On Nightfall, What It Is, and Whether It Falls on Us

I enjoyed these passages in A. Roger Ekirch’s At Day’s Close: Night in Times Pasta well-known and well-liked work of social history, where he describes how the term “nightfall” reveals an older way of thinking about night. Not as the absence of light, but as an actual substance descending from the sky. As he points out, “falling” is not in fact an accurate visual description of what happens at sundown:

Rather than falling, night, to the watchful eye, rises. Emerging first in the valleys, shadows slowly ascend sloping hillsides. Fading rays known as “sunsuckers” dart upward behind clouds as if being inhaled for another day. While pastures and woodlands are lost to gloom, the western sky remains aglow even as the sun draws low beneath the horizon. …

Darkness signified more than the temporary absence of light. According to popular cosmology, night actually fell each evening with the descent of noxious vapors from the sky. Night, wrote Richard Niccols in 1610, “did powre grim darknesse downe.” Kept at bay by daylight, descending mists reportedly contributed, no less than the sun’s departure, to the onset of darkness. In Herefordshire, nightfall was known as “drop night.” Some individuals described themselves “within night,” as if enveloped by a mammoth black cloud; in fact, criminal prosecutions in Scottish courts routinely referred to offenses having been committed “under cloud of night.” …

In his essay “On Nightfall, What It Is, and Whether It Falls on Us,” the sixteenth-century French physician Laurent Joubert derided popular fears… he disputed the prevailing notion that “nightfall is a certain rheumatic quality in the evening and night air that falls from the sky.” “There is no evil quality in nightfall air,” he insisted, with night itself being “nothing more than the obscurity or darkness of the air as a result of the absence of the sun.” All the same, the traditional wisdom about nightfall persisted for many years.

The idea of sixteenth-century pamphleteers duking it out over the reality of nightfall, in a sort of archaic version of internet flame wars over climate change, is somehow very pleasing.

512bkzdtlgfl

Soviet urbanization was highly coercive

If there is a consensus view of the first decades of Soviet economic history, it probably goes something like this: Stalin oversaw a dramatic transformation of the Russian economy from agrarian to industrial, but at enormous and unnecessary human cost. The most famous example of his coercive policies leading to terrible human costs is probably agricultural collectivization, but in recent reading I learned that the early urbanization drive was also highly coercive.

A long 2012 report by Charles Becker, S. Joshua Mendelsohn and Kseniya Benderskaya, “Russian urbanization in the Soviet and post-Soviet eras” is a very useful overview, and touches on this question:

The magnitude of the USSR’s economic transition during the Stalin and Khrushchev eras can be difficult for outsiders to grasp: in 1928, some 75 per cent of Russia’s labour force were self-employed farmers and craftspeople, 18 per cent were manual workers, and only 3 per cent were members of a kolkhoz or cooperative. By 1939, only 3 per cent of the labour force remained as own-account farmers, while 47 per cent were members of a kolkhoz or cooperative, and 50 per cent were manual workers. …

In 1926 there were still no large regions where even one-quarter of the population was urban. … This setting changed dramatically in the next 13 years, when the USSR’s urban population as a whole rose by 119 per cent. By 1939, urbanization rates above 40 per cent were recorded in the Northwest and Russian Far East, while most other regions were between 25 and just under 40 per cent urban.

russia-urban-pop

This explosive urbanization in the 1930s reflected both crash industrialisation and agricultural collectivisation, which drove many people from the land. To urbanise rapidly during a period of rural upheaval and declining productivity could occur at that time only in a command economy whose directors were willing to suppress consumption, especially by the rural population. …

It is also important to recognise than much Russian migration was not fully voluntary: studies cited by Mkrtchian (2009) suggest that ‘migration organised by the authorities’ peaked at about 40 per cent of the total in the late 1940s, and even in the late 1970s and early 1980s accounted for as much as 15 per cent of the total. A considerable but uncertain share of this organised migration involved forced labour (of political prisoners and conventional criminals). After sentences were completed, it was common to prevent convicts from returning to their original homes, forcing them to settle in remote, northern areas. …

There is more detail in the following passages from Fiona Hill and Clifford Gaddy’s The Siberian Curse: How Communist Planners Left Russia Out in the Cold:

Soviet statistics deliberately masked the fact that the achievements of the USSR’s industrialization campaign were based on slave labor. Forced labor camps in the GULAG system that exceeded 3,000 or 5,000 people (depending on location) were classified as towns. This meant that to the outside observer, regions like Siberia were experiencing unprecedented population as well as industrial growth.  In their book on prison labor in the USSR, David Dallin and Boris Nikolaevsky note that forced migration was an essential component in this population growth— underscored by the fact that the fastest urban growth was recorded in the Russian North and the Far East, where most of the labor camps were located.

