Visit to the Silk Museum and Paradise Mill in Macclesfield

As readers of this blog know, I take every year my economic history students to the Quarry Bank Mill near Manchester: a large and important cotton factory of the First Industrial Revolution.

But of course, the Manchester region also had other clusters, such as pottery cluster in Stoke-on-Trent (affectionately known as “The Potteries”), and a silk cluster in the region of Macclesfield (where a couple of modern silk-related factories in fact still operate today).

So, in a recent weekend, I visited the Silk Museum and Paradise Mill in Macclesfield. The Paradise Mill had its origins in the early nineteenth century and operated until the 1980s. Visiting was a great experience, and I share some pictures here.

The raw input:

Some general info:

Making the punch cards. These binary instructions define the patterns, and of course influenced modern computers:

An example of the resulting pattern (notice the small upper-left square):

Notice how detailed and fine this could become:

The machines:

The “code” and resulting pattern in a pillow:

Feeding the “code”:

A Short History of the Bank of England: Dan Snow’s History Hit podcast

You can hear my participation in Dan Snow’s History Hit podcast here. Thanks to Dan for the invitation.

For anyone interested in knowing more, this is the paper (joint with Patrick O’Brien) recently published in the EHR and motivated this participation, available in open access here. This was the main paper underlying our discussion, though in the podcast Dan and I also discuss monetary politcy and the role of central banks in more recent times.

p.s. I heard the recording and take the opportunity to mention that around minute 17.43, when I say “sixteenth century”, I obviously meant to say “eighteenth century”. And just before the break when I said “lending”, I meant “borrowing”: though this should be clear from the context. That was my fault of course: perils of live recordings!

💥Emergency podcast💥

Economic historian @nunopgpalma explains how the Bank of England came to be, how it supported Britain's imperial and industrial ambitions and why the cost of borrowing matters. Alot.

🎧: https://t.co/OeywtiLKdS

— Dan Snow (@thehistoryguy) September 27, 2022

The Value of Political Connections: Evidence from China’s Anti-Corruption Campaign

This paper (written by Marta Alonso, Beatriz Simon-Yarza and me), also available as a CEPR discussion paper, is now forthcoming at the Journal of Institutional Economics.

Abstract:

We study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 16% higher subsidies over sales per firm (7 million yuan). Connected state-owned enterprises access debt at 11% cheaper cost, which translates into average savings of close to 32 million yuan per firm in lower interest payments. We find that the value of the political connections persisted after the Anti-Corruption Campaign of 2012. It became weaker for the cost of debt in state-owned enterprises, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the Anti-Corruption Campaign because they became a less risky alternative to corruption. We also show that connected firms do not perform better.

Stunting and wasting in a growing economy

Update: this post has been updated in 2022, follwing the release of the new version of our paper.

A new paper is out, with the title “Stunting and wasting in a growing economy: Biological living standards in Portugal during the Twentieth Century”. You can find the CEPR (gated) version here, and an open access version here.

In this paper, we document the remarkable progress that happened for the living standards of children and young adults in Portugal during the second half of the 20th century. Portugal’s real income per head grew by a factor of eight during the second half of the twentieth century, a period of fast convergence towards Western European standards of living. To which extent was there a reflection of this progress on the wellbeing of people?

We use a new sample of 3400 children to document trends in the prevalence of stunting and wasting. We additionally use a sample of 26,000 young adult males covering the entire country which shows similar trends.

We find that the prevalence of stunting and wasting fell quickly from the 1950s, for both males and females. Natually, 20 year-olds lagged behind children and the county also lagged behind Lisbon. But life improved for everyone, and it did so for females as much as for males. Stunting and wasting were considerably higher for infants than children (as we show in the paper), at least partly due to selection of survivors. Child mortality was high but steadily declining over our period. For children (2 to 10 years of age), for example, the prevalence of wasting (being underweight, usually due to malnourishment or diseases) fell sharply. The results for stunting (children well below the normal height for a given age) are similar.

