Sheilagh Ogilvie on Epidemics, Guilds, and the Persistence of Bad Institutions

0:04Conversations with Tyler is produced by the Mercatus Center at George Mason University. Bridging the Gap Between Academic Ideas and Real-World Problems. Learn more at Mercatus.org. For a full transcript of every conversation, enhanced with helpful links, visit conversationswithtyler.com. Hello, everyone, and welcome back to Conversations with Tyler. Today I'm chatting with Sheila Ogilvie, who is a historian and an economic historian. She is currently at All Souls College of Oxford, formerly of Cambridge University, originally housed from, I believe, Western Canada. She has a new book out, which is excellent, and the title is Controlling Contagion, Epidemics and Institutions from the Black Death to COVID.

0:52Sheila, welcome. It's a pleasure to be here. The history of epidemics. When there were earlier pandemics, how large would a GDP decline typically be? How bad were they for economies? They were really bad for economies. So first they were bad because people were really frightened because there was nothing they felt that they could do about it personally. So they withdrew from the market voluntarily, as it were. And then on top of that, there were all sorts of measures to try to limit the spread of contagion. And that also, of course, had an impact on the economy. So it was a sort of double whammy as far as people in the past was concerned.

1:32Do you have a sense of the relative importance of those two factors? So I have a table in the book where I try to put together probably 15 or 16 quantitative examples that we have from, you know, shortly after the Black Death straight through to the present day. And it varied hugely. So on the whole, it seems as if voluntary market withdrawal was pretty high in the medieval and early modern period, but then people were poorer then. And so the implications of withdrawing from the market were really big for them because a lot of them didn't have any cushion of savings until the late medieval period.

2:18There was no tendency for the local community or the state to provide support for people who observed lockdown. And so I think there were really big differences compared to nowadays. But on the whole, it looks like voluntary market withdrawal was really higher in past epidemics than it was, for instance, during influenza in the early 20th century or COVID in the early 21st. And the range of GDP declines, what would those numbers be? I think that's a question that should be answered, but we can't answer right now. So all we can observe is the degree to which people stopped buying beer in a particular tavern in a Middle Eastern city in the 15th century.

3:11So we can't generalize that to the whole of the economy. You know, we're, in a sense, we're just trying to have good macroeconomic estimates of what GDP was for a lot of these economies. But let's say 50 to 60, sometimes 90 % withdrawal from the market of individuals. For instance, the merchant use of the postal system in 17th century Italian cities during plagues went down 90 % during the plague compared to what it normally was. Why did the 1969 pandemic not have bigger economic effects? The 69 flu pandemic. Right. It just wasn't that bad a flu or people ignored it or what happened? That's a good question.

4:02We thought we didn't even need to study these things until recently. So looking at how people responded to different pandemics, I remember I was a kid at the time, and that pandemic was going on. But we didn't really pay attention to it. Same here. I remember 1969, but I don't remember there was a pandemic. No, I remember. Was it called the Spanish flu or the Hong Kong flu? Hong Kong flu, I believe. It's always blamed on foreigners. That is something that goes right back to the Black Death. Now, one commonly hears the claim that, you know, the Black Death, of course, it was terrible for society, terrible for those who died, but that in some ways, medium term, longer term, it had positive effects, that wages went up, that spurred labor-saving innovation, helped Europe grow.

4:55Is there any truth to that, or is that a just-so story that's fabricated? I think my personal view is that it is mostly a sort of happy story, a sort of takeaway from something that we all intuitively know was terrible. I think the sheer scale of the human suffering or death, 30 to 60 % of the European and Middle Eastern population died. So compared to modern pandemics, it's the worst pandemic we have any information about. So just, you know, a lot of people died. Walking through villages and towns after the Black Death would have been way worse than Dresden after the Second World War or Altadena after the fires a month ago.

5:45So even the survivors, in the longer term, maybe their wages went up and in some cases their bargaining ability vis-a-vis employers went up. But for the time being, their employers were dead. Their villages were deserted. They were basically walking around having lost one to two-thirds of their neighbors. It took a while for the beneficial redistributional effects to kick in. So it wasn't until the later 14th or even the early 15th century that the sort of wage effects really started redistributing towards the workers and away from the owners of land and capital. And the other thing is that the effects were really different in different societies.

