Downton on down

Martin Hutchinson argues that — even after factoring in the crushing losses of WWI — the ‘Downton era’ did things better:

In certain respects — behavioral and otherwise — the “Downton Abbey economy” of 1920 was greatly preferable to the one we are experiencing today. […] A move to a “Downton Abbey economy” should not imply a sharp increase in inequality, rather the opposite. It is interesting to note that almost 100 years of progressive bloat of the public sector in both Britain and the U.S. — supposedly undertaken to reduce economic inequality — have in reality tended to increase it. […] Public spending (including local government) was around 25% of GDP in Britain in 1920 and about 15% of GDP in the U.S., compared to 40% plus in both countries today. It must be questioned what benefits the public has gained, either in greater equality or better services, from the massive rise in public spending since the Downton Abbey period, which itself was inflated from pre-World War I days.

[…]

Apart from smaller government and less inequality, the Downton Abbey economy had a number of other advantages over today’s … First, total factor productivity growth was much greater. The decade saw the most rapid adoption of the advances in power and transportation that had grown up from the 1880s. The result was U.S. TFP growth of around 2% annually, about double the recent rate. This generated an explosion in living standards during the decade.

Second, the “Downton Abbey economy” had much lower asset prices because of higher interest rates and much easier construction procedures. Shares paid higher dividends and were much lower valued in terms of assets and earnings, while leverage ratios were infinitely more conservative. The world was used to a gold standard, in which leverage could kill you in a downturn, and was much more careful about incurring it. Real estate was valued at its rebuilding cost, and rebuilding costs were much lower than today because there were no planning approvals and no environmental-impact statements. I have written several times about the extraordinary inflation of infrastructure costs, from the 1920-27 Holland Tunnel’s $48 million, equivalent to $700 million in today’s prices to the outrageous projected $9 billion of the recently cancelled Trans-Hudson Tunnel (functionally an identical project). In “Downton Abbey’s” world, real estate costs were modest and new infrastructure projects were built on time, at a fraction of today’s real cost.

Third, the “Downton Abbey” world had positive real interest rates and no inflation psychology. People could be assured that their efforts in saving would not be destroyed by inflation or by being dumped into an overvalued bubble stock market. While World War I had brought a doubling in prices in Britain and the United States, everyone expected that this process would be largely reversed, probably by a British return to the gold standard. Indeed, until World War II, those expectations were realized. For people planning their lives, it was a much easier era. In peacetime, money was a solid store of value, not something that had to be monitored constantly for inflationary erosion.

Finally, both the economic system and the financial system were carried on with high standards of integrity, more so in Britain than in the U.S., but higher in both countries than today. Banks, corporations and managers relied heavily on their reputation, and those doing business with them made careful enquiries about that reputation. There were few fallible government regulations, no bailouts and little leverage. A notable feature of the Bernard Madoff Ponzi scheme of 2008 was that it was able to attract about 500 times as much money in real terms as the $3 million collected in 1920 by the Charles Ponzi and carry on for about 40 times as long as Ponzi’s eight months. The ability of Madoff to grow so big and last so long is testimony to the futility of modern regulation and to the sad decline of ethical standards in today’s blue-chip houses.

February 27, 2014admin 20 Comments »
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20 Responses to this entry

  • Kevin C. Says:

    My first question, upon reading this, is to what degree the economic differences Mr. Hutchinson outlines are the product not of sociopolitical or cultural differences, but technological ones (fraction of the population in agriculture, automation, servants versus appliances, etc.)?

    Consider also his point about the size of government. However, I note that a set of n entities has n(n-1)/2 possible pairs, and so the rate of interactions between entities goes like their density squared. Hence, as humanity becomes more urban (more physically dense) and more wired/interconnected (socially dense), the rate of interactions, and thus conflicts, grows at an above-linear rate, including those conflicts requiring address by law and government. Add in urban anonymity, an inevitable byproduct of growing city size versus a fixed Dunbar’s number and the increased mobility required by modern economies, and that means more government growth just to maintain the same standards. All of this is without bringing in the additional challenges of ethnic diversity. And note that the automobile brought traffic laws, traffic cops, traffic lights and their maitenance, the DMV, and so on.

    And as for the loss of “integrity” and the portions that are cultural, the saying “you can’t unscramble an egg” comes to mind.

    [Reply]

    admin Reply:

    If urbanization drove statism, how could Hong Kong exist? One could as easily argue that the economies of scale (or density) from urbanization reduced the need for government — you must have encountered the ‘rural post offices’ argument?

    [Reply]

    Kevin C. Reply:

    “‘Rural post offices’ argument”

    Actually, never heard of it.

    [Reply]

    fotrkd Reply:

    There’s no profit, so we get a Universal Service Obligation instead.

