BAD LOCATIONS: Many French towns have been trapped in obsolete places for centuries

Beaumaris,_1610
John Speed (1610), 17th century map of Beaumaris. Available on Wiki Commons.

Only three of the 20 largest cities in Britain are located near the site of Roman towns, compared with 16 in France. That is one of the findings of research by Guy Michaels (London School of Economics) and Ferdinand Rauch (University of Oxford), which uses the contrasting experiences of British and French cities after the fall of the Roman Empire as a natural experiment to explore the impact of history on economic geography – and what leads cities to get stuck in undesirable locations, a big issue for modern urban planners.

The study, published in the February 2018 issue of the Economic Journal, notes that in France, post-Roman urban life became a shadow of its former self, but in Britain it completely disappeared. As a result, medieval towns in France were much more likely to be located near Roman towns than their British counterparts. But many of these places were obsolete because the best locations in Roman times weren’t the same as in the Middle Ages, when access to water transport was key.

The world is rapidly urbanising, but some of its growing cities seem to be misplaced. Their locations are hampered by poor access to world markets, shortages of water or vulnerability to flooding, earthquakes, volcanoes and other natural disasters. This outcome – cities stuck in the wrong places – has potentially dire economic and social consequences.

When thinking about policy responses, it is worth looking at the past to see how historical events can leave cities trapped in locations that are far from ideal. The new study does that by comparing the evolution of two initially similar urban networks following a historical calamity that wiped out one, while leaving the other largely intact.

The setting for the analysis of urban persistence is north-western Europe, where the authors trace the effects of the collapse of the Western Roman Empire more than 1,500 years ago through to the present day. Around the dawn of the first millennium, Rome conquered, and subsequently urbanised, areas including those that make up present day France and Britain (as far north as Hadrian’s Wall). Under the Romans, towns in the two places developed similarly in terms of their institutions, organisation and size.

But around the middle of the fourth century, their fates diverged. Roman Britain suffered invasions, usurpations and reprisals against its elite. Around 410CE, when Rome itself was first sacked, Roman Britain’s last remaining legions, which had maintained order and security, departed permanently. Consequently, Roman Britain’s political, social and economic order collapsed. Between 450CE and 600CE, its towns no longer functioned.

Although some Roman towns in France also suffered when the Western Roman Empire fell, many of them survived and were taken over by Franks. So while the urban network in Britain effectively ended with the fall of the Western Roman Empire, there was much more urban continuity in France.

The divergent paths of these two urban networks makes it possible to study the spatial consequences of the ‘resetting’ of an urban network, as towns across Western Europe re-emerged and grew during the Middle Ages. During the High Middle Ages, both Britain and France were again ruled by a common elite (Norman rather than Roman) and had access to similar production technologies. Both features make is possible to compare the effects of the collapse of the Roman Empire on the evolution of town locations.

Following the asymmetric calamity and subsequent re-emergence of towns in Britain and France, one of three scenarios can be imagined:

  • First, if locational fundamentals, such as coastlines, mountains and rivers, consistently favour a fixed set of places, then those locations would be home to both surviving and re-emerging towns. In this case, there would be high persistence of locations from the Roman era onwards in both British and French urban networks.
  • Second, if locational fundamentals or their value change over time (for example, if coastal access becomes more important) and if these fundamentals affect productivity more than the concentration of human activity, then both urban networks would similarly shift towards locations with improved fundamentals. In this case, there would be less persistence of locations in both British and French urban networks relative to the Roman era.
  • Third, if locational fundamentals or their value change, but these fundamentals affect productivity less than the concentration of human activity, then there would be ‘path-dependence’ in the location of towns. The British urban network, which was reset, would shift away from Roman-era locations towards places that are more suited to the changing economic conditions. But French towns would tend to remain in their original Roman locations.

The authors’ empirical investigation finds support for the third scenario, where town locations are path-dependent. Medieval towns in France were much more likely to be located near Roman towns than their British counterparts.

These differences in urban persistence are still visible today; for example, only three of the 20 largest cities in Britain are located near the site of Roman towns, compared with 16 in France. This finding suggests that the urban network in Britain shifted towards newly advantageous locations between the Roman and medieval eras, while towns in France remained in locations that may have become obsolete.