6:35So the happy story is one that we tell ourselves about Western Europe, where there was a comparatively free bargain that went on between workers and employers. In Eastern Europe, the shortage of labor after the Black Death actually created an incentive for the major employers who were the feudal landlords to strengthen their controls, their restrictions over their serfs, over their unfree peasants. So you actually get something called the second serfdom coming into effect, where the incentives for landlords to coerce unfree labor become really strong when you have very little labor. So Eastern Europe goes into serfdom, Western Europe frees itself from serfdom.

7:22So even the happy story is regionally very various. But just from a theory point of view, I've never understood the happy story. So I see that the supply of labor goes down, but one would think the demand for labor and the products of labor would go down more or less proportionally. So is there any reason to expect real wages to go up in that scenario? Well, the wage evidence actually does suggest that gradually, as the economy recovered after the Black Death in Western Europe, wages went up. And so employers actually immediately start complaining to the government, oh, you know, you have to suppress wages.

8:01You know, there aren't enough servants, there aren't enough laborers. And even in Western Europe, the rulers try to do that. So there was a perception, at any rate, that workers felt that they were able to demand higher wages. And in particular, females were demanding higher wages. And this was seen as really outrageous because, you know, women were supposed to be, you know, sort of obedient, disciplined workers. And here they were saying, I'm going to leave the village unless you increase my wages. So I think that although your reasoning is right, I think the balance of the effect really was to increase wage pressure.

8:42But how the society responded to it depended a lot on whether the employers could get the state on their side to help suppress the wage demands. Let's say we send you back in time, let's say to southwestern Germany. It's an area you know a lot about. During the Black Death, and you can give people advice what they should do to cope. What do you tell them? That's a very good question. I think maybe the first thing I would say is don't believe what your priest says, because one of the things I do in the book is I try to assess the effect of different social institutions. One of them is religion.

9:22And although religion did provide consolation and a certain amount of charitable support, One of the very, very salient things it did during the Black Death was that most religious figures admonished people in order to induce God to take away the plague. It was essential for them to get together in processions and church services, not observe social distancing, but engage in super spreader events. So I think, perhaps I was joking slightly to say, don't listen to your parish priest, but I think that in the short term I would definitely have said that. The question about what to do in the longer term is a good one because just allowing people to decide for themselves about whether to withdraw from the market or whether to keep away from their neighbors is one partial solution.

10:23we know that people withdraw from the market spontaneously, even nowadays and in most historical societies. But they probably don't withdraw as much as they would if they were taking into account the effect of their actions on other people. And so, although I would be advising the villagers to keep your market transactions going, it's the thing that's going to generate enough resources for you to, you know, pay for recovery and invest in health inputs and so on. I would be saying you might want to get together within your community to think about observing some sanitation, some social distancing in a coordinated way, not just as individuals.

11:11Are there any fictional depictions of pandemics that you find persuasive? Manzoni, Camus, Pamuk, anything, even Boccaccio, where you think, oh, this captures it. Actually, I do think Boccaccio captures it. When I was writing the book, I kept on finding that there were passages in Boccaccio which exactly described what the historical sources were showing. So he would describe how people in the immediate aftermath of the Black Death, They were—the family, you know, to some extent broke down. People were abandoning their family members. They weren't helping their neighbors. So it was casting a sort of dark light on the ability of family and community to cope by itself during such a huge crisis.

12:02So probably Boccaccio would be my favorite, maybe because he himself had experienced it. The later fictional accounts, I mean, they're great literature, but I somehow felt that they convinced me less than a guy who actually went through it. Who or what invented variolation? We don't know. It was a spontaneous invention, as far as we know, in all sorts of societies across the world, lost in the mists of time. The first documents we have suggest that it was widely practiced in China in the 1560s, and they got integrated both into Chinese religion, but also they had commercial variolators. There was a dynasty of commercial variolators operating in China in the 16th century.

