Thread: 1/For folks interested in 19c US history of capitalism and pol econ, I cannot recommend enough @yuenyuenang's How China Escaped the Poverty Trap. It offers fresh thinking for reflecting on the US case. This thread raises one implication I took from the book @pseudoerasmus

2/The final chapter makes its own comparison to the 19c US, drawing on Wallis's work on public finance w/the "open access" framework he developed with North and Weingast and recently elaborates in an ed. volume with Lamoreaux. This is fine, but there's much more one could do

3/In ch. 4 Ang gives a fascinating account of how Chinese top leaders rewrote the rules for bureaucratic pay & promotion to focus on economic deliverables without micromanaging local methods. The result was a swarm of bureaucratic entrepreneurialism using personal social networks

3b/This chapter very effectively solves the conundrum of how it was (and is) that bureaucrats across the entire spectrum of government acted (and are acting) as daring, creative & bootstrapping entrepreneurs using the materials ready at hand, such as family connections

4/The flip side is lots of corruption. Regions that developed first subsequently shifted bureaucratic goals and compensation to become more recognizably impersonal and Weberian. Ang stresses this two-step process, each one appropriate to conditions given developmental goals

5/Let's compare this to the 19c US using Nicholas Parrillo's Against the Profit Motive, which charts a "salary revolution" in 19c US officialdom. At first, US gov officials were paid by user fees, leading them to treat citizens like customers. . . .

6/Later this came to seem corrupt and salaries were substituted, making for a more impersonal official-citizen relationship. A neat parallel w/Ang's story, which raises this interesting question: Could it be that the early fee regime was developmentally effective in the US case?

6b/Qs like these are the payoff of thinking US history through Ang instead of the usual theories and historical set pieces. H/T @NMaggor

7/There was no top-down directive in the US case. But there may have been a set of intentional incentives embedded in the fee structure. This seems plausible because of the well known way that US policymakers deploy indirect incentives for econ growth, e.g. through the tax code

8/Consider the early development of the USPS, as told in Richard John's Spreading the News. John shows that the USPS departed from European revenue-raising models for gov postal monopolies and that this was crucial for US development because it stressed information flow instead.

8/Congress decided very early to subsidize newspaper deliver to encourage info flow. Question was whether newspapers should go totally free or not. Madison successfully insisted on a small fee, payable by *receiver*, to ensure that post workers *actually delivered the papers*

9/In another example, John explains that postmasters were allowed to collect fees for PO boxes, thus providing an important service for local merchants. Another critical perquisite was "franking" privilege, the right of postmasters to send their own mail for free

10/The result of the fee structure might then have been what Ang calls central gov "influence" rather than "control." Instead of commands, Congress signaled a certain set of relationships. Fee-earning officials became interested in local development to expand their customer base

11/As in modern China, however, the inherently corrupt and willy-nilly development this encouraged eventually wore thin as the booster phase succeeded and a degree of public planning and technocratic capacity became more appealing even to businesspeople

12/On this point see, e.g., Robin Einhorn's classic on 19c urban public finance, Property Rules. The bigger point is that reading new analyses of nonwestern econ dev can offer important lenses and insights for rethinking US and even Euro econ history. Thank you & goodnight.