doubt that global governance could be achieved, since such measures would not offset climate change equally in all regions, Rogue nations might undertake projects that they hoped would have purely local effects.

Aldy and Zeckhauser argue that bad behavior may in fact be flowing in the opposite direction.  Climate change is an emotional issue; circumspection with respect to solar-radiation management is the usual stance; opposition to research is often fierce. As a result, very little has been performed. One of the first outdoor experiments – a dry run – was shut down earlier this year.

In his 2018 Nobel lecture, William Nordhaus, of Yale University, saw the problem somewhat differently.

“To me, geo-engineering resembles what doctors call ‘salvage therapy’– a potentially dangerous treatment to be used when all else fails. Doctors prescribe salvage therapy for people who are very ill and when less dangerous treatments are not available. No responsible doctor would prescribe salvage therapy for a patient who has just been diagnosed with the early stage of a treatable illness. Similarly, no responsible country should undertake geo-engineering as the first line of defense against global warming.’’

After a while, it seemed to me that the debate over global warming does indeed bear more than a little resemblance to what goes on in Pirandello’s play. Three possible policy avenues exist. The first is talked about constantly: the second enters the conversation more frequently than before. The third is all but excluded from mainstream discussion.

It’s not so much about what stage of a treatable illness you think we’re in.  Public opinion around the world will determine that, as time goes by. It’s about whether the question of desperate measures should be systematically explored at all.  The three-pronged approach is a policy in search of an author.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay first appeared.

David Warsh: Of sportswriters, race and great news publications

New York Times executive editor Dean Baquet

SOMERVILLE, Mass.

Because it was August, I was reading Tall Men, Short Shorts, the 1969 NBA Finals: Wilt. Russ. Lakers. Celts, and a Very Young Sports Reporter (Doubleday, 2021). Leigh Montville was one of the many excellent sports columnists at The  Boston Globe in  the twenty years that I was there, somebody whom I always read no matter who or what he was writing about. After he was unreasonably refused an exit as columnist from the ghetto of sports, he left the paper for Sports Illustrated, where he wrote extended features and the back-of-the-magazine column for many years. He wrote eight books along the way. Tall Men, Short Pants is his ninth, a summing-up of much he learned about life in a fifty-year career as a journalist.

I’d been alerted to the book by The Globe’s former long-time managing editor, Thomas F. Mulvoy, who wrote about it in the Dorchester Reporter. At one point, Mulvoy says:

In a section that comes off the page with a sharp edge of sadness, Montville redresses himself (for the umpteenth time, his words suggest) for his silence at the press table when the Celtics played the Knicks in New York earlier in the season. A Globe colleague sitting next to him gave vent to his bigotry by loudly and repeatedly using the N-word while talking about the game being played in front of them. [Montville] writes: “I have thought for all these years of the things I should have done. I should have told [him] to shut up. Right away, I should have done that. If he didn’t shut up, I should have grabbed him, done something. …  I should have reported all this to someone at the Globe on our return. I should have decided never to talk to him again. I should have done any of this stuff. I did nothing”

The 26-year-old Montville, who is White, served as no more than witness that day – the book reveals how he learned that his Globe colleague was deliberately baiting another Globe sportswriter, a well-known liberal, nearby – only much later affording a glimpse of the fractious mood of the nation in 1969. Montville attended his colleague’s wake thirty years later. Otherwise, he imaginatively covered changing attitudes about race in America, in columns and books, including Manute: The Center of Two Worlds (2011), and Sting like a Bee. Muhammad Ali vs. the United States of America, 1966-1971 (2017). Sports has done more than its share, and better than Hollywood, to illuminate rapidly changing stereotypes of race and class in the last fifty years. Montville was alert to the story every step of the way.

Reading Tall Men, Short Pants brought into focus a project of The New York Times of which I gradually became aware over the last couple of years.

I do not mean the paper’s scrutiny of the killings of Black men and the occasional Black woman by Whites, mostly police officers, before George Floyd was murdered by Officer Derek Chauvin, in Minneapolis on May 25, 2020, though even now, thanks to the emergence of the Black Lives Matter movement in 2013, it seems important to remember their names.

(Those whose stories made the front pages include Trayvon Martin, in Sanford, Fla; Eric Garner, in Staten Island, New York; Michael Brown, in Ferguson, Mo.; Walter Scott, in North Charleston, S.C.; Philando Castile, in St. Paul; Stephen Clark, in Sacramento, and Breonna Taylor, in Louisville.

Nor do I mean the special issue of the magazine called The 1619 Project, the Times’s coverage of the debate over Critical Race Theory, or the series of essays by critic-at-large Wesley Morris that earlier this year was recognized with a Pulitzer Prize. I have in mind something less concrete but ultimately even more eye-opening, at least to me.

I am thinking of a surge of ordinary news stories about contributions to American culture by African-American citizens. These stories appeared in unusual numbers, day after day, over the course of the last eighteen months. In the trade, this kind of display is called ROP, or run of the paper, with stories placed anywhere in the paper at the option of an editor – world, U.S., politics, NY, business, opinion, tech, science, health, sports, arts, books, style, food, travel, real estate, obituaries. The surge was as unmistakable as it is difficult to describe. Instead of data, I have only personal experience of it, to which I aim to testify here, briefly.

I scan the print editions of The Times, The Wall Street Journal and the Financial Times each morning at home, glance online at Bloomberg and study the story list of The Washington Post when I reach the office. In the evening, I read and clip (or print) whatever is most important to me. The differing trajectories of these five great English-language news organizations in the thirty years since the Internet emerged as a public communications medium has been fascinating, but that is a subject for another day. For now it is enough to say that The Times remains the most ambitious among them, more sparkling than ever in its aspirations.

It was the morning scanning of The Times that first produced the effect. So relentless had  its coverage of Blacks newsmakers and their concerns become over the last year that one day it dawned on me what The Times had achieved. Some of the stories made big impressions. Others seemed peripheral, at least to my interests. I discussed the experience with my friend, Vincent McGee, who described it thus: “I first noticed it with obituaries, some current – mainly arts, music and sports – and others ‘catch ups’, often of Black women lost in history.”

By distorting its usual budget of stories – not much, mind you, this was only a surge – the newspaper’s editors had given me, a White reader, the feeling of somehow being unimportant. For some fleeting part of the day, I felt as many Black readers must feel most days, oppressed by the relentless attention The Times paid to the Other. This was showing, not telling, how it felt to be left out. It showed, too, what it meant to be included in. As an exercise in good newspaper editing, I will never forget it.

How had the decision to reorient the coverage been made? Anyone who knows anything about newspapers understands that inspiration comes from the bottom up. Orders are given, of course; stories are assigned, or turned back for more work. There are countless meetings, discussions, bull sessions, retreats.  Word gets around.  Better to say that a curiosity about race, gender, ethnicity and discrimination had been authorized at The Times as long ago as the Nineties, then encouraged, becoming wide-ranging, before coming to a low boil in 2020.

