Interesting 14Th Century Data: Wages, Inflation, House Prices

[justthisbloke]

Well, I found it interesting, anyway:

https://medium.com/@zavidovych/what-we-can-learn-by-looking-at-prices-and-wages-in-medieval-england-8dc207cfd20a

But my family do think I'm really, really boring.

[@contradevian]

How on earth can you run an economy with stable prices? No Ye Banke of Englande to stoke inflation a little?

[renting til I die]

Well, I found it interesting, anyway:

https://medium.com/@zavidovych/what-we-can-learn-by-looking-at-prices-and-wages-in-medieval-england-8dc207cfd20a

But my family do think I'm really, really boring.

Thanks for that, that was really interesting. My favourite part was

Average inflation for entire period was near zero.

I wonder if that is anything to do with using precious metals for coinage!

[stormymonday_2011]

Thanks for that, that was really interesting. My favourite part was

I wonder if that is anything to do with using precious metals for coinage!

Might have something to do with something from 1/3 to 1/2 of the population pegging it during the Black Death

People ate well until the crops failed then they went hungry as in the years 1315-1317

It should be noted that England was in many ways atypical in medieval europe in that it had a relatively small population to support and its people were noted for being generally well fed and having access to meat. Go to France or the Holy Roman Empire which had far bigger populations and the story was often different.

Edited November 16, 2014 by stormymonday_2011

[oracle]

Thanks for that, that was really interesting. My favourite part was

I wonder if that is anything to do with using precious metals for coinage!

Probably because we still had anti usury laws in those days, everybody including the earl of the manor went to church on sunday and such was the power of the priesthood in those days not paying your dues to the chancel as well as to the king basically meant total trade boycott and ostracisation from the community.

the basic hierarchy in those days circa 1300 consisted of

1) pope( although this was hotly disputed by 2)

2) kings

3)regional cardinals/bishops/abbots

4)knights of the realm, earldom and baronets,major landowners

5)parish priests

6) local law enforcement+judiciary

7) merchants+minor landowners

8) little people.

you make some good points about using precious metals.

it was not necessarily the use of precious metals as the basis for the stability, probably rather the sustainability of the quality of such coinage.

as in the days of rome, it was all fine and dandy until people started coin clipping.(actually it's also documetned of ancient isreal in the old testament, there's nothing new about it..thats why there used to be laws agains false weights& measures and so on)

inflation is the modern day equivalent of coin clipping.

once that happens, the corruption sets in,standards drop and the debasement in peoples behaviour starts to increase....so the lords and masters will get into even more bizarre and bloody spectacles as bread and circus the keep the masses occupied while they are being stolen from.

then it turns into us v them on the streets and social cohesion breaks down

eventually somebody with more discipline comes and invades, conquers etc....

the difference this time is most of us know that the people doing it this time are doing it to debase us deliberately.

it is not as natural cycle of birt/growth/decay as it ought to be.

Edited November 16, 2014 by oracle

[Sancho Panza]

Sustained inflation is more of a recent phenomenon than you'd suppose.

http://en.wikipedia.org/wiki/Inflation

Edited November 16, 2014 by Sancho Panza

[interestrateripoff]

