Electric Camelot: An Economist Visits King Arthur's Court (Mark Twain on economics)

I have posted several items about Mark Twain on economics. Those are listed below. 

This is the title of an article that was published recently and was actually in Spanish by Rafael Galvão de Almeida. He is at Universidade Federal de Minas Gerais, Brasil. The title in Spanish is "Camelot Elétrica: Um Economista Visita a Corte do Rei Arthur."

It was published in the journal "História Econômica & História de Empresas" which means "Economic History & Business History." Click here for more information.

Here is the abstract:

"Mark Twain wrote the book A Connecticut Yankee in King Arthur's Court(1889) as a way of reflecting on the changes taking place in the United States of the so-called “Golden Age”. The book tells the story of Hank Morgan, an engineer who ended up in 6th century England, when King Arthur led the Knights of the Round Table in Camelot. Hank attempts to industrialize England twelve centuries earlier, using his knowledge of technology and culture. However, his Electric Camelot project, over numerous setbacks and failure. The novel is relevant to economists because it deals with various topics of interest, such as entrepreneurship and economic development. The literature on the “visiting economist syndrome” identifies numerous problems in a country’s development aid process due to a number of factors, including even the arrogance and naivety of economic models, but that are present when dealing with different contexts. It is argued that these problems were discussed by Mark Twain, who was interested in the nascent neoclassical economics, in the novel in question. Although Hank is an engineer, his trajectory is similar to that of a visiting economist. Thus, the book is a tool to explore through fiction problems and challenges of economic development."

Click here for a link to the entire paper. It is in Spanish.

Related posts:

Chapter 33 Of Mark Twain's A Connecticut Yankee in King Arthur’s Court Is Titled "SIXTH CENTURY POLITICAL ECONOMY" And Deals With "Money Illusion"

Mark Twain On Work And Pay

Mark Twain On Labor Markets And How Wages Should Be Decided-By Government Fiat Or By Markets?

Mark Twain Understood That It Is The Purchasing Power Of Wages That Matters

Mark Twain, Free Trade and Tariffs

Mark Twain, Economist?

Who Matters More in a Move: You or Your Spouse?

New research finds couples are more likely to move for a job when it benefits the man, even when the woman’s career stands to benefit more by moving

By Dalvin Brown of The WSJ. Excerpts:

"Couples are moving again for better job opportunities. They are more likely to make those moves when the husband’s earnings stand to benefit. 

Men’s earnings increase 5% to 10% after a move, while women’s earnings tend to stagnate, according to a September study of opposite-sex couples led by economist Seema Jayachandran of Princeton University.

The study finds that they are more likely to go through with it to improve the man’s earnings—even in cases when the woman’s career stands to benefit more by moving."

"The relocation penalty for women is a rarely examined factor of why women’s earnings often lag behind men’s. While more women are working than ever before, some of what’s holding them back professionally comes from decisions made inside the household.

“This imbalance is a hidden factor that keeps women from advancing as quickly as men in their careers,” Jayachandran said. “It’s rooted in household decisions rather than workplace bias.”"

"This pattern of losing ground on earnings is common for women, who more often relocate for their partner’s job, according to Jeremy Burke, a senior economist at the University of Southern California.

His 2018 study on military families found that nonmilitary spouses typically face a 15% reduction in earnings after a move, with losses persisting for at least two years. The drop would likely be higher if the study included spouses who dropped out of the workforce entirely, he said."

Related post:

Is there sufficient evidence to conclude that women experience systematic pay discrimination? (2013)

Is there sufficient evidence to conclude that women experience systematic pay discrimination? Not according to Harvard economist Claudia Goldin. See The Truth About the Pay Gap: Feminist politics and bad economics by Steve Chapman. Here is an excerpt from that article:

"I [Chapman] asked Harvard economist Claudia Goldin if there is sufficient evidence to conclude that women experience systematic pay discrimination. "No," she replied. There are certainly instances of discrimination, she says, but most of the gap is the result of different choices. Other hard-to-measure factors, Goldin thinks, largely account for the remaining gap -- "probably not all, but most of it."

The divergent career paths of men and women may reflect a basic unfairness in what's expected of them. It could be that a lot of mothers, if they had their way, would rather pursue careers but have to stay home with the kids because their husbands insist. Or it may be that for one reason or another, many mothers prefer to take on the lion's share of child-rearing. In any case, the pay disparity caused by these choices can't be blamed on piggish employers.

