Krauthammer Annoys My Inner Pedant
“In the old days — from the Venetian Republic to, oh, the Bear Stearns rescue — if you wanted to get rich, you did it the Warren Buffett way: You learned to read balance sheets. Today you learn to read political tea leaves. If you want to make money on Wall Street (or keep from losing your shirt), you do it not by anticipating Intel’s third-quarter earnings but by guessing instead what side of the bed Henry Paulson will wake up on tomorrow.”
Think about the first sentence. Krauthammer seems to be saying that whereas today we have to pay attention to politicians to get rich, back in the Olden Days people only had to read balance sheets. The whims of political leaders were, apparently, of no concern to them. Let’s be nice to Krauthammer and assume that he’s talking about the history of the US and Western Europe, and thus that it would not be fair to adduce the USSR or the later Qing dynasty as counterexamples.
Hurlburt notes that what Krauthammer says isn’t true of the Venetian Republic. But the thing is: it isn’t true of almost anywhere. It’s like saying that from the time of the Venetian Republic until a few months ago, people enjoyed religious liberty or complete social mobility: it’s not just false, but spectacularly false. I could pick any one of a large number of examples, but let’s just stick to France under Louis XIV:
“During the reign of Louis XIV, competition for access to the spoils of government transformed the character of the French aristocracy. The great families of the realm had to establish residences in the capital or the court itself because the political and factional struggles between the king’s courtiers often determined both major and minor economic decisions. Because seeking out royal patronage was more highly rewarded than staying in the provinces to oversee the local economy and local affairs, nobles moved to Paris and devoted themselves to competing for the unearned income handed out by the king. However, nobles needed to invest time and money to acquire the political information that would win them sinecures, posts in the Church, access to commercial or industrial patents of monopoly, or shares in tax farms (often using a false name or straw man). Like firms in the highly centralized nations of present-day Latin America, they had to move their offices to the capital at the expense of their provincial activities. Once transformed into courtiers, the nobility directed much of their activities toward gaining shares in short-term loans to the Crown and trying to persuade the government that the projects of their clients were best suited to national priorities. One hidden cost the mercantile economy had to bear was the extravagant court and social life of Paris, which by the time of Louis XVI consumed almost 6 percent of the state’s revenues and an equally significant, but difficult to measure, proportion of private revenues. The calculation scarcely captures the full economic costs of the competition for privilege.” (pp. 37-38)
An example of just how much control the King and his government exercised:
“Two of the most extreme examples of the suppression of innovation in France occurred shortly after the death of Colbert during the lengthy reign of Louis XIV. Button-making in France had been controlled by various guilds, depending on the material used, the most important part belonging to the cord- and button-makers’ guild, who made cord buttons by hand. By the 1690s, tailors and dealers launched the innovation of weaving buttons from the material used in the garment. The outrage of the inefficient hand-button-makers brought the state leaping to their defence. In the late 1690s, fines were imposed on the production, sale, and even the wearing of the new buttons, and the fines were continually increased. The local guild wardens even obtained the right to search people’s houses and to arrest anyone in the street who wore the evil and illegal buttons. In a few years, however, the state and the hand-button-makers had to give up the fight, since everyone in France was using the new buttons.
More important in stunting France’s industrial growth was the disastrous prohibition of the popular new cloth, printed calicoes. Cotton textiles were not yet of supreme importance in this era, but cottons were to be the spark of the Industrial Revolution in eighteenth century England. France’s strictly enforced policy made sure that cottons would not be flourishing there.
The new cloth, printed calicoes, began to be imported from India in the 1660s, and became highly popular, useful for an inexpensive mass market, as well as for high fashion. As a result, calico printing was launched in France. By the 1680s, the indignant woollen, cloth, silk and linen industries all complained to the state of ‘unfair competition’ by the highly popular upstart. The printed colours were readily outcompeting the older cloths. And so the French state responded in 1686 by total prohibition of printed calicoes: their import or their domestic production. In 1700, the French government went all the way: an absolute ban on every aspect of calicoes including their use in consumption. Government spies had a hysterical field day: ‘peering into coaches and private houses and reporting that the governess of the Marquis de Cormoy had been seen at her window clothed in calico of a white back ground with big red flowers, almost new, or that the wife of a lemonade-seller had been seen in her shop in a casquin of calico’. Literally thousands of Frenchmen died in the calico struggles, either being executed for wearing calicoes or in armed raids against calico-users.”
I don’t think that counts as “getting rich the Warren Buffett way”.
My best guess is that Krauthammer is doing something I recognize from reading undergraduate papers: saying something that he probably not only doesn’t believe, but has scarcely even noticed, simply because it’s a nice-sounding way to start a column. It’s the same lazy mental habit that leads otherwise intelligent students to write opening sentences like: “Throughout history, philosophers have debated the morality of human cloning.” Is this true? Obviously not. Does its truth or falsity play any role in their argument? No. Have they bothered to reflect at all on whether or not people were debating human cloning in, say, ancient Greece, or even Victorian England? No. They just need a suitably impressive-sounding opening sentence, and its actual content is of so little concern to them that they don’t even notice its evident absurdity.
The thing is, though: they are students. What’s Charles Krauthammer’s excuse?