But did it really matter for future economic development that medieval French towns remained in Roman-era locations? To shed light on this question, the researchers focus on a particular dimension of each town’s location: its accessibility to transport networks.

During Roman times, roads connected major towns, facilitating movements of the occupying army. But during the Middle Ages, technical improvements in water transport made coastal access more important. This technological change meant that having coastal access mattered more for medieval towns in Britain and France than for Roman ones.

The study finds that during the Middle Ages, towns in Britain were roughly two and a half times more likely to have coastal access – either directly or via a navigable river – than during the Roman era. In contrast, in France, there was little change in the urban network’s coastal access.

The researchers also show that having coastal access did matter for towns’ subsequent population growth, which is a key indicator of their economic viability. Specifically, they find that towns with coastal access grew faster between 1200 and 1700, and for towns with poor coastal access, access to canals was associated with faster population growth. The investments in the costly building and maintenance of these canals provide further evidence of the value of access to water transport networks.

The conclusion is that many French towns were stuck in the wrong places for centuries, since their locations were designed for the demands of Roman times and not those of the Middle Ages. They could not take full advantage of the improved transport technologies because they had poor coastal access.

Taken together, these findings show that urban networks may reconfigure around locational fundamentals that become more valuable over time. But this reconfiguration is not inevitable, and towns and cities may remain trapped in bad locations over many centuries and even millennia. This spatial misallocation of economic activity over hundreds of years has almost certainly induced considerable economic costs.

‘Our findings suggest lessons for today’s policy-makers – conclude the authors – The conclusion that cities may be misplaced still matters as the world’s population becomes ever more concentrated in urban areas. For example, parts of Africa, including some of its cities, are hampered by poor access to world markets due to their landlocked position and poor land transport infrastructure. Our research suggests that path-dependence in city locations can still have significant costs.’

‘‘Resetting the Urban Network: 117-2012’ by Guy Michaels and Ferdinand Rauch was published in the February 2018 issue of the Economic Journal.

To contact the authors:
Guy Michaels (G.Michaels@lse.ac.uk)
Ferdinand Rauch (ferdinand.rauch@economics.ox.ac.uk)

WHEN ART BECAME AN ATTRACTIVE INVESTMENT: New evidence on the valuation of artworks in wartime France

by Kim Oosterlinck (Université Libre de Bruxelles)

 

Scene_from_Degenerate_Art_auction,_1938,_works_by_Picasso,_Head_of_a_Woman,_Two_Harlequins
Scene from the Degenerate Artauction, spring 1938, published in a Swiss newspaper; works by Pablo PicassoHead of a Woman (lot 117), Two Harlequins (lot 115). “Paintings from the degenerate art action will now be offered on the international art market. In so doing we hope at least to make some money from this garbage” wrote Joseph Goebbels in his diaries. From Wikipedia

The art market in France during the Nazi occupation provided one of the best available investment opportunities, according to research published in the Economic Journal. Using an original database to recreate an art market price index for the period 1937-1947, his study shows that in a risk-return framework, gold was the only serious alternative to art.

The research indicates that discretion, the inflation-proof character of art, the absence of market intervention and the possibility of reselling works abroad all played a crucial role in the valuation of artworks. Some investors were ready to go to the black market to acquire assets that could easily be resold abroad. But for those who preferred to stay on the side of legality, the art market provided an attractive alternative.

The author notes that the French art market during the occupation has been the subject of numerous publications. But most of these focus on the fate of looted artworks, with limited attention given to the art market itself.

What’s more, previous research on the economics of art usually considers artworks as a poor investment. But the case of occupied France shows that in extreme circumstances, artworks may prove extremely attractive investment vehicles.

During wartime, illegal activities and the risk of being forced to flee the country increased the appeal of ‘discreet assets’ – ones that allow the storage of a large amount of value in small and easily transportable goods.

By comparing the price index for small and large artworks, the new study establishes that investors were looking for smaller artworks, especially just before the German invasion and during the period 1942-1943, when the black market flourished.