The Times’s executive editor is Dean Baquet, who was born in 1956. He is a consummate newspaperman, having started working in New Orleans even before graduating from Columbia University, in 1978. He moved from The Times-Picayune, in New Orleans, to the Chicago Tribune in 1984, where he won one Pulitzer Prize, and just missed another, before joining TheTimes, in 1990. Tribune Co. hired him back in 2000 to serve as managing editor of its newly acquired Los Angeles Times; he replaced John Carroll as editor in 2006 but was quickly dismissed after opposing newsroom budget cuts. He returned to The Times later that year as its Washington bureau chief, became its managing editor in 2011, and succeeded Jill Abramson in the top newsroom job in 2014.

Baquet is also a Black man, the fourth of five sons of a successful New Orleans restaurateur. Many years will be required to hash out all that has happened on his watch, some of it under the heading of “woke.” Baquet will write a book. Culture wars will continue. The equitable distribution of attention – of “play” – will become the next editor’s problem. Baquet turns 65 later this month; he will retire next year.

Leigh Montville won the Associated Press Sports Editors Red Smith Award in 2015; he never got out of the sportswriting ghetto, but he nevertheless became one of the finest columnists of his generation, pure and simple. Dean Baquet broke race out of the newspaper ghetto and made it ROP, maintaining news values evolved by the modern profession. He will enter history books as one of The New York Times’s greatest editors.  Both men made the most of their opportunities.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column originated.

David Warsh: America’s fracturing ‘politics of purity’ since the ‘70s

Ralph Nader in 1975, in his heyday

SOMERVILLE, Mass.

Like a lot of people, I am interested in what has been happening in the world, the U.S. in particular, since the end of World War II.  I am especially intrigued by goings on in university economics, but I take a broad view of the subject.  I grew up in the Fifties, and the single most persuasive account I’ve found of the underlying nature of changing times since 1945 has been a series of five books by historian Daniel Rodgers, of Princeton University. In Age of Fracture (Belknap, Harvard, 2011), Rodgers described very well my experience of the increasingly thinner life of things.

Across the multiple fronts of ideational battle, from the speeches of presidents to books of social and cultural theory, conceptions of human nature that in the post-World War II era had been thick with context, social circumstance, institutions, and history gave way to conceptions of human nature that stressed choice, agency, performance and desire. Strong metaphors of society were supplanted by weaker ones. Imagined collectivities shrank; notions of structure and power thinned out. Viewed by its acts of mind, the last quarter of the century was an era of disaggregation, a great age of fracture.

But I’m always interested in a new narrative.  One such is Public Citizens: The Attack on Big Government and the Remaking of American Liberalism (Norton, 2021), by historian Paul Sabin, of Yale University.  Sabin employs the career of Ralph Nader, the arc of which extends from Harvard Law School and auto-safety crusader in Sixties to his Green Party candidacy in the U.S. presidential election of 2000, as a metaphor for a variety of other liberal activists who mounted assaults of their own on centers of government power in the second half of the 20th  Century.

The harmonious post-war partnership of business, labor and government proclaimed in the Fifties by economist John Kenneth Galbraith and New Dealer James Landis, symbolized by the success of the Tennessee Valley Authority’s government-sponsored electrification of the rural South, was not built to last.  But how did government go from being the solution to America’s problems to being the cause of them? It was more complicated than Milton Friedman and Ronald Reagan, Sabin shows.

Jane Jacobs (The Death and Life of Great American Cities, 1961), Rachel Carson (Silent Spring, 1962) and Nader (Unsafe at Any Speed. 1965), were exemplars of a new breed of critics of capture industrial manipulation and capture of government function, Sabin writes.  Jacobs attacked large-scale city planning and urban renewal. Carson exposed widespread abuses by the commercial pesticide industry. Nader criticized automotive design. These were only the first and most visible cracks in the old alliance of industries, labor unions and federal administrative agencies.  Public-interest law firms began springing up, loosely modeled on civil-rights organizations. The National Resources Defense Council; the Conservation Law Foundation; the Center for Law and Social Policy and many other start-ups soon found their way into federal courts. Nader tackled the leadership of the United Mineworkers Union, leading then-UMW President Tony Boyle to order the murder of reform candidate Tony Yablonski, his wife, and daughter, on New Year’s Eve, 1969.

In Age of Fracture, Rodgers wrote that “The first break in the formula that joined freedom and obligation all but inseparably together began with Jimmy Carter.” Carter’s outside-Washington experience as a peanut farmer and Georgia governor, as well as his immersion in low-church Protestant evangelical culture led him to shun presidential authority. “Government cannot solve our problems, it can’t set our goals, it cannot define our vision,” he said in 1978.

Sabin takes a similar view but offers a different reason for the rupture. Caught in between the idealistic aspirations of outside critics inspired by Nader and the practical demands of governing by consensus, Carter struggled to maintain the traditional balance but failed to placate his critics. “Disillusionment came easily and quickly to Ralph Nader,” Sabin writes.  “I expect to be consulted, and I was told that I would be,” Nader complained almost immediately. Reform-minded critics attacked Carter from nearly every direction. A fierce primary challenge by Sen. Edward M. Kennedy (D.-Mass.) failed in 1980. The stage was set for Ronald Reagan.

Sabin recalls the battles of the 1970s with grim determination to show the folly of politics of purity.  Nader made his first run for the presidency as leader of the Green Party in 1996, challenging Bill Clinton and Bob Dole. He was in his sixties; his efforts were half-hearted.  In his second campaign, in 2000, he campaigned vigorously enough to tip the election to George W. Bush. Even then it wasn’t Nader’s last hurrah. He ran again, in 2004, as candidate of the Reform Party; and a fourth time, as an independent, in 2008. At 87, he is today conspicuously absent from the scene.

The public-interest movement initiated by urbanist Jane Jacobs, scientist Rachel Carson and Ralph Nader was effective in its early stages, Sabin concludes. The nation’s air and water are cleaner; its highways and workplaces safer; its cities more open to possibility. But Sabin is surely right that all too often, go-for-broke activism served mainly to undermine confidence in the efficacy of administrative government action among significant segments to the public.

The critique of federal regulation was clearly not the whole story, any more than was The Great Persuasion, undertaken in 1948 by the Mont Pelerin Society, pitched unsuccessfully in 1964 by presidential candidate Barry Goldwater, and translated into slogans in 1980 by Milton and Rose Friedman. Nor is the thoroughly disappointing 20-year aftermath to 9/11, another day when the world seemed to many to “break apart,” as historian Dan Rodgers put it in an epilogue to Age of Fracture.

What might put it back together? Accelerating climate change, perhaps.  But that’s another story.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column first appeared.

David Warsh: Time to read ‘Three Days at Camp David’

The main lodge at Camp David

SOMERVILLE, Mass.

The heart-wrenching pandemonium in Kabul coincided with the seeming tranquility of the annual central banking symposium at Jackson Hole, Wyoming. For the second year in a row, central bankers stayed home, amid fears of the resurgent coronavirus. Newspapers ran file photos of Fed officials strolling beside Jackson Lake.