Comparison of stunting in Lisbon vs. Portugal for 20 year-old males show that standards of living were higher in Lisbon, but there were improvements over time in the country overal over time, with the timing of the improvements in Lisbon ahead of elsewhere:

In the paper, we discuss the causes of these trends: changes in income and public policy which affected the ontogenetic environment of children. The income and health improvements which happened in Portugal over the second half of the 20th century led to the improvements that we document. From around 1950, infrastructure improved considerably, both with regards to water access, sewage, and quality of dwellings. This decreased the incidence of diarrhea and other digestive diseases that commonly affect children. Infant mortality due to digestive diseases up to 3 y.o. fell, and literacy levels among children also steadily rose from the late 1920s. Later, these became more informed parents, who presumably took better decisions.

The macroeconomic progress which occurred in Portugal during the second half of the 20th century was associated with considerable improvements in the living standards of ordinary citizens including children and young adults. That progress began under the Estado Novo regime and further continued under democracy. As a result of this joint progress, Portugal was transformed during the 1945-1994 half century from a country with dismal development outcomes into a modern developed country as far as health outcomes are concerned.

Was Portugal’s growth miracle (c. 1950-1973) due to the exploitation of Africa?

It is commonly heard in Portugal today that if the country converged during Estado Novo’s dictatorship it was because of exploitation of Africa. This claim has become louder recently, in the wake of a series of polemics in the media involving me. In this post I give some background and show that the claim is false. Exports to Africa in the last phase of Portugal’s empire were only about 3% of GDP and involved large administrative and warfare-related costs. These were not the causes of Portugal’s fast convergence to European living standards, from around a third of the GDP per head of the core of Europe’s richest countries in 1940 to 60% in 1973. This progress was the fastest and most prolonged in Portugal’s history, and it was of course accompanied by pronounced improvements in living standards, notable for example in a dramatic fall of infant mortality, from 131 per thousand in 1940 to about a third of that by 1974.

Before I dig into the details, here’s a quick summary of the events leading to this debate. A few months ago, I participated in a policy discussion about the future of Portugal, where I discussed the economic history of the country. I gave a description of Portugal’s economic history, mentioning facts that are well-accepted in academic circles. Nonetheless, lots of ignorant people including politicians, journalists and pundits got very angry about what I said. They did not want to accept that Portugal converged to European living standards during the Estado Novo dictatorship, arguing that it only happened because of democracy. The content of my talk was much discussed on TV, radio, and in an endless number of newspaper op-ed articles. The whole thing was turned into a sectarian, partisan debate, even though I do not belong to any political party. Accusation letters were sent to the University of Manchester, the BBC and the Guardian with lies, calling me a fascist and trying to get me fired, even though in my talk I had explicitly condemned the Estado Novo on political grounds (for being a dictatorship; the regime was not in fact fascist). Although my talk was on youtube, and it was easy to check what I actually said, several people lied a lot about the content of what I had supposedly said, and this included journalists, pundits, MPs and a loud MEP. Fortunately, they were exposed for it by many including independent fact-checkers.

