J. Bradford DeLong's Blog, page 1119

Hoisted from Other People's Archives: The First Inaugural Address of Franklin D. Roosevelt Could Be About the Masters of Europe Today...

Franklin D. Roosevelt: First Inaugural Address: "Values have shrunken to fantastic levels...

...taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths...

In Which I Confess, Once Again, That I Do Not Understand the Argument for the Taper as Long as Inflation is Below Its Target...: Monday Focus

Over at Equitable Growth:

...its taper of the programme popularly known as QE3.... The Fed's move looks shortsighted and dangerous.... There is little sign that labour markets are running out of slack. There are lots of downside risks abroad. The Fed should be trying to overshoot its target in order to build up more of a cushion against low inflation and interest rates, and so on. But... let's stick with the most basic argument of all.... The Fed's mandates... maximum employment and stable prices.... The best way to deliver on those mandates, it reckons, is by targeting a rate of inflation of 2%, as measured by the price index for personal consumption expenditures. This is monetary orthodoxy of the highest order, delivered directly from the Fed. It could not be clearer. Here is what has happened to the price index for personal consumption expenditures since that time: READ MOAR

Market-based measures of inflation expectations are not perfect, but... they have indicated that inflation is likely to be below target on average over the next five years. It would be shocking if that were not the case, given that the most recent Fed projections also indicate that inflation will be below target for the foreseeable future. We can debate whether the Fed has the right target.... Do you know what's not up for debate?... Setting a public target, consistently missing that target, projecting that the target will be consistently missed in future, and conducting policy so as to make sure the target is in fact missed: that is lousy monetary policy making. And I cannot understand why the Fed does not see this record as detrimental to the recovery and highly corrosive of the Fed's credibility....

I understand why so many people are uncomfortable with QE. It would be much more satisfying if the Fed could stimulate the economy by printing money to give to orphanages; sadly it is not allowed to do so. But... we should not let distaste with the means to drift into tolerance for a failure to achieve the Fed's self-adopted ends. So, QE critics, what should the Fed do?

As you know, I am of the view that the Federal Reserve ought to be following feedback rule by which it should add to its balance sheet when nominal GDP is below its target and reduce its balance sheet nominal GDP is or imminently threatens to rise above its target. Part of this is that it is not clear to me what the risks are of the Federal Reserve's having a larger balance sheet as long as inflation is and is expected to remain below its target. It has always seem to me that the more rapid and the more imminent the Federal Reserve can make expectations of economic normalization, the more will long-term interest rates approach their normal levels and the less tempted will be organizations, like commercial banks and insurance companies whose business model is that of holding duration, to reach for yield and so run excessive risks. Conversely, the more rapidly people expect the Federal Reserve's balance sheet to be unwound and reduced, the greater are the risks of getting stuck for a long time at the ZLB and losing not just one decade--we have already lost one decade of economic growth--but two.

I do not count the risks of the Federal Reserve would have to lose by selling long-term bonds some of the money it is made since 2007 as a risk at all. Does anybody else see that as a risk?

These are serious questions: How does prolonging the time the economy spends at and near the ZLB enhance financial stability? In what sense are the possible losses that the Federal Reserve would suffer on its bond portfolio from a rapid normalization of the interest rates a risk?

Does anybody have any answers?

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Over at Equitable Growth: Am I Imagining a Golden Age That Never Was?: (Late) Friday Focus

Over at Equitable Growth: Not to pick on Mr. David Rennie especially--simply this piece of his struck me as very characteristic of a great deal of what I read in the Economist these days (outside its http://economist.com/freeexchange). But:

Economist: The Nostalgia Trap: Politicians need to stop pretending to angry voters that globalisation can be wished away: "THE public is losing faith in the American Dream...

...Mitch McConnell declared.... Now begins a more important contest, Mr McConnell told Kentucky Republicans: the race to save the centuries-old ‘compact’ that every American generation leaves the next one better off. Mr McConnell declared that promise imperilled by ‘distant planners in federal agencies’, whether they are killing jobs in coal mines or--in their zeal to impose Obamacare--cancelling families’ health insurance plans.... Republicans such as Mr McConnell are right to criticise government when it overreaches. But it is a stretch to suggest that reining in environmental rules on coal, or even repealing Obamacare, can revive the American Dream.... Coal mines, steel mills and factories have closed throughout the rich world, in countries with very different governments, labour laws and environmental rules.... READ MOAR

American conservatives growl that if the country feels all wrong it is because Democrats buy elections with ‘free stuff’ for the feckless poor, destroying the national work ethic. Democrats say no, it is because Republicans are too heartless to care about the middle classes, and because unpatriotic billionaires send jobs overseas.... This is not a call for political apathy. In every country some policies are better than others, and bad ones should be changed.... But let political leaders everywhere tell their publics the truth: the years of easy post-war growth are gone, replaced by competition that cannot be wished away, and so must be met head-on--and ideally harnessed. That will take hard work and new ideas. Time to wake up.

It almost seems as though as other more-nimble journalistic enterprises enter the new media-substantive analysis space, John Micklethwait's Economist leaves it. The Economist I read in the late 1970s--back in the days when the very young Jeff Sachs would tell his students "YOU HAVE TO READ THE ECONOMIST!!"--wouldn't have said anything like:

McConnell declared... ‘distant planners in federal agencies’... are... in their zeal to impose Obamacare... cancelling families’ health insurance plans.... But it is a stretch to suggest that... even repealing Obamacare can revive the American Dream...

The old Economist* would have said, at very least:

McConnell's adversaries point out that the plans ObamaCare required be cancelled either paid out a much smaller share of premiums than average or did not actually insure against the costly expenses of treating truly serious illnesses...

And something like:

According to the Gallup Organization, the number of Americans without health insurance has fallen by a quarter--that is, by 7.7 million--in the first nine months of ObamaCare's implementation...

Or, at least, the old Economist as I remember it would have said that. Perhaps I have fuzzy memories of a golden age of journalism on St. James Street that never really was. But I don't think so: back when I would occasionally teach the late Susan Rasky's Journalism School students, we would hold up the Economist as something that would stay close to reality--and to quantitative reality--rather than succumbing to the lure of writing beat-sweeteners or degenerating into op-ed word-salad pieces.

Here we most aggressive we get is the forthright:

In every country some policies are better than others, and bad ones should be changed...