Even after their release, prisoners still contributed to the population growth of regions like Siberia. On the completion of their sentences, former prisoners were given a new provisional status of “special migrant.” As such, they were legally prohibited from relocating or moving back to their original homes. Everyone who passed through the GULAG system east of the Urals became part of the “migration” wave that swept through Siberia and the Far East, whether they liked it or not.

The town of Norilsk and the giant mining company Norilsk Nickel are probably one of the most famous result of this type of forced urbanization:

Noril’sk consisted of a series of labor and construction camps that operated from June 1935 to August 1956. The early numbers of prisoners were small, around 1,200 in October 1935, but swelled to a peak of 72,500 in 1951. The camp construction brigades built the giant Noril’sk Nickel foundry, the city of Noril’sk itself, most of its basic municipal infrastructure, and other small processing factories that served Noril’sk Nickel. Camp labor extracted and processed local resources including gold, cobalt, platinum, and coal; produced cement; and provided the labor pool for a whole range of local industries.

Hill and Gaddy argue that this forced urbanization, with its concentration on populating the cold Siberian wastes, led to a city pattern that is highly costly and inefficient. And because of path dependencies–cities rarely shrink once they are established–the legacy of that forced urbanization continues to impose costs on the Russian economy.

For me, this urbanization evidence weakens the view that “Stalin killed lots of people, but at least he urbanized and industrialized the country” and gives more weight to the argument that “Stalin killed lots of people, and screwed up the industrialization process.” An excellent recent and data-driven assessment of the Stalin era, “Was Stalin Necessary for Russia’s Economic Development?” also generally supports the latter view.

“Impatient with ordinary sunsets”: Eve Babitz’s one-liners

Winning the award for the book most unlike what I usually read is Eve Babitz’s Slow Days, Fast Company: The World, The Flesh, and L.A.a sort of impressionistic mini-memoir of Los Angeles in the early 1970s. I can’t say that I had a particular interest in Hollywood party people before picking it up, but it sucked me in nonetheless, mainly because she is such a brilliant writer. One example:

A long time ago my mother and I were driving to a wedding. I had been engaged to both the groom and the best man at one time or another. I was twenty-three, a clerk-typist by day and a groupie- adventuress prowling the hot Sunset Strip at night. I’d broken off with both of those guys because I was impatient with ordinary sunsets; I was sure that somewhere a grandiose carnival was going on in the sky and I was missing it. But still, it made me feel funny having those guys slip away like that.

“Impatient with ordinary sunsets” is just a wonderful turn of phrase.

Once I start excerpting it’s hard to stop, so I’ll confine myself to one of her classic one-liners:

She was an actress, and like all actresses, she was only real when she was pretending.

OK, one more, just because:

Art is supposed to uphold standards of organization and structure, but you can’t have those things in Southern California—people have tried.

The general theme is that Babitz works very hard to seem superficial while actually cutting to the chase.

41trroywaal

What is the real driver of the Russian revanche?

The deterioration of US-Russia relations, and Russia’s shift to increasingly repressive domestic politics and an increasingly aggressive external stance, is one of the most important shifts in global politics over the past couple of decades. One of the standard explanations for this worrying trend is that it is Russia’s natural reaction to what it could only perceive as aggression by the West: the expansion of NATO up to Russian borders. Indeed, just such an outcome was predicted by many Russia hands when NATO expansion was first proposed. Here is George F. Kennan’s famous 1997 op-ed in the New York Times: 

And perhaps it is not too late to advance a view that, I believe, is not only mine alone but is shared by a number of others with extensive and in most instances more recent experience in Russian matters. The view, bluntly stated, is that expanding NATO would be the most fateful error of American policy in the entire post-cold-war era.

