150 Years Ago

I've just re-read The Wealth of Nations, and while this might have been true of Americans before 1815, it doesn't seem to have been true of the English, or the lowland Scots. He writes a lot about division of labour and inland trade.

Adam Smith also writes about the America's lack of own manufactures and attributes that to two causes, firstly that land was so cheap as soon as anyone accmulated any capital as an artisan they bought land and started farming, and secondly the misguided mercantalist policies of Britain in attempting to monopolise trade with America and restrict its production. Not to say that the transportation revolution wasn't fantastic for productivity everywhere (and Adam Smith didn't envisage the improvements), just that the story about the lack of trade in America before 1815 might not have been down to a lack of technology.

The Erie canal was a (state) government infrastructure project. Why was NYS smart enough to pull off effective large scale projects in the 1820's but has become a blundering monstrosity today?

Tracy,

Everywhere in Britain is within 100 miles of the sea, and the country is filled with navigable rivers. It has therefore always been very easy to transport goods around Britain - by water. Nowadays we take land transport of goods for granted, but before the steam engine it was extremely difficult to transport anything heavy overland. That is why, as Arnold mentions in the article, it was cheaper to transport goods from the East Coast to Europe than inland - water transport much easier than overland. But because of Britain's geography they never had these problems of needing lots of overland transport. It's also why the first stage of the Industrial Revolution in Britain, in the 1770s, was building canals to connect up their river networks. By contrast the geography of America is very different, which is why the transport revolution affected much more.

About those "ever larger and more distant markets," what about the enhancement of refrigerated transportation?

While growing up in southeastern Michigan in the 50s & 60s, I never ate an avocado or a kiwi or a mango, never had a tomato during the winter, and Harry & David's box of oranges was a winter bonanza.

Now, we think nothing of eating next-day fruits and vegetables from around the planet, and fresh Valentine's Day flowers flown in from South America.

Gotta love it.

Salem - Arnold Kling's comment didn't strike me as being specific to America, apart from being supported only by US examples and Americans do that a lot even if they're talking about things with universal applicability. That, and my understanding is that a lot of colonists lived near the East Coast of the USA, which mean they had the sea for sea transport.

Before the transportation revolution, it was cheaper to transport goods from the East Coast to Europe than to transport them thirty miles inland.

I'm having trouble accepting this. I'm not saying it's not true, just that it's hard to accept.

With a dirt road that would have been about a two-day trip, one way, for a horse-and-carriage. A trading post at the halfway point could have done a nice job as a rest place for deliverymen, although securing goods overnight would have been difficult.

Today, we take specialization and trade for granted. We get ticked off when the government "fails to create jobs."

A few hundred years ago everyone was a sole proprietor, or the direct personal hire of one. How did they deal with recessions? I guess wages were much less sticky.

Dan,

Maybe the right way to think about it is the cost of transporting a ship load of goods to Europe (port to port) vs transporting the same mass of the same goods inland in a wagon train.

Yet the unemployed do not revert to growing their own food, sewing their own clothes, and dipping their old candles.

Here are some of the signs I tell people I look for to see if things are really bad:
- The deer population in my neighborhood dwindles.
- Roadkill isn't a common sight.
- I would get unsolicited bids to fix a few obvious things that need fixing (though I could think of a few reasons this wouldn't happen even if things were bad).
- And to your first point, gardens would much more prevalent.

And in a weird twist, it occurred to me as I watched Ellen Degeneres show off her new garden, that we're so well off that we can now afford to garden again.

Hi Arnold,

What do you think on the need for a minimal safety net when a person’s previous specialization is no longer valid and in a world of greater specialization, he/she has to train much longer to gain a new competitive advantage?

I don't have any issues with the world getting closer. I'm just thinking about retraining costs exceeding the benefits of global specialization.

Is there a theory in economic literature comparing these. Rates of job loss and consequent retraining costs and benefits of specialization?