History & wealth: Burke vs Rand

Via the CEPR come two new papers:

Almost (pdf) a century and a half after the first large [United States] migration wave of the late 19th century, those places where migrants settled in big numbers are significantly better off than those which were virtually untouched by the migration wave...migration has left an imprint which still affects economic performance.

And a study (pdf) of 18th and 19th century England finds that:

children of couples of low fecundity (and hence small families) were more likely to become literate and employed in a skilled profession than those born to couples of high fecundity.

This, the authors say "could well have played a key role" in the industrial revolution.

These two different papers add to a growing body of evidence which shows that quite distant history strongly influences our economic fortunes today. Barack Obama was right to say in his "you didn't build that" speech that "if you’ve been successful, you didn’t get there on your own." You were helped not only by teachers and the government, but (unwittingly?) by previous generations.

In those remarks, Obama was criticizing Randian Conservatives - who are sadly not confined to the US - with their silly idea that today's rich are heroic self-made men. But there is another strand of conservatism which is wholly consistent with the idea that we owe our fortune to the past. Edmund Burke famously said that society is "a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born."

Which raises a paradox. Whilst economic research now supports Burke's view, much of the right no longer does so, preferring ahistorical inidividualist tosh. But as Will says:

A Conservative without a sense of history is just a whining, pleading bully.

Comments

[Patrick]

The dead and the living had/have a say in taxation. Those to be born have none but our accumulated debt, being taxation deferred, falls most heavily on their unformed shoulders.

A perfect example of taxation without representation.

While the left may seize on the inheritance of a common past their silence on the immorality of leaving a debt burden for our common future is telling.

[Anonymous]

Evidence, eh?

They (conservatives, classical liberals and libertarians, et al) don't like it up 'em.

[Luke]

Patrick, even leaving out the philosophical problems about worrying about people who don't exist, I'm not sure that point really gets you anywhere. First, it depends why the debt was incurred - if it was to prevent financial collapse, future generations will see it as a reasonable price. Similarly, if it's used to do useful things (defeat Hitler, build bridges etc). Second, while our children will inherit the debt, at least some of them will inherit the gilts (or the banks and insurers that own them). Only about 30% of gilts are foreign owned (sorry link not working).

[Patrick]

Luke, if Mr Burke can fret about the unborn don't see why I can't - have you tried that point on your local Green candidate? Your financial collapse example is logic of the circular variety and you'll struggle to find anybody who would argue it was immoral to incur a debt defeating Hitler.
Morality rears its head when the debt left behind is incurred in order that today's generation benefits from a lifestyle that without the build up of debt would otherwise not be possible a.k.a. living beyond our means. The choice thus boils down to tough for us or tough for our kids.

[gastro george]

Patrick. You confuse money with resources. The Greens would have a point about consumption of resources affecting our children. But the future will have no problems with money as long as they have enough resources.

[Tim Newman]

"In those remarks, Obama was criticizing Randian Conservatives - who are sadly not confined to the US - with their silly idea that today's rich are heroic self-made men."

Any examples of such folk?

[Patrick]

Gastro George, no confusion.

Your interpretation of my remark would yield a rather odd Green candidate who cared intensely about the next 60/70 years but not a jot thereafter.

[Metatone]

The first paper is very disappointing - there seems no recognition that very many of the counties of high immigration were also counties where industry and urbanisation were also present. As such, all the stuff about "entrepreneurial culture of immigrants" is largely unsupported, because it largely says: counties which were either industry or resource rich in the industrial revolution (and thus had jobs to attract immigrants) stayed rich.

What superficially makes the paper seem better is that the traditional "South" didn't attract immigrants and had industry, but stayed poor - but again, there are bigger factors (Civil War aftermath) that need to be invoked.

[gastro george]

"Morality rears its head when the debt left behind is incurred in order that today's generation benefits from a lifestyle that without the build up of debt would otherwise not be possible a.k.a. living beyond our means. The choice thus boils down to tough for us or tough for our kids."

Patrick - this is gold standard/quantity theory of money thinking. Deficits are normal, as is government "debt". It's expansion should reflect the growing wealth of the nation because, as Luke points out, "debt" is somebody else's asset.

Money is just a claim on tomorrow's resources. Our prosperity will depend on our real resources and ability to use them. Government controls the claims on those resources. We're only living beyond our means if we are consuming more than our resources could provide. With millions unemployed, that's not likely at the moment.

[Account Deleted]

@Patrick, Burke's tyranny of the past and future was nailed by Tom Paine: "Every generation is, and must be, competent to all the purposes which its occasions require. It is the living, and not the dead, that are to be accommodated". See http://fromarsetoelbow.blogspot.co.uk/2012/01/those-pesky-kids.html for the full quotation and Burke's original claim.