Such a decision may be expected to inflame the nationalistic, anti-Western and militaristic tendencies in Russian opinion; to have an adverse effect on the development of Russian democracy; to restore the atmosphere of the cold war to East-West relations, and to impel Russian foreign policy in directions decidedly not to our liking.

nato_map_final

The new “Russia Beyond Putin” issue of Daedalus (available on Kindle) has an interesting piece by Keith A. Darden, “Russian Revanche: External Threats & Regime Reactions,” which suggests a slightly different narrative. Rather than NATO expansion per se, he argues, it was NATO’s shift to a doctrine of external intervention that catalyzed Russia’s fears:

NATO expansion – which began in the mid-1990s – was not well received in Russia, but NATO expansion alone appears to have been insufficient to raise the specter of a threat to Russia’s territorial integrity. Russia’s security doctrine in 1997, which followed the invitation of Poland, Hungary, and the Czech Republic to join the NATO alliance, did not explicitly identify NATO or the United States in the list of threats Russia faced. Indeed, external military threats hardly merited mention.

This changed with Kosovo. The NATO bombing of Yugoslavia in 1999 shifted perceptions completely: it showed that the alliance could (and would) be used for offensive out-of-area operations to intervene in the internal affairs of a sovereign state without United Nations approval. Russian leaders immediately registered the potential threat. The link of external (U.S./NATO) military power with internal opposition (the Kosovo Liberation Army) to undermine a rival government came to be perceived as a new model of warfare and the “foundation of a unipolar world.”

In Russia’s October 1999 National Security Concept – the first following the Kosovo War – international influence in Russia’s internal politics was identified as a threat to national security. An expansion of the domestic control of the state was articulated as strategically necessary to prevent external actors from undermining Russia’s internal security. In a world of asymmetric Western power, the notion that a state’s internal opposition could be exploited by outside powers to undermine a regime created a perverse incentive for some regimes to circumscribe or eliminate the internal pluralism essential to democratic rule. …

The extra-constitutional ouster of Viktor Yanukovych’s government [in Ukraine] and the seizure of power by a pro-U.S., pro-NATO, and anti-Russian coalition clearly marked a sharp increase in the perception of threat in Moscow, triggering a full triad of balancing efforts (military, internal, and ideological). As a military response, Russia used its newly revamped special forces to quickly invade and annex Crimea and to sustain a separatist insurgency in eastern Ukraine. By May 2014, the Russian security doctrine identified color revolutions as a form of hybrid warfare used by the United States as the primary external threat.

If Russia’s anti-Western reaction is not a uniquely Russian phenomenon, but instead an instance of a more general trend, then this interpretation makes sense. Only Russia was threatened by the expansion of NATO. But many countries could reasonably feel threatened by the West’s new willingness to overthrow governments it dislikes.

Darden suggests that China has followed a similar trajectory for similar reasons. And indeed it is true that China’s government perceived the “color revolutions” of the early 2000s in much the same way as Russia did, as “organizational pro-Western proxies used by the U.S. to oust unfriendly leaders.” The broader conclusion is not very cheerful:

To place the Russian reaction in broader context it is useful to recall historian and diplomat E. H. Carr, who pointed to the relations of power that underlay normative commitments in international affairs. Writing in the 1930s, but looking back at the ideologies of predominant states, Carr noted that internationalism and universalism were ideologies of states that aspired to world leadership – to hegemony. Universal values suit the powerful, Carr thought, for they justify universal intervention and interference in the internal affairs of other states, something only the powerful are capable of. “Pleas for international solidarity and world union,” Carr wrote, “come from those dominant nations which may hope to exercise control over a unified world.”

Similarly, Carr noted that the ideological reaction of rising powers was a function of positions of relative weakness. “Countries which are struggling to force their way into the dominant group naturally tend to invoke nationalism against the internationalism of the controlling powers.” Universalism, whether liberal or communist, is the ideology of the dominant. The aspiring or declining powers mobilize nationalism and particularism.