And there are hints--but not quite statements--that the Economist does not like: "government when it overreaches" thus "killing jobs in coal mines or--in their zeal to impose Obamacare--cancelling families’ health insurance plans" even though it is a "stretch to suggest that reining [them] in..." plus hints that it does not like "farm subsidies, industrial policies to prop up favoured firms, welfare, transfers from rich countries to poor ones and a dose of protectionism..." There is a statement that "Close the borders! Quit the EU! Secede!" are "false remedies". But little more save that "countries’ travails owe more to global forces than to [particular politicians'] opponents’ folly..."

David Rennie is a decade younger than I am, but he was 29 in 1999, back when America's investments in high-tech were paying enormous dividends for the world as a whole and especially for America, and when the burning question of the day was whether the Silicon Valley companies that were at the Bleeding Edge would develop business models that allowed them to make a profit or whether 100% of the benefits from their investments would go to consumers in the form of surplus. He saw the world of the 1990s in which real wages were rising strongly throughout the North Atlantic--albeit more strongly in North America than in Europe, and accompanied by stubbornly-rising income and wealth inequality. Back then in the Clinton years destruction was creative, and globalization was our servant and not our master. Surely a declaration that North Atlantic malaise is due to "global forces" requires at least a sentence explaining why those "global forces" have turned malign since 1999?

I ask the Economist: would an article like this appear in http://vox.com/ or http://nytimes.com/upshot or http://fivethirtyeight.com or http://washingtonpost.com/wonkblog? No. So I ask the Economist: where has your mojo gone? Please stick close to reality. Please be quantitative. Please take stands on the issues of the day.

Be Bagehotian.

If I think you get it wrong in your judgments, I will call you out, true. But if you don't make judgments, I will do even worse. You will then have transgressed the unwritten law, and in response I will use sarcasm--I know all the tricks: dramatic irony, metaphor, bathos, puns, parody, litotes and satire. And I will say:

Questo misero modo

tegnon l'anime triste di coloro

che visser sanza 'nfamia e sanza lodo....

Caccianli i ciel per non esser men belli,

né lo profondo inferno li riceve,

ch'alcuna gloria i rei avrebber d'elli...

For if there is one thing that I cannot attribute the gap between what I see today's Economist as being and Vox, the Upshot, 538, and Wonkblog, I cannot attribute it to global forces.

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David Graeber Smackdown Watch: The Gedrosian Desert of Essentialist Anti-Europeanism Edition

The continued absence of high-quality DeLong smackdowns on the internet distresses me.

It distresses me because it means that today, once again, for our Monday Smackdown Watch, we must continue our death-march read (see the [backstory][c]) of chapter 11 of David Graeber's Debt: The First 5000 Mistakes.

By now I am desperately hoping that I will come across even a single kindle screen that does not have egregious errors of fact or analysis on it--one single screen in which what Graeber says is at least arguably right. We are talking Alexander the Great's army in the Gederosian Desert here.

But this is not that day.

Today I read only one kindle screen before collapsing into a fit of some sort:

Recall the question Graeber asked and is presumably trying to answer in these pages:

How exactly did the new global economy" created by the Spanish-Portuguese conquest of the Americas, the Portuguese creation of a sea route to Asia, and the consequent enormous growth of American-European-Asian trade "cause the collapse of living standards in Europe?"

And recall the last kindle screen we read:

(1) We read about how the growth of the Asia trade led to a perennial shortage of cash in Europe--so much so that:

most families were so low on cash that they were regularly reduced to melting down their family silver to pay their taxes...

To which one could only say:

Most families in the sixteenth and seventeenth centuries do not have "family silver"...
Melting down your family silver to pay your taxes is not something you can do "regularly"--you do it once, and your silver is gone...
Silver was rarely melted down: silversmiths were expensive to hire, and much better to keep the silver in the shape that it is in by selling it to a silver dealer for cash...

One also had to say: The price level is tripling over these two centuries as too much (cash and credit) money chases too few goods. In what sense is this a money shortage? It is, rather, an income shortage, and unconnected with the flow of cash money to Asia.

(2) After that, on the last kindle screen we had a paragraph that said that what had written at the start of the chapter about the sixteenth and seventeenth centuries seeing a shift from credit back to bullion was wrong--that, rather, those centuries saw :the creation of new forms of credit money:...

(3) Then we had the extremely strange paragraph about how the process of the enclosure--theft from the peasantry--of common lands was part of the "price revolution". Never mind that the price revolution should not have happened because Graeber claims there was a deflationary shortage of money. Never mind Graeber offers no explanation of why rising prices would not apply to spot wheat prices long before fixed rent charges--rising prices should have made first lords and then landlords more eager to keep peasants on the land and growing crops. Never mind that Graeber offers no accounting for how all of this expulsion from the countryside goes along with the rising rural populations of these centuries...

And we were told by Graeber that this--the transformation of rents, dues, and taxes into sums due in money rather than in kind, the creation of new forms of credit-money, the erosion of old forms of within-community accounting tokens, the enclosures of common lands, the creation of better sheep breeds, the price revolution, the crushing of peasant rebellions, the rounding up of vagabonds and their transportation to colonies as indentured servants (never mind that in the 150 years before the American Revolution the average number of involuntary indentures transported per year was 400)--happened., or almost all of this happened, through a "manipulation of debt". How, exactly? David Graeber doesn't say, because he can't. Because it didn't.

So now: On to this week's reading!

Do we get an answer to how it was that the China trade caused the impoverishment of Europe?

No.

Do we even get an explanation of how it was that almost all of "this" was accomplished through a "manipulation of debt"?

We do not.

Instead, on this kindle screen we get a poorly-motivated essentialist anti-Europeanist rant. Graeber dismisses European cultures as uniquely evil, ending in:

Any number of civilizations have probably been in a position to wreak havoc on the scale that the European powers did in the sixteenth and seventeenth centuries (Ming China itself was an obvious candidate), but almost none actually did so...

Graeber's claim that the Ming Dynasty was in some sense less prone to "wreak havoc" than the Europeans of the early-modern period is especially unfortunate. It leads one to suspect that Graeber never bothered to learn anything about the Ming Dynasty.

Let's look at it: How peaceful and civilized was the Ming Dynasty, anyway?

