Question

Please help me respond to these questions: Question based on article: A Quantitative Approach to the Study of Railroads in American Economic Growth: A Report of Some Preliminary Findings” by Robert W. Fogel (1962).

5. On p. 170 Fogel writes “This difference is in fact larger than what the true social saving would have been.” Explain what this means and why it is an important point to make.

6. In this article Fogel only looks at data from one year (1890). How does he justify drawing conclusions about a much longer time period (1850-1890) from data from just one year?

7. Was it cheaper to transport freight by rail or by water? Explain. (Hint: This is not a one-word answer.)

8. On page 193 Fogel explains that longer transport times require traders to carry larger inventories (so that they can maintain a constant supply in between deliveries). Therefore longer transportation times imply a larger stock of inventories, on average. As Fogel notes on page 194, water routes were closed for five months out of the year, while rail routes were open all year round. Yet when comparing water vs. rail transportation for agricultural commodities, he claims that this fact is irrelevant to the amount of inventories held on average (“the limited season of navigation would—at least with respect to grains—have had no effect on the inventory requirements of the nation.”) According to Fogel, why is this the case?

Answer 1

Read the article “A Quantitative Approach to the Study of Railroads in American Economic Growth: A Report of Some Preliminary Findings” by Robert W. Fogel (1962). Then answer following questions.

1.     Concisely describe the viewpoint that Fogel is responding to with this article.

• Fogel’s foci point in the paper is “advent of a single new technology cannot be a game- changer as there is a substitute for everything and its impact on economic growth shall be evaluated while considering the importance of these substitutes..”
• Fogel challenges the conventional idea and perception of people regarding the introduction of railways [a new technology] as new means of transportation in U.S. in 19^th century.
• He is of the viewpoint that while there is change in supply of transportation services, price will be predominantly depend on the availability of substitutes.
• Also, he stressed on the criteria of social saving while comparing the benefits of substitutes and the new technology.

1. Summarize the reasoning and/or evidence that has been offered to support this viewpoint.

• In his paper, he built canals [hypothetically] and not railroads in order to compare advantages and public social savings in both the cases.
• He observed that had canals been constructed, transportation system would have been cheaper as compared to the transportation with railroads.
• Also, he found that due to invention of railroad there was only increment of few percent in the per capita income which was in against of the theories and numbers given by others as railroad was considered to be a breakthrough development.

1. According to Fogel, what is the most important problem with this viewpoint? Quote one or more sentences from the article to support your answer.

• The most important problem while making calculations to determine advantages in terms of social saving is not an easy task as these savings are a net result of indirect effects.
• These variable or indirect effects are assumed. Like in the article social savings are considered of a hypothetical world.
• Fogel’s calculations[page no.85-7] assumptions that all sites along navigable waterways, in case of canals, would have been feasible and would resemble to sites along the railway lines is an oversimplification of the realistic constraints.
• He himself admits that his assumptions like that the pattern of transportation will remain the same even if railroads are not built and at the same time economy would evolve to make the best use of substitute are flawed.

1. The article Fogel provides a quote from Morris Raphael Cohen. Explain the relevance of this quote to the article.

• As, fogel approach is to make a comparative analysis between the new technology and its substitutes before arriving on any final result or conclusion of what is inevitable or is a ‘iron horse’; the quote by Morris Raphael Cohen justifies Fogel’s approach according to which we can understand the significance of what happens only when we contrast it with what may happen.