Saturday, April 25, 2015

390. Paul Krugman, Benjamin Franklin and Old-Time Economics

In his New York Times Op-Ed Article That Old-Time Economics, April 17, 2015, Paul Krugman pointed out,  "In recent years, however, innovative economic ideas, far from helping to provide a solution, have been part of the problem. We would have been far better off if we had stuck to that old-time macroeconomics, which is looking better than ever." I agree with his opinion. To learn from history is always a good way to solve today's issues.

Paul Krugman's opinion reminds me of the article, Benjamin Franklin and China by Dr. Dave Wang. In this article, Dr. Wang examined Franklin's study of Chinese economic theory.  According to Dr. Wang,  at some point between 1765 and 1774, Franklin studied Chinese economic theory. Franklin wrote the following to convey a pamphlet on economic theories by George Whatley, his friend; "It was an excellent saying of a certain Chinese Emperor, I wil, if possible, have no Idlesin my Dominions’ for if there be one Man idle, some other Man must suffer Cold andHunger. We take this Emperor’s Meaning to be, that the Labor due to the Public, by each Individual, not being perform’d by the Indolent, and necessary to furnish his Subsistence, must naturally fal to the share of others, who must thereby sufer.”

From Franklin's autobiography we learn that Franklin practiced the Chinese emperor’s theory at his home. In his own home he “kept no idle Servants”.  In October 1786, Franklin showed his position “against accumulation of debts as a practice adverse to the economy and cited the high interest in China as a salutary means of discouraging borrowing.” He stated that interest was 3 percent per month, for 10 months in China, or 30 per cent per ann., which promoted industry, kept down the price of land, & made freehold more common.”

From Dr. Dave Wang’s article we have learned that Franklin’s examination of Chinese economics was so broad that even by today’s standard his study was more extensive than certain so-called experts specializing in Chinese economics. Franklin tried to gather economic information from China as detailed as he could. He recorded in his notebook, a silversmith’s and his apprentice’s salary in a month, and a medical doctor’s income for his visit to his patients. Interestingly enough, Franklin even examined the “Fee paid on a Gift from the King.” His study of silk economy also gives readers a very deep impression. After examining the silk economy in China, Franklin pointed out the perspective for silk economy in Pennsylvania. "That Part of the Imperial Revenue in China paid in Silk, amounts to above 955,000Ib. Troy, and perhaps this is not the twentieth Part of the Produce of that Empire. One Million of Trees disposed into Mulberry Walks, in Pennsylvania, would in a few Years, enable a yearly Remittance to Great-Britain of a Million Sterling, and no Ways interfere with the other necessary Branches of Labour in the Community."

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