    Kevin C. Reply:

    Secondly, I only said urbanization was a contributing factor, not the sole determinant of government growth. And as for Hong Kong, while I can’t speak to the precise details, I’d note that is has a number of rare or unique advanteges (economic, geographic, entry selection mechanisms, and so on), but that the biggest difference is, of course, HBD. I’d put East Asians as a partial exception to the density mechanism above; in particular, the Chinese have three advantages as I see it:

    1. The ability to live and get along with others in close, low-privacy conditions is likely influenced by a number of genetic variations, where Asians likely have a number of advantages; lower body odor from fewer apocrine sweat glands, for example; or the products of the selection forces that removed the 7R allele of DRD4 (associated with ADHD) from the Chinese population (not to mention the effects of generation upon generation of rice farming with regards to avoiding conflict with others).

    2. Common culture: common mores and norms, a general understanding of right and wrong shared by all, common interests and tastes, all of these are not only helpful in reducing the frequency of the sort of conflicts requiring government intervention, but necessary to doing so. And Hanification/Sinicization has done a fairly decent job of that (compared to the Anglosphere).

    3. As I understand it, in Imperial China the legal system made all court proceedings, civil and criminal, so onerous and unpleasant for all involved, that people were essentialy forced to develop what were essentialy privatized law/norm enforcement and dispute resolution mechanisms, including a lex mercatoria-like system, with arbitration, for economic disputes between merchants. The existence of such was likely another selection pressure, feeding back to #1, but was dependent entirely on #2; these mechanisms are only possible with a common culture. (It also depends on effective reputation and shame mechanisms increasingly absent in rootless, atomized, anonymous and hyper-mobile Westerners).

    [I’d also point out that all this ties in to the near total replacement of the traditional Anglo-Saxon common-law/jury system by prosecutorial discretion and plea barganing (see Stuntz’s The Collapse of American Criminal Justice, or Fred Reed’s latest at Taki’s Magazine): a common law system requires a common culture, a common morality (perhaps even, one might say, a common religion); and an Anglo-Saxon court system can only work with Anglo-Saxon crime rates). I’d also point to Stuntz’s book as a source with arguments supporting my contention that urban density and anonymity are contributing factors to increased crime rates and law enforcement costs.]

    In short, the Chinese can tolerate more easily densities the rest of humanity require goverment intervention to withstand, because of HBD.

    Posted on February 27th, 2014 at 9:05 am Reply | Quote
  • spandrell Says:

    Now that’s something I didn’t expect a techno-futurist to link to.

    My worst cringe watching Downton was on the Christmas ball, when the aristocrats had to dance with the servants. What the hell. I can imagine the reaction of a Chinese aristocrat watching that.

    “Those white devils make their daughters dance with the servants!! Holding hands!!”

    [Reply]

    admin Reply:

    It ‘s more in honor of the 1920s than the landed aristocracy. (Anyone who doesn’t love that decade has some kind of personality disorder.)

    [Reply]

    spandrell Reply:

    It’s easy to love, but I find it hard to forget how it all ended. The 1929 crash. What can’t go on has to stop.

    [Reply]

    admin Reply:

    The ’29 crash would have been therapeutic if it had just been ridden out.

    Lesser Bull Reply:

    Read Saving Calvin Coolidge in a Dream right now.

    [Reply]

    Posted on February 27th, 2014 at 9:36 am Reply | Quote
  • VXXC Says:

    O/T but see Christians fighting AQ/ISIS, Assad and the Cathedral.

    And yet they move.

    http://www.nationalreview.com/article/372096/syrias-christian-sheep-among-wolves-andrew-doran/page/0/1

    [Reply]

    Posted on February 27th, 2014 at 2:16 pm Reply | Quote
  • VXXC Says:

    On Thread,

    Yes it would be nice to return to values of Duty and Prudence. They require Sacrifice however. Lord Downtown led anything but a Life of Leisure, he led a Life of Duty.

    For a more accurate account of WW1 read Anthony Saunders “Trench Warfare”. No they weren’t idiots who mindlessly threw men at entrenched machine guns at all. That’s a postwar socialist myth. The lie is also given to the myth by British General Officer casualty lists.

    A return to the Values of that era and the economics of prudence and the gold standard would be laudable. A return to Aristocracy would require that this Aristocracy Earn It and that’s a lot of earning. Aristocracies validate their existence by Defending the Realm, not their property. They defend the integrity of the realm. No Western and indeed Eastern Aristorcracy coming to mind ever viewed it’s own citizens as property to be traded as commodity. Even Timur, Even Chighis. The idea of the nation and it’s people as commodity to be exploited by the High IQ’s and high testing is already the governing ethos of the current ruinous managerial State. We already have pyschopaths in charge. Changing the pyschopaths helps no realm.

    Aristocrats were validated by their status of Defenders, whatever their shortcomings. The Downtown Abbey crowd – from the 1st episode – the real deal stood on the deck of the Titantic and let the women from 3d class exceed their own survival rate 3X fold. Men’s 1st class survival rate was one-third that of 3d class women. That is a lesson that is yet utterly missed by NRxn. Most of the men survivors of the Titantic would wear the shame of coward for the rest of their lives.

    Many if not most here would justify their survival as “Heroes of HBD”.