Anyway, this saga lasted for many weeks, but once the dust settled, two things became clear to all reasonable observers: 1) that I am not and never was a sympathiser of the far-right at all, as some had claimed; imagine, by analogy, how absurd it would be if one was accused of being a supporter of absolute monarchy for saying that there had been growth in the eighteenth century! my statements about the Estado Novo were descriptive, not normative, and in fact I had previously criticized the far-right in public [plus Brexit, Trump, Órban, etc]; 2) that my description of Portugal’s economic history was factually correct, even though it clashed with what people are taught at school and tend to hear in uninformed debates. Once these facts became clear, far-left politicians who pretend to be historians – and for some sinister and mysterious reason are often treated as impartial historians by much of the media in Portugal – had to change their strategy. So they decided to start claiming that Portugal grew and converged, yes, but that was thanks to the exploitation of Africa. This was repeated a few times, most recently last Wednesday in a well-known national newspaper by the far-left politician Fernando Rosas, who happens to also be a professor emeritus of History with many students but no relevant publications at all [he is in fact known mainly for his political activities in a Maoist party, first, and then as a founder of the reasonably successful party “Left Block”, one of the most radical parties in Europe, according to the Chapel Hill expert survey often used by political scientists]. He and and others frequently use their access to the media to lobby for the creation of endless commissions and reparations comitees – i.e. for jobs for their followers. It’s a rather decadent spectacle, typical of a country where most full professors in the humanities and social sciences don’t have a single article or mongraph in a decent academic journal or book publisher. In the case of Rosas, he had been one of the pundits attacking me in public; I left many links to these polemics in my other blog, for those who may be interested in more details and who understand the Portuguese language. (As some people may know, I have two blogs dedicated to dissemination of research in economic history. This one, which I started in 2016, and one in the Portuguese language, which I founded in 2015.)

Moving on, in order to answer the now often-heard claim that if Portugal grew in the postwar it was thanks to exploiting Africa, I wrote a short post in the Portuguese blog explaining why this could not have been the case. Although the calculations are very simple, dishonest politicians have no problem repeating quantitative claims while providing no evidence, even though such claims are easy to disprove. Pseudoerasmus – the great exception to the general rule that most anonymous Twitter accounts are useless trolls – and Anton Howes, both encouraged me to write an English version:

This is excellent. You should make an English version of this. It would interest people outside of Portugal.

— Pseudoerasmus (@pseudoerasmus) August 6, 2021

The proximate growth factors for Portugal’s economic growth and convergence from around 1950 to 1973 had little to do with Africa. Exports to the colonies were around 15% of total exports in 1972-3. Since total exports were around 20% of GDP then, this implies that annual exports to Africa were only around 3% of GDP. In the 1950s, exports to the colonies were 20-25% of total exports, but total exports were much smaller as a percentage of GDP than in 1973; as a result, exports to Africa should have been again around 3% of GDP. Even though there were some additional transfers, all of this could not have been enough to pull economic growth significantly – also because it did not come for free: there were large administrative (and from the 1960s) warfare-related costs associated with Africa. There was war in three fronts: Angloa, Guiné, and Mozambique. Revenues were not profits.

In fact, we know the true proximate reasons why the economy industrialized and grew. Portugal benefited from the European Golden Age, but there were also internal factors. Human capital – in particular, basic literacy among children – improved markedly with Salazar’s dictatorship from the late 1920s. 75% of people had been iliterate in Portugal in 1900, but this problem was largely solved (among children) by the 1950s. Partly as the result of solving this secular bottleneck, there was structural and demographic change and the economy industrialized a lot already in the 1950s. In 1961 it entered EFTA, and market integration with European markets deepened considerably. Portugal’s small economy benefitted from this openness and the opportunities that came with it as a result. There were similar integration stories in other backward parts of Europe: Spain and Greece also coverged at the time while did not having any important colonies to exploit. The external sector of Portugal’s economy grew due to market integration with Europe, not Africa. The Portuguese (white) elite in Africa were only around 600 to 700 thousand people who returned to Portugal during 1974-5, plus a few who stayed or moved to South Africa, and this corresponds to the peak of this population at the end of the regime. The Marxist-Leninist idea that it was because of exploiting Africa that Portugal grew and converged in this period is simply incorrect.

I end by noting that the myth that the Empire mattered a lot for Portugal’s economy during all kinds of other historical periods is common, but also incorrect. Another period for which this is often repeated is the sixteenth century; Leonor Costa, Jaime Reis and I showed that this was incorrect in a 2015 article published in the European Review of Economic History. This does not mean that colonial trade never mattered for other periods and countries (I provided a summary of my views on the state of the debate in an earlier post). But as far as Portugal is concerned, note that in fact, the long-run effects of the eighteenth-century empire of Brazil were in fact negative due to a resource curse. Traditional historians need to get into the habit of actually quantifying things if they wish to make claims about what mattered, how, and when. As for politicians who are into making claims about history simply to advance their agendas, we must do our best to expose them for the fraud which they represent.