Market participants are preoccupied with timing of the taper, the Fed’s plan to reduce its current high level of asset purchases. That is not beside the point, but neither is it the most important decision facing the Biden administration with respect to the conduct of economic policy. Whom to nominate to head the Federal Reserve Board for the next four years? For a glimpse of the background to that question, a good place to start is a paper from a a Bank of England workshop earlier in the summer

Central Bank Digital Currency in Historical Perspective: Another Crossroads in Monetary History, by Michael Bordo, of Rutgers University and the Hoover Institution, brings to mind the timeless advice of Yogi Berra:  when you come to a crossroad, take it.

Bordo briefly surveys the history of money and banking. Gold, silver and copper coinage (and paper money in China) can be traced back over two millennia, he notes, but three key transformations can be identified in the five hundred years since Neapolitan banks began experimenting with paper money.

First, fiduciary money took hold in the 18th Century, paper notes issued by banks and ostensibly convertible into precious metal (specie) held in reserve by the banks. Fractional banking emerged, meaning that banks kept only as much specie in the till as they considered necessary to meet the ordinary ebb and flow of demands for redemption, leaving them vulnerable to periodic panics or “runs.”  Occasional experiments with fiat money, issued by governments to pay for wars, but irredeemable for specie, generally proved spectacularly unsuccessful, Bordo says (American Continentals, French assignats).

Second, the checkered history of competing banks and their volatile currencies, led, over the course of a century, to bank supervision and monopolies on  national currencies, overseen by central banks and national treasuries.

Third, over the course of the 17th to the 20th centuries, central banks evolved to take on additional responsibilities:  marketing government debt; establishing payment systems; pursuing financial stability (and serving as lenders of last resort when necessary to halt panics); and maintaining a stable value of money. For a time, the gold standard made this last task relatively simple: to preserve the purchasing power of money, maintain a fixed price of gold. But as gold convertibly became ever-harder to manage, nations retreated from their fiduciary monetary systems in fits and starts. In 1971, they abandoned them altogether in favor of fiat money. It took about 20 years to devise central banking techniques with which to seek maintain stable purchasing power.

As it happens, the decision-making at the last fork in the road of the international currency and monetary system is laid out with great clarity and charm in a new book by Jeffrey Garten, Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy (2021, Harper) Garten spent a decade in government before moving to Wall Street.  In 2006 he returned to strategic consulting in Washington, after about 20 years at Yale’s School of Management, ten of them as dean.

The special advantage of his book is how Garten brings to life  the six major players at the Camp David meeting, Aug. 13-15, 1971 – Richard Nixon, John Connally, Paul Volcker, Arthur Burns, George Shultz, Peter Peterson and two supporting actors, Paul McCracken an Henry Kissinger – and explores their stated aims and private motives.  The decision they took was momentous:  to unilaterally quit the Bretton Woods system, to go off the gold standard, once and for all. It was a transition the United States had to make, Garten argues, and in this sense bears a resemblance to Afghanistan and the present day:

A bridge from the first quarter-century following [World War II] –where the focus was on rebuilding national economies that had been destroyed and on re-establishing a functional world economic system – to a new emvironment where power and responsibility  among the allies had to be readjusted . with the burden on the United States being more equitably  shared and with the need for multilateral cooperation to replace Washington’s unilateral dictates.

What about Nixon’s re-election campaign in 1972?  Of course that had something to do with it; politics always has something to do with policy, Garten says. But one way or another, something had to be done to relieve pressure on the dollar. “The gold just wasn’t there” to continue, writes Garten.

The trouble is, as with all history, that was fifty years ago.  What’s going on now?

Read, if you dare, the second half of Michael Bordo’s paper, for a concise summary of the money and banking issues we face. Their unfamiliarity is forbidding; their intricacy is great.  The advantages of a digital system may be manifest. “Just as the history of multiple competing currencies led to central bank provision of currency,” Bordo writes, “ the present day rise of cryptocurrencies and stable coins suggests the outcome may also be a process of consolidation towards a central bank digital currency.”

But the choices that central bankers and their constituencies must make are thorny.  Wholesale or retail? Tokens or distributed ledger accounts? Lodged in central banks or private institutions? Considerable work is underway, Bordo says, at the Bank of England, Sweden’s Riksbank, the Bank of Canada, the Bank for International Settlements, and the International Monetary Fund, but whatever research the Fed has undertaken, “not much of it has seen the light of day.”

Who best to help shepherd this new world into existence?  The choice for the U.S. seems to be between reappointing Fed Chairman Jerome Powell, 68, to a second term, beginning in February, or nominating a Fed governor Lael Brainard, 59, to replace him.  President Biden is reeling at the moment. I am no expert, but my hunch is that preferring Brainard to Powell is the better option overall, for both practical and political ends. After all, what infrastructure is more fundamental to a nation’s well-being than its place in the global system of money and banking?

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column first ran.

David Warsh: Of The Globe, John Kerry, Vietnam and my column

An advertisement for The Boston Globe from 1896.

SOMERVILLE, Mass.

It has taken six months, but with this edition, Economic Principals finally makes good on its previously announced intention to move to Substack publishing.  What took so long? I can’t blame the pandemic. Better to say it’s complicated. (Substack is an online platform that provides publishing, payment, analytics and design infrastructure to support subscription newsletters.)

EP originated in 1983 as columns in the business section of The Boston Sunday Globe. It appeared there for 18 years, winning a Loeb award in the process. (I had won another Loeb a few years before, at Forbes.) The logic of EP was simple: It zeroed in on economics because Boston was the world capital of the discipline; it emphasized personalities because otherwise the subject was intrinsically dry (hence the punning name).  A Tuesday column was soon added, dwelling more on politics, because economic and politics were essentially inseparable in my view.

The New York Times Co. bought The Globe in 1993, for $1.13 billion, took control of it in 1999 after a standstill agreement expired, and, in July 2001, installed a new editor, Martin Baron.  On his second morning on the job, Baron instructed the business editor, Peter Mancusi, that EP was no longer permitted to write about politics. I didn’t understand, but tried to comply. I failed to meet expectations, and in January, Baron killed the column. It was clearly within his rights. Metro columnist Mike Barnicle had been cancelled, publisher Benjamin Taylor had been replaced, and editor Matthew Storin, privately maligned for having knuckled under too often to the Boston archdiocese of the Roman Catholic Church, retired. I was small potatoes, but there was something about The  Globe’s culture that the NYT Co. didn’t like.  I quit the paper and six weeks later moved the column online.

After experimenting with various approaches for a couple of years, I settled on a business model that resembled public radio in the United States – a relative handful of civic-minded subscribers supporting a service otherwise available for free to anyone interested.  An annual $50 subscription brought an early (bulldog) edition of the weekly via email on Saturday night.  Late Sunday afternoon, the column went up on the Web, where it (and its archive) have been ever since, available to all comers for free.

Only slowly did it occur to me that perhaps I had been obtuse about those “no politics” instructions.  In October 1996, five years before they were given, I had raised caustic questions about the encounter for which then U.S. Sen. John Kerry (D.-Mass.) had received a Silver Star in Vietnam 25 years before. Kerry was then running for re-election, I began to suspect that history had something to do with Baron ordering me to steer clear of politics in 2001.

