When political interests block new infrastructures: evidence from party connections in the age of Britain’s first transport revolution

New research shows how party politics and connections slowed the diffusion of much-needed improvements in river navigation in Britain during the early eighteenth century. The study by Dan Bogart (University of California Irvine), which is forthcoming in the Economic Journal, reveals that modern concerns about powerful interests coalescing to block infrastructure projects that will benefit the wider economy are nothing new.

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Islington Tunnel in the early 19th century. Source: <http://www.islingtongazette.co.uk/news/a-look-back-at-regent-s-canal-history-200-years-after-plans-were-approved-1-1443464&gt;

 

The famous economist Adam Smith noted in The Wealth of Nations that landowners close to London petitioned Parliament against the extension of transport improvements because it threatened their rents. Was Smith right: do ‘downstream’ interests use their political connections to block ‘upstream’ transport improvements? The new research addresses this question in the context of river navigation, which before the development of canals and railways, was a key part of Britain’s early transport system.

A river navigation act established a company with rights to levy tolls and purchase land necessary for improvements in navigation. Through their statutory powers, navigation companies played a key role in the extension of inland waterways. Improved navigation lowered transport costs since freight rates by inland waterway were approximately one-third of the freight rates by road.

In light of their economic importance, it is significant that the diffusion of navigation acts was slow. It took nearly 50 years to extend navigation on most rivers in Britain. One immediate reason is that projects were proposed several times in Parliament as bills before being approved, and some were never approved.

In general, bills proposing infrastructure projects had high failure rates in Parliament. Opposition from interest groups was the most direct reason. Interest groups would appeal to their MP for assistance, and as this research shows, it was significant whether their MP was connected to the majority political party.

The Whig and Tory parties were in intense competition between 1690 and 1741, with the majority party in the House of Commons switching seven times. The two parties differed in their policy positions and their supporters. The Tories were favoured by small to medium-sized landowners, and the Whigs by merchants, financiers and large landowners.

This study is one of first to test empirically whether Britain’s early parties contributed to different development policies and whether they targeted supporters. The research uses new town-level economic, political and geographical data to investigate how party connections and interest groups worked in this important historical period.

The results show that the characteristics of river navigation supporters and opponents in neighbouring areas had a large effect on their diffusion. For example, more towns with roads in upstream areas (generally supporters) increased the likelihood of a town’s river bill succeeding in Parliament and more towns with harbours downstream (generally opponents) reduced the likelihood of the bill succeeding. Such factors were as important as project feasibility, measured by elevation changes.

Another important factor was the strength of majority party representation in neighbouring political constituencies. Having more downstream MPs in the majority party (a measure of opposition connections) reduced the likelihood of a town’s bill succeeding in Parliament and getting blocked from navigation acts. The identity of the majority party was also relevant. Whig majorities increased the probability of river acts being adopted.

These findings confirm the forces highlighted by Adam Smith and show that the institutional environment in Britain was not always favourable to rapid adoption of infrastructure. Interest groups were powerful and could block projects that went against their interest. The Whig and Tory parties contributed to the blocking power or bias from interest groups, although the Whigs appear to have been more pro-development.

More generally, this case focuses attention on the distributional effects of infrastructure and efforts to block projects. Political connections matter and can have important economic consequences.

‘Party Connections, Interest Groups, and the Slow Diffusion of Infrastructure: Evidence from Britain’s First Transport Revolution’ by Dan Bogart is forthcoming in the Economic Journal.

The TOWER OF BABEL: why we are still a long way from everyone speaking the same language

Nearly a third of the world’s 6,000 plus distinct languages have more than 35,000 speakers. But despite the big communications advantages of a few widely spoken languages such as English and Spanish, there is no sign of a systematic decline in the number of people speaking this large group of relatively small languages.

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These are among the findings of a new study by Professor David Clingingsmith, published in the February 2017 issue of the Economic Journal. His analysis explains how it is possible to have a stable situation in which the world has a small number of very large languages and a large number of small languages.

Does this mean that the benefits of a universal language could never be so great as to induce a sweeping consolidation of language? No, the study concludes:

‘Consider the example of migrants, who tend to switch to the language of their adopted home within a few generations. When the incentives are large enough, populations do switch languages.’

‘The question we can’t yet answer is whether recent technological developments, such as the internet, will change the benefits enough to make such switching worthwhile more broadly.’

Why don’t all people speak the same language? At least since the story of the Tower of Babel, humans have puzzled over the diversity of spoken languages. As with the ancient writers of the book of Genesis, economists have also recognised that there are advantages when people speak a common language, and that those advantages only increase when more people adopt a language.

This simple reasoning predicts that humans should eventually adopt a common language. The growing role of English as the world’s lingua franca and the radical shrinking of distances enabled by the internet has led many people to speculate that the emergence of a universal human language is, if not imminent, at least on the horizon.

There are more than 6,000 distinct languages spoken in the world today. Just 16 of these languages are the native languages of fully half the human population, while the median language is known by only 10,000 people.

The implications might appear to be clear: if we are indeed on the road to a universal language, then the populations speaking the vast majority of these languages must be shrinking relative to the largest ones, on their way to extinction.

The new study presents a very different picture. The author first uses population censuses to produce a new set of estimates of the level and growth of language populations.

The relative paucity of data on the number of people speaking the world’s languages at different points in time means that this can be done for only 344 languages. Nevertheless, the data clearly suggest that the populations of the 29% of languages that have 35,000 or more speakers are stable, not shrinking.

How could this stability be consistent with the very real advantages offered by widely spoken languages? The key is to realise that most human interaction has a local character.

This insight is central to the author’s analysis, which shows that even when there are strong benefits to adopting a common language, we can still end up in a world with a small number of very large languages and a large number of small ones. Numerical simulations of the analytical model produce distributions of language sizes that look very much like the one that actually obtain in the world today.

Summary of the article ‘Are the World’s Languages Consolidating? The Dynamics and Distribution of Language Populations’ by David Clingingsmith. Published in Economic Journal on February 2017