• 

“Standards of living in Europe’s Global Empires” session in the WEHC, Paris 2022

UPDATE: the date and locations are out – July 29th 2022 PA.137, 09:00 – 12:30,  Centre des colloques – Room 3.09

This session has been accepted to the World Economic History Conference in Paris.

Session title: “Standards of living in Europe’s Global Empires”

Organizer: Nuno Palma (University of Manchester; ICS, Univ. de Lisboa; CEPR)

Please notice this program is still subject to changes. I will update it as new information arrives.

There are 10 papers in total, which means approx. 15 minutes per paper (plus questions at the end of each session) as this will be a double (2 x 90 minutes) session.

Session 1 (90 minutes)

India and Bengal

Pim de Zwart (Wageningen University), When did India’s decline begin? Real wages in western India, c. 1500-1850 (with Hélder Carvalhal, Jan Lucassen and Paulo Teodoro de Matos)

Jan Lucassen (IISH, Amsterdam): Deep monetization and real wage developments: India C13th-19th

Joseph Enguehard (Lyon): Local living standards and development in Bengal, 1890-1930

Africa

Nuno Palma (Univ. Manchester, Univ. Lisboa; CEPR), Living standards in Angola, 1760-1800, with Hélder Carvalhal (University of Manchester)

Session 2 (90 minutes)

Latin America & Southern Europe

Tancredi Buscemi (University of Perugia), Real wages in the Kingdom of Sicily (1540-1830)

Guilherme Lambais (ICS-UL), Welfare and real wages in Bahia (1574-1920), with Nuno Palma (University of Manchester; ICS-UL; CEPR),

Russia

Elena Korchmina (University of South Denmark): Living standards in Russia, 1700-1850, with Viktor Borisov (HSE University, Moscow)

Comparative

Calumet Links (Stellenbosch University), Ecology and Agency: Indigenous responses to Europeans in the Cape Colony and Hudson Bay, with Ann Carlos, Erik Green and Angela Redish

Michael Adelsberger (University of Vienna) and Georg Stoger (Salzburg). Re-evaluating Urban Real Wages and Standards of Living for the Central European Area, ca. 1450-1850

What can we learn from two centuries of budget data? (Highlight IV)

This post continues the highlights series. The author is Per F. Andersson, who is a Lecturer at Lund University, and an expert in Comparative Politics, Institutions, and Taxation. He is responsible for the text below, and the amazing dataset he mentions was was put together both by him and by Thomas Brambor.

The data and codebook are available at: https://www.perfandersson.com/data.html

What can we learn from two centuries of budget data? Introducing the “Financing the State: Government Tax Revenue from 1800 to 2012” dataset – Per F. Andersson

The history of the state is closely linked to the history of taxation. Austrian sociologist Rudolf Goldscheid held that “the budget is the skeleton of the state stripped of all misleading ideologies”, and  Joseph A. Schumpeter went even further, famously stating that “The spirit of a people, its cultural level, its social structure, the deeds its policy may prepare – all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else ([1918]1991 p. 101).“ If Schumpeter and Goldscheid were right, much can be gained from studying taxation during the last two centuries, an era that saw dramatic changes not only in the extent of taxation but also in economic and political organization.

Given the importance of taxation for understanding politics, state capacity, and economic growth, it is surprising that there is no historical cross-country dataset over government finances. In this post I present an attempt by me and Thomas Brambor to provide this information. The dataset provides information from 31 countries: Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, Colombia, Denmark, Ecuador, Finland, France, Germany, Ireland, Italy, Japan, Mexico, New Zealand, Norway, Paraguay, Peru, Portugal, Spain, Sweden, Switzerland, the Netherlands, the United Kingdom, the United States, Uruguay, and Venezuela from 1800 (or independence) to 2012. In other words, it includes all South American, North American, and Western European countries with a population of more than one million, plus Australia, New Zealand, Japan, and Mexico.

