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Vincent Geloso Profile picture
@VincentGeloso
Mar 6, 2023 • 9 tweets • 6 min read • Read on X
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Thread: New paper available at Social Science Quarterly (cc. @SSQ_Online) with @casey_joe on the myth of wartime prosperity. onlinelibrary.wiley.com/doi/10.1111/ss… #econhist #econtwitter
We take inspiration from Robert Higgs' 1992 "Myth of Wartime Prosperity" in the Journal of Economic History but shift from the USA to Canada.
Higgs had found that all claims of rising living standards were ill-founded. Most of this was the result of bad statistics, bad understanding of economics and wartime distortions to the meaningfulness of prices to convert quantities into "GDP" as a measure of wellbeing
Why Canada? Because it was in the war in 1939 rather than 1941 (i.e. more time to study) and it was also avoided the physical destruction. We also apply this to WW1. So, do we find the same results as Higgs?
Yes, we do. First, when we correct GDP numbers to concentrate on civilian well-being , we find that there was far smaller increases over the course of the war than the uncorrected figures do. This is true for WW1 as well.
When we correct for the disruptive effects of price controls on the deflator, we find that the war was merely a continuation of the Great Depression.
We also find that investments (private) were not above trends during either war. Similar finding for stock market data (from the TSX)
Again, the paper is here: onlinelibrary.wiley.com/doi/10.1111/ss…
cc. @ccoyne1 @IndependentInst @AlexNowrasteh @danieljmitchell @bryan_caplan @ATabarrok @tylercowen @CatoEdwards @edstringham @DrPatrickNewman

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More from @VincentGeloso

Vincent Geloso Profile picture
Apr 23
🧵Comme Hayek avertissait les socialistes de tous bords, il faut maintenant mettre en garde contre la tentation protectionniste, omniprésente de Trump à @francoislegault en passant par @RubaGhazalQS et @MarkJCarney. Un résumé de mon op-ed dans @LP_LaPresse Image
1/ Derrière des slogans comme « champions nationaux » ou « industries stratégiques », le protectionnisme se cache sous un vernis technique. Ca donne des platitudes comme « promouvoir des champions nationaux », « protéger nos industries stratégiques », « rapatrier les chaînes d’approvisionnement » ou encore « se protéger contre les abus des étrangers ».
2/ Mais les effets sont clairs :
Hausse des coûts pour les entreprises
Moins d’exportations
Moins d’investissements
Moins de croissance et de salaire
Read 7 tweets
Vincent Geloso Profile picture
Apr 22
🧵There is no fatality for social mobility in Canada as report suggests. In fact, there is every reason to be optimistic about the potential to create a highly mobile society. This thread is based on a half-dozen articles of mine (with co-authors)
First, it's important to distinguish between two types of social mobility: absolute and relative. Absolute mobility refers to the ability to earn more than one's parents, while relative mobility concerns the extent to which a person's income rank is independent of their parents' rank.
You could have fast economic growth (+10% a year) such that there would be insanely high absolute mobility. However, if everyone stays at the same rank (my parents are at p50=median, I am at p50=median), that growth means no relative mobility

Refs:
1) Chetty, R., Grusky, D., Hell, M., Hendren, N., Manduca, R., & Narang, J. (2017). The fading American dream: Trends in absolute income mobility since 1940. Science, 356(6336), 398-406.
2) Chetty, R., Jackson, M. O., Kuchler, T., Stroebel, J., Hendren, N., Fluegge, R. B., ... & Wernerfelt, N. (2022). Social capital I: measurement and associations with economic mobility. Nature, 608(7921), 108-121.
3) Chetty, R., & Hendren, N. (2018). The impacts of neighborhoods on intergenerational mobility II: County-level estimates. The Quarterly Journal of Economics, 133(3), 1163-1228.
4) Deutscher, N., & Mazumder, B. (2023). Measuring intergenerational income mobility: A synthesis of approaches. Journal of Economic Literature, 61(3), 988-1036.
Read 27 tweets
Vincent Geloso Profile picture
Mar 4
🧵Last time Canada did "big" retaliatory tariffs? After Smoot-Hawley in the Great Depression. The result? Trade collapsed, and tariffs (U.S. + Canada) explain half the economic contraction from 1929 to 1934. Half.

1/N
Ref : Amaral, P., & MacGee, J. J. (2016). Trade, Relative Prices, and the Canadian Great Depression (No. 1606). Federal Reserve Bank of Cleveland.
Yes, Canada's response to the Smoot-Hawley Tariff Act was a disaster (image). The U.S. tariff hikes in 1930 triggered a wave of retaliatory tariffs worldwide, with Canada being among the hardest hit. Image
In response, the Canadian government imposed steep retaliatory tariffs on American goods, redirecting trade toward Britain and the rest of the Commonwealth under the 1932 Ottawa Agreements. Image
Read 12 tweets
Vincent Geloso Profile picture
Feb 16
🧵New paper (with my students @PatRubenFitz and @jrhall97) forthcoming at the Scandinavian Economic History Review. It makes a simple point: there was less inequality than you think in America 1921-41 and it fell faster than you think. 1/n Image
The Great Leveling, a sharp decline in U.S. income inequality, is often dated to the 1940s. But did it start earlier? We argue that correcting for regional price differences suggests a more gradual decline beginning in the 1920s. 2/n
Standard inequality measures use nominal incomes, ignoring that regional price disparities were large and declining over time. Adjusting for local price levels reveals a different pattern of income distribution. 3/n
Read 6 tweets
Vincent Geloso Profile picture
Dec 18, 2024
🧵Now that the book is completed, I want to tell you in this thread why America, between 1870 and 1910, actually was enjoying fast growth in living standards for the bottom 90% -- as fast the improvements for the top 1% & faster than the improvements for the top 10% #econtwitter Image
The story usually told is that inequality was rising. I dispute that in full. For reasons that historians know and agree but never aggregated as corrections to measurement. There are five big corrections.
1: Inflation was not the same for all. More precisely, deflation (the norm of the era) was not the same for all. The poor saw their cost of living fall more than the rich. This is something I pointed out in 2019 with Peter Lindert. The graph to the right shows the ratio of price indexes for rich and poor. If it falls, the rate of price changes is biased in favor of boosting the poor's real income more than the rich.

This is because the prices of services (consumed by the rich) were driven up by rising productivity of unskilled labor (i.e., wages went up) and the price of staple goods was falling fast.Image
Image
Read 20 tweets
Vincent Geloso Profile picture
Dec 11, 2024
🧵The United States' weird position on this chart has not as much to do with health care as one would first think.

1. The US has a high rate of car fatality and car ownership. The mortality is concentrated among young people and they heavily reduce life expectancy at birth.
1 (continued): If you shift to life expectancy at 65, which is bound to be less affected by this, the US is not as much of an outlier (see big black dot). Image
2. The United States, as Emily Oster pointed out, report infant deaths in a far more different manner than elsewhere. This makes America look like it has a higher IMR than elsewhere and IMR has a big effect on Life Expectancy at Birth.

Chen, A., Oster, E., & Williams, H. (2016). Why Is Infant Mortality Higher in the United States Than in Europe?. American Economic Journal: Economic Policy, 8(2), 89-124.
Read 9 tweets

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