I have written a concept album with a band called The Benevolent Dictators all about Adam Smith, and the first song was just released.

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My motivations for writing the album and general vibe will be left for another time, but I feel inclined to discuss more about this particular song’s thematic significance. The song is inspired by text from The Wealth of Nations, Book 3, Chapters 2-4. The summary: commerce liberated the masses from the feudal system.

[Adam Smith was an 18th century Scotsman. His first book, Theory of Moral Sentiments, is about morality and human nature. His second book, Wealth of Nations, is considered the starting point for modern economic thought.]

The story begins just after the Roman Empire’s demise. Everything is in chaos and eventually order is restored via different sovereign monarchs throughout the former Empire. The monarchs don’t have the capability to enforce laws and protect everyone in their respective polities, so they enlist the help of others in exchange for big chunks of land. These estates produce enough food for the feudal landlords to survive. But, Smith observes, our desire for food is limited to the extent our bellies can make space. To utilize the surplus food, the feudal lords give their additional food to individuals in exchange for their servitude in the feudal estate. At the time, the feudal lords had no other outlets for their surplus food. Thus, their best option was to increase their power by making commoners dependent on them for food.

Meanwhile, a bunch of city dwellers (called “Burghers”) were given a special exemption by the king to start making stuff. These are the artisans and merchants. Soon, the Burghers had shiny baubles and trinkets that they were looking to sell. The feudal landlords might have limits for their desire to fill their bellies, but they have no boundaries on their childish vanity. The feudal lords wanted to show off how great they were and get their hands on these diamond trinkets. As a result, they started to trade their surplus food not for the servitude of commoners, but for the luxury goods the merchants were selling.

What they used to exchange for the servitude of hundreds, sometimes thousands of men, was now going to service their childish vanity. As the demand for these trinkets went up, so did the supply, so the previously dependent commoners now could join in on the market. Before, when the commoners were given subsistence-level resources in exchange for their work, there was of course no incentive to innovate or increase efficiency. They did the bare minimum that allowed them to survive, because any extra work would go unrewarded. Now, they began to cultivate different areas, knowing the fruits of their labor would mean more money for themselves. Prosperity follows.

In addition to the cultivation, this new market brought about interdependence where dependence used to be. In a sense, all of the parties involved were just as reliant on each other as before. The commoners of course needed the landlords as consumers of their goods, and the landlords needed an outlet for their surplus food. The difference now was that the power was completely decentralized. Rather than a commoner being subjected to the whims of one feudal lord, the market gave him the ability to appeal to the childish vanity of all the landlords to which he could ship his goods.

What is more exciting than reading about how peaceful commercial exchange liberated the masses from the tyranny of the feudal system? Smith emphasizes how this ‘silent revolution’ came about not because a top-down authority dictated it, and not because anyone was consciously trying to bring about positive change for the masses.

A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.

There are free PDFs all around the internet if you’d like to read the passages in their entirety. Here is one.

I leave you with the lyrics of Silent Revolution:

They say beauty is in order
What’s left over in so few hands
But the landlords spell their doom
Wanting the jewelry the merchants have

The price they paid could buy them
A thousand different men
And though they get the diamond
Power leaves them
And commerce wins instead

Here comes the silent revolution
Moving slowly, no certainty
Interdependence, cultivation
From no design comes prosperity

Without any intention
Without beneficence
The feudal system’s dying
Lords made obsolete from
Their childish vanity

Without any intention
Without beneficence
The feudal system’s dying
Lords made obsolete from
Their childish vanity

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A new post at Novel Stance is up about the fragility of the euro currency given its current institutional structure.

The institutional arrangement is not set up to support a stable currency area and the cultural differences across the eurozone make it nearly impossible to move towards a regime that makes the currency integration beneficial. As countries experience more frustration and powerlessness from giving up significant political and economy autonomy, the arrangement will come apart and the currency will no longer exist in the same form as it does today.

