me:
>>> When I was studying economic history in grad school, Fogel's work on
>>> railroads was the clearest case of bogus history, applying the
>>> "counterfactual" method where it didn't apply (i.e., history).
>>> Counterfactuals -- what if the railroads had never been built? what if
>>> the South had won the Civil War? what if Hitler had been
>>> toilet-trained in a different way? etc. -- are fun but their validity
>>> assume (1) a complete knowledge of the relevant past and (2) a
>>> completely accurate theory of how the economy, politics, etc. work.
>>> All economic history can do is to make a case for one theory compared
>>> to others.
David Shemano:
> Well then, how would you suggest we make logical arguments concerning whether
> or not railroad construction added to historical wealth creation? <
Understanding history is a lot like litigation. People develop
different hypotheses ("railroads weren't necessary to promote US GDP
growth," "the available alternatives -- canals and roads -- weren't
adequate to link the West and East across the Rockies & Sierras,"
etc.) Then, people present historical evidence to back up their
hypotheses and make their competitors' hypotheses look bad, try to
present logical arguments for their views while undermining the
logical standing of other views, try to make their arguments fit the
totality of the situation while pointing to the incompleteness of
others' views. Then, the jury (historians and lay readers) has to
decide which hypothesis is best (until a new one comes along).
Instead of directly answering David's question, let's think about the
implication of Fogel's railroad hypothesis some more. The building of
the railroads and their subsidy by the government (under the political
spell of the would-be railroad builders) was going to happen anyway.
The political and economic stars were aligned. As far as I know, Fogel
never suggested ways to change the constellation of political powers
that produced 19th century U.S. economic policies.
Suppose Fogel is right that the social rate of return of the
railroad-building project exceeded the social cost. He goes back in
time (using Mr. Peabody''s Way-back Machine) and trumpets this fact.
The political and economic actors would say "so what??" As long it was
expected to be worthwhile to _them_ (expected to promote their profits
and/or political careers) it doesn't matter. They can dump any
external costs on the taxpayers, the American Indians, etc. If they
complain, they can take a flying leap at the moon. So social returns
don't matter. Further, the "captains of industry" and their
lieutenants in politics would hire ideologists (e.g., economists) to
justify their position and argue that this strange guy who claims that
he's from the future is really an escapee from Bedlam. And they might
be right.
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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