Non-pecuniary motives for buying art, such as ‘conspicuous consumption’, are often thought of as playing an important role in art valuation. The new research analyses this point for occupied France by exploiting the distinction made by the Nazis between ‘degenerate’ and ‘non-degenerate’ artworks.

Pricing of ‘degenerate’ works was indeed affected by the impossibility of engaging in their conspicuous consumption. The price difference between these two categories of artworks is clear at the beginning of the occupation, when the Nazi policy towards ‘degenerate’ artworks held in France had not been clearly spelled out.

The difference gradually vanished as it became known that Hitler took a favourable view of French ‘artistic decadence’ and was not planning to get these works destroyed as long as they remained in France.

Discretion does not only concern artworks, the researcher notes. Other discreet assets, such as collectible stamps, also experienced sharp price increases during the Nazi occupation of France. Assets that are easy to transport and hide therefore have characteristics that are valued by some investors during troubled times.

The interest in discreet artworks goes beyond wartime. At any point, tax evaders may be willing to buy art or other discreet assets to hide illicit profits or to diminish their tax burden. As a result, when wealth and wealth inequality increase, so does demand for discreet assets.

Whereas previous research traditionally attributes these price increases to social competition, the new study suggests an alternative explanation: assets that facilitate tax evasion should fetch a higher price in an environment characterised by increasing wealth inequality. The research thus opens the door to a different interpretation of the high demand for artworks in Japan in the 1990s or in China today.

To contact the author: koosterl@ulb.ac.be

Five hundred years of French economic stagnation: from Philippe Le Bel to the Revolution, 1280-1789

by Leonardo Ridolfi (IMT School for Advanced Studies Lucca)

In 2008, output per capita in France amounted to around $22,000 dollars per year. After the Second World War, in 1950, annual average income per capita reached $5,000 dollars, while in 1820, at the beginning of the first official national statistics, GDP per capita averaged $1,100 (Maddison, 2010). Nevertheless, precise knowledge of economic growth in France stops when we get back as far as 1820; before this date, the quantitative reconstruction of economic development is shrouded in mystery.

That mystery lies in the difficulty of uncovering sufficient resource material, devising adequate measures of economic performance in the past, and ultimately interpreting the complexity of the dynamics involved. These dynamics stretch far beyond just the mere economic sphere and concern the way a society is itself organised and structured. Nevertheless, several questions spring to mind.

What was the level of material living standards between the thirteenth and the late eighteenth century, from the early stages of state formation to the French Revolution? How did per capita incomes evolve over time? And were French workers richer or poorer than their European counterparts during the pre-industrial period?

This research provides answers to these questions by estimating the first long-run series of output per capita for France from 1280 to 1789.

The study reveals one important conclusion: the dominant pattern was stagnation in levels of output per capita. For the first time indeed, these estimates document quantitatively and in the aggregate what was previously known only qualitatively or for some regions by the classic works of French historiography (Goubert, 1960; Le Roy Ladurie, 1966): the French economy was an inherently stagnating growthless system, a ‘société immobile’, which at the beginning of the eighteenth century was not much different than five centuries earlier.

At the time of the death of King Philip the Fair in 1314, France was a leading economy in Europe and output per capita averaged $900 per year. Almost five centuries later, this threshold was largely unchanged, but the France of King Louis XVI now belonged to the group of the least developed countries in Western Europe. In the 1780s, per capita income was slightly above $1,000, about half the level registered in England and the Low Countries.

Nevertheless, stagnation was not the same as stability. The French economy was highly volatile and experienced multiple peaks and troughs. In addition, these results reject the argument that there was no long-run improvement in living standards before the Industrial Revolution, demonstrating that GDP per capita rose more than 30% between the 1280s and the 1780s.

Yet most of the rise was explained by a single episode of economic growth that took place prior to the Black Death between the 1280s and the 1340s and which shifted the trajectory of growth onto a higher path.

Overall, these estimates suggest that the evolution of the French economy can be suitably interpreted as an intermediate case between the successful example of England and the Low Countries and the declining patterns of Italy and Spain. Being neither a southern country nor a northern one, the growth experience of France seems to reflect this geographical heterogeneity.