And:

Simply put, the United States got to be where it is today after more than two centuries of friction and it wasn’t easy. Even with all that, it benefitted from having tremendously more linguistic homogeneity than Europe has and it didn’t have millennia of regional identity baked in to individual identity. Furthermore, Project Euro has attempted to expedite this tough process of integration and identity in a mere 17 years. Having eurozone citizens suddenly consider themselves “European” before considering themselves “German” or even “Bavarian” isn’t going to happen anytime soon.

Do read the whole thing.

For those of you not aware, I did a podcast series with the Development Research Institute at NYU earlier this year. It was nine episodes focusing on development that happens on a level other than the nation-state. Each episode featured me discussing a paper with its author and is worth checking out. My favorite one is probably the fourth episode, focusing on the centuries-long history of one New York City block. Here’s the summary:

Between Houston and Prince Streets on Greene Street in lower Manhattan, one city block has undergone dramatic changes over the course of four centuries. Today this Greene Street block is home to luxury retail and expensive residences, but not too long ago it was filled with art galleries, brothels, and garment manufacturing. The shifts in the block’s physical character and value were often sudden and totally unanticipated. Looking only at the nation-state level can obscure meaningful growth that occurs on much smaller levels, but how much can we learn from looking at just a city block? William Easterly of New York University tells us about this exciting and surprising history of one New York City block and what it can teach us about development.

Here’s a link to the iTunes page.

I’ve got a new post over at Novel Stance about putting the “economic anxiety” of the Western working class in the greater context of global income trends. A couple excerpts:

Whatever legitimate economic anxiety Brexiteers and Trumpkins have from the last few decades of increasing globalization, it is dwarfed by the historic rise in living standards nearly everywhere else in the world.

In a sense, we can think of the “Western working-class” being pushed aside by an “Emerging Market working-class.” Emerging market economies like China, India, Brazil, and Indonesia are building their own middle classes, simultaneously lifting hundreds of millions out of poverty and displacing the Westerners that used to do that work.

I’ve got a post over at Novel Stance about Brazil’s economic woes and the misguided blame Dilma Rousseff gets for it. Here’s a teaser:

But look closer at the causes of Brazil’s economic performance during the two’s rule: Lula held office at a time when commodity prices were soaring. Nearly half of Brazil’s exports are commodities. The world economy was stronger in the 00s than it is now, meaning other countries had more money to buy the stuff Brazil was digging out of the ground. Rousseff survived one term with decent commodity prices but was in power when the price of iron ore and oil fell 67%, corn lost a quarter of its value and soybeans cheapened by nearly half. These underlying conditions had nothing to do with either Rousseff or Lula.

 

I get it.

You found a candidate that agrees with your views and doesn’t carry the stinky baggage that political “insiders” seem to carry. When your candidate was eliminated, you were left with a binary choice that quite frankly does not excite you. But I beg of you: please do not sit this election out and refuse to vote for Hillary.

This will be the first year I am voting for President, though I have been a registered voter for two previous elections. My hesitation towards voting is still with me. I firmly believe that most people vote uninformed and that a reckless vote is worse than a non-vote. My decision to abstain from voting for the previous two Presidential elections most likely fits into a #NeverHillary mindset: both major party candidates included at least one thing in their platform I considered to be a deal-breaker. Add on the fact that the states I was registered to vote in weren’t even close to swing states, so I was pretty sure my vote would be a waste. Voting symbolically or to give a candidate moral support wasn’t in the cards because they both supported things I considered deal-breakers.

This time around, I can understand why Bernie-or-bust people are saying they won’t vote for Hillary. Decades in Washington have left her with suspicious relationships, more than a few regrettable past positions, and likely a foreign policy that seems reprehensible to you. But this time is much different. To people who defend their non-vote with a cry of her shortcomings being some sort of moral equivalency to Trump: are you kidding?