We make three main contributions. First, we move beyond previous historical studies which focus on Western Europe by including North America, all major countries in South America, and Australia, Mexico, New Zealand and Japan. Second, in contrast to existing modern datasets, usually covering a large number of countries but only for a few decades, our dataset goes back to the early nineteenth century. Third, while previous efforts have concentrated on overall revenue or contrasting direct and indirect taxes, we provide more detailed information allowing for a more comprehensive understanding of the rise of the modern tax state.

This post begins with a short description of how the dataset was put together, and how it differs from previous efforts (for longer discussion see the online codebook available at: https://www.perfandersson.com/data.html). In the second part of the post I demonstrate how the data can be used to explore changes in the size and composition of government revenue during the last two centuries.

Constructing the dataset

The dataset contains information on the public finances of central governments. We focus on tax revenues, defining taxes as compulsory and unrequited levies by the government. The information on tax revenue is presented as a share of the total budget and as a share of total domestic product. We have divided tax revenue from the central state into several categories. First, we are interested in the shares of total revenue coming from direct and indirect taxes. Further, we measure types of direct taxes, namely taxes on property and income. For indirect taxes, we separate excises (taxes on specific goods, such as salt or tobacco), broad-based consumption taxes (such as value-added tax), and taxes on international trade (a complete list of variables and their definitions is available in the codebook.)

Collecting data for a large number of countries over long time spans presents difficult issues regarding measurement and consistency. The overall goal of the data collection has been to create long time series that are internally consistent within a country over time and that connect to contemporary datasets which in turn allow easy continual updates in the future. When different sources of data are combined, there need to be decisions about how to decide which sources to use and how to judge their quality. In addition, using and combining different sources has the potential to introduce measurement error and potentially bias the constructed estimates. In the codebook we describe in detail the decisions about how we integrated disparate sources, and also address a few issues that are relevant for analysis based on these data.

Comparison with related efforts

Previous research using historical tax revenue data either relies on information with a long historical coverage (some even long before 1800, e.g., Dincecco 2009, Karaman and Pamuk 2013) but for a few number of countries — usually Western Europe (Aidt and Jensen 2013), sometimes adding English-speaking off-shoots and Japan (Tanzi and Schuknecht 2000) — or a wide geographic coverage but only for the most recent decades (e.g., Prichard et al. 2014). These efforts rarely provide yearly data (e.g., Tanzi and Schuknecht 2000), or present information only on the size of government (Mauro et al 2013, Karaman and Pamuk 2013).

Many recent papers still rely heavily on Mitchell (2007) (e.g., Beramendi et al. 2019; Lee and Paine 2020). For various reasons we have a different approach which we believe has much to contribute.

Instead of taking existing cross-country databases (such as Mitchell) at face value, we took great pains at comparing and evaluating different sources – often cross checking them with country-specific sources – in order to find as reliable data as possible. During our work we discovered that Mitchell in particular is often unreliable. When comparing the information provided in his volumes with contemporary, high-quality, country-specific data we found two main causes for concern. First, Mitchell is often inconsistent in the way budget items are coded or even which parts of government budgets are presented, which causes problems when interpreting changes over time and across countries. The second problem is that the subcategories of revenues in Mitchell (e.g., direct and indirect taxes) at times sum to more than a hundred percent, which suggest underlying issues in the aggregation process. For these reasons, among others, we have tried to minimize our use of Mitchell as a source, and when we use it, we try to find ways of validating the trustworthiness of his estimates (for example by using country-specific sources).

Overall, a substantial part of our dataset comes from country-specific sources, all listed in the codebook. For users who wish to explore the data in more depth, we also provide detailed information by country allowing analysts to scrutinize by variable which sources were used for every year.