                                                                      • ••

John Kerry had become well known in the early ‘70s as a decorated Navy war hero who had turned against the Vietnam War. I’d covered the war for two years, 1968-70, traveling widely, first as an enlisted correspondent for Pacific Stars and Stripes, then as a Saigon bureau stringer for Newsweek. I was critical of the premises the war was based on, but not as disparaging of its conduct as was Kerry. I first heard him talk in the autumn of 1970, a few months after he had unsuccessfully challenged the anti-war candidate Rev. Robert Drinan, then the dean of Boston College Law School, for the right to run against the hawkish Philip Philbin in the Democratic primary. Drinan won the nomination and the November election. He was re-elected four times.

As a Navy veteran, I was put off by what I took to be the vainglorious aspects of Kerry’s successive public statements and  candidacies, especially in the spring of 1971, when in testimony before the Senate Foreign Relation Committee, he repeated accusations he had made on Meet the Press that thousands of atrocities amounting to war crimes had been committed by U.S. forces in Vietnam. The next day he joined other members of the Vietnam Veterans against the War in throwing medals (but not his own) over a fence at the Pentagon.

In 1972, he tested the waters in three different congressional districts in Massachusetts before deciding to run in one, an election that he lost. He later gained electoral successes in the Bay State, winning the lieutenant governorship on the Michael Dukakis ticket in 1982, and a U.S. Senate seat in 1984, succeeding Paul Tsongas, who had resigned for health reasons. Kerry remained in the Senate until 2013, when he resigned to become secretary of state.  [Correction added]

Twenty-five years after his Senate testimony, as a columnist I more than once expressed enthusiasm for the possibility that a liberal Republican – venture capitalist Mitt Romney or Gov. Bill Weld – might defeat Kerry in the 1996 Senate election. (Weld had been a college classmate, though I had not known him.) This was hardly disinterested newspapering, but as a columnist, part of my job was to express opinions.

In the autumn of 1996, the recently re-elected Weld had challenged Kerry’s bid for a third term in the Senate, The campaign brought old memories to life. On Sunday Oct. 6, The Globe published long side-by-side profiles of the candidates, extensively reported by Charles Sennott.

The Kerry story began with an elaborate account of his experiences in Vietnam – the candidate’s first attempt. I believe, since 1971 to tell the story of his war. After Kerry boasted of his service during a debate 10 days later, I became curious about the relatively short time he had spent in Vietnam – four months. I began to research a column. Kerry’s campaign staff put me in touch with Tom Belodeau, a bow gunner on the patrol boat that Kerry had beached after a rocket was fired at it to begin the encounter for which he was recognized with a Silver Star.

Our conversation lasted half an hour. At one point, Belodeau confided, “You know, I shot that guy.” That evening I noticed that the bow gunner played no part in Kerry’s account of the encounter in a New Yorker article by James Carroll in October 1996 – an account that seemed to contradict the medal citation itself. That led me to notice the citation’s unusual language: “[A]n enemy soldier sprang from his position not 10 feet [from the boat] and fled. Without hesitation, Lieutenant (Junior Grade) Kerry leaped ashore, pursued the man behind a hootch and killed him, capturing a B-40 rocket launcher with a round in the chamber.” There are now multiple accounts of what happened that day. Only one of them, the citation, is official, and even it seems to exist in several versions. What is striking is that with the reference to the hootch, the anonymous author uncharacteristically seems to take pains to imply that nobody saw what happened.

The first column (“The War Hero”) ran Tues., Oct. 24. Around that time, a fellow former Swift Boat commander, Edward (Tedd) Ladd, phoned The Globe’s Sennott to offer further details and was immediately passed on to me. Belodeau, a Massachusetts native who was living in Michigan, wanted to avoid further inquiries, I was told. I asked the campaign for an interview with Kerry. His staff promised one, but day after day, failed to deliver. Friday evening arrived and I was left with the draft of column for Sunday Oct. 27 about the citation’s unusual phrase (“Behind the Hootch”). It included a question that eventually came to be seen among friends as an inside joke aimed at other Vietnam vets (including a dear friend who sat five feet away in the newsroom): Had Kerry himself committed a war crime, at least under the terms of his own sweeping indictments of 1971, by dispatching a wounded man behind a structure where what happened couldn’t be seen?

The joke fell flat. War crime? A bad choice of words! The headline?  Even worse. Due to the lack of the campaign’s promised response, the column was woolly and wholly devoid of significant new information. It certainly wasn’t the serious accusation that Kerry indignantly denied. Well before the Sunday paper appeared, Kerry’s staff apparently knew what it would say. They organized a Sunday press conference at the Boston Navy Yard, which was attended by various former crew members and the admiral who had presented his medal. There the candidate vigorously defended his conduct and attacked my coverage, especially the implicit wisecrack the second column contained.  I didn’t learn about the rally until late that afternoon, when a Globe reporter called me for comment.

I was widely condemned. Fair enough: this was politics, after all, not beanbag. (Caught in the middle, Globe editor Storin played fair throughout with both the campaign and me). The election, less than three weeks away, had been refocused. Kerry won by a wider margin than he might have otherwise. (Kerry’s own version of the events of that week can be found on pp. 223-225 of his autobiography.)

                                                                           • ••

Without knowing it, I had become, in effect, a charter member of the Swift Boat Veterans for Truth. That was the name of a political organization that surfaced in May 2004 to criticize Kerry, in television advertisements, on the Web, and in a book, Unfit for Command.  What I had discovered in 1996 was little more than what everyone learned in 2004 – that some of his fellow sailors disliked Kerry intensely. In conversations with many Swift Boat vets over the year or two after the columns, I learned that many bones of contention existed. But the book about the recent history of economics I was finishing and the online edition of EP that kept me in business were far more important. I was no longer a card-carrying member of a major news organization, so after leaving The Globe I gave the slowly developing Swift Boat story a good leaving alone. I spent the first half of 2004 at the American Academy in Berlin.

Whatever his venial sins, Kerry redeemed himself thoroughly, it seems to me, by declining to contest the result of the 2004 election, after the vote went against him by a narrow margin of 118,601 votes in Ohio. He served as secretary of state for four years in the Obama administration and was named special presidential envoy for climate change, a Cabinet-level position, by President Biden,

Baron organized The Globe’s Pulitzer Prize-winning Spotlight coverage of Catholic Church secrecy about sexual abuse by priests, and it turned into a world story and a Hollywood film. In 2013 he became editor of The Washington Post and steered a steady course as Amazon founder Jeff Bezos acquired the paper from the Graham family and Donald Trump won the presidency and then lost it. Baron retired in February. He is writing a book about those years.

But in 2003, John F. Kerry: The Complete Biography by the Boston Globe Reporters Who Know Him Best was published by PublicAffairs Books, a well-respected publishing house whose founder, Peter Osnos, had himself been a Vietnam correspondent for The Washington Post. Baron, The Globe’s editor, wrote in a preface, “We determined… that The Boston Globe should be the point of reference for anyone seeking to know John Kerry. No one should discover material about him that we hadn’t identified and vetted first.”

