Monday, October 3, 2016

Some gossip about David Ricardo

From Crisis Chronicles: The Crisis of 1816, the Year without a Summer, and Sunspot Equilibria at Liberty Street Economics, by Jim Narron and Don Morgan:
1816: The Year without a Summer
The financial and economic difficulties associated with the end of the Napoleonic wars were exacerbated by extremely cold, dark weather across northern Europe and the northeastern United States in 1816. The poor weather was caused by the eruption in the Dutch East Indies (Indonesia) of Mount Tambora, which spewed smoke and ash into the atmosphere, obscuring the sun. So severe was the weather that snow was recorded in Albany, New York, and in cities in northern Europe—in July. The cold and dark caused widespread crop failures and severe famine across the Northern Hemisphere, and 1816 became known as the “Year without a Summer” and the “Poverty Year.” People were observed eating “bread” of sawdust and straw. Lord Byron commemorated the calamity with a poem, “Darkness.”

     The famine caused many German and Swiss residents to flee certain starvation by traveling to Russia and the Americas, while Italians flocked to the cities. Hundreds of thousands died from the combined effects of typhus, exposure, and starvation. Food prices increased dramatically by 1817 and this led to one of the first direct public interventions in failed markets, as local governments coordinated food imports to feed the starving. However, not all were in favor of public aid. British political economist David Ricardo argued that funds raised for employing destitute people were wastefully diverted from “other productive employment.”

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