Crisis as History: Reinhart & Rogoff vs. Galbraith & Mackay

Exciting results; but not reading

My bedside table is a victim of the debt crisis – how else can I explain it being overburdened by Reinhart & Rogoff’s This time is different (2010), Galbraith’s The Great Crash 1929 (1954) and Mackay’s Extraordinary Popular Delusions (1841) ? Reinhart & Rogoff”s book nearly topped the Amazon best-seller list (only beaten by Stieg Larsson), but will it become a classic like Galbraith or Mackay? I don’t think so, even though Reinhart & Rogoff make an incredible important historical argument about national debt crisis, and crises more generally. It turns out that crises happen often – every country it seems has had one or more in recent times – they play out in various ways and there is a lot of novel data and research in the book (!) to prove it. But it’s a pain to read…

I don’t understand why it is so difficult to make an argument simply and clearly. The writing – or possibly the editing – is just poor. Never mind that they make a lot of technical points first, that’s fine; it’s the general structure of the writing which is frustrating. Whenever an argument begins to be developed (and you have to get to chapter 4 before arguments appear) they interrupt the story with two-page text-boxes, unrelated tables or other random elements. All of them valuable in their own right, but none of them in an order that makes much sense. Consider the opening of chapter five on page 68:

We open our tour of the panorama of financial crisis by discussing sovereign default on external debt… (Some background on the historical emergence of sovereign debt markets is provided in box 5.1). Figure 5.1 plots the percentage of all independent countries… [and between 1820-1840s] nearly half the countries in the world were in default (including all

That’s where the page ends… ! The next two and half pages are one long text box, and thereafter the sentence “(including all…” is completed. By the next page we get to see figure 5.1 (promised at the start), but they throw in figure 5.2 for good measure, not that it’s clear what it means yet (Reinhart & Rogoff, 2010: 68-72).

A classic; and great read

It’s annoying. And particularly so, as Reinhart & Rogoff has such an important point to make, with such interesting data. Apparently it took 10 years to write this book. I wish they’d spent some more time editing. There is a reason why Galbraith’s and Mackay’s work not only became standard references in the literature (as Reinhart & Rogoff’s will), but also became classics (which Reinhart & Rogoff’s won’t). The classics are well researched and well written. At times wonderfully so; as with Galbraith’s commentary on how banks are shy to advertise their very efficient operations which actually facilitate speculators liquidity positions and led to instability:

Banks supply funds to brokers, brokers to customers and the collateral [which customers use to leverage stock transactions] goes back to the banks… Wall Street, in these matters, is like a lovely and accomplished woman who must wear black cotton stockings, heavy woollen underwear, and parade her knowledge as a cook because, unhappily, her supreme accomplishment is as a harlot. (1954 [2009: 47-8])

Reinhart & Rogoff has much to contribute with their book. A good read is tragically not one of them, and that may stop its transition from good research into great piece of work. What a shame.


10 thoughts on “Crisis as History: Reinhart & Rogoff vs. Galbraith & Mackay

  1. I will have to dissent on both counts here.

    I think Reinhart & Rogoff is not a sloppy text. It is not a narrative, has no suspense nothing to invite to stay that extra ten minutes in bed reading to get to some lull in the action. It is written as a textbook, with primers on x and y, banking, financial instruments, regulation, repeating the argument in every unit, over and over, repetition works, over and over. It is in the mode of many books these days, that are not supposed to read whole and have chapters tailored for different audiences.

    Neither is Galbraith all good. I was horrified by the quote you transcribe. I did not know and now discover, that Galbraith was a misogynist.

  2. Hi Clement,
    I remember reading the the Galbraith when I was around 18 and just loving it! Bought it again last year and still enjoyed reading it.

    @Tiago: I don’t think you can say so lightly of someone who spent his entire professional life advancing progressive ideas and who has payed for scholarships at Radcliffe rather than Harvard that he is sexist. What Clement quotes may not be politically correct but is by no means misogynist.

    1. Unless Galbraith was paraphrasing Bernstein’s On the Town (
      – and I suspect it will still be a very bad excuse – this fragment is a great example of male chauvinism. Women are described through their underwear. It is said that well-accomplished women are harlots. And the alternative of being a harlot is cooking well.
      I’m afraid that having progressive ideas (unfortunately) does not immunize you against being sexist, racist or anti-Semite. Can we not say that George Washington was a slave owner? Can we not discuss whether Keynes had anti-Semitic attitudes?

  3. Tiago, I am not convinced that any defense of a writing style can begin “It is not a narrative, has no suspense nothing to invite to stay that extra ten minutes in bed reading to get to some lull in the action. It is written as a textbook” – Never mind that your point on the narrative is bang on, but even textbooks have to have a logical structure (more so than narratives), and has to make a point with associated diagrams close by, and not cut itself off midway to talk about something else – all of which R&R do.