All three authors – Michael Kranish, Brian Mooney, Nina Easton – were skilled newspaper reporters. Their propensity to careful work appears on (nearly) every page. Mooney and Kranish I considered I knew well.  But the latter, who was assigned to cover Kerry’s early years, his upbringing, and his combat in Vietnam, never spoke to me in the course of his reporting.  The 1996 campaign episode in which I was involved is described in three paragraphs on page 322. The New Yorker profile by James Carroll that prompted my second column isn’t mentioned anywhere in the book; and where the Silver Star citation is quoted (page 104), the phrase that attracted my attention, “behind the hootch,” is replaced by an ellipsis. (An after-action report containing the phrase is quoted on page 102.)

Nor did Baron and I ever speak of the matter. What might he have known about it? He had been appointed night editor of The Times in 1997, last-minute assessor of news not yet fit to print; I don’t know whether he was already serving in that capacity in October 1996, when my Globe columns became part of the Senate election story. I do know he commissioned the project that became the Globe biography in December, 2001, a few weeks before terminating EP.

Kranish today is a national political investigative reporter for The Washington Post. Should I have asked him about his Globe reporting, which seems to me lacking in context? I think not. (I let him know this piece was coming; I hope that  eventually we’ll talk privately someday.) But my subject here is how The  Globe’s culture changed after NYT Co. acquired the paper, so I believe his incuriosity and that of his editor are facts that speak for themselves.

Baron’s claims of authority in his preface to The Complete Biography by the Boston Globe Reporters Who Know Him Best strike me as having been deliberately dishonest, a calculated attempt to forestall further scrutiny of Kerry’s time in Vietnam. In this Baron’s book failed. It is a far more careful and even-handed account than Tour of Duty: John Kerry and the Vietnam War (Morrow, 2004), historian Douglas Brinkley’s campaign biography. Mooney’s sections on Kerry’s years in Massachusetts politics are especially good. But as the sudden re-appearance of the Vietnam controversy in 2004 demonstrated, The Globe’s account left much on the table.

                                                                        • ••

I mention these events now for two reasons.  The first is that the Substack publishing platform has created a path that did not exist before to an audience – in this case several audiences – concerned with issues about which I have considerable expertise. The first EP readers were drawn from those who had followed the column in The Globe.  Some have fallen away; others have joined. A reliable 300 or so annual Bulldog subscriptions have kept EP afloat.

Today, with a thousand online columns and two books behind me – Knowledge and the Wealth of  Nations: A Story of Economic Discovery (Norton, 2006) and Because They Could: The Harvard Russia Scandal (and NATO Expansion) after Twenty-Five Years (CreateSpace, 2018) – and a third book on the way, my reputation as an economic journalist is better-established.

The issues I discuss here today have to do with aspirations to disinterested reporting and open-mindedness in the newspapers I read, and, in some cases, the failure to achieve those lofty goals. I have felt deeply for 25 years about the particular matters described here; I was occasionally tempted to pipe up about them. Until now, the reward of regaining my former life as a newsman by re-entering the discussion never seemed worth the price I expected to pay.

But the success of Substack says to writers like me, “Put up or shut up.” After the challenge it posed dawned in December, I perked up, then hesitated for several months before deciding to leave my comfortable backwater for a lively and growing ecosystem. Newsletter publishing now has certain features in common with the market for national  magazines that emerged in the U.S. in the second half of the 19th Century – a mezzanine tier of journalism in which authors  compete for readers’ attention. In this case, subscribers participate directly in deciding what will become news.

The other reason has to do with arguments recently spelled out with clarity and subtlety by Jonathan Rauch in The Constitution of Knowledge: A Defense of Truth (Brookings, 2021). Rauch gets the Swift Boat controversy mostly wrong, mixing up his own understanding of it with its interpretation by Donald Trump, but he is absolutely correct about the responsibility of the truth disciplines – science, law, history and journalism – to carefully sort out even the most complicated claims and counter-claims that endlessly strike sparks in the digital media.

Without the places where professionals like experts and editors and peer reviewers organize conversations and compare propositions and assess competence and provide accountability – everywhere from scientific journals to Wikipedia pages – there is no marketplace of ideas; there are only cults warring and splintering and individuals running around making noise.

EP exists mainly to cover economics. This edition has been an uncharacteristically long (re)introduction. My interest in these long-ago matters is strongly felt, but it is a distinctly secondary concern. I expect to return to these topics occasionally, on the order of once a month, until whatever I have left to say has been said: a matter of ten or twelve columns, I imagine, such as I might have written for the Taylor family’s Globe.

As a Stripes correspondent, I knew something about the American war in Vietnam in the late Sixties. As an experienced newspaperman who had been sidelined, I was alert to issues that developed as Kerry mounted his presidential campaign. And as an economic journalist, I became interested in policy-making during the first decade of the 21st Century, especially decisions leading up to the global financial crisis of 2008 and its aftermath. Comments on the weekly bulldogs are disabled.  Threads on the Substack site associated with each new column are for bulldog subscriber only. As best I can tell, that page has not begun working yet. I will pay close attention and play comments there by ear.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this essay originated.

David Warsh: Whatever happened to Decoration Day?

“The March of Time” (oil on canvas), Decoration Day {now called Memorial Day} in Boston, by Henry Sandham (1842-1910), a Canadian painter.

SOMERVILLE, Mass.

Decoration Day began on May 1, 1865, in Charleston, S.C., when an estimated 10,000 people, most of them former slaves, paraded to place flowers on the newly dug graves of 257 Union soldiers who had been buried without coffins behind the grandstand of a race course. They had been held in the infield without tents, as prisoners of war, while Union batteries pounded the city’s downtown during the closing days of the Civil War.

The evolution of Decoration Day over the next fifty years was one of the questions that led historian David W. Blight to write Race and Reunion: The Civil War in American Memory (Harvard, 2001). After Blight’s book appeared, it was quickly overshadowed by the events of 9/11.  Eric Foner conveyed its message most clearly in The New York Times Book Review – but only on page 28.  Today Race and Reunion is more relevant than ever. For a better idea of what the book is about than I can give you, read Foner’s review.

When I was a kid, May 30, Decoration Day was still ostensibly about remembering the Civil War, but the events of that May day in Charleston were no part of the story (though the POW camp at Andersonville, Ga., certainly had become part of the lore.). The names of veterans of various wars were read on the village green.  A bugler played taps. Decoration Day had been proclaimed a day of commemoration in 1868, when the commander of the Grand Army of the Republic ordered soldiers to visit their comrades’ graves. In 1890 it was declared a state holiday in New York.

And by the time that Woodrow Wilson, the first Southerner to be elected president since the Civil War, spoke at Gettysburg, on July 4, 1913, fifty years after the battle itself, the holiday had become national – but the experiences of black Americans had all but dropped out of the narrative. The hoopla was about the experiences of the Blue and the Gray, never mind that many blacks had served in the Union army.

