Posts tagged ‘Poland’

The Effect of the Black Death on Labor and Grain Prices

Long time readers will know that if I were asked to relive my life doing something entirely different, I would like to try studying economic history.  Today, in a bit of a coincidence, my son called me with a question about the effect of the Black Death in Europe on labor and grain prices ... just days after I had been learning about the exact same part of history in Professor Daileader's awesome Teaching Company course on the Middle Ages (actually he has three courses - early, high, late - which are all excellent).

From the beginning of the 14th century, Europe suffered a series of demographic disasters.  Climate change in the form of the end of the Medieval warm period led to failed crops and several years of famine early in the century.  Then, later in the century, the Black Death came... over and over, perhaps made worse by the fact that Europeans were weakened already from famine.  As a result, the population of Europe dropped by something like half.

It is not entirely obvious to me what such a demographic disaster would do to prices.  Panic and uncertainty usually drive them up in the near term, but what about after that?  Both the supply and demand curves for most everything will be dropping in tandem.  So what happens to prices?

In the case of the 14th century, we know the answer:  the price of labor rose dramatically, while the price of grain dropped.  The combination tended to bankrupt the landholding aristocracy, who went so far as to try to reimpose serfdom to get their finances back in balance (some things never change).  The nobility pretty much failed at this in the West (England, France) and were met with a series of peasant revolts.  They generally succeeded in the East (Germany, Poland, Russia) which is why a quasi-feudal agricultural system persisted so long in those countries.

But why?  Why did grain price go down rather than up?  Why did labor go in the opposite direction?  I could look it up, but that is no fun.

A first answer, which does not satisfy

People who think of all of the middle ages as "the dark ages" miss the boom that occurred between 1000-1300.  Population increased, and technology advanced (just because this technology seems pedestrian to us, like the plow harness for horses or the stirrup, does not make it any less so).  It was the only time between about 300 and 1500 when the population was growing (a fact we climate skeptics will note coincided with the Medieval warm period).

But even without the setbacks of the 1300's, historians probably would argue that Europe was headed for a Malthusian collapse no matter what in the 14th century.   An enormous amount of forest had been cleared and new farmland created, such that by 1300 some pretty marginal land was being farmed just so Europe could barely keep up with demand.  At the margin, really low productivity land was being farmed.

So if there is a sudden 50% population cut, then that means that all that marginal farm land will be abandoned first.  While the number of farmers would be cut in half, production would be reduced by less than half because presumably the least productive farms would be abandoned first.  With demand cut by half and production cut by less than half, prices would fall for grain.

But this doesn't work for labor.  The same argument should apply.  To get everyone fed, we would actually need less than half the prior labor force because they would concentrate on the best land.  Labor prices should fall in this model as well, but in fact they went up.  A lot.  In fact, they went up not by a few percent but by multiples, enough to cause enormous social problems across Europe.

A second answer, that makes more sense

After thinking about this for a while, I came to realize that I had the wrong model for the economy in my head.  I was thinking about our modern economy.   If suddenly, say, online retailing reduces demand for physical stores dramatically, people close stores and redeploy capital and labor and assets to other investments in other industries.  That is how I was thinking about the Middle Ages.

But it may be more correct to see the Middle Ages as a one product economy.  There was agriculture, period.  Everything else was a rounding error.

So now let's think about the "farmers" in the Middle Ages.  They are primarily all the 1%, the titled nobility, who either farm big estates with peasant labor or lease large parts of their estates to peasants for farming.

OK, half the population is suddenly gone.  The Noble's family has lots of death but someone is still around to inherit.  They have a big estate where growing grain supports their lifestyle as well as any military obligations they may have to their lord (though this style of fighting with knights on horseback supported by grants of land is having its last hurrah in the 100 years war).

Then grain prices collapse.  That is a clear pricing signal.  In the modern economy, that would tell us to get out and find a new place for our capital.  So, as Lord Coyote of the Castle Aaaaargh, I am going to do what, exactly?  How can I redeploy my capital, when it is essentially illiquid?  I can't sell the family land.  And if I did, land prices, along with grain prices and the demographic collapse, are falling through the floor.  And even if I could sell for cash, what would I do for a living?  What would I reinvest the money in?  Running an estate is all I know.  It's all anyone knows.  I have to support myself and my 3 mistresses and my squires and my string of warhorses.

All I can do is try to farm the land I have always farmed.  And everyone else does the same.  The result is far more grain than anyone needs with the reduced population, so prices fall.   But I still need the same number of people to grow the food, irregardless of the price it fetches, but there are now half as many workers available so the price of labor goes through the roof.  When grain demand collapsed, there was no way to clear the excess capacity.  It turns out everyone had a nearly vertical supply curve, because irregardless of price, they had nothing else they could do with their time and money.  You can see now why they tried to solve their problem by reimposing serfdom (combined with price controls, a bad idea for Diocletian and for Nixon and everyone in between).

Of course, nothing is stuck forever.   One way capacity cleared was through the growth of the bureaucratic state over the next 2 centuries.  Nobles eventually had to find some new way to support themselves, and did so by taking jobs in growing state bureaucracies.  They became salaried ministers rather than feudal knights supported by agriculture.  At the same time, rising wealth among the 99% non-nobility allowed kings to support themselves through taxes rather than the granting of fiefs, which in turn paid for the nobility to take jobs in the bureaucracy and paid for peasant armies with guns and bows that replaced the lords fighting on horseback.  So in the long term, the price signal was inordinately powerful -- so powerful it helped reshape much of European government and society.

By the way, if you are reading this expecting some point about modern politics, sorry.  Just something I was thinking about and it helped to write it down.  Comments are appreciated.  I still have not cribbed the answer from the history texts yet.