    Also no Western Aristocrat of the last several hundred years would take exception in context to the dance of the Ball. Even the slave socieities alll the way thru the AnteBellum South had periods of respite. No doubt NRxn/HBD slave societies – if ever they came into existence except as result of Co-Opt by Progs – would not. And fall in less than a year. For until the last few years the Progs knew more of Ruling than Reactionaries and most Conservatives.

    The leading and ruling of men, even lessers, even slaves must be earned.

    And how many would indeed utterly capitulate to the Cathedral tommorrow if their tenue included White males only?

    Lord Downtown went to do his Duty in the Boer War, and ensured despite cost to him a lame servant as Valet, because Lord Downtown understood Duty to his former comrade.

    Duty yet utterly eludes any mention in the NRxn canon. This is a disqualifier for Rule. We have the Rule of the vain and selfish now.

    [Reply]

    Saddam Hussein's Whirling Aluminium Tubes Reply:

    THIS

    [Reply]

    Dan Reply:

    I am glad I read that. It is humbling. I do think that the Christian right had a lot of what you speak of. They are crushed underfoot, and called bigots for hewing to values that have stood for many centuries. They are given no public platform even to defend or explain themselves, let alone to share their personal success.

    Neoreaction, in my view is full of bitter people, such as myself, who had sincere public-mindedness and who felt totally defeated. When lessers rule and attack good or successful people specifically because they are good or successful what use is there? Bill DeBlasio sees that the performance of students of all races in the charter schools is orders of magnitude better than in public schools so he aims to destroy them. The administration goes on the warpath to overturn a judge who granted asylum to a hardworking German homeschooling family while granting extralegal amnesty to millions of illegal dependents and turning loose thousands of violent criminal aliens. Concientious objectors to SSM are crushed. The culture taught by television is utterly toxic most of the time.

    So people flee. They cocoon. If society attacks that which is good, it is foolish to put forth good things.

    [Reply]

    Lesser Bull Reply:

    You speak the truth.

    [Reply]

    admin Reply:

    So nobility, as you so impressively depict it, automatically ensures that it is selected out of the gene pool. That looks like an argument for social pessimism to me. What am I missing? Surely exhortations aren’t going to reverse a tendency whose mechanical inexorability you have just brutally described?

    [Reply]

    VXXC Reply:

    @admin,

    Exhortations no, earning it as nobility always has and always will.

    The tendency you refer to is not mechnical it is human will, the strength of the Left’s will – which is at this moment despite their increasing histronics, indeed that’s increasingly desperate madness – their strength is getting weaker and weaker.

    There is no such thing as mechanical inexorability in Human Affairs. That Sir is the Progressiveness of Doom. It is False.

    The Left earned their power through deeds of power, striking at the weakened old order after World War I. We are now living through the beginning of the end of their order, they are dying and we are seeing syphilitic madness manifiest. They are also bankrupt, utterly bankrupt morally, spiritually and most important financially. They are so hyper-extended on fantasy fiat that the only sane people in the government are stealing as fast as they can.

    I don’t know what you think of the European Parliament scandals but they pale into childs play next to the epic and pandemic corruption openly displayed within American government. Pandemic corruption from top to bottom . They’re all quite Detroit, it just hasn’t caught up as fast everywhere. These are the sane people executing a rational plan.

    The rest are either in a fog they may have been born into, or in quiet despair tending their gardens like some who haunt Neo-Reaction like the Ghost of Lord Downton.

    Have a look at Mark Leibowitz’s “This Town”. This doesn’t go on. We’re in worse shape than the English government I’m quite sure.

    And to opportunity: when the Finances are reckoned, when they are “normalized” and returned to the grim earth from the clouds there will be an hour of reckoning for people utterly unequipped to face it. Quite enough of the people are quite ready for leadership, tired of seeing all that they are and came from degraded and insulted, without leadership or representation, ready to hear a message of truth and yes hope, but justice for our kind again. The Cathedral does not trust it’s army, and it’s police are not trustworthy either – and of course there’s no central police force in the United States, it’s one of our Jeffersonian legacies that they are quite local. When their money is no good anymore they have not even their rented welfare friends, nor their imported ones, they’re quite alone. Der Bunker without the SS or the Werhmacht.

    They have the media as long as the champagne flows, the University faculty as the grant money still overwhelms their consciences, they have fags and feminists.

    But no more men. Who have been shoved aside.

    Who have watched this ruin long enough.

    No, not mere exhortations. But the opportunity to show one’s qualities at last dawns out of a dark night.

    [Reply]

    RiverC Reply:

    Isn’t it the case that people used to deal with this by having a lot of children? People nowadays think that just because your kids don’t die of polio or some other childhood disease that you need fewer of them. Back when they were more successful, these sacrificial folks doubled down on the kids, because you can’t spend what you don’t have.

    [Reply]

    Posted on February 27th, 2014 at 2:36 pm Reply | Quote
  • VXXC Says:

    That world was better. But it was also earned.

    [Reply]

    Posted on February 27th, 2014 at 2:42 pm Reply | Quote
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    Posted on March 1st, 2014 at 4:03 pm Reply | Quote

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