Soon after the war had ended, another war had begun, a contest of ideas about how the meaning of the war was to be understood: the emancipation of the slaves vs. the reconciliation of the contending armies. The politics of Reconstruction – the attempted elevation of Blacks to full citizenship and constitutional equality – ended in defeat. In his book, Blight wrote, “The forces of reconciliation overwhelmed the emancipation vision in the national culture.” Decoration Day gradually became Memorial Day, just as Armistice Day in November became Veterans Day. Americans got what the novelist William Dean Howells said they inevitably wanted:  tragedies with a happy endings.

The age of segregation didn’t end until the Sixties. Black leaders such as Frederick Douglass and W.E. B. Du Bois had burnished the vision of emancipation. Educators, writers, and agitators articulated it and put it into practice. A second Reconstruction began in the years after World War II. In the 1960s the Civil Rights Movement reached a political peak.  A new equilibrium was achieved and lasted for a time.

So don’t fret about “Critical Race Theory.”  A broad-based Third Reconstruction has begun.  Blight was an early text, as was Derrick Bell’s Faces at the Bottom of a Well: The Permanence of Racism, which appeared in 1992. The tumult will continue for some time. Rising generations will take account of it. A new equilibrium will be attained. It will last for a time, before a Fourth Reconstruction begins.

In the meantime, the new holiday of Juneteenth is an appropriate successor to the original Decoration Day – a civic holiday of importance second only to the Fourth of July.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this column originated.

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David Warsh: Article seems to have prompted Biden to order probe into idea that engineered COVID leaked from lab

Did COVID-19 escape from this complex?

SOMERVILLE, Mass.

There are few better-known brands in public service journalism than the Bulletin of the Atomic Scientists.  Founded in 1945 by University of Chicago physicists who helped produce the atom bomb, the organization adopted its famous clock  logo two years later, with an original setting of seven minutes to midnight. Since then it has expanded the coverage of its monthly magazine and Web page to include climate change, biotech and other disruptive technologies.

In May, it published “The origin of COVID: Did people or nature open Pandora’s box at Wuhan?,” by veteran science journalist Nicholas Wade. Its appearance apparently prompted President Biden to ask U.S. intelligence agencies to reassess the possibility that a virus genetically engineered to become more dangerous had inadvertently escaped from a partly U.S.-funded laboratory in Wuhan, China, the Wuhan Institute of Virology.  So when the Bulletin last week produced publisher Rachel Bronson, editor-in-chief John Mecklin and Wade for a one-hour q&a podcast, I tuned in.

Wade, too, has a substantial reputation.  He served for many years as a staff writer and editor for Nature, Science and the science section of The New York Times.  He is the author of many books as well, including The Nobel Duel: Two Scientists’ Twenty-one Year Race to Win the World’s Most Coveted Research Prize (1980), Before the Dawn: Recovering the Lost History of Our Ancestors (2006), and The Faith Instinct (2009).

True, Wade took a bruising the last time out, with Troublesome Inheritance: Genes, Race, and Human History (2014), which argued that human races are a biological reality and that recent natural selection has led to genetic difference responsible for disparities in political and economic development around the world. Some 140 senior human-population geneticists around the world signed a letter to The New York Times Book Review complaining that Wade had misinterpreted their work. But the editors of the Bulletin of the Atomic Scientists would have taken that controversy into consideration.

The broadcast was what I expected. Publisher Bronson was proud of the magazine’s consistent attention to issues of lab safety; investigative journalist Wade, pugnacious and gracious by turns; editor-in-chief Mecklin, cautious and even-handed. When they were done, I re-read Wade’s article. I highly recommend it to anyone interested in the details. He is a most lucid writer.

What comes through is connection between the U.S. National Institutes of Health and the Wuhan lab, one of several, in which NIH was funding a dangerous but essentially precautionary vaccine-development enterprise known as “gain-of-function” research (see Wade’s piece for a lucid explanation). Experts have known since the beginning that the virus was not a bioweapon. The only question was how it got loose in the world.  What I find lacking in Wade’s account is context.

From the beginning, the Trump, administration sought a Chinese scapegoat to distract from the president’s failure to comprehend the emergency his government was facing. Wade complains that “The political agendas of governments and scientists” had generated “thick clouds of obfuscation that the mainstream media seem helpless to dispel.”

What he fails to recognize is the degree to which the obfuscation may have been deliberate, foam on the runway, designed to prevent an apocalyptic political explosion until vaccines were developed and the contagion contained. In the process, a few whoppers about the likelihood that the virus had evolved by itself in nature were devised by members of the world’s virology establishment. Wade’s generosity in his  acknowledgments at the end of his article make it clear there was ample reason to want to know more about the lab-leak explanation long before Biden commissioned a review.

Wade is a journalist of a very high order, but to me he seems tone-deaf to the overtones of his assertions.  I was reminded of a conversation that Emerson recorded in his journal in 1841.  “I told [William Lloyd] Garrison that I thought he must be a very young man, or his time hang very heavy on his hands, who can afford to think much, and talk much, about the foible of his neighbors, or ‘denounce’ and ‘play the son of thunder,’ as he called it.” Wade, in contrast, likes to quote Francis Bacon: “Truth is the daughter, not of authority, but time.”

But remember too that time, as the saying goes, is God’s way of keeping everything from happening at once. The news Friday that The New York Times has been recognized with the 2020 Pulitzer Prize for Public Service for its coverage of the pandemic was not surprising.  There are six months of developments yet to go in 2021, but my hunch is that, when preparations begin for the award next year, a leading nominee will be the Bulletin of the Atomic Scientists.

David Warsh, an economic historian and a veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this column first appeared.

David Warsh: Economic complexity and price revolutions

— Graphic by Hiroki Sayama

SOMERVILLE, Mass.

I listened idly as two old friends hashed over the argument between Larry Summers and Biden administration officials about the inflationary potential of continuing low interest rates. This, I thought, was where I had come in. My mind drifted back to the book I published in 1984, The Idea of Economic Complexity.

Its premise was what I took to be the similarity between the “price revolution” of the 16th Century and that of the 20th. In the century and a half between 1500 and 1650, everyday prices across Europe had risen roughly six-fold, before settling on a new plateau.  Theory usually ascribed these otherwise baffling developments to the importation of New World treasure and improvement in mining techniques: too much money chasing too few goods.

In the fifty years after World War II, costs of living grew as much as five- or ten-fold, depending on how which costs were measured, before leveling off again. This time opinions were divided. “Keynesians” emphasized political pressures, “cost-push” factors in some instances, “demand-pull” episodes in others. “Monetarists” insisted central bankers’ increases in the quantity of money were to blame.

In The Idea of Economic Complexity, I suggested picking up the other end of the stick.  Perhaps changes in the world economy had been at the heart of both price explosions: the settlement of the New World, the development of the slave trade, and the rise of the middle class in the 16th and 17th centuries; democratization, urbanization, globalization and the growth of government in the 20th.

The book convinced few. I gradually became interested in what economists seem to understand pretty well already: prices and quantities, trade policy, economic history, social welfare.  In all the years since, I have made only one advance in speaking more clearly about what might be meant by “economic complexity.” Economic complexity is surely complexity of the division of labor.

At some point the acuity of Adam Smith’s dictum that the division of labor is limited by the extent of the market was borne in on me. There are other ways of maintaining the division of labor, chiefly taxes. Even in wartime, though, taxes, too, depend on the extent of the market.