From Timothy Brook (2010):

The first major constitutional crisis shook the new [Ming] dynasty to its foundations in its thirteenth year. Zhu Yuanzhang [the Hongwu Emperor] charged his prime minister, Hu Weiyong, with plotting to assassinate him, conspiring with hostile foreign forces (certainly the Japanese, perhaps the Vietnamese, possibly even the Mongols), and wanting to replace Zhu's dynasty with his own.

Whether the charge was true or concocted is impossible to say, as all the records concerning Hu Weiyong have been doctored or destroyed; but it is possible. The last straw was Hu's failure to report a tribute embassy from Champa (Vietnam). Receiving tribute was an imperial prerogative, not the right of a prime minister. The charge, woven from thin shreds of errors and suspicions, may have had a basis in fact, but it played to the paranoia of someone newly on the throne.

The History of the Ming Dynasty is uncharacteristically sparse on the details, presumably because the details were thoroughly suppressed at the time and unavailable to Qing historians. Underneath the charge, however, lay the constitutional reality of a prime minister's power. As the head of the civil bureaucracy, he had the authority to make appointments, and therefore could place his supporters in all the important posts, effectively building an entire administration that was staffed independently of the emperor's choices. As that was his job, Hu was not necessarily exceeding his mandate on any point except the reception of an embassy, assuming this charge was even true.

What Zhu could not tolerate was the possibility that his prime minister was excluding him from administering the realm hands-on. He eliminated Hu, and in time anyone ever connected to him. Zhu himself estimated the number of victims to be 15,000 people. A string of purges followed over the next fourteen years, leading to the further execution of some 40,000 state officials at all levels. The purge of the 138os was the most horrendous bloodbath of civilian violence in human history to that time, and inflicted a far greater trauma on the educated elite than anything the Mongols had ever done...

And, a generation later:

Zhu Di [the Yongle Emperor] made the mistake of thinking he could win over Jianwen's chief advisor, Fang Xiaoru (1357-1402). A staunch conservative who believed that the only way to improve the world was to restore ancient ways, not to adapt to contemporary practices, Fang could never agree to the replacement of the legitimately enthroned emperor he had advised, let alone countenance an imperial succession from a nephew to an uncle. According to the principles laid down by Yongle's father, the only possible successor to Jianwen was Jianwen's son.

Yongle decided to test whether Fang Xiaoru would submit to his rule by ordering him to pen the edict authorizing his succession. Fang would not. He threw his brush to the ground, declaring that he would prefer to die. Yongle acquiesced and ordered him executed by lingchi or "death by a thousand cuts." Yongle later grandly declared that "I use only the Five Classics to rule the realm," yet the doctrine of moral reciprocity between superiors and inferiors that animates Confucian ethics is hardly in evidence in his reign. When the emperor's authority was absolute, the virtue of informed loyalty dwindled to the vice of abject subservience. Fang Xiaoru was but one of many court officials who would pay dearly for choosing loyalty to the dynasty over subservience to the man who happened to hold power at any one moment in time.

Fang was not the only victim of what Yongle termed his "pacification of the south." The coup was followed by the execution of tens of thousands in a bloodbath that rivaled the worst of his father's purges. A second founder in the mold of the first was on the throne. The autocratic turn in Chinese politics has been laid at the feet of the Mongol emperors who ruled Yuan China, yet emperors Hongwu and Yongle were decisive in hollowing out the core Confucian values of obligation and reciprocity that the Ming regime might have nurtured in the restoration of the old imperial system...

To put these numbers in context, Ming Dynasty China had "20,400 civil officials, 10,000 military officials, and 35,800 students on government stipends... [plus the] licenciates registered at the official Confucian school... over 150,000..." in the pool of potential literati-officials.

It looks as though the purge by Hongwu in 1381 and then a generation ago the purge by Yongle in 1402 each killed off between a tenth and a quarter of their literate administrative classes.

Hongwu and Yongle nicer than Cortez and Pizarro?

Nope.

Hongwu and Yongle constrained in their social matrix to be less brutal than Cortez and Pizarro could be in their social matrix?

Nope.

Hongwu and Yongle were Ming China's Cortez and Ming China's Pizarro.

It is not as though the character of the Ming Dynasty's rule is any kind of secret, or that the scale of its purges is anything of a mystery, is it?

And I don't have the heart to read any more today.

As Daniel Davies said once about a similar project:

F--- me! This is going to be more work than I thought...

Or at least take longer. Shooting this many fish in this small a barrel is not work in any sense. But at one kindle screen per week, interrupted by whatever high-quality real DeLong smackdowns arrive on the internet, we are going to be mocking David Graeber for a long time to come...

The absence these days of what I regard as high-quality critiques of my writings on the internet poses me a substantial intellectual problem, since I have this space and this feature on my weblog: the DeLong Smackdown Watch. So what should I do with it? Counter-smacking inadequate and erroneous smack downs is, after all, not terribly satisfying. The fun is in absorbing and rethinking issues in response to cogent and interesting critiques.

But there is one task left undone, from April Fool's Day 2013. Then I dealt with chapter 12 of David Graeber's Debt: The First 5000 Years in the manner that that chapter richly deserved to be dealt with. But nobody has taken an equivalent look at the earlier chapters. So, henceforth, now, until and unless my critics step up their game, I'm going to devote the Monday DeLong Smackdown space to a close reading of chapter 11 of David Graeber's Debt: The First Five Thousand Years.

Let's go!

As you may or may not remember, my initial assessment of David Graeber's Debt: The First 5000 Years, gained from skimming the first several chapters, was rather positive:

Economic Anthropology: David Graeber Meets the Noise Machine...: ...and is annoyed at having his summary of anthropological findings dismissed as "nonsensical": David Graeber: On the Invention of Money:

I mentioned that the standard economic accounts of the emergence of money from barter appears to be wildly wrong... this contradicted a position taken by one of the gods of the Austrian pantheon.... Credit and debt comes first, then coinage emerges thousands of years later and then, when you do find 'I'll give you twenty chickens for that cow' type of barter systems, it's usually when there used to be cash markets, but for some reason--as in Russia, for example, in 1998--the currency collapses or disappears." Indeed. It really looks from the anthropologists that Adam Smith was wrong--that we are not animals that like to "truck, barter, and exchange" with strangers but rather gift-exchange pack animals--that we manufacture social solidarity by gift networks, and those who give the most valuable gifts acquire status hereby...

He soon fixed that positive assessment:

David Graeber: Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...

