Isegoria

Darkness is the norm, Jim points out:

Copper production shows three peaks: The Roman Empire in the west, the Song Dynasty, and modernity.

The Roman Empire in the west and the Song Dynasty had about seven times the preceding and following level of copper production, thus while those civilizations were going concerns, they had far more production and wealth than the rest of the world put together.

When the Roman Empire in the West fell, its GDP dropped about a hundred fold.

So, looking at the past few thousand years, the norm has been relatively brief periods of civilization in relatively small parts of the world.

I would guess the problem is that the state lacks the cohesion and self discipline necessary to refrain from devouring civil society, and anarchy lacks the cohesion necessary to keep the roads safe and property rights secure. Technology can advance during anarchic periods, often quite rapidly, but the amount of wealth, as indicated by copper production, shipwrecks, and such, tends to be very low indeed during such periods. Despotic states, on the other hand, have higher wealth, probably because they can make the roads safe over a large area, but are apt to end technological progress, and often reverse it.

Despite recent disasters we are still trapped in the economists’ world:

But the moment you pull back and look at that world from a wider perspective strange things start to emerge.

When the neoliberal project first began in 1979 with Mrs Thatcher the idea was that politicians would give away power to the markets and the state would shrink. Over the past 15 years the idea of the “market” has been extended to practically every area of society — education, health, even the arts. But to make this happen those running the neoliberal project had to enforce it by creating vast and intricate performance indicators and feedback systems (which in many cases led to wide scale absurdities). And to do this they used the mighty power of the state.

The crucial thing is that these systems had practically nothing to do with the original idea of the “market”. They are actually a strange pseudo-scientific piece of planning engineered by politicians and groups of technocrats that borrowed far more from cold-war ideas of feedback engineering and cybernetics than from the risky roller coaster of the market. And to create the systems they had to greatly enlarge the state and the extent of its power, which is the very opposite of the vision of a free-market utopia.

And when you examine the roots of the neoliberal idea of the market it gets odder still. The ideas that rose up in the post-war years that captured the imagination of people like Mrs Thatcher are actually a very strange mutation of capitalism. If you listen to interviews with Friedrich Hayek he talks far more like a cold war systems engineer discussing information signals and feedback than Adam Smith with his theories of Moral Sentiment.

While the roots of the technical systems that the banks created to manage risk also lie back in the cybernetic dreams of the 1950s and 60s. Dreams not of progress through the dynamism of markets — but of using computers to create a balanced, almost frozen world. — just like in the Cold War.

Which raises the question — have we misunderstood what we have lived through since 1979?

We think it was the resurgence of capitalism. But maybe it was something very different? Something that we can’t see properly because we are still trapped in the economists’ world and their mindset.

Gregory Clark explains his research on economic mobility:

What gave you the idea to look at surname data?

Initially I was interested just in extending conventional social mobility estimates into the distant past. Estimating social mobility is very data intensive. You need to link individual parents and children. There are thus no such estimates for any society before 1850.

Tracking surname status was a convenient shortcut. In most societies, all the people with a surname such as Goodhart descended from the earlier set of Goodharts. We do not know the individual linkages, but we can ask what is happening to their status as a group across generations.

And what did you find in collecting this surname data?

I found that you get radically slower estimated mobility rates for all societies when you switch to surnames. The conventional estimates of status correlation across generations are 0.2–0.6. With surname groupings it is always 0.7–0.8.

The effect is dramatic in some countries. Modern Sweden has some of the most rapid social mobility rates estimated in the world. Yet surnames in modern Sweden show status persistence exactly in this 0.7-0.8 range. This result was completely unexpected. Understanding why that is the case is a key puzzle the book tackles.

You don’t just look at income either. You look at educational attainment, what occupation they’re in, etc.

The book mainly concentrates on measures such as education, occupational status, wealth and longevity as indicators of status. Another surprising puzzle that emerged is that with surnames, the persistence of status was the same for all these measures.

We might expect wealth to persist in a different way, since it can be transmitted across generations in a different way than education. You do not need any talent to inherit wealth. This is another regularity the book tries to account for.

Social mobility seems impervious to government intervention:

It is clear that families are very powerful determinants of children’s outcomes. But what do parents transmit to their children? Is it mainly some type of culture? Or is it mainly genetics?

The data does not exist to provide any conclusive answer to this question. But even if this is cultural transmission, it looks in all respects just the same as biological inheritance. The book performs a series of tests to see if biological transmission can be ruled out as the important link, and the empirical patterns never rule this out.

For example, if biological transmission is the most important, then elite groups will never be the product of the adoption of particular cultural traits. Instead they will always represent a selection from the upper end of abilities of a parent population. Modern Jews will not be elite because of the social and religious mores of Judaism, but because they are a selection based on ability from a larger parent Jewish population.

For all such elite groups we observe, they do indeed turn out to be a selection from a larger population. Egyptian Copts are such a social elite, for example, but they represent the descendants of the Copts rich enough at the time of the Arabian conquest to be able to afford the head tax levied on all who did not convert to Islam.

A recent book, The Triple Package [by Amy Chua and Jed Rubenfeld], argues the extreme opposite of biology in explaining social status, with the claim that successful cultural groups in the U.S. have three key features leading to success, one being impulse control.

But what is remarkable is how disparate the culturally successful groups they identify are — Jews, Chinese, Indians, Mormons, Iranians, Lebanese, Nigerians, Cubans. And it is demonstrable that most of the successful groups identified here were elites selected from the parent populations as a combined result of politics at home and immigration policy in the U.S.

[...]

Accounts that emphasize cultural transmission all have a hard time explaining why successful groups, and successful families in general, all experience regression to the mean. There is nothing to stop a cultural trait being inherited unchanged. We see the preservation of such cultural forms as religious rituals unchanged over many generations.

Only biological inheritance has an inbuilt mechanism to explain observed regression to the mean. It also has predictions about when this regression to the mean will not be observed (complete endogamy). It further implies that the rate of regression to the mean will be the same at the top of the status distribution as at the bottom.