June O'Neill, an economist at Baruch College and former director of the Congressional Budget Office, has uncovered something that debunks the discrimination thesis. Take out the effects of marriage and child-rearing, and the difference between the genders suddenly vanishes. "For men and women who never marry and never have children, there is no earnings gap," she said in an interview."

The time demands of many jobs can explain much of the gender pay gap (2017)

Do Some Sellers on eBay Have an Edge Over Other Sellers? (2016) 

See Male Sellers on eBay Have an Edge Over Women, Study Finds. By PAM BELLUCK of the NY Times.

U.S. Economy Again Leads the World, IMF Says

International Monetary Fund upgrades U.S. growth outlook as strong investment boosts productivity

By Josh Mitchell of The WSJ. 

There is some good economic news out there. A related post was one from two weeks ago was A comparison of the inflation rates, unemployment rates and poverty rates from 1975-83 with the current rates. All three of those rates are much lower now.

Excerpts from The WSJ article:

"The U.S. is increasingly pulling ahead of the world’s advanced economies, with a surge of investment paying off in higher productivity and wages."

"The IMF projects U.S. gross domestic product to expand 2.5% in the fourth quarter from a year earlier—half a percentage point higher than a July forecast, which itself was an upgrade from a January estimate. U.S. output rose 3.2% in 2023.

That would be the fastest among the Group of Seven major advanced economies."

"Advanced economies as a whole are expected to expand 1.9% this year after growing 1.7% last year."

"The euro area’s economy is expected to grow 1.2% this year"

"The IMF attributed the latest boost in the U.S. outlook to higher nonresidential investment and stronger consumer spending, which is being supported by rising real, or inflation-adjusted, wages. Real wages tend to rise when productivity grows, because companies that become more efficient can pay their workers more.

Investor money has flooded the U.S. in recent years, while big legislative packages funded green energy and infrastructure. Meanwhile, abundant domestic supplies largely insulated U.S. companies from energy shortages and price shocks."

"Economists say that has all led to a surge in investment in the U.S., which boosts productivity—or output per hour worked."

"U.S. gross fixed capital formation—a broad measure of investment—will rise 4.5% this year from 2023, more than triple the rate for all advanced economies. From 2016-2025, the IMF estimates U.S. investment will have grown an average 3.3% a year, versus 2.3% for all advanced economies."

"In the prior decade, from 2006-2015, U.S. investment spending grew an average 1.2% a year, roughly in line with the advanced-economy average."

"In the 2010s the U.S. used new technologies such as fracking to increase domestic energy production. That itself boosted productivity—while also insulating the U.S. from global energy shocks."

"European Union companies are still paying two to three times more for electricity than U.S. firms, and four to five times more for natural gas"

"productivity gains by big U.S. companies are a primary reason why the U.S. and Europe have diverged in recent years."

Child Care, Rent, Insurance: Where Inflation Hits Hardest Now

Big, fixed costs that are tough to avoid are crushing household budgets.

By Harriet Torry and Terell Wright of The WSJ. 

I have done several posts on how people have been dealing with the inflation of the last few years as well as how they have been affected. Those are listed after some excerpts from the article.

"Rent and electricity bills are up 10% or more over the past two years, and car-insurance costs are up nearly 40%"

"Housing is by far the biggest monthly expense for U.S. households. In the CPI, shelter costs—a measure of rent and the equivalent cost to homeowners, as well as lodging away from home and household insurance—have risen more than 13% in two years. 

When a family’s $3,000 rent or mortgage payment jumps 13%, that dings the bank account by about $400 a month.

Some prices are rising owing to factors other than traditional supply and demand. Home insurance costs for owners in some parts of the U.S. have ballooned partly because of storms and fires. Utility bills have climbed as companies try to shore up an aging power grid."

"Families with young children are also paying higher prices for child care. Costs have risen 6.4% over the past two years, in line with the overall CPI. Because daycare bills can be as big as the rent payment or the mortgage, even a relatively small increase can feel like a lot. 

The median price to put an infant in center-based care in 2022 was more than $1,400 a month in major metro areas, according to the Labor Department. A 6.4% increase puts that bill closer to $1,500."

"According to the Labor Department, essential services such as water, sewer and trash collection have jumped nearly 11% in price over the past two years, and electricity has climbed 10%.

The cost of transportation services, which includes vehicle insurance and repair, has jumped more than 18% in the past two years, according to the CPI. That would slap an extra $55 a month on a $300 budget. An increasing number of cash-strapped Americans are choosing to drive without car insurance."