How might the division of labor be described?  One promising beginning employs network theory. An alternative, suggested by Eric Beinhocker, in The Origin of Wealth: The Radical Remaking of Economics and What It Means to Business and Society (2007) sought to apply the mechanisms of biological evolution. In that case, cladistics and other systems of phylogenetic nomenclature are worth exploring.  For managers of a monetary system to efficiently control a global division of labor of evolving complexity, they must know something about complexity itself.

Economics has made great strides borrowing analytic techniques from pneumatics and celestial mechanics.  There is probably something to be learned from evolutionary biology as well. It was here, and to Peter Blume’s painting. “The Parade,’’ on the jacket of The Idea of Economic Complexity, that my mind wandered while my friends debated fiscal pressures.

Economic journalism has plenty of first-rate reporters at work in financial capitals around the world, but the Covid pandemic has been as hard on those of us who interested in taking stock of longer trends. Get ready for a spate of books – some of them probably quite good – about the significance of digital and crypto-currencies for money.  Complexity was a young man’s book. The next book here – the last – will be different altogether.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this columnist originated.      

David Warsh: Of shadowy commodities traders, ‘tropical gangsters’, deluded crowds

At the Chicago Board of Trade before the pandemic

SOMERVILLE, Mass.
Because my tastes are well-established, I sometime receive new books that otherwise might escape readers’ attention. Herewith some recent arrivals.

The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources (Oxford), by Javier Blas and Jack Farchy. A pair of former Financial Times commodities reporters, both now working for Bloomberg News, Blas and Farchy explore the  shadowy world of billionaire commodity trading firms – Glencore, Trifigura, Vitol, Cargill, and the founders of the modern industry, Phillip Brothers and Marc Rich. Firms and individuals whose business is trading physical commodities – fossil fuels, agricultural commodities, metals and rare earths – enjoy a unique degree of privacy and autonomy, except from market forces. Blas and Farchy illuminate the goings-on in an otherwise almost unnoticed immense asset class ordinarily tucked away in the interior of newspapers’ financial pages.

The Culture and Development Manifesto (Oxford), by Robert Klitgaard.  Remember Tropical Gangsters: Development and Decadence in Deepest Africa?

The New York Times Book Review called Klitgaard’s tale of adventures during two-and-a-half years in Equatorial Guinea one of the six best nonfiction books of 1990.  The author is back, summing up various lessons learned during 30 more years advising nations, foundations, and universities on how to change (and not change) their ways. Why a manifesto? His determination, with the same good humor as before, to persuade economists and anthropologists to work together, the better to understand the context of the situations they seek to change.

The Day the Markets Roared: How a 1982 Forecast Sparked a Global Bull Market (Matt Holt Books), by Henry Kaufman. What was Reaganomics all about? Plenty of doubt remains.  There is, however, no doubt about the forecast that triggered its beginning. Salomon Brothers’ long-time  “Dr. Doom” recalls the circumstances surrounding the “fresh look” he offered of the future of interest rates on Aug. 17, 1982. In doing so, he reconstructs a lost world.  The Dow Jones Industrial Average soared an astonishing 38.81 points the next day – its greatest gain ever to that point.

The Delusions of Crowds: Why People Go Mad in Groups (Atlantic Monthly Press), by William J. Bernstein. A neurologist, author of The Birth of Plenty: How the Prosperity of the Modern World Was Created (McGraw-Hill, 2010), Bernstein tracks the spread of contagious narratives among susceptible groups over centuries, from the Mississippi Bubble and the 1847 British railway craze to the Biblical number mysticism of Millerite end-times in 19th Century New England and various end-time prophecies in the Mideast.  Such behavior is dictated by the Stone Age baggage we carry in our genes, says Bernstein.

Albert O. Hirschman: An Intellectual Biography (Columbia), by Michele Alacevich. It was never hard to understand the success of Worldly Philosopher: The Odyssey of Albert O. Hirschman, by Jeremy Adelman, a Princeton University professor and personal friend of the economist and his wife. Hirschman cut a dashing figure.  He fled Berlin for Paris in the ’30s, studied economics in London, fought with the Republicans in the Spanish Civil War, moved to New York, and returned to wartime France to lead refugees fleeing the Nazis over the Pyrenees, from Marseilles to Barcelona. As a historian, biographer Adelman was less attuned to Hirschman’s subsequent career as an economic theorist – of development, democracy, capitalism, and commitment.  Alacevich has provided a perfect complement, a study of the works and life of the author of the classic, Exit, Voice, and Loyalty.

David Warsh, a veteran columnist and an economic historian, is proprietor of Somerville-based economicprincipals.com, where this piece first ran.

David Warsh: Spence Weart sums up the global-warming crisis that's upon us

Average surface air temperatures from 2011 to 2020 compared to a baseline average from 1951 to 1980 (Source: NASA)

SOMERVILLE, Mass.

Every April since I first read it, in 2004, I take down and re-read some portions of my copy of The Discovery of Global Warming (Harvard), by Spence Weart. (The author revised and expanded his book in 2008.) I never fail to be moved by the details of the story: not so much his identification of various major players among the scientists – Arrhenius, Milankovitch, Keeling, Bryson, Bolin – but by the account of the countless ways in which the hypothesis that greenhouse-gas emissions might lead to climate change was broached, investigated, turned back on itself (more than once), debated and, eventually, confirmed.

In the Sixties, Weart trained as an astrophysicist. After teaching for three years at Caltech, he re-tooled as a historian of science at the University of California at Berkeley. Retired since 2009, he was for 35 years director of the Center for the History of Physics of the American Institute of Physics, in College Park, Md.

This year, too, I looked at the hypertext site with which Weart supports his much shorter book, updating it annually in February, incorporating all matter of new material. It includes recent scientific findings, policy developments, material from other histories that are beginning to appear. The enormous amount of material is daunting. Several dozen new references were added this year, ranging from 1956 to 2021, bringing the total to more than 3,000 references in all. Then again, all that is also reassuring, exemplifying in one place the warp and woof of discussion taking pace among scientists, of all sorts, that produces the current consensus on all manner of questions, whatever it happens to be. Check out the essay on rapid climate change, for example.

Mainly I was struck by the entirely rewritten Conclusions-Personal Note, reflecting what he describes as “the widely shared understanding that we have reached the crisis years.”

 Global warming is upon us. It is too late to avoid damage — the annual cost is already many billions of dollars and countless human lives, with worse to come. It is not too late to avoid catastrophe. But we have delayed so long that it will take a great effort, comparable to the effort of fighting a world war— only without the cost in lives and treasure. On the contrary, reducing greenhouse gas pollution will bring gains in prosperity and health. At present the world actually subsidizes fossil fuel and other emissions, costing taxpayers some half a trillion dollars a year in direct payments and perhaps five trillion in indirect expenses. Ending these payments would more than cover the cost of protecting our civilization.