    That said, they are honest in saying that their history is not a “narrative” based one (like Kindleberger or Ferguson), but rather the “the core ‘life’ of this book is contained in the (largely) simple tables and figures in which these data are presented rather than in narratives of of personalities, politics, and negotiation. We trust that our visual quantitative history of financial crises is no less compelling than the earlier narrative approach” (R&R 2010: xxvii). The reality is that this is not a textbook; it is a history, written in data and quantitative analysis, and despite their trust, the narrative approach of past writers is a lot better to be honest. If their empirics had been presented well – even in a textbook style – this would probably have worked, and may have been a better book than the ‘narrative’ style.

    Also, in regards to Galbraith. I am amused to find trained historians making a 2010 post sex-and-the-city criticism of a humorous analogy written in the mid 1950s. Even today there are gender stereotypes, and it is not clear to me how this comment is chauvanist – it’s funny and pretty much on the spot for the 1950s – and even today it (sadly) resonates… Either way, I’m not impressed by the allusion to misogyny for a man awarded ‘Humanist of The Year 1985’ and who co-founded “Americans for Democratic Action” – one suspects more evidence is wanted for such a claim, than a very different reading of one paragraph in the thousands of papers and dozens of books written over a lifetime.

    Oh, and as for Keynes the anti-semite; can I recommend the preface to the first German edition of the General Theory, written by Maynard himself.

    1. On the Galbraith issue. I think the best counter evidence you can offer is that as President of the AEA he created CSWEP, the other accolades make him a Progressive but need not testify with regard to his views of women. And even CSWEP and specific actions taken for the advancement of women, the same year inviting J. Robinson to do the Ely lecture, need not close the conversation. See Reder, HOPE winter 2000; and a forthcoming paper by Weintraub, also HOPE, that reviews the literature on the anti-semitism of Keynes. I don’t want to make a case out of your quote, but I don’t want either to have the issue dismissed as ridiculous or hysterical. Maybe not all writing and humor age well.

  4. @Benjamin: Sorry for attributing the post to Clement. Its because I came here via his fb wall

    @Tiago & Reading Bird: I was trying to re-access the paper Galbraith wrote on the work of his wife when he was ambassador to India and the pages about the economic role of women but can’t access either. If I remember well, JKG has not only been an early supporter of women rights but has also written, in The Affluent society about the unfairness of the salary discrepancies in the workplace.

    By the way, even though I wouldn’t myself use the same image, I don’t find his comparison sexist. He is not saying that well accomplished women are harlots but denouncing that a woman who is sexually free is asked to act and dress like a housekeeper. I really wouldn’t resist calling him a sexist if I thought he was one but all what I’ve read until now suggest that he’s been in the honorable side on these issues.

    1. @hadyba: Thanks for your reply and for clarifying. I’m still not sure I’ll read it like that but I’m happy to have an alternative reading to mine instead of being accused of doing “2010 post sex-and-the-city criticism”. (Sorry Benjamin, I don’t own a TV so you might want to explain that to me (us?))
      @all: Only a few more exploratory questions (if I may):
      (1)Honestly, can one really infer from the excerpt given that he is denouncing the situation at all?
      (2) Do you think that this quote can be offensive?
      (3) Would you still use a similar image today? if not, why?
      (4) (a more general one) Is it ok for “historians” to exhume old “jokes” about oppressed minorities (and majorities) and to humour the “good old chaps” who wrote them just because they were accepted (and allegedly funny) at the time without any kind of context or criticism?

  5. @Reading Bird:
    (1) I don’t think he is denouncing the situation at all, he’s just pointing that in this regard, wall street is acting like a harlot hiding her true accomplishment because of the known moral bigotry of the time.
    (2) I happen to be black but I’m really not that touchy even about racially charged humour so. I don’t think this quote is offensive but I suppose it is a matter of point of view. Plus we are here totally out of context with a very little excerpt
    (3) No. I’ve decided years ago to totally stop even the slightest sexist joke because it can be misinterpreted or create a women’s unfriendly environment. (exception: with my sisters and my very best friends who happen to be girls and only in private settings. I’m globally respecting this rule since 2002) I’d rather joke about male or black people if I wanted to make fun of someone because I belong to these groups.
    (4) No. But I suppose many historians wouldn’t at all perceive the excerpt as sexist so…

  6. @ Reading Bird, I’m sorry for the sex-and-the-city comment, and should have gone the way of hadyba’s analysis – which I completely agree with – but I think in the spur of the moment and at the end of a too long reply, I was just a bit flabbergasted by the reading… That shouldn’t have let me ping off silly comments, but done is done, and so be it.

    On your questions, I would agree with Hadyba’s reply to 1, 2 and 4, although have to happily admit that I think one can joke about anything as long as you’re comfortable saying it in front of anyone. I respect Hadyba’s decision, but personally if something is funny (be it sexist toward men, women or variations on the theme) its funny. A little like the US supreme courts decision on pornography, when in defining porn Justice Potter said “I know it when I see it, and the motion picture involved in this case is not that” (Jacobellis v. Ohio 1964).

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