In the antiliberalism of great powers like Russia and China, we see the paradoxical effect of the singularity of American power and dominance: a defensive inversion of dominant norms. For states strong enough to mount a challenge, and with a prior history of framing internal pluralism as a source of external threat, resistance to U.S. power will present as an antiliberalism that is likely to shape domestic institutions. It is depressing that the primary effect of a world dominated by liberal democratic states may not be the gradual extension of democracy and the normative assimilation of the world’s nondemocratic emerging powers, but it should not come as a surprise. The primary effect of muscular liberalism may be to generate an opposing reaction.

So far, my favorite book about the 2016 election is one that came out in 2014

Like many good books, Martin Gurri’s The Revolt of the Public and the Crisis of Authority in the New Millennium is about One Big Idea, though the implications take a while to work through. It’s basically a story of how technology and media are changing politics.

Though Gurri does not, I found it helpful to put the idea in economists’ terms: a dramatic increase in the supply of information and media has pushed down its value. For many established institutions, this has meant a decline in influence, as their once-authoritative statements must now compete for attention and truth-value with a growing horde of statements from the margins. The struggles of old-line newspapers, political parties, and governments in the new environment are thus all of a piece:

The grand hierarchies of the industrial age feel themselves to be in decline, and I’m disposed to agree. They evolved to operate on a more docile social structure – one in which far less information circulated far more slowly among far fewer persons. Today a networked public runs wild among the old institutions, and bleeds them of the power to command attention and define the intellectual and political agenda. Every expert is surrounded by a horde of amateurs eager to pounce on every mistake and mock every unsuccessful prediction or policy. Every CRU has its hacker, every Mubarak his Wael Ghonim, every Barack Obama his Tea Party. Nothing is secret and nothing is sacred, so the hierarchies some time ago lost their heroic ambitions and now they have lost their nerve. They doubt their own authority, and they have good reason to do so.

Gurri really won my heart when he brought this insight together with the work of the great anthropologist Mary Douglas, who had an uncanny knack for creating powerful and useful analytical frameworks:

Another way to characterize the collision of the two worlds is as an episode in the primordial contest between the Center and the Border. The terms were employed by Mary Douglas and Aaron Wildavsky in another context, long before the advent of the information tsunami, but they are singularly apt for our present condition. “Center” and “Border” can be applied to organizations embracing specific structures, ideals, and beliefs about the future. The two archetypes are relative to each other, and perform a kind of dance which determines the direction of social action.

The Center, Douglas and Wildavsky write, is dominated by large, hierarchical organizations. It frankly believes in sacrificing the few for the good of the whole. It is smug about its rigid procedures. It is too slow, too blind to new information. It will not believe in new dangers and will often be taken by surprise. The Center envisions the future to be a continuation of the status quo, and churns out program after program to protect this vision. The Border, in contrast, is composed of “sects” – we would say “networks” – which are voluntary associations of equals. Sects exist to oppose the Center: they stand firmly against. They have, however, “no intention of governing” and develop “no capacity for exercising power.” Rank means inequality, hierarchy means conspiracy to the Border. Rather than articulate programs as alternatives to those of the Center, sects aim to model the behaviors demanded from the “godly or good society.” Making a program is a center strategy; attacking center programs on behalf of nature, God, or the world is border strategy.

If this is starting to sound a bit like what happened in the primaries last year, that is no accident. Gurri I think provides a useful way of thinking about the realignment of politics made clear by the 2016 election in the US, and the UK’s Brexit referendum:

I was trained, as even the youngest of us were, to think in terms of the old categories: to think, for example, that the direction of American politics depended on the balance between Democrats and Republicans. Yet both parties are, in form and spirit, organizations of the Center. Both are heavily invested in the established order, offering the public minor differences in perspective on the same small set of questions. Surprises in America’s political trajectory are unlikely to come from the alternation of Democrat and Republican. The analyst searching for discontinuities – for the possibility of radical change – must wrench his mind free of the old categories and turn to the subterranean strife of hierarchy and network: in the political parties, between “netroots” activists and a variety of Tea Party networks on one side, and the Democratic and Republican organizations on the other. There, different languages are spoken, potent contradictions can be found. …

The book is consistently interesting, and although he refrains from making explicit predictions it nonetheless often feels quite prescient. Gurri’s blog extends the analysis into 2016, though that piece will make more sense after having read the book.

51eiqavwepl-_sx260_

The continuing relevance of Kornai for China

It’s feeling like something of a Kornai moment to me: not long after finishing a nice book covering Kornai’s influence on China of the 1980s, I have stumbled across an excellent discussion of Kornai’s ideas apply to China today.