http://mpra.ub.uni-muenchen.de/15748/

Abstract

One of the most common myths in European economic history, and indeed in Economics itself, is that the Black Death of 1347-48, followed by other waves of bubonic plague, led to an abrupt rise in real wages, for both agricultural labourers and urban artisans – one that led to the so-called ‘Golden Age of the English Labourer’, lasting until the early 16th century. While there is no doubt that real-wages in mid- to late- 15th century England did reach a peak far higher than that ever achieved in past centuries, real wages in England did not, in fact, rise in the immediate aftermath of the Black Death. In southern England, real wages of building craftsmen (rural and urban), having plummeted with the natural disaster of the Great Famine (1315-21), thereafter rose to a new peak in 1336-40. But then their real wages fell during the 1340s, and continued their decline after the onslaught of the Black Death, indeed into the 1360s. Not until the later 1370s – almost thirty years after the Black Death – did real wages finally recover and then rapidly surpass the peak achieved in the late 1330s. Thereafter, the rise in real wages was more or less continuous, though at generally slower rates, during the 15th century, reaching a peak in 1476-80 – at a level not thereafter surpassed until 1886-90, by the usual methods of calculating real wages with index numbers: i.e., by NWI/CPI = RWI [nominal wage index divided by the consumer price index equals the real wage index]. Most of the textbooks that still perpetuate the myth about the role of the Black Death in raising real wages, as an almost immediate consequence, employ a demographic model based on Ricardian economics, which predicts (ceteris paribus) that depopulation will result in falling grain prices and thus in falling rents on grain-producing lands (on land in general) and in rising real wages. The fall in population – perhaps as much as 50 percent by the late 15th century (from the 1310 peak) – presumably altered the land:labour ratio sufficiently to increase the marginal productivity of labour and thus its real wage (though in economic theory the real wage is determined by the marginal revenue product of labour). The rise in real wages would also have been a product of the fall in the cost of living, chiefly determined by bread-grain prices, whose decline would have been the inevitable result of both the abandonment of high-cost marginal lands and the rise in the marginal productivity of agricultural labour. But the evidence produced in this study demonstrates that the Black Death was followed, in England, by almost thirty years of high grain prices – high in both nominal and real terms; and that was a principal reason for the post-Plague behaviour of real wages. This study differs from all traditional models by examining the role of monetary forces in producing deflation in the second and final quarters of the fourteenth century, but severe inflation in between those quarters (i.e., from the early 1340s to the mid 1370s). The analysis of the evidence on money, prices, and wages in this study concludes that monetary forces and the consequent behaviour of the price level – in terms of those deflations and intervening inflation – were the most powerful determinant of the level of real wages (i.e., in terms of the formula: NWI/CPI = RWI). Thus the undisputed rise in nominal or money wages following the Black Death was literally ‘swamped’ by the post-Plague inflation, so that real wages fell. Conversely, the rise of real wages in the second quarter of the fourteenth century was principally due to a deflation in which consumer prices fell much more than did nominal wages. In the final quarter of the century, the even stronger rise in real wages was principally due to another deflation in which consumer prices fell sharply, but one in which, for the first time in recorded English history, nominal wages did not fall: an era that inaugurated the predominance of wage-stickiness in English labour markets for the next six centuries. But that perplexing phenomenon of downward wage-stickiness must be left to other studies. The 14th century is the most violent one before the 20th; and violent disruptions from plague, war, and civil unrest undoubtedly produced severe supply shocks and high (relative) prices. Europe also experienced more severe oscillations in monetary changes and consequently in price levels – i.e., the aforesaid deflations and intervening inflation – during the 14th century than in any other before the 20th.

Paper at the link.

[interestrateripoff]

http://web.mit.edu/14.731/papers/greatdivergence.pdf

The Great Divergence in European Wages and Prices

from the Middle Ages to the First World War

Robert C. Allen

1

Nuffield College, Oxford OX1 1NF

This paper traces the history of prices and wages in European cities from the fourteenth

century to the First World War. It is shown that the divergence in real incomes observed

in the mid-nineteenth century was produced between 1500 and 1750 as incomes fell in

most European cities but were maintained (not increased) in the economic leaders.

[AteMoose]

Backs up the argument that wage inequality has been very large until very recently

[Killer Bunny]

65% taxes.

[VeryMeanReversion]

65% taxes.

.. which is the current marginal tax rate for anyone in the £50-60K band with two kids.

[winkie]

How on earth can you run an economy with stable prices? No Ye Banke of Englande to stoke inflation a little?

Stable economy then....money in pocket, the value was preserved....none of this 2% plus inflation malarkey we have today.....prices must go up, things must get more expensive less competitive, wages for a large swath of society lose out because of falling real wages and rising targeted inflation, erosion of hard worked for lifetime savings...debt is growth/wealth for the highly indebted and people in the position of power and influence who have cheap access to newly created debt.

[Rare Bear]

.. which is the current marginal tax rate for anyone in the £50-60K band with two kids.

I would suspect that if you add direct taxes and indirect taxes you would hit that sort of level for total taxes very easily today, especially someone who smokes, drinks or drives. Dan't forget, any money taken by the government is a txx, no matter what it is called.