Noel Johnson: observation

Transcript context

…Clearly, that’s not what happened. But it’s what I would expect if you asked me a priori. So Paul Romer’s wrong? There are not increasing returns? You can just have higher wages and be much smaller? Yeah, yeah, I think Paul Romer’s right. And in fact, I think one of the things about the Black Death that’s nice is that we can test some theories of increasing returns using it. Something that, again, Mark Koyama, Remi Jedwab, and I have been working on is looking at the Black Death as a test of theories of urban agglomeration, which is very much related to increasing returns in the way that you bring up. One thing that you can look at if you want to tell whether or not increasing returns are one of the main reasons why you have cities in the place they are — that is, are people in cities where they are because that’s where all the people are? — you can take the people away, and then see if they move to a different location that might have something tied to geography or tied to space which is better. For example, what I just mentioned is that there is a general shift towards northern trading networks. We know — because of what we’ve been looking at — that the Hanseatic cities, which are the trading network that exists on the Baltic in the north of Europe — those cities recovered much more quickly than cities in the south, cities tied to the old Roman road network that centered on the Mediterranean, for example. And this makes sense if you think that trade has been shifting with wool trade, for example, over time, since the collapse of Rome. But then, if you have increasing returns, you’re not going to immediately see this shift in the urban network. But if you take away, on average, 40 percent of the population of the cities, then this allows you to let people reshuffle. And in effect, this did happen to a certain extent. Confiscating land from the Church during the French Revolution. Did it enhance economic value or not?…

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