Tuesday, 17 October 2017

Shit Historians Say

One of the things I hate about many historians is their insane tendency to simply say things. That is, with no evidence at all and no attempt at convincing me of their position, they simply assert things. Sometimes it’s entire arguments, but more commonly it happens when they’re trying to evaluate or derive causal relationships. Let me give three examples I came across recently  – and if I looked around I’m sure I could find enough material for literal bookshelves on the topic.

The first one is from Avner Offer, since I just happened to read his chapter (‘Narrow Banking, Real Estate, and Financial Stability in the UK c.1870-2010’) in an otherwise brilliant book – British Financial Crises Since 1825, edited by Nicholas Dimsdale & Anthony Hotson – and since he’s at Oxford too. Discussing banking and British financial stability mainly in the 20th century, he identifies that between the Gurney crisis in 1866 and the British commercial property crisis in 1973, Britain suffered no banking crises – a century of remarkable banking stability.
Even the Great Depression of the 1930s was comparatively mild for Britain, and its banking system was never really threatened. In the introduction of his chapter, then, Offer states:
the main attribute of this world we have lost was the functional specialization of different parts of the banking system. Each activity in the financial system was undertaken by a different set of institutions. This is in contrast with the encompassing ‘universal banking’ institutions which emerged after the 1970s and which came to dominate. (p. 158)
Ok, not to mention that this red herring echo of Glass-Steagall has been debunked in countless ways, this kind of nonsense is not worthy of a scholar like Offer. A quick look around Europe would have informed him of his mistake: the universal banking systems of say Germany or Sweden also suffered from the financial crisis in 2007, but largely escaped the extravagances and banking collapses of Britain that so intensely occupy the rest of Offer’s chapter. The investment banks that set off the GFC in the United States were primarily just that: investment banks. But the most astonishing thing is that he never gives us a serious reason to believe his main assertion that “the main attribute […] was the functional specialization of different parts of the banking system.” (p. 158). There were tons of things that changed British banking from the boring, relatively safe turn-of-the-century business that have emerged from the avalanche of recent scholarship, to the crisis-prone (well, I’m not sure if 2-3 crises over 40 years classify as ‘crisis-prone’) system we know today:
  • Overwhelming government regulation 
  • Shareholder liability
  • Bank of England liquidity facilities
  • Reduced reserve ratios (often explicitly by Government instruction, in order to extend credit to selected constituents)
And if you don’t like crude economistic reasons, how about culture? Behaviour in response to perverse risk-rewarding incentives set up, primarily by central banks and chancellors alike, although bankers are hardly innocent here. For a brilliant overview of precisely this question (or perhaps, doing the research Offer should have been doing) see Turner's Banking in Crisis.

Another example is the charming lady who presented at one of our amazing Economic & Social History seminar last week. After an interesting story of matching-up census data, following particular individuals throughout their lives to establish whether youth correction facilities of the late-Victorian era were successful, she concluded that they were, but only when combined with flexible labour market and housing markets. Okay? Barely any control group, no consideration of other explanations, no inquiry or evidence in support of those conclusions; it’s like the fact that she and her co-authors had gone through the painstaking process of matching up these individuals allowed her to state whatever conclusion she wanted, however much it lacked support.

A third and final example is the historian Paul Kennedy in one of our core readings for last week. It’s honestly hilarious when historians try to invoke the authoritative language of economics, but without fully (or even partially) grasping its meaning. In his otherwise quite informative section on WWII (Chapter 7), he comments on the rebuilding of Germany after the war, and notes:
trade among developed countries was always more profitable than trade elsewhere, simply because the mutual demand was greater.
What this sentence is meant to mean is beyond me: the profitability of a trade has no particular bearing on its “mutual demand” (and the "mutual demand" is not what steers or governs profitability; if demand here refers to the Misesian version of revealed preference and profitability assessed ex ante from the point of view of an individual, it is nothing but a redundancy; if he’s trying to devise that entire countries may have “mutual demands” with another, he’s crazier than I thought. They don't: only individuals do.

I'm sure every profession have people saying and doing really strange things, perhaps academics and politicians moreso than others (note: irony).  Today I took the liberty of showing some examples from historians in this obvious reference to the hillarious facebook-page Shit Academics Say. If nothing else, this stuff is quite entertaining. Enjoy!

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