And then he gave three contradictory and inconsistent explanations of how he came to write such a sentence demonstrating a previously-unseen total cluelessness about the economy in which he lived: The Very Last David Graeber Post...:

(1) Graeber claimed that it was perfectly true, but not of Apple but of other companies (none of which he has ever named)....

(2) Graeber, when questioned about the Apple passage by Mark Gimein, said that he believed he had been misled by Richard Wolff....

(3) And Graeber claimed that it was his editor/publisher's fault...

Things went downhill from there. And so when I finally got the change to read Graeber's chapter 12, on the post-1971 world, I read it with a jaundiced eye: dozens upon dozens of simple mistakes:

The Federal Reserve is not a council of eighteen private bankers plus a presidential appointee as their chair.
Korean-American shopkeepers do not long to treat everybody else in Brooklyn the way Saul and Samuel treated the people of Amalek.
That people are happier to hold the debt of the Swiss than the US government shows that it is not fear of being bombed by the US Air Force that makes people eager to hold U.S. Treasuries.
The Federal Reserve is perfectly constitutional--as is the FDA, the FCC, the EPA, the FTC, etc.
Nixon did not close the gold window because of the mounting costs of the Vietnam War.
There is nothing that makes Iraq more likely than any other corner of the world to be the source of the next forward leap in human society.
The Federal Reserve does not lend private banks money at the prime rate--you really don't know whether to laugh or cry at passages like: "For those who don't know how the Fed works: technically, there are a series of stages. Generally the Treasury puts out bonds to the public, and the Fed buys them back. The Fed then loans the money thus created to other banks at a special low rate of interest ('the prime rate')..."
And dozens upon dozens more in chapter 12 alone.

I looked, but could not find anybody masochistic enough give a similarly jaundiced reading to David Graeber's earlier chapters. So we began in on chapter 11. We had noted:

Graeber's lumping together of five eras--the Waning of the Middle Ages, the Commercial Revolution, the Industrial Revolution, the First True Era of Globalization, and the Drive to High Mass Consumption--in his one chapter on "The Age of the Great Capitalist Empires, 1450-1971", mixing not just apples and oranges but apples, yeast, giant redwoods, and tyrannosaurs. Such a macedoine is highly unlikely to produce anything coherent.

Graeber's starting his chapter in 1450 and ending it in 1971. Richard Nixon's 1971 abandonment of the Bretton Woods system is not the end of or the beginning of any important story. And what does 1450 mark? The Fall of Constantinople to Mehmet II? But that happened in 1453.

Graeber's long introductory quotation about debt peonage. As Marx knew better than anyone else, capitalism is three things--(i) wage labor, (ii) the separation of private property in land from thick-tie social relationships, and (iii) markets--that together a world in which people are the puppets of market forces transmitted through the equilibrium prices at which they buy and sell. Debt peonage is when there is one and only one person from whom you have to buy--the patron, the latifundista--one and only one person to whom you can sell--again, the patron--and, soon and inevitably, one and only one person to whom you try to pay the interest on your debt. What does debt peonage have to do with the creation of great capitalist empires? Very little. How does debt peonage require a great capitalist empire to support it? It doesn't. How do great capitalist empires depend on debt peonage? They don't.

Graeber's writing that it is "odd to frame [1450-1971] as just another turn of an [ongoing] historical cycle". He is right. It is odd.

Graeber's claiming that the amount of bullion and precious-metal coinage in Europe underwent some sort of inflection point in 1450. It did not.

Graeber's claiming that starting in 1450 we see a "turn away from virtual currencies and credit economies" back to bullion. We do not. The funded, liquid, traded debt of the Dutch Republic in 1600 as it fought off Spanish-Habsburg conquest vastly exceeded the debt that Philippe IV Capet could issue in 1300. And the virtual credit flows later on in the 1450-1971 period absolutely dwarfed those before 1450.

Graeber's writing of "the 1400s... [as] a century of endless catastrophe: large cities were regularly decimated by the Black Death". The 1400s saw a very substantial rebound in urban life after the disasters of the 1300s: Europe's largest cities in 1500 look to have been half again as numerous as they had been in 1400.

Graeber's writing of how in the 1400s saw "knightly classes squabbl[ing] over the remnants, leaving much of the countryside devastated by endemic war..." The 1400s saw rather less endemic warfare than the centuries on either side of it had. It was the 1300s that had the bulk of the Hundred Years War. It was the 1500s that had first the French-Spanish struggles over Italy and then the Wars of Religion. Wars, yes. Chevauchee, yes--urning out of the countryside as a way to get the opposing knights to come out of their castles. But only par for the late-medieval course.

Graeber's claiming that in the 1400s "Christendom was staggering, with the Ottoman Empire... pushing steadily into central Europe..." Here Graeber has simply lost his mind. The 1400s do not see the Ottoman Empire anywhere in central Europe--in the 1400s it conquers Constantinople, acquires a very loose acknowledgement of vassalage from the Khan of the Crimea, establishes naval bases and outposts at the site of the 2014 Winter Olympic Games, wins a somewhat stronger acknowledgement of vassalage from the Princes of Wallachia and Moldavia, and conquers (a) Bosnia, (b) Albania, (c) Attica, and (d) the Peloponnese count either. If conquering Bosnia is a steady push into central Europe that causes Christendom to stagger, that is news to everyone except the Bosniaks. The first of the two unsuccessful Ottoman attempt to conquer Vienna came in 1529. The conquest of Buda and Pest did not, IIRC, occur until 1541. The attack on Malta in 1565 might count as an incursion into southern Europe--if Malta were in southern Europe, that is, and if the attempt to conquer Malta had not been a failure. The Ottomans did conquer Cyprus in 1570-1. The Ottoman high-water marks took place at the Battle of Lepanto in 1571 on sea, and in the first half of the 1600s on land. Perhaps Graeber simply doesn't look either at maps or dates?

Let's mock Graeber again on his claiming that in the 1400s "Christendom was staggering..." Western Christendom does shrink along its borders with the Ottoman Empire. But everywhere else things are different: The 1400s see the ethnic cleansing of Muslims and Jews from the Spanish peninsula by Castile. The 1400s see the advance of the Portuguese forces of Dom Henrique Aziz and his successors from Cueta south along the coast of Africa and into the Indian Ocean. The 1400s see Cristobal Colon and his Spanish company leap across the Atlantic in the last eight years of the century. The 1400s see Casimir IV Jagiellon of Poland on the offensive deep into the Ukrainian steppe. They see Ivan III Rurik of Muscovy subdue the Khanate of Kazan. My considered and sober judgment is that a California high-school student cribbing from Wikipedia would have done considerably better.

