July 2008 Archives

The primary flaw of the book is not that it lacks analysis or has poor analysis, but merely that the analysis is uneven.  The consequence is that--not unlike European history itself--there is a fascinating account of the ancient world and a gripping description of modern times, with a conspicuous void in the middle.  The chapters on the late Middle Ages especially feel like a list of dates, names, and places strung together.  This is particularly problematic because the modern reader is generally most interested in impressive political, cultural, and technological developments, of which there were already very few in the Middle Ages.  A dry account of a dry time is taxing to read.

These 300 pages in the middle notwithstanding, the book is superb.  While there are many periods in which Davies's exposition is noteworthy, two general features that correct flaws in prior accounts of European history are the most refreshing.  The first is Davies's conscious attempt to avoid equating European history with Western European history.  This equation has been a persistent feature of my previous education in history, even at the University of Chicago.  Many historical accounts of the post-ancient world focus almost exclusively on the Britain/France/Germany triangle with the Vatican occasionally thrown in.  Ancient history is frequently reduced to the Greece-Rome axis.  Davies overcomes these painful oversimplifications through extensive discussions of peoples at Carthage, Syracuse, and the vast expanse of Eastern Europe.  Nor does he even dwell on the typical suspects of these domains.  In the discussion of Russian history, for example, Novgorod is treated on equal footing with Muscovy until 1570, when Ivan the Terrible overran Novgorod.  Similarly, Davies exerts significant efforts describing developments in Poland-Lithuania and Constantinople.  These discussions are critical, even to an understanding of strictly Western Europe.  Many developments in western Christendom, such as the crusades and even the Renaissance, cannot be understood fully without Constantinople and its interactions with Islam.  Similarly, the Holocaust cannot be understood without first understanding why there were so many Jews in Poland.  The reason?  In addition to having a stunning number of liberal and quasi-democratic institutions for the period, the Commonwealth of Poland-Lithuania (also "The Most Serene Republic") had an amazing degree of religious freedom between Jews, Catholics, Orthodox Christians, Protestants, and even Muslims.  Jews were not ghettoized in Poland-Lithuania like their counterparts farther west.  As a result, Poland became a center of the European Jewry.

The second bias which Davies attempt to correct with some success, is the tendency to "read history backwards".  At no point in history is this more prevalent than in accounts of World War II.  There is a rather pervasive tendency in the popular understanding toward the "victors' bias".  People tend to view WWII as a moral war of good against evil, Western liberalism against fascism, etc.  On a fairly superficial level this is true.  Hitler was evil, while the Western powers were certainly less so.  Hitler and Mussolini were fascists, while Churchill and Roosevelt were proponents of liberal democracy.  But Stalin was neither good nor liberal in any sense of either words.  This is where the popular belief in the moral supremacy of the Allied powers becomes overzealous.  Davies does a good job showing how the factors that determined the behavior of Britain, France, and the US were less influenced by grand ideological visions than strategic considerations.  Britain and France, for example, only entered into war after the failure of the Munich Agreement to contain Germany clearly demonstrated that it posed an undeniable territorial threat to the entire continent.  The US only entered in the war after Pearl Harbor showed that the war could pose a tangible strategic threat.  Western countries were quick to ally with Stalin, a leader who was arguably more morally repugnant and culpable than Hitler (if nothing else he killed far more people with methods that were about as brutal).  Stalin's USSR also conveniently shared no borders with the Western Allies, and could therefore not pose an immediate territorial threat.  One can only imagine whether the US and UK would have allied with Nazi Germany if the geographic positions of Germany and the USSR were reversed.  In short, the Allies were morally superior, but their behavior was driven far more strategic considerations than the ideological ones that people tend to believe.  Ironically, the country whose actions were most driven by ideological and moral considerations (perverse ones, that is) was Germany, which succeeded in being one of the world's most repugnant and failed regimes.  Basing war on morals is a dangerous and frequently insane proposition.  Davies's discussion of World War II, in particular, achieves an objectivity that cuts through the obfuscation of our victorious rose-colored glasses.

In short, the book is lengthy with a few dry spots, but it excels at objectivity and describing a representative cross-section of Europe.

--From an article in the Times today, reporting on the sudden popularity of hamburgers in chic Parisian restaurants.