12:57We in Europe learned about it. I mean, not we, but my ancestors, I guess, mostly came from Europe, as far as I know. learned about it not until the 18th century. So it had been being practiced in China, in northern Africa, in the Middle East, possibly in India since the 16th or 17th century. It was introduced into England in the first couple of decades of the 18th century, simultaneously by an English East India Company surgeon writing a letter back to the Royal Society in London, and by Lady Mary Wortley Montague, who was the ambassador's wife in Istanbul, Constantinople as it then was, who learned that there was this amazing practice which the women of Constantinople practiced in order to prevent both themselves and their children from getting smallpox.

13:53And she actually got an English doctor in Istanbul to do it to her son, her two-year-old son. And then when she went back to England, she got it done. It was probably the first variolation in England. She got it done by the same doctor. She dragged him out of retirement, said, do my daughter, and he did it. And because she was a member of the aristocracy, she made it the cool thing to do. So she was an early 18th century influencer, and it became the sort of fashionable thing for aristocratic ladies, and then sort of poorly mobile people to do. And it happened that it was a really good way of spreading it, because we even know nowadays that mothers, women, are often the decision makers as far as vaccination and health decisions in the family are concerned.

14:48So the fact that she was such a great influencer, and she kind of modeled this behavior as being, you know, very cool. And what rich, you know, upper-class ladies did, meant that it spread very quickly in England, but sadly, very much not on the continent of Europe. But how well did it work back then? Was it a no-brainer that you should do it, or it was highly risky, or what do we know? It was a little bit risky. So if you carried out a cost-benefit analysis, you would do it. So variolation, for those of our listeners who don't know about it, it was like vaccination before vaccination. So what you did in order to be variulated was that it wasn't that you got injected with cowpox, which is not a disease that kills you.

15:36You got injected with a weakened version of smallpox itself. And because it was weakened, it normally didn't kill you. It gave you a mild attack of the disease, but 1.6 % of people who got very elated died of it. On the other hand, the risk of actually catching smallpox and dying of it was something between 10 % and 20%. And so you get these merchants, or not merchants, but doctors in both China and England saying, well, you know, you should just think about it as a merchant would do, costs and benefits. The cost, the risk is really high that you will get natural smallpox. And the risk that you will die of variolation is only 1.6%.

16:24And therefore, you should do it. So they're kind of using the calculus of capitalism to decide whether to get variolated or whether to get it done to their children. And lots of people did. So should we have done that in 2020, as Robin Hanson suggested? If it passes the cost-benefit test? I don't know if variolation would work for COVID is the problem. It's a virus, not a bacterium. So it's not a herd immunity argument. It's an actual medical immunization argument. But clearly, normal people understood it very well in the 18th century. So if you were a teenager in an English village in the 18th century, and you were deciding, okay, I'm going to move to London and get a job, you and your friendship group from the village would all go into the nearest town, pay a commercial variulator.

17:24You'd all get smallpox together. You'd go back to your village, you'd suffer through this mild case of smallpox, and then you would be immunized for life, assuming that you hadn't died, and you would go off to London and seek your fortune. So it became like it was very much a normal teenage thing to do. And there was this incredible franchising set up in England. So it was kind of like a McDonald's, but to get very elated. So there were these entrepreneurs who advertised themselves as having lower risk ways of getting immunized and cheaper ways of getting immunized. And so there was this famous family of the Suttons that started a franchise in 18th century England in the 1750s.

18:14And then they spread into the continent of Europe and actually into North America. So you would have done it back then? Oh, definitely. With enthusiasm? I'm a counter. I look at 1.6 % and compare it to 10 or 20%. I know which way I'd go. The earlier history of pandemics, if you had to say in general, did local autonomy or centralized control do better? What is your view? Local autonomy, definitely. So one of the big theories that economists have developed in recent years about how to get nearly every good outcome in economics is to have lots of state capacity. And one component of the theory of state capacity is that you want state centralization.

19:01Well, I'm not really totally convinced about that for any outcome, but certainly the historical evidence suggests that local government was a lot more effective than central government at dealing with contagion control. And what were they better at? How did that play out? So they were better in lots of ways. They were not so good in a couple of ways, but they were better in knowing what the local preference was of the cost-benefit analysis between economic effects and epidemiological effects. They were good at liaising with informal community level neighborly effects, so monitoring of neighbors by one another, altruism among neighbors, and so on.