Exploring the data

To begin with, Figures 1 and 2 below present total tax revenues and the share coming from direct and indirect taxes (averages for all countries in the dataset). The figures show how the overall size of the state grew from about six percent of GDP in the nineteenth century to almost twenty percent in the 2000s. During the same period states went from financing themselves mainly through indirect taxes to a more even mix of direct and indirect taxes.

 

   Figure 1. Central Tax Revenue/GDP

Figure 2. Share of Direct and Indirect Tax Revenue

However, this general development hides important changes within the categories of direct and indirect taxes. As Figure 3 shows, excises and taxes on international trade were the main sources of indirect tax revenue in the nineteenth century, while broad-based consumption taxes – such as value-added tax – became more important in the late twentieth century. Figure 4 shows the evolution of direct taxes in the same period, documenting how property taxes — an important part of budgets in the nineteenth century — were superseded by income taxes in the twentieth century.

    Figure 3. Indirect Taxes.

Figure 4. Direct Taxes.

It is also interesting to observe what happened to taxation around the world during and after major international conflicts. Figure 5 below show total revenues and the share of income taxes — which is considered to be a good indicator of fiscal capacity (e.g., Rogers and Weller 2014) — and three major conflicts: the Napoleonic Wars, the First World War, and the Second World War. While the number of countries for which we have data (and some did not exist at the time) is lower during the Napoleonic wars, it is still interesting to note that the conflict is neither associated with a permanent increase in income tax share nor in the overall size of the state. The two world wars are different. After World War I, the average size of government remained higher than before the war, and this tendency is even stronger after World War II. Looking at the share of revenue coming from income tax, this tendency is much weaker after World War I: while the share increased dramatically during the war, it decreased after the conflict ended (but not all the way down to pre-war levels). In contrast, income tax revenues not only became hugely important during World War II, they also remained so afterwards.

Figure 5. Size of Government, Income Tax, and War.

Finally, one of the great strengths of our wide geographic coverage is that it allows for comparisons between regions. Figure 6 below shows the evolution of total tax revenues and income tax share between Latin America and Europe.

Figure 6: The Size of Government and Income Tax in Europe and Latin America

There are several interesting things to note. First, although Latin America does not experience an increase in the income tax share during World War I as Europe does, both regions experience an increase in income tax revenues around the time of World War II. Second, between the end of World War II and the mid-1970s, Europe and Latin America relied to a similar extent on income taxes. But after around 1975, the two regions diverge, both in terms of the income tax share and in terms of total tax revenues.

These are just a couple of examples of what can be explored using our dataset. In my own work I have looked into how democracy and urbanization affect the tax mix (Andersson 2018),  how electoral systems condition the impact of ideology on taxation (Andersson 2019a), and how the adoption of taxes affects fiscal capacity and what types of states make these investments (Andersson 2019b). Thomas Brambor has investigated the legacy effect of non-democratic introductions of the income tax (Brambor 2016).

The data and the codebook are available at: https://www.perfandersson.com/data.html.

References

Andersson, Per F. 2018. “Democracy, Urbanization, and Tax Revenue.” Studies in Comparative International Development 53(1):111–150.

Andersson, Per F. 2019. “Power-sharing and Income Taxation in non-Democratic States.” STANCE Working Paper. Lund University.

Andersson, Per F. 2019. “Left-wing Tax Strategy Depends on the Electoral System.” Working Paper. Lund University.

Aidt, Toke ., & Peter S. Jensen. 2013. “Democratization and the size of government: Evidence from the long 19th century”. Public Choice, 157(3/4), 511-542.

Beramendi, Pablo, Mark Dincecco and Melissa Rogers. 2019. “Intra-Elite Competition and Long-Run Fiscal Development.” The Journal of Politics 81(1):49–65.

Brambor, Thomas. 2016. “Fiscal Capacity and the Enduring Legacy of the First Income Tax Law”. Unpublished manuscript: Lund University.