Punitive Bombing

I grew up in the 1970's, a time when a lot of Americans post-Vietnam were questioning the value, even the sanity, of war.  Opinions were certainly split on the subject, but one thing I remember is that the concept of "punitive bombing" was widely mocked and disdained.  Which is why I find it amazing to see bipartisan, multi-country support for exactly this tired old idea as applied to Syria.  Has bombing ever done anything but radicalize the bombed civilian population against the bombers?  The reaction to the London Blitz was not to have the English suddenly decide that they had been wrong in supporting Poland.  Nor did Germans or Japanese generally reprimand their leaders for the past policies as as result of our firebombing Tokyo or Dresden.  Or look at drone strikes in Afghanistan -- do you get the sense anyone there is saying, "Boy, have we ever been taught a lesson."

In the comments, readers are welcome to contribute examples of countries who "learned their lesson" from punitive air strikes and changed their behavior.

PS-  Apparently the reason we "must" have at least air strikes is that we have established a policy that we will "do something" if countries use chemical weapons.  And if we don't have air strikes, the world will think we are weak, right?  But the problem is that this logic never ends.  If the country then ignores our air strikes and behaves as before, or perhaps performs an FU of their own by using chemical weapons openly, then what?  Aren't we obligated to do something more drastic, else the world will think we are weak?

Twilight Struggle

Over Christmas break, my son (home from college) and I have played a half dozen or more games of Twilight Struggle, the #1 rated game on Boardgame Geek that refights to US-USSR cold war from the 1950's to the 1980's.   There is a good reason for that ranking - it is a very enjoyable game to which he and I have become addicted.

I mentioned it before Christmas, and after playing it once made a couple of comments that I want to revise.  I had said I remembered it to be "complex."  Actually, for a wargame, the rules are quite simple (no zone of control rules, line of sight, tracing supply, movement costs over terrain, etc etc.).  Basically, each turn you play a card from your hand.  You may either take the effects of the event on the card, or you may take one of four actions using the operations points on the card (sometimes, if the event benefits your opponent, you have to take the event and the operations points).  Your goal is to gain influence over countries and regions, which in turn translates into victory points.

The cards are divided into early, mid, and late-game cards that are staged into the game.  This helps avoid anachronisms like Solidarity union forming in Poland in 1950.  It also creates a setting where the Russian has early advantages, while the US has late advantages.  This really befuddled me for a number of games as I played as Russian against my son, and lost more than I won despite the general sense in the playing community that the game (until recently revised) is a bit unbalanced in favor of the Russian.  The problem is that my play style in wargames tends to be methodical and defensive, and to win at Russia you have to open with an RTS-like rush and gain the largest possible lead before the Americans come back in the end game.  I finally routed the Americans in the last game when I finally got more aggressive.

The game's complexity comes not from a lot of rules but from three sources:

1) dealing with complexity of scoring possibilities, as while there are only a few types of actions one can take, there are a hundred locations on the map where one can take those actions.  The scoring dynamics causes focus of both players to shift around the world, sometimes in Asia, sometimes in Latin America, sometimes in Africa, etc.  The cards ensure that no region is ever "safe" (for example the combination of John Paul II's election and Solidarity can turn a strong Soviet position in Poland into a total mess.

2) getting rid of or minimizing the impact of events that benefit your opponent.  The latter adds a lot of the flavor of the game.  On average, half the event cards in your hand help you, and half help your opponent.  If a card helps you, you can take either the op points or the event, but not both.  This is sometimes a tough choice in and of itself, made more complicated by the fact that unused events get recycled and can come back later, when they might be more or less useful.  But if the card has an opponent event on it, you generally (with a few exceptions) have to take the op points AND trigger an event favorable to your opponent.  Managing the latter consumes a lot of the mental effort of the game, and really helps give the game its Cold War flavor of jumping from crisis to crisis.

3) the interaction of the cards.  Like most card-driven games, there are a near infinite number of card interactions.  This means that there are almost always certain card pairings where the resulting net effect is unclear.  We had to keep our iPad nearby locked into a web site of the game maker that includes rulings on each card.  Since the game is now 6+ years old, we never encountered a situation where a clear ruling was not available.

Anyway, we think the game absolutely deserves its #1 rating.  Highly recommended.

 

Another Reason to Love Fracking

Anything Vladimir Putin fears can't be all bad

Whilst it is exceedingly difficult to summon up much sympathy for either Russia’s state-owned natural gas monopoly Gazprom or Russian President-elect Vladimir Putin, the dynamic rise of natural gas produced by hydraulic fracturing, or ‘fracking,” has raised alarm bells in the highest reaches of the Kremlin.

Why?

Because Gazprom’s European customers, tired of being ripped off by Gazprom, are avidly exploring the possibilities of undertaking fracking to develop their own sources of the “blue gold,” and nowhere is interest higher than in the Russian Federation’s neighbors Ukraine, Poland, Romania, Bulgaria and China.

If Only the US Been Part of the Soviet Economy...

... then it would be much easier to reduce CO2 production, because we could just shut down stupid-inefficient boneheaded and outdated Soviet-era industry, like Poland has:

Polish Prime Minister reminded that the economy of Poland, who has cut carbon emissions by about 30 percent since 1988, relies on coal for up to 90 percent of its energy needs. This, he argued, entitles Poland to encourage other countries, for whom climate protection is a hard nut to crack.

Amount of Polish CO2 reduction that would not have happened anyway in the course of modernizing their economy and is instead due to focus on CO2:  Zero.

More on how the vast majority of European progress towards Kyoto goals is due to the shutdown of Soviet industry, and how this is the primary reason the 1990 benchmark date was chosen, here.