19:53So they were really highly informed about who was keeping the well clean, who was getting variulated or vaccinated, that, you know, the sort of sharp-eyed neighbor, the curtain-twitching effect. So they were highly informed. It probably wasn't that fun if you were not keeping your latrine clean and you weren't getting vaccinated, but your neighbors were watching you. And they were pretty good at running, at least in some parts of Europe, running a local level welfare system where they could observe which villagers were going through difficulties and provide them with some welfare support that would enable them to observe lockdown or get virulated or, you know, would provide them with some food if they needed to quarantine.

20:43And that often works well on the local level because the deserving poor are very easily identified locally. So I'm talking up local government. The problem is that pandemics, epidemics often spill out beyond the village walls. And when that was the case, you actually sometimes needed higher levels of government to bang a few local heads together. because the problem with villages, small towns, is that they only care about what's going on inside the community. And sometimes we know there are cross-border externalities. None of us are safe until we're all safe. And so looking at the spillover effects beyond the local community, I think having higher levels of government to do a bit of local headbanging was a useful thing.

21:38But on the whole, it was local governments that did most of the heavy lifting. And the central government, at best, was just permitting the local government to do its thing rather than actually taking initiatives. Now, you were living in England during the COVID pandemic, right? I was. Given all the history you know, what struck you as standing out or surprising or unusual? How do you see the British response differently from how less informed people might? I was not that happy with the British response while I was living here. There were aspects of it that I continued to be unhappy with until fairly recently, such as, for instance, I mean, there were things I was very proud of in the sense that the Oxford COVID vaccine got developed really quickly and rolled out really quickly.

22:31And I had it. And that was wonderful. And, of course, I had just moved to Oxford at the beginning of COVID. I taught for 30 years in Cambridge before I moved to All Souls College. So I was starting a new job at the exact time that COVID was starting. So I was very pleased that science was kicking in. I think that was something that Britain did fairly well. Some other countries had more delay in approving the early vaccines. On the other hand, one thing I didn't like was that there were some government initiatives that actually paid people to go out and go to restaurants while the pandemic was still going on.

23:19So our then-Chancellor of the Exchequer had a program called Help Out to Eat Out, and he was actually subsidizing people to go out to restaurants while the pandemic was still going on to help business. And a very nice piece of econometric analysis was carried out by an economist at Warwick, which showed that immediately after the Eat Out to Help Out initiative was put into place, there were massive increases in COVID infections and deaths in the affected places. So I think that was shocking. The other thing that I didn't like about living here was that it was actually not possible to get a COVID vaccination on the market until last year.

24:06So you had to wait to come up in the queue of the government deciding whether your age group was allowed to be vaccinated. Whereas not just in Canada and the United States, but in Germany, in France, all over Europe. I had a former postdoc who was saying, yeah, I'm going on holiday next week. So I've made an appointment with my GP, this was in Essen in Germany, to get my COVID vaccination. So he was just free to do it, whereas the rest of us were waiting for our government permission to get our vaccination. And I thought it was a reversal of Britain's precocious status as the world center of variolation in the 18th century.

24:51Why was it being like this? It had a really highly, highly market-provided variolation system in the 18th century. And why was it not mobilizing market provision of vaccination in the 21st? So, you know, I think everyone, you probably have things you remember from living in the U.S. during the COVID pandemic that perhaps weren't quite the way you might have liked them to be. I drove to North Carolina to get my vaccine a month early, and that worked out great. It was totally legal, to be clear. But federalism has some advantages, referring back to local autonomy. So you know what you were like?

25:29You were like diplomats from the Netherlands and Spain and France in the 18th century, where at home it was illegal to get variolated. And so they would make sure that they got a posting to London and they would take all their kids with them so they could all get variolated in London. So they were sort of, you know, jurisdiction shopping as well. Now, given your long knowledge of the history, opposition to variolation, opposition to vaccination, when you see so much opposition today, especially in my country, where does that come from? What insight do you have as to the persistence of these crazy views?