And let us mock Graeber for forgetting that just a couple of pages after he writes about how in the 1400s "the commercial economy sagged... whole cities went bankrupt, defaulting on their bonds..." with the knightly classes "squabbl[ing] over the remnants" he writes that the 1400s saw "so much wealth was flowing into the hands" of people outside the knightly feudal hierarchy that "government... forbid... the lowborn to wear silks and ermine". You see the problem? The "lowborn" wearing silks and ermine are the burghers and guild masters of the cities that Graeber claimed--only two pages before--had been depopulated by plague and were defaulting on their debt because economies had "sagged" and, in places, "collapsed". This is word salad.

Note that up to this point in the chapter, with its many errors and misconceptions, Graeber has managed to drop only one footnote. Does the footnote explain or justify any of his more bizarre claims? No. It simply notes Dyer (1989), Humphrey (2001), and Federici (2008) as sources for the changing level of English real wages and the changing quality of English "festive life". (I would note that were Graeber to talk in the presence of the Londoners of the days of Charles II Stuart (1660-1685) of how "Medieval festive life, with its floats and dragons, maypoles and church ales, its Abbots of Unreason and Lords of Misrule" was in the "next centuries" after 1450 "destroyed" would have evoked their surprise and laughter. There was a reduction in "festivity" as the so-called Little Ice Age and the down-phase of the Malthusian population cycle took hold: with fewer growing days and smaller farms you did need to put in more working hours. But Graeber's religious-ideology claims are greatly overstated. In general in early-modern Europe Reformers were not Calvinists, Calvinists were not Puritans: And even Puritans were not culturally hegemonic for much more than a decade anywhere other than Scotland and New England. You can talk about a privatization and a desacralization of celebration and spectacle. But I really do not think you can talk of any sort of destruction of feast and festivity...)

Graeber's inability to do arithmetic leaves him unaware of how badly the numbers on the price revolution he presents undermine his own thesis on post-1450 seeing a relative shift from credit to bullion.

Graeber's inability to understand why economic historians have shifted from Jean Bodin's monetary wage-stickiness understanding of declining real wages in Europe post-1400 to demographic-Malthusian ones.

Graeber's sudden declaration that "the place to start" if you are looking for "the origins of the modern world economy" is "not in Europe at all"--meaning that he started the chapter in the wrong place, and then couldn't get his act together to rewrite it to start it in the right place, China.

Graeber's failure to understand that the Chinese abandonment of paper money for specie is hardly "the place to start" in understanding a modern world economy that makes and has made immense use of paper money and other financial instruments for half a millennium.

Graeber's strange claim that the Ming Dynasty saw American silver as something that made their task of ruling easier, and that they welcomed.

Graeber's strange belief that the Chinese economy boomed during the Ming Dynasty because of a mid-Ming shift to pro-market pro-silver policies rather than favorable agricultural capital and agricultural technology.

Graeber's strange belief that the Ming continued Mongol feudalization and tax policies as a reaction against the Mongols.

Graeber's reliance for Ming economic history on Brook (1998), a cultural history that fails to recognize that for most Chinese inhabitants the replacement of Mao by Deng came as a profound liberation.

Graeber's failure to understand that Europe exported precious metals rather than furs, foodstuffs, and artifacts not because it was absolutely unproductive but because it controlled a greater proportion of metal mines than of population--hence it had a comparative advantage in the production of precious metals.

Graeber's failure to understand that as of 1500 Portuguese and Spanish (and shortly thereafter the Dutch, and eventually the English and the French) ships were technologically more advanced than Middle Eastern, Indian, and East Asian.

Graeber's bizarre and wrong belief that: "entire project of American colonization [would have] foundered, had it not been for the demand [for silver] from China."

Graeber's mysterious claim: "Many of these Chinese products ended up in the new cities of Central and South America" at a time when there were at most 200,000 people--0.03% of the world's population in a world in which China was 25%--in the cities of Central and South America.

Graeber's wrong belief that the seaborne trade around the Cape of Good Hope was "the most significant factor in the global economy" of the seventeenth century. It was the sixth-most at best: behind the engine of commercial development, the Columbian Exchange, the sugar and molasses to rum and guns to slaves triangle "trade" (if you want to call it that, which you should not), the general demographic expansion, and the beginning of the European settlement diaspora.

Graeber's wrong claim that Italian merchant bankers "became fabulously rich" after 1500 because they controlled the ultimate levers of the trades from Lisbon and Amsterdam to Asia. A look at the map would convince you that, as was the case, Italian merchants and merchant bankers lost heavily as trade with Asia was redirected from the Mediterranean to the Atlantic after Portuguese navigators rounded the Cape of Good Hope

Graeber asks: "How did the new global economy cause the collapse of living standards in Europe?" It didn't. The collapse of living standards in Europe had other, Malthusian causes.

Graeber's bizarre belief that the European price revolution impoverished workers. It didn't. It impoverished those who had transformed their income streams into fixed amounts of silver and gold.

Graeber's strange belief that Spanish sailors could become better fighters by fighting Turkish sailors in the Mediterranean naval wars, but that Turkish sailors could not become better fighters by fighting Spanish sailors.

Afternoon Must-Read: Rob Dent et al.: Measuring Labor Market Slack: Are the Long-Term Unemployed Different?

Rob Dent et al.: Measuring Labor Market Slack: Are the Long-Term Unemployed Different?: "There has been some debate...

...Krueger, Cramer, and Cho (2014) and Gordon (2013) about whether the short-term unemployment rate is a better measure of slack than the overall unemployment rate.... The two measures are sending different signals.... One can argue that the unemployment rate is exaggerating the extent of underutilization in the labor market, based on the premise that the long-term unemployed are, in practice, out of the labor force and likely to exert little pressure on earnings. If this is indeed the case, inflationary pressures might start building up sooner than suggested by the overall unemployment rate. In a three-part series, we study the available evidence on the long-term unemployed and argue against this premise. The long-term unemployed should not be excluded from measures of labor market slack...

Afternoon Must-Read: Adair Turner: Printing Money to Fund Deficit Is the Fastest Way to Raise Rates

Adair Turner: Printing money to fund deficit is the fastest way to raise rates - FT.com: "What is the right course for monetary policy?...