 

References

Goubert, Pierre (1960) École pratique des hautes etudes, Laboratoire cartographique, Beauvais et le Beauvaisis de 1600 à 1730: contribution a l’histoire sociale de la France du 17e siècle, Sevpen.

Ladurie, Emmanuel Le Roy (1966) Les paysans de Languedoc Vol. 1. Mouton.

Maddison, Angus (2010) Historical Statistics of the World Economy: 1-2008 AD, Paris.

France’s Nineteenth Century Wine Crisis: the impact on crime rates

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Street Wine Merchant, France 19th century. From Wikimedia Commons

 

The phylloxera crisis in nineteenth century France destroyed 40% of the country’s vineyards, devastating local economies. According to research by Vincent Bignon, Eve Caroli, and Roberto Galbiati, the negative shock to wine production led to a substantial increase in property crime in the affected regions. But their study, published in the February 2017 issue of the Economic Journal, also finds that there was a significant fall in violent crimes because of the reduction in alcohol consumption.

It has long been debated whether crime responds to economic conditions. In particular, do crime rates increase because of financial crises or major downsizing events in regions heavily specialised in some industries?

Casual observation and statistical evidence suggest that property crimes are more frequent during economic crises. For example, the United Nations Office on Drugs and Crime has claimed that in a sample of 15 countries, theft has sharply increased during the last economic crisis.[1]

These issues are important because crime is also known to have a damaging impact on economic growth by discouraging business and talented workers from settling in regions with high rates of crime. If an economic downturn triggers an increase in the crime rate, it could have long-lasting effects by discouraging recovery.

But since multiple factors can simultaneously affect economic conditions and the propensity to commit crime, identifying a causal effect of economic conditions on crime rates is challenging.

The new research addresses the issue by examining how crime rates were affected by a major economic crisis that massively hit wine production, France’s most iconic industry, in the nineteenth century.

The crisis was triggered by the near microscopic insect named phylloxera vastatrix. It originally lived in North America and did not reach Europe in the era of sailing ships since the transatlantic journey took so long that it had died on arrival.

Steam power provided the greater speed needed for phylloxera to survive the trip and it arrived in France in 1863 on imported US vines. Innocuous in its original ecology, phylloxera proved very destructive for French vineyards by sucking the sap of the vines. Between 1863 and 1890, it destroyed about 40% of them, thus causing a significant loss of GDP.

Because phylloxera took time to spread, not all districts started being hit at the same moment, and because districts differed widely in their ability to grow wines, not all districts were hit equally. The phylloxera crisis is therefore an ideal natural experiment to identify the impact of an economic crisis on crime because it generated exogenous variation in economic activity in 75 French districts.

To show the effect quantitatively, the researchers have collected local administrative data on the evolution of property and violent crime rates, as well as minor offences. They use these data to study whether crime increased significantly after the arrival of phylloxera and the ensuing destruction of the vineyards that it entailed.

The results suggest that the phylloxera crisis caused a substantial increase in property crime rates and a significant decrease in violent crimes. The effect on property crime was driven by the negative income shock induced by the crisis. People coped with the negative income shock by engaging in property crimes. At the same time, the reduction in alcohol consumption induced by the phylloxera crisis had a positive effect on the reduction of violent crimes.

From a policy point of view, these results suggest that crises and downsizing events can have long lasting effects. By showing that the near-disappearance of an industry (in this case only a temporary phenomenon) can trigger long-run negative consequences on local districts through an increasing crime rate, this study underlines that this issue must be high on the policy agenda at times of crises.

 

Summary of the article ‘Stealing to Survive? Crime and Income Shocks in Nineteenth Century France’ by Vincent Bignon, Eve Caroli and Roberto Galbiati. Published in Economic Journal on February 2017

[1] ‘Monitoring the impact of economic crisis on crime’, United Nations Office on Drugs and Crime, 2012. This effect was also noted by the French ‘Observatoire national de la délinquance et des réponses pénales’, when it underlines that burglaries sharply increased in France in the period 2007 to 2012.