26:11nowadays its sources are partly historical and you can see their roots in history because one of the sources of opposition to both variolation and vaccination was religion not mainstream religion but extreme sort of dissenting religion so if you like the religious left and extreme authoritarian religion. So if you like, the super-orthodox Catholics, for instance, in France were very anti-variolation, as were the super-Protestant dissenter types in, for instance, Germany and various parts of Scandinavia. It was the religious extremes. How do you model that? Why are those the people who oppose it?

27:03Is it rebelliousness, or they don't trust authority? Well, I don't think it can be not trusting authority because they certainly believe in their own authority. And the religious right, I mean, the sort of Jansenist Catholics in France certainly were not anti-authoritarian. I think, so I was talking to a colleague who was writing a book about the economics of religion while I was writing my book, and it was during COVID. And we were talking about how religion is sort of a platform, if you like. I mean, it's sort of like Amazon, in the sense that you get a bunch of different services from it. And one reason why people sign up to anti-variolation or anti-vax sentiment is that they want other things which their particular religious platform is offering.

27:57So it might be offering consolation, spiritual consolation, might be offering charitable relief, it might be offering social networking. But in order to get the linked goods within that religious platform, you have to sign up to the epistemological craziness of, the sort of anti-scientific views. So that was one reason, historically, and I think that's still in operation. Historically, there was another reason, which was the medical guilds, the equivalent of the American Medical Association, only much, much worse, back in early modern Europe, did not like the idea of this new thing that they had not, this new technology that they had not approved, and that were also going to challenge their business model and take away their fees from treating smallpox patients.

28:58So in France and in Spain, it was the medical guilds, together with the Catholic Church, that lobbied the state to make variolation illegal. So it was like this unholy alliance between the medical associations and religion. Fortunately, modern medical associations are not as bad as medical guilds. There may be some ways in which they're similar, but in that respect, they're not. And I think that that's, I mean, there are sort of renegade medics who, you know, go on, you know, go on the internet and say, you know, I'm a trained medic and I can tell you vaccination is bad. But in general, you know, medical guilds, medical associations aren't like that anymore.

29:41Now, you mentioned the guilds. One of the things you're best known for is your two books on the guilds and your articles. What's the best argument you can make on behalf of medieval and Renaissance guilds? Is there anything you can say for them? I might be sort of becoming soft-hearted in my old age, but I can see, I think there are examples of guild systems which operated effective professional training. I would say the Dutch and English guilds had a fairly good sort of vocational training system. It was good because it did provide a sort of training framework for young people to learn crafts and services.

30:31in England and the Netherlands, it was even possible for females, for girls, to sometimes get vocational training and not be excluded from the guild apprenticeship system. And the other amazing thing about the English guild system was that once you had been apprenticed to any occupation in London, you could practice any other. So you just had to get membership of one guild, and then you could do any gilded occupation in London. This was unique. This was not the way guilds normally were. So I finished saying my good things about the guilds. The bad things were that no other apprenticeship system in Europe was flexible like that.

31:17In fact, in most European societies, guilds fundamentally, in principle, did not let not just, they didn't let women, girls, get any formal vocational training. They excluded Jews. They excluded poor boys who could not pay the several years of wages necessary to pay the training fees. They excluded migrants. They excluded people with the wrong color of skin. So in 18th century Spain, a cobbler's guild in one Spanish city excluded all boys from apprenticeship whose skin was darker than the color of quince jelly. So, you know, there was a literal color bar to getting into a guild. It completely, even getting any training.

32:05So it was completely not merit-based. So I think in general, the problem with guilds is that they seek the benefits of their existing members, and restricting entry always enables you to raise prices. And so it was quite difficult to prevent a guild from behaving like a little mini cartel. So I would say guilds did operate training systems for those they let in, but they didn't let everyone in. And they did some quality control over goods and services, but they often imposed quality restrictions that meant that it was not possible to sell cheap and nasty products. They focused on the nastiness, and they didn't focus on the fact that sometimes less well-off people would like something nasty, as long as it's a bit cheaper.