In the latest issue of the Journal of Economic Literature, Xu Chenggang reviews János Kornai’s Dynamism, Rivalry, and the Surplus Economy. Kornai calls the 2013 book a sequel of sorts to his 1992 classic The Socialist System, as it lays out a conceptual framework for understanding capitalism in contrast to socialism. But Xu also uses the review to think through China’s current situation in the context of Kornai’s framework, especially the key concept of the soft budget constraint:

Two pairs of concepts highlight the analytical framework for contrasting capitalism to socialism: shortage economy versus surplus economy and soft budget constraint (SBC) versus hard budget constraint (HBC). Compared with the distinctive feature of socialism called chronological shortage, which was first pointed out by the author in the 1970s, capitalism is characterized as chronological surplus, which means excess supply, including excess capacity and excess inventories, and labor unemployment. …

One of the major challenges beyond understanding “pure” systems is the hybrid system, which covers most of the economies in the world. China presents an interesting case of such a challenge. The pre-reform socialist China was a shortage economy, which is exactly consistent with Kornai’s predictions. Since the reform, China transformed into a particular type of hybrid system, that is, state capitalism, similar to that in Vladimir Lenin’s New Economic Policy. …

The Chinese economy is a super-surplus economy featured by massive over-capacity, which exceeds the over-capacity problem in all leading capitalist economies in the world. Such an extraordinary over-capacity problem is concentrated in the state sector with SBC. The SBC syndrome and the “forced growth” behavior of the SOEs create shortage under the socialist system. This phenomenon raises the issue of why SBC under state capitalism is associated with surplus. …

In contrast to private firms in capitalism, state firms under state capitalism continually produce and expand unwanted and obsolete products because they are protected by SBC (i.e., no “destruction” policy). The monopolistic power and government protection provide SOEs with the privilege of heavily subsidized capital. They imitate other innovations at extremely low costs because of favorable technology transfer deals from advanced multinational firms that are supported by the government and the monopolized super-large scale of the market (e.g., high-speed train technology). …

In socialism, SBC and lack of competition create shortage. Moreover, SBC is a mechanism that hampers competition. Indeed, market competition was weak in the Central and Eastern Europe and Former Soviet Union (CEE–FSU) reformed economies when central planning was replaced by market mechanisms. Different from CEE–FSU reforms, the large-scale entry of nonstate firms, particularly private firms, makes market competition the norm in the Chinese economy. Even SOEs, which are subject to SBC, are driven to fierce market competition and regional competition.

When high-powered incentives associated with these competitions are given to the CEOs of SOEs for market share or for profits and when SBC serves as insurance against insolvency, SOEs are induced to take bold risks in competition for market shares. This situation seems to be the force that produces extraordinary surplus. Thus, the coexistence of fierce product market competition and severe SBC could trigger more drastic over-capacity problems.

This phenomenon in which SBC under fierce competition may exacerbate surplus can also be observed in leading capitalist economies. Examples include the bad loan problems in Japan and the sub-prime mortgage problem in the United States. If the essential mechanism of SBC is the moral-hazard problem created by the removal of bankruptcy threat (broader than bailing out by an ex ante identifiable agent), the sub-prime mortgage scheme in the United States can be regarded as a sophisticated variation of SBC in advanced capitalism.

Like most of Xu’s work, the whole review is worth a read. I also happen to think that Xu’s 2011 article “The Fundamental Institutions of China’s Reforms and Development” is one of the single best things ever written about the Chinese economy; it and other pieces are at Xu’s profile and bibliography page.

What happened to the Chinese arguments for inland infrastructure investment?

There is a pretty overwhelming consensus these days that China is wasting huge amounts of money by building lots of unneeded infrastructure projects in its less-populated inland provinces. A lot has been written on this theme since the 2009 mega-stimulus that launched the infrastructure spending boom, but one of the more recent examples is this piece by Trefor Moss in The Wall Street Journal; here’s a sample:

While President Donald Trump says the U.S. urgently needs to invest in its decaying transport systems, China, if anything, faces the opposite problem of profligate infrastructure spending, according to some economists. Yet after years spent building airports, roads and railways, Beijing outlined plans for more of the same in a recent policy paper.