Plenty else is going on in climate policy. President Biden is hosting a virtual Leaders Summit on Climate on Thursday, April 22 (Earth Day) and Friday, April 23. Nobel laureate William Nordhaus pushes next month The Spirit of Green: The Economics of Collisions and Contagions in a Crowded World (Princeton), reinforcing Weart’s conviction that it actually costs GDP not to impose a carbon tax on polluters.  Public Broadcasting will roll out later this month a three-part series in which the BBC follows around climate activist Greta Thunberg in A Year to Change the World. And Stewart Brand, who in 1967 published the first Whole Earth Catalog, with its cover photo of Earth seen from space, is the subject of a new documentary, We Are as Gods, about to enter distribution. There is other turmoil as well. But if you are looking for a way to observe Earth Day, reading Spencer Weart’s summing-up is an economical solution.

David Warsh, an economic historian and a veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this column first appeared.

© 2021 DAVID WARSH, PROPRIETOR

—Graphic by Adam Peterson

David Warsh: Mundell, the enigmatic guru of 'supply-side economics'

Robert Mundell

SOMERVILLLE, Mass.

Email last week brought a copy of The Gypsy Economist: The Life and Times of Colin Clark, by Alex Millmow. Starting in the 1930s, Clark (1905-1989) was an important student of global economic development who, though born in London, spent most of his career in Australia. The same mail brought news, too, of the death of international macro-economist Robert Mundell. He was 88, a Canadian who spent 45 years at Columbia University.

Another decade or two will pass before an even-handed biography of Mundell arrives, but it will be worth the wait. Mundell was a brilliant student of the rapid evolution of the international monetary system in the years after 1960 and was sometimes described as “father of the Euro.”  He became the enigmatic guru of “supply side economics,” and plumped for a return to the gold standard as well.  As a new Nobel laureate, in 1999, Mundell entertained guests by concluding his banquet speech by singing a few lines of My Way.

While waiting for a thorough, absorbing, and graceful appraisal of a remarkable life (I have in mind, as an example, David Ricardo: A Biography, by David Weatherall, though Mundell was no Ricardo), we have the Nobel Committee’s own explanation. We have as well the testimony of the economist who did more than any other person to make Mundell’s Nobel Prize come about,  Rüdiger Dornbusch, of the Massachusetts Institute of Technology. A year after Mundell was recognized, Dornbusch described his contributions in the Scandinavian Journal of Economics

“Mundell’s central claim to fame is to have recast entirely the way we think about the functioning of an economy with an open capital account, including the stark implications for policy.  That is the purely intellectual part.  But there is also the marketing department: the wonderful skill to capture the story in a few equations, a simple diagram. Just as [Nobel laureate] John Hicks… brilliantly summarized [in 1937] the essence of Keynesian economics in the IS-LM diagram, Mundell’s models likewise reduce to the textbook level a dramatically new view of the open economy.”

Mundell had come to economics at the right time, Dornbusch wrote. He graduated from MIT in 1956, “after two decades of formalization had clarified the distinction between goods and asset markets.”  Post-war capital controls were giving way to convertibility under the Bretton Woods system.  It helped, too, that Mundell was Canadian.  Canada had shifted from fixed to floating rates in the 1950s, offering him a wealth of practical problems to ponder.

Mainly, Mundell entered with alacrity into the policy debates in international trade and finance that heated up as global growth surged in the early 1960s.  A two-year stint in the research department of the International Monetary Fund, 1961-63, served him especially well.  Two papers in 1963 – “Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates” and “”Inflation and Real Interest Rates” – made his reputation. Mundell arrived at the University of Chicago in 1965, and for the next several years, as the international system of convertibility to gold via dollars under Bretton Woods Agreement gave way to flexible exchange rates, he was, as the saying goes, the straw that stirred the drink. “He did not shy away from the difficult task of setting out a framework for policy thinking,” wrote Dornbusch.  “There was no international monetary issue of the 1960s and 1970s in which he was not prominently and decisively involved.”

Departmental friction, probably mainly with Milton Friedman, led Mundell to quit Chicago and accept a position at the up-and-coming University of Waterloo, in southwestern Ontario,  starting in 1971. Ricard Caves, of Harvard University, who had recently edited a volume of Readings in International Economics for the American Economic Association, memorably cracked wise: “At last Waterloo has met its Napoleon!”

In 1974, Mundell accepted an offer from Columbia University. Once in New York, he struck up a conversation with the editorial page of The Wall Street Journal. A 1970 lecture to a full house at the University of Chicago – “The Dollar and the Policy Mix” – had “failed to convince,” Dornbusch wrote; there had been no model, no carefully spelled-out assumptions, just assertions – tax cuts would foster growth on the supply side, tight money would diminish inflationary expectations.

But after Princeton’s economic department published the lecture as a pamphlet in 1971, its argument gathered force, especially after WSJ editorial writer Jude Wanniski anointed it as the “Mundell-Laffer hypothesis” in an article in The Public Interest in 1975. (Arthur Laffer had been a Chicago colleague). Mundell had become “guru for a movement that may not have much intellectual appeal,” Dornbusch wrote in 2000, “but it certainly has changed the world.” As for Mundell’s advocacy of gold, Dornbusch added, it was hard to tell if he was serious. But, he continued, Mundell always had an undeniable streak of the enfant terrible.”

Left behind in Chicago in 1972 were Mundell’s students, Dornbusch, Jacob Frenkel and Michael Mussa; his faculty colleagues, Harry Johnson, a fellow Canadian 10 years his senior; Stanley Fischer, Arnold Harberger, and the deeper theorists whose work had influenced Mundell’s conversion from classical Keynesian view to those of a global monetarist.  Dornbusch and Fischer moved the next year to MIT and taught two luminaries of the next generation of international economists, Kenneth Rogoff and Maurice Obstfeld, who in turn wrote the text for the generation after that.  Frenkel went to the International Monetary Fund and prepared the way for future policymakers at the Bretton Woods institutions, including Fischer, Mussa, Rogoff, Obstfeld, and, in the present day, Gita Gopinath at the IMF and Carmen Reinhart, at the World Bank.

Might the Swedes somehow have diluted Mundell’s contribution?  Or turned a blind eye to it altogether? Marcus Fleming, IMF deputy research director, who shared credit for “the Mundell-Fleming model,” died in 1976; Harry Johnson in 1977; Robert Triffin in 1993.  Dornbusch argued that the epochal transition to the open-economy world could not be overlooked. With Obsfeld, and Guillermo Calvo, of Columbia University, he organized a 1997 Festschrift conference (published as Money, Capital, Mobility, and Trade); and a campaign among those who had been invited to submit nominations

It worked. Mundell was recognized and went on to 20 years of enhanced celebrity, generating ample material for the later chapters of that future biography.

Dornbusch died of cancer, in 2002, at 60, after a courageous struggle. Interesting as was his life, significant as were his contributions to international economics (his work on exchange rate “overshooting,” as well as that of his student Pentti Kouri, was mentioned in the background information that accompanied Mundell’s prize), he is unlikely to get a biography of his own. He was, however, one of the best-loved economists of his generation. And the story of his service to economics is a reminder of how the profession works.

 David Warsh, an economic historian and a veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this column originated.