Related posts:

Why do workers dislike inflation? (2024)

Inflation Usually Hits Harder for Poor Families. For a Couple of Years, It Didn’t. New research on how inflation varies between the poor, middle class and rich paints a different picture of poverty and inequality (2024)

The Haves and Have-Nots at the Center of America’s Inflation Fight: There’s a growing gap between Americans who are battered by high inflation and interest rates and those who are actually benefiting (2024)

An Increase in Uninsured Drivers Is Pushing Up Costs for Everyone Else (2024) 

Inflation has caused consumers to choose what they need to cut back on (insurance)

Costco and Sam’s Club Aisles Are Full of Gen Z Shoppers (2024)

Consumers are buying in bulk to save money by getting a lower per unit price

Inflation is mentally taxing (2024)

Inflation is mentally taxing. Dealing with a straitened budget exacts a psychological toll as well as a financial one

Store Brands Are Filling Up More of Your Shopping Cart (2024) 

People are on the look out for cheaper alternatives due to inflation

Consumers Fed Up With Food Costs Are Ditching Big Brands (2024) 

After years of price increases, food companies say more consumers pull back; fast-food chains and snack makers plan new deals and flavors

Are Americans Worrying Too Much About Inflation? Two opposing views (2024)

The Era of One-Stop Grocery Shopping Is Over (2024)

One thing that I always talked about with inflation was that one of its costs was all the things we had to do to avoid it. Consumers are making 8% more trips to different retailers as inflation continues to upend household budgets. They are going to more stores to find lower prices. But it costs time to do that and probably more money on gas.

When workers were paid twice a day and given half-hour shopping breaks (Germany, 1923) 

By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. The requirements to calculate and recalculate commercial transactions in the billions and trillions made it practically impossible to do business in paper Marks.

The Year Politicians Turned Their Backs on Economics

On taxes, deficits and prices, Trump, Biden and Harris all seem determined to trash as many economic principles as possible

By Greg Ip. Excerpts:

"It’s too soon to predict the winner of November’s presidential election, but not too soon to predict the loser: economics.

Economists routinely advise against price controls, tariffs, discriminatory taxes and wider budget deficits. Donald Trump, Joe Biden and Kamala Harris are entertaining some or all of them."

"the candidates haven’t just demoted economic principles this year; they’ve jettisoned them altogether. It’s as if they wanted to flip the bird at the economic establishment.

“Doesn’t anyone listen to economists anymore?” asked Columbia University economist Glenn Hubbard, who chaired President George W. Bush’s Council of Economic Advisers. “Economists don’t seem very involved in either campaign or in internal decisions in recent administrations.”"

No taxes on tips

"Tax policy usually involves a trade-off between equity (treating people fairly) and efficiency (improving growth and consumer well-being). Former President Trump’s proposal to end taxes on tips, quickly adopted by Harris, manages to be both inequitable and inefficient. 

It’s inequitable because it would tax people paid mostly via wages, such as cooks, more heavily than similar people paid mostly via tips, such as waiters.

It’s inefficient because it rewards a clumsy and often arbitrary form of compensation. Research finds tips only loosely correlated with quality of service. Tips survive because of social norms and psychological bias: restaurants that replace tips with higher wages have to raise prices, but customers prefer lower posted prices even when the all-in expense is the same. 

When tips are no longer taxed, employees and employers will try to take advantage by structuring more compensation as tips."

Price and rent controls

"The U.S. hasn’t had economywide wage and price controls since the early 1970s, and Harris isn’t proposing them now.

She and Biden are proposing something narrower: taking federal tax benefits away from corporate landlords that raise rents more than 5%, and cracking down on “price-gouging.”"

"Yet as with formal price controls, they short-circuit the essential role of higher prices: drawing in new supply and encouraging substitution toward cheaper alternatives. 

Price controls are justified when a few companies enjoy market power, because they are monopolists or oligopolists, or because of an emergency. Those conditions don’t apply to apartments or food.

After apartment rents soared during the pandemic, developers responded by building record new units. Thanks to that flood of supply, new lease rents are now falling, according to the Labor Department."

"no multifamily developer controls enough of the apartment market to have market power."

"rents aren’t rising much anyway"

"If perceived to be permanent, developers will try to raise rents immediately, screen tenants more tightly, build fewer of the affected buildings (more than 50 units), or convert apartments to condominiums"

[Trump] "routinely called for Medicare to negotiate drug prices. It finally happened this year, under Biden. Given Medicare’s size, and the penalties for not cooperating, drug companies consider this tantamount to price controls."