Under the plan, China would have 260 commercial airports by the end of the decade, up from 207 in 2015. Additions include a second major airport in Beijing at a cost of $11.7 billion, and a second airport for the western city of Chengdu for $10.2 billion. …

Three-quarters of Chinese airports—and virtually all the country’s regional airports—lose money, the then-chief of the civil aviation authority, Li Jiaxiang, said in 2014, in the agency’s most recent public comment on the issue. The agency spent $191 million last year subsidizing loss-making airports.

Airports in far-flung parts of western China are especially vulnerable. The $57-million Libo airport in Guizhou, for example, drew media attention in 2009 for handling just 151 passengers, yet the zombie facility hasn’t been allowed to close.

In this context it was interesting for me to recently read an older book that makes a strongly argued case for doing lots of infrastructure investment in inland provinces, with plenty of statistical evidence and full consideration of the relevant economics literature. The book is The Political Economy of Uneven Development: The Case of China by Wang Shaoguang and Hu Angang; it was published in 1999 but is a translated and revised version of a Chinese book composed in 1995. Therefore it very much predates the launch of China’s “develop the West” drive in 1999, and indeed the book seems to be a key source for the intellectual arguments driving that program and subsequent efforts to close the gap between the coast and the inland.

I would summarize Wang and Hu’s main arguments as follows:

  • There is no natural trend for regional disparities to be narrowed through a process of convergence. Market forces do not necessarily cause factors of production to spread evenly around the economy, but can concentrate them in areas that possess initial advantages. And in fact, regional inequality in China in the early 1990s was rising sharply.
  • Regional inequality in China was already extremely high by any international standard, which poses risks to national unity and political stability. (“The China of 1994 would undoubtedly have higher levels of regional inequality [if properly measured using units of similar size] than did Yugoslavia in 1988, just a few years before its disintegration.”)
  • The different endowments of China’s provinces–geography, economic structure, human capital, etc.–are either a function of differences in per-capita GDP or have no statistically significant relationship with per-capita GDP. In fact the numerous historical, geographical and cultural differences among provinces are less important than gaps in transportation infrastructure.
  • Differences in economic growth rates across China’s provinces are mainly driven by differences in investment, and differences in investment are mainly driven by differences in provinces’ local savings. Since local savings levels are themselves determined by the level of economic development, higher-income provinces have a natural tendency to grow faster.
  • These natural advantages could be offset by a capable and committed government that organized inter-provincial capital flows. But policies in the 1980s and early 1990s lead to fiscal decentralization and favoritism for the rich coastal provinces, aggravating rather than alleviating regional inequality.
  • The solution then is for the central government to stop unnecessarily favoring coastal provinces, and instead organize large fiscal transfers and investment programs in inland provinces in order to compensate for their lower savings, boost their growth and put them on a more equal footing with the coastal provinces.

Compared to most academic policy recommendations, these were almost unbelievably influential: two decades of large investment programs for inland provinces have followed. Yet the regional gaps that so worried Wang and Hu have not closed; indeed recently they have widened again. I would be surprised if many people these days would argue that the problem with inland provinces is that they aren’t getting enough infrastructure investment.

So what went wrong? I can think of a few possibilities, which are not mutually exclusive:

  • The differences in endowments among provinces were more consequential than expected, and could not be equalized simply by building more transportation infrastructure in poorer inland provinces. Coastal provinces’ real advantages may have been less about geography, infrastructure and transport costs, and more about greater access to social and business networks abroad, stronger entrepreneurial experience and traditions, and higher levels of education and human capital. Lowering transportation costs for the inland provinces helps, but it isn’t everything.
  • All investment is not created equal — public-sector investment in infrastructure and private-sector investment in manufacturing are not substitutes. Boosting public-sector investment in the inland provinces may have added to their GDP in the short run, but it did less to change their growth potential and economic structure than private-sector investment would have. High rates of public investment also risk entrenching dependency rather than ending it, in much the same way that huge amounts of foreign aid are not always helpful for poor countries.
  • The infrastructure investment boom was in practice not a centrally-organized transfer of capital designed to narrow regional gaps, but more of a nationwide epidemic of soft budget constraints.