Unlike the Obama-Romney or Obama-McCain elections, a more-of-two-evils candidate actually threatens the future of the republic this election. Trump has already done damage to our credibility abroad and brought out of the woodwork people and views in America that a lot of us hoped were a relic of the 1950s. Since I’m targeting this post to Bernie supporters, I’m going to skip over any explanation for how bad and morally repugnant Trump is. The point is that, unlike a Mitt Romney or John McCain victory, putting Trump in the White House would do irreparable damage. You thought Bush was bad? He never threatened Federal judges or to default on Treasury debt. One could make the argument that the worst parts of a Bush Presidency are things that will take decades to recover from. But I’m convinced the country, and likely the world, would never recover fully from a Trump Presidency. Bush’s faults are miniscule compared to the damage Trump would do.

I recently spoke with a #NeverHillary Bernie supporter who welcomed the idea of a Trump Presidency because he thought it would speed up the process of getting to a Bernie utopia. Things would get so bad under Trump, the reasoning goes, that the country would have no choice but to turn to a politician like Bernie. This scorched-earth philosophy is misguided in mainly two ways. First, thinking economic/social/political catastrophe will end in your favored result is an insanely big risk to take. A quick gander at history shows that economic depressions and episodes of massive political carnage are just as likely to end up going to the extreme on the other side as the extreme to the side you favor. When the dust settles after the disaster of a Trump Presidency, who’s to say people won’t be even angrier and more drawn to identity politics and xenophobia than they are now?

The second way is that the country as we know it may not survive a Trump Presidency. The American experiment in the last few centuries is a pretty delicate thing. The Civil War showed, among other things, how a single-issue can divide the country apart and test the balances between states rights and the Federal government. A century and a half later, this divide is still around. The Cold War pitted centralized planning versus economic liberalism and the outcome was never a sure thing (my 8 months of living during a world with the Soviet Union were very formative on me). Every step forward in civil rights has been met with backlash and a question of how much freedom the public as a whole wants to grant people. a Trump Presidency could actually be the ultimate test.

The delicacy of liberalism is the rule, rather than the exception, throughout history. For all that Trump campaigns on, he never uses rhetoric based on the words “liberty” or “freedom.” We all have different definitions of what these words mean or to what extent we value liberty over other political goals. But Trump doesn’t value them at all. Censorship of the press, removal of judicial independence, religious litmus testing for not only migrants but also citizens…these are things that would threaten the underlying ethos of America and what I consider to be the political intellectual descendants of the Enlightenment. Trump would send us back to the Dark Ages.

When I think of the last eight or so years when I started to become focused on policy and developed a generally libertarian viewpoint, the political issues I vehemently disagreed with people on seem laughably minor compared to the issues this election. Fighting over the employment effects of a $9 versus $7.25 Federal minimum wage was an adorable quibble during a time when we could wake up knowing politicians weren’t going to say women who had abortions should be punished under the law. Arguing over how to price parking in cities or the efficacy of a 3-cent tax on carbonated beverages is embarrassingly trivial compared to the issues that Trump brings to the global political landscape.

I will say that, within a window of what we might call the status quo political landscape, Hillary will actually be a pretty damn good President. After decades of being in “the game,” she knows how to play it and get stuff done. I think Obama’s first term was filled with surprises of how realistic a President needs to be when working with an opposition Congress. Hillary is a seasoned vet in the landscape and will know how to work the system. My libertarian dreams of nearly-open borders and total drug legalization probably won’t happen under her. But under reasonable expectations, I think she has the ability to be a better two-term President than Obama.

Hillary has her faults, do not get me wrong. I still think a lot of her economic plans are foolish and misguided/ineffective efforts to help the poor. Her hawkishness on foreign policy makes me very uncomfortable. The e-mail stuff does not sit well. I still think there are a lot of squeamish parallels between the Underwoods and the Clintons. In most other elections, I could understand not wanting to endorse some of her baggage by refusing to vote for her. But this election is much different. A Trump victory is something we may not recover from.

So please, Berners, get out there and save the Republic.

Head over to the hot new blog Lombard Street Economics to check out another piece on Brexit from Gaurav Ganguly.