...The International Monetary Fund seems to answer with forked tongue. Its latest World Economic Outlook urges that monetary policy should stay loose to stimulate growth. Yet its Global Financial Stability Review warns that loose monetary policy risks creating financial instability.... In fact the best policy is to print money and raise interest rates. That sounds contradictory, but it is not.... Most countries have opted to combine fiscal tightening with ultra-loose monetary policy, setting short-term interest rates close to zero and using quantitative easing to reduce long-term rates and boost asset prices. But... sustained low interest rates create incentives for highly leveraged financial engineering.... The Bank for International Settlements therefore argues that monetary policy should be tightened as well as fiscal, but that would depress demand yet further.

We should indeed seek a swift return to higher interest rates, to remove the dangerous subsidy to high leverage.... The best way to do that, particularly in Japan and the eurozone, would be to deploy a variant of Friedman’s idea of dropping money from a helicopter. Government deficits should temporarily increase, and they should be financed with new money created by the central bank and added permanently to the money supply. Money-financed deficits would increase demand without creating debts that have to be serviced. This would lift either real output or inflation and allow interest rates to return to normal more quickly...

Kansas Announces Big Budget Gap, but True Gap May Be Even Larger: Live from the Roasterie

Thanks to the Republican election victory in Kansas this cycle--and thanks to the inability of moderate Republicans (we are looking at you, Bob Dole and Nancy Kassebaum) to get their act together to defend the civilization on the prairie that my ancestors started to build before theirs ever got here--the voters of Kansas continue their attempt to transform it into a Texas--but with little oil, hostile to Hispanics, and with days in November when it is fifteen degrees.

The extremely-sharp yet still Republican Josh Barro reports:

Josh Barro: Kansas Announces Big Budget Gap, but True Gap May Be Even Larger: "State officials said this week...

...that the tax cuts championed by Gov. Sam Brownback would force them to start a new round of substantial budget cuts before the end of June... cut $279 million, $239 million of which is attributable to lower-than-expected personal income tax collections. Those aren’t small numbers in a state budget of approximately $6 billion.... A close look at the state’s new revenue projections makes clear they are highly optimistic.... Kansas says it expects to collect slightly more personal income tax this year than it did last year, even though, with four months of collections in, they are 11 percent behind last year’s pace.

If the last four months’ performance is similar to the next eight, the state won’t miss its original income tax estimate by $239 million. It will miss it by $546 million.... Because the state was already scheduled to spend down nearly its entire rainy-day fund balance (which totaled over $700 million in 2013) by the end of this year, it will have to respond to any widening budget gap with some combination of further spending cuts and tax increases. ‘They’re clearly expecting income tax revenue to beat last year in April and May, but we’re not on any path to do that,’ said Duane Goossen, a former state budget director under governors including Bill Graves, a Republican, and Kathleen Sebelius, a Democrat. ‘I would expect that the estimate is still too high.’...

One reason to believe Kansas would issue a rosy estimate is that both liberals and conservatives in the state have incentives to believe in a high estimate and just cross their fingers. For conservatives, a lower revenue estimate would be embarrassing, because it shows the Brownback tax cuts were much more costly than advertised. For liberals, a lower revenue estimate would require a bigger round of state spending cuts in the short term. A detailed memo about the estimates, which may explain why revenues would be better in the remainder of the fiscal year , should be released late this or early next week by the Consensus Revenue Estimating Group, a group made up of Kansas budget officials and state academics...

Liveblogging World War II: November 17, 1944: FDR to Vannevar Bush

Franklin D. Roosevelt to Vannevar Bush:

Noted for Your Evening Procrastination for November 16, 2014

Over at Equitable Growth--The Equitablog

Nighttime Must-Read: Scott Erik Kaufman: There Is Privilege, Then There Is Privilege... - Washington Center for Equitable Growth
Evening Must-Read: Mike Konczal: The UNC Coup and the Second Limit of Economic Liberalism - Washington Center for Equitable Growth
Evening Must-Read: Wolfgang Munchau: The Wacky Economics of Germany’s Parallel Universe - Washington Center for Equitable Growth
Morning Must-Read: Kevin Drum: People Who Use Obamacare Sure Do Like It - Washington Center for Equitable Growth
Over at Grasping Reality: The Extent of Insolvency in Late September 2008 - Washington Center for Equitable Growth
Over at Grasping Reality: Jon Gruber in 2011: Yes, Subsidies Are Available to People Purchasing Health Insurance on the Federal Exchange - Washington Center for Equitable Growth
Morning Must-Read: Nick Bunker: What the Beveridge Curve Tells Us - Washington Center for Equitable Growth

Plus:

Things to Read at Nighttime on November 16, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:)

U.S. Expects $5 Billion From Program That Funded Solyndra
Peter Temin and David Vines: Why Keynes is important today
Luis Garicano and Lucrezia Reichlin: A safe asset for Eurozone QE: A proposal
Scott Erik Kaufman: There is privilege, then there is privilege...
Mike Konczal: The UNC Coup and the Second Limit of Economic Liberalism
Wolfgang Munchau: The wacky economics of Germany’s parallel universe
Kevin Drum: People Who Use Obamacare Sure Do Like It
Nick Bunker: What the Beveridge Curve may tell us about the U.S. labor market
Dani Rodrik: Mexico’s Growth Problem
Bridget Ansel: The evolution of class-based gaps in young children’s home environments
D.J. Diff: The Halbig Challengers’ Biggest Textual Obstacle

And Over Here:

Liveblogging the American Revolution: November 16, 1776: Fort Washington Is Captured (Brad DeLong's Grasping Reality...)
Weekend Reading: Jason Zweig from Fifteen Years Ago on the Internet Bubble (Brad DeLong's Grasping Reality...)
Liveblogging World War II: November 15, 1944: Marshall to Draper (Brad DeLong's Grasping Reality...)
For the Weekend: S--- Is All F----- Up and B------- Edition: Come Thou Fount of Every Blessing (Brad DeLong's Grasping Reality...)
Liveblogging World War II: November 14, 1944: Letters (Brad DeLong's Grasping Reality...)
Law in the Raw: Live from the Roasterie (Brad DeLong's Grasping Reality...)
Do Twitter Cards Work? (Brad DeLong's Grasping Reality...)
Jon Gruber in 2011: Yes, Subsidies Are Available to People Purchasing Health Insurance on the Federal Exchange (Brad DeLong's Grasping Reality...)
Hoisted from Other People's Archives from September 20, 2008: Financial Crisis Edition (Brad DeLong's Grasping Reality...)
Liveblogging the American Revolution: November 13, 1776: John Paul Jones (Brad DeLong's Grasping Reality...)
Hoisted from the Archives: The Dynamics of Political Language: Partisan Asymmetries Weblogging (Brad DeLong's Grasping Reality...)

