The bias against presidential restraint

I have a new working paper available, this time co-authored with Frank Garmon and Phillip Magness. In this paper, we argue that rankings of presidential greatness in the United States (i.e. the evaluation of presidential performance) have systemic biases resulting from Presidents wanting to rank higher in such rankings. Because Presidents care about their historical reputations (i.e. how well they rank relative to other Presidents), they want to leave a mark that historians can observe. This means that there is a bias in favor of being proactive and that there is a penalty to being restrained. Presidential restraint means that there are fewer crumbs in the forest for historians to follow. However, there is no reason to believe that restraint is an inefficient (in terms of socio-economic outcomes) course of action. There are numerous instances where restraint could be warranted. Thus, restraint may be desirable socially but undesirable for an individual president as it means that he will not be seen as easily by historians. The abstract is below and the paper is available here on SSRN:

Comparative rankings of presidential performance can be clouded with partisan biases. Here, we argue that there is another and often overlooked bias: active presidents use power and in the process they highlight their performance. It is easier to observe the use of power than the restraint of power. As such, there is a form of selection bias in expert rankings of presidents whereby we are best able to evaluate those who are more proactive rather than those who, willfully or not, exercise political restraint. In this paper, we consider how presidential rankings of greatness are affected by measures of presidential restraint (use of veto powers, divided government, changes in the size of government). We find evidence that restraint has a negative effect on presidential rankings suggesting the presence of a bias historical evaluation whereby presidents that adopt proactive and interventionist policy stances leave more visible marks that impress more favorably upon expert rankings of presidents.

Did Separatism Hurt Quebec’s Economy? The Causal Effects of the Election of the Parti Québécois in 1976

I have a new working paper, co-authored with Kevin Grier. In the paper, we consider the consequences of the election of Quebec’s first separatist government in 1976. This is a paper that should have been written years ago given how often the topic is discussed in Canadian politics.  The paper can be consulted here on SSRN and the abstract is below:

Most separatist movements overlap with ethnic tensions and are associated with violent and economically destructive outcomes. In this paper, we consider a (largely) peaceful separatist movement. Specifically, we use the synthetic control method to study the economic consequences of the surprising victory of the Parti Québécois in Quebec in 1976 and the subsequent referendum on Quebec’s independence in 1980. We find that, relative to our control, the election of separatists had a small positive effect on economic activity until 1980 after which a small negative effect appears. We further find that the size of the provincial government (relative to GDP) constantly and significantly exceeded its synthetic control. We argue that the economic costs of separatism may arise from the frequently associated violence and not be intrinsic to any sort of political disintegration.

Measuring Away the Importance of Institutions: The Case of Seigneurial Tenure and Agricultural Output in Canada East, 1851

My paper on measurement errors of agricultural output in Lower Canada in 1851 and how it affects our evaluation of the effects of land tenure laws on farming productivity is now publicly available in Social Science Quarterly.  The abstract is below:

This article argues that the 1851 census of Canada East (the modern‐day province of Quebec) requires a set of important corrections. Using corrections based on ethnic origin composition, I demonstrate how significantly wheat and oat yields were underestimated in Canada East. More importantly, I argue that the measurement errors are not randomly distributed and that they are biased against attempts to test the role of institutions. I show how the new method of correcting the data change our interpretation of agricultural efficiency in Lower Canada in the mid‐19th century. While this correction may seem minor, it shows that in the past, the data took a form that was biased against numerous hypotheses concerning land tenure institutions.

New working paper: Social Justice, Public Goods and Rent-Seeking in Narratives

I have a new working paper (co-authored with Phil Magness) which has been submitted to Independent Review. In this short article, we explain a way to sort the wheat from the chaff with regards to social justice. We argue that relational equality (an idea at the center of the social justice literature) is a potent concept and that cementing relational inequality is a method of preserving rent-seeking arrangements that discriminate against particular groups (minorities or majorities). The paper is available here on SSRN and the abstract is below:

Social justice, as a concept, has long been considered inimical to the classical liberal tradition (Hayek 1976; Nozick 1973; 1974). To be fair, there is much to criticize about the concept. The definitional fluidity of the term, along with its frequent deployment for “activist” political endeavors, cast doubt upon the scholarly rigor of the term (Hayek 1978). However, where there is chaff, there is wheat and thus the possibility of salvaging some parts of the social justice concept to serve both normative and positive ends (Tomasi 2012, xvii-xx). Sorting the wheat from the chaff is the aim of this paper. To do so, we introduce the concept of “rent-seeking in narratives,” which, as we argue, takes the best concepts from the literature on social justice in order to make it a relevant tool for social science and classical liberal thought.