It is always tyrants who appeal to the debt we owe the past and our obligations to the future, as by this they can dismiss the interests of the present. This is why the Green movement has a conservative and anti-democratic core. The left is just as susceptible to sentimentality in this regard as the right, hence the privileging of pensioners and schoolkids.

But votes for sperm is perhaps taking it too far.

[Keith]

Patricks contribution shows the lamentable tendency to confuse real wealth with financial claims. It is elementary if you study say J. S. Mill of 1848 vintage that "money and bullion are not wealth... but merely the sign or symbol of wealth". If creating financial claims increases productivity all is well. There will be output to meet the claim. If more people studied this even in their limited spare time con men like David Cameron and his Bullingdon bullies would not win elections. Debt fear mongers will condemn the UK and the rest of the world to decay and decline unless more people learn economics.

The problem with Libertarianism is that it denies the idea of reciprocity. It is a teenage ideology of selfishness and historical ignorance. At least in the last Guilded Age the leisure class read books and had curiosity. Andrew Carnegie endowed Libraries to educate the people. More people need tovisit one and learn to think about society.

[Nigel Sedgwick]

Burke was, IMHO, a very great guy: but he died in 1797. He was also a moderate Whig with a sensible appreciation of the value of our institutions and history.

His experience of peace-time government expenditure was typically below 10% of GDP, rather than above 40% of GDP and increasing, as shown in this plot http://www.ukpublicspending.co.uk/spending_chart_1700_2010UKp_12c1li011lcn_F0t_UK_Public_Spending_As_Percent_Of_GDP

To claim that this man (of largely classical liberal views) would be a supporter of the sort of heavy government expenditure and other involvement that is common nowadays is to take the man out of his time to support your views for the current world. He is dead and cannot argue back: a position rather like those to be afflicted by hanging 'our' government borrowing around the necks of future generations.

As to 'you did not do that alone', the whole concept of managing society and government (like that of nearly every business) is that it will remain a going concern. Obviously those who now work for or live in such an enterprise must benefit from the fact that it exists. To attempt to read more than that into it is, in its current incarnation, the desperation of a man who has done his job badly and wants to claim some credit for just about anything going: so he has chosen the fact that society is ongoing and, with the inevitability of technological progress and some retained value from labour, will (almost certainly over the longer term) be better than what preceded it.

But he did not make it so.

Best regards

[David Newman]

Comprehensive article and a good read! An interesting topic to argue about. History is for the victors, and wealth goes along with them too.

CyberLock.com

[aragon]

Gastro George, FromArseToElbow and Keith are correct on the 'Nature of Money'

The problem with the Randian view is that the rich think their claim on resources is justified.

[Chris2]

Think of Burke as a highly gifted political consultant or publicist, a political professional who understood what his clients needed better than they did.
The attractive Burke is not the sad embittered war hawk of Letters on a Regicide Peace but the Quixote who pursued Warren Hastings through an impeachment process that lasted years. An Irishman talking about what the Empire meant.

arsetoelbow: it is bit cheeky to employ Paine (of English System of Finance fame) to defend the funding system which he prophesied would be England's ruination. I suspect that Paine would argue, as Cobbett, who was equally indebted to both Burke and Paine, did that every new generation has the right to choose how it will handle the debt. Whether to honour it, whether to refund it or to audit it or to repudiate it in toto.

[Frances Coppola]

Tim Newman:

A quick look at the US GOP will turn up many examples of Randian Conservatives. Somehow they manage to combine Rand's gospel of selfishness with Christianity, whose message is diametrically opposed. Cognitive dissonance is alive and well in American politics.

Patrick:

As the future of my children, and the very existence of their children, depends on my ability to survive in the present, wrecking the economy now in the name of "reducing the debt burden for future generations" does no-one any favours, least of all said future generations.

[Tim Newman]

Frances,,

This whole premise looks to be a straw man. Which individuals of any importance, or in great enough numbers to be significant, are on record as having declared that they - or others - are heroic self-made men who have derived no benefit at all from the contributions of others? Pointing me to a group of people and asking me to find such examples myself only confirms the nature of the straw man.

[chris]

@ Tim: I was thinking of this sort of thing.
http://www.entrepreneur.com/blog/224322
Of course, few people are full Randians. But there is a strand of opinion which overstates the role of individual agency in creating wealth and which is excessively respectful of the rich - vis the talk of business people as "wealth creators" and the tendency of the BBC, among others, to uncritically solicit their opinion on economic policy (in a way that welfare recipients' advice on welfare policy is rarely sought).

[Stephen]

It is beginning to look as if Sir Boyle Roche spoke with more wisdom than he was credited with at the time:

"Mr Speaker, we hear much of our Duty to Posterity. But I ask honourable Members: What has Posterity ever done for Us?"

[ICSE Schools in Mumbai]

Extensive content and a excellent read! An exciting subject to claim about. Record is for the winners, and success goes along with them too.