In Box

The Not So Dark Ages

When it comes to comparing economies, 'medieval' may not mean what you think it means.

Shocked observers often refer to conditions in the world's poorest countries as "medieval." It turns out that may be generous.

A new study led by economists at the University of Warwick shows that life under the feudal system wasn't as dire as Monty Python made it out to be. The researchers used measures of output such as agricultural yields and the productivity of early industries like textiles to estimate economic growth in England between 1270 and 1700 and found that the average annual income there was closer to $1,000, expressed in 1990 dollars. That's still way below incomes in the modern developed world, but well above current incomes in places like Zimbabwe ($779), Haiti ($686), and Afghanistan ($869). Even on the eve of the Black Death, incomes in England averaged around $800.

Sadly, it seems the question is not when the world's poorest countries will escape the Dark Ages; it's when will they catch up with them.


In Box

The Lesser Evil?

The relativism of corruption.

It's pretty well agreed that corruption, any way you slice it, is bad. Unless you slice it between embezzlement and bribery, that is. According to scholars C. Simon Fan, Chen Lin, and Daniel Treisman, there's a big difference in impact between the two. Bribery discourages business and international investment and leads to mistrust between citizens and their government. But embezzlement, the economists argue in a working paper published by the National Bureau of Economic Research, can actually act as a substitute for wages when officials are underpaid.

Take China, where embezzling public funds is not even technically illegal as long as the official returns the money within three months. Bribery, by contrast, can be punished with a death sentence.

"China’s strategy of tolerating a certain level of embezzlement … effectively serves as an efficiency wage to contain more harmful ways of corruption," argues Fan.

Fostering a healthy culture of embezzlement might not be the best lesson to take from China's success. But it does show that when cracking down on corruption, it helps to prioritize.