Thoreau remarks, in his characteristically draconian way, that:

As of July 1, the city of Chicago now has the highest tax rate of any major city.  The general sales tax on all nonperishable goods was raised to 10.25%.  Illinois sales tax law mandates a general 6.25% sales tax, with 5% going to the state, 1% going to the city, and 0.25% going to the county.  Chicago is permitted to charge additional sales taxes on top of this level.  In addition, Chicago has an incredibly convoluted list of other random taxes that can be found here.  There is, for example, a $1 tax on every new tire sold, and an additional 1% tax on food and beverages sold in the downtown area.

It is easy to lambaste such a list of taxes as being arbitrary and excessive, when in fact there may be legitimate reasons for having obscure taxes to correct specific externalities.  It is also easy to accuse the local government of inefficiency and waste.  But while I am often sympathetic to higher taxes, I sincerely doubt that Chicago's taxation can be justifiable.  Firstly, although any large city needs to have many services to support infrastructure, education, and the urban poor, other major cities like New York City, Los Angeles, or Boston do this with a lower level of taxation.  It is not clear that Chicago does a better job than any of these other cities at providing basic services.  In fact, there is evidence that it may do a worse job: the city's notorious experiences with police brutality and public housing are just a couple examples.  Additionally, although governments are always accused of inefficiency and corruption, there is very strong evidence that Chicago is more than a standard deviation or two above the mean.  The fact that the second Richard Daley is now in his 6th term is alone cause for some concern, aside from the regular charges of corruption levied against his administration.

Beyond the simple question of whether taxes need be so high, there is the question of whether they are assessed in the correct manner.  This is largely a normative issue, but it is worth describing so that the reader can form his own opinions.  There is considerable economic evidence that consumption taxes are favorable to income taxes.  So Chicago has done well in this regard.  For whatever reason, people in the US generally favor a strongly progressive tax structure.  Chicago's tax code would seem to be quasi-progressive.  Since poor people spend a large amount of their income on food and consumables, which is taxed very minimally on average (the rates are very complicated: I pay a tax on some food items, none on most food, and a different tax rate on soap, and a different tax rate on clothes), they pay very little in taxes.  The middle class spend most of their income, but much of it is spent on non-perishable goods.  The wealthy have a much higher savings rate than other income brackets, so they probably pay a lower effective tax rate on the middle class.  On the one hand it is surprising that the middle class would pay the highest tax rate, given that this is generally politically unpopular.  On the other hand is should not be surprising because they are probably the most politically under-represented income group in Chicago.

My final critique concerns transparency.  As I have already alluded to, Chicago has a very convoluted tax code, with multiple tax rates applying to different items in different places.  One of the benefits of having a consumption tax is that they are generally very transparent to the consumer.  But this benefit is largely lost in the Chicago system.  It is unlikely that most taxpayers know all of the rates for various items.  I spent about 30 minutes looking for a comprehensive listing of sales tax rates, and it was not even clear to me what the structure was.  Moreover, the tax code is frequently irregular and irrational.  The city charges a $0.05 tax on every bottle of water sold, but a 13.25% tax on soda.  It is completely unclear why one is an excise tax and the other is an ad valorem tax.  If the motivation for the law were to internalize environmental externalities, then both would have a similar tax, with soda perhaps taxed at a higher rate.  But a $0.50 can of soda has a $0.07 tax, while a $0.50 water has a $0.05 bottled water tax plus a 2.25% tax of about $0.01 cents for a total of $0.06 tax (such prices are attainable by buying in bulk).  

It would be interesting to see what the economic effect of Chicago's taxes are.  Unlike a state sales tax increase, municipal sales tax increases may actually have an even more adverse effect on local economies.  It seems that the costs of moving a business across a city boundary or opening a shop in across the street from Chicago in Evanston instead of in the far north side are much less than moving a business to another state.  Since businesses can keep all of their same customers and employees by relocating or expanding just outside Chicago instead of just inside, the economic effects of local sales tax hikes may be as negative as they come.  Indeed, this event would serve as a very interesting natural experiment to test the effect of sales tax on economic activity.  I'm sure this has been done before, but perhaps not on the municipal level where sales taxes are generally not levied.

And I have found the best tea I have ever tasted:

And I have sampled one of the best inexpensive Earl Greys I have ever tasted:

In fact, this Earl Grey was one of the top 5 Earl Greys for under $10 / 100g at the World Tea Championships.  If you value good tea, you should buy it from these people.

--David Brooks, "Obama's Money Class"

To be honest, I have no problem whatsoever with the Obama camp being driven by the interests of Goldman Sachs or the University of California.  At least the resulting policies might make an ounce of economic sense or have a modicum of intellectual coherence.  At least it's better than having the interests of Halliburton running the country.