Scott Erik Kaufman: There is privilege, then there is privilege...: "...and then there is whatever this is: George W. Bush: ‘You have to earn your way into politics,’ nothing ‘is ever given to you’](http://www.rawstory.com/rs/2014/11/ge...)

Mike Konczal: The UNC Coup and the Second Limit of Economic Liberalism: "There was a quiet revolution in the University of North Carolina higher education system in August, one that shows an important limit of current liberal thought.... The UNC System Board of Governors voted unanimously to cap the amount of tuition that may be used for financial aid for need-based students at no more than 15 percent.... As a board member told the local press, the burden of providing need-based aid ‘has become unfairly apportioned to working North Carolinians,’ and this new policy helps prevent that.... The problem for liberals isn’t just that there’s no way for them to win this argument with middle-class wages stagnating.... The far bigger issue for liberals is that this is a false choice, a real class antagonism that has been created entirely by the process of state disinvestment, privatization, cost-shifting of tuitions away from general revenues to individual, and the subsequent explosion in student debt. As long as liberals continue to play this game, they’ll be undermining their chances..."

Wolfgang Munchau: The wacky economics of Germany’s parallel universe: "German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes. To describe the economic mainstream in Germany as conservative misses the point.... As compelling as a comparison between the German mainstream and the Tea Party may appear, it does not survive scrutiny.... A good example of orthodox dogma was last week’s annual report of the Council of Economic Experts.... They did not criticise a lack of investment, excessive current account surpluses or overzealous fiscal rectitude. Instead they criticised the minimum wage and some minor relaxation to the retirement age. In other words: they want the government of Angela Merkel, chancellor, to be even tougher.... Macroeconomics in Germany and elsewhere are tantamount to parallel universes. In practice, German macroeconomic exceptionalism did not really matter all that much--until recently, when it started to matter a lot. When you have your own currency and engage with the rest of the world mainly through trade, a wacky ideology is your problem. That changes when you enter a monetary union, which is when policy makers have to work together..."

Kevin Drum: People Who Use Obamacare Sure Do Like It | Mother Jones: "Jonathan Cohn points us today to a Gallup poll with yet more good news for Obamacare.... The people who are actually using Obamacare... 74 percent said the quality of health care they received was good or excellent, and 71 percent said the overall coverage was good or excellent. What's remarkable is that these numbers are nearly the same as those for everyone else with health insurance, which includes those with either employer coverage or Medicare. Here's the bottom line from Cohn: 'You hear a lot about what’s wrong with the coverage available through the marketplaces and some of these criticisms are legitimate. The narrow networks of providers are confusing, for example, and lack of sufficient regulations leaves some patients unfairly on the hook for ridiculously high bills. But overall the plans turn out to be as popular as other forms of private and public insurance. It’s one more sign that, if you can just block out the negative headlines and political attacks, you’ll discover a program that is working.' Republicans can huff and puff all they want, but the evidence is clear: despite its rollout problems, Obamacare is a success..."

Nick Bunker: What the Beveridge Curve may tell us about the U.S. labor market: "Tthe Federal Reserve Bank of Cleveland used historical data on printed job advertisements to create a jobs opening rate for years prior to 2000. And if you look at their Beveridge Curve for economic recoveries going back over 60 years, you see the current shift is actually quite typical. The curve appears to shift quite a bit (up and over to the right) after large recessions and shifts back (down and over to the left) after the labor market recovers from the large shock..."

Dani Rodrik: Mexico’s Growth Problem: "When Mexico’s then-[Usurper] President Carlos Salinas de Gortari and his American counterpart, Bill Clinton, signed the North American Free Trade Agreement (NAFTA) more than 20 years ago, the hope was that the Mexican economy would be swept forward by a rising wave of globalization. By many measures, that hope has been amply fulfilled. Mexico’s foreign-trade volume... climbed... roughly doubling, to more than 60% of GDP. Net foreign investment inflows relative to GDP tripled... manufactured exports have led the way, as the economy has become ever more tightly integrated into North American supply chains.... Like so many other countries, Mexico was initially hit hard by Chinese competition in global markets.... Nonetheless, Mexico’s proximity to the US market and its conservative monetary, fiscal, and labor-market policies have provided significant protection.... Remarkably, Mexico’s exceedingly high levels of inequality have begun to fall since 1994, thanks in large part to reforms in social policy and educational improvements. Mexico’s success shows up everywhere, except where it counts the most over the long term: overall productivity and economic growth. In both areas, there has been disappointment galore... growth in total factor productivity... has been negative since the early 1990s... living standards in Mexico have fallen further behind the US and most emerging-market economies. Probably no other country in the world presents a starker contrast between external success and domestic failure..."

Bridget Ansel: The evolution of class-based gaps in young children’s home environments: "The racial gaps in test scores are narrowing.... Yet there is an even larger skills gap between children in low and high income households... sizeable before they even enter kindergarten. In fact, the achievement gap between the rich and the poor is widening dramatically, so much so that income is now a better predictor of test scores than race.... Ariel Kalil... will document and examine whether and how these class-based gaps in parenting have changed over the past 25 years, and if so, whether these changes contribute to the growing income-based achievement gap. It is clear that the fate of low- and high-income Americans has diverged in terms of educational attainment and cognitive skills, such as memory, reasoning, perception and intuition. Can the same be said for non-cognitive skills, such as resilience, motivation and attentiveness, necessary precursors for cognitive skill acquisition?..."