State Capacity and Economic Development: Causal Mechanism or Correlative Filter?

I have a new working paper available with Alexander Salter (Texas Tech University). This time, we tackle the topic of state capacity by asking the question of why we fail to observe persistent cases of societies with low state capacity and high levels of economic development. The paper is available on SSRN here, the abstract is below:

In this paper, we explore why there are no examples of societies with low state capacity and high economic development. We argue that such an outcome is unlikely because of the nature of investments in state capacity. Societies that become rich in the absence of a strong state invite predation by societies that develop such states. Thus societies invest in state capacity, in part, to plunder other societies’ wealth. Those investments are a form of rent-seeking. Potentially preyed-upon societies are forced to invest in state capacity in turn so as to deter potential attackers. This entails that as soon as a rent seeker enters the game, the likelihood of a low-capacity, high-development society surviving falls. This explains the historical lack of such societies. We thus interpret state capacity not as a causal condition for widespread economic prosperity, but a survivability condition for enjoying this prosperity.

Collusion and combines in Canada, 1880–1890

I have a new working paper available (it is under consideration as we speak). The paper studies Canada’s Anti-Combines Act of 1889. The Act, meant to limit collusion in business practices, was passed a full year before the American Sherman Antitrust Act. It is generally a forgotten piece of history that Canada adopted such an Act before the United States. However, the Act’s genesis is very much like that of the Sherman Act. In the paper, I study price and output evidence and argue that the impetus for its passage had little (if nothing) to do with consumer welfare. The paper is available here on SSRN and the abstract is below:

It is a little-known fact that Canada adopted its own antitrust laws one year before the landmark Sherman Antitrust Act of 1890. The Anti-Combines Act of 1889 was adopted after a decade in which ‘combines’ (the Canadian equivalent of ‘trusts’) grew more numerous. From their numbers, Canadian historians, legal scholars and economists inferred that consume welfare was hindered. However, price and output evidence has never been marshalled to provide even a first step towards assessing the veracity of this claim. This paper undertakes that task. I highlight that the output from industries accused of collusion increased faster than national output in the decade before the passage of the Act and that their prices accordingly fell faster than the national price index. I argue that these findings militate for the position that the origins of Canada’s Anti-Combines Act were rooted in rent-seeking processes similar to those that American scholars have found driving the Sherman Antitrust Act of 1890.

Monopsony and Industrial Development in Nineteenth Century Quebec: The Impact of Seigneurial Tenure

Along with Vadim Kufenko and Alex Arsenault Morin, I have a new paper available (here on SSRN) on labor coercion. Labor coercion (i.e. labor market institutions that are geared towards redistributing rent from workers to employers) is a topic that has garnered growing interest on the part of economists such as Daron Acemoglu (see here).  Numerous case studies exist concerning sugar plantations in the Caribbean (here and here), the regulation of emigration agents in the United States that reduced the internal migration of Black Americans (see here) and British servants in the 19th century (see here). What this literature has cemented is the possibility that even “mild” coercion (i.e. the “lighter shades of coercion”) can have large negative effects.   In this most recent paper, myself and my co-authors use a mild coercive institution – that of seigneurial tenure of Canada – to expand on this insight. Using a provision in the Constitutional Act of 1791, we test the impact of this feudal institution on wages and industrial development in the province of Quebec between 1831 and 1851. We find that it had a large negative effect which depressed wages by a margin sufficient to bring Quebec in line with large portions of North America (rather than being a laggard). The abstract is below and the paper can be consulted here on SSRN:

We argue that the system of seigneurial tenure used in the province of Quebec until the mid-nineteenth century — a system which allowed significant market power in the establishment of plants, factories and mills, combined with restrictions on the mobility of the labor force within each seigneurial estate — is best understood as a system of regionalized monopsonies in the non-farm sector. Seigneurs had incentives to reduce their employment in those sectors to reduce wage rates. We use the fact that later, with the Constitutional Act of 1791, all new settled lands had to be settled under a different system (British land laws). This fact lends itself efficiently to a regression discontinuity design. Using wages contained in the 1831 census, we find strong evidence that the monopsonist features of seigneurial tenure depressed wages and industrial development.