Dincecco, Mark. 2009. “Fiscal Centralization, Limited Government, and Public Revenues in Europe, 1650–1913.” The Journal of Economic History 69(1):48–103.

Flora, Peter, Franz Kraus, and Winfried Pfenning. 1983. State, Economy, and Society in Western Europe 1815-1975: The growth of industrial societies and capitalist economies, Frankfurt: Campus Verlag.

International Monetary Fund (IMF). 2012. “Government finance statistics (GFS).”

Karaman, K. Kivanc and Sevket Pamuk. 2013. “Different Paths to the Modern State in Europe: The Interaction Between Warfare, Economic Structure, and Political Regime.” American Political Science Review 107(3):603–626.

Lee, Alexander and Jack Paine. 2020. “The Great Revenue Divergence”. Working paper.

Mauro, Paolo, Rafael Romeu, Ariel Binder, and Asad Zaman. 2013. “A Modern History of Fiscal Prudence and Profligacy,” IMF working paper WP/13/5

Mitchell, Brian R. 2007. International historical statistics: Africa, Asia & Oceania, 1750- 2005, 5. ed., New York: Palgrave Macmillan.

, International historical statistics: Europe, 1750-2005, 6. ed., New York: Palgrave Macmillan.

, International historical statistics: the Americas, 1750-2005, 6. ed., New York: Palgrave Macmillan.

Prichard Wilson, Alex Cobham and Andrew Goodall. 2014. “The ICTD Government Revenue Dataset” ICTD Working Paper 19. https://www.wider.unu.edu/sites/default/files/ICTD_WP19.pdf

Rogers, Melissa Ziegler and Nicholas Weller. 2014. “Income taxation and the validity of state capacity indicators.” Journal of Public Policy 34(2):183–206.

Schumpeter, Joseph. 1991. “The Crisis of the Tax State”. In Joseph A. Schumpeter: The Economics and Sociology of Capitalism, ed. Richard Swedberg. Princeton: Princeton University Press. First published in 1918.

Tanzi, Vito & Ludger Schuknecht. 2000. Public spending in the 20th Century. Cambridge, UK: Cambridge University Press.

 

Can autocracy promote literacy? evidence from a cultural alignment success story

Update: This paper is now published at the Journal of Economic Behavior and Organization. See also below for a permanent open access link to the paper.

What can the XXth century Portuguese experience teach us about the interaction between political regimes, culture, and literacy attainment?

Here’s a recent paper on this topic by Jaime Reis and myself. The CEPR version is gated, but you can find a free (open access) version here. There is also a voxeu summary available.

Here’s the abstract: 

“Do countries with less democratic forms of government necessarily have lower literacy rates as a consequence? Using a random sample of 9000 individuals from military archives in Portugal, we show that 20-year old males were 50% more likely to end up literate under an authoritarian regime than under a democratic one. Our results are robust to controlling for a host of factors including economic growth, the disease environment, and regional fixed effects. We argue for a political economy and cultural explanation for the success of the authoritarian regime in promoting basic education.”

In a sense, this is a paper in the spirit of Edmund Burke’s argument that successful social change needs to be gradual, and we cannot change societies by top-down design overnight.

To contextualize the paper further, note that Portugal during the first half of the XXth century was very poor. In 1910 it had a GDP per capita of international GK $1228, compared with 4,611 for England, and hence closer to that of Côte d’Ivoire today (1,195 in 2010). Even as late as 1950 Portugal, at IGK $2,086, was behind Mozambique today (with IGK $1876 in 2010), and was clearly poorer than Cape Verde today its last avaliable data year, 2008 (IGK $2,735). Source: the 2013 Maddison Project. (I haven’t updated these numbers using the newest MPD but the general pattern won’t have changed much).

Literacy increased the most in the most Catholic areas of the country because these were more alingned with the values of the Estado Novo regime