D.J. Diff: The Halbig Challengers’ Biggest Textual Obstacle: "The challengers have a big textual obstacle standing in their way: the statute’s provision for federal exchanges in section 1321.... Unlike the ACA’s Medicaid provisions, the exchange provisions have a federal fallback.... This isn’t Medicaid; it’s the Clean Air Act (CAA).... If the state turns down the ACA’s inducement to create an exchange, then under the challengers’ view the state’s 'punishment' is not merely the withholding of funds—it’s the withholding of funds and the creation of a federal exchange to operate in the state. This is an odd kind of inducement. Without the availability of subsidies, the federal exchange is an empty shell.... For devotees of the Cato Institute, perhaps this would be a convincing pitch: 'If you don’t create a state exchange then we’ll set up a costly, ineffective, useless federal program in your state'.... 'Attention states! You need to set up a program to provide health care to low-income individuals. If you set up such a program, then the federal government will give you lots of money to help run it. However, if you decline, then you don’t get the money. Moreover, if you decline we’ll spend millions of dollars on a totally useless web portal for low-income individuals to purchase health care in your state. But the health care on the portal will be too expensive for those folks to afford. And the website won’t even work well.' Under the challengers’ view, that is the system of incentives and cooperative federalism that Congress intended to create in the ACA. It doesn’t make a whole lot of sense.... Alternatively, we could avoid all of this assumed ineffectiveness and just adopt a reading of section 1321 that allows federal exchanges to stand in the shoes of state exchanges. Then the ACA’s 'fallback' structure actually makes sense..."

Should Be Aware of:

Amazon and Hachette Resolve Dispute - NYTimes.com
Obama Plans to Protect Up to 5 Million From Deportation - NYTimes.com
Jeremy Hsu: “Good Enough” Tanks Won WWII
abbe Gluck: Obamacare subsidies as textualism’s big test
Alexis Madrigal: How to meet someone on TV
Marc Andreessen: The ‘90s Had It Right

 

Paul Krugman: Rage of the Traders: "I really, truly expected that even Wall Street would consider PeterPaul Singer’s hyperinflation in the Hamptons rant embarrassing, and try to pretend that it never happened. But no; apparently it’s being passed around eagerly by traders and big shots who think it’s the greatest thing since sliced foie gras.... Jesse Eisinger at ProPublica tries to make a case for the rage of the hedgies... argu[ing that]... the government and the Fed have created a fake sense of financial health.... Eisinger is imputing a reasonable analysis to the likes of Singer based on no evidence.... I’d suggest that when Singer talks about a debased currency and fake economic growth, that’s because he really believes that we have a debased currency and fake growth, not as a metaphor for some other kind of economic deception. And where is that perception coming from? I still think that Brad DeLong’s analysis has it right.... Traders... concluded that low interest rates would surely rise back to historical norms. When those rates did no such thing, they looked at the Fed’s intervention... [as] a big trader distorting markets, London Whale-style, by making huge bets that would surely go bad. So they sat back and waited for the collapse. And the collapse keeps not happening, because the Fed is not a rogue trader and historical norms for interest rates aren’t relevant in a persistently depressed, deleveraging economy. But rather than acknowledge that they were wrong, let alone that, er, Keynesian macroeconomics has something to teach them, these guys lash out.... [And they] have no idea when they look ridiculous. After all, who in their entourage is going to tell them?"

Robert Solow: The Ramsey model: "Friends have reminded me that much of the effort of ‘modern macro’ goes into the incorporation of important deviations from the Panglossian assumptions that underlie the simplistic application of the Ramsey model... wage and price stickiness, gaps and asymmetries of information, long-term contracts, imperfect competition, search, bargaining and other forms of strategic behavior.... But... why do so many of those research papers begin with a bow to the Ramsey model and cling to the basic outline?... Attaching a realistic or behavioral deviation to the Ramsey model does not confer microfoundational legitimacy on the combination. Quite the contrary: a story loses legitimacy and credibility when it is spliced to a simple, extreme, and on the face of it, irrelevant special case.... Adding some realistic frictions does not make it any more plausible that an observed economy is acting out the desires of a single, consistent, forward-looking intelligence.... The theory is neat, learnable, not terribly difficult, but just technical enough to feel like ‘science’..."

Rex Sorgatz: Surfing, Drowning, Diving: A Brief History of Inventing New Media: "15 years ago, the surface cracked open. The glossy patina of digital television ruptured, revealing its polar opposite: bewildering depth.... Blogger (1999) forecasts a future where every person creates their own content empire. This triggers a decade of schizoid seizures in old media companies.... Napster (1999) transforms your computer into a music database server, as the history of human recording becomes instantly available. Wikipedia (2001) turns human knowledge into a massive data repository.... Google News (2002) is invented to capture all the content that media companies were moving to digital platforms.... The Long Tail (2004).... YouTube (2005) begins to archive every moving image ever created.... In 2010, NYT licenses FiveThirtyEight, one of the first attempts to control the data deluge. Netflix Streaming (2007) shifts Netflix from a superficial ‘surfing’ technology (three DVDs, no more) to a ‘drowning’ experience.... By 2010, we were drowning.... We are now in the era of the deep dive. Consider the media buzzwords of this moment: think piece, longform, recap, and binge watch. All of these terms suggest a break from the era of big data into the epoch of deep exploration. The most successful recent innovations illustrate the shift.... Phase One: Surfing.... Phase Two: Drowning.... Phase Three: Diving.... The water is warm, come on in."

Liveblogging the American Revolution: November 16, 1776: Fort Washington Is Captured

: This Day in History:

Hessian Lieutenant General Wilhelm von Knyphausen and a force of 3,000 Hessian mercenaries and 5,000 Redcoats lay siege to Fort Washington at the northern end and highest point of Manhattan Island. Throughout the morning, Knyphausen met stiff resistance from the Patriot riflemen inside the fort, but by afternoon, the Patriots were overwhelmed, and the garrison commander, Colonel Robert Magaw, surrendered. Nearly 3,000 Patriots were taken prisoner, and valuable ammunition and supplies were lost to the Hessians. The prisoners faced a particularly grim fate: Many later died from deprivation and disease aboard British prison ships anchored in New York Harbor.

Among the 53 dead and 96 wounded Patriots were John and Margaret Corbin of Virginia. When John died in action, his wife Margaret took over his cannon, cleaning, loading and firing the gun until she too was severely wounded. The first woman known to have fought for the Continental Army, Margaret survived, but lost the use of her left arm.

Two weeks earlier, one of Magaw's officers, William Demont, had deserted the Fifth Pennsylvania Battalion and given British intelligence agents information about the Patriot defense of New York, including details about the location and defense of Fort Washington. Demont was the first traitor to the Patriot cause, and his treason contributed significantly to Knyphausen's victory.