Tariffs

"Economists have a visceral dislike of tariffs. They’re a tax on imports, and imports are quite useful."

"Trump’s proposed 10%, or even 20%, “baseline” tariff on every country and product serves no obvious purpose. He claims this will cause American consumers to buy U.S. instead of foreign-made goods, boosting jobs and reducing the trade deficit.

Certainly, if you’re willing to force consumers to pay thousands of dollars extra, you can make them buy domestic instead of imported products. But for what purpose? Factory jobs are not intrinsically superior to other jobs; pay and working conditions are often better in services. Protection can be justified for infant industries such as green tech or products essential to national security, like semiconductors. T-shirts, wine and countless other imported products don’t qualify."

"Despite tariffs, the trade deficit widened during Trump’s presidency."

"the European Union and China, will likely retaliate, as they did in his first term."

"manufacturing employment deteriorated in the U.S. after Trump’s trade war began in 2018"

The tax giveaway arms race

"Harris has proposed a $6,000 tax credit for the parents of a newborn child. Not to be outbid, Trump’s running mate JD Vance has pitched a $5,000 credit for every child, no matter how rich the parents."

"The Committee for a Responsible Federal Budget estimates Harris’s promises, beyond those already made by Biden, cost about $1 trillion over a decade; Trump’s Social Security tax repeal would cost at least $1.6 trillion." 

Worldwide Efforts to Reverse the Baby Shortage Are Falling Flat

Subsidized minivans, no income taxes: Countries have rolled out a range of benefits to encourage bigger families, with no luck

By Chelsey Dulaney of Thhe WSJ. Excerpts:

"Imagine if having children came with more than $150,000 in cheap loans, a subsidized minivan and a lifetime exemption from income taxes.

Would people have more kids? The answer, it seems, is no.

These are among the benefits—along with cheap child care, extra vacation and free fertility treatments—that have been doled out to parents in different parts of Europe, a region at the forefront of the worldwide baby shortage. Europe’s overall population shrank during the pandemic and is on track to contract by about 40 million by 2050, according to United Nations statistics."

"Europe and other demographically challenged economies in Asia such as South Korea and Singapore have been pushing back against the demographic tide with lavish parental benefits for a generation. Yet falling fertility has persisted among nearly all age groups, incomes and education levels. Those who have many children often say they would have them even without the benefits. Those who don’t say the benefits don’t make enough of a difference."

"Europe and other demographically challenged economies in Asia such as South Korea and Singapore have been pushing back against the demographic tide with lavish parental benefits for a generation. Yet falling fertility has persisted among nearly all age groups, incomes and education levels. Those who have many children often say they would have them even without the benefits. Those who don’t say the benefits don’t make enough of a difference."

"Both Hungary and Norway spend more than 3% of GDP on their different approaches to promoting families—more than the amount they spend on their militaries, according to the Organization for Economic Cooperation and Development."

"Hungary says in recent years its spending on policies for families has exceeded 5% of GDP. The U.S. spends around 1% of GDP on family support"

"Hungary’s subsidized housing loan program has helped almost 250,000 families buy or upgrade their homes"

"Hungary is especially generous to families who have several children, or who give birth at younger ages."

"Families who pledge to have three or more children can get more than $150,000 in subsidized loans. Other benefits include a lifetime exemption from personal taxes for mothers with four or more kids, and up to seven extra annual vacation days for both parents."

"Under another program that’s now expired, nearly 30,000 families used a subsidy to buy a minivan"

"New parents in Norway can share nearly a year of fully paid leave, or around 14 months at 80% pay. More than three months are reserved for fathers to encourage more equal caregiving. Mothers are entitled to take at least an hour at work to breast-feed or pump."

"Its fertility rate of 1.4 children per woman has steadily fallen from nearly 2 in 2009."

Related posts:

The Economy Affects The Birth Rate (2010)

Did The Recession Help Lower The Birth Rate? (2011)

U.S. Fertility Rate Hits Lowest Level on Record (2012) 

A number of women who put off having babies after the 2007-09 recession are forgoing them altogether; more educated women and student debt also contribute to decline in birth rates (2018)

Births in U.S. Drop to Levels Not Seen Since 1979 (2021) 

U.S. Population Growth, an Economic Driver, Grinds to a Halt (2021)