Friday, October 19, 2012

Some Economic History

A fascinating tour of recent economic history: Downton Abbey Economics
The historical truth is markedly different.  The span of relevant history starts out with a major bailout of the landed gentry and the banking system, and ends with the rise of the financial sector providing much of the income for the Downton Abbeys of the time. It progresses through the Industrial Revolution to a late-Victorian English ruling elite that was smug, narrowly educated and scientifically illiterate, rich from the financial sector but with a manufacturing base that had been increasingly starved for the capital to keep up with the technological pace of change.  It spans a time of tectonic social shift from an agrarian economy to one where a rising industrial middle class needed workers for its factories. Because of that fundamental change, the working poor were largely cut off from the land and social structure which produced the food they ate, making them dependant solely on the factories that provided their wages.

The bailout occurred when Parliament passed the Corn Laws, a steep tariff on cheap imported grain   As the eminent British historian Eric Hobsbawm wrote, “The Corn Laws which the farming industry imposed on the country in 1815 were not designed to save a tottering sector of the economy, but rather to preserve the abnormally high profits of the Napoleonic war-years, and to safeguard farmers from the consequences of their wartime euphoria, when farms had changed hands at the fanciest prices, loans and mortgages had been accepted on impossible terms.” The linkage to the sub-prime debacle and subsequent bailouts is obvious. Then, as now, making risky loans based on bubble-inflated real estate was a recipe for trouble.

The costs of the tariffs literally took bread out of the mouths of the newly emerging class of factory workers, who then needed higher wages just to eat...
And then there's this:
The disastrous effects of the social structure showed up in a working class stunted by decades of malnutrition.  In the 1870s,’s the height of the twelve- year- olds at the prestigious ‘public’ schools was a full five inches taller than that of the industrial students in their separate schools.   When the nation conscripted its soldiers in 1917, this first comprehensive look at the health of the male population showed that two thirds suffered disqualifying disabilities.  Providing significantly improved conditions for the working class, proper nutrition, comprehensive education and, despite the work of reformers like public health pioneer Florence Nightingale, all this and readily available health services were decades in the future.
Does any of this sound familiar – a global empire whose economy has become nothing more than financial games funneling wealth to a small hereditary aristocracy; an underinvestment in research, science, technology and infrastructure; massive spending on a military “empire” fighting wars all over the world; an upper-class completely cut off from those they rule over; an educational system specifically designed to enhance privilege and inequality, with concurrent lack of social mobility; laws passed to enhance the profits of the idle rich while starving the working classes, and a lower class suffering the maladies of ill-health, substandard housing, and lack of jobs and education.

And we all know what happened to the British Empire, right?


  1. The peasants and workers were probably largely guided by the church and landowning establishment to believe their lot in life was inevitable and ordained because they were inherently inferior. After a tour of surrounding countryside in my area this weekend, it looks like our rural gentry and proletariat are now